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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of theSecuritiesthe Securities Exchange Act of 1934
Filed by the Registrant ☒ Filed by a party other than the Registrant ☐
Check the appropriate box:
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| Preliminary Proxy Statement |
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| Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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| Definitive Proxy Statement |
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| Definitive Additional Materials |
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| Soliciting Material Under Rule 14a-12 |
UNIVERSAL HEALTH SERVICES, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | ||
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| Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
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| Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing: | ||
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UNIVERSAL HEALTH SERVICES, INC.
April 5, 20188, 2021
Dear Stockholder:
You are cordially invited to attend the 2021 Annual Meeting of Stockholders of Universal Health Services, Inc. (the “Company”) to be held at the offices of the Company, Universal Corporate Center, 367 South Gulph Road, King of Prussia, Pennsylvania, on Wednesday, May 16, 2018,19, 2021, beginning at 10:00 a.m. In light of the continuing public health impact of the novel coronavirus (COVID-19) outbreak and to support the health and well-being of our communities, employees, stockholders and other stakeholders, this year’s Annual Meeting will be conducted completely virtually, via a live audio webcast; there will be no physical meeting location. You will be able to attend and participate in the Annual Meeting by visiting www.meetingcenter.io/296174706, where you will be able to listen to the meeting live, submit questions, and vote. The annual meeting is being held for the following purposes:
| (1) | the election of three directors by the holders of Class A and Class C Common Stock (voting together as a single class); |
| (2) | the ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, |
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| the transaction of such other business as may properly come before the meeting or any adjournment thereof. |
Detailed information concerning these matters is set forth in the Important Notice Regarding the Availability of Proxy Materials (the “Notice”) you received in the mail and in the attached Notice of Annual Meeting of Stockholders and Proxy Statement. We have elected to provide access to our Proxy Materials over the internet under the Securities and Exchange Commission’s “notice and access” rules. If you want more information, please see the Questions and Answers section of this Proxy Statement.
Your vote is important. Whether or not you plan to attend the meeting online, please either vote by telephone or internet or, if you received printed Proxy Materials and wish to vote by mail, by promptly signing and returning your Proxy card in the enclosed envelope. Please review the instructions on each of your voting options described in this Proxy Statement as well as in the Notice you received in the mail. If you then attend and wish to vote your shares in person,online, you still may do so. In addition to the matters noted above, we will discuss the business of the Company and be available for your comments and discussionquestions relating to the Company.
I look forward to seeing you at the meeting.
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Sincerely, |
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Alan B. Miller |
Executive Chairman |
the Board of Directors |
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Marc D. Miller |
Chief Executive Officer and President |
UNIVERSAL HEALTH SERVICES, INC.
UNIVERSAL CORPORATE CENTER
367 SOUTH GULPH ROAD
KING OF PRUSSIA, PENNSYLVANIA 19406
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 16, 201819, 2021
Notice is hereby given that the Annual Meeting of Stockholders (the “Annual Meeting”) of Universal Health Services, Inc. (the “Company”) will be held on Wednesday, May 16, 201819, 2021 beginning at 10:00 a.m., The Annual Meeting will be held via live audio webcast available at the offices of the Company, Universal Corporate Center, 367 South Gulph Road, King of Prussia, Pennsylvaniawww.meetingcenter.io/296174706 for the following purposes:
| (1) | the election of three directors by the holders of Class A and Class C Common |
| (2) | the ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, |
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| the transaction of such other business as may properly come before the meeting or any adjournment thereof. |
You are entitled to vote at the Annual Meeting only if you were a Company stockholder of record at the close of business on March 20, 2018.25, 2021.
You are cordially invitedThis year, out of an abundance of caution, to attendproactively deal with the continuing health impact of coronavirus disease, also known as COVID-19, and to mitigate risks to the health and well-being or our communities, employees, stockholders and other stakeholders, we will hold the Annual Meeting in person.a virtual only format, which will be conducted via live audio webcast. Stockholders will have an equal opportunity to participate at the Annual Meeting online regardless of their geographic location.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING ONLINE, PLEASE VOTE BY TELEPHONE OR INTERNET OR, IF YOU RECEIVED PRINTED PROXY MATERIALS AND WISH TO VOTE BY MAIL, MARK YOUR VOTES, THEN DATE AND SIGN THE ENCLOSED FORM OF PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE. YOU MAY REVOKE YOUR PROXY IF YOU DECIDE TO ATTEND THE ANNUAL MEETING AND WISH TO VOTE YOUR SHARES IN PERSON.ONLINE AT THE MEETING.
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be held on Wednesday, May 16, 2018:19, 2021:
The Proxy Statement and Annual Report to Stockholders are available at
http://www.edocumentview.com/uhs.
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BY ORDER OF THE BOARD OF DIRECTORS |
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STEVE G. FILTON, Secretary |
King of Prussia, Pennsylvania
April 5, 2018
8, 2021
UNIVERSAL HEALTH SERVICES, INC.
UNIVERSAL CORPORATE CENTER
367 SOUTH GULPH ROAD
KING OF PRUSSIA, PA 19406
PROXY STATEMENT
QUESTIONS AND ANSWERS
1. | Q: Why am I receiving these materials? |
| A: | This Proxy Statement and enclosed forms of Proxy (first mailed to the holders of Class A and Class C Common Stock, and to the holders of Class B and Class D Common Stock who requested to receive printed Proxy Materials, on or about April |
2. | Q: What is the purpose of the Annual Meeting? |
| A: The Annual Meeting is being held for the following purposes (1) to have the holders of Class A and C Common Stock (voting together as a single class) elect three Class I directors, each such director to serve for a term of three years until the annual election of directors in 2024 or the election and qualification of their respective successor; (2) the ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021; and |
3. | Q: Why did holders of Class B and Class D Common Stock receive a notice in the mail regarding the internet availability of Proxy Materials instead of a full set of Proxy Materials? |
| A: | In accordance with “notice and access” rules adopted by the U.S. Securities and Exchange Commission, or SEC, we may furnish Proxy Materials, including this Proxy Statement and our Annual Report to Stockholders, to our stockholders by providing access to such documents on the internet instead of mailing printed copies. Holders of Class B and Class D Common Stock will not receive printed copies of the Proxy Materials unless they request them. Instead, the Notice, which was mailed to holders of Class B and Class D Common Stock that did not request printed copies of the Proxy Materials, will instruct you as to how you may access and review all of the Proxy Materials on the internet. Please visit http://www.edocumentview.com/uhs. The Notice also instructs you as to how |
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you may submit your Proxy on the internet. If you would like to receive a paper or e-mail copy of our Proxy Materials, you should follow the instructions for requesting such materials in the Notice. |
4. | Q: Who may attend the Annual Meeting? |
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5. | Q: How can I attend and vote at the online meeting? |
A: | For registered stockholders: If on the record date your Shares were registered directly in your name with our transfer agent, Computershare Trust Company, N.A. (“Computershare”), then you are a stockholder of record (also known as a “record holder”). Stockholders of record at the close of business on the record date will be able to attend the Annual Meeting online, ask a question and vote by visiting www.meetingcenter.io/296174706 at the meeting date and time. We encourage you to access the Annual Meeting prior to the start time. Online access will begin at 9:45 a.m., Eastern Time. The two items of information needed to access the Special Meeting from the website are the following: |
Username: the 15-digit control number located in the shaded bar on the proxy card
Meeting password: UHS2021
For beneficial owners: If on the record date your Shares were not registered directly in your name with Computershare but instead held by an intermediary, such as a bank, broker or other nominee, then you are the beneficial owner of shares held in “street name”. The organization holding your account is considered to be the stockholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you must register in advance to attend the Annual Meeting, vote and submit questions. To register in advance you will need to obtain a legal proxy from the bank, broker or other nominee that holds your Shares giving you the right to vote the Shares. Once you have received a legal proxy form from your bank, broker or other nominee, forward the email with your name and the legal proxy attached or send a separate email with your name and legal proxy attached labeled “Legal Proxy” in the subject line to Computershare, at legalproxy@computershare.com. Requests for registration must be received no later than 5:00 p.m., Eastern Time, on May 14, 2021. You will then receive a confirmation of your registration, with a control number, by email from Computershare. At the time of the meeting, go to www.meetingcenter.io/296174706 and enter your control number and the meeting password, UHS2021, if requested. If you do not have your control number you may attend as a guest (non-stockholder) by going to www.meetingcenter.io/296174706 and entering the requested information. Please note that guest access is in listen-only mode and you will not have the ability to ask questions or vote during the Annual Meeting.
6. | Q: Do I need to register to attend the Annual Meeting virtually? |
A: | Registration is only required if you are a beneficial owner. Beneficial holders may register as set forth above or register at the Annual Meeting using the control number received with their voting information form. For the 2021 proxy season, an industry solution has been agreed upon to allow beneficial holders to register online at the Annual Meeting to attend and ask questions. |
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We expect that the vast majority of beneficial holders will be able to fully participate using the control number received with their voting instruction form. Please note, however, that this option is intended to be provided as a convenience to beneficial holders only, and there is no guarantee this option will be available for every type of beneficial holder voting control number. The inability to provide this option to any or all beneficial holders shall in no way impact the validity of the Annual Meeting. Beneficial holders may choose the Register in Advance of the Annual Meeting option above, if they prefer to use this traditional, legal proxy option set forth in #5 aboveand have the ability to vote. In any event, please go to www.meetingcenter.io/296174706 for more information on the available options and registration instructions. The online meeting will begin promptly at 10:00 a.m., EDT. We encourage you to access the meeting prior to the start time leaving ample time for the check in. Please follow the registration instructions as outlined in this proxy statement. |
7. | Q: What if I have trouble accessing the Annual Meeting virtually? |
A: | The virtual meeting platform is fully supported across browsers (MS Edge, Firefox, Chrome and Safari) and devices (desktops, laptops, tablets and cell phones) running the most up-to-date version of applicable software and plugins. Participants should ensure that they have a strong Wi-Fi connection wherever they intend to participate in the meeting. We encourage you to access the meeting prior to the start time. A link on the meeting page will provide further assistance should you need it, or you may call 1-888-724-2416. |
8. | Q: Who is entitled to vote at the Annual Meeting? |
| A: | Only stockholders |
| Q: Who is soliciting my vote? |
| A: | The principal solicitation of Proxies is being made by the Board of Directors by mail. Certain of our officers, directors and employees, none of whom will receive additional compensation therefor, may solicit Proxies by telephone or other personal contact. We will bear the cost of the solicitation of the Proxies, including postage, printing and handling and will reimburse the reasonable expenses of brokerage firms and others for forwarding material to beneficial owners of shares. We have not engaged any third party to assist us in solicitation of proxies at the Annual Meeting, but we may decide to retain the services of a proxy solicitation firm in the future if we believe it is appropriate under the circumstances. |
| Q: What items of business will be voted on at the Annual Meeting? |
| A: | The holders of Class A and C Common Stock (voting together as a single class) will elect three Class I directors, each such director to serve for a term of three years until the annual election of directors in |
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| Q: How does the Board of Directors recommend that I vote? |
| A: | The Board of Directors recommends that holders of Class A and Class C Common Stock vote shares “FOR” the election of the respective nominees to the Board of Directors (Proposal 1). |
The Board of Directors recommends that holders of Class A, Class C, Class B and Class D Common Stock vote shares “FOR” the ratification of the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2018 (Proposal 2).
The Board of Directors recommends that holders of Class A, Class C, Class B and Class D Common Stock vote shares “AGAINST” the stockholder proposal regarding proxy access, if properly presented at the meeting; (Proposal 3).
| The Board of Directors recommends that holders of Class A, Class C, Class B and Class D Common Stock vote shares “FOR” the ratification of the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2021 (Proposal 2). |
12. | Q: How will voting on any other business be conducted? |
| A: | Other than the items of business described in this Proxy Statement, we know of no other business to be presented for action at the Annual Meeting. As for any business that may properly come before the |
Annual Meeting, your signed Proxy gives authority to the persons named therein. Those persons may vote on such matters at their discretion and will use their best judgment with respect thereto. |
| Q: What is the difference between a “stockholder of record” and a “street name” holder? |
| A: | These terms describe how your shares are held. If your shares are registered directly in your name with Computershare, our transfer agent, you are a “stockholder of record.” If your shares are held in the name of a brokerage, bank, trust or other nominee as a custodian, you are a “street name” holder. |
| Q: How do I vote my shares if I am a stockholder of record? |
| A: | A separate form of Proxy applies to our Class A and Class C Common Stock and a separate form of Proxy applies to our Class B and Class D Common Stock. For specific instructions on how to vote your shares, please refer to the instructions on the Notice Regarding the Availability of Proxy Materials you received in the mail or, if you received printed Proxy Materials, your enclosed Proxy card. If you received printed Proxy Materials, enclosed is a Proxy card for the shares of stock held by you on the record date. If you received printed Proxy Materials, you may vote by signing and dating each Proxy card you receive and returning it in the enclosed prepaid envelope, or you may vote by telephone or internet. Unless otherwise indicated on the Proxy, shares represented by any Proxy will, if the Proxy is properly executed and received by us prior to the Annual Meeting, be voted “FOR” each of the nominees for |
| Q: How do I vote by telephone or electronically? |
| A: | Instead of submitting your vote by mail on the enclosed Proxy card (if you received printed Proxy Materials), your vote can be submitted by telephone or electronically, via the internet. Please refer to the specific instructions set forth on the Notice Regarding the Availability of Proxy Materials or, if you received printed Proxy Materials, on the enclosed Proxy card. For security reasons, our electronic voting system has been designed to authenticate your identity as a stockholder. |
| Q: How do I vote my shares if they are held in street name? |
| A: | If your shares are held in street name, your broker or other nominee will provide you with a form seeking instruction on how your shares should be voted. |
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| Q: Can I change or revoke my vote? |
| A: | Yes. Any Proxy executed and returned to us is revocable by delivering a later signed and dated Proxy or other written notice to our Secretary at any time prior to its exercise. Your Proxy is also subject to revocation |
18. Q: How do I vote during the meeting?
A: If you have not already voted your shares in advance as described above, provided you are a registered stockholder with a control number or a beneficial stockholder that has submitted a Legal Proxy and has received a control number from Computershare, you will also be able to vote your shares electronically during the Annual Meeting by clicking on the “Cast Your Vote” link on the Meeting Center site. Whether or not you plan to attend the Annual Meeting, we urge you to vote and submit your proxy in advance of or during the Annual Meeting by one of the methods described in the proxy materials.
19. Q: How do I ask questions during the meeting?
A: If you are attending the meeting as a stockholder of record or registered beneficial owner, questions can be submitted by accessing the meeting center at www.meetingcenter.io/296174706, entering your control number and meeting password, UHS2021, if requested, and clicking on the message icon in the upper right-hand corner of the page. To return to the main page, click the “i” icon at the top of the screen. Please note that guest access is in listen-only mode and you will not have the ability to ask questions or vote during the Annual Meeting.
| Q: What constitutes a “quorum”? |
| A: | The holders of a majority of the common stock votes issued and outstanding and entitled to vote, either in person or represented by Proxy, constitutes a quorum. Proxies received but marked as abstentions and broker non-votes will be included in the calculation of the number of shares considered to be present at the meeting. |
| Q: What are our voting rights with respect to the election of directors? |
| A: | Our Restated Certificate of Incorporation provides that, with respect to the election of directors, holders of Class A Common Stock vote as a class with the holders of Class C Common Stock, and |
holders of Class B Common Stock vote as a class with holders of Class D Common Stock, with holders of all classes of Common Stock entitled to one vote per share. |
As of March 20, 2018,25, 2021, the shares of Class A and Class C Common Stock constituted 7.7%8.5% of the aggregate outstanding shares of our Common Stock, had the right to elect five members of the Board of Directors and constituted 86.8%88.0% of our general voting power; and as of that date the shares of Class B and Class D Common Stock (excluding shares issuable upon exercise of options) constituted 92.3%91.5% of the outstanding shares of our Common Stock, had the right to elect two members of the Board of Directors and constituted 13.2%12.0% of our general voting power.
| Q: What are our voting rights with respect to matters other than the election of directors? |
| A: | As to matters other than the election of directors, our Restated Certificate of Incorporation provides that holders of Class A, Class B, Class C and Class D Common Stock all vote together as a single class, except as otherwise provided by law. |
Each share of Class A Common Stock entitles the holder thereof to one vote; each share of Class B Common Stock entitles the holder thereof to one-tenth of a vote; each share of Class C Common Stock entitles the holder thereof to 100 votes (provided the holder of Class C Common Stock holds a number
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of shares of Class A Common Stock equal to ten times the number of shares of Class C Common Stock that holder holds); and each share of Class D Common Stock entitles the holder thereof to ten votes (provided the holder of Class D Common Stock holds a number of shares of Class B Common Stock equal to ten times the number of shares of Class D Common Stock that holder holds).
In the event a holder of Class C or Class D Common Stock holds a number of shares of Class A or Class B Common Stock, respectively, less than ten times the number of shares of Class C or Class D Common Stock that holder holds, then that holder will be entitled to only one vote for every share of Class C Common Stock, or one-tenth of a vote for every share of Class D Common Stock, which that holder holds in excess of one-tenth the number of shares of Class A or Class B Common Stock, respectively, held by that holder. The Board of Directors, in its discretion, may require holders of Class C or Class D Common Stock to provide satisfactory evidence that such owner holds ten times as many shares of Class A or Class B Common Stock as Class C or Class D Common Stock, respectively, if such facts are not apparent from our stock records.
| Q: Will my shares be voted if I do not sign and return my Proxy card or vote by telephone or internet? |
| A: | If you are a stockholder of record and you do not sign and return your Proxy card or vote by telephone or internet, your shares will not be voted at the Annual Meeting. If your shares are held in street name and you do not issue instructions to your broker, your broker may vote your shares at its discretion on routine matters, but may not vote your shares on nonroutine matters. Under the New York Stock Exchange rules, each of the proposals other than the ratification of the selection of the Company’s independent registered public accounting firm is deemed to be a nonroutine matter with respect to which brokers and nominees may not exercise their voting discretion without receiving instructions from the beneficial owner of the shares. |
| Q: What is a “broker non-vote”? |
| A: | “Broker non-votes” are shares held by brokers or nominees which are present in person or represented by Proxy, but which are not voted on a particular matter because instructions have not been received from the beneficial owner. Under the rules of the Financial Industry Regulatory Authority, member brokers generally may not vote shares held by them in street name for customers unless they are permitted to do so under the rules of any national securities exchange of which they are a member. Under the rules of the New York Stock Exchange, New York Stock Exchange-member brokers who hold shares of Common Stock in street name for their customers and have transmitted our Proxy |
solicitation materials to their customers, but do not receive voting instructions from such customers, are not permitted to vote on nonroutine matters. Under the New York Stock Exchange rules, each of the proposals other than the ratification of the selection of the Company’s independent registered public accounting firm is deemed to be nonroutine matters with respect to which brokers and nominees may not exercise their voting discretion without receiving instructions from the beneficial owner of the shares. |
| Q: What is the effect of a broker non-vote? |
| A: | Broker non-votes will be counted for the purpose of determining the presence or absence of a quorum but will not be considered present and entitled to vote on any matter for which a broker, bank or other nominee does not have authority. For the Annual Meeting, pursuant to the rules of the New York Stock Exchange, your broker, bank or other nominee will be permitted to vote for you without instruction only with respect to Proposal 2 regarding the ratification of PricewaterhouseCoopers LLP. A broker non-vote will not have any impact on the outcome of any other proposals. |
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| Q: What is the vote required to approve each proposal? |
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Item of Business | Votes Required for Approval | Abstentions | Signed But Unmarked Proxy Cards | Broker Non-Votes |
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Proposal 1: Election of Directors | Three Class I directors will be elected by the highest number of affirmative votes of the shares of Class A and Class C Common Stock, voting together as a single class, present in person or represented by Proxy and entitled to vote.
| No effect | Count as votes FOR | No effect on voting |
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Proposal 2: Ratification of Independent Registered Public Accounting Firm | Majority of the Class A, B, C and D Common Stock votes, present in person or represented by Proxy and entitled to vote. | Count as votes AGAINST | Count as votes FOR | Not applicable |
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| Q: Who will count the votes? |
| A: | The Secretary will count the Class A and Class C votes. Our transfer agent will count the Class B and Class D votes and serve as inspector of elections. |
| Q: When are stockholder proposals due in order to be included in our Proxy Statement for the |
| A: | Any stockholder proposal intended to be included in the proxy materials for the |
| Q: Can I receive more than one set of Annual Meeting materials? |
| A: | If you share an address with another stockholder, each stockholder may not receive a separate copy of our Annual Report and Proxy Statement. We will promptly deliver a separate copy of either document to any stockholder upon written or oral request to our Secretary at Universal Health Services, Inc., Universal Corporate Center, 367 South Gulph Road, P.O. Box 61558, King of Prussia, Pennsylvania 19406, telephone (610) 768-3300. If you share an address with another stockholder and (i) would like to receive multiple copies of the Proxy Statement or Annual Report to Stockholders in the future, or (ii) if you are receiving multiple copies and would like to receive only one copy per household in the future, please contact your bank, broker, or other nominee record holder, or you may contact us at the above address and phone number. |
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| Q: How can I obtain additional information about the Company? |
| A: | Copies of our annual, quarterly and current reports we file with the Securities and Exchange Commission, or SEC, and any amendments to those reports, are available free of charge on our website, which is located at http://www.uhsinc.com. Copies of these reports will be sent without charge to any stockholder requesting it in writing to our Secretary at Universal Health Services, Inc., Universal Corporate Center, P.O. Box 61558, 367 South Gulph Road, King of Prussia, Pennsylvania 19406. The information posted on our website is not incorporated into this Proxy Statement. |
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of March 20, 2018,25, 2021, the number of shares of our equity securities and the percentage of each class beneficially owned, within the meaning of Securities and Exchange Commission Rule 13d-3, and the percentage of our general voting power currently held, by (i) all stockholders known by us to own more than 5% of any class of our equity securities, (ii) all of our directors and nominees who are stockholders, (iii) the executive officers named in the Summary Compensation Table and (iv) all directors and executive officers as a group. Except as otherwise specified, the named beneficial owner has sole voting and investment power. No shares are currently pledged as security by any of our directors or executive officers.
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Name and Address of Beneficial Owner(1) |
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John H. Herrell 1021 10th Street, S.W. Rochester, MN 55902 |
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| 45,383(11) |
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Robert H. Hotz Houlihan Lokey Howard & Zukin 245 Park Avenue, 20th Floor New York, NY 10167 |
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Alan B. Miller |
| 5,163,885(6)(17)(20) |
| 78.3% |
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| 8,709,115(4)(11)(12)(18)(21) |
| 9.2% |
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Marc D. Miller |
| 1,641,815(7)(15)(17) |
| 24.8% |
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| 2,589,710(4)(11)(14)(18)(19) |
| 2.9% |
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|
| 2.6 | % | ||||
|
|
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|
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|
Anthony Pantaleoni Norton Rose Fulbright US LLP 1301 Avenue of the Americas New York, NY 10019 |
| 615,330(13)(16)(20) |
| 9.3% |
|
| 786,756(4)(11)(14) |
| (5) |
|
|
| — |
|
| — |
|
|
| — |
|
| — |
|
| (5) |
| |||||
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|
Warren J. Nimetz Norton Rose Fulbright US LLP 1301 Avenue of the Americas New York, NY 10019 |
|
| — |
|
| — |
|
|
| — |
|
| — |
|
|
| — |
|
| — |
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|
| — |
|
| — |
|
| (5) |
| |
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|
Lawrence S. Gibbs Cannonball Trading LLC 22 Trafalgar Drive Livingston, NJ 07039 |
|
| — |
|
| — |
|
| 34,298(11) |
| (5) |
|
|
| — |
|
| — |
|
|
| — |
|
| — |
|
| (5) |
| |||
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|
Eileen C. McDonnell The Penn Mutual Life Insurance Company 600 Dresher Road Horsham, PA 19044 |
|
| — |
|
| — |
|
| 28,960(11) |
| (5) |
|
|
| — |
|
| — |
|
|
| — |
|
| — |
|
| (5) |
| |||
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|
Debra K. Osteen |
|
| — |
|
| — |
|
| 268,174(11) |
| (5) |
|
|
| — |
|
| — |
|
|
| — |
|
| — |
|
| (5) |
| |||
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|
Steve G. Filton |
|
| — |
|
| — |
|
| 452,334(11)(24) |
| (5) |
|
|
| — |
|
| — |
|
|
| — |
|
| — |
|
| (5) |
| |||
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| Title of Class |
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Name and Address of Beneficial Owner(1) |
| Class A Common Stock(2) |
|
|
|
|
| Class B Common Stock(2) |
|
|
|
|
| Class C Common Stock(2) |
|
|
|
|
| Class D Common Stock(2) |
|
|
|
|
| Percentage of General Voting Power(3) |
| |||||
|
| Shares |
| % |
|
| Shares |
| % |
|
| Shares |
| % |
|
| Shares |
| % |
|
|
|
|
| ||||||||
Alan B. Miller |
| 5,163,885(6)(17)(20) |
| 78.5% |
|
| 8,918,256(4)(11)(12)(18)(21)(23) |
| 10.5% |
|
| 661,688 |
| 100% |
|
|
| — |
|
| — |
|
|
| 85.0 | % | ||||||
|
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|
|
Marc D. Miller |
| 1,641,815(7)(15)(17)(22) |
| 25.0% |
|
| 2,724,619(4)(11)(14)(18)(19) |
| 3.4% |
|
|
| — |
|
| — |
|
|
| — |
|
| — |
|
|
| 2.6 | % | ||||
|
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|
Elliot J. Sussman, M.D. The Villages Health 1149 Main Street The Villages, FL 32159 |
|
| — |
|
| — |
|
| 15,000(11) |
| (5) |
|
|
| — |
|
| — |
|
|
| — |
|
| — |
|
| (5) |
| |||
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|
Maria R. Singer 245 Park Avenue New York, NY 10167 |
|
| — |
|
| — |
|
| 2,500(11) |
| (5) |
|
|
| — |
|
| — |
|
|
| — |
|
| — |
|
| (5) |
| |||
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|
Warren J. Nimetz Norton Rose Fulbright US LLP 1301 Avenue of the Americas New York, NY 10019 |
| 799,830(13)(16)(20)(22) |
|
| — |
|
| 986,256(4)(11)(14) |
| (5) |
|
|
| — |
|
| — |
|
|
| — |
|
| — |
|
| (5) |
| ||||
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|
|
Lawrence S. Gibbs 48 Crescent Road Livingston, NJ 07039 |
|
| — |
|
| — |
|
| 28,077(11) |
| (5) |
|
|
| — |
|
| — |
|
|
| — |
|
| — |
|
| (5) |
| |||
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|
Eileen C. McDonnell The Penn Mutual Life Insurance Company 600 Dresher Road Horsham, PA 19044 |
|
| — |
|
| — |
|
| 22,237(11) |
| (5) |
|
|
| — |
|
| — |
|
|
| — |
|
| — |
|
| (5) |
| |||
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|
|
Steve G. Filton |
|
| — |
|
| — |
|
| 445,577(8)(11) |
| (5) |
|
|
| — |
|
| — |
|
|
| — |
|
| — |
|
| (5) |
| |||
|
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|
|
|
Marvin G. Pember |
|
| — |
|
| — |
|
| 153,336(11) |
| (5) |
|
|
| — |
|
| — |
|
|
| — |
|
| — |
|
| (5) |
| |||
|
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|
|
Matthew J. Peterson |
|
| — |
|
| — |
|
| 13,801(11) |
| (5) |
|
|
| — |
|
| — |
|
|
| — |
|
| — |
|
| (5) |
| |||
|
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|
|
BlackRock, Inc. 55 East 52nd Street New York, NY 10055 |
|
| — |
|
| — |
|
| 5,196,958(9) |
| 6.7% |
|
|
| — |
|
| — |
|
|
| — |
|
| — |
|
| (5) |
| |||
|
|
|
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|
|
|
|
|
9
Marvin G. Pember |
|
| — |
|
| — |
|
| 151,124(11) |
| (5) |
|
|
| — |
|
| — |
|
|
| — |
|
| — |
|
| (5) |
| |||
|
|
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|
|
|
|
|
|
Wellington Management Company, LLP 280 Congress Street Boston, MA 02210 |
|
| — |
|
| — |
|
| 7,479,051(8) |
| 8.6% |
|
|
| — |
|
| — |
|
|
| — |
|
| — |
|
|
| 1.1 | % | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BlackRock, Inc. 55 East 52nd Street New York, NY 10055 |
|
| — |
|
| — |
|
| 6,343,722(9) |
| 7.3% |
|
|
| — |
|
| — |
|
|
| — |
|
| — |
|
| (5) |
| |||
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
|
|
|
|
|
|
The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355 |
|
| — |
|
| — |
|
| 8,966,124(10) |
| 10.3% |
|
|
| — |
|
| — |
|
|
| — |
|
| — |
|
|
| 1.3 | % | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vanguard Specialized Funds—Vanguard Health Care Fund 100 Vanguard Blvd. Malvern, PA 19355 |
|
| — |
|
| — |
|
| 4,644,600(22) |
| 5.3% |
|
|
| — |
|
| — |
|
|
| — |
|
| — |
|
| (5) |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maverick Capital, Ltd. 300 Crescent Court, 18th Floor Dallas, TX 75201 |
|
| — |
|
| — |
|
| 5,442,665(23) |
| 6.3% |
|
|
| — |
|
| — |
|
|
| — |
|
| — |
|
| (5) |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All directors & executive officers as a group (10 persons) |
|
| 6,574,600 |
| 99.7% |
|
|
| 11,830,409 |
| 12.3% |
|
|
| 661,688 |
| 99.7% |
|
|
| — |
|
| — |
|
|
| 86.9 | % | |||
The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355 |
|
| — |
|
| — |
|
| 8,300,819(10) |
| 10.7% |
|
|
| — |
|
| — |
|
|
| — |
|
| — |
|
|
| 1.2 | % | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All directors & executive officers as a group (10 persons) |
|
| 6,574,600 |
| 99.96% |
|
|
| 11,707,303 |
| 13.4% |
|
|
| 661,688 |
| 100.0% |
|
|
| — |
|
| — |
|
|
| 88.3 | % | |||
(1) | Unless otherwise shown, the address of each beneficial owner is c/o Universal Health Services, Inc., Universal Corporate Center, 367 South Gulph Road, King of Prussia, PA 19406. |
(2) | Each share of Class A, Class C and Class D Common Stock is convertible at any time into one share of Class B Common Stock. |
(3) | As to matters other than the election of directors, holders of Class A, Class B, Class C and Class D Common Stock vote together as a single class. Each share of Class A Common Stock entitles the holder thereof to one vote; each share of Class B Common Stock entitles the holder thereof to one-tenth of a vote; each share of Class C Common Stock entitles the holder thereof to 100 votes (provided the holder of Class C Common Stock holds a number of shares of Class A Common Stock equal to ten times the number of shares of Class C Common Stock that holder holds); and each share of Class D Common Stock entitles the holder thereof to ten votes (provided the holder of Class D Common Stock holds a number of shares of Class B Common Stock equal to ten times the number of shares of Class D Common Stock that holder holds). |
(4) | Includes shares issuable upon the conversion of Classes A, C and/or D Common Stock. |
(5) | Less than 1% of the class of stock or general voting power. |
(6) | Includes 400,000 shares of Class A Common Stock that are beneficially owned by Mr. Alan Miller and are held by Mr. Alan Miller in trust for the benefit of his spouse. |
(7) | Includes |
(8) |
|
(9) | These securities are held by Blackrock, Inc. and its subsidiaries. Blackrock, Inc. has sole power to vote with respect to |
(10) | These securities are held by The Vanguard |
10
(11) | Includes |
(12) | Includes |
(13) | Does not |
(14) | Includes 171,426 shares held by the three 2011 Family Trusts for the benefit of Alan B. Miller’s three children. |
(15) | Includes 237,800 shares held by the 2012 Family Trust for the benefit of Abby Miller King and Marni Spencer. |
(16) | Includes 356,700 shares held by the 2012 Family Trust for the benefit of Alan B. Miller’s three children. |
(17) | Includes 350,000 shares held by three separate limited liability companies 100% of the interests of which are held by the three |
Miller disclaims beneficial ownership of the shares held by the 2002 Trust for the benefit of Abby Miller |
(18) | Includes |
(19) | Includes |
11
shares held by the 2002 Trust for the benefit of Abby Miller |
(20) | Includes 258,630 shares held by The Alan B. Miller 2002 Trust. |
(21) | Excludes |
(22) Includes 184,500 shares of Class A Common Stock which are held by three sub-trusts (the “2017 Sub-Trusts”) for the benefit of certain of Alan B. Miller’s family members of which Marc D. Miller and Mr. Nimetz are trustees. Marc D. Miller has sole voting power with respect to these shares. Marc D. Miller disclaims beneficial ownership interest of shares held by the 2017 Sub-Trust for the benefit of descendants of Abby Miller King (61,500) and shares held by the 2017 Sub-Trust for the benefit of descendants of Marni Spencer (61,500). Mr. Nimetz disclaims beneficial ownership of all these shares. Warren Nimetz disclaims any beneficial interest in the shares. (23) Includes 500,000 shares held by the three 2020 Grantor Retained Annuity Trusts. Alan B. Miller has sole dispositive power and sole voting power with respect to these shares. |
|
|
|
|
|
Equity Compensation Plan Information
The table below provides information, as of the end of December 31, 2017,2020, concerning securities authorized for issuance under our equity compensation plans.
Plan Category (1.) |
| (a) Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (2.) |
|
| (b) Weighted Average Exercise Price of Outstanding Options, Warrants and Rights |
|
| (c) Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (excluding securities reflected in column (a)) (3.) |
|
| (a) Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (2.) |
|
| (b) Weighted Average Exercise Price of Outstanding Options, Warrants and Rights |
|
| (c) Number of Securities Remaining Available for Future Issuance under Equity Compensation Plan (excluding securities reflected in column (a)) (3.) (4.) |
| ||||||
Equity compensation plans approved by security holders |
|
| 9,639,949 |
|
| $ | 112.40 |
|
|
| 9,148,966 |
|
|
| 8,238,966 |
|
| $ | 109.47 |
|
|
| 6,579,454 |
|
Total |
|
| 9,639,949 |
|
| $ | 112.40 |
|
|
| 9,148,966 |
|
|
| 8,238,966 |
|
| $ | 109.47 |
|
|
| 6,579,454 |
|
(1.) | Shares of Class B Common |
(2.) | As of March |
(3.) | As of March |
(4.) | For purposes of determining the remaining number of shares subject to the Company’s 2020 Omnibus and Stock Incentive Plan, each share underlying a stock option or SAR shall be counted as one (1) share, while all other awards, including full-value restricted stock or units, shall be counted as four (4) shares against the |
13
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Our Restated Certificate of Incorporation provides for a Board of Directors of not fewer than three members nor more than nine members. The Board of Directors after the Annual Meeting will be fixed atis currently comprised of seven members, and is divided into three classes, with members of each class serving for a three-year term. At each Annual Meeting of Stockholders, directors are chosen to succeed those in the class whose term expires at such Annual Meeting and, in the case of this Annual Meeting, directors will be elected as Class I directors. Under our Restated Certificate of Incorporation, holders of shares of our outstanding Class B and Class D Common Stock (voting together as a single class) are entitled to elect 20% (but not less than one) of the directors, currently two directors, one in Class II and one in Class III, and the holders of Class A and Class C Common Stock (voting together as a single class) are entitled to elect the remaining five directors, three in Class I, one in Class II, and one in Class III.
The persons listed below include our Board of Directors and nominees. The terms of the current Class I directors, Messrs. John H. Herrell, andMr. Marc D. Miller, Ms. Eileen C. McDonnell, and Dr. Elliot J. Sussman, expire at the 2018 Annual Meeting. Mr. John H. Herrell will not be seeking reelection at the 20182021 Annual Meeting. Mr. Marc D. Miller, Ms. Eileen C. McDonnell, and Dr. Elliot J. Sussman, have been nominated to be elected by the holders of Class A and C Common Stock. We have no reason to believe that any of the nominees will be unavailable for election; however, if either nominee becomes unavailable for any reason, the shares represented by the Proxy will be voted for the person, if any, who is designated by the Board of Directors to replace the nominee. All nominees have consented to be named and have indicated their intent to serve if elected. The following information is furnished with respect to each of the nominees for election as a director and each member of the Board of Directors whose term of office will continue after the meeting.
Name |
| Class of Director |
| Class of Stockholders Entitled to Vote |
| Age |
| Business Experience |
| Director Since |
DIRECTOR NOMINEES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Elliot J Sussman, M.D. |
| I |
| A Common C Common |
| 66 |
| Chairman of the Villages Health. Former President and Chief Executive Officer of Leigh Valley Hospital and Health Network from 1993 to 2010. Currently, a member of the Board of Directors of iCAD, Inc. since 2002. |
| 2018 |
|
|
|
|
|
|
|
|
|
|
|
Name | Class of Director | Class of Stockholders Entitled to Vote | Age | Business Experience | Director Since | |||||
DIRECTOR NOMINEES |
14
Name |
| Class of Director |
| Class of Stockholders Entitled to Vote |
| Age |
| Business Experience |
| Director Since |
|
|
|
|
|
|
|
|
|
|
|
Elliot J. Sussman, M.D. |
| I |
| A Common C Common |
| 69 |
| Chairman of The Villages Health. Former President and Chief Executive Officer of Lehigh Valley Hospital and Health Network from 1993 to 2010. A member of the Board of Directors of Yale New Haven Health System since 2011. Chair of Board of Directors of North East Medical Group, a wholly owned subsidiary of Yale New Haven Health System. |
| 2018 |
|
|
|
|
|
|
|
|
|
|
|
Marc D. Miller |
| I |
| A Common C Common |
| 50 |
| Appointed as our Chief Executive Officer in January 2021 and continues to serve as President. Previously served as Senior Vice President and Co-Head of our Acute Care Division since 2007 and served as a Vice President since 2004. Also served in various roles in our Acute Care Division since 2003 and served in other management positions at various hospitals from 1999 to 2003. Currently serves as a member of the Board of Trustees of Universal Health Realty Income Trust and as a member of the Board of Directors of Premier, Inc. Son of Alan B. Miller, our Executive Chairman, and former Chief Executive Officer. |
| 2006 |
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Eileen C. McDonnell |
| I |
| A Common C Common |
| 58 |
| Ms. McDonnell currently serves as Chairman and Chief Executive Officer of The Penn Mutual Life Insurance Company since her appointment in 2011. Ms. McDonnell joined Penn Mutual in 2008 and previously served as President of the company. She was also appointed to The Penn Mutual Board of Trustees in 2010. Ms. McDonnell also serves on the Board of Janney Montgomery Scott LLC, a wholly owned subsidiary of Penn Mutual. Ms. McDonnell also serves as a Director of the Insurance Federation of Pennsylvania, serves on the Corporate Council of Children’s Hospital of Philadelphia, and is a national advisor to Vision 2020, an initiative of Drexel University College of Medicine Institute for Women’s Health and Leadership. |
| 2013 |
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DIRECTORS WHOSE TERMS EXPIRE IN 2022 |
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Warren J. Nimetz |
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| A Common C Common |
| 64 |
| Mr. Nimetz is a Partner at the law firm of Norton Rose Fulbright and has been an attorney since 1979. We utilized during the year ended December 31, 2020, and currently utilize, the services of Norton Rose Fulbright as outside counsel. |
| 2018 |
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Maria R. Singer |
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| B Common D Common |
| 47 |
| Ms. Singer is Chief Operating Officer, Corporate Finance at Houlihan Lokey. She previously served as Managing Director and COO of Blackstone Advisory Partners from 2008-2015. She served in various roles at Lehman Brothers, Inc. from 2002-2008, including Senior Vice President, Office of the Chairman and Senior Vice President, Debt Capital Markets. |
| 2020 |
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DIRECTORS WHOSE TERMS EXPIRE IN 2023 |
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Alan B. Miller |
| III |
| A Common C Common |
| 83 |
| Mr. Alan B. Miller, who had previously served as our Chief Executive Officer since our inception in 1978, stepped down from that role effective as of January 1, 2021 and assumed the role of Executive Chairman of the Board. Prior to 1978, Mr. Alan B. Miller was Chairman of the Board, Chief Executive Officer and President of American Medicorp, Inc. Mr. Alan B. Miller continues to serve as Chairman of the Board of Trustees, Chief Executive Officer and President of Universal Health Realty Income Trust. He is the Father of Marc D. Miller, a Director, and our Chief Executive Officer and President. |
| 1978 |
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Lawrence S. Gibbs |
| III |
| B Common D Common |
| 49 |
| Product Manager at AIG, artificial intelligence platform, since 2019. Previously served in various portfolio manager and chief investment officer roles including Chief Investment Officer at Erdos Capital and Portfolio Manager, Chief Investment Office at JP Morgan Chase Bank NA. |
| 2011 |
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Marc D. Miller |
| I |
| A Common C Common |
| 47 |
| Appointed as our President in May 2009. Previously served as Senior Vice President and Co-Head of our Acute Care Division during 2007 and served as a Vice President since January 2005. Served as Vice-President of our Acute Care Division since August 2004; Assistant Vice President and Group Director of Acute Care Division, Eastern Region since June 2003, and; served in other management positions at various hospitals from 1999 to 2003. Currently serves as a member of the Board of Trustees of Universal Health Realty Income Trust and as a member of the Board of Directors of Premier, Inc. Son of Alan B. Miller, our Chief Executive Officer and Chairman of the Board. |
| 2006 |
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Eileen C. McDonnell |
| I |
| A Common C Common |
| 55 |
| Ms. McDonnell was appointed to our Board of Directors in April 2013 and she currently serves as Chairman and Chief Executive Officer of The Penn Mutual Life Insurance Company since her appointment in February 2011. Ms. McDonnell joined Penn Mutual in 2008 and previously served as President of the company. She was also appointed to The Penn Mutual Board of Trustees in 2010. Before joining Penn Mutual, Ms. McDonnell founded ExecMPower, a strategic planning and executive coaching consultancy. Previously, she was president of New England Financial, a wholly-owned subsidiary of MetLife, and senior vice president of the Guardian Life Insurance Company. |
| 2013 |
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DIRECTORS WHOSE TERMS EXPIRE IN 2019 |
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Warren J. Nimetz |
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| A Common C Common |
| 61 |
| Warren J. Nimetz was elected as a Director of Universal Health Services, Inc. in January, 2018. Mr. Nimetz is currently a Partner at the law firm of Norton Rose Fulbright and has been an attorney since 1979. We utilized during the year ended December 31, 2017 and currently utilize the services of Norton Rose Fulbright as outside counsel. |
| 2018 |
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Robert H. Hotz |
| II |
| B Common D Common |
| 73 |
| Senior Managing Director, Global Co-Head of Corporate Finance, and Vice Chairman of Houlihan Lokey Howard & Zukin. Member of the Operating Committee, Houlihan Lokey Howard & Zukin since June 2002. Previously a member of the Board of Directors, Houlihan Lokey Howard & Zukin. |
| 1991 |
DIRECTORS WHOSE TERMS EXPIRE IN 2020 |
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Alan B. Miller |
| III |
| A Common C Common |
| 80 |
| Our Chairman of the Board and Chief Executive Officer since 1978 and previously served as President until May 2009. Prior thereto, President, Chairman of the Board and Chief Executive Officer of American Medicorp, Inc. Chairman of the Board of Trustees, Chief Executive Officer and President of Universal Health Realty Income Trust. Father of Marc D. Miller, a Director and President. |
| 1978 |
Lawrence S. Gibbs |
| III |
| B Common D Common |
| 46 |
| Portfolio Manager at Ramius, LLC since January 2017 and from 2010 to 2014. Previously served in various portfolio manager and chief investment officer roles. |
| 2011 |
See the “Corporate Governance” section for additional information about our Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF THESE NOMINEES AS DIRECTORS.
17
PROPOSAL NO. 2
RATIFICATION OF THE SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
The Audit Committee of the Board has selected, and as a matter of good corporate governance, is requesting the ratification by the stockholders of the selection of PricewaterhouseCoopers LLP to serve as our independent registered public accountants for the year ending December 31, 2018.2021. PricewaterhouseCoopers LLP has served as our independent registered public accountants since 2007. If a favorable vote is not obtained, the Audit Committee may reconsider the selection of PricewaterhouseCoopers LLP. 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 stockholders.
PricewaterhouseCoopers LLP 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.
Vote Required
Ratification of the selection of the independent registered public accountants by the stockholders requires that affirmative “FOR” vote of the holders of a majority of the Class A, Class B, Class C and Class D Common Stock votes present in person or represented by proxy and entitled to vote on the matter. Unless marked to the contrary, proxies will be voted FOR the ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accountants.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE RATIFICATION OF THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2018.
PROPOSAL NO. 3
STOCKHOLDER PROPOSAL REGARDING STOCKHOLDER PROXY ACCESS
We have been notified that the Comptroller of the City of New York, Scott M. Stringer, as the custodian and a trustee of the New York City Employees’ Retirement System, the New York City Fire Department Pension Fund, the New York City Teachers’ Retirement System, and the New York City Police Pension Fund, and custodian of the New York City Board of Education Retirement System (the “Systems”) intends to present a non-binding proposal for consideration at the Annual Meeting. The Comptroller of the City of New York represents that the Systems, collectively, are the beneficial owners of 136,456 shares of common stock. The stockholders making this proposal have provided the proposal and supporting statement, which is set forth below.
The Board opposes adoption of the proposal and asks stockholders to review the Board’s statement in opposition to the proposal, which follows the stockholders’ proposal and supporting statement below.
Stockholder Proposal Regarding Proxy Access
RESOLVED: Shareholders of Universal Health Services, Inc. (“UHS”) ask the board of directors (“Board”) to take the steps necessary to adopt a “proxy access” bylaw. The bylaw should require UHS to include in proxy materials prepared for a shareholder meeting at which Class B/D directors are to be elected the name, Disclosure and Statement (defined below) of any person nominated for election as a Class B/D director by a Class B/D shareholder or group (“Nominator”) satisfying the criteria established below and allow Class B/D shareholders to vote on such nominee(s) on UHS’s proxy card.
The number candidates nominated pursuant to the bylaw for a given meeting should not exceed one quarter of the directors then comprising the Board, subject to any limitations on the number of Class B/D directors to be elected by Class B/D shareholders at the meeting. (Currently, holders of Class B and D shares elect two of UHS’s seven directors, and they are in different classes resulting from UHS’s classified board.) This bylaw, which supplements existing rights, should provide that a Nominator must:
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The Nominator may submit a statement not exceeding 500 words in support of each nominee (the “Statement”). The Board shall adopt procedures for promptly resolving disputes over whether notice of a nomination was timely, whether the Disclosure and Statement satisfy the bylaw and applicable rules, and the priority to be given when the limit on nominees is exceeded.
SUPPORTING STATEMENT
We believe proxy access is a fundamental shareholder right that will make directors more accountable and enhance shareholder value. A 2014 CFA Institute study concluded that proxy access would “benefit both the markets and corporate boardrooms, with little cost or disruption” and could raise overall US market capitalization by up to $140.3 billion if adopted market-wide. (http://www.cfapubs.org/doi/pdf/10.2469/ccb.v2014.n9.1 )
The proposed terms enjoy strong investor and company support. Between January 2015 and October 2017, at least 444 companies of various sizes across industries enacted bylaws with similar terms.
MANAGEMENT’S STATEMENT IN OPPOSITION TO STOCKHOLDER PROPOSAL
This is the third consecutive year that the Comptroller of the City of New York has submitted this proposal or a substantially similar proposal. At our 2017 annual meeting, this proposal received the support of less than 10% of the common stock votes represented in person or by proxy at the meeting. Our Board of Directors continues to believe that the implementation of proxy access is not in the best interests of our Company. The Board has carefully considered this specific proposal and recommends a vote AGAINST it for the following reasons:
Proxy access is a procedure designed to facilitate company-financed proxy contests in director elections, pitting the Board’s nominees against one or more proxy access candidates nominated by a stockholder to be included in the Company’s proxy statement. The Board recommends that you vote against this proposal because it advances a solution for a problem that does not exist at our Company, does not take into account the effective voice our stockholders already have, undercuts the role of the independent Nominating and Governance Committee, and would introduce an unnecessary and potentially expensive and destabilizing dynamic into the Board election process.
The Board believes this proposal advances a solution for a problem that does not exist at the Company and our Board has strong support from our stockholders. The Company’s current corporate governance policies and practices provide stockholders with the ability to effectively express their views and participate meaningfully in director elections, and ensure that the Board of Directors is accountable to stockholders. For example,
As a “controlled company” for purposes of NYSE Listed Company Manual Section 303A.00, we are not required to have a majority of independent directors and we are exempt from the NYSE’s requirements relating to compensation committees and nominating/corporate governance committees. However, the Company has a majority of independent directors on our Board of Directors and all independent directors serving on our Compensation Committee and Nominating & Governance Committee. We believe that our Board and committee structure provides independence and good corporate governance practices while our multi-tiered voting structure preserves our ability to manage the Company in the best interests of all our stockholders.
We have an empowered Lead Independent Director.
Stockholders are able to:
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We do not have a “poison pill” which would limit the amount of shares any group of stockholders could hold.
Since its founding in 1979 UHS has become one of the largest and most respected hospital management companies in the nation. As a Fortune 500 corporation, with net revenues of approximately $10.41 billion generated during the twelve-month period ended December 31, 2017 that produced net income attributable to UHS of approximately $752 million, UHS subsidiaries owned and operated 326 inpatient acute care and behavioral health care facilities in 37 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands and the United Kingdom, and employ more than 83,000 people. Our governance structure has enabled us to grow our business and to succeed despite a rapidly changing landscape and changes in technology, market structure and regulatory regimes. The tenure of our directors enables the Board to provide insight into the rationale and historical context for past decisions and strategies that has allowed us to successfully adapt to our evolving business environment. This continuity increases the full Board’s collective experience, provides new directors the opportunity to learn about our business from the continuing directors and improves the Board’s ability to develop, refine, and execute our long-term strategic plans. All of this is even more important in today’s uncertain environment with increased challenges and opportunities facing companies within the healthcare industry. An abrupt change in the composition of our Board could impair our progress in achieving our strategic goals.
The proposal would undermine the important role of the independent Nominating and Governance Committee. Allowing stockholders to nominate competing candidates for director in our proxy statement would seriously undercut the role of the independent Nominating and Governance Committee and our Board in one of the most crucial elements of corporate governance, the election of directors. An effective Board of Directors is composed of individuals with a diverse and complementary blend of experiences, skills and perspectives. Our independent Nominating and Governance Committee and our Board of Directors are in the best position to assess the particular qualifications of potential director nominees and determine whether they will contribute to an effective and well-rounded Board that operates openly and collaboratively and represents the interests of all stockholders, not just those with special interests.
The Nominating and Governance Committee, which is comprised of independent, non-management directors who owe fiduciary duties to act in the best interests of all stockholders, has developed criteria and a process for identifying and recommending director candidates for election by our Class B and D stockholders, which are described in this Proxy Statement under “Committees of the Board of Directors-Nominating and Governance Committee.”
As part of this process, stockholders can recommend prospective director candidates for the Nominating and Governance Committee’s consideration. No stockholders have recommended prospective director candidates through this process to date, which we believe reflects the confidence of our stockholders in the nomination process of the Nominating and Governance Committee outlined above. However, any nominee proposed by stockholders for the Committee’s consideration through this process would be evaluated and considered in the same manner as a nominee recommended by a Board member, management, search firm or other source.
This process is designed to identify and nominate qualified director candidates who possess a combination of skills, professional experience and diversity of backgrounds necessary to oversee our business and who can contribute to the overall effectiveness of our Board. The Nominating and Governance Committee also carefully reviews and considers the independence of potential nominees. Stockholders already have a voice in this process and the ability to nominate potential directors for consideration by the Committee. Through this process, we believe that our Nominating and Governance Committee and Board achieve the optimal balance of directors and best serve the Company and all of our stockholders.
This proxy access proposal would potentially enable a holder, or a group of holders, with ownership of as little as 3% of our outstanding shares to completely bypass this process by placing directly into nomination candidates who may fail to meet the qualifications established by the Board, fail to contribute to the desired mix of perspectives, or fail to represent the interests of stockholders as a whole. In addition, this proposal, if implemented, would allow a constantly shifting alignment of stockholders that have held shares for the requisite three-year period to aggregate their shares to reach this 3% threshold creating a never ending cycle of stockholders seeking to disrupt the Company’s governance.
The proposal could have a number of other significant adverse consequences. In addition to proxy access being unnecessary, the Board believes that proxy access as proposed in this stockholder proposal could have a number of significant adverse consequences and harm the Company and stockholders by:
Creating an Uneven Playing Field and Increasing Company Costs. In the absence of proxy access, the playing field is level, in that a stockholder seeking to elect its own nominee to the Board outside of the process of the Nominating and Governance Committee outlined above would, like the Company, need to undertake the expense of preparing proxy materials and soliciting proxies on its nominee’s behalf. We see little reason why a stockholder owning 3% or more of the outstanding shares of the Company (which as of December 31, 2017 constituted approximately $320 million worth of shares) should not, if the stockholder has a legitimate interest in having representation on the Board, bear the expense of preparing proxy materials and soliciting proxies. Moreover, in a contested election resulting from proxy access, we would likely feel compelled to undertake an additional and potentially expensive campaign in support of Board-nominated candidates and inform stockholders of the reasons why we believe the Board-nominated candidates rather than the stockholder nominee(s) should be elected. In this regard, the United States Court of Appeals for the District of Columbia overturned the SEC’s proxy access rule because it determined that the SEC failed to adequately assess the economic effects of the rule, including the expense and distraction that contested director elections arising out of proxy access would entail.
Increasing the Influence of Special Interest Groups. Proxy access creates the potential for a stockholder with a special interest to use the proxy access process to promote a specific agenda rather than the interests of all stockholders or to extract concessions from the Company related to that stockholder’s special interests, thereby creating the risk of politicizing the Board election process at virtually no cost to the proponent.
Encouraging Short-Termism. With proxy access, contested director elections could become routine. The Board believes that the potential for frequent contested elections arising from proxy access would not only be highly distracting to the Board and management, but could also encourage a short-term focus with respect to the management of the business that would not be in the long-term interests of our stockholders. We believe that our Board’s stability has driven, and will continue to drive, long-term value for stockholders who are committed to holding our stock for extended periods. As a testament to this belief, our shares have outperformed leading stock indices by significant margins since our initial public offering in 1981. More recently, since 2000, our stock performance has outperformed the S&P 500 Index by a margin of 5.3 to 1 during the 18-year period ended December 31, 2017. After various stock splits and reinvested dividends are considered, an investor who purchased $1,000 of our Class B Common Stock on January 1, 2000, would have had an investment valued at $13,609 as of December 31, 2017, as compared to $2,579 for a $1,000 investment made in the S&P 500 Index during the same period.
Disrupting Board Operations. Frequent contested director elections arising out of proxy access could also disrupt our Board operations and dynamics in various ways. Abrupt changes in the composition of our Board arising out of proxy access could disrupt continuity on our Board in a manner that could interfere with our ability to develop, refine, monitor and execute our long-term strategic and business plans. In addition, the election of stockholder-nominated directors through proxy access could create factions on the Board, leading to dissension and delay, and thereby potentially preclude the Board’s ability to function effectively and serve the best interests of all our stockholders. Finally, the potential for frequent contested elections arising out of proxy access could hinder collegiality among our Board members by creating the potential for our Board members to be pitted against one another in contested director elections on a regular basis where there would be more nominees up for election than available director positions.
Discouraging Highly Qualified Director Candidates from Serving. Under the current process overseen by the Nominating and Governance Committee, we have a well-functioning team of directors with a diverse range of expertise and experience. However, the prospect of routinely standing for election in a contested situation may deter highly qualified individuals from Board service. Moreover, the prospect of perennial contested elections may cause incumbent directors to become excessively risk adverse, thereby impairing their ability to provide sound and prudent guidance with respect to our operations and interests.
The Board believes that the current measures the Company employs for the nomination and election of directors, as well as the Company’s stockholder engagement program, have led to a Board that is responsive to stockholder input and promotes a strategy of long-term value creation. Indeed over the years our nominees routinely receive in excess of 90% of all votes cast. While our Board strives to implement corporate governance best practices when appropriate, our Board believes that proxy access would be unnecessary and counterproductive for the Company. Moreover, our Board believes that proxy access could disrupt the functioning of our Board and adversely affect the implementation of our long-term strategy. Finally, while proxy access has been the subject of significant publicity in recent years, proxy access has only been implemented by a relatively small number of U.S. public companies, which we believe creates the potential for other unforeseen problems in light of the complicated issues associated with the implementation of proxy access.
For the foregoing reasons, the Board believes that this proposal is not in the best interests of the Company or its stockholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “AGAINST” THE STOCKHOLDER PROPOSAL REGARDING STOCKHOLDER PROXY ACCESS DESCRIBED IN PROPOSAL NO. 3.
2021.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Our 2017 PerformanceChief Executive Officer Transition in 2021
The following are highlightsEffective January 1, 2021, Mr. Alan B. Miller was appointed Executive Chairman of the Board. He had previously served as Chairman of the Board and Chief Executive Officer since our inception in 1978.
Also effective as of January 1, 2021, Mr. Marc D. Miller was appointed Chief Executive Officer and President. He had served as President since May, 2009 and prior thereto served as Senior Vice President and co-head of our 2017 financialAcute Care Hospitals since 2007. He was elected to our Board of Directors in 2006.
Our 2020 Performance and operating performance:Highlights
The impact of the COVID-19 pandemic, which began during the second half of March, 2020, had a material unfavorable effect on our operations and financial results during 2020, before giving effect to the $413 million of revenues recorded during the year in connection with the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) and other governmental grants.
• As a result of the COVID-19 pandemic, patient volumes and results of operations at our acute care and behavioral health facilities were unfavorably impacted by various factors including, among other things, “shelter-in-place” orders or other similar restrictions mandated at various times by state and local governments, reluctance of individuals to seek medical care delivered in traditional venues, and increased costs of providing patient care including labor costs which have been pressured during the COVID-19 pandemic due to a shortage of clinicians and increased wage rates resulting from increased demand for those services.
In response to the unprecedented operational challenges created by the COVID-19 pandemic: our facilities and dedicated staff continued to diagnose and treat patients accurately, efficiently and compassionately while delivering critical care through an evolving environment; we quickly activated our Crisis Response infrastructure; implemented protocols consistent with new (and changing) federal, state and local guidelines; procured medical supplies through new sources and in bulk quantities and managed staffing challenges.
• During 2017,2020, our adjusted net income attributable to UHS (see footnote A. below) increased to $725.5was $954.7 million, or $7.53$11.12 per diluted share, as compared to $720.2$891.8 million, or $7.32$9.99 per diluted share, during 2016.2019.
Our net revenues increased 6.6%1.6% to $10.41$11.56 billion during 20172020 as compared to $9.77$11.38 billion during 2016.2019.
Net revenues at our acute care hospitals owned during both years increased 4.7%3.0% during 20172020 as compared to 2016.2019, including approximately $316 million of revenues recorded during 2020 in connection with CARES Act and other governmental grants. During 20172020 at these facilities, adjusted admissions (adjusted for outpatient activity) increased 5.5%decreased 15.2% and adjusted patient days increased 2.8%decreased 5.5% as compared to 2016.2019.
Net revenues at our behavioral health care facilities owned during both years increased 1.7%0.6% during 20172020 as compared to 2016. During 2017 at these facilities, adjusted admissions increased 2.4% and adjusted patient days increased 0.2% as compared to 2016.2019, including approximately $97 million of revenues recorded during 2020 in
In addition to strong financial performance, we continued to focus on delivering quality care to our patients. The following are a few of the quality and patient care highlights achieved in 2017:19
connection with CARES Act and other governmental grants. During 2020 at these facilities, adjusted admissions decreased 8.0% and adjusted patient days decreased 5.3% as compared to 2019. |
We invested more than $300$480 million in our acute care division, and approximately $250$246 million in our behavioral health care division, to construct, expand, equip and improve our facilities.
Our acute care hospital delivered nearly $1.8 billion in uncompensated care.Although the Company was resilient during 2020, as a result of the COVID-19 pandemic and its material unfavorable impact on our results of operations, no cash incentive bonuses were paid to any of our named executive officers pursuant to the Executive Incentive Plan for the year ended December 31, 2020.
In March of 2020, we changed our long-term incentive program and began awarding performance based equity to our named executive officers with 50% of the awards consisting of performance stock options with a premium exercise price.
A. | Adjusted net income and adjusted net income per diluted share for 2020 and 2019 were publicly disclosed and reconciled to our reported results for each year on the Schedule of Non-GAAP Supplemental Consolidated Statements of Income Information, included with our earnings for the years ended December 31, 2020 and 2019, as filed on Form 8-K on February 25, 2021. Annex A contains a reconciliation of these non-GAAP financial measures to financial measurements determined in accordance with GAAP. |
The following are a few of the quality and patient care highlights achieved in 2020:
Acute Care Services:
The Leapfrog Group evaluates hospitals efforts in protecting patients from harm and meeting national safety standards.
o | Eight of our acute care hospitals were awarded an “A” grade in the fall 2020 Leapfrog Hospital safety grade as follows: |
▪ | Aiken Regional Medical Center (5 consecutive “A” grades). |
▪ | Henderson Hospital (5 consecutive “A” grades). |
▪ | Northern Nevada Medical Center (6 consecutive “A” grades). |
▪ | South Texas Health System-Edinburg Regional Medical Center/Children’s Hospital (5 consecutive “A” grades). |
▪ | South Texas Health System-McAllen Medical Center (5 consecutive “A” grades). |
▪ | St. Mary’s Regional Medical Center (5 consecutive “A” grades). |
▪ | Temecula Valley Hospital (2 consecutive “A” grades). |
▪ | Texoma Medical Center (2 consecutive “A” grades). |
o | Ten of our acute care hospitals were awarded a “B” grade in the fall 2020 Leapfrog Hospital safety grade. |
The Leapfrog Group designated Temecula Valley Hospital and Northern Nevada Medical Center as Top General Hospitals (our facilities were 2 of only 29 hospitals to receive the designation), and Henderson Hospital as a Top Teaching Hospital (our facility was 1 of only 48 hospitals to receive the designation).
Newsweek, in collaboration with The Leapfrog Group recognized Corona Regional Medical Center, Lakewood Ranch Medical Center and South Texas Health System- Edinburg Regional Medical Center/Children’s Hospital as Best Maternity Hospital in the U.S. The list includes 217 hospitals across 36 state that meet the highest standards for safety and quality for maternity care.
The Patient Safety Index 90 (“PSI-90”) is a composite of indicators created by the Agency for Healthcare, Research and Quality. The PSI-90 provides an overview of hospital level quality as it relates to a set of potentially preventable hospital related events associated with harmful outcomes for
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patients. For 2020, the Company’s acute care PSI 90 score of 0.86 was better than the national average of 0.99. |
Risk-adjusted observed to expected mortality (“O:E Ratio”) is another commonly used method to assess acute care quality (an O:E Ratio of 1.0 represents the average mortality rate; less than 1.0 represents a better-than-expected mortality rate). The Company’s acute care 2020 O:E Ratio of 0.9685 compared favorably to the expected O:E Ratio.
Our overall internal data indicates that our acute care hospitals realized a 64% improvementdelivered nearly $2.2 billion in the PSI-90 score from 2014 to 2017.uncompensated care.
Behavioral Health Care Services:
The Centers for Medicare and Medicaid Services’ inpatient psychiatric facility quality reporting measures compare our behavioral health care facilities to approximately 1,5001,600 providers acrossin the country.U.S. Our 2019 behavioral health results exceed the average of the group in 812 out of 1215 indicators.
• | The Joint Commission’s Core Measures for hospital-based inpatient psychiatric services quality compares our behavioral health care facilities to over 700 providers in the U.S. The results indicate that, on a comparative basis, our behavioral health care facilities outperform the group in all four measures. |
• In 2017,2020, patients in our behavioral health care facilities rated their overall care, on average, as 4.5 out of 5 in our patient satisfaction surveys. More than 92%91% indicated they felt better following care at one of our facilities.
Our Executive Officers
Marc D. Miller – Chief Executive Officer, President and Director: Mr. Marc D. Miller was appointed Chief Executive Officer and President effective January 1, 2021. He has served as President since May, 2009 and prior thereto served as Senior Vice President and co-head of our Acute Care Hospitals since 2007. He was elected a Director in May, 2006 and Vice President in 2005. He has served in various capacities related to our acute care division since 2000. He was elected to the Board of Trustees of Universal Health Realty Income Trust in December, 2008. He also serves as a member of the Board of Directors of Premier, Inc., a publicly traded healthcare performance improvement alliance.
Alan B. Miller – Executive Chairman of the Board: Mr. Alan B. Miller was appointed Executive Chairman of the Board effective January 1, 2021. He had been Chairman of the Board and Chief Executive Officer since our inception in 1978 and also served as President from inception until 2009. Prior thereto, he was President, Chairman of the Board and Chief Executive Officer of American Medicorp, Inc. He currently serves as Chairman of the Board, Chief Executive Officer and President of Universal Health Realty Income Trust.
Steve G. Filton – Executive Vice President, Chief Financial Officer and Secretary: Mr. Filton was elected Executive Vice President in 2017 and continues to serve as Chief Financial Officer since his appointment in 2003. He has also served as Secretary since 1999. He had served as Senior Vice President since 2003, as Vice President and Controller since 1991, and as Director of Corporate Accounting since 1985.
Marvin G. Pember – Executive Vice President, President of Acute Care Division: Mr. Pember was elected Executive Vice President in 2017 and continues to serve as President of our Acute Care Division since commencement of his employment with us in 2011. He had served as Senior Vice President since 2011. He was formerly employed for 12 years at Indiana University Health, Inc. (formerly known as Clarian Health Partners,
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Inc.), a nonprofit hospital system that operates multiple facilities in Indiana, where he served as Executive Vice President and would referChief Financial Officer.
Matthew J. Peterson – Executive Vice President, President of Behavioral Health Division: Mr. Peterson’s employment with us commenced in September, 2019 as Executive Vice President and President of our Behavioral Health Division. He was formerly employed at UnitedHealth Group for 11 years serving in various capacities including Chief Operating Officer for OptumGovernment, a friend or familyhealth services and technology company, as well as various other Senior Vice President/Vice President roles. In addition to his civilian business career, Mr. Peterson has served for nearly 30 years as a member of the United States Military, currently serving as a Colonel and hospital/healthcare administrator in need of care.the Air National Guard.
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Compensation Philosophy and Objectives
Our compensation philosophy of aligning pay strongly with performance is grounded in best practices that are regulatory compliant, financially sound and provide long-term value to stockholders. Specifically, we:
Review peer group market data on an annual basis;
Discuss financial and operational performance rigorously in determining any base salary and incentive decisions;
Enforce maximums on incentive payments to limit undue risk;
Evaluate our compensation practices on an annual basis;
Retain an independent, outside consultant;
Do not provide plans generally outside of current market practices, and;
Do not offer excessive perquisites to our executivesexecutives.
In designing our compensation programs for our named executive officers, we follow our belief that compensation should reflect the value created for stockholders while supporting our strategic business goals. In doing so, our compensation programs reflect the following objectives:
Compensation should encourage increases in stockholder value;
Compensation programs should support our short-term and long-term strategic business goals and objectives;
Compensation programs should reflect and promote our core values set forth in our mission statement, which includes commitment to excellence, high ethical standards, teamwork and innovation;
Compensation should reward individuals for outstanding performance and contributions toward business goals, and;
Compensation programs should enable us to attract, retain and motivate highly qualified professionals.
These objectives govern the decisions that the Compensation Committee of the Board of Directors (the “Compensation Committee”) and management of the Company make with respect to the amount and type of compensation payable to our named executive officers. The Compensation Committee believes that linking executive compensation to corporate performance results in a strong alignment of compensation with corporate business goals and stockholder value. This belief has been adhered to through the use of incentive pay programs that provide competitive compensation for achieving superior performance and creating value for stockholders.
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Executives are rewarded commensurately for the achievement of specified business goals and performance objectives, which may increase the value of our stock. Our compensation programs are reviewed annually to ensure that these objectives continue to be met.
Compensation Setting Process
The Compensation Committee has traditionally taken into account the input and recommendations of our former Chairman and Chief Executive Officer, Mr. Alan Miller, with respect to our compensation programs, including the compensation arrangements with our named executive officers other than himself. The Compensation Committee believes that Mr. Alan Miller, due to his former role within the Company, his years of healthcare experience and other factors, as mentioned below, is a valuable resource to the Compensation Committee. Mr. Alan Miller attendsattended certain Compensation Committee meetings by invitation, however, he doesdid not have the right to vote on
matters addressed by the Compensation Committee and he doesdid not participate in the discussions with respect to his own compensation. Mr. Alan Miller conductsconducted formal performance evaluations on an annual basis of the named executives who havehad direct reporting responsibility to him.
Unlike our other named executive officers, Mr. Alan Miller’s base salary, minimumtarget annual bonus and certain perquisites are determined under his employment agreement. Please also refer to the discussion of Mr. Alan Miller’s employment agreement in the Chief Executive Officer Employment Agreement section of this Proxy Statement. In addition, the compensation setting process for Mr. Alan Miller variesvaried from that of our other named executive officers because it iswas determined by the Compensation Committee without Mr. Alan Miller’s participation. The Compensation Committee, in determining Mr. Alan Miller’s compensation, takestook into account his former position as Chief Executive Officer, his role as a founder of our Company in 1978, his years of dedicated service and his expertise and reputation in the hospital management industry. The Compensation Committee also considersconsidered Mr. Alan Miller’s responsibilities in overseeing all of our Company’s businesses, operations, development and overall strategy and his role as the public face of our Company, which shapesshaped our corporate image and identity. These factors differentiatedifferentiated Mr. Alan Miller from the other named executive officers.
In addition, during 2020 for Mr. Alan Miller and the Company’s other named executive officers, the Compensation Committee reviewed data prepared in early 2017December of 2019 by Pay Governance LLCFW Cook that compared the Company’s executive compensation levels to data for comparable positions from two reference points: a primary reference of other similar companies within the healthcare industry;UHS peer group established and detailed in our 2019 proxy and a secondary reference of size-adjusted (by revenues) data from the broader general industry. Data for the primarypeer reference were drawn from publicly filed proxies of peer healthcare companies, and dataproxies. Data for the secondary reference were drawn from published compensation surveys by Willis Towers Watson and Aon covering a range of companies and industries. Data were compiled for all elements of compensation including base salary, annual incentive opportunity, and equity/long-term incentive awards. These data, as well as Company-specific factors including the prior year performance of our executives and the Company’s operating and shareholderstockholder return performance relative to our competitors, were considered by the Committee in determining 20172020 compensation for Mr. Alan Miller and our other named executive officers. In light of the above factors, the Compensation Committee approved the base salary, annual cash incentive opportunity, and long-term compensation award to each of the named executive officers in 20172020 and believesbelieved that the forms and amounts of compensation for each year adequately reflect our compensation goals and policies. However, as discussed below, as a result of the COVID-19 pandemic and its material unfavorable impact on our results of operations, no cash incentive bonuses were paid to any of our executive officers pursuant to the Executive Incentive Plan for the year ended December 31, 2020.
Say on Pay Considerations
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After undertaking our comprehensive review with FW Cook to identify potential performance-based equity award design alternatives, we modified our stock option award program. It is currently intended, although not required by the terms of the 2020 Stock Incentive Plan, that a portion of the options awarded to the named executive officers of the Company will be exercisable at 110% of the fair market value on the date of grant. In 2020, we delivered 50% of our award value to named executive officers, including the Chief Executive Officer, in stock options with a premium exercise price of 10% above grant date market value.
Elements of Compensation
Our executive compensation is based on six primary components, each of which is intended to serve the overall compensation objectives. These components include:
annual base salary;
annual cash incentive;
long-term incentive awards, and;
deferred compensation, retirement benefits and other benefits, including perquisites.
Compensation Peer Group
Acadia Healthcare Company, Inc.
Brookdale Senior Living, Inc.
Community Health Systems, Inc.
DaVita, Inc.
Encompass Health Corporation
Genesis Healthcare, Inc.
HCA Healthcare, Inc.
Henry Schein, Inc.
Laboratory Corporation of America Holdings
Molina Healthcare, Inc.
Quest Diagnostics Incorporated
Select Medical Holdings Corporation
Tenet Healthcare Corporation
Annual Base Salary
Our annual base salary levels are intended to be consistent with competitive pay practices and level of responsibility, with salary increases reflecting competitive trends, our overall financial performance, the performance of each individual executive and general economic conditions.
In establishing the base salary for our named executive officers, various criteria are reviewed including the following:
the executive officer’s achievements, performance in his or her position with us, taking into account the tenure of service, the complexity of the position and current job responsibilities;
prior to 2021, Mr. Alan Miller’s recommendations as to the proposed base salary, other than his own;
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company financial performance, and;
salaries of similar positions in our healthcarepeer competitor companies and general industry comparisons.
For our named executive officers, an analysis was conducted in 2017December of 2019 utilizing the most currently available proxy statements and financial results, as filed with the Securities and Exchange Commission, from seventhirteen comparable companies that we believe aremake up our most direct competitors.compensation peer group, in addition to survey data provided by FW Cook. We believe these companies, which are indicated below,above, are comparable peer companies based upon the median revenues of this peer group, which were approximately $6.3$11.3 billion in December, 2019 when the competitive analysis was conducted, as compared to our 20172020 revenues of $10.4 billion.approximately $11.6 billion:
The companies are:
Acadia Healthcare Company, Inc.
Community Health Systems Inc.
HCA Inc.
Iasis Healthcare
Kindred Healthcare, Inc.
LifePoint Hospitals, Inc.
Tenet Healthcare Corporation
For Mr. Alan Miller, his 20172020 base salary exceeded the 75th90th percentile of the peer and general industry groups, due to his long tenure in the position, his value as the Company’s founder, his status within the healthcare industry and his performance. The median years of same company/role experience of other executives in the peer group was 6.2 years compared to Mr. Alan Miller’s 39 years.
For 2017, the actual base salary rates for our named executives (excluding Mr. Alan B. Miller) were within approximately 15% of their respective median base salary market rates (as assessed relative to our peer and general industry groups). For 2017,2020, for our other named executive officers (excluding Mr. Alan Miller), we targeted the median (50th percentile) base salary paid by the peer companies (listed above), along with the median of broader general industry data, to establish our base market rate. We generally consider our base salaries to be competitive if they are approximately within a 15% range of the median market rate. For 2020, Mr. Marc Miller’s salary was within 20% of the respective actual median base salary market rates (as assessed relative to our peer and general industry groups). Mr. Filton, Mr. Pember and Mr. Peterson’s salaries were within 15% of the data. However, actual base salaries are not dictated solely by the median market rate. We also take into account an individual’s expertise, tenure in the position, responsibilities and achievements.
Annual Cash Incentives
Cash incentives for our named executive officers are awarded under the Executive Incentive Plan, which was adopted by our stockholders at our 2010 Annual Meeting and re-approved by our stockholders at our 2015 Annual Meeting. The Executive Incentive Plan is intended to support our efforts to attract, retain and motivate highly qualified senior management and other executive officers of the Company and its affiliates through the payment of performance-based incentive compensation. Annual incentive compensation may be awarded under the Executive Incentive Plan to our named executive officers and others as selected by the Compensation
Committee for any calendar year. The Compensation Committee believes that the payment of cash incentives to our named executive officers under the Executive Incentive Plan is consistent with the objectives for our compensation programs by rewarding such officers for the achievement of specified business goals and performance objectives and that may increase the value of our stock.
The amount of an employee’s cash incentive award for a calendar year is based upon the employee’s target cash incentive and the extent to which the performance goal(s) applicable to the employee are achieved. For each calendar year, an employee’s target cash incentive will be equal to a fixed percentage of the employee’s base salary earned during the year.
The Compensation Committee establishes performance goals for the named executive officers using such business criteria and other measures of performance discussed herein; provided that, in the case of incentive awards intended to qualify as “performance-based compensation” under Section 162(m) of the Code,herein and the Compensation Committee will establish objective performance goals based upon one or more of the following business criteria:
attainment of certain target levels of, or a specified increase in, after-tax or pre-tax profits;
attainment of certain target levels of, or a specified increase in, earnings per diluted share or adjusted earnings per diluted share, and;
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attainment of certain target levels of, or a specified increase in, return on capital or return on invested capital.
In the case of an award intended to qualify as “performance-based compensation” under Section 162(m) of the Code, except as otherwise permitted under Section 162(m) of the Code,, the applicable target cash incentive, performance goals and performance factors with respect to any calendar year will be established in writing by the Compensation Committee no later than 90 days after the commencement of that year. Promptly after the date on which the necessary financial or other information for a particular year becomes available, the Compensation Committee will determine the amount, if any, of the cash incentive compensation payable to each participant for that calendar year and will certify in writing prior to payment that the performance goals for the year were in fact satisfied. The maximum incentive award which any participant may earn under the Executive Incentive Plan for any calendar year shall not exceed $5 million. The Executive Incentive Plan provides the Compensation Committee with the discretion to establish higher or lower performance factors for levels of performance that are more or less than the target levels. Performance goals may be adjusted for changes in accounting methods, corporate transactions and other similar types of events, provided that, such adjustment is permitted under Section 162(m) of the Code.events.
On December 22, 2017, the President of the United States signed into law comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act of 2017 (the “TCJA-17”). TCJA-17 modifies Section 162(m) under the Code removing the exception for performance-based compensation applicable to years beginning after December 31, 2017. This change does not apply to compensation stemming from contracts entered into on or before November 2, 2017, unless such contracts were materially modified on or after that date. Compensation agreements entered into and share-based payment awards granted after this date will be subject to the revised terms of Section 162(m).
2017 COVID-19 Pandemic:
The impact of the COVID-19 pandemic, which began during the second half of March, 2020, had a material unfavorable effect on our operations and financial results during the year ended December 31, 2020, before giving effect to the $413 million of revenues recorded during the year in connection with the CARES Act and other governmental grants.
In an effort to slow the spread of the disease, since March, 2020, at various times, most state and local governments mandated general “shelter-in-place” orders or other similar restrictions that require or strongly encourage social distancing and, face coverings, and that have closed or limited non-essential business activities. Some of these restrictions remain in place. Additionally, evidence suggests that individuals may be deciding to forego medical care delivered in traditional venues. These dynamics have manifested themselves in our hospitals in, among other ways, reduced emergency room visits, elective/scheduled procedures and acute and behavioral health patient days.
While such measures assisted in responding to the outbreak, self-quarantines, shelter-in-place orders, and suspension of voluntary procedures and surgeries had an adverse impact on the operations and financial position of health care provider systems due to increased costs (including labor costs which have been pressured during the COVID-19 pandemic due to a shortage of clinicians and increased wage rates resulting from increased demand for those services) and reduction in overall patient volumes. Despite these measures, there have been waves of escalated COVID-19 cases at various times in many states in the U.S., including many states in which we operate hospitals.
In March of 2020, due to the materially unfavorable impact that the COVID-19 pandemic was expected to have on our patient volumes and results of operations during the year ended December 31, 2020, the Compensation Committee deferred approval of the specific formula for the determination of the target annual cash incentive for our executive officers pursuant to the Executive Incentive Plan. Since the unfavorable impact that the
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COVID-19 pandemic had on our results of operations persisted throughout 2020 and into early 2021, there was no specific target formula approved by our Compensation Committee for the 2020 year pursuant to the Executive Incentive Plan.
As a result of the COVID-19 pandemic and its material unfavorable impact on our results of operations, no cash incentive bonuses were paid to any of our named executive officers pursuant to the Executive Incentive Plan for the year ended December 31, 2020.
Annual Cash Incentive Formula and Performance Goals: The
Although, as discussed above, no specific target formula was approved for the 2020 year to the COVID-19 pandemic, and no cash incentive bonuses were paid to any of our named executive officers pursuant to the Executive Incentive Plan, typically, the Compensation Committee approvedapproves the specific formula for the determination of the target annual cash incentive compensation for our named executive officers pursuant to the Executive Incentive Plan with respect to the yearseach year ending December 31 2017.st. Under the formulae typically approved by the Compensation Committee, each of the Company’s executive officers wasis assigned a percentage of such executive officer’s base salary as a target bonus to be paid based on pre-specified performance criteria.
On March 17, 2021, the Compensation Committee approved specific bonus formulae for the determination of annual incentive compensation for the Company’s executive officers pursuant to the Executive Incentive Plan (the “Plan”) for the year ending December 31, 2021. Under the formulae approved by the Compensation Committee, each of the Company’s named executive officers was assigned a percentage of such executive officer’s 2021 base salary as a target bonus based upon corporate performance criteria. The corporate performance criteria target bonus award indicated below for Mr. Alan B.Marc D. Miller is stipulated in his employment agreement dated July 24, 2013.December 23, 2020, which became effective on January 1, 2021.
Mr. Alan B. Miller, who previously served as our Chief Executive Officer and Chairman of the Board of Directors, transitioned to the role of Executive Chairman of the Board of Directors effective January 1, 2021. As part of his compensation in connection with his role as Executive Chairman of the Board, Mr. Alan B. Miller may be entitled to bonuses and other compensation (including annual incentive bonuses) as may be determined by the Board of Directors.
The following table shows each named executive officer’s corporate performance criteria target bonus as a percentage of his or hertheir base salary for 2017.2021. With respect to Messrs. Alan B. Miller, Marc D. Miller and Steve G. Filton, 100% of their annual incentive bonus for 2017 was2021 will be determined using the corporate performance criteria, as described below. With respect to Ms. OsteenMessrs. Pember and Mr. Pember,Peterson, their 2021 annual incentive bonus will be determined utilizing: (i) 25% of their annual incentive bonus wassalary based upon the achievement of the corporate performance criteria, andand; (ii) 75% of their annual incentive bonus wassalary based upon the achievement of the divisional income targets, as described below.
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Name |
| Title |
| Target Incentive Bonus Award as a % of salary |
| |
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| Chief Executive Officer and
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| 100 |
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| % | |||
Steve G. Filton |
| Executive Vice President and Chief Financial Officer |
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| 50 | % | |
Marvin G. Pember |
| Executive Vice President and President-Acute Care Division | 50 | % | ||
Matthew J. Peterson | Executive Vice President
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| 50 | % | |
As part of our peer company compensation review for executive officers as discussed above in Annual Base Salary, we also target the median (50th percentile) market rate from our healthcare peers and the broader general industry data when determining each officer’s target annual incentive. For 2017, our target annual incentive opportunities were assessed as being below the market 25th percentile. Actual cash incentive awards, however, appropriately vary from this targeted level based upon performance, consistent with our pay for performance philosophy, and are detailed in the Summary Compensation Table in this Proxy Statement. The Compensation Committee believes that the annual incentive opportunities offered to our named executive officers are appropriate to facilitate our ability to attract, retain, motivate and reward our named executive officers, and that actual incentive payouts appropriately reflect the Company’s performance.
Pursuant to the Plan and the formulae approved by the Compensation Committee, each named executive officer iswill be entitled to receive between 0% and 250% of that executive officer’s target bonus based, either entirely or in part, on the Company’s achievement of a combination of: (i) a specified range of target levels of adjusted net income per diluted share attributable to UHS (as set forth in our Proxy Statement), and; (ii) a specified range of target levels of return on capital (adjusted net income attributable to UHS divided by quarterly average net capital) for the year ending December 31, 2017.2021. The adjusted net income per diluted share attributable to UHS generally excludes, among other things, the impact of items, if applicable, that are nonrecurring or non-operational in nature including items such as, but not limited to, the depreciationimpact of gains/losses on sales of assets and amortization expense incurredbusinesses, reserves for legal settlements and judgments, impairments of long-lived and intangible assets, the impact of unrealized gains/losses resulting from changes in connection with the implementationmarket value of electronic health records applications at our acute care hospitals,shares of certain marketable securities held for investment and classified as available for sale, the impact on our provision for income taxes and net income attributable to UHS resulting from ourthe adoption of ASU 2016-09, which amended the accounting for employee share-based payment transactions, the impact of the Tax Cuts“Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting”, and Jobs Act of 2017, as well as other amounts that may be nonrecurring or non-operational in nature ormaterial amounts that may be reflected in the current yearour financial statements that relate to prior years.
On March 29, 2017, the Compensation Committee approved specific bonus formulae for the determination of annual incentive compensation for our named executive officers pursuant to the Executive Incentive Plan for the year ending December 31, 2017. Pursuant to the terms of the Executive Incentive Plan for 2017, our named executive officers were eligible to receive the applicable portion of their annual cash incentive (which were based on the corporate performance criteria) at various increments ranging from 0% of their bonus target award (based upon the achievement of a Target of adjusted net income per diluted share attributable to UHS of $7.22 or less, and Return on Capital of 7.9% or less) up to 250% of their annual cash incentive target award (based upon the achievement of a Target of adjusted net income per diluted share attributable to UHS of $8.67 or greater and Return on Capital of 9.6% or greater). Although the cash incentive formula in for 2017 was unchanged from 2016’s cash incentive formula, the Targets have been adjusted, as necessary, to correlate to the range of our estimated 2017 adjusted net income per diluted share attributable to UHS, as publicly disclosed.
On February 28, 2017, we publicly disclosed our 2017 estimated range of adjusted net income per diluted share attributable to UHS of $7.70 to $8.20. The 2017 Target of adjusted net income per diluted share attributable to UHS, which represented the approximate midpoint within the publicly disclosed range of our projected consolidated earnings per diluted share estimate for the year, was $7.95 per diluted share. The 2017 Return on Capital Target was 8.8%. In July of 2017, and October of 2017, based upon our actual operating results experienced during the first six months of 2017, and the first nine months of 2017, respectively, we publicly disclosed decreases to our previously disclosed estimated range of adjusted net income per diluted share attributable to UHS for 2017; however, our annual incentive performance targets were not impacted by these publicly disclosed revisions.
The divisional income targets consist of the projected aggregate pre-tax income for our Acute Care and Behavioral Health Services segments, net of deductions for the allocation of corporate overhead expenses and a charge for the estimated cost of capital. The actual divisional income and the targets generally exclude, among other things, the impact of amounts that may be nonrecurring or non-operational in nature or amounts that may be reflected in the current year financial statements that relate to prior years. The divisional income targets may be adjusted to include the impact of acquisitions or divestitures made during the year, if material.
For 2017, toTo the extent that the actual divisional results exceeded the targets, Ms. OsteenMessrs. Pember and Mr. Pember werePeterson are entitled to 75% of the following (as applied to their annual base salary) as the portion of their annual bonus that is based upon divisional income targets: (i) 25% if actual results meet divisional income targets; (ii) 50% if actual results exceed divisional income targets by the greater of 5% or $10 million; (iii) 75% if actual results exceed
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divisional income targets by the greater of 10% or $20 million, and; (iv) 100% if actual results exceed divisional income targets by the greater of 15% or $30 million.
In determining the corporate and divisional performance criteria, various factors are considered, including the projected revenue and earnings growth over the prior year. Since the value received by stockholders is measured, in large part, by an increase in stock price, which is in turn typically influenced by increases in revenues and earnings, our performance criteria are established at reasonably aggressive levels to encourage the attainment of our financial objectives which, if accomplished, may result in an increase to our stock price and increased value to stockholders. As mentioned above, the corporate performance criteria are established annually (except for 2020) and the Target of adjusted net income per diluted share attributable to UHS directly correlates to our annual earnings guidance that is typically publicly disclosed by us during the first quarter of each year. The divisional performance criteria are also established annually and represent each division’s respective portion of the corporate performance criteria.
The actual cash incentives awarded for 2017 (which were based upon corporate performance criteria) were based upon the achievement of 44% of the target, as determined by the Compensation Committee in March 2018, based upon our 2017 actual operating results. During 2017, our adjusted net income per diluted share attributable to UHS was $7.53, as compared to a target of $7.95 per diluted share. This adjusted net income per diluted share attributable to UHS for 2017 was publicly disclosed and reconciled to our reported 2017 net income per diluted share attributable to UHS of $7.81, on the Schedule of Non-GAAP Supplemental Consolidated Statements of Income Information, included with our earnings for the year ended December 31, 2017, as filed on Form 8-K on February 28, 2018. The Return on Capital was 8.2% for 2017, as compared to a target of 8.8%. The Return on Capital is calculated by dividing our annual adjusted net income attributable to UHS by the consolidated average net capital.
For 2017, Ms. Osteen’s divisional income target was $279 million. The divisional income target consists of the projected aggregate pre-tax income for our Behavioral Health Services segment, net of deductions for the allocation of corporate overhead expenses and a charge for the estimated cost of capital. The 2017 actual divisional income, as calculated, was $181 million. If applicable, the divisional income target or the actual divisional income was adjusted for certain amounts that may be nonrecurring or non-operational in nature or amounts that may be reflected in the current year financial statements that relate to prior years. Since the actual divisional income was less than the divisional target income, Ms. Osteen was not entitled to the portion of her bonus that was based upon the achievement of the divisional income target.
For 2017, Mr. Pember’s divisional income target was $61 million. The divisional income target consists of the projected aggregate pre-tax income for our Acute Care Services segment, net of deductions for the allocation of corporate overhead expenses and a charge for the estimated cost of capital. The actual divisional income as calculated, was $67 million. If applicable, the divisional income target or actual divisional income was adjusted for certain amounts that may be nonrecurring or non-operational in nature or amounts that may be reflected in the current year financial statements that relate to prior years. Since the actual divisional income compared favorably to the target by more than 5% ($67 million actual divisional income exceeded the $61 million divisional income target by 9%), but did not exceed by $10 million (exceeded by $6 million), Mr. Pember was entitled to 25% of the portion of his bonus (75%) that was based upon the achievement of the divisional income target.
The performance goals related to the Executive Incentive Plan, as outlined above, are generally based upon the achievement of our business plan financial objectives. Performance goals are established at reasonably aggressive levels to encourage and motivate executive performance and attainment of our financial objectives. At the time the Compensation Committee approved the Executive Incentive Plan for fiscal year 2017, we believed that the performance goals were attainable, but not certain. Since the achievement of the corporate performance criteria of 44% of target for 2017 contrasts with the 85% of target earned for 2016, we believe that our system demonstrates the variability and performance-oriented nature of payouts over time.
For a further description of the cash incentives and other elements of compensation granted to our named executive officerofficers for 2017, 20162020, 2019 and 2015,2018, please refer to the Summary Compensation Table in this Proxy Statement.
Long-Term Incentives
The Compensation Committee believes that the grant of equity-based, long-term compensation, primarily in the form of stock options and restricted shares, to our named executive officers is appropriate to attract and retain such individuals and to motivate them to enhance stockholder value.
Further, long-term incentive awards reward individuals for their performance and achievement of business goals. The Compensation Committee believes that our best interests will be advanced by enabling our named executive officers, who are responsible for our management, growth and success, to receive compensation in the form of long-term incentive awards that may increase in value in conjunction with an increase in the value of our common stock.
As is the case with respect to base salaries, a number of factors are taken into account in calibrating grants of long-term incentive awards, including an individual’s performance in light of his or her position, responsibilities and contribution to our financial performance. In addition, the Compensation Committee takes into account an individual’s potential contribution to our growth and productivity. In determining appropriate long-term incentive grants, there is no other predetermined formula, factors or specified list of criteria that is followed.
For a description of the long-term incentive awards granted to our named executive officers for 2017,2020, please read the Summary Compensation Table and the Grants of Plan-Based Awards Table included in this Proxy Statement.
Stock options. Our Third Amended and Restated 2005 Stock Incentive Plan (the “Stock Incentive Plan”), as amended in 2008, 2011, 2015 and 2017, providesprovided for the issuance of options to purchase shares of our Class B Common Stock at an exercise price equal to the fair market value on the date of grant. The Stock Incentive Plan is
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was intended to provide a flexible vehicle through which we maycould offer equity basedequity-based compensation incentives to our named executive officers and other eligible personnel in support of our compensation objectives.
AwardsIn May, 2020 at our Annual Meeting, the stockholders approved the 2020 Omnibus Stock and Incentive Plan (“2020 Stock Incentive Plan”), and as a result, as of that date, no additional awards were granted under the Stock Incentive Plan may be inand the formreserve for shares that were remaining for future issuance was cancelled. The 2020 Stock Incentive Plan provides for the issuance of incentive stock options and non-qualified stock options to purchase shares of our Class B Common Stock, (includingincluding awards of performance-based stock options with premium exercise prices. Additionally, the 2020 Stock Incentive Plan authorizes awards of restricted stock and restricted stock units, as discussed below, stock appreciate rights and restricted stock units and awards intended to qualify as “incentive stock options” within the meaning of Section 422 of the Code and options which do not qualify as “incentive stock options”) and stock appreciation rights (“SARs”). Awards may be granted to our present or future employees, our affiliates and our directors and consultants who are not employees. To date, no SARs have been granted.performance-based awards.
Typically, option awards are granted by the Compensation Committee on specific dates that are scheduled in advance, which generally coincide with regularly scheduled meetings of the Compensation Committee and the Board of Directors. There is no separate policy with respect to the timing of option awards to our named executive officers. Typically, option awards are granted to our named executive officers at the same time as option awards are granted to our other employees. In certain circumstances, such as new hires or promotions, option awards are granted separately by the Compensation Committee or our Chief Executive Officer and Chief Financial Officer who are duly authorized by the Compensation Committee.
Subject to the provisions of the 2020 Stock Incentive Plan, the Compensation Committee has the responsibility and full power and authority to select the persons to whom awards will be made, to prescribe the terms and conditions of each award and make amendments thereto, to construe, interpret and apply the provisions of the Stock Incentive Plan and of any agreement or other instrument evidencing an award and to make any and all determinations and take any and all other actions as it deems necessary or desirable in order to carry out the terms of the Stock Incentive Plan.
Stock options have such vesting and other terms and conditions as the Compensation Committee, acting in its discretion, may determine. Generally, grants of stock options vest in equal amounts over four years, are scheduled to expire on the fifth anniversary of the date of grant and, unless otherwise determined, employees must be employed by us for such options to vest. We do not have any plan to select option grant dates for our named executive officers in coordination with the release of material non-public information. The exercise price per share of Class B Common Stock covered by an option shall be any price determined by the Compensation Committee, but may not be less than
100% of the fair market value of the underlying Class B Common Stock on the date of grant. The exercise price of incentive stock options shall not be less than 110% of the fair market value on the date of grant if the optionee owns, directly or indirectly, stock possessing more than 10% of the voting power of all classes of our stock. For purposes of the 2020 Stock Incentive Plan, unless otherwise determined by the Compensation Committee, the fair market value of a share of Class B Common Stock as of any given date is the closing sale price per share reported on a consolidated basis for securities listed on the principal stock exchange or market on which the Class B Common Stock is traded on the date as of which such value is being determined or, if there is no sale on that day, then on the next day on which a sale was reported.
2020 Stock Option Awards: After giving consideration to comments received from investors in 2019 that our equity award program could be enhanced by including performance-based equity awards, and after undertaking a comprehensive review with our third-party compensation consultant (FW Cook) to identify potential performance-based equity award design alternatives, we decided to modify our stock option award program in 2020. It is intended by our Compensation Committee, although not required by the terms of the 2020 Stock Incentive Plan, that a portion of the options awarded to the named executive officers of the Company will be exercisable at 110% of the fair market value on the date of grant. Beginning in March of 2020, we have
30
delivered 50% of the award value to our named executive officers, including Mr. Alan B. Miller (our Chief Executive Officer prior to January 1, 2021) and Mr. Marc D. Miller (our Chief Executive Officer effective as of January 1, 2021), in stock options with a premium exercise price of 10% above grant date market value.
In March of 2017,2020, Mr. Alan B. Miller made recommendations to our Compensation Committee with respect to stock option and stock premium stock option (issued at 110% of the fair market value on the date of grant) awards to our named executive officers (except for himself) and other eligible employees. The number of stock options awarded to each of our named executive officers during 2017March of 2020 were as follows: Alan B. Miller (590,000)(295,000 stock options and 349,399 stock premium stock options); Marc D. Miller (103,000)(50,000 stock options and 59,220 stock premium stock options); Steve G. Filton (70,000); Debra K. Osteen (70,000); and;(35,000 stock options and 41,454 stock premium stock options), Marvin G. Pember (60,000)(35,000 stock options and 41,454 stock premium stock options), and; Matthew J. Peterson (25,000 stock options and 29,610 stock premium stock options).
In determining the number of options to award to our named executive officers, the Compensation Committee considered Mr. Alan B. Miller’s recommendations and took into account individual performance in light of a named executive officer’s position, responsibilities and contribution to our financial performance as well as his or her potential contribution to our growth and productivity. In addition, the Compensation Committee also reviewed and considered the compensation data and competitive performance data prepared by Pay Governance LLCFW Cook in January 2017,early 2020, including stock-based compensation, and reviewed historical company practices with respect to stock option and long-term incentive awards.
awards).
Restricted Stock Awards and Restricted Stock Units. The Amended and Restated 2010 Employees’ Restricted Stock Purchase Plan (the “Restricted Stock Plan”), which iswas administered by the Compensation Committee, providesprovided for the grant of shares of our Class B Common Stock to eligible personnel for a purchase price equal to par value. Shares of our Class B Common Stock maycould be granted under the Restricted Stock Plan to any of our employees or consultants. Historically, our restricted grants have had a scheduled vesting period ranging from one to five years.
As mentioned above, our 2020 Incentive Plan was approved by our shareholders in May of 2020, and as of that date, the Restricted Stock Plan was cancelled and no additional awards will be granted under the Restricted Stock Plan. The reserve for shares remaining for future issuance under the Restricted Stock Plan was cancelled at that time.
Vesting conditions on shares or units issued under the Restricted Stock2020 Incentive Plan may consist of continuing employment for a specified period of time following the purchase date. Alternatively, or in addition, vesting may be tied to the satisfaction of specific performance objectives established by the Compensation Committee based upon any one or more of the business criteria used in determining the bonuses for our named executive officers, as mentioned above. We have the right to repurchase the shares for the same purchase price (par value) if specified vesting conditions are not met.
The Compensation Committee believes restricted stock awards and restricted stock units, at times, can be effective in achieving our compensation objectives because it provides employees with a strong retention incentive and aligns the value of the award or unit with our stock price performance. Additionally,The Compensation Committee may provide that Restricted Stock Awards and Restricted Stock Units shall earn dividends or dividend equivalents (payable in cash or additional shares, or a combination of cash and shares), however, dividends or dividend equivalents may not be paid with respect to any award or unit until vesting requirements are paid on all outstanding awardssatisfied. Generally, holders of restricted stock as an additional element of compensation and restricted stock units receive dividend equivalents which are subject to provide employees incentivesvesting in line with the underlying award to sustain or increase our performance.which they relate. We do not have any plan to select restricted stock
31
award or restricted stock unit grant dates for our named executive officers in coordination with the release of material non-public information.
Contractual Restricted Stock and Cash Awards to Mr. Alan B. Miller is(prior to 2021). Prior to his transition from Chief Executive Officer to Executive Chairman of the Board, effective as of January 1, 2021, pursuant to his 2013 employment agreement, as amended in November, 2018, Mr. Alan B. Miller was entitled toto: (i) an annual grant of restricted stock having a minimum value of $1.5$1.0 million pursuant to his Employment Agreement(14,774 shares of restricted stock granted in March of 2020 with the Company
a grant date market price of $67.69 per share), and; (ii) a minimum annual cash award of $1 million (paid in March of 2020). There are no such awards stipulated in Mr. Alan B. Miller’s employment agreement dated December 23, 2020, which became effective on January 1, 2021.
Deferred Compensation
Our Deferred Compensation Plan, which is subject to the applicable provisions of Internal Revenue Code Section 409A, provides that eligible employees may elect to defer a portion of their base salary and bonus award into deferred compensation accounts that accrue earnings based upon the selection of available investment options. Under the Deferred Compensation Plan, an employee is deemed eligible if their base compensation for
2017 2020 was $120,000$130,000 or higher and they are performing duties in a qualified position. The base compensation threshold is adjusted annuallyfrom time-to-time for cost-of-living increases. Pursuant to the terms of the Deferred Compensation Plan, the minimum annual amount that can be deferred is $2,000.1% of an employee’s base salary. No more than 50% of an employee’s base salary or 95% of an employee’s annual bonus may be deferred under the Deferred Compensation Plan in any calendar year. Employees may allocate a portion of their deferred compensation to be distributed in a lump sum or installments to begin at retirement or a scheduled distribution date. The available investment options consist of certain mutual funds which include: (i) conservative (e.g. money markets or bonds); (ii) moderately conservative (e.g. balanced funds), and; (iii) aggressive (e.g. domestic and international equity).
Our obligation to make payments of amounts credited to participants’ deferred compensation accounts is a general unsecured obligation. In addition, under the Deferred Compensation Plan, we may make discretionary contributions on behalf of an eligible employee. Since inception of the Deferred Compensation Plan, we have not made any discretionary contributions on behalf of employees. Three of our named executive officers deferred a portion of their base salary and/or bonus paid during 20172020 to the Deferred Compensation Plan. The Compensation Committee believes that, by offering an alternative savings vehicle for our named executive officers, the Deferred Compensation Plan supports our objectives to attract, retain and motivate talented personnel.
For a further description of the Deferred Compensation Plan, please refer to the Nonqualified Deferred Compensation table and the narrative discussion included in this Proxy Statement.
Retirement Benefits
Our retirement benefits consist of our Executive Retirement Income Plan, Supplemental Executive Retirement Income Plan and a 401(k) plan. These plans are designed in combination to provide an appropriate level of replacement income upon retirement. The Compensation Committee believes that these retirement benefits provide a balanced and competitive retirement program and support our objectives to attract, retain and motivate talented personnel.
Supplemental Executive Retirement Income Plan (“SERIP”). In July 2018, the Board of Directors adopted the SERIP. Pursuant to the terms of this plan, a select group of management or other highly compensated employees may be designated as plan participants. Our SERIP, which is subject to the applicable provisions of Internal Revenue
32
Code Section 409A, provides eligible employees with annual employer contributions which are entirely at the Company’s discretion. Generally, each annual contribution vests on the earlier of: (i) the 5th anniversary of the date of funding to the participant’s account, or; (ii) the participant attaining the qualified age of retirement (either age 62 or 65, as stipulated in the SERIP). The SERIP also provides for discretionary alternative vesting schedules for certain supplemental discretionary contributions made on an individual basis. Upon attaining the plan’s qualified age of retirement, distributions are paid in 10 annual installments to the participant. Distributions due to events other than retirement are paid in a lump sum. Our obligation to fund payments to participants’ accounts pursuant to the SERIP is a general unsecured obligation. Four of our named executive officers are participants in the SERIP.
In 2018, upon commencement of the SERIP, certain participants of the ERIP, who had not yet approached their qualified age of retirement, were given the option to remain in the ERIP or convert their participation into the SERIP. ERIP participants that elected to convert to the SERIP have been provided with an unfunded, lump sum conversion balance that was credited to the participant’s SERIP account. The unfunded ERIP conversion balances transferred to the SERIP, which were computed based upon the participant’s 2017 salary and will remain permanently unchanged after conversion, are payable over 60 monthly installments, if the participant attains their qualified age of retirement, as previously stipulated in the ERIP. If the participant does not attain their qualified age of retirement, the ERIP conversion balance is forfeited unless the Board of Directors, in its full discretion, determined otherwise. For ERIP participants who elected to convert to the SERIP, their participation in the ERIP was terminated upon conversion and no future benefits will be earned pursuant to the ERIP. SERIP participants who converted from the ERIP are entitled to future benefits pursuant to the terms of the SERIP.
Executive Retirement Income Plan (“ERIP”). In October 1993, the Board of Directors adopted the Executive Retirement Income Plan,ERIP, which was subsequently closed to new participants effective January 1, 2015. Pursuant to the terms of this plan,the ERIP, certain management or other highly compensated employees, who had been previously designated as plan participants by our Board of Directors prior to December 31, 2014, and who had completed at least 10 years of active employment with us, may receive retirement income benefits. The
Subject to certain conditions, the monthly benefit is payable to a participant who retires after he or she reaches age 62 (applicable to participants added to the planERIP before 2008) or age 65 (applicable to participants added to the planERIP after January 1, 2008). The benefit is equal to 3% of the employee’s average monthly base salary over the three years preceding retirement multiplied by the number of qualified years (not to exceed 10) of the participant’s employment with us. Payment of the benefit will be made in 60 monthly installments following the participant’s retirement date. If an employee ceasesa participant’s employment with us is terminated prior to the applicabletheir qualified age of retirement, age, or an employee has not completed at least 10 years of active employment with us, no retirement incomeERIP benefits will be payable to the employee unless the Board of Directors, in its full discretion, determines otherwise. In 2018, certain participants were transferred to the SERIP and were provided with an unfunded, lump sum conversion balance pursuant to the SERIP, as discussed above. One of our named executive officers remains a participant in the ERIP.
For a further description of the Executive Retirement Income Plan,SERIP and ERIP, please refer to the Pension Benefits Table included in this Proxy Statement.
401(k) Plan. We maintain a 401(k) plan for all employees, including our named executive officers, as an additional source of retirement income. Pursuant to the 401(k) plan, in 2017,2020, we made matching contributions (subject to highly compensated employee limits set by the Internal Revenue Code) to the 401(k) plan of approximately $50$67 million. All of the named executive officers participated in the 401(k) plan in 2017.2020. Accordingly, we made matching contributions equal to $8,100$8,550 to the 401(k) plan for each of the participating named executives.
33
Benefits
Our named executive officers are eligible to participate in the benefit plans generally available to all of our employees, which include health, dental, life insurance, vision and disability plans, all of which the Compensation Committee believes are commensurate with plans of other similarly situated public companies in the hospital management industry.
Company Aircraft. We have a partial ownership interest in a fixed wing aircraft that is available for business purpose use by members of our management team, including our named executive officers, and for personal use by Mr. Alan Miller, as stipulated in his employment agreement. When the aircraft is utilized for personal purposes by Mr. Alan Miller and/or his family members, the incremental costs incurred, including the regular hourly charges, variable fuel charges and associated fees and taxes, are directly reimbursed to us by Mr. Alan Miller and therefore no imputed amounts are included in the Summary Compensation Table.
Automobile. Mr. Alan Miller utilizes his automobiles for both business and personal purposes. As partial reimbursement for his business-related usage,During 2019, we paid 70%100% of the cost of a new vehicle purchased in 2006 andfor Mr. Alan Miller paid the remainder.Miller. Included in the Summary Compensation Table in “All other compensation” for 2017,2020, is $980$23,075 related to the lease value as determined by the IRS, maintenance and fuel costs paid by the Company deemed to be related to his personal vehicle use.
Reimbursement of Relocation Expenses. In the normal course of business, in an effort to satisfy our staffing needs with high-quality personnel and/or support the career development of an employee by enabling them to assume a position of broader scope and complexity, we may need to place an executive in a position in a geographic location which differs from that in which the individual resides. The relocation benefits for our executives are patterned on standard industry practices and are competitive in design. The provisions for relocation benefits are the same for several of the top layers of management and consistently administered. Included in the relocation benefits are reimbursements or direct payment to vendors for expenses that include items like a short duration house hunting trip, movement of household goods and personal items, short duration of interim living expenses and certain closing costs for the sale and purchase of a house. Relocation reimbursement that is taxable to the individual is typically grossed-up to cover the resulting incremental income tax expense. During 2017,2020, we did not pay anypaid certain relocation expenses, including income tax gross-ups, for Mr. Peterson as disclosed on behalf of our named executive officers.the Summary Compensation Table contained in this proxy statement.
Other Perquisites. From time to time, we make tickets to cultural and sporting events available to our employees, including our named executive officers, for business purposes. If not utilized for business purposes, the tickets are made available to our employees, including our named executive officers, for personal use.
Split-Dollar Life Insurance Agreements. In December 2010, our Board of Directors approved the Company’s entering into supplemental life insurance plans and agreements on the lives of our chief executive officer (“CEO”)Executive Chairman and his wife. As a result of these agreements, as amended in October 2016, based on actuarial tables and other assumptions, during the life expectancies of the insureds, we would pay approximately $28 million in premiums, and certain trusts owned by our CEO,Executive Chairman, would pay approximately $9 million in premiums. Based on the projected premiums mentioned above, and assuming the policies remain in effect until the death of the insureds, we will be entitled to receive death benefit proceeds of no less than approximately $37 million representing the $28 million of aggregate premiums paid by us as well as the $9 million of aggregate premiums paid by the trusts. In connection with these policies, we paid approximately $1.2 million and $1.3$1.1 million in premium payments during 20172020 and 2016, respectively.2019.
Based on these projections, which are subject to the achievement of certain investment income and life expectancy assumptions, the total economic pre-tax cost to the Company (which includes the projected cost of capital net of the income resulting from the Company’s expected future receipt of the $9 million of premiums paid
34
by the Trusts) would be approximately $10 million over the life expectancies of the insureds. We estimate that our
share of the premium payments due on these policies will approximate $1.1$1.0 million in 20182021 and decrease annually to approximately $200,000 over the life expectancies of the insureds. Our aggregate premium payments (as well as the Trust’s) are expected to be repaid to us utilizing the death benefit proceeds.
The Compensation Committee has determined to offer the above-described fringe benefits and perquisites in order to attract and retain our named executive officers by offering compensation opportunities that are competitive. In determining the total compensation payable to our named executive officers, for a given fiscal year, the Compensation Committee considers such fringe benefits and perquisites. However, with the exception of the above-mentioned split dollar life insurance agreements related to Mr. Alan B. Miller, given the fact that such other fringe benefits and perquisites, which are available to our named executive officers, represent a relatively insignificant portion of their total compensation, they do not materially influence the decisions made by the Compensation Committee with respect to other elements of each individual’s total compensation. For a further description of the fringe benefits and perquisites received by our named executive officers during 2017,2020, please refer to the All Other Compensation table included in this Proxy Statement.
Rewards/Compensation Risk Analysis: As part of its oversight of the Company’s executive compensation program, the Compensation Committee considers the impact of the Company’s executive compensation program, and the incentives created by the compensation awards that it administers, on the Company’s risk profile. In addition, the Company reviews all of its compensation policies and procedures, including the incentives that they create and factors that may reduce the likelihood of excessive risk taking, to determine whether they present a significant risk to the Company. The review found that there were no excessive risks encouraged by the Company’s reward programs and the rewards programs do not produce payments that have a material impact on the financial performance of the organization. Approximately 500800 employees (including the named executive officers) of our approximate 55,00062,800 full-time employees in the U.S. and U.K. (comprising approximately 1%1.3% of our full-time employees) have incentive plans that entitle those individuals to larger bonus awards if profitability increases. However, although the plans are based on profitability, the bonus awards for these employees are capped at specific award levels (typically at 125% or less of base salary). Therefore, should our profitability increase, even by significant amounts, we do not believe the additional aggregate bonus awards would have a material unfavorable impact on our future results of operations.
Tax Considerations
Our chief executive officer, our chief financial officer and the next three most highly compensated officers are referred to herein as the named executive officers. For years beginning prior to January 1, 2018, Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) placed a limit of $1 million on the amount of compensation we may deduct for federal income tax purposes in any one year with respect to our named executive officers with the exception of our chief financial officer however,officer. However, performance-based compensation that met certain requirements is excluded from this $1 million limitation.
On December 22, 2017, the President of the United States signed into law comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act of 2017 (the “TCJA-17”). TCJA-17 modifies Section 162(m) by (1) expanding which employees are considered covered employees by including the chief financial officer applicable to years beginning after December 31, 2017, (2) providing that if an individual is a covered employee for a year beginning after December 31, 2016, the individual remains a covered employee for all future years, and (3) removing the exceptions for performance-based compensation applicable to years beginning after December 31, 2017. These changes do not apply to compensation stemming from contracts entered into on or before November 2, 2017, unless such contracts were materially modified on or after that date. Compensation
35
agreements entered into and share-based payment awards granted after this date will be subject to the revised terms of Section 162(m).
In reviewing the effectiveness of the executive compensation program, the Compensation Committee considers the anticipated tax treatment to us and to the named executive officers of various payments and benefits. However, the deductibility of certain compensation payments depends upon the timing of an executive’s vesting or exercise of previously granted awards, as well as interpretations and changes in the tax laws and other factors beyond the Compensation Committee’s control. For these and other reasons, including to maintain flexibility in compensating the named executive officers in a manner designed to promote varying corporate goals, the Compensation Committee did not necessarily, or in all circumstances, limit executive compensation to that which is deductible under Section 162(m) of the Code and had not adopted a policy requiring all compensation to be deductible.
Summary
The foregoing discussion describes the compensation objectives and policies that were utilized with respect to our named executive officers during 2017.2020. In the future, as the Compensation Committee continues to review each element of the executive compensation program with respect to our named executive officers, the objectives of our executive compensation program, as well as the methods that the Compensation Committee utilizes to determine both the types and amounts of compensation to award to our named executive officers, may change.
Compensation Committee Report
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management; and based on the review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.
COMPENSATION COMMITTEE
Robert H. HotzEileen C. McDonnell (Chairperson)
Lawrence S. Gibbs
Elliot J. Sussman, M.D.
John H. Herrell
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Board of Directors is composed of Robert H. Hotz,Eileen C. McDonnell, Lawrence S. Gibbs and Elliot J. Sussman and John H. Herrell.Sussman. All the members of the Compensation Committee are independent directors and no member has ever been one of our officers or employees or had a relationship with us that required disclosure.
36
SUMMARY COMPENSATION TABLE
The following table sets forth certain compensation information for our Chief Executive Officer, our Chief Financial Officer and the other most highly compensated executive officers for services rendered to UHS and its subsidiaries during the past three fiscal years. We refer to these officers collectively as our named executive officers:
Name and principal position |
| Year |
| Salary ($) |
|
| Bonus ($) |
|
| Grant Date Fair Value Stock Awards (1.) ($) |
|
| Grant Date Fair Value Option Awards (2.) ($) |
|
| Non-Equity Incentive Plan Compensation (3.) ($) |
|
| Change in Pension Value and Nonqualified Deferred Compen- sation Earnings (4.) ($) |
|
| All other compen- sation (5.) ($) |
|
| Total ($) |
|
| Year |
| Salary (7.) ($) |
|
| Bonus ($) |
|
| Grant Date Fair Value Stock Awards (1.) ($) |
|
| Grant Date Fair Value Option Awards (2.) ($) |
|
| Non-Equity Incentive Plan Compensation (3.) ($) |
|
| Change in Pension Value and Nonqualified Deferred Compen- sation Earnings (4.) ($) |
|
| All other compen- sation (9.) ($) |
|
| Total ($) |
| ||||||||||||||||
Alan B. Miller, Chairman of the Board and Chief Executive Officer |
| 2017 |
| $ | 1,635,063 |
|
| $ | 0 |
|
| $ | 2,000,060 |
|
| $ | 15,978,734 |
|
| $ | 719,428 |
|
| $ | 43,407 |
|
| $ | 1,254,169 |
|
| $ | 21,630,861 |
| ||||||||||||||||||||||||||||||||||
Alan B. Miller, Executive Chairman (8.) |
| 2020 |
| $ | 1,446,473 |
|
| $ | 1,000,000 |
| (5.) | $ | 1,000,052 |
|
| $ | 8,603,615 |
|
| $ | 0 |
|
| $ | 44,826 |
|
| $ | 1,151,248 |
|
| $ | 13,246,214 |
| ||||||||||||||||||||||||||||||||||
|
| 2016 |
|
| 1,600,061 |
|
|
| 0 |
|
|
| 1,500,069 |
|
|
| 14,024,359 |
|
|
| 1,360,053 |
|
|
| 44,599 |
|
|
| 1,338,607 |
|
|
| 19,867,748 |
|
| 2019 |
|
| 1,700,065 |
|
|
| 1,000,000 |
| (5.) |
| 1,000,057 |
|
|
| 17,956,614 |
|
|
| 1,564,060 |
|
|
| 44,520 |
|
|
| 1,207,924 |
|
|
| 24,473,240 |
|
|
| 2015 |
|
| 1,568,310 |
|
|
| 0 |
|
|
| 1,500,022 |
|
|
| 12,553,430 |
|
|
| 3,434,599 |
|
|
| 49,722 |
|
|
| 1,370,948 |
|
|
| 20,477,031 |
|
| 2018 |
|
| 1,665,064 |
|
|
| 1,000,000 |
| (5.) |
| 1,500,062 |
|
|
| 16,616,760 |
|
|
| 1,531,859 |
|
|
| 43,044 |
|
|
| 1,232,094 |
|
|
| 23,588,883 |
|
Marc D. Miller, President and Director |
| 2017 |
| $ | 752,216 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 2,789,508 |
|
| $ | 215,134 |
|
| $ | 43,152 |
|
| $ | 15,285 |
|
| $ | 3,815,295 |
| ||||||||||||||||||||||||||||||||||
Marc D. Miller, Chief Executive Officer and President (8.) |
| 2020 |
| $ | 823,020 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 1,458,238 |
|
| $ | 0 |
|
| $ | 49,519 |
|
| $ | 15,220 |
|
| $ | 2,345,997 |
| ||||||||||||||||||||||||||||||||||
|
| 2016 |
|
| 720,861 |
|
|
| 0 |
|
|
| 0 |
|
|
| 2,377,010 |
|
|
| 398,276 |
|
|
| 30,819 |
|
|
| 14,107 |
|
|
| 3,541,073 |
|
| 2019 |
|
| 825,318 |
|
|
| 0 |
|
|
| 0 |
|
|
| 3,043,494 |
|
|
| 493,540 |
|
|
| 47,164 |
|
|
| 15,697 |
|
|
| 4,425,213 |
|
|
| 2015 |
|
| 695,027 |
|
| $ | 0 |
|
|
| 0 |
|
|
| 1,914,930 |
|
|
| 989,371 |
|
|
| 46,133 |
|
|
| 13,877 |
|
|
| 3,659,338 |
|
| 2018 |
|
| 786,068 |
|
|
| 0 |
|
|
| 0 |
|
|
| 2,816,400 |
|
|
| 470,069 |
|
|
| 333,951 |
|
|
| 16,511 |
|
|
| 4,422,999 |
|
Steve G. Filton, Executive Vice President, Chief Financial Officer and Secretary |
| 2017 |
| $ | 608,518 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 1,895,782 |
|
| $ | 133,874 |
|
| $ | 30,290 |
|
| $ | 17,593 |
|
| $ | 2,686,057 |
|
| 2020 |
| $ | 652,613 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 1,020,766 |
|
| $ | 0 |
|
| $ | 39,656 |
|
| $ | 18,043 |
|
| $ | 1,731,078 |
|
|
| 2016 |
|
| 584,606 |
|
|
| 0 |
|
|
| 0 |
|
|
| 1,663,907 |
|
|
| 248,458 |
|
|
| 18,688 |
|
|
| 17,443 |
|
|
| 2,533,102 |
|
| 2019 |
|
| 660,938 |
|
|
| 0 |
|
|
| 0 |
|
|
| 2,130,446 |
|
|
| 304,031 |
|
|
| 38,154 |
|
|
| 18,251 |
|
|
| 3,151,820 |
|
|
| 2015 |
|
| 566,022 |
|
|
| 0 |
|
|
| 0 |
|
|
| 1,489,390 |
|
|
| 619,794 |
|
|
| 29,305 |
|
|
| 17,443 |
|
|
| 2,721,954 |
|
| 2018 |
|
| 635,903 |
|
|
| 0 |
|
|
| 0 |
|
|
| 1,971,480 |
|
|
| 292,515 |
|
|
| 185,536 |
|
|
| 17,743 |
|
|
| 3,103,177 |
|
Debra K. Osteen, Executive Vice President and President, Behavioral Health Division |
| 2017 |
| $ | 662,788 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 1,895,782 |
|
| $ | 36,453 |
|
| $ | 39,420 |
|
| $ | 17,637 |
|
| $ | 2,652,080 |
| ||||||||||||||||||||||||||||||||||
|
| 2016 |
|
| 638,025 |
|
|
| 0 |
|
|
| 0 |
|
|
| 1,663,907 |
|
|
| 67,790 |
|
|
| 28,200 |
|
|
| 17,114 |
|
|
| 2,415,036 |
| ||||||||||||||||||||||||||||||||||
|
| 2015 |
|
| 620,024 |
|
|
| 0 |
|
|
| 0 |
|
|
| 1,489,390 |
|
|
| 518,495 |
|
|
| 28,315 |
|
|
| 17,115 |
|
|
| 2,673,339 |
| ||||||||||||||||||||||||||||||||||
Marvin G. Pember, Executive Vice President and President, Acute Care Division |
| 2017 |
| $ | 643,451 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 1,624,956 |
|
| $ | 156,037 |
|
| $ | 0 |
|
| $ | 17,847 |
|
| $ | 2,442,291 |
|
| 2020 |
| $ | 679,177 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 1,020,766 |
|
| $ | 0 |
|
| $ | 41,621 |
|
| $ | 17,549 |
|
| $ | 1,759,113 |
|
|
| 2016 |
|
| 618,502 |
|
|
| 0 |
|
|
| 0 |
|
|
| 1,307,356 |
|
|
| 529,592 |
|
|
| 0 |
|
|
| 17,926 |
|
|
| 2,473,376 |
|
| 2019 |
|
| 693,686 |
|
|
| 0 |
|
|
| 0 |
|
|
| 2,130,446 |
|
|
| 209,840 |
|
|
| 40,185 |
|
|
| 19,159 |
|
|
| 3,093,316 |
|
|
| 2015 |
|
| 599,210 |
|
|
| 0 |
|
|
| 0 |
|
|
| 1,063,850 |
|
|
| 613,441 |
|
|
| 0 |
|
|
| 17,697 |
|
|
| 2,294,198 |
|
| 2018 |
|
| 669,706 |
|
|
| 0 |
|
|
| 0 |
|
|
| 1,971,480 |
|
|
| 202,586 |
|
|
| 178,885 |
|
|
| 18,247 |
|
|
| 3,040,904 |
|
Matthew J. Peterson, Executive Vice President and President, Behavioral Health Division |
| 2020 |
| $ | 576,397 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 729,119 |
|
| $ | 0 |
|
| $ | 10,247 |
|
| $ | 150,492 |
|
| $ | 1,466,255 |
| ||||||||||||||||||||||||||||||||||
|
| 2019 |
|
| 170,775 |
|
|
| 100,000 |
| (6.) |
| 0 |
|
|
| 1,493,045 |
|
|
| 0 |
|
|
| 0 |
|
|
| 61,915 |
|
|
| 1,825,735 |
| ||||||||||||||||||||||||||||||||||
|
| 2018 |
| N/A |
|
| N/A |
|
| N/A |
|
| N/A |
|
| N/A |
|
| N/A |
|
| N/A |
|
| N/A |
| ||||||||||||||||||||||||||||||||||||||||||
(1.) |
|
(2.) |
|
37
(3.) | Reflects the dollar value of annual bonuses earned during each of the last three years pursuant to the terms of our Executive Incentive |
(4.) | These amounts represent the aggregate change in |
(5.) | Prior to his transition from Chief Executive Officer to Executive Chairman of the Board, effective as of January 1, 2021, pursuant to his 2013 employment agreement, as amended in November, 2018, Alan B. Miller was entitled to minimum annual cash award of $1.0 million. There are no such awards stipulated in Alan B. Miller’s employment agreement dated December 23, 2020, which became effective on January 1, 2021. |
(6.) | The $100,000 cash bonus paid to Mr. Peterson in 2019 was a sign-on bonus upon commencement of employment. |
(7.) | In June of 2020, in response to the COVID-19 pandemic, the Compensation Committee approved reductions to the 2020 base salaries of our executive officers in the following amounts: $289,294 for Alan B. Miller, $43,680 for Marc D. Miller, $34,580 for Steve G. Filton, $35,929 for Marvin G. Pember and $30,407 Matthew J. Peterson. In conjunction with these 2020 base salary reductions, the Company contributed the funds generated from the reductions to the UHS Foundation, our previously established employee assistance fund. |
(8.) | Mr. Alan B. Miller was appointed Executive Chairman of the Board effective January 1, 2021. He had been Chairman of the Board and Chief Executive Officer from our inception through December 31, 2020. Mr. Marc D. Miller was appointed Chief Executive Officer and President effective January 1, 2021. Marc D. Miller had previously served as President since May, 2009. |
(9.) | Components of All Other Compensation are as follows: |
ALL OTHER COMPENSATION TABLE
Name |
| Year |
| Perquisites and Other Personal Benefits ($) (1.) |
|
| Tax Reimbur- sements ($) (2.) |
|
| Insurance Premiums ($) (3.) |
|
| Company Contributions to Retirement and 401(k) Plans ($) |
|
| Dividends Paid on Unvested Stock |
|
| Total ($) |
|
| Year |
| Perquisites and Other Personal Benefits ($) (1.) |
|
| Tax Reimbur- sements ($) (2.) |
|
| Insurance Premiums ($) (3.) |
|
| Company Contributions to Retirement and 401(k) Plans ($) |
|
| Dividends Paid on Unvested Stock |
|
| Total ($) |
| ||||||||||||
Alan B. Miller |
| 2017 |
| $ | 46,605 |
|
| $ | 0 |
|
| $ | 1,185,260 |
|
| $ | 8,100 |
|
| $ | 14,204 |
|
| $ | 1,254,169 |
|
| 2020 |
| $ | 64,819 |
|
| $ | 0 |
|
| $ | 1,071,393 |
|
| $ | 8,550 |
|
| $ | 6,486 |
|
| $ | 1,151,248 |
|
|
| 2016 |
|
| 46,986 |
|
|
| 0 |
|
|
| 1,271,403 |
|
|
| 7,950 |
|
|
| 12,268 |
|
|
| 1,338,607 |
|
| 2019 |
|
| 68,948 |
|
|
| 0 |
|
|
| 1,112,530 |
|
|
| 8,400 |
|
|
| 18,046 |
|
|
| 1,207,924 |
|
|
| 2015 |
|
| 46,391 |
|
|
| 0 |
|
|
| 1,306,534 |
|
|
| 7,950 |
|
|
| 10,073 |
|
|
| 1,370,948 |
|
| 2018 |
|
| 49,250 |
|
|
| 0 |
|
|
| 1,159,281 |
|
|
| 8,250 |
|
|
| 15,313 |
|
|
| 1,232,094 |
|
Marc D. Miller |
| 2017 |
| $ | 1,488 |
|
| $ | 0 |
|
| $ | 5,697 |
|
| $ | 8,100 |
|
| $ | 0 |
|
| $ | 15,285 |
|
| 2020 |
| $ | 973 |
|
| $ | 0 |
|
| $ | 5,697 |
|
| $ | 8,550 |
|
| $ | 0 |
|
| $ | 15,220 |
|
|
| 2016 |
|
| 460 |
|
|
| 0 |
|
|
| 5,697 |
|
|
| 7,950 |
|
|
| 0 |
|
|
| 14,107 |
|
| 2019 |
|
| 1,600 |
|
|
| - |
|
|
| 5,697 |
|
|
| 8,400 |
|
|
| 0 |
|
|
| 15,697 |
|
|
| 2015 |
|
| 230 |
|
|
| 0 |
|
|
| 5,697 |
|
|
| 7,950 |
|
|
| 0 |
|
|
| 13,877 |
|
| 2018 |
|
| 2,564 |
|
|
| 0 |
|
|
| 5,697 |
|
|
| 8,250 |
|
|
| 0 |
|
|
| 16,511 |
|
Steve G. Filton |
| 2017 |
| $ | 0 |
|
| $ | 0 |
|
| $ | 9,493 |
|
| $ | 8,100 |
|
| $ | 0 |
|
| $ | 17,593 |
|
| 2020 |
| $ | 0 |
|
| $ | 0 |
|
| $ | 9,493 |
|
| $ | 8,550 |
|
| $ | 0 |
|
| $ | 18,043 |
|
|
| 2016 |
|
| 0 |
|
|
| 0 |
|
|
| 9,493 |
|
|
| 7,950 |
|
|
| 0 |
|
|
| 17,443 |
|
| 2019 |
|
| 358 |
|
|
| 0 |
|
|
| 9,493 |
|
|
| 8,400 |
|
|
| 0 |
|
|
| 18,251 |
|
|
| 2015 |
|
| 0 |
|
|
| 0 |
|
|
| 9,493 |
|
|
| 7,950 |
|
|
| 0 |
|
|
| 17,443 |
|
| 2018 |
|
| 0 |
|
|
| 0 |
|
|
| 9,493 |
|
|
| 8,250 |
|
|
| 0 |
|
|
| 17,743 |
|
Debra K. Osteen |
| 2017 |
| $ | 372 |
|
| $ | 0 |
|
| $ | 9,165 |
|
| $ | 8,100 |
|
| $ | 0 |
|
| $ | 17,637 |
| ||||||||||||||||||||||||||
|
| 2016 |
|
| 0 |
|
|
| 0 |
|
|
| 9,165 |
|
|
| 7,950 |
|
|
| 0 |
|
|
| 17,115 |
| ||||||||||||||||||||||||||
|
| 2015 |
|
| 0 |
|
|
| 0 |
|
|
| 9,165 |
|
|
| 7,950 |
|
|
| 0 |
|
|
| 17,115 |
| ||||||||||||||||||||||||||
Marvin G. Pember |
| 2017 |
| $ | 900 |
|
| $ | 0 |
|
| $ | 8,847 |
|
| $ | 8,100 |
|
| $ | 0 |
|
| $ | 17,847 |
|
| 2020 |
| $ | 900 |
|
| $ | 0 |
|
| $ | 8,099 |
|
| $ | 8,550 |
|
| $ | 0 |
|
| $ | 17,549 |
|
|
| 2016 |
|
| 1,130 |
|
|
| 0 |
|
|
| 8,847 |
|
|
| 7,950 |
|
|
| 0 |
|
|
| 17,927 |
|
| 2019 |
|
| 1,912 |
|
|
| 0 |
|
|
| 8,847 |
|
|
| 8,400 |
|
|
| 0 |
|
|
| 19,159 |
|
|
| 2015 |
|
| 900 |
|
|
| 0 |
|
|
| 8,847 |
|
|
| 7,950 |
|
|
| 0 |
|
|
| 17,697 |
|
| 2018 |
|
| 900 |
|
|
| 0 |
|
|
| 8,847 |
|
|
| 8,250 |
|
|
| 0 |
|
|
| 17,997 |
|
Matthew J. Peterson |
| 2020 |
| $ | 96,130 |
|
| $ | 38,695 |
|
| $ | 7,117 |
|
| $ | 8,550 |
|
| $ | 0 |
|
| $ | 150,492 |
| ||||||||||||||||||||||||||
|
| 2019 |
|
| 37,771 |
|
|
| 17,992 |
|
|
| 688 |
|
|
| 5,464 |
|
|
| 0 |
|
|
| 61,915 |
| ||||||||||||||||||||||||||
|
| 2018 |
| N/A |
|
| N/A |
|
| N/A |
|
| N/A |
|
| N/A |
|
| N/A |
| ||||||||||||||||||||||||||||||||
(1.) |
|
38
Amounts for Mr. Alan Miller consistconsists of the followingfollowing: : (i) $25,000 for professional tax services; (ii) $15,713$10,789 for payment of country club dues; (iii) $1,306$2,573 for accounting services; (iv) $3,022 for maintenance on personal residence; (v) $23,075 for the lease value, fuel and maintenance charges incurred in connection with his automobile, and; (vi) $360 wireless stipend.
Amount for Mr. Marc D. Miller consists $768 for sporting event tickets paid for by us and $205 for a token gift provided by the Company.
Amount for Mr. Marvin G. Pember consists of $900 for cell phone stipend.
Amount for Mr. Matthew J. Peterson consists of the following: (i) $94,025 of relocation expenses paid for by the Company; (ii) $1,000 related to the Employee Stock Purchase Plan discount; (iii) $900 for cell phone stipend, and; (iv) $205 for a token gift provided by the Company.
2019:
Amounts for Mr. Alan Miller consist of the following: (i) $25,000 for professional tax services; (ii) $10,773 for payment of country club dues; (iii) $9,330 for accounting services; (iv) $2,906 for maintenance on personal residence; (v) $20,604 for the lease value, fuel and maintenance charges incurred in connection with his automobile, and; (vi) $335 wireless stipend.
Amounts for Messrs. Marc D. Miller and Steve G. Filton consist of $1,600 and $358, respectively, for sporting event tickets paid for by us.
Amount for Mr. Marvin G. Pember consists of $900 for cell phone stipend and $1,012 for sporting event tickets paid for by us.
Amount for Mr. Matthew J. Peterson consists of $37,508 relocation expenses paid by us and $263 for cell phone stipend.
2018:
Amounts for Mr. Alan Miller consist of the following: (i) $25,000 for professional tax services; (ii) $15,788 for payment of country club dues; (iii) $3,632 for accounting services; (iv) $2,806 for maintenance on personal residence; (v) $980$1,724 for fuel and maintenance charges incurred in connection with his automobile;automobile, and; (vi) $300 wireless stipend, and; (vii) $500 for sporting event tickets paid for by us.stipend.
Amount for Mr. Marc D. Miller consists of $1,488 for sporting event tickets paid for by us.
Amount for Ms. Debra K. Osteen consists of $372$2,564 for sporting event tickets paid for by us.
Amount for Mr. Marvin G. Pember consist of $900 for cell phone stipend.
2016:
Amount for Mr. Alan Miller consists of the following: (i) $25,000 for professional tax services; (ii) $14,990 for payment of country club dues; (iii) $2,642 for accounting services; (iv) $2,740 for maintenance on personal residence; (v) $854 for fuelstipend and maintenance charges incurred in connection with his automobile; (vi) $300 wireless stipend, and; (vii) $460 for sporting event tickets paid for by us.
Amount for Mr. Marc D. Miller consists of $460 for sporting event tickets paid for by us.
Amount for Mr. Marvin G. Pember consist of: (i) $900 cell phone stipend, and; (ii) $230$250 for sporting event tickets paid for by us.
2015:
Amount for Mr. Alan Miller consists of the following: (i) $25,000 for professional tax services; (ii) $13,846 for payment of country club dues; (iii) $2,548 for accounting services; (iv) $2,707 for maintenance on
personal residence; (v) $1,530 for fuel and maintenance charges incurred in connection with his automobile; (vi) $300 wireless stipend, and; (vii) $460 for sporting event tickets paid for by us.
Amount for Mr. Marc D. Miller consists of $230 for sporting event tickets paid for by us.
Amount for Mr. Marvin G. Pember consist of a $900 cell phone stipend.
(2.) |
|
(3.) | Amounts for Messrs. Marc. D. Miller, Steve G. Filton, |
Amounts for Mr. Alan B. Miller consist of: (i) $1,173,435$1,061,667 in 2017, $1,259,5782020, $1,102,810 in 20162019 and $1,294,709$1,147,456 in 2015,2018, of premium payments made in connection with split-dollar-life insurance agreements, as discussed in Split Dollar Life Insurance Agreement, included herein, and; (ii) $9,726 in 2020, $9,721 in 2019 and $11,825 in each of 2017, 2016 and 20152018 of premiums paid in connection with long term disability coverage.
GRANTS OF PLAN-BASED AWARDS
The following table provides information regarding plan-based awards granted during fiscal year 20172020 to our named executive officers.
|
|
|
|
|
|
|
|
| All Other Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| All Other Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Awards: |
|
| All Other |
|
| Exercise |
|
| Grant |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Awards: |
|
| All Other |
|
| Exercise |
|
| Grant |
|
|
|
|
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Number |
|
| Option |
|
| or |
|
| Date |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Number |
|
| Option |
|
| or |
|
| Date |
|
|
|
|
| ||||||||
|
|
|
| Estimated Future |
|
| Estimated Future |
| of |
|
| Awards: |
|
| Base |
|
| Fair |
|
| Closing |
|
|
|
| Estimated Future |
| Estimated Future |
| of |
|
| Awards: |
|
| Base |
|
| Fair |
|
| Closing |
| |||||||||||||||||||||||||||||||
|
|
|
| Payouts Under |
|
| Payouts Under |
| Shares |
|
| Number of |
|
| Price |
|
| Value of |
|
| Price |
|
|
|
| Payouts Under |
| Payouts Under |
| Shares |
|
| Number of | �� |
| Price |
|
| Value of |
|
| Price |
| |||||||||||||||||||||||||||||||
|
|
|
| Non-Equity Incentive Plan |
|
| Equity Incentive Plan |
| of |
|
| Securities |
|
| of |
|
| Stock |
|
| on |
|
|
|
| Non-Equity Incentive Plan |
| Equity Incentive Plan |
| of |
|
| Securities |
|
| of |
|
| Stock |
|
| on |
| |||||||||||||||||||||||||||||||
|
| Approval/ |
| Awards (1.) |
|
| Awards |
| Stock or |
|
| Underlying |
|
| Option |
|
| and Option |
|
| Grant |
|
| Approval/ |
| Awards (1.) |
| Awards |
| Stock or |
|
| Underlying |
|
| Option |
|
| and Option |
|
| Grant |
| |||||||||||||||||||||||||||||||
|
| Grant |
| Threshold |
|
| Target |
|
| Maximum |
|
| Threshold |
| Target |
| Maximum |
| Units |
|
| Options |
|
| Awards |
|
| Awards (5.) |
|
| Date |
|
| Grant |
| Threshold |
| Target |
| Maximum |
| Threshold |
| Target |
| Maximum |
| Units |
|
| Options |
|
| Awards |
|
| Awards (4.) |
|
| Date |
| |||||||||||||
Name |
| Date |
| ($) (2.) |
|
| ($) (2.) |
|
| ($) (2.) |
|
| ($) |
| ($) |
| ($) |
| (3.) (#) |
|
| (4.) (#) |
|
| ($ /Sh) |
|
| ($) |
|
| ($ / Sh) |
|
| Date |
| ($) |
| ($) |
| ($) |
| ($) |
| ($) |
| ($) |
| (2.) (#) |
|
| (3.) (#) |
|
| ($ /Sh) |
|
| ($) |
|
| ($ / Sh) |
| |||||||||||||
Alan B. Miller |
| 3/29/2017 |
| $ | 81,753 |
|
| $ | 1,635,063 |
|
| $ | 4,087,658 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3/18/2020 |
| N/A |
| N/A |
| N/A |
|
|
|
|
|
|
|
| 14,774 |
|
|
|
|
|
|
|
|
|
| $ | 1,000,052 |
|
| $ | 67.69 |
|
|
| 3/29/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 16,057 |
|
|
|
|
|
|
|
|
|
| $ | 2,000,060 |
|
| $ | 124.56 |
|
| 3/18/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 295,000 |
|
| $ | 67.69 |
|
| $ | 4,300,995 |
|
| $ | 67.69 |
|
|
| 3/29/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| — |
|
|
| 590,000 |
|
| $ | 124.56 |
|
| $ | 15,978,734 |
|
| $ | 124.56 |
|
| 3/18/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 349,399 |
|
| $ | 74.46 |
|
| $ | 4,302,620 |
|
| $ | 67.69 |
|
Marc D. Miller |
| 3/29/2017 |
| $ | 24,447 |
|
| $ | 488,940 |
|
| $ | 1,222,351 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3/18/2020 |
| N/A |
| N/A |
| N/A |
|
|
|
|
|
|
|
|
|
|
|
| 50,000 |
|
| $ | 67.69 |
|
| $ | 728,982 |
|
| $ | 67.69 |
|
|
| 3/29/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| — |
|
|
| 103,000 |
|
| $ | 124.56 |
|
| $ | 2,789,508 |
|
| $ | 124.56 |
|
| 3/18/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| — |
|
|
| 59,220 |
|
| $ | 74.46 |
|
| $ | 729,256 |
|
| $ | 67.69 |
|
Steve G. Filton |
| 3/29/2017 |
| $ | 15,213 |
|
| $ | 304,259 |
|
| $ | 760,648 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3/18/2020 |
| N/A |
| N/A |
| N/A |
|
|
|
|
|
|
|
|
|
|
|
| 35,000 |
|
| $ | 67.69 |
|
| $ | 510,287 |
|
| $ | 67.69 |
|
|
| 3/29/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| — |
|
|
| 70,000 |
|
| $ | 124.56 |
|
| $ | 1,895,782 |
|
| $ | 124.56 |
|
| 3/18/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| — |
|
|
| 41,454 |
|
| $ | 74.46 |
|
| $ | 510,479 |
|
| $ | 67.69 |
|
Debra K. Osteen |
| 3/29/2017 |
| $ | 4,142 |
|
| $ | 207,121 |
|
| $ | 704,212 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||
|
| 3/29/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| — |
|
|
| 70,000 |
|
| $ | 124.56 |
|
| $ | 1,895,782 |
|
| $ | 124.56 |
| ||||||||||||||||||||||||||||||||||
Marvin G. Pember |
| 3/29/2017 |
| $ | 4,022 |
|
| $ | 201,078 |
|
| $ | 683,667 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3/18/2020 |
| N/A |
| N/A |
| N/A |
|
|
|
|
|
|
|
|
|
|
|
| 35,000 |
|
| $ | 67.69 |
|
| $ | 510,287 |
|
| $ | 67.69 |
|
|
| 3/29/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| — |
|
|
| 60,000 |
|
| $ | 124.56 |
|
| $ | 1,624,956 |
|
| $ | 124.56 |
|
| 3/18/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| — |
|
|
| 41,454 |
|
| $ | 74.46 |
|
| $ | 510,479 |
|
| $ | 67.69 |
|
Matthew J. Peterson |
| 3/18/2020 |
| N/A |
| N/A |
| N/A |
|
|
|
|
|
|
|
|
|
|
|
| 25,000 |
|
| $ | 67.69 |
|
| $ | 364,491 |
|
| $ | 67.69 |
| ||||||||||||||||||||||||||||||||||||||||
|
| 3/18/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| — |
|
|
| 29,610 |
|
| $ | 74.46 |
|
| $ | 364,628 |
|
| $ | 67.69 |
| ||||||||||||||||||||||||||||||||||||||||
N/A – Not applicable for 2020, see footnote 1 below for additional disclosure.
(1.) |
|
(2. |
|
| Restricted shares of Class B Common Stock issued under the Company’s Amended and Restated 2010 Employees’ Restricted Stock Purchase Plan. |
| Stock option awards issued on March |
| Represents the full grant date fair value for the stock awards and option awards, calculated in accordance with ASC 718 as described in our Form 10-K for the year ended December 31, |
Marc D. Miller’s Employment Agreement as Chief Executive Officer, Employment Agreementeffective January 1, 2021
AsMr. Marc D. Miller was appointed Chief Executive Officer (“CEO”) and President effective January 1, 2021. He has served as President since May, 2009 and prior thereto served as Senior Vice President and co-head of our Acute Care Hospitals since 2007.
Certain elements of Mr. Marc D. Miller’s compensation for 2021 will be determined by the terms of his employment agreement that was entered into on December 23, 2020, with an effective date of January 1, 2021. Pursuant to the terms of the employment agreement, Mr. Marc D. Miller will serve as CEO with a term scheduled to end on January 1, 2026, subject, however, to earlier termination, and subject further to automatic renewal for additional one year periods unless either party elects otherwise.
Pursuant to the terms of his employment agreement, Marc Miller’s salary as our Chief Executive Officer will be $1,100,000 for 2021 which is a 26.9% increase over his 2020 base salary as President of UHS (prior to the COVID-19 salary reduction, as discussed herein). Mr. Marc D. Miller is also entitled to an annual bonus opportunity target equal to 100% of his salary. The amount of the annual bonus for any year may be more or less than the target amount and will be determined by the Board of Directors in accordance with pre-established performance measures. Additionally, Mr. Marc D. Miller may also be paid during the term of his employment agreement, bonuses and other compensation as may from time to time be determine by the Board of Directors.
Mr. Marc D. Miller participates in benefit plans and programs that are made available to other employees and will be eligible to receive annual awards under the Company’s long-term incentive plan(s) (“LTIP”) as in effect from time to time, which will be subject to conditions as are consistent with terms and conditions applicable to LTIP awards made to other senior executives of the Company.
For a further description of the employment agreement, please refer to the Potential Payments Upon Termination or Change-in-Control section below. For a further description of the compensation setting process with respect to Mr. Marc D. Miller, please refer to the Compensation Discussion and Analysis unlike our other named executive officers, section above. For a further description of Mr. Marc D. Miller’s benefits under the Company’s Supplemental Executive Retirement Income Plan, please refer to the Pension Benefits section below.
Alan B. Miller’s Employment Agreement as Executive Chairman, effective January 1, 2021
Mr. Alan B. Miller was appointed Executive Chairman of the Board effective January 1, 2021. He had been Chairman of the Board and Chief Executive Officer since our inception in 1978 and also served as President from inception until 2009.
Certain elements of Mr. Alan B. Miller’s compensation isfor 2021 will be determined in large part by the terms of his employment agreement. Mr. Miller’s base salary, minimum annual bonus and certain perquisites are determined under his employment agreement. On July 24, 2013, weagreement that was entered into on December 23, 2020, with an effective date of January 1, 2021. Pursuant to the terms of the employment agreement, with Alan B. Miller (effective July 1, 2013) that provides that Mr. Miller will continue to serve as Chief Executive Officer and Chairman of our Board of Directors through December 31, 2017,with a term scheduled to end on January 1, 2023, subject, however, to earlier termination, and subject further to automatic annual renewal for additional one year periods unless either party elects otherwise.
41
Mr. Alan B. Miller’s employment agreement was automatically renewedsalary as our Executive Chairman will be $1,000,000 for one year through December 31, 2019.2021 which is a 42.4% decrease from his 2020 base salary as CEO (prior to the COVID-19 salary reduction, as discussed herein). Additionally, Mr. Alan Miller may also be entitled to bonuses and other compensation as may from time to time be determined by the Board of Directors. Mr. Alan B. Miller will also be eligible to receive annual awards under the Company’s long-term incentive plan(s) (“LTIP”) as in effect from time to time, which will be subject to conditions as are consistent with terms and conditions applicable to LTIP awards made to other senior executives of the Company.
Mr. Alan B. Miller participates in benefit plans and programs that are made available to other employees and he receives certain executive perquisites, including, but not limited to, split dollar life insurance benefits, payment of certain automobile costs, payment of country club dues, tax and accounting services, use of a private plane for personal purposes for up to 60 hours per year, subject to reimbursement by Mr. Alan B. Miller of the incremental costs incurred at market rates, and such other fringe benefits as the Compensation Committee of our Board of Directors may determine (as discussed in the Compensation Discussion and Analysis).
For a further description of the employment agreement, please refer to the Potential Payments Upon Termination or Change-in-Control section below. For a further description of the compensation setting process with respect to Mr. Alan B. Miller, please refer to the Compensation Discussion and Analysis section above. For a further description of Mr. Alan B. Miller’s salarybenefits under the Company’s Executive Retirement Income Plan, please refer to the Pension Benefits section below.
Alan B. Miller’s Employment Agreement as our Chief Executive Officer through December 31, 2020
Mr. Alan B. Miller’s compensation during his tenure as Chief Executive Officer was determined in large part by the terms of his employment agreement that was in effect during his time as CEO. Mr. Miller’s base salary, minimum annual bonus and certain perquisites were determined under his employment agreement that was entered into on July 24, 2013 and amended in November 2018 (“2013 Employment Agreement”). This employment agreement was superseded by a new employment agreement dated December 23, 2020 and effective January 1, 2021, as discussed above.
In November 2018, we entered into an amendment to the 2013 Employment Agreement with Alan B. Miller, in order to adjust certain terms of the minimum annual awards that Mr. Miller will be $1,665,000 for 2018 which iseligible to receive during the period of his services as CEO. For each year of the CEO employment commencing on January 1, 2019, the annual award under our long-term incentive plan(s) (“LTIP”), as in effect from time to time, will have a 1.8% increase over his 2017 salary.minimum value of $2,000,000, with 50% of such annual LTIP award being in the form of restricted stock and 50% of such annual LTIP award being in the form of cash. LTIP awards received by Mr. Miller is also entitledshall vest in equal amounts over two years and otherwise shall be subject to an annual bonus opportunity target equalconditions as are consistent with terms and conditions applicable to 100%LTIP awards made to our other senior executives. In 2020, Mr. Miller received $1,000,000 in the form of cash, plus $1,000,052 in the form of restricted stock pursuant to his salary. The amount ofamended 2013 Employment Agreement. As mentioned above, the annual bonus for any year may be more or less than the target amount and will be determined2013 Employment Agreement was superseded by the Board of Directors in accordance with pre-established performance measures.employment agreement that was entered into on December 23, 2020, and became effective on January 1, 2021.
In addition to the stock options and/or restricted stock granted to Mr. Alan Miller during the years discussed above in the Compensation Discussion and Analysis-Restricted Stock Awards and Stock Options, he was also eligible to receive awards under our long-term incentive plan(s), including shares of restricted stock.
For a further description of the employment agreement, please refer to the Potential Payments Upon Termination or Change-in-Control section below. For a further description of the compensation setting process with respect to Mr. Miller, please refer to the Compensation Discussion and Analysis section above.
Chief Executive OfficerAlan B. Miller’s Restricted Stock Grants in 20172020, 2019 and 20162018, as Chief Executive Officer
Pursuant to the terms of Mr. Alan B. Miller’s 2013 Employment Agreement, which has since been replaced by the employment agreement that was entered into on December 23, 2020, and became effective on January 1,
42
2021, in March of 2017, 20162020 and 2015,2019 and January of 2018, as indicated below, the Compensation Committee approved the issuance of restricted shares of our Class B Common Stock to Mr. Alan Miller pursuant to the Amended and Restated 2010 Employees’ Restricted Stock Purchase Plan.
The restricted shares issued in each of March 20172020 and 2019 had a grant date market value of $2.0$1.0 million, and the restricted shares issued in March, 2016January, 2018 had a grant date market value of $1.5 millionmillion. The March of 2020 and 2019 restricted stock grants have a vesting schedule of 50% on each of the first and second anniversaries of the date of grant. EachThe January of these2018 restricted stock grants havegrant has a vesting schedule of 25% on each of the first, second, third and fourth anniversaries of the grant date. The forfeiture of these shares prior to the vesting dates are determined pursuant to the terms set forth in the Restricted Stock Purchase Agreement. Dividends declared by the Company are paid with respect to outstanding shares of restricted stock.
16,05714,774 restricted shares of our Class B Common Stock issued on March 29, 201718, 2020 (grant date market value of $124.56$67.69 per share).
12,6467,462 restricted shares of our Class B Common Stock issued on March 23, 201620, 2019 (grant date market value of $118.62$134.02 per share).
12,926 restricted shares of our Class B Common Stock issued on January 17, 2018 (grant date market value of $116.05 per share).
OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 20172020
The following table provides information about the number of outstanding equity awards held by our named executive officers at December 31, 2017.
2020.
|
| Option Awards (1.) |
| Stock Awards (2.) |
|
| Option Awards (1.) |
| Stock Awards (2.) |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Equity |
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Incentive |
|
| Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Incentive |
|
| Equity |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Plan |
|
| Incentive |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Plan |
|
| Incentive |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Awards: |
|
| Plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Awards: |
|
| Plan |
| ||||
|
|
|
|
|
|
|
|
|
| Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Number |
|
| Awards: |
|
|
|
|
|
|
|
|
|
| Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Number |
|
| Awards: |
| ||||||
|
|
|
|
|
|
|
|
|
| Incentive |
|
|
|
|
|
|
|
| Number |
|
|
|
|
|
| of |
|
| Market or |
|
|
|
|
|
|
|
|
|
| Incentive |
|
|
|
|
|
|
|
| Number |
|
|
|
|
|
| of |
|
| Market or |
| ||||||||
|
|
|
|
|
|
|
|
|
| Plan |
|
|
|
|
|
|
|
| of |
|
| Market |
|
| Unearned |
|
| Payout |
|
|
|
|
|
|
|
|
|
| Plan |
|
|
|
|
|
|
|
| of |
|
| Market |
|
| Unearned |
|
| Payout |
| ||||||||||
|
|
|
|
|
|
|
|
|
| Awards: |
|
|
|
|
|
|
|
| Shares |
|
| Value of |
|
| Shares, |
|
| Value of |
|
|
|
|
|
|
|
|
|
| Awards: |
|
|
|
|
|
|
|
| Shares |
|
| Value of |
|
| Shares, |
|
| Value of |
| ||||||||||
|
|
|
|
|
|
|
|
|
| Number of |
|
|
|
|
|
|
|
| or Units |
|
| Shares |
|
| Units or |
|
| Unearned |
|
|
|
|
|
|
|
|
|
| Number of |
|
|
|
|
|
|
|
| or Units |
|
| Shares |
|
| Units or |
|
| Unearned |
| ||||||||||
|
| Number of |
|
| Number of |
|
| Securities |
|
|
|
|
|
|
|
| of Stock |
|
| or Units |
|
| Other |
|
| Shares, |
|
| Number of |
|
| Number of |
|
| Securities |
|
|
|
|
|
|
|
| of Stock |
|
| or Units |
|
| Other |
|
| Shares, |
| ||||||||||||||
|
| Securities |
|
| Securities |
|
| Underlying |
|
|
|
|
|
|
|
| That |
|
| of Stock |
|
| Rights |
|
| Units or |
|
| Securities |
|
| Securities |
|
| Underlying |
|
|
|
|
|
|
|
| That |
|
| of Stock |
|
| Rights |
|
| Units or |
| ||||||||||||||
|
| Underlying |
|
| Underlying |
|
| Unexercised |
|
| Option |
|
|
|
| Have |
|
| That |
|
| That |
|
| Other Rights |
|
| Underlying |
|
| Underlying |
|
| Unexercised |
|
| Option |
|
|
|
| Have |
|
| That |
|
| That |
|
| Other Rights |
| ||||||||||||||||
|
| Unexercised |
|
| Unexercised |
|
| Unearned |
|
| Exercise |
|
| Option |
| Not |
|
| Have Not |
|
| Have Not |
|
| That Have |
|
| Unexercised |
|
| Unexercised |
|
| Unearned |
|
| Exercise |
|
| Option |
| Not |
|
| Have Not |
|
| Have Not |
|
| That Have |
| ||||||||||||||||
|
| Options (#) |
|
| Options (#) |
|
| Options |
|
| Price |
|
| Expiration |
| Vested |
|
| Vested |
|
| Vested |
|
| Not Vested |
|
| Options (#) |
|
| Options (#) |
|
| Options |
|
| Price |
|
| Expiration |
| Vested |
|
| Vested |
|
| Vested |
|
| Not Vested |
| ||||||||||||||||
Name |
| Exercisable |
|
| Unexercisable |
|
| (#) |
|
| ($) |
|
| Date |
| (#) |
|
| ($) (3.) |
|
| (#) |
|
| ($) |
|
| Exercisable |
|
| Unexercisable |
|
| (#) |
|
| ($) |
|
| Date |
| (#) |
|
| ($) (4.) |
|
| (#) |
|
| ($) |
| ||||||||||||||||
Alan B. Miller |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 36,735 |
|
| $ | 4,163,912 |
|
|
| 0 |
|
|
| 0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 28,983 |
|
| $ | 3,985,163 |
|
|
| 0 |
|
|
| 0 |
|
|
|
| 442,500 |
|
|
| 147,500 |
|
|
| 0 |
|
| $ | 78.17 |
|
| 03/25/2019 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 442,500 |
|
|
| 147,500 |
|
|
| 0 |
|
| $ | 124.56 |
|
| 03/28/2022 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
|
| 295,000 |
|
|
| 295,000 |
|
|
| 0 |
|
| $ | 117.29 |
|
| 03/17/2020 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 295,000 |
|
|
| 295,000 |
|
|
| 0 |
|
| $ | 119.64 |
|
| 04/12/2023 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
|
| 147,500 |
|
|
| 442,500 |
|
|
| 0 |
|
| $ | 118.62 |
|
| 03/22/2021 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 147,500 |
|
|
| 442,500 |
|
|
| 0 |
|
| $ | 134.02 |
|
| 03/19/2024 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
|
| 0 |
|
|
| 590,000 |
|
|
| 0 |
|
| $ | 124.56 |
|
| 03/28/2022 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 295,000 |
|
|
| 0 |
|
| $ | 67.69 |
|
| 03/17/2025 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 0 |
|
|
| 349,399 |
|
|
| 0 |
|
| $ | 74.46 |
|
| 03/17/2025 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||
Marc D. Miller |
|
| 67,500 |
|
|
| 22,500 |
|
|
| 0 |
|
| $ | 78.17 |
|
| 03/25/2019 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 77,250 |
|
|
| 25,750 |
|
|
| 0 |
|
| $ | 124.56 |
|
| 03/28/2022 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
|
| 50,000 |
|
|
| 50,000 |
|
|
| 0 |
|
| $ | 119.64 |
|
| 04/12/2023 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
| ||||||||||||||||||||||||||||||||||
|
|
| 45,000 |
|
|
| 45,000 |
|
|
| 0 |
|
| $ | 117.29 |
|
| 03/17/2020 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 25,000 |
|
|
| 75,000 |
|
|
| 0 |
|
| $ | 134.02 |
|
| 03/19/2024 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
|
| 25,000 |
|
|
| 75,000 |
|
|
| 0 |
|
| $ | 118.62 |
|
| 03/22/2021 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 50,000 |
|
|
| 0 |
|
| $ | 67.69 |
|
| 03/17/2025 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
|
| 0 |
|
|
| 103,000 |
|
|
| 0 |
|
| $ | 124.56 |
|
| 03/28/2022 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 59,220 |
|
|
| 0 |
|
| $ | 74.46 |
|
| 03/17/2025 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steve G. Filton |
|
| 52,500 |
|
|
| 17,500 |
|
|
| 0 |
|
| $ | 78.17 |
|
| 03/25/2019 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 20,000 |
|
|
| 0 |
|
|
| 0 |
|
| $ | 118.62 |
|
| 03/22/2021 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
|
| 35,000 |
|
|
| 35,000 |
|
|
| 0 |
|
| $ | 117.29 |
|
| 03/17/2020 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 52,500 |
|
|
| 17,500 |
|
|
| 0 |
|
| $ | 124.56 |
|
| 03/28/2022 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
|
| 17,500 |
|
|
| 52,500 |
|
|
| 0 |
|
| $ | 118.62 |
|
| 03/22/2021 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 35,000 |
|
|
| 35,000 |
|
|
| 0 |
|
| $ | 119.64 |
|
| 04/12/2023 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
|
| 0 |
|
|
| 70,000 |
|
|
| 0 |
|
| $ | 124.56 |
|
| 03/28/2022 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 17,500 |
|
|
| 52,500 |
|
|
| 0 |
|
| $ | 134.02 |
|
| 03/19/2024 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 0 |
|
|
| 35,000 |
|
|
| 0 |
|
| $ | 67.69 |
|
| 03/17/2025 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
Debra K. Osteen |
|
| 52,500 |
|
|
| 17,500 |
|
|
| 0 |
|
| $ | 78.17 |
|
| 03/25/2019 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
| ||||||||||||||||||||||||||||||||||
|
|
| 35,000 |
|
|
| 35,000 |
|
|
| 0 |
|
| $ | 117.29 |
|
| 03/17/2020 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
| ||||||||||||||||||||||||||||||||||
|
|
| 17,500 |
|
|
| 52,500 |
|
|
| 0 |
|
| $ | 118.62 |
|
| 03/22/2021 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
| ||||||||||||||||||||||||||||||||||
|
|
| 0 |
|
|
| 70,000 |
|
|
| 0 |
|
| $ | 124.56 |
|
| 03/28/2022 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 41,454 |
|
|
| 0 |
|
| $ | 74.46 |
|
| 03/17/2025 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marvin G. Pember |
|
| 37,500 |
|
|
| 12,500 |
|
|
| 0 |
|
| $ | 78.17 |
|
| 03/25/2019 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 13,750 |
|
|
| 0 |
|
|
| 0 |
|
| $ | 118.62 |
|
| 03/22/2021 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
|
| 25,000 |
|
|
| 25,000 |
|
|
| 0 |
|
| $ | 117.29 |
|
| 03/17/2020 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 15,000 |
|
|
| 15,000 |
|
|
| 0 |
|
| $ | 124.56 |
|
| 03/28/2022 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
|
| 13,750 |
|
|
| 41,250 |
|
|
| 0 |
|
| $ | 118.62 |
|
| 03/22/2021 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 17,500 |
|
|
| 35,000 |
|
|
| 0 |
|
| $ | 119.64 |
|
| 04/12/2023 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
|
| 0 |
|
|
| 60,000 |
|
|
| 0 |
|
| $ | 124.56 |
|
| 03/28/2022 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 17,500 |
|
|
| 52,500 |
|
|
| 0 |
|
| $ | 134.02 |
|
| 03/19/2024 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
|
| 0 |
|
|
| 35,000 |
|
|
| 0 |
|
| $ | 67.69 |
|
| 03/17/2025 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
| ||||||||||||||||||||||||||||||||||
|
|
| 0 |
|
|
| 41,454 |
|
|
| 0 |
|
| $ | 74.46 |
|
| 03/17/2025 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
| ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||
Matthew J. Peterson (3.) |
|
| 0 |
|
|
| 50,000 |
|
|
| 0 |
|
| $ | 151.99 |
|
| 09/17/2024 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
| ||||||||||||||||||||||||||||||||||
|
|
| 0 |
|
|
| 25,000 |
|
|
| 0 |
|
| $ | 67.69 |
|
| 03/17/2025 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
| ||||||||||||||||||||||||||||||||||
|
|
| 0 |
|
|
| 29,610 |
|
|
| 0 |
|
| $ | 74.46 |
|
| 03/17/2025 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
| ||||||||||||||||||||||||||||||||||
1. | Stock option awards. |
On March 26, 2014, stock options were granted with an exercise price of $78.17.
On March 18, 2015, stock options were granted with an exercise price of $117.29
On March 23, 2016, stock options were granted with an exercise price of $118.62.
On March 29, 2017, stock options were granted with an exercise price of $124.56.
On April 13, 2018, stock options were granted with an exercise price of $119.64.
On March 20, 2019, stock options were granted with an exercise price of $134.02.
On September 18, 2019, stock options were granted with an exercise price of $151.99.
On March 18, 2020, stock options were granted with an exercise price of $67.69.
On March 18, 2020, stock premium stock options were granted with a 10% premium exercise price of $74.46.
2. | Restricted Stock Awards. The outstanding restricted stock awards for Mr. Alan B. Miller are scheduled to vest as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date |
| 2018 |
|
| 2019 |
|
| 2020 |
|
| 2021 |
|
| TOTAL |
|
| 2021 |
|
| 2022 |
|
| TOTAL |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
January 17, |
|
| 3,231 |
|
|
| 3,232 |
|
|
| 6,463 |
| ||||||||||||||||||||
March 18, |
|
| 3,197 |
|
|
| 3,198 |
|
|
| - |
|
|
| - |
|
|
| 6,395 |
|
|
| 7,387 |
|
|
| 7,387 |
|
|
| 14,774 |
|
March 23, |
|
| 3,162 |
|
|
| 3,161 |
|
|
| 3,162 |
|
|
| - |
|
|
| 9,485 |
| ||||||||||||
March 26, |
|
| 4,798 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 4,798 |
| ||||||||||||
March 20, |
|
| 3,731 |
|
|
| - |
|
|
| 3,731 |
| ||||||||||||||||||||
March 29, |
|
| 4,014 |
|
|
| 4,014 |
|
|
| 4,014 |
|
|
| 4,015 |
|
|
| 16,057 |
|
|
| 4,015 |
|
|
| - |
|
|
| 4,015 |
|
TOTAL |
|
| 15,171 |
|
|
| 10,373 |
|
|
| 7,176 |
|
|
| 4,015 |
|
|
| 36,735 |
|
|
| 18,364 |
|
|
| 10,619 |
|
|
| 28,983 |
|
3. | Mr. Peterson was hired by the Company in September 2019 and was awarded stock options upon the commencement of his employment, which are scheduled to vest in three equal installments on the second, third and fourth anniversaries of the grant date. |
4. | Based on the closing sale price of the Class B Common Stock on the New York Stock Exchange on December 31, |
45
OPTION EXERCISES AND STOCK VESTED
The following table provides information about stock option exercises by, and the vesting of stock for, our named executive officers during fiscal year 2017:2020:
|
| Option Awards |
|
| Stock Awards |
|
| Option Awards |
|
| Stock Awards |
| ||||||||||||||||||||
Name |
| Number of Shares Acquired on Exercise (#) |
|
| Value Realized on Exercise ($) |
|
| Number of Shares Acquired on Vesting (#) (1.) |
|
| Value Realized on Vesting ($) |
|
| Number of Shares Acquired on Exercise (#) |
|
| Value Realized on Exercise ($) |
|
| Number of Shares Acquired on Vesting (#) (1.) |
|
| Value Realized on Vesting ($) |
| ||||||||
Alan B. Miller |
|
| 590,000 |
|
| $ | 31,374,900 |
|
|
| 3,197 |
|
| $ | 383,896 |
|
|
| 780,000 |
|
| $ | 11,615,125 |
|
|
| 14,139 |
|
| $ | 1,377,436 |
|
|
|
|
|
|
|
|
|
|
|
| 3,161 |
|
| $ | 375,274 |
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| 4,797 |
|
| $ | 584,706 |
| ||||||||||||||||
Marc D. Miller |
|
| 90,000 |
|
| $ | 4,701,375 |
|
|
|
|
|
|
|
|
|
|
| 70,000 |
|
| $ | 1,095,500 |
|
|
|
|
|
|
|
|
|
Steve G. Filton |
|
| 70,000 |
|
| $ | 3,987,200 |
|
|
|
|
|
|
|
|
|
|
| 50,000 |
|
| $ | 593,500 |
|
|
|
|
|
|
|
|
|
Debra K. Osteen |
|
| 17,500 |
|
| $ | 856,625 |
|
|
|
|
|
|
|
|
| ||||||||||||||||
Marvin Pember |
|
| 37,500 |
|
| $ | 2,136,000 |
|
|
|
|
|
|
|
|
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Marvin G. Pember |
|
| - |
|
| $ | - |
|
|
|
|
|
|
|
|
| ||||||||||||||||
Matthew J. Peterson |
|
| - |
|
| $ | - |
|
|
|
|
|
|
|
|
| ||||||||||||||||
(1.) | Restricted stock for Alan B. Miller vested as follows: |
On January 17, 2020, 3,232 shares at $143.94 per share.
On March 18, 2017, 3,19720, 2020, 3,731 shares of restricted stock vested for Mr. Alan B Miller.at $84.84 per share.
On March 23, 2017, 3,1612020, 3,162 shares of restricted stock vested for Mr. Alan B Miller.at $75.42 per share.
On March 26, 2017, 4,79729, 2020, 4,014 shares of restricted stock vested for Mr. Alan B Miller.at $88.99 per share.
PENSION BENEFITS
The following table provides information about pension benefits pursuant to our Executive Retirement Income Plan for our named executive officers.
Name |
| Number of Years Credited Service (#) |
|
| Present Value of Accumulated Benefit ($) (1.) |
|
| Payments During Last Fiscal Year ($) |
| |||
Alan B. Miller |
|
| 39 |
|
| $ | 2,138,404 |
|
|
| 0 |
|
Marc D. Miller |
|
| 23 |
|
| $ | 847,945 |
|
|
| 0 |
|
Steve G. Filton |
|
| 32 |
|
| $ | 770,578 |
|
|
| 0 |
|
Debra K. Osteen |
|
| 33 |
|
| $ | 855,122 |
|
|
| 0 |
|
Marvin G. Pember |
| N/A |
|
| $ | 0 |
|
|
| 0 |
| |
|
|
In October 1993, the Board of Directors adopted the Executive Retirement Income Plan,ERIP, which was subsequently closed to new participants effective January 1, 2015. Pursuant to the terms of this plan,the ERIP, certain management or other highly compensated employees, who had been previously designated as plan participants by our Board of Directors prior to December 31, 2014, and who had completed at least 10 years of active employment with us, may receive retirement income benefits. The
Subject to certain conditions, the monthly benefit is payable to a participant who retires after he or she reaches age 62 (applicable to participants added to the plan before 2008) or age 65 (applicable to participants added to the plan after January 1, 2008). The benefit is equal to 3% of the employee’s average monthly base salary over the three years preceding retirement multiplied by the number of qualified years (not to exceed 10) of the participant’s employment with us.
PaymentUpon attaining the qualified age of retirement as stipulated in the benefit will beplan, subject to certain conditions, payment of ERIP benefits are made to participants in 60 monthly installments following the participant’stheir retirement date. UnderIn certain circumstances, the participant may be entitled to elect to receive the present value of the payments in one lump sum or receive payments over a period of 10 years. If an employee ceasesa participant’s employment with us is terminated prior to the applicabletheir qualified age of retirement, age, or an employee has not completed at least 10 years of active employment with us, no retirement incomeERIP benefits will be payable to the employee unless the Board of Directors, in its full discretion, determines otherwise.
For In 2018, upon commencement of the Supplemental Executive Retirement Income Plan (“SERIP”), as discussed below, certain participants of the ERIP, who had not yet approached their qualified age of retirement, were given the option to remain in the ERIP or convert their participation into the SERIP. Please see Supplemental Executive Retirement Income Plan below for additional disclosure related to participants who elected to convert from the ERIP to the SERIP.
Mr. Alan B. Miller remains a participant in the ERIP. Mr. Alan B. Miller’s aggregate benefit payable under the ERIP (for the 60 months in which the participant receives benefits), assuming retirement as of December 31, 20172020, amounted to approximately $2.4$2.6 million. Pursuant to Alan B. Miller’s employment contract dated December 23, 2020, for purposes of the ERIP, the monthly compensation for the three years preceding retirement shall be deemed to be the average monthly compensation for the three years ended immediately prior to January 1, 2021. As of December 31, 2017, the projected aggregate benefit payable for each ofdiscussed below, Marc D. Miller and Steve G. Filton and Debra K. Osteen were approximately $1.7 million, $914,000, $960,000, respectively, based uponconverted their ERIP participation into the following assumptions: (i) each participant will retire at the age of 62, and; (ii) annual salary increases of 3% are provided until the age of 62 is attained.
NONQUALIFIED DEFERRED COMPENSATIONSERIP.
The following table providestables provide information about pension benefits pursuant to our Deferred Compensation PlanERIP for our named executive officers.officer, as described below.
Name |
| Executive Contributions in Last Fiscal Year ($) (1.) |
|
| Registrant Contributions in Last Fiscal Year ($) (2.) |
|
| Aggregate Earnings in Last Fiscal Year ($) (2.) |
|
| Aggregate Withdrawals / Distributions ($) |
|
| Aggregate Balance at Last Fiscal Year-End ($) |
| |||||
Alan B. Miller |
| $ | 100,000 |
|
| $ | 0 |
|
| $ | 248,552 |
|
| $ | 0 |
|
| $ | 1,884,263 |
|
Marc D. Miller |
| $ | 39,828 |
|
| $ | 0 |
|
| $ | 19,769 |
|
| $ | 0 |
|
| $ | 114,296 |
|
Steve G. Filton |
| $ | 0 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 0 |
|
Debra K. Osteen |
| $ | 0 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 0 |
|
Marvin G. Pember |
| $ | 414,796 |
|
| $ | 0 |
|
| $ | 264,269 |
|
| $ | 0 |
|
| $ | 1,651,832 |
|
Name |
| Number of Years Credited Service (#) |
|
| Value of Accumulated Benefit ($) (1.) |
|
| Payments During Last Fiscal Year ($) |
| |||
Alan B. Miller |
|
| 42 |
|
| $ | 2,270,794 |
|
|
| 0 |
|
(1.) |
|
47
Supplemental Executive Retirement Income Plan (“SERIP”)
In July, 2018, the Board of Directors adopted the SERIP. Pursuant to the terms of the SERIP, a select group of management or other highly compensated employees may be designated as plan participants. Our SERIP, which is subject to the applicable provisions of Internal Revenue Code Section 409A, provides eligible employees with annual employer contributions which are entirely at the Company’s discretion. Generally, each annual contribution vests on the earlier of: (i) the 5th anniversary of the date of funding to the participant’s account, or; (ii) the participant attaining the qualified age of retirement (either age 62 or age 65, as stipulated in the SERIP). The SERIP also provides for discretionary alternative vesting schedules for certain supplemental discretionary contributions made on an individual basis. Upon attaining the SERIP’s qualified age of retirement, distributions are paid in 10 annual installments to the participant upon the participants retirement. Distributions due to events other than retirement are paid in a lump sum. Our obligation to make payments of amounts credited to participants’ accounts is a general unsecured obligation.
As discussed above, a select group of employees who were previously participants in the ERIP and elected to convert to the SERIP, have been provided with an unfunded, lump sum conversion balance that was credited to the participant’s SERIP account. The unfunded ERIP conversion balances transferred to the SERIP, which were computed based upon the participant’s 2017 salary and will remain permanently unchanged after conversion, are payable over 60 monthly installments, if the participant attains their qualified age of retirement, as previously stipulated in the ERIP. If the participant does not attain their qualified age of retirement, the ERIP conversion balance is forfeited unless the Board of Directors, in its full discretion, determined otherwise. For ERIP participants who elected to convert to the SERIP, their participation in the ERIP was terminated upon conversion and no future benefits will be earned pursuant to the ERIP. SERIP participants who converted from the ERIP are entitled to future benefits pursuant to the terms of the SERIP.
Marc D. Miller and Steve G. Filton elected to convert their ERIP participation into the SERIP. As a result of their elections, their unfunded ERIP conversion balances, which are reflected below and were computed based upon their 2017 salaries, will remain permanently unchanged. Marvin G. Pember and Matthew J. Peterson, who were not previously ERIP participants, also participate in the SERIP.
The following tables provide information about pension benefits pursuant to our SERIP for our named executive officers as described below.
Name |
| SERIP Beginning Balance 1/1/2020 ($) |
|
| Company SERIP Contributions in Last Fiscal Year ($) (1.) |
|
| SERIP Gains in Last Fiscal Year ($) |
|
| SERIP Distributions ($) |
|
| SERIP Balance at Last Fiscal Year-End ($) |
|
| ERIP Conversion Balance to SERIP |
| Aggregate Balance at Last Fiscal Year-End ($) |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Vested |
| Unvested |
|
|
|
|
|
|
|
| ||
Marc D. Miller |
| $ | 100,349 |
|
| $ | 49,519 |
|
| $ | 24,798 |
|
| $ | - |
|
| $ | - |
| $ | 174,666 |
|
| $ | 1,136,438 |
| $ | 1,311,104 |
|
Steve G. Filton |
| $ | 79,160 |
|
| $ | 39,656 |
|
| $ | 14,131 |
|
| $ | - |
|
| $ | 132,947 |
| $ | - |
|
| $ | 919,340 |
| $ | 1,052,287 |
|
Marvin G. Pember |
| $ | 233,528 |
|
| $ | 41,621 |
|
| $ | 32,413 |
|
| $ | - |
|
| $ | 307,562 |
| $ | - |
|
| $ | - |
| $ | 307,562 |
|
Matthew J. Peterson |
| $ | - |
|
| $ | 10,247 |
|
| $ | 1,662 |
|
| $ | - |
|
| $ | - |
| $ | 11,909 |
|
| $ | - |
| $ | 11,909 |
|
| (1.) | Amounts |
Deferred Compensation
Our Deferred Compensation Plan, which is subject to the applicable provisions of Internal Revenue Code Section 409A provides that eligible employees may elect to convert and defer a portion of their base salary and bonus award into investment options in lieu of receiving cash. Under the Deferred Compensation Plan, an employee is deemed eligible if their base compensation for 20172020 was $120,000$130,000 or higher and they are performing duties in a qualified position. The base compensation threshold is adjusted annually for cost-of-living increases.
Pursuant to the terms of the Deferred Compensation Plan, the minimum annual amount that can be deferred is $2,000. Prior to January 1, 2016, no more than 25%1% of an employee’s base salary or 50% of an employee’s annual bonus may be deferred under the Deferred Compensation Plan in any calendar year. Effective January 1, 2016, nosalary. No more than 50% of an employee’s base salary or 95% of an employee’s annual bonus may be deferred under the Deferred Compensation Plan in any calendar year. Employees may allocate a portion of their deferred compensation to be distributed in a lump sum or installments to begin at retirement or a scheduled distribution date. The available investment options consist of certain mutual funds which include: (i) conservative (e.g. money markets or bonds); (ii) moderately conservative (e.g. balanced funds), and; (iii) aggressive (e.g. domestic and international equity). Our obligation to make payments of amounts credited to participants’ deferred compensation accounts is a general unsecured obligation. In addition, under the Deferred Compensation Plan, we may make discretionary contributions on behalf of an eligible employee. Since inception of the Deferred Compensation Plan, we have not made any discretionary contributions on behalf of employees.
Our obligations under the Deferred Compensation Plan in connection with an employee’s retirement account are payable, beginning at retirement at age 55 and 10 years of service for deferrals made prior to January 1, 2016, and age 55 and 5 years of service for deferrals made on or after January 1, 2016, in equal installments over a ten year period; except that an employee may make a distribution election to receive the balance of the participant’s retirement account in either a single lump sum or equal annual or less frequent installments over a period not to exceed ten years. For deferrals made on or after January 1, 2016, an employee may elect to defer the retirement distribution to begin one year following retirement. An employee or designated beneficiary will receive a lump sum distribution as a result of death, disability, or termination, of employment other than for retirement, death or disability.retirement. An employee may change his distribution elections by making new distribution elections at least 12 months prior to
the date on which such payment was otherwise scheduled to be made and must be delayed until a date that is at least five years after the date the distribution was previously scheduled to begin.
Our obligations under the Deferred Compensation Plan in connection with an employee’s scheduled distribution are payable in a lump sum or installments of two to ten years, commencing on the date indicated by the employee. If the employee’s employment is terminated prior to the distribution of obligations in accordance with a scheduled distribution then the amounts credited to such accounts will be transferred to the employee’s retirement account and distributed in accordance with the employee’s distribution election for that account.
If an employee experiences a financial hardship that is the result of an “unforeseeable emergency,” as defined under the Deferred Compensation Plan, he or she may apply to the administrator of the Deferred Compensation Plan for an emergency withdrawal against his or her accounts. Such an emergency withdrawal may be allowed at the discretion of the administrator, in which case the employee’s account will be reduced accordingly.
Executive Retirement Income PlanNONQUALIFIED DEFERRED COMPENSATION
For a description of the Executive Retirement IncomeThe following table provides information about our Deferred Compensation Plan and potential payments thereunder, please refer to the Pension Benefits Table and the related narrative discussion included in this Proxy Statement.for our named executive officers.
Name |
| Executive Contributions in Last Fiscal Year ($) (1.) |
|
| Company Contributions in Last Fiscal Year ($) |
|
| Aggregate Earnings in Last Fiscal Year ($) |
|
| Aggregate Withdrawals / Distributions ($) |
|
| Aggregate Balance at Last Fiscal Year-End ($) |
| |||||
Alan B. Miller |
| $ | 100,000 |
|
| $ | 0 |
|
| $ | 478,079 |
|
| $ | 0 |
|
| $ | 3,016,149 |
|
Marc D. Miller |
| $ | 0 |
|
| $ | 0 |
|
| $ | 54,408 |
|
| $ | 0 |
|
| $ | 258,196 |
|
Steve G. Filton |
| $ | 0 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 0 |
|
Marvin G. Pember |
| $ | 499,348 |
|
| $ | 0 |
|
| $ | 651,963 |
|
| $ | (80,364 | ) |
| $ | 4,047,795 |
|
Matthew J. Peterson |
| $ | 120,000 |
|
| $ | 0 |
|
| $ | 35,233 |
|
| $ | 0 |
|
| $ | 217,409 |
|
(1.) | Amounts included in “salary” in the Summary Compensation Table. |
Split-Dollar Life Insurance Agreements:
See Split-Dollar Life Insurance Agreements as included above in this Proxy Statement.
Potential Payments Upon Termination or Change-in-Control
Mr. Potential Payments Upon Termination
Alan Miller’s employment agreement datedB. Miller July 24, 2013 providesEmployment Agreement:
On July 24, 2013, we entered into an employment agreement, as amended on November 5, 2018, with Alan B. Miller (“Prior Agreement”) that stipulated that Mr. Alan Miller will continue towould serve as Chief Executive Officer andthe Chairman of our Board of Directors and Chief Executive Officer (“CEO”) through December 31, 2017, and subject further toprovided for automatic annual renewalrenewals unless either party elects otherwise. Mr. Alan Miller’s agreement was automatically renewed for one year through December 31, 2019. The agreement also contemplatescontemplated that Mr. Alan Miller willwould remain as Executive Chairman of our Board of Directors during the term of his CEO employment. The employment agreementEmployment Agreement also containscontained customary non-disparagement, non-solicitation and non-competition provisions. Effective January 1, 2021, this agreement was superseded by a new agreement (see additional disclosure below).
In general, pursuant to his Prior Agreement, Mr. Alan Miller’s long-term stock-based incentive awards granted pursuant to his employment agreementPrior Agreement will become fully vested upon termination of his employment other than by us for “cause” or voluntarily by Mr. Alan Miller before the end of the applicable term (under circumstances not involving a breach of the employment agreementEmployment Agreement by us).
If Mr. Alan Miller’s employment is terminated for “cause”, as defined in the employment agreement,Employment Agreement, he will be entitled to any benefits payable to or earned by Mr. Miller with respect to any period of his employment or other service prior to the date of such discharge.
If Mr. Alan Miller’s employment as Chief Executive Officer is terminated due to his disability, Mr. Alan Miller shall be paid a pro rata portion of the annual bonus which would otherwise have been payable for the year in which his employment terminates, plus an amount equal to one-half of Mr. Alan Miller’s base salary, payable
50
in twelve equal monthly installments. If Mr. Alan Miller’s employment or service terminates due to his death, Mr. Alan Miller’s beneficiary shall receive a pro rata portion of the annual bonus which would otherwise have been payable to Mr. Alan Miller for the year of his death.
If Mr. Miller terminates his employment or other service under the employment agreementEmployment Agreement because of a material change in the duties of his office or any other breach by us of our obligations, or in the event of the termination of Mr. Alan Miller’s employment by us without cause or otherwise in breach of the employment agreement,Employment Agreement, Mr. Alan Miller will generally continue to receive all of the cash compensation, benefits and minimum long term incentive compensation set forth in the employment agreementEmployment Agreement as if his employment or service had not terminated, and the vesting of his long-term incentive plan awards will accelerate.
The following table provides quantitative disclosure of the estimated payments that would be made to Mr. Alan Miller under his employment agreementPrior Agreement as of December 31, 2017,2020, the last business day of our fiscal 2017,2020, assuming that the employment agreementMr. Alan Miller’s Prior Areement would have been in effect at that time:
|
| Cash Severance Payment ($) |
|
|
| Perquisites/ Benefits ($) |
|
|
| Vesting Acceleration of Previously Granted Stock Based Awards ($) (e.) |
|
| Continuation of Restricted Stock Awards ($) |
|
|
| Total Termination Benefits ($) |
|
| Cash Severance Payment ($) |
|
|
| Perquisites/ Benefits ($) |
|
|
| Vesting Acceleration of Previously Granted Stock Based Awards ($) (e.) |
|
| Long Term Incentive Plan Awards ($) |
|
|
| Total Termination Benefits ($) |
| ||||||||||
Alan B. Miller |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by Us for “Cause” |
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
| $ | 0 |
|
|
| $ | 0 |
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
| $ | 0 |
|
|
| $ | 0 |
|
Termination Due to Mr. Alan Miller’s Disability |
| $ | 1,665,000 |
| (a.) |
| $ | 0 |
|
|
| $ | 39,548,584 |
|
| $ | 0 |
|
|
| $ | 41,213,584 |
|
| $ | 1,770,414 |
| (a.) |
| $ | 0 |
|
|
| $ | 55,322,613 |
|
| $ | 0 |
|
|
| $ | 57,093,027 |
|
Termination Due to Mr. Alan Miller’s Death |
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 39,548,584 |
|
| $ | 0 |
|
|
| $ | 39,548,584 |
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 55,322,613 |
|
| $ | 0 |
|
|
| $ | 55,322,613 |
|
Termination by Mr. Alan Miller for “Breach by the Company” or Termination by the Company Without Cause |
| $ | 6,726,600 |
| (b.) |
| $ | 2,473,949 |
| (c.) |
| $ | 39,548,585 |
|
| $ | 3,000,000 |
| (d.) |
| $ | 51,749,134 |
|
| $ | 7,152,473 |
| (b.) |
| $ | 2,215,288 |
| (c.) |
| $ | 55,322,613 |
|
| $ | 4,000,000 |
| (d.) |
| $ | 68,690,374 |
|
(a.) | Based upon 50% of the estimated targeted |
(b.) | Assumes (i) continuation of all cash compensation through |
(c.) | Assumes (i) continuation of all entitled perquisites through |
(d.) |
|
51
(e.) | Represents |
Alan B. Miller January 1, 2021 Employment Agreement:
On December 23, 2020, we entered into a new employment agreement with Alan B. Miller (“New Employment Agreement”) which provides the terms and conditions on Mr. Alan Miller’s continuing service with the Company and supersedes the amended and restated employment agreement dated as of July 24, 2013 (“Prior Agreement”). The New Employment Agreement has an effective date of January 1, 2021 and contemplates that Mr. Alan Miller will be employed by the Company as Executive Chairman of the Board of Directors of the Company and provides for automatic annual renewals unless either party elects otherwise at least one year in advance.
In general, Mr. Alan Miller’s long-term stock-based incentives awards granted during or before employment as Executive Chairman will become fully vested upon termination of his employment as Executive Chairman at the time such employment ends, other than by us for “cause” or voluntarily by Mr. Alan Miller before or at the end of the applicable term (under circumstances not involving a breach of the New Employment Agreement by us).
If Mr. Alan Miller’s employment is terminated for “cause”, as defined in the New Employment Agreement, he will be entitled to any benefits payable to or earned by Mr. Alan Miller with respect to any period of his employment or other service prior to the date of such discharge. Mr. Alan Miller would not be entitled to any termination benefits if he had been terminated for cause at December 31, 2020 and his New Employment Agreement had been in effect.
If Mr. Alan Miller’s employment is terminated due to his disability, Mr. Alan Miller shall be paid an amount equal to one-half of Mr. Alan Miller’s base salary, payable in twelve equal monthly installments. Including the accelerated vesting of his unvested long-term stock-based incentive awards granted before employment as Executive Chairman, the estimated total termination benefits is $55,822,613 if he had been terminated for reason of disability on December 31, 2020 and his New Employment Agreement had been in effect.
If Mr. Alan Miller’s employment or service terminates due to his death, Mr. Alan Miller’s beneficiary shall receive any salary and reimbursements that would otherwise have been payable to Mr. Alan Miller as of the date of his death in addition to any life insurance benefits under insurance policies maintained on Mr. Alan Miller’s life by us and for which Mr. Alan Miller had the right to designate the beneficiary. Including the accelerated vesting of his unvested long-term stock-based incentive awards granted before employment as Executive Chairman, the estimated total termination benefits is $55,322,613 if he had been terminated for reason of death on December 31, 2020 and his New Employment Agreement had been in effect.
If Mr. Alan Miller terminates his employment or other service under the New Employment Agreement because of a material change in the duties of his office or any other breach by us of our obligations, or in the event of the termination of Mr. Alan Miller’s employment by us without cause or otherwise in breach of the New Employment Agreement, Mr. Alan Miller will generally continue to receive for the remainder of the employment term all of the cash compensation, long-term equity incentive compensation and other benefits as if his employment or service had not terminated, and the vesting of his long-term incentive plan awards will accelerate.
52
We may condition Mr. Alan Miller’s right to receive any severance benefits on his execution of a general release in favor of us. The estimated total termination benefit is $59,468,249 if he had been terminated by us without cause or he had resigned due to breach by us on December 31, 2020 and his New Employment Agreement had been in effect.
Marc D. Miller January 1, 2021 Employment Agreement:
On December 23, 2020, we entered into an employment agreement with Marc D. Miller (“MDM Employment Agreement”) which provides for the employment of Mr. Marc Miller as Chief Executive Officer (“CEO”) for an initial term beginning January 1, 2021 and ending on January 1, 2026, subject to earlier termination in accordance with its terms, and subject to automatic annual renewal for additional one-year periods unless either party elects to terminate the terms of Mr. Marc Miller’s employment at the end of the initial term or at the end of the renewal term by giving one year’s advance written notice of such termination. At all times during the term of employment, Mr. Marc Miller shall be nominated to serve as a member of the Board of Directors.
In general, Mr. Marc Miller’s long-term stock-based incentives awards granted during or before employment as CEO will become fully vested upon termination of his employment as CEO at the time such employment ends, other than by us for “cause” or voluntarily by Mr. Marc Miller before or at the end of the applicable term (under circumstances not involving a breach of the MDM Employment Agreement by us).
If Mr. Marc Miller’s employment is terminated for “cause”, as defined in the MDM Employment Agreement, he will be entitled to any benefits payable to or earned by Mr. Marc Miller with respect to any period of his employment or other service prior to the date of such discharge. Mr. Marc Miller would not be entitled to any termination benefits if he had been terminated for cause at December 31, 2020 and his MDM Employment Agreement had been in effect.
If Mr. Marc Miller’s employment is terminated due to his disability, Mr. Marc Miller shall be paid a pro rata portion of the annual bonus which would otherwise have been payable for the year in which his employment terminates, plus an amount equal to one-half of Mr. Marc Miller’s base salary, payable in twelve equal monthly installments. Including the accelerated vesting of his unvested long-term stock-based incentives awards granted before employment as CEO, the estimated total termination benefits is $9,810,934, if he had been terminated for reason of disability on December 31, 2020 and his MDM Employment Agreement had been in effect.
If Mr. Marc Miller’s employment or service terminates due to his death, Mr. Marc Miller’s beneficiary shall receive any salary and reimbursements that would otherwise have been payable to Mr. Marc Miller as of the date of his death, in addition to a pro rata portion of the annual bonus which would otherwise have been payable for the year of his death. Mr. Marc Miller’s beneficiary shall also receive any life insurance benefits under insurance policies maintained on Mr. Marc Miller’s life by us and for which Mr. Marc Miller had the right to designate the beneficiary. Including the accelerated vesting of his unvested long-term stock-based incentive awards granted before employment as CEO, the estimated total termination benefits is $8,710,934 if he had been terminated for reason of death on December 31, 2020 and his MDM Employment Agreement had been in effect.
If Mr. Marc Miller terminates his employment or other service under the MDM Employment Agreement because of a material change in the duties of his office or any other breach by us of our obligations, or in the event of the termination of Mr. Marc Miller’s employment by us without cause or otherwise in breach of the MDM Employment Agreement, Mr. Marc Miller will generally continue to receive for the remainder of his employment term all of the cash compensation, long-term equity incentive compensation and other benefits as if his
53
employment or service had not terminated, and the vesting of his long-term incentive plan awards will accelerate. We may condition Mr. Marc Miller’s right to receive any severance benefits on his execution of a general release in favor of us. The estimated total termination benefit is $20,482,492 if he had been terminated by without cause or had he resigned due to breach by us on December 31, 2020 and his MDM Employment Agreement had been in effect.
Other Executive Officers
In addition, in the event of an involuntary termination of their respective employment by the Company without cause, Mr. Pember and Mr. Peterson are each entitled to receive salary continuation for 12 months and Mr. Peterson is also entitled to reimbursement of a portion of his COBRA premium for 12 months. Assuming such an involuntary termination of their respective employment had occurred as of December 31, 2020, Mr. Pember and Mr. Peterson would be entitled to receive aggregate cash severance payments of $718,576 and $608,137, respectively, and Mr. Peterson would have been entitled to the reimbursement of a portion of his COBRA premium aggregating to $19,402.
Potential Payments upon a Change of Control
Pursuant to our Third Amended and Restated 2005 Stock Incentive Plan, (under which, as of December 31, 2020, all unvested stock options of our named executive officers were granted), all of our employees receive full acceleration of the vesting of any unvested stock options in the event that such stock options are not assumed or substituted by the surviving or acquiring company following a change of control of the Company. The intrinsic value of our named executive officers’ stock options for which vesting would have accelerated assuming a change in control of the Company in which equity awards are not assumed or substituted had occurred as of December 31, 2020, is as follows: Alan B. Miller: $51,337,313; Marc D. Miller: $8,710,934; Steve G. Filton: $6,090,860; Marvin G. Pember: $6,058,510; and Matthew J. Peterson: $3,611,864. Such intrinsic values of the accelerated stock options were calculated based upon the closing price per share of our common stock on December 31, 2020 of $137.50 as reported on the NYSE. Vesting acceleration of stock option awards if such equity awards are not assumed or substituted is the only benefit provided to our named executive officers in the event of a change of control. In the event of a termination of employment following a change in control of the Company, the named executive officers may be entitled to payments and benefits as described above under “Potential Payments Upon Termination”.
CEO Pay Ratio
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), and Item 402(u) of Regulation S-K, we are providing the following information about the
relationship of the annual total compensation of our employees and the annual total compensation of Mr. Alan B. Miller, the current Executive Chairman of our Board of Directors and former Chairman of the Board and Chief Executive Officer.Officer through December 31, 2020.
As is permitted under the SEC rules, we reasonably determined our median employee by using the greater of total annual W-2 wages of employees both in the U.S. and the U.K. who were employed as of December 31, 20172020 (excluding Mr. Miller), or calculated annualized pay for those who commenced work during 20172020 or were on a leave of absence. The employee population consisted of our full-time, part-time and temporary employees. The inclusion of part-time and temporary employees reduces the median of the annual total compensation for the overall group of our employees. We selected anDue to the amount of turnover and job status changes that exist in the healthcare
54
industry, we recalculated the median employee from that groupin 2020 and determined that person’s total compensation was $39,978.$43,337. The ratio of CEO pay to median worker pay is 541:305:1.
The SEC 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 compensation practices. As such, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
A 2017 CEO pay ratio survey completed by Equilar of 356 public companies across the country indicated that our ratio fell between the 75th and 90Th percentile for companies with revenue between $5 and $15 billion. Our ratio is close to the 75th percentile for companies with greater than 43,000 employees.
20172020 DIRECTOR COMPENSATION
The following table provides information concerning the compensation of our Non-Employeenon-employee Directors for 2017.2020.
Name |
| Fees Earned or Paid in Cash ($) |
|
| Grant Date Fair Value Stock Awards (1.) ($) |
|
| Grant Date Fair Value Option Awards (2.) ($) |
|
| Non-Equity Incentive Plan Compensation ($) |
|
| All Other Compensation ($) |
|
| Total ($) |
|
| Fees Earned or Paid in Cash ($) |
|
| Grant Date Fair Value Stock Awards (1.) ($) |
|
| Grant Date Fair Value Option Awards (2.) ($) |
|
| Non-Equity Incentive Plan Compensation ($) |
|
| All Other Compensation ($) |
|
| Total ($) |
| ||||||||||||
Lawrence S. Gibbs |
| $ | 90,500 |
|
| $ | 0 |
|
| $ | 270,826 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 361,326 |
|
| $ | 86,500 |
|
| $ | 0 |
|
| $ | 145,796 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 232,296 |
|
John H. Herrell (3.) |
| $ | 98,000 |
|
| $ | 0 |
|
| $ | 270,826 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 368,826 |
| ||||||||||||||||||||||||
Robert H. Hotz |
| $ | 100,500 |
|
| $ | 0 |
|
| $ | 270,826 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 371,326 |
| ||||||||||||||||||||||||
Robert H. Hotz (3.) |
| $ | 13,066 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 13,066 |
| ||||||||||||||||||||||||
Eileen C. McDonnell |
| $ | 87,500 |
|
| $ | 0 |
|
| $ | 270,826 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 358,326 |
|
| $ | 99,000 |
|
| $ | 0 |
|
| $ | 145,796 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 244,796 |
|
Anthony Pantaleoni (4.) |
| $ | 66,000 |
|
| $ | 0 |
|
| $ | 270,826 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 336,826 |
| ||||||||||||||||||||||||
Warren J. Nimetz |
| $ | 68,000 |
|
| $ | 0 |
|
| $ | 145,796 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 213,796 |
| ||||||||||||||||||||||||
Maria R. Singer |
| $ | 69,434 |
|
| $ | 0 |
|
| $ | 145,796 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 215,230 |
| ||||||||||||||||||||||||
Elliot J. Sussman, M.D. |
| $ | 91,500 |
|
| $ | 0 |
|
| $ | 145,796 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 237,296 |
| ||||||||||||||||||||||||
(1.) | There were no restricted stock awards made to our non-employee directors during |
(2.) | Each non-employee director received 10,000 stock options on March |
(3.) | Mr. |
|
|
| As of December 31, |
Lawrence S. Gibbs |
| |||
|
| |||
|
|
| 55,000 |
|
Eileen C. McDonnell |
|
|
|
|
|
|
|
| |
Maria R. Singer | 10,000 | |||
Elliot J. Sussman, M.D. | 30,000 |
|
|
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20172020 Cash Compensation. During 2017,2020, all non-employee directors who were active in 2017 received ana pro rata annual retainer of $65,000 for service on the Board of Directors. Additionally, during 2017, John H. Herrell,2020, Eileen C. McDonnell, Chairperson of the Audit Committee received an annual retainer of $10,000 for hisher services in that capacity and Eileen C. McDonnell,capacity. Lawrence S. Gibbs,
Maria R. Singer and Robert H. Hotz,Elliott J. Sussman, M.D. members of the Audit Committee, each received an annual pro rata retainer of $2,500. Also during 2017, Robert H. Hotz,$2,500 for services in that capacity. Eileen C. McDonnell, Chairperson of the Compensation
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Committee, received an annual retainer of $5,000 for her services in that capacity. and Elliot J. Sussman, M.D., Chairman of the Nominating and Governance Committee received an annual retainer of $5,000 for his services as Chairperson of the Compensation Committee and an additional $5,000 for his services as Chairperson of the Nominating & Governance Committee. in that capacity.
Each non-employee director also was paid a $1,000 meeting fee for participation in each committee meeting in excess of 30 minutes. Committee meeting fees paid during 20172020 were as follows: Robert H. Hotz was paid $22,000,Lawrence S. Gibbs, Eileen C. McDonnell and Elliot J. Sussman, M.D. were each paid $16,000 and Maria S. Singer was paid $19,000, John H. Herrell was paid $22,000, Lawrence S. Gibbs was paid $22,000 and Anthony Pantaleoni$10,000. Warren J. Nimetz was not paid for any committee meeting fees during 2017.2020. Additionally, during 2020, there were three special meetings held which all the Board of Directors attended. Special meeting fees paid during 2020 were $3,000 to each non-employee directorof Lawrence S. Gibbs, Eileen C. McDonnell, Warren J. Nimetz, Marie R. Singer and Elliot J. Sussman, M.D. Robert H. Hotz resigned from our Board of Directors on March 1, 2020 and was paid $1,000$10,656 in retainer fees, $410 as a member of the Audit Committee and $2,000 for a special meeting.committee meeting fees.
20172020 Stock Option Awards. On March 29, 2017,18, 2020, all non-employee directors active during 2017 received an optionoptions to purchase 10,000 shares of our Class B Common Stock at an exercise price of $124.56$67.69 per share. These options havehad a grant date fair value of $27.08$14.58 per share. These stock options were granted under our Third Amended and Restated 2005 Stock Incentive Plan, vest ratably over four years and expire on the fifth anniversary of the grant date.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and executive officers, and persons who own more than ten percent of a registered class of our equity securities, to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of our Common Stock and other equity securities.
Based upon a review of the copies of such reports furnished to us during fiscal year 2017 and written representations from our executive officers and directors, we believe that during the 2017 fiscal year, the officers, directors and holders of more than 10% of our Common Stock complied with all Section 16(a) filing requirements.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Alan B. Miller isserves as the Chairman of our Board of Directors and our Chief Executive Officer.Chairman. Alan B. Miller also serves as the Chairman of the Board of Trustees, Chief Executive OfficerCEO and President of Universal Health Realty Income Trust (“UHT”), a publicly traded real estate investment trust which commenced operations in 1986. The Company acts as advisor to UHT pursuant to the terms of an annually renewable advisory agreement and also leases the real property of certain of its facilities from UHT.
Marc D. Miller isserves as our Chief Executive Officer (“CEO”), President and a member of our Board of Directors and President of the Company.Directors. Marc D. Miller is the son of Alan B. Miller, the Chairman of our Board of Directors and our Chief Executive Officer.Miller. Marc D. Miller is a named executive officer and therefore the salary and other compensation arrangements between us and Marc D. Miller are disclosed and described throughout this Proxy Statement. Additionally, Marc D. Miller serves as a member of the Board of Trustees of UHT, and also serves as a member of the Board of Directors of Premier, Inc., a healthcare performance improvement alliance which contracts with the Company pursuant to a group purchasing agreement. All fees earned by Marc D. Miller in his capacity as a Board member of Premier, Inc. are paid to the Company.
Warren J. Nimetz, a member of our Board of Directors and a member of the Executive Committee and the Finance Committee, is a Partner in Norton Rose Fulbright US LLP, the law firm we use as outside corporate counsel. We paid approximately $212,000$434,000 in legal fees to this law firm in 2017.2020. This law firm also provides personal legal services to Alan B. Miller, our Chief Executive Officer.Chairman. Mr. Nimetz in the trustee of certain trusts for the benefit of Alan B. Miller and his family.
Anthony Pantaleoni retired from the Board of Directors in January 2018. He was formerly Of Counsel to Norton Rose Fulbright US LLP, the law firm we use as outside corporate counsel. He remainsis the trustee of certain trusts for the benefit of Alan B. Miller and his family.
Pursuant to our Code of Business Conduct and Corporate Standards, all employees, officers and directors of the Company and its subsidiaries are prohibited from engaging in any relationship or financial interest which is a conflict of interest with, or which interferes or has the potential to interfere with, the interests of the Company or any of its subsidiaries or facilities. In addition, all employees, officers and directors of the Company and its subsidiaries are required to disclose to our chief compliance officer any financial interest or ownership interest or any other relationship that he or she (or a member of his or her immediate family) has with customers, vendors, or competitors of the Company or any of its subsidiaries or facilities. James Caponi is currently our Chief Compliance Officer.
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All employees, officers and directors of the Company and its subsidiaries are prohibited from entering into a related party transaction with the Company without the prior approval of Ms. Mia Meloni, our chief compliance officer.Chief Compliance Officer. Any request for the Company to enter into a transaction with an employee, officer or director or any of such persons’ immediate family members must first be presented to our chief compliance officerChief Compliance Officer for review, consideration and approval. In approving or rejecting the proposed agreement, our chief compliance officerChief Compliance Officer will consider the relevant facts and circumstances available and deemed relevant, including but not limited to, the risks, costs, and benefits to the Company, the terms of the transactions, the availability of other sources for comparable services or products, and, if applicable, the impact on director independence. Our chief compliance officerChief Compliance Officer shall only approve those agreements that, in light of known circumstances, are in or are not inconsistent with, the Company’s best interests, as determined in good faith by our chief compliance officer.Chief Compliance Officer.
Except as otherwise disclosed in this Proxy Statement, since the beginning of the Company’s last fiscal year, we have not been a party to, and we have no plans to be a party to, any transaction or series of similar transactions in which the amount involved exceeded or will exceed $120,000 and in which any employee, executive officer or director, holder of more than 5% of our voting securities, or any member of the immediate family of any of the foregoing, had or will have a direct or indirect material interest.
Please see “Corporate Governance—Director Independence” for additional information on the independence of our directors.
CORPORATE GOVERNANCE
Director Independence
Our Board of Directors has affirmatively determined that fivefour of its eightseven current members (John H. Herrell, Robert H. Hotz, Lawrence(Lawrence S. Gibbs, Eileen C. McDonnell, Maria R. Singer and Elliot J. Sussman, M.D.) are independent directors under the applicable rules and regulations of the SEC and the New York Stock Exchange listing standards.
In determining independence, the Board of Directors affirmatively determines each year whether directors have any material relationship with us. When assessing the materiality of a director’s relationship with us, the Board of Directors considers all relevant facts and circumstances, not merely from the director’s standpoint, but also from the standpoint of the persons or organizations with which the director has an affiliation. Material relationships can include commercial, banking, industrial, consulting, legal, accounting, charitable and familial relationships. The Board of Directors has concluded that no material relationship exists between us and any of our independent directors, other than each such person’s position as one of our directors.
We are eligible to be treated as a controlled company under New York Stock Exchange Rule 303A due to the fact that the family of Alan B. Miller holds more than 95% of the shares of Class A and Class C Common Stock, which is entitled to elect 80% of the entire Board of Directors and constitutes more than 50% of our aggregate voting power. New York Stock Exchange Rule 303A states that a controlled company need not have a majority of independent directors on its board or have nominating/corporate governance and compensation committees composed entirely of independent directors. We have elected to avail ourselves of a limited aspect of the Rule 303A exemption, determining that the Nominating & Governance Committee is not responsible for identifying and recommending qualified candidates for Board positions that, in accordance with our Restated Certificate of Incorporation, are to be elected by the holders of Class A and Class C Common Stock of the Company. We currently intend to have a majority of independent directors on our Board of Directors and all independent directors on our Audit Committee, Compensation Committee and Nominating & Governance Committee.
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Meetings of the Board of Directors
Regular meetings of the Board of Directors are generally held every other month, while special meetings are called when necessary. Before each Board of Directors or committee meeting, directors are furnished with an agenda and background materials relating to matters to be discussed. During 2017,2020, there were six regular meetings of the Board of Directors. All directors participated in each of the meetings of the Board of Directors and all or substantially all of meetings held by the respective committees on which they served, if applicable. Directors are expected to attend the Annual Meeting of Stockholders. All of our directors attended the 2017virtual 2020 Annual Meeting of Stockholders.
Our Corporate Governance Guidelines provide that the Board of Directors shall hold, in accordance with a schedule determined by the Nominating & Governance Committee of the Board of Directors, executive sessions where non-management directors (i.e., directors who are not our officers, but who do not otherwise have to qualify as “independent directors”) meet without management participation (except as otherwise specifically requested by the non-management directors). John H. Herrell presides over the executive sessions of the non-management directors. Interested parties may communicate directly and confidentially with the presiding director or with the non-management directors of the Board of Directors as a group by writing to that person or group at Universal Health Services, Inc., c/o Secretary, Universal Corporate Center, 367 South Gulph Road, P.O. Box 61558, King of Prussia, PA 19406.
Board Leadership Structure and Board of Directors
Mr. Alan B. Miller serves as both the Company’sExecutive Chairman of the Board and Chief Executive Officer. John H. Herrell has beenBoard. Eileen C. McDonnell serves as the Lead Independent Director whoand presides over the executive sessions of the non-management directors. The Company believes this structure allows all of the non-management directors to participate in the full range of the Board’s responsibilities with respect to its oversight of the Company’s management. The Board has determined that this leadership structure is appropriate given the size and complexity of the Company, the number of directors overseeing the Company and the Board’s oversight responsibilities.
The specific experience, qualifications, attributes or skills that led to the conclusion that each Director should serve as a Director of the Company, in light of the Company’s business and structure, are as follows:
Alan B. Miller has been a Director of the Company since 1978. Mr. Alan Miller has been the Company’s1978 and is currently Executive Chairman of the Board and Chief Executive OfficerBoard. Effective January 2021, Mr. Alan B. Miller stepped down as CEO, a position he has held since 1978, when he founded the Company. Prior thereto, he was President, Chairman of the Board and Chief Executive Officer of American Medicorp, Inc. Mr. Alan Miller currently serves as Chairman of the Board of Trustees, Chief Executive Officer and President of Universal Health Realty Income Trust. He was formerly a Director of Penn Mutual Life Insurance Company from 1994 until February 2013. Mr. Alan Miller oversees all of the Company’s businesses, its operations, development and overall strategy. As a result of his many years of service, Mr. Alan B. Miller provides expertise on the hospital management industry.
Marc D. Miller has been a Director of the Company since 2006 and was appointed CEO in January 2021. He continues to serve as President of the Company, ina position he has held since May 2009. Previously he has served in various management positions including: Senior Vice President and Co-Head of our Acute Care Division (2007-2009); and Vice President, Acute Care Division (2004-2007), and; Assistant Vice President and Group Director of the. Also served in various roles in our Acute Care Division Eastern Region (2003-2004). He has alsosince 2003 and served in other management positions at various acute care hospitals from 1999 to 2003. Additionally, Mr. Marc D. Miller serves as a member of the Board of Trustees of Universal Health Realty Income Trust and as a member of the Board of Directors of Premier, Inc. Mr. Marc D. Miller provides expertise on the hospital management industry.
Robert H. Hotz has been a Directoroversees all of the Company since 1991. He is Senior Managing Director, Global Co-Head of Corporate FinanceCompany’s businesses, its operations, development and Vice Chairman of Houlihan Lokey Howard & Zukin. He previously served as a member of the Board of Directors of Houlihan Lokey Howard & Zukin from 2002-2015. He has also been a member of the Operating Committee of Houlihan Lokey Howard & Zukin since June 2002. Mr. Hotz was formerly Senior Vice Chairman, Investment Banking for the Americas, of UBS LLC. Mr. Hotz provides expertise on financial and strategic advisory matters.overall strategy.
John H. Herrell has been a Director of the Company since 1993. He was the former Chief Administrative Officer of the Mayo Foundation from 1993 through 2002. Mr. Herrell was the Chief Financial Officer of the Mayo Foundation from 1984 until 1993 and held various other capacities since 1968. Mr. Herrell provides expertise on health care companies and financial matters. Mr. Herrell’s term expires at the 2018 Annual Meeting on May 16, 2018 and he has provided notice to us that he plans to retire from our Board of Directors at that time.
Lawrence S. Gibbs has been a Director of the Company since 2011. He is currently a PortfolioSince September 2019, he has served as Product Manager at Ramius, LLC since January, 2017 and from 2010 to 2014.AIG, artificial intelligence platform. Prior thereto, he wasserved as the Chief Investment
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Officer at Erdos Capital, Managing Partner at Cannonball Trading, LLC from 2014(2010 to 2017, a2017), Portfolio Manager, Chief Investment Office at JP Morgan Chase Bank NA (2006 to 2009) and Portfolio Manager at Millennium Partners, LLC from February 2009(2005 to March 2010 and a Portfolio Manager, Chief Investment Officer at JP Morgan Chase Bank N.A. from 2006 to 2009.2006). Mr. Gibbs provides expertise on corporate finance and investment matters.
Eileen C. McDonnell was appointedhas been a Director of the Company in Aprilsince 2013. Ms. McDonnell currently serves as Chairman and Chief Executive Officer of The Penn Mutual Life Insurance Company since her appointment in February 2011.Company. She joined Penn Mutual in 2008 and previously served as President of the company. Ms. McDonnell was also appointed to The Penn Mutual Board of Trustees in 2010. Before joining Penn Mutual, Ms. McDonnell founded ExecMPower, a strategic planning and executive coaching consultancy. Previously, she was president of New England Financial, a wholly owned subsidiary of MetLife, and senior vice president of the Guardian Life Insurance Company. Ms. McDonnell also serves on the Board of Managers of Janney Montgomery Scott LLC, a wholly owned subsidiary of Penn Mutual. In addition, Ms. McDonnell isalso serves as a memberDirector of the American Council of Life Insurers Political Action Committee and the Insurance Federation of Pennsylvania. ShePennsylvania, serves on the Corporate Council of Children’s Hospital of Philadelphia, and is also a national advisor to Vision 2020, an initiative of Drexel University College of Medicine Institute for Women’s Health and Leadership. Ms. McDonnell provides expertise on the insurance industry and financial matters.
Warren J. Nimetz was elected to the Board of Directorshas been a Director of the Company insince January 2018. Mr. Nimetz is currentlyHe has been a Partner at the law firm of Norton Rose Fulbright US LLP.LLP since 1987, and he is Administrative Partner of the New York office. Mr. Nimetz focuses his practice on general corporate and securities law, with special emphasis on mergers and acquisitions of public and private companies including tender offers, leveraged and other buyouts, private equity investments, joint ventures and related corporate governance issues. He also has substantial experience with all types of financing transactions, including public offerings, private placements and bank and other institutional lending and structured finance. Mr. Nimetz advises public and private companies’ boards of directors and their committees on all aspects of corporate governance and has special expertise in structuring and negotiating transactions involving the acquisition, financing and disposition of hospital and other health care and life science companies and properties. Mr. Nimetz provides expertise on legal matters.
Maria R. Singer was elected to our Board of Directors in March 2020. She is Chief Operating Officer, Corporate Finance at Houlihan Lokey. She previously served as Managing Director and COO of Blackstone Advisory Partners (2008 to 2015). She also served in various roles at Lehman Brothers, Inc. including Senior Vice President, Office of the Chairman and Senior Vice President, Debt Capital Markets (2002 to 2008). Ms. Singer provides expertise on financial and strategic advisory matters.
Elliot J. Sussman, M.D. was elected to the Board of Directorshas been a Director of the Company insince March 2018. He is Chairman of The Villages Health. He previously served as President and Chief Executive Officer of Lehigh Valley Hospital and Health Network from 1993 through 2010. He has been a member of the Board of Directors of iCAD, Inc.Yale New Haven Health System since 2002.2011. Dr. Sussman provides expertise on the management of hospitals and health systems.
The Board holds six regular meetings each year to consider and address matters involving the Company. The Board also may hold special meetings to address matters arising between regular meetings. These meetings may take place in person or by telephone. The independent directors also regularly meet in executive sessions outside the presence of management. The Board has access to legal counsel for consultation concerning any issues
that may occur during or between regularly scheduled Board meetings. As discussed below, the Board has established a Compensation Committee, an Audit Committee, a Nominating & Governance Committee, an Executive Committee and a Finance Committee to assist the Board in performing its oversight responsibilities.
The Nominating & Governance Committee annually oversees a self-evaluation of the current Board members and those committees as the Board shall specify from time to time and reports to the Board with respect to whether the Board and its committees are functioning effectively. The full Board discusses each evaluation
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report to determine what, if any, actions should be taken to improve the effectiveness of the Board or any committee thereof.
The Board’s Role in Risk Oversight
Consistent with its responsibility for oversight of the Company, the Board, among other things, oversees risk management of the Company’s business affairs directly and through the committee structure that it has established. The principal risks associated with the Company are risks related to concentration of the locations of our facilities, dependence on payments from the government and other third party payors, the inability to collect payments from patients,impact of the Coronavirus pandemic on our facilities and the markets in which they operate, cyber security, a worsening of the economic and employment conditions in the United States, uncertainties regarding health care reform, the inability to collect payments from patients, competition for patients from other hospitals and health care providers, our ability to recruit and retain quality physicians, our ability to attract and retain qualified nurses and medical support staff, compliance with extensive laws and government regulations, liabilities from claims brought against our facilities, governmental investigations, regulatory actions, whistleblower lawsuits and purported shareholderstockholder class action lawsuits, accreditation of our facilities, acquisition and integration of hospitals, state efforts to regulate the construction or expansion of health care facilities, fluctuations in our operating results, quarter to quarter earnings and other factors, significant corporate regulation as a public company, and dependence on key management personnel.
The Board’s role in the Company’s risk oversight process includes regular reports from senior management on areas of material risk to the Company, including operational, financial, legal and regulatory, and strategic and reputational risks. The full Board (or the appropriate committee) receives these reports from management to identify and discuss such risks.
The Board periodically reviews with management its strategies, techniques, policies and procedures designed to manage these risks. Under the overall supervision of the Board, management has implemented a variety of processes, procedures and controls to address these risks.
The Board requires management to report to the full Board on a variety of matters at regular meetings of the Board and on an as-needed basis, including the performance and operations of the Company and other matters relating to risk management. The Audit Committee also receives regular reports from the Company’s independent registered public accounting firm on internal control and financial reporting matters. These reviews are conducted in conjunction with the Board’s risk oversight function and enable the Board to review and assess any material risks facing the Company. John H. Herrell.,Eileen C. McDonnell, the Lead Independent Director, periodically meets with management and the Company’s independent registered public accounting firm to review and discuss the activities of the Company and to provide direction with respect thereto.
Policy on Hedging Transactions
The Company has a policy that prohibits employees and directors from engaging in any hedging transaction that would result in lack of exposure to the full risks of stock ownership. Prohibited hedging transactions include, but are not limited to, collars, forward sale contracts, trading in publicly-traded options, puts, calls or other derivative instruments related to our common stock or debt.
Stockholder Communications
Stockholders who wish to send communications to the Board of Directors or an individual director should address such communications to Universal Health Services, Inc., c/o Secretary, Universal Corporate Center, 367
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South Gulph Road, P.O. Box 61558, King of Prussia, PA 19406. The Secretary will forward such communications
to the Board of Directors or the specified individual director to whom the communication is directed unless such communication is unduly hostile, threatening, illegal or similarly inappropriate, in which case the Secretary has the authority to discard the communication or take appropriate legal action regarding such communication.
Committees of the Board of Directors
The Compensation Committee, the Audit Committee, the Nominating & Governance Committee, the Executive Committee and the Finance Committee are the standing committees of the Board of Directors. A current copy of our Corporate Governance Guidelines, Code of Business Conduct and Corporate Standards, Code of Ethics for Senior Financial Officers, Compensation Committee Charter, Nominating & Governance Committee Charter and Audit Committee Charter are available free of charge on our website at www.uhsinc.com. Copies of these documents also are available in print free of charge to any stockholder who requests them. We intend to satisfy the disclosure requirements under Item 5.05 of Form 8-K relating to amendments to or waivers of any provision of our Code of Ethics for Senior Financial Officers by promptly posting the information on our website.
Compensation Committee. The current members of the Compensation Committee are Robert H. Hotz,Eileen C. McDonnell (Chairperson), Lawrence S. Gibbs John H. Herrell and Elliot J. Sussman, M.D., The Compensation Committee met oncethree times during 2017.2020. The Board of Directors has determined, in its business judgment, that each member of the Compensation Committee qualifies as an “independent” director under the regulations adopted by the SEC and the New York Stock Exchange.
The Compensation Committee reviews and approves our goals and objectives relevant to the compensation of our Chief Executive Officer and other executive officers, evaluates their performance, determines and approves their compensation level, reviews and determines the form and amount of compensation of the non-management members of the Board of Directors, administers incentive-compensation plans and equity-based plans and approves compensation awards, among other duties and responsibilities.
The amount and mix of the compensation paid to our named executive officers and directors are evaluated on an annual basis. See the section titled “Compensation Setting Process,” in the Compensation Discussion & Analysis for an additional discussion.
The Compensation Committee has the authority to establish one or more subcommittees that shall have the responsibilities and consist of those members of the Compensation Committee as the Compensation Committee may determine from time to time. The Compensation Committee also has the sole authority to retain and terminate compensation consultants to assist it in evaluating our compensation plans, particularly those pertaining to our directors, our Executive Chairman, Chief Executive Officer and our other executive officers, and to approve the fees and other terms relating to the provision of those services. As discussed in the Compensation Discussion and Analysis, unlike our other named executive officers, Mr.certain elements of Messrs. Alan Miller’s and Marc. Miller’s compensation is determined in large part by the terms of histheir employment agreement.agreements.
Audit Committee. Current members of the Audit Committee are John H. Herrell, Robert H. Hotz,Eileen C. McDonnell (Chairperson), Lawrence S. Gibbs, Eileen C. McDonnellMaria R. Singer and Elliot J. Sussman, M.D. (appointed in March, 2018). No member serves on the audit committee of more than three public companies. The Audit Committee met nineteenthirteen times during 2017.2020.
The Board of Directors has determined, in its business judgment, that each member of the Audit Committee qualifies as an “independent” director under the regulations adopted by the SEC and the New York Stock Exchange and is financially literate and that John H. Herrell and Eileen C. McDonnell qualifyqualifies as an “audit committee financial experts”expert” under SEC regulations and has accounting or related financial management expertise.
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The Audit Committee provides assistance to the Board of Directors in fulfilling its financial, compliance and quality oversight responsibility to the stockholders, potential stockholders, the investment community and others relating to: the integrity of our financial statements, the financial reporting process, the systems of internal accounting and financial controls, the performance of our internal audit function and independent auditors, the independent auditors’ qualifications and independence and our compliance with legal and regulatory requirements.requirements and quality of care standards. This Committee has the authority, duties and responsibilities set forth in its Audit Committee Charter, as amended. The Audit Committee’s oversight includes review and oversight of the Company’s health care compliance program. The Audit Committee periodically reviews our data security programs, including cyber security and procedures regarding disaster recovery and critical business continuity, and reviews our programs and plans that management has established with data security compliance programs and test preparedness.
Nominating & Governance Committee. The current members of the Nominating & Governance Committee are Robert H. Hotz,Elliot J. Sussman, M.D., (Chairman), Lawrence S. Gibbs John H. Herrell, and Elliot J. Sussman, M.D.Maria R. Singer. This Committee met once during 2017.2020. The Board of Directors has determined, in its business judgment, that each member of the Nominating & Governance Committee qualifies as an “independent” director under the regulations adopted by the SEC and the New York Stock Exchange.
The Nominating & Governance Committee was established, with respect to those directors who are to be elected by the holders of Class B and Class D Common Stock of the Company in accordance with the our Restated Certificate of Incorporation, for the purpose of: (i) assisting the Board of Directors by identifying individuals who are qualified to become directors, consistent with the criteria approved by the Board of Directors; (ii) recommending to the Board of Directors Class B and D director nominees for the next annual meeting of stockholders at which a Class B and D director is to be elected; (iii) developing and recommending to the Board of Directors a set of corporate governance principals in the form of our corporate governance guidelines; (iv) leading and overseeing the Board of Directors in its annual review of the performance of the Board of Directors and our management, and; (v) recommending to the Board of Directors director nominees for each committee of the Board of Directors. The Nominating & Governance Committee provides such assistance in identifying and recommending Class A and Class C Common Stock director nominees as may be requested by the entire Board of Directors. The Nominating & Governance Committee adopted our Corporate Governance Guidelines.
In light of the concentration of over 95% of the voting power of our Class A and Class C Common Stock in a single individual and related entities, and in accordance with the “Controlled Companies” exemption set forth in Section 303A of the New York Stock Exchange Listed Company Manual, the Nominating & Governance Committee is not responsible for identifying and recommending qualified candidates for directors that, in accordance with our Restated Certificate of Incorporation, are to be elected by the holders of Class A and Class C Common Stock. The Nominating & Governance Committee shall, however, provide such assistance in identifying and recommending Class A and C Director nominees as may be requested by the entire Board of Directors.
The Nominating & Governance Committee will consider Class B and D director nominees recommended by stockholders. Under our Restated Certificate of Incorporation, the number of directors to be elected by the Class B and D Common stockholders is limited to 20% of the entire Board of Directors, or a maximum of two directors. Stockholders who wish to recommend a nominee for the Nominating & Governance Committee’s consideration may do so by submitting the individual’s name and qualifications to the Nominating & Governance Committee c/o Secretary, Universal Corporate Center, 367 South Gulph Road, P.O. Box 61558, King of Prussia, PA 19406. Recommendations must be received by the Nominating & Governance Committee no later than the date by which stockholder proposals for presentation at the next Annual Meeting must be received. Recommended nominees will only be considered if there is a vacancy or if the Board of Directors decides to increase the number of directors.
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The Nominating & Governance Committee identifies and evaluates committee-recommended Class B and D director nominees considering, among other factors, the following minimum qualifications: the individual’s integrity, experience, education, expertise, independence and any other factors that the Board of Directors and the Nominating & Governance Committee deem would enhance the effectiveness of the Board of Directors and our governance. The Nominating & Governance Committee seeks persons who have achieved prominence in their
fields and who possess significant experience in areas of importance to the Company. Additionally, strong analytical skills, independence, energy, forthrightness and integrity are desired characteristics that the Nominating & Governance Committee seeks in potential candidates. We do not have a formal policy with regard to the consideration of diversity in identifying director nominees. However, the Board of Directors believes that it is essential that its members represent diverse viewpoints, with a broad array of experiences, professions, skills, geographic representation and backgrounds, including diversity of gender and race that, when considered as a group, provide a sufficient mix of perspectives to allow the Board of Directors to best fulfill its responsibilities to the long-term interests of our stockholders. The Nominating & Governance Committee will evaluate a nominee on the same basis if the individual is recommended by a stockholder. The Nominating & Governance Committee does not currently pay a fee to a third party to identify or evaluate nominees but may consider from time to time engaging a search firm to identify Class B and D director candidates.
Executive Committee. The Executive Committee has the responsibility, between meetings of the Board of Directors, to advise and aid our officers in all matters concerning the management of the business and, while the Board of Directors is not in session, has the power and authority of the Board of Directors to the fullest extent permitted under law. The Executive Committee did not meet in 2017. Members2020. Current members of the Executive Committee are Alan B. Miller Robert H. Hotz,(Chairman), Eileen C. McDonnell, Marc D. Miller and Warren J. Nimetz.
Finance Committee. The Finance Committee is responsible for reviewing our overall long-term financial planning. The Finance Committee did not meet during 2017.2020. Members of this Committee are Alan B. Miller Robert H. Hotz,(Chairman), Marc D. Miller, and Warren J. Nimetz.Nimetz and Maria R. Singer.
Corporate Social Responsibility and Sustainability
The Board of Directors and its committees oversee the environmental, social and governance (“ESG”) initiatives across our business and facilities.
We recognize the need to protect the natural environment as well as serve patients and the communities in which we operate. Keeping our surroundings clean and minimizing pollution is of benefit to all. We are committed to following best practices when managing our energy usage and consumption, and disposing of waste. Stewardship continues to play an important role in our commitment to a clean environment and strong communities.
Energy Star Certification
We continued work on the UHS Corporate Energy Efficiency Initiative, which was launched in 2017. We invested $6.49 million toward LED lighting upgrades and optimization of our large heating, ventilation and air conditioning (HVAC) systems during the year. The projects implemented during 2020 are projected to save 12.36 million kWh of electricity and 171,862 therms of natural gas annually, resulting in 9,648 metric tons of CO2 emission reduction.
This equates to:
• 2,084 passenger vehicles removed from the road, or 23.94 million fewer miles driven by an average passenger vehicle, or
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• 10.6 million pounds of less coal burned, or
• 1,633 homes’ electricity use for one year.
We continued installing and successfully implementing smart analytics faults detection and diagnostics systems in large HVAC systems. This technology will help us to proactively identify, prioritize and address critical HVAC system components’ failure and faults, per their energy savings potential.
LEED/Green Globes Certification
Originally, we obtained verification for Leadership in Energy and Environmental Design (LEED) in five of our six Las Vegas area hospitals inclusive of subsequent expansions where applicable. Subsequently, we have applied for certification under the science-based Green Globes rating system, which traces its origins to the European green building standard, Building Research Establishment Environmental Assessment Methodology (BREEAM). This action supports our focus on systematic annual increases in overall energy efficiency while improving our activities in the operation and maintenance of our facilities. Such higher efficiencies have proven particularly welcome during the COVID-19 pandemic, due to the need for additional powered equipment to implement specific safety protocols. In the end, we registered slightly increased usage compared to the previous year.
Furthermore, the Green Globes system includes wellness elements, which demonstrate our commitment to not only operate sustainable buildings but also provide enhanced environments for our patients and their families, physicians and employees. At the end of 2020, five Green Globes certifications were earned and a sixth for a newly constructed tower is in progress.
Uncompromised Culinary and Nutrition Standards
The Culinary and Nutrition Department is part of our Corporate Supply Chain structure and is comprised of Licensed Registered Dietitians and Accredited Chefs. In 2020, we continued our Food as Healing Fuel integrated approach. Even during the disruptions and initial uncertainty of the pandemic, we retained that focus.
Our team maintained a strong throughput of products during the three pandemic waves, for the sake of our patients’ well-being and satisfaction. This became increasingly challenging as manufacturers temporarily shut down, reduced production, and even went out of business. Compounding this were the difficulties our distributors had in securing product, let alone getting our diminished allocations delivered to our facilities.
Food deliveries fell to 78% of order volume during April of 2020. To compensate, we utilized our Managed Order Guides to fill in any available products that met our nutritional and price point goals. We sought out alternative vendors and sources. Keeping the flow of food and disposables stable required daily conversations, negotiations, contractual re-evaluation and collaboration. By August of 2020, despite the peak of the second wave, appropriate product fill rates climbed to 88%; and returned to the normal 98% by October.
During the various stages of the pandemic, we also experienced unusual price escalation when supplies were limited. Despite this, we were able to keep our food costs for our behavioral health division relatively unchanged after adjusting for inflation. In the acute care division, we focused on patient menus and meals for our dedicated staff. Because of the decrease in typical customer retail traffic, their hospital cafeterias, catering and food expenses were abnormally lower for 2020. Across both of our divisions, keeping the focus on Contract Compliance and Purchasing Program Maximizations helped significantly stabilize expenses.
The pandemic did not prevent Culinary and Nutrition from meeting other commitments. They were able to assist UHS Supply Chain as a whole to source non-traditional products. They also fulfilled digital software implementations and worked with the UHS Design & Construction team on eight new or rejuvenated partnerships.
64
Improved Environmental Services
Our Environmental Services (EVS) was more critical and visible due to COVID-19. Our dedicated teams continued to improve and innovate the manner in which we clean and provide safe environments for our patients, staff and visitors. During the year, we expanded the use of Adenosine Triphosphate (ATP) testing in patient and sterile areas to improve the depth of inspections beyond visual as well as increased treatments in UV cleaning.
Our teams across our facilities moved to digital/cloud-based inspection tools, significantly reducing and in many cases eliminating the need for paper-based inspections. Significant reduction of paper usage has occurred in changing these processes while improving our ability to collect data and document results faster.
Our facilities have significantly reduced the use of floor waxes and are instead applying environmentally safer floor finishes, eliminating the need for caustic floor stripping products while expanding use of safer floor care products within our facilities
Responsible Pharmaceutical Waste Management
Proper disposal of pharmaceutical waste, controlled substance waste, and ensuring regulatory compliance continue to be the foundational components of the UHS Pharmaceutical Waste Management Program.
The use of Drug Enforcement Agency (DEA) and Environmental Protection Agency (EPA) compliant disposal containers prevent diversion of controlled substances and prevent pharmaceutical waste from entering our environment.
In 2020, we closely monitored COVID-19 vaccine development and state-specific distribution plans in order to manage the influx of sharps and waste from vaccinations. Preparation and planning efforts focused on adequate inventory levels of reusable sharps containers and frequency of pickups by our pharmaceutical waste vendor in order to accommodate the additional waste generated at our facilities.
Proper disposal of pharmaceutical and controlled substance waste generated at our hospitals supports the safety of our patients and employees while protecting the environment in the communities we serve.
Reprocessing and Waste Diversion
Through reprocessing and remanufacturing efforts with our business partners, we are able to minimize our environmental impact utilizing key sustainability programs. Our acute care facilities worked with vendors to collect identified products, and participate in sustainable and environmentally friendly practices resulting in waste diversion. These vendors break down collected products into recyclable components keeping them out of the waste stream.
In 2020, our acute care division was able to divert 116,940 pounds of waste through collection of 429,862 individual items. Through participation in one vendor’s recycling program, 274 trees were planted on behalf of UHS through the National Forest Foundation. We have been participating in reprocessing and remanufacturing programs for over 18 years.
Uncompensated Care (Charity Care and Uninsured Discounts)
Our commitment to corporate social responsibility is evident across the company in a number of ways, including the care that we provide to patients and their families, regardless of their ability to pay.
Generally, patients treated at our hospitals for non-elective services, who have gross income less than 200% to 400% of the federal poverty guidelines, are deemed eligible for charity care. The federal poverty guidelines are established by the federal government and are based on income and family size.
65
The following table shows the amounts recorded at our acute care hospitals for charity care and uninsured discounts, based on charges at established rates, for the years ended December 31, 2020, 2019 and 2018:
|
| (dollar amounts in thousands) |
| |||||||||||||||||||||
|
| 2020 |
|
| 2019 |
|
| 2018 |
| |||||||||||||||
|
| Amount |
|
| % |
|
| Amount |
|
| % |
|
| Amount |
|
| % |
| ||||||
Charity care |
| $ | 622,668 |
|
|
| 28 | % |
| $ | 672,326 |
|
|
| 31 | % |
| $ | 761,783 |
|
|
| 40 | % |
Uninsured discounts |
|
| 1,578,470 |
|
|
| 72 | % |
|
| 1,511,738 |
|
|
| 69 | % |
|
| 1,132,811 |
|
|
| 60 | % |
Total uncompensated care |
| $ | 2,201,138 |
|
|
| 100 | % |
| $ | 2,184,064 |
|
|
| 100 | % |
| $ | 1,894,594 |
|
|
| 100 | % |
66
AUDIT COMMITTEE REPORT
The Board of Directors is committed to the accuracy and integrity of the Company’s financial reporting. The Audit Committee takes an involved and active role in delivering on this commitment.
The Audit Committee provides independent, objective oversight of our accounting functions and internal controls.
The Audit Committee reviews and evaluates, and discusses and consults with our management, internal audit personnel and the independent auditors about the following:
the plan for, and the independent auditors’ report on, each audit of the Company’s consolidated financial statements and internal controls;
changes in our accounting practices, principles, controls or methodologies, or in the Company’s financial statements;
significant developments in accounting rules;
the adequacy of our internal accounting controls, and accounting, financial and auditing personnel; and
the establishment and maintenance of a work environment that promotes ethical behavior.
The Audit Committee acts under a written charter that was originally adopted by the Board of Directors in 2004 and is reviewed and approved on an annual basis. The Audit Committee reviews, acts on and reports to the Board of Directors with respect to various auditing, accounting, financial reporting, internal control and regulatory compliance matters. In discharging its oversight role, the Audit Committee may engage independent counsel and other advisers as it determines necessary. In accordance with the Sarbanes-Oxley Act of 2002, the Audit Committee also has the direct responsibility to select, evaluate, determine the compensation of, oversee, and where appropriate, replace our independent auditors, and has the authority to resolve disagreements between management and our auditors. The Audit Committee may establish procedures for the receipt, retention and treatment of complaints received by us regarding accounting and auditing matters, as well as confidential, anonymous submission by employees. The Board of Directors has determined that each of the members of the audit committee is “independent” within the meaning of the rules of the New York Stock Exchange and the Securities Exchange Act of 1934, as amended by the Sarbanes-Oxley Act of 2002.
The Audit Committee recommended to the Board of Directors that the consolidated financial statements be included in the Annual Report on Form 10-K. The Audit Committee took a number of steps in making this recommendation for 2017:2020:
First, the Audit Committee discussed with our independent auditors the overall scope and plans for their audits.
Second, the Audit Committee met with the independent auditors, to discuss the results of their audits, their evaluations of our internal controls and the overall quality of our financial reporting.
Third, the Audit Committee reviewed and discussed the audited consolidated financial statements in the Annual Report on Form 10-K with management, including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the consolidated financial statements.
67
Fourth, the Audit Committee reviewed with the independent auditors their judgments as to the quality, not just the acceptability, of our accounting principles and such other matters as are required to be discussed with the Audit Committee under the standards of the Public Company Accounting Oversight Board (United States).
|
Fifth, the Audit Committee discussed with the independent auditors the auditors’ independence from management and the Company, including the matters in the written disclosures required by the Independence Standards Board, and considered the compatibility of non-audit services with the auditors’ independence.
Finally, the Audit Committee obtained and reviewed a report from the independent auditor describing: (i) the independent auditor’s internal quality-control procedures; (ii) any material issues raised by the most recent internal quality-control review, or peer review, of the independent auditor, or by any inquiry or investigation by governmental or professional authorities within the preceding five years inspecting one or more independent audits carried out by the independent auditor, and any steps taken to deal with any such issues; and (iii) all relationships between the independent auditor and the Company.
The Audit Committee reviewed and discussed our consolidated financial statements with the Board of Directors and discussed them with PricewaterhouseCoopers LLP during the 20172020 fiscal year, along with the matters required to be discussed by Statement on Auditing Standards No. 61, as amended (AICPA Professional Standards, Vol. 1 AU Section 380) as adopted by the Public Company Accounting Oversight Board in Rule 3200T. The Audit Committee received from PricewaterhouseCoopers LLP the written disclosures, including the letter, required by PCAOB 3524 and 3526 and discussed with PricewaterhouseCoopers LLP its independence. The Audit Committee discussed with the independent accountants matters required to be discussed by Statement of Auditing Standard No. 16, Communications with Audit Committees, as amended, and as adopted by the Public Company Accounting Oversight Board. The Audit Committee received from PricewaterhouseCoopers LLP the written disclosures, including the letter, required by PCAOB 3524 and 3526 and discussed with PricewaterhouseCoopers LLP its independence.
Based on the discussions with PricewaterhouseCoopers LLP and management, the consolidated financial statement review, and such other matters deemed relevant and appropriate by the Audit Committee, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in our 20172020 Annual Report on Form 10-K, as filed on February 28, 2018.25, 2021.
Audit Committee
John H. HerrellAUDIT COMMITTEE
Robert H. HotzEileen C. McDonnell (Chairperson)
Lawrence S. Gibbs
Eileen C. McDonnellMaria R. Singer
Elliot J. Sussman, M.D.
68
RELATIONSHIP WITH INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP (“PwC”) served as our independent auditors during 20172020 and 2016.2019. Representatives from PwC will be presentin attendance at the Annual Meeting and will have an opportunity to make a statement, if they desire to do so, and to respond to any appropriate inquiries of the stockholders or their representatives.
PwC’s audit report on our consolidated financial statements as of and for the years ended December 31, 20172020 and 20162019 did not contain an adverse opinion or a disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles.
Set forth below are the fees paid or accrued for the services of PwC during 20172020 and 2016:2019:
|
| 2017 |
|
| 2016 |
| ||
Audit fees |
| $ | 3,018,000 |
|
| $ | 3,263,500 |
|
Audit-related fees |
|
| — |
|
|
| — |
|
Tax fees |
|
| 72,894 |
|
|
| 60,130 |
|
All other fees |
|
| 559,384 |
|
|
| 465,719 |
|
Total |
| $ | 3,650,278 |
|
| $ | 3,789,349 |
|
Audit fees consisted of professional services rendered to us or certain of our subsidiaries. Such audit services include audits of financial statements, audit of our annual management assessment of the effectiveness of internal control over financial reporting in 20172020 and 20162019 (as required by Section 404 of the Sarbanes-Oxley Act of 2002), reviews of our quarterly financial statements and audit services provided in connection with regulatory filings, acquisitions, bond issuances and other matters. Audit fees in 2016 also included fees related to a bond offering.
|
| 2020 |
|
| 2019 |
| ||
Audit fees |
| $ | 3,904,000 |
|
| $ | 3,725,500 |
|
Audit-related fees |
|
| 12,400 |
|
|
| 12,400 |
|
Tax fees |
|
| 104,809 |
|
|
| 257,715 |
|
All other fees |
|
| 250,000 |
|
|
| 260,000 |
|
Total |
| $ | 4,271,209 |
|
| $ | 4,255,615 |
|
Fees for tax services in 20172020 and 20162019 consisted primarily of consultation on various tax matters related to us and our subsidiaries, including when applicable, preparation of federal and state income tax returns for certain of our subsidiaries.
The other fees to PwC during each of 2020 and 2019 consist of:
2017: (i) consulting services related to U.K. acquisitions ($459,784); (ii)of consulting services related to an enhanced reimbursement project ($45,000), and; (iii) Independent Review Organization services ($54,600).
2016: (i) consulting services related to an acquisition in the U.K. ($337,784); (ii) information technology consulting services ($74,690), and; (iii) Independent Review Organization services ($53,245).project.
The Audit Committee has considered and determined that the provision of non-audit services by our principal auditor is compatible with maintaining auditor independence.
All audit and permissible non-audit services provided to us by the independent auditors are pre-approved by the Audit Committee, which considers whether the proposed services would impair the independence of the independent auditors. The Chairperson of the Audit Committee may pre-approve audit and permissible non-audit services during the time between Audit Committee meetings if the fees for the proposed services are less than $25,000.
Annex A
Schedule of Non-GAAP Supplemental Information
For the Years Ended December 31, 2020 and 2019
(in thousands, except per share amounts, unaudited)
| Year ended |
|
| Year ended |
| ||||||||||
| December 31, 2020 |
|
| December 31, 2019 |
| ||||||||||
|
|
|
|
| Per |
|
|
|
|
|
| Per |
| ||
| Amount |
|
| Diluted Share |
|
| Amount |
|
| Diluted Share |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to UHS | $ | 943,953 |
|
| $ | 10.99 |
|
| $ | 814,854 |
|
| $ | 9.13 |
|
Plus/minus after-tax adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized loss on marketable securities held for sale |
| 3,313 |
|
|
| 0.04 |
|
|
| - |
|
|
| - |
|
Increase in Department of Justice Reserve and related income taxes |
| - |
|
|
| - |
|
|
| 14,583 |
|
|
| 0.16 |
|
Impact of ASU 2016-09 |
| 7,443 |
|
|
| 0.09 |
|
|
| (12,200 | ) |
|
| (0.14 | ) |
Provision for asset impairment, after-tax |
| - |
|
|
| - |
|
|
| 74,583 |
|
|
| 0.84 |
|
Subtotal adjustments |
| 10,756 |
|
|
| 0.13 |
|
|
| 76,966 |
|
|
| 0.86 |
|
Adjusted net income attributable to UHS | $ | 954,709 |
|
| $ | 11.12 |
|
| $ | 891,820 |
|
| $ | 9.99 |
|
70
YOU ARE URGED TO VOTE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE OR VOTE YOUR PROXY BY TELEPHONE OR INTERNET AT YOUR EARLIEST CONVENIENCE, WHETHER OR NOT YOU CURRENTLY PLAN TO ATTEND THE ANNUAL MEETING IN PERSON.ONLINE.
BY ORDER OF THE BOARD OF DIRECTORS
STEVE G. FILTON, Secretary
King of Prussia, Pennsylvania
April 5, 20188, 2021
PROXY CLASS A COMMON STOCK CLASS C COMMON STOCK
UNIVERSAL HEALTH SERVICES, INC. This Proxy Solicited By The Board Of DirectorsDirectors For The Annual Meeting Of Stockholders To Be Held On May 16, 201820, 2020 Alan B. Miller and Steve Filton and each of them, as the true and lawful attorneys, agents and proxies of the undersigned, with full power of substitution, are hereby authorized to represent and to vote, as designated below, all shares of Class A Common Stock and Class C Common Stock of Universal Health Services, Inc. (the “Company”) held of record by the undersigned on March 20, 201824, 2020 at the Annual Meeting of Stockholders to be held at 10:00 a.m. on Wednesday, May 16, 201820, 2020, virtually via live audio webcast available at the offices of the Company, Universal Corporate Center, 367 South Gulph Road, King of Prussia, Pennsylvaniawww.meetingcenter.io/266493346, and at any adjournment thereof. To participate at the Annual Meeting online, please visit www.meetingcenter.io/266493346 and use the password: UHS2020. Any and all proxies heretofore given are hereby revoked. Important Notice Regarding Availability of Proxy Materials for the Stockholder Meeting to be held on Wednesday, May 20, 2020. The Proxy Statement and Annual Report to Stockholders are available at www.edocumentview.com/uhs THIS PROXY IS CONTINUED ON THE REVERSE SIDE. PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY
71
PROXY CLASS A COMMON STOCK CLASS C COMMON STOCK UNIVERSAL HEALTH SERVICES, INC. This Proxy Solicited By The Board Of Directors For The Annual Meeting Of Stockholders To Be Held On May 19, 2021 Alan B. Miller and Steve Filton and each of them, as the true and lawful attorneys, agents and proxies of the undersigned, with full power of substitution, are hereby authorized to represent and to vote, as designated below, all shares of Class A Common Stock and Class C Common Stock of Universal Health Services, Inc. (the “Company”) held of record by the undersigned on March 25, 2021 at the Annual Meeting of Stockholders to be held at 10:00 a.m. on Wednesday, May 19, 2021, virtually via live audio webcast available at www.meetingcenter.io/ 296174706, and at any adjournment thereof. To participate at the Annual Meeting online, please visit www.meetingcenter.io/296174706 and use the password: UHS2021. Any and all proxies heretofore given are hereby revoked. Important Notice Regarding Availability of Proxy Materials for the Stockholder Meeting to be held on Wednesday, May 16, 2018.19, 2021. The Proxy Statement and Annual Report to Stockholders are available at www.edocumentview.com/uhs THIS PROXY IS CONTINUED ON THE REVERSE SIDE. PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY
ACCOUNT NUMBER 
PLEASE MARK YOUR CHOICE LIKE THIS IN BLUE OR BLACK INK ‘ ACCOUNT NUMBER CLASS A COMMON CLASS C COMMON The Board of Directors recommends a vote FOR Proposalsthe nominees listed in Proposal 1 and 2, and AGAINSTFOR Proposal 3:2. 1. The Election of Elliot J. Sussman, M.DM.D. ‘ For ‘ Withhold Authority The Election of Marc. D. Miller ‘ For ‘ Withhold Authority The Election of Eileen C. McDonnell ‘ For ‘ Withhold Authority 2. To ratify the selection of PricewaterhouseCoopers LLP, as the company’s independent registered public accounting firm for the fiscal year ending December 31, 2018. ‘ For ‘ Against ‘ Abstain 3. Stockholder proposal regarding proxy access if properly presented at the meeting.2021. ‘ For ‘ Against ‘ Abstain Discretionary authority is hereby granted with respect to such other matters as may properly come before the meeting. DATED: SIGNATURE: SIGNATURE: IMPORTANT: Please sign exactly as name appears at the left. Each joint owner shall sign. Executors, administrators, trustees, etc. should give full title. The above-signed acknowledges receipt of the Notice of Annual Meeting of Stockholders. WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DESIGNATED. IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED FOR THE ELECTION OF ELLIOT J. SUSSMAN, M.D., MARC D. MILLER, AND EILEEN C. MCDONNELL AS DIRECTORS AND FOR THE RATIFICATION OF THE SELECTION OF PRICEWATERHOUSECOOPERS LLP, AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2018, AND AGAINST THE STOCKHOLDER PROPOSAL REGARDING PROXY ACCESS IF PROPERLY PRESENTED AT THE MEETING.2021.
UNIVERSAL HEALTH SERVICES, INC. Electronic Voting Instructions Available 24 hours a day, 7 days a week! Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy. VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. Proxies submitted by the Internet or telephone must be received by 11:59 p.m., Eastern Time, on May 15, 2018. Vote by Internet • Go to www.envisionreports.com/UHS • Or scan the QR code with your smartphone • Follow the steps outlined on the secure websiteUniversal Health Services, Inc. Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. VoteYour vote matters – here’s how to vote! You may vote online or by telephone •phone instead of mailing this card. Online Go to www.envisionreports.com/UHS or scan the QR code — login details are located in the shaded bar below. Phone Call toll free 1-800-652-VOTE (8683) within the USA, US territories &and Canada on a touch tone telephoneSave paper, time and money! Sign up for electronic delivery at www.envisionreports.com/UHS Annual Meeting Proxy Card • Follow the instructions provided by the recorded message q IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION,VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q• + ProposalsProposal — The Board of Directors recommends a vote FOR Proposal 1 and AGAINST Proposal 2. A For Against Abstain 1.2. Proposal to ratify the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2018. 2. Stockholder Proposal regarding proxy access if properly presented at the meeting.2021. Discretionary authority is hereby granted with respect to such other matters as may properly come before the meeting. For Against Abstain WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DESIGNATED. IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED FOR PROPOSAL 1, AND AGAINST STOCKHOLDER PROPOSAL 2. Non-Voting Items Change of Address — Please print your new address below. Comments — Please print your comments below. Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below Meeting Attendance Mark the box to the right if you plan to attend the Annual Meeting.B Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. 1UPX + 03EXBE
The 2021 Annual Meeting of Stockholders of Universal Health Services, Inc. Stockholders Wednesday,will be held on May 16, 201819, 2021, at 10:00 a.m. Universal Corporate Center 367 South Gulph Road KingEDT virtually via live webcast at www.meetingcenter.io/296174706 To access the virtual meeting, you will need the 15-digit control number that is printed in the shaded bar located on the reverse side of Prussia, PAthis form. The password for the meeting is UHS2021. Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be held on Wednesday, May 16, 2018:19, 2021: The Proxy Statement and Annual Report to Stockholders are available at http://www.envisionreports.com/UHS qSmall steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.envisionreports.com/UHS • IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION,VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q• Proxy — UNIVERSAL HEALTH SERVICES, INC. + UNIVERSAL HEALTH SERVICES, INC. This Proxy Solicited By The Board Of Directors For The Annual Meeting Of Stockholders To Be Held On May 16, 201819, 2021 Alan B. Miller and Steve Filton and each of them, as the true and lawful attorneys, agents and proxies of the undersigned, with full power of substitution, are hereby authorized to represent and to vote, as designated below, all shares of Class B Common Stock and Class D Common Stock of Universal Health Services, Inc. held of record by the undersigned on March 20, 201825, 2021 at the Annual Meeting of Stockholders to be held at 10:00 a.m. on Wednesday, May 16, 2018,19, 2021, virtually via live audio webcast available at the offices of the Company, Universal Corporate Center, 367 South Gulph Road, King of Prussia, Pennsylvaniawww.meetingcenter.io/296174706, and at any adjournment thereof. Please call 1-800-814-5819 to obtain directions to the Annual Meeting to vote in person. Any and all proxies heretofore given are hereby revoked. WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DESIGNATED. IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED FOR PROPOSAL 2. THIS PROXY IS CONTINUED ON THE REVERSE SIDE. PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY. Non-Voting Items C Change of Address — Please print new address below. Comments — Please print your comments below. Meeting Attendance Mark box to the right if you plan to attend the Annual Meeting. +
