UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 26, 2024 (
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
2024 Executive Officer Performance Excellence Program
On February 22, 2024, the Compensation Committee (the “Committee”) of the Board of Directors of HCA Healthcare, Inc. (the “Company”) adopted the 2024 Executive Officer Performance Excellence Program (the “Executive Officer PEP”). Under the Executive Officer PEP, the executive officers of the Company shall be eligible to earn performance awards based upon the achievement of certain specified performance targets. The Executive Officer PEP award opportunities for the Company’s named executive officers and other executive officers are weighted (i) 80% for the achievement of certain EBITDA (as defined in the Executive Officer PEP) targets and (ii) 20% for the achievement of targets associated with certain quality metrics. The EBITDA weighted portion of the American Group, Atlantic Group and National Group Presidents’ Executive Officer PEP awards is based 50% on Company EBITDA and 50% on EBITDA for their respective Group. The quality weighted portion of the Executive Officer PEP is based on each of the following quality categories: Healthcare-Associated Infections and Sepsis (30%), Complication and Mortality (30%) and Care Experience (40%) (each as defined in the Executive Officer PEP).
Target Executive Officer PEP award opportunities for 2024 for the Company’s named executive officers1 are as follows:
| • | 170% of base salary for Samuel N. Hazen, our Chief Executive Officer; |
| • | 125% of base salary for Jon M. Foster, our Executive Vice President and Chief Operating Officer; and |
| • | 85% of base salary for Michael R. McAlevey, our Senior Vice President and Chief Legal Officer (to be increased to 100%, effective April 1, 2024, in connection with Mr. McAlevey’s appointment as Executive Vice President – Chief Legal and Administrative Officer). |
| 1 | William B. Rutherford intends to retire as Executive Vice President and Chief Financial Officer, effective May 1, 2024, and will therefore not participate in the Executive Officer PEP. |
With respect to the EBITDA weighted portion of the Executive Officer PEP, participants will receive 100% of the EBITDA weighted portion of the target award for target performance, 25% of the EBITDA weighted portion of the target award for a minimum acceptable (threshold) level of performance, and a maximum of 200% of the EBITDA weighted portion of the target award for maximum performance. With respect to the quality weighted portion of the Executive Officer PEP, participants will receive 100% of the quality weighted portion of the target award applicable to each individual quality of care metric for performance at the target level of performance for such metric, 0% of the quality weighted portion of the target award applicable to each individual quality of care metric for performance at or below the minimum (threshold) level of performance for such metric and a maximum of 200% of the quality weighted portion of the target award applicable to each individual quality of care metric for maximum performance for such metric; provided, that, in the event the Company’s actual EBITDA is less than 90% of the target level of EBITDA, there will be no payment with respect to the quality weighted portion of the Executive Officer PEP.
Awards pursuant to the Executive Officer PEP will be paid solely in cash. No payments will be made for performance below specified threshold amounts. Payouts between threshold and target or target and maximum will be calculated by the Committee in its sole discretion using straight-line interpolation. The Committee may make adjustments to the terms and conditions of awards, the performance criteria, and/or associated targets under the Executive Officer PEP in recognition of unusual or nonrecurring events affecting a participant or the Company, or the financial statements of the Company, or in certain other instances specified in the Executive Officer PEP. In addition, in the event the applicable governmental agency adjusts any of the definitions of the quality of care metrics during the performance period, appropriate adjustments shall be made to the targets, or results, or both, to properly account for such changes, in the Committee’s sole discretion. Awards pursuant to the Executive Officer PEP are also subject to discretionary recovery or adjustment by the Company in certain circumstances in which the operating results on which the payment was based were restated or otherwise adjusted or in the event a participant’s conduct is not in good faith and materially disrupts, damages, impairs or interferes with the business of the Company and its affiliates. Any award granted pursuant to the Executive Officer PEP shall also be subject to mandatory repayment by the participant to the Company as set forth in the Executive Officer PEP.
The foregoing description of the Executive Officer PEP does not purport to be complete and is qualified in its entirety by reference to the Executive Officer PEP, a copy of which is attached to this report as Exhibit 10.1 and incorporated herein by reference.
Compensation of Michael R. McAlevey as Executive Vice President – Chief Legal and Administrative Officer
On February 16, 2024, the Board of Directors appointed Michael R. McAlevey as the Executive Vice President – Chief Legal and Administrative Officer of the Company, effective April 1, 2024. On February 22, 2024, the Committee approved a base salary of $990,000 for Mr. McAlevey beginning on the effective date of his appointment. In addition, in connection with his appointment, the Committee determined to grant Mr. McAlevey a long-term equity incentive award with a total target grant date value of $500,000 (the “Equity Award”), with fifty percent (50%) of the target award in the form of stock appreciation rights which vest over four years and the other fifty percent (50%) of the target award in the form of performance share units which vest upon achievement of a cumulative three year earnings per share goal, in each case, in accordance with the terms and conditions of the award agreements and the 2020 Stock Incentive Plan for Key Employees of HCA Healthcare, Inc. and its Affiliates. The Equity Award is anticipated to be granted in late April 2024.
| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits:
| Exhibit 10.1 | HCA Healthcare, Inc. 2024 Executive Officer Performance Excellence Program | |
| Exhibit 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| HCA HEALTHCARE, INC. | ||
| /s/ John M. Franck II | ||
| John M. Franck II | ||
| Vice President – Legal & Corporate Secretary | ||
Date: February 26, 2024