UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): November 17, 2005
HealthSouth Corporation
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(Exact Name of Registrant as Specified in its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
1-10315 63-0860407
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(Commission File Number) (IRS Employer Identification No.)
One HealthSouth Parkway, Birmingham, Alabama 35243
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(Address of Principal Executive Offices, Including Zip Code)
(205) 967-7116
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(Registrant's Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01. Entry into a Material Definitive Agreement.
Key Executive Incentive Program
On November 17, 2005, the Special Committee of the Board of Directors
of HealthSouth Corporation (the "Company") approved, upon the recommendation of
the Compensation Committee of the Board and the Chief Executive Officer (who is
not a participant), the HealthSouth Corporation Key Executive Incentive Program
(the "Program"). The Program is a supplement to the Company's overall
compensation program for executives and is intended to incentivize key senior
executives with equity awards that vest and cash bonuses that are payable, in
each case through January 2009.
Eight executive officers (each a "Participant" and, collectively, the
"Participants") are entitled to receive incentive awards under the Program. The
eight Participants include the following named executive officers: Michael D.
Snow, Executive Vice President and Chief Operating Officer; John L. Workman,
Executive Vice President and Chief Financial Officer; Gregory L. Doody,
Executive Vice President, General Counsel and Secretary; and John Markus,
Executive Vice President and Chief Compliance Officer. All other Participants
in the Program are also executive officers of the Company.
The Participants will receive approximately 50% of their awards in
equity and 50% in cash, except that Messrs. Snow and Workman will receive 60%
of their awards in equity and 40% in cash. The equity component will be
comprised of approximately one-third stock options and two-thirds restricted
stock.
The equity award will be a one-time special equity grant, awarded in
the fourth quarter of 2005. This award is separate from, and in addition to,
the normal equity grants awarded in March and generally will be equivalent to
the Participant's normal annual grant. The equity awards granted to the
Participants who are named executive officers are as follows: Mr. Snow: 140,797
shares of restricted stock and 88,635 stock options; Mr. Workman: 119,617
shares of restricted stock and 75,301 stock options; Mr. Doody: 54,418 shares
of restricted stock and 34,257 stock options; and Mr. Markus: 54,418 shares of
restricted stock and 34,257 stock options. The stock options will have an
exercise price equal to $3.87 per share, the fair market value on the date of
grant. The stock options and restricted stock will vest according to the
following schedule: twenty-five percent in January 2007, twenty-five percent in
January 2008, and the remaining fifty percent in January 2009.
The cash component of the award will be a one-time cash incentive
payment payable twenty-five percent in January 2007, twenty-five percent in
January 2008, and the remaining fifty percent in January 2009. This cash bonus
will be equivalent to between approximately 80% and 110% of the Participant's
base salary. In order for each Participant to receive each installment of the
cash award, he or she must be employed in good standing on a full-time basis at
the time of each payment, and the Company must have attained certain
performance goals based on liquidity.
In order to implement the Program, the Company intends to enter into
individual awards agreements with each of the Participants, which agreement
will set forth the terms and conditions of the awards consistent with the
description above.
2005 Equity Incentive Plan
On November 17, 2005, upon recommendation of the Compensation
Committee, the Special Committee of the Board of Directors of the Company also
adopted the HealthSouth Corporation 2005 Equity Incentive Plan (the "Equity
Plan"). The Equity Plan was adopted to replace the Company's 1995 Stock Option
Plan, which recently expired. The Equity Plan provides for the grant of stock
options, restricted stock, stock appreciation rights, deferred stock and other
stock-based awards (collectively, the "Awards") to directors, executives and
other key employees of the Company as determined by the Board of Directors or
the Compensation Committee of the Board in accordance with the terms of the
Equity Plan and evidenced by an award agreement with each participant.
The Equity Plan has a term of three years, unless terminated earlier
by the Board. Any Awards outstanding under the Equity Plan at the time of its
termination will remain in effect in accordance with their terms. The aggregate
number of shares of common stock available for issuance under the Equity Plan
is 22 million shares, subject to equitable adjustment upon a change in
capitalization of the Company or the occurrence of certain transactions
affecting the common stock reserved for issuance under the Equity Plan. Any
awards under the Equity Plan must have a purchase price or an exercise price
not less than the fair market value of such shares of common stock on the date
of grant. Unless otherwise determined by the Board or as provided in an award
agreement, upon a Change in Control (as defined in the Equity Plan) of the
Company, the vesting of all outstanding awards will accelerate.
Notwithstanding the foregoing, no option may be exercised and no
shares of stock may be issuable pursuant to other Awards under the Equity Plan
until the Company complies with its reporting and registration obligations
under the federal securities laws, unless an exemption from registration is
available with respect to such shares.
ITEM 9.01. Financial Statements and Exhibits.
(d) Exhibits.
See Exhibit Index.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Current Report on Form 8-K to be signed on
its behalf by the undersigned hereunto duly authorized.
HealthSouth Corporation
By: /s/ Gregory L. Doody
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Name: Gregory L. Doody
Title: Executive Vice President,
General Counsel, and Secretary
Dated: November 21, 2005
EXHIBIT INDEX
Exhibit Number Description
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10 HealthSouth Corporation 2005 Equity Incentive Plan