DEF 14A of Universal Health Services Inc
Filed Apr 4, 2024 · FY20230001193125-24-086555
ELECTION OF DIRECTORS
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 exact number to be determined by the Board of Directors. The Board of Directors is 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. Holders of shares of our outstanding Class B and Class D Common Stock (voting together as a single class) are entitled to elect two directors, currently 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 directors, currently three in Class I, one in Class II, and one in Class III. The persons listed below include the members of our Board of Directors whose term of office will continue after the meeting and nominees. The terms of the current Class I directors, Ms. Eileen C. McDonnell, Mr. Marc D. Miller and Dr. Elliot J. Sussman, expire at the 2024 Annual Meeting. Ms. McDonnell, Mr. Marc D. Miller and Dr. 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. 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 Board has refreshed the Board by replacing 80% of the non-management members of the Board within the last six years. The Board has three female members, one of whom, Eileen McDonnell, serves as lead director and one of whom is a member of an underrepresented minority group.
Director Nominees
Director Nominees
Class I Directors
Class I Directors
Class I Directors
| Eileen C. McDonnell | | | | Director Since: 2013 Age: 61 | Class of Stockholders Entitled to Vote: • A Common • C Common | Committee Membership: • Audit (Chair) • Compensation (Chair) • Nominating and Governance • Executive | | | Business Experience Ms. McDonnell currently serves as a Trustee of the Penn Mutual Life Insurance Company. She served as Chairman of Penn Mutual until December 2023. She joined Penn Mutual in 2008 and served as Chief Executive Officer from March 2011 until December 2021. Ms. McDonnell was 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. Ms. McDonnell also served as a Director of the Insurance Federation of Pennsylvania and was a national advisor to VisionForward, an initiative of Drexel University College of Medicine Institute for Women’s Health and Leadership. | |
Class I Directors
| Marc D. Miller | | | | Director Since: 2006 Age: 53 | Class of Stockholders Entitled to Vote: • A Common • C Common | Committee Membership: • Executive • Finance | | | Business Experience Mr. Miller was appointed as our Chief Executive Officer in January 2021 and continues to serve as President. Mr. Miller previously served as Senior Vice President and Co-Head of our Acute Care Division since 2007 and served as a Vice President since 2004. He 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. Mr. Miller 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. Mr. Miller is the son of Alan B. Miller, our Executive Chairman, and former Chief Executive Officer. | |
Class I Directors
| Elliot J. Sussman, M.D. | | | | Director Since: 2018 Age: 72 | Class of Stockholders Entitled to Vote: • A Common • C Common | Committee Membership: • Audit • Compensation • Nominating and Governance (Chair) • Quality and Compliance (Chair) | | | Business Experience Dr. Sussman is the Chairman of The Villages Health. Formerly, Dr. Sussman was the President and Chief Executive Officer of Lehigh Valley Hospital and Health Network from 1993 to 2010. He previously served as a member of the Board of Directors of Yale New Haven Health System from 2011 to 2023. Dr. Sussman previously chaired the boards of the Council of Teaching Hospitals and of the Association of American Medical Colleges. | |
Directors whose Terms Expire in 2025
Directors whose Terms Expire in 2025
Class II Directors
Class II Directors
Class II Directors
| Warren J. Nimetz | | | | Director Since: 2018 Age: 67 | Class of Stockholders Entitled to Vote: • A Common • C Common | Committee Membership: • Executive • Finance | | | Business Experience Mr. Nimetz is a Partner at the law firm of Norton Rose Fulbright US LLP and has been an attorney since 1979. We utilized during the year ended December 31, 2023, and currently utilize, the services of Norton Rose Fulbright US LLP as outside counsel. | |
Class II Directors
| Maria R. Singer | | | | Director Since: 2020 Age: 50 | Class of Stockholders Entitled to Vote: • B Common • D Common | Committee Membership: • Audit • Finance • Nominating and Governance • Quality and Compliance | | | Business Experience 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. | |
Directors whose Terms Expire in 2026
Directors whose Terms Expire in 2026
Class III Directors
Class III Directors
Class III Directors
| Nina Chen-Langenmayr | | | | Director Since: 2022 Age: 67 | Class of Stockholders Entitled to Vote: • B Common • D Common | Committee Membership: • Quality and Compliance • Compensation • Special Litigation | | | Business Experience Ms. Chen-Langenmayr is Special Projects Consultant at The Welcoming Center in Philadelphia since 2013. Ms. Chen-Langenmayr previously served as Partner, Client Relationship Management Group at Mercer. Ms. Chen-Langenmayr has multiple years of experience in the human capital management and outsourcing arena, particularly in the pharmaceutical and healthcare industries. She is a Juris Doctor and Founding Member of the Asian Pacific American Bar Association of Pennsylvania and a member of the Forum of Executive Women. | |
Class III Directors
| Alan B. Miller | | | | Director Since: 1978 Age: 86 | Class of Stockholders Entitled to Vote: • A Common • C Common | Committee Membership: • Executive (Chair) • Finance (Chair) | | | Business Experience 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. | |
Class III Directors
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.
Compensation Philosophy and Objectives
| • | Review peer group market data on an annual basis; |
Compensation Philosophy and Objectives
| • | Compensation programs should support our short-term and long-term strategic business goals and objectives; |
Elements of Compensation
| • | annual cash incentive; |
Elements of Compensation
| • | long-term incentive awards, and; |
Elements of Compensation
We believe these peer companies, which are indicated above, are comparable peer companies based upon the median revenues of this peer group, which were approximately $12.2 billion in 2023, as compared to our 2023 revenues of approximately $14.3 billion. For 2023, 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 2023, Messrs. Marc Miller, Filton, Peterson and Sim’s salaries were within 15% of the data (as assessed relative to our peer and general industry groups). 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. 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 and the Compensation Committee will establish objective performance goals based upon one or more of the following business criteria:
Elements of Compensation
In the case of an award intended to qualify as “performance-based compensation”, 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. 2023 Annual Cash Incentive Formula and Performance Goals: On March 15, 2023, the Compensation Committee approved specific bonus formulae for the determination of the target annual incentive compensation for the Company’s named executive officers pursuant to the Executive Incentive Plan (the “Plan”) for the year ending December 31, 2023. 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 2023 base salary as a target bonus based upon corporate performance criteria. The corporate performance criteria target bonus award indicated below for Mr. Marc D. Miller is stipulated in his employment agreement dated December 23, 2020, which became effective on January 1, 2021. Mr. Marc Miller’s employment agreement was amended in March, 2022, primarily to provide for the changes to the elements of his compensation implemented in 2022, as discussed above. 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. With respect to:
Elements of Compensation
| • | Messrs. Marc D. Miller and Steve G. Filton – 100% of their annual incentive target bonus for 2023 was based upon the corporate performance criteria, as described below. |
Elements of Compensation
| • | Messrs. Sim and Peterson – their 2023 annual incentive target bonus was based upon: |
Elements of Compensation
| Name | Title | Target Incentive Bonus Award as a % of salary | | Marc D. Miller | Chief Executive Officer and President | 150% | | Steve G. Filton | Executive Vice President and Chief Financial Officer | 100% | | Edward H. Sim | Executive Vice President and President-Acute Care Division | 100% | | Matthew J. Peterson | Executive Vice President and President-Behavioral Health Division | 100% |
Elements of Compensation
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. 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. 2023 Annual Cash Incentive Targets: Target Corporate Performance Criteria: On February 27, 2023, we publicly announced that our initial estimated range of adjusted net income per diluted share attributable to UHS for 2023 was $9.50 to $10.50. In July of 2023, based upon our actual operating results experienced during the first six months of 2023, we publicly disclosed a revision to our previously disclosed estimated range of adjusted net income per diluted share attributable to UHS for 2023 (revised the lower end of the range to $9.85 per diluted share from $9.50 per diluted share; while the upper end of the range remained unchanged at $10.50 per diluted share). However, our annual incentive performance targets were not impacted by this publicly disclosed revision. On March 15, 2023, 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, 2023. For 2023, 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 $8.99 or less, and Return on Capital of 5.7% or less) up to 200% 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 $11.00 or greater and Return on Capital of 7.1% or greater). The 2023 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 $10.00 per diluted share. The 2023 Return on Capital Target was 6.4% The adjusted net income per diluted share attributable to UHS excludes, among potentially other things, if applicable and material and/or nonrecurring or nonoperational in nature, the impact of changes in the market value of shares of certain equity securities, impairments of goodwill, long-lived and intangible assets, reserves for various matters including settlements, legal judgments and lawsuits, costs related to extinguishment of debt, gains/losses on sales of assets and businesses and other amounts that may be reflected in the current year financial statements that related to prior periods. The Targets were adjusted from prior years to correlate to the range of our initial estimated 2023 adjusted net income per diluted share attributable to UHS, as publicly disclosed on February 27, 2023. Target Divisional Performance Criteria: Also on March 15, 2023, the Compensation Committee approved the specific bonus formulae based upon the achievement of the divisional income targets pursuant to the 2022 Executive Incentive Plan for the year ended December 31, 2023. Messrs. Sim and Peterson were each entitled to receive between 0% and 200% of their target bonus that was based on the divisional results (75%). The divisional income targets consist of the projected aggregate pre-tax income for our acute care segment and our behavioral health care services segment (excluding our facilities located in the U.K.), net of certain deductions which consist primarily of a charge for the estimated cost of capital. The divisional income targets may be adjusted to include or exclude the impact of items, if applicable and material, that are, among other things, nonrecurring or non-operational in nature. For 2023, the divisional income targets were as follows:
Elements of Compensation
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 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 in February of each year. The divisional performance criteria are also established annually and represent each segment’s respective portion of the Company’s consolidated estimated earnings. For each of our named executive officers that had approved specific bonus formulae for the determination of annual incentive compensation pursuant to the Executive Incentive Plan, the following table sets forth the actual 2023 annual incentive bonus awarded as well as the pre-established ranges of potential payouts under our non-equity incentive plan.
Elements of Compensation
| | | 2023 Non-Equity Incentive Plan Awards | | | | | Name | Title | Actual | Minimum | Target | Maximum | | Marc D. Miller | Chief Executive Officer and President | $3,042,117 | $283,931 | $2,028,078 | $4,056,156 | | Steve G. Filton | Executive Vice President and Chief Financial Officer | $1,240,047 | $115,738 | $826,698 | $1,653,396 | | Edward H. Sim | Executive Vice President and President-Acute Care | $372,014 | $108,504 | $775,030 | $1,550,060 | | Matthew J. Peterson | Executive Vice President and President-Behavioral Health Care | $1,224,160 | $97,654 | $697,527 | $1,395,054 |
Elements of Compensation
Mr. Alan B. Miller, our Executive Chairman, receives compensation pursuant to his employment agreement which provided for a base salary of $1.04 million in 2023, and the potential for a discretionary cash bonus, as determined by our Board of Directors. A discretionary cash bonus of $1.04 million was approved by our Compensation Committee and paid to Mr. Alan B. Miller for the year ended December 31, 2023. 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. For a further description of the cash incentives and other elements of compensation granted to our named executive officers for 2023, 2022 and 2021, 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 2023, please read the Summary Compensation Table and the Grants of Plan-Based Awards Table included in this Proxy Statement. 2020 Stock Incentive Plan: In May, 2020, at our Annual Meeting, the stockholders approved the 2020 Omnibus Stock and Incentive Plan (“2020 Stock Incentive Plan”). 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, including 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 appreciation rights and restricted stock units and awards intended to be performance-based awards. The 2020 Stock Incentive Plan is intended to provide a flexible vehicle through which we may offer equity-based compensation incentives to our named executive officers and other eligible personnel in support of our compensation objectives. On March 23, 2022, the Board of Directors adopted an amendment and restatement of our 2020 Omnibus Stock and Incentive Plan, which was approved by our stockholders at our 2022 Annual Meeting, which among other things increased the numbers of shares of our Class B Common Stock that may be issued under the 2020 Stock Incentive Plan by 6.0 million (to 12.1 million shares from 6.1 million shares). 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: Typically, option awards under the 2020 Stock Incentive Plan 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. 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. Restricted Stock and Restricted Stock Units: The 2020 Stock Incentive Plan provides for the grant of shares or units of our Class B Common Stock to eligible personnel for a purchase price equal to par value. Shares of our Class B Common Stock could be granted under the 2020 Incentive Plan to any of our employees or consultants. Historically, our restricted grants have had a scheduled vesting period ranging from one to five years. Vesting conditions on shares or units issued under the 2020 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.
Elements of Compensation
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. 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 satisfied. Generally, holders of restricted stock and restricted stock units receive dividend equivalents which are subject to vesting in line with the underlying award to which they relate. We do not have any plan to select restricted stock award or restricted stock unit grant dates for our named executive officers in coordination with the release of material non-public information. 2023 Stock-Based Compensation Awards: To continue to enhance our equity awards program toward performance-based equity awards, as discussed below, in March of 2023, our CEO and NEOs received: (i) 50% of their annual target stock-based compensation awards in the form of options to purchase shares of our Class B Common Stock at the grant date market value (with the exception of Mr. Sim who was hired in December, 2022, and received options to purchase shares of our Class B Common Stock at the grant date market value in January, 2023), and; (ii) 50% of their annual target stock-based compensation awards in the form of performance-based restricted stock units that will be earned based on the three-year growth in our earnings before interest, taxes, depreciation and amortization, the impacts of other income/expense and net income attributable to noncontrolling interests, as compared to a range of pre-established three-year growth thresholds. On March 15, 2023, our Compensation Committee awarded to our named executive officers, the following:
Elements of Compensation
| • | Stock options issued at $117.65, representing the grant date market value of our Class B Common Stock, which are scheduled to vest in four equal installments on the first, second, third and fourth anniversaries of the grant date and will expire on March 14, 2028 (with the exception of Mr. Sim who was hired in December, 2022, and received stock options issued at $145.65 representing the grant date market value on January 18, 2023, which are scheduled to vest in four equal installments on the first, second, third and fourth anniversaries of the grant date and will expire on January 17, 2028), and; |
Elements of Compensation
| • | Performance-based restricted stock units that will be earned based upon the achievement of a pre-established specified range of target levels based on the three-year growth in our earnings before interest, taxes, depreciation and amortization, and the impacts of other income/expense and net income attributable to noncontrolling interests (“EBITDA”). |
Elements of Compensation
The number of stock options and target awards of performance-based restricted stock units awarded to each of our named executive officers during 2023 were as follows:
Elements of Compensation
| • | Marc D. Miller - 119,223 stock options and 42,024 performance-based restricted stock units (all granted on March 15, 2023). |
Elements of Compensation
| • | Alan B. Miller - 62,696 stock options and 22,099 performance-based restricted stock units (all granted on March 15, 2023). |
Elements of Compensation
| • | Steve G. Filton - 30,345 stock options and 10,696 performance-based restricted stock units (all granted on March 15, 2023). |
Elements of Compensation
| • | Edward H. Sim - 50,000 stock options (granted on January 18, 2023) and 10,000 performance-based restricted stock units (granted on March 15, 2023). |
Elements of Compensation
| • | Matthew J. Peterson - 24,928 stock options and 8,787 performance-based restricted stock units (all granted on March 15, 2023). |
Elements of Compensation
Mr. Marvin G. Pember retired from the Company effective as of December 31, 2022. Pursuant to his Separation Agreement and General Release: (i) all of Mr. Pember’s performance-based restricted stock units awarded on March 23, 2022 with a grant date fair value of $1.2 million, which were scheduled to be earned based on the three-year growth in certain Company financial metrics, were canceled on December 31, 2022, and; (ii) all of Mr. Pember’s unvested stock options granted prior to his termination date continued to vest until April 1, 2023 and all stock options scheduled to remain unvested as of April 1, 2023 were canceled as of December 31, 2022, (including 75% of options awarded on March 23, 2022). In determining the number of options to award to our named executive officers, the Compensation Committee reviewed the compensation data and competitive performance data prepared by FW Cook in early 2023, including stock-based compensation, and reviewed historical company practices with respect to stock option and long-term incentive awards. The Committee also considered individual performance in light of a named executive officer’s position, responsibilities and contribution to our financial performance as well as his potential contribution to our growth and productivity. 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 2023 was $135,000 or higher and they are performing duties in a qualified position. The base compensation threshold is adjusted from 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 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. One of our named executive officers deferred a portion of his base salary and/or bonus paid during 2023 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 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 Executive Retirement Income Plan (“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, determines 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 ERIP, which was subsequently closed to new participants effective January 1, 2015. Pursuant to the terms of 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.
Elements of Compensation
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 890 employees (including the named executive officers) of our approximate 61,100 full-time employees in the U.S. and U.K. (comprising approximately 1.5% 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 Future Annual Stock-Based Compensation. After reviewing market data prepared by FW Cook, a third-party executive compensation consultant, the Compensation Committee has determined that the target pay mix for all our employees, including our CEO and our other NEOs, could be more closely aligned with the comparable target pay mix at our peer group companies. To this end, the Compensation Committee intends in the future to move away from annual stock-based compensation awards to all our employees, including our CEO and NEOs, in the form of options to purchase shares of our Class B Common Stock and to instead grant annual stock-based compensation awards in the form of time based restricted stock units to our non-NEO employees and, in the case of our NEOs, a mix of time-based and performance-based restricted stock units. The performance-based restricted stock units will be earned based upon achievement of a pre-established specified range of target levels based on the three-year growth in our earnings before interest, taxes, depreciation & amortization, and the impacts of other income/expense and net income attributable to noncontrolling interests. We believe these changes to the elements of compensation for each of our employees and NEOs continue to preserve significant reliance on at-risk, performance-based compensation. The Compensation Committee believes restricted stock awards and restricted stock units, 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. 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 satisfied. Generally, holders of restricted stock units receive dividend equivalents which are subject to vesting in line with the underlying award to which they relate. We do not have any plan to select restricted stock unit grant dates for our named executive officers in coordination with the release of material non-public information. 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. Clawbacks: Effective October 2, 2023, the Company adopted a clawback policy to align with listing rules adopted by NYSE as required by the SEC. The policy applies to all executive officers (as defined under the applicable rules) and requires the Company to seek to recoup certain incentive-based compensation, whether cash- or equity-based, from current or former officers and in the event that the Company is required to prepare an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under the securities laws.
SUMMARY COMPENSATION TABLE
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 (“NEOs”):
SUMMARY COMPENSATION TABLE
| 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 Compensation Earnings(4.) ($) | All other compensation(7.) ($) | Total ($) | | Marc D. Miller, Chief Executive Officer and President | 2023 | $1,352,052 | $0 | | $4,944,124 | $4,944,434 | $3,042,117 | $78,003 | $47,207 | $14,407,937 | | | 2022 | 1,300,050 | 0 | | 4,754,071 | 4,754,007 | — | 66,003 | 45,845 | 10,919,976 | | | 2021 | 1,100,042 | 0 | | 0 | 10,104,427 | 2,750,105 | 52,002 | 14,366 | 14,020,942 | | Alan B. Miller, Executive Chairman | 2023 | $1,040,040 | $1,040,040 | (5.) | $2,599,947 | $2,600,138 | $0 | $0 | $1,089,566 | $8,369,731 | | | 2022 | 1,000,038 | — | | 2,499,993 | 2,499,990 | 0 | 0 | 1,138,603 | 7,138,624 | | | 2021 | 1,000,038 | 1,000,000 | (5.) | — | 10,104,427 | 0 | 0 | 1,092,036 | 13,196,501 | | Steve G. Filton, Executive Vice President and Chief Financial Officer | 2023 | $826,698 | $0 | | $1,258,384 | $1,258,472 | $1,240,047 | $47,194 | $19,362 | $4,650,157 | | | 2022 | 786,574 | 0 | | 1,210,017 | 1,210,020 | — | 42,881 | 18,612 | 3,268,104 | | | 2021 | 714,681 | 0 | | 0 | 3,168,736 | 893,351 | 41,232 | 18,162 | 4,836,162 | | Edward H. Sim, Executive Vice President and President, Acute Care (6.) | 2023 | $775,030 | $550,000 | (6.) | $1,176,500 | $2,578,358 | $372,014 | $0 | $17,235 | $5,469,137 | | | 2022 | 59,120 | 0 | | 0 | — | — | — | — | 59,120 | | | 2021 | N/A | N/A | | N/A | N/A | N/A | N/A | N/A | N/A | | Matthew J. Peterson, Executive Vice President and President, Behavioral Health | 2023 | $697,527 | $0 | | $1,033,791 | $1,033,818 | $1,224,160 | $40,015 | $20,293 | $4,049,604 | | | 2022 | 666,922 | 0 | | 994,015 | 993,990 | — | 37,402 | 19,216 | 2,711,545 | | | 2021 | 623,364 | 0 | | 0 | 2,724,166 | 545,444 | 36,408 | 18,351 | 3,947,733 |
SUMMARY COMPENSATION TABLE
| (1) In 2023, performance-based restricted stock units were issued under our 2020 Omnibus Stock and Incentive Plan. In March, 2023, our CEO and NEOs with the exception of Mr. Edward H. Sim, each received 50% of their annual target stock-based compensation awards in the form of performance-based restricted stock units. The March, 2023 values represent 100% of the target, with a grant date value of $117.65 per unit. Mr. Edward H. Sim commenced employment in December 2022 and was awarded 10,000 performance-based restricted stock units in March, 2023 with a grant date value of $117.65 per unit. The performance-based restricted stock units for our CEO and all NEOs will be based upon achievement of a pre-established specified range of target levels based on the three-year growth in our earnings before interest, taxes, depreciation and amortization, and the impacts of other income/expenses and net income attributable to noncontrolling interests. |
SUMMARY COMPENSATION TABLE
| (2) In March, 2023, our CEO and NEOs with the exception of Mr. Edward H. Sim, each received 50% of their annual target stock-based compensation awards in the form of options to purchase shares of our Class B Common Stock at the grant date market value. Amounts in March, 2023 represent the aggregate fair value of options granted at the market price on the date of grant (grant date fair value of $41.47). In connection with Mr.Sim’s commencement of employment in December, 2022, he was awarded options to purchase shares of our Class B Common Stock in January, 2023, at the grant date market value. Mr. Sim’s amount in 2023 represents the aggregate fair value of options granted on the market price on the date of grant (grant date fair value of $51.57). Amounts in 2022 represent the aggregate fair value of options granted at the market price on the date of grant (grant date fair value of $45.71). Amounts in 2021 represent the aggregate fair value of options granted at the market price on the date of grant (grant date fair value of $40.42) and options granted at 110% of the market price on the date of grant (grant date fair value of $35.98). Options granted during each year presented were awarded pursuant to our 2020 Omnibus Stock and Incentive Plan. For the assumptions used for the fair value valuations, please refer to Note 5—Common Stock, to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the years ended December 31, 2023, 2022 and 2021. |
SUMMARY COMPENSATION TABLE
| (3) Reflects the dollar value of annual bonuses earned during each of the last three years pursuant to the terms of our Executive Incentive Plan. In March, 2024 (for 2023) our Compensation Committee approved annual cash incentive bonuses pursuant to the Executive Incentive Plan. For 2023 as a percentage of each individual’s annual base salary, the bonus amounts earned were as follows: Marc D. Miller 225%; Steve G. Filton 150%; Edward H. Sim 48%, and; Matthew J. Peterson 176%. Mr. Alan B. Miller did not receive an annual incentive bonus pursuant to the Executive Incentive Plan for 2023. However, in March, 2024, our Board of Directors awarded Mr. Alan B. Miller a discretionary bonus of approximately $1.04 million for 2023. No cash incentive bonuses were paid to any of our executive officers for the year ended December 31, 2022 since the minimum thresholds of the established corporate and divisional performance goals were not achieved and Mr. Alan B. Miller received no discretionary bonus award for the year. In March of 2022 (for 2021) our Compensation Committee approved annual cash incentive |
Summary Compensation Table
Summary Compensation Table
Summary Compensation Table
| bonuses which, as a percentage of each individual’s annual base salary, were as follows: Marc D. Miller 250%; Steve G. Filton 125%, and; Matthew J. Peterson 88%. Mr. Edward Sim’s employment commenced in December, 2022 and therefore he was not paid a bonus for 2021. Also in March, 2022, our Board of Directors awarded Mr. Alan B. Miller a $1.0 million discretionary bonus for 2021. |
Summary Compensation Table
| (4) These amounts represent the aggregate change in pension value for each named executive ( with the exception of Edward H. Sim who was hired in December of 2022 and was not eligible for the Plan in 2023), in 2023, 2022 and 2021 pursuant to the Executive Retirement Income Plan or the Supplemental Executive Retirement Income Plan, as disclosed herein. These amounts are considered service costs. The amounts in this column do not reflect compensation deferrals pursuant to our Nonqualified Deferred Compensation Plan since there are no contributions or benefits provided by us in connection with the plan. |
Summary Compensation Table
| (5) In each of March, 2022 (for 2021), and March, 2024 (for 2023), our Compensation Committee awarded discretionary bonuses of approximately $1.0 million to Mr. Alan B. Miller. |
Summary Compensation Table
| (6) Mr. Edward H. Sim was hired by the Company in December, 2022 to succeed Mr. Marvin G. Pember who retired from the Company effective as of December 31, 2022. A $550,000 cash bonus was paid to Mr. Sim in 2023 as a sign-on bonus upon commencement of employment. |
Summary Compensation Table
| (7) Components of All Other Compensation are as follows: |
GRANTS OF PLAN-BASED AWARDS
GRANTS OF PLAN-BASED AWARDS The following table provides information regarding plan-based awards granted during fiscal year 2023 to our named executive officers who were employed on the grant date of March 15, 2023.
GRANTS OF PLAN-BASED AWARDS
| | Approval/ Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1.) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(3.) | | | All Other Stock Awards: Number of Shares of Stock or Units(5.) (#) | All Other Option Awards: Number of Securities Underlying Options(6.) (#) | Exercise or Base Price of Option Awards ($ /Sh) | Grant Date Fair Value of Stock and Option Awards(7.) ($) | Grant Date Fair Value of Maximum Stock and Option Awards(8.) ($) | Closing Price on Grant Date ($ / Sh) | | Name | | Threshold ($)(2.) | Target ($)(2.) | Maximum ($)(2.) | Threshold (#)(4.) | Target (#)(4.) | Maximum (#)(4.) | | | | | | | | Marc D. Miller | 3/15/2023 | $283,931 | $2,028,078 | $4,056,156 | | | | — | 119,223 | $117.65 | $4,944,434 | | $117.65 | | | 3/15/2023 | | | | 21,012 | 42,024 | 63,036 | | | | $4,944,124 | $7,416,185 | $117.65 | | Alan B. Miller | 3/15/2023 | $— | $— | $— | | | | | 62,696 | $117.65 | $2,600,138 | | $117.65 | | | 3/15/2023 | | | | 11,050 | 22,099 | 33,149 | — | | | $2,599,947 | $3,899,980 | $117.65 | | Steve G. Filton | 3/15/2023 | $115,738 | $826,698 | $1,653,396 | | | | | 30,345 | $117.65 | $1,258,384 | | $117.65 | | | 3/15/2023 | | | | 5,348 | 10,696 | 16,044 | — | | | $1,258,472 | $1,887,577 | $117.65 | | Edward H. Sim | 1/18/2023 | $108,504 | $775,030 | $1,550,060 | | | | | 50,000 | $145.65 | $2,578,358 | | $145.65 | | | 3/15/2023 | | | | 5,000 | 10,000 | 15,000 | — | | | $1,176,500 | $1,764,750 | $117.65 | | Matthew J. Peterson | 3/15/2023 | $97,654 | $697,527 | $1,395,054 | | | | | 24,928 | $117.65 | $1,033,791 | | $117.65 | | | 3/15/2023 | | | | 4,394 | 8,787 | 13,181 | — | | | $1,033,818 | $1,550,686 | $117.65 |
GRANTS OF PLAN-BASED AWARDS
| (1) Pursuant to the 2022 Executive Incentive Plan and the formula approved by the Compensation Committee, in 2023 each named executive officer other than Mr. Alan B. Miller was entitled to receive between 0% and 200% of that executive officer’s target bonus based, either entirely or in part, on our achievement of certain corporate and divisional performance criteria. As discussed in the Compensation Discussion and Analysis, with respect to Messrs. Marc D. Miller and Steve G. Filton, 100% of their target 2023 annual incentive bonus was determined using certain corporate performance criteria, and with respect to each of Messrs. Sim and Peterson, their target 2023 annual incentive bonus was determined utilizing: (i) 25% of their annual salary based upon the achievement of certain corporate performance criteria, and; (ii) 75% of their annual salary based upon the achievement of certain divisional income targets. |
GRANTS OF PLAN-BASED AWARDS
| (2) Estimates calculated based upon 2023 salaries. |
GRANTS OF PLAN-BASED AWARDS
| (3) Pursuant to the formula approved by the Compensation Committee, each named executive officer was entitled to receive between 50% and 150% of that executive officer’s target stock-based compensation in the form of performance-based restricted stock units. The performance-based restricted stock units will be based upon achievement of a pre-established specified range of target levels based on the three-year growth in our earnings before interest, taxes, depreciation and amortization, and the impacts of other income/expenses and net income attributable to noncontrolling interests. |
GRANTS OF PLAN-BASED AWARDS
| (4) Performance-based restricted stock units issued on March 15, 2023 were issued under our 2020 Omnibus Stock and Incentive Plan. In 2023, our CEO and NEOs, with the exception of Mr. Edward H. Sim who was hired in December, 2022, each received 50% of their annual target stock-based compensation awards in the form of performance-based restricted stock units. Mr. Edward H. Sim received 10,000 performance-based restricted stock units issued on March 15, 2023. |
GRANTS OF PLAN-BASED AWARDS
| (5) Restricted shares of Class B Common Stock issued under the Company’s 2020 Omnibus Stock and Incentive Plan. |
GRANTS OF PLAN-BASED AWARDS
| (6) Stock option awards issued during 2023 were issued under our 2020 Omnibus Stock and Incentive Plan with an exercise price equal to the grant date market value. Stock option awards on January 18, 2023 to Mr. Edward H. Sim were issued in connection with the commencement of his employment. |
GRANTS OF PLAN-BASED AWARDS
| (7) Represents the full grant date fair value for the option awards, calculated in accordance with ASC 718 as described in our Form 10-K for the year ended December 31, 2023. |
GRANTS OF PLAN-BASED AWARDS
| (8) Represents the maximum performance-based restricted stock unit value if the maximum award is achieved. |
Grants of Plan-Based Awards
Grants of Plan-Based Awards 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. On March 23, 2022, we entered into an amendment to the employment agreement with Mr. Marc D. Miller which increased his annual bonus opportunity and annual base salary, as discussed below. Pursuant to the terms of his employment agreement, as amended on March 23, 2022, Marc Miller’s salary as our CEO will be $1,406,000 for 2024 which is a 4.0% increase over his 2023 base salary. Mr. Marc D. Miller is also entitled to an annual bonus opportunity target equal to 150% of his salary. Mr. Marc Miller’s Agreement was also amended to narrow the circumstances under which Mr. Marc D. Miller can resign from employment with good reason and receive acceleration of future long-term incentive awards, including his Performance Based Restricted Stock Units. 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 determined 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, subject to certain acceleration rights upon a qualifying termination of employment as set forth in his employment agreement. 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 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.
OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2023
OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2023 The following table provides information about the number of outstanding equity awards held by our named executive officers at December 31, 2023.
OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2023
| | Option Awards(1.) | | | | | Stock Awards(2.) | | | | | | Number of Securities Underlying Unexercised Options (#) | Number of Securities Underlying Unexercised Options (#) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(5.) | | Name | Exercisable | Unexercisable | | | | | | | | | Marc D. Miller | | | | | | 0 | 0 | 33,058 | $5,039,362 | | | | | | | | 0 | 0 | 42,024 | 6,406,139 | | | 37,500 | 12,500 | 0 | $67.69 | 03/17/2025 | 0 | 0 | 0 | 0 | | | 44,415 | 14,805 | 0 | $74.46 | 03/17/2025 | 0 | 0 | 0 | 0 | | | 62,500 | 62,500 | 0 | $138.80 | 03/16/2026 | 0 | 0 | 0 | 0 | | | 70,213 | 70,212 | 0 | $152.68 | 03/16/2026 | 0 | 0 | 0 | 0 | | | 26,000 | 78,001 | 0 | $143.81 | 03/22/2027 | 0 | 0 | 0 | 0 | | | 0 | 119,223 | 0 | $117.65 | 03/14/2028 | 0 | 0 | 0 | 0 | | Alan B. Miller | | | | | | 0 | 0 | 17,384 | $2,650,017 | | | | | | | | 0 | 0 | 22,099 | 3,368,772 | | | 195,000 | — | 0 | $134.02 | 03/19/2024 | 0 | 0 | 0 | 0 | | | 221,250 | 73,750 | 0 | $67.69 | 03/17/2025 | 0 | 0 | 0 | 0 | | | 262,049 | 87,350 | 0 | $74.46 | 03/17/2025 | 0 | 0 | 0 | 0 | | | 62,500 | 62,500 | 0 | $138.80 | 03/16/2026 | 0 | 0 | 0 | 0 | | | 70,213 | 70,212 | 0 | $152.68 | 03/16/2026 | 0 | 0 | 0 | 0 | | | 13,673 | 41,018 | 0 | $143.81 | 03/22/2027 | 0 | 0 | 0 | 0 | | | 0 | 62,696 | 0 | $117.65 | 03/14/2028 | 0 | 0 | 0 | 0 | | Steve G. Filton | | | | | | 0 | 0 | 8,414 | $1,282,630 | | | | | | | | 0 | 0 | 10,696 | 1,630,498 | | | 70,000 | — | 0 | $134.02 | 03/19/2024 | 0 | 0 | 0 | 0 | | | 26,250 | 8,750 | 0 | $67.69 | 03/17/2025 | 0 | 0 | 0 | 0 | | | 31,091 | 10,363 | 0 | $74.46 | 03/17/2025 | 0 | 0 | 0 | 0 | | | 19,600 | 19,600 | 0 | $138.80 | 03/16/2026 | 0 | 0 | 0 | 0 | | | 22,019 | 22,018 | 0 | $152.68 | 03/16/2026 | 0 | 0 | 0 | 0 | | | 6,618 | 19,853 | 0 | $143.81 | 03/22/2027 | 0 | 0 | 0 | 0 | | | 0 | 30,345 | 0 | $117.65 | 03/14/2028 | 0 | 0 | 0 | 0 |
Outstanding Equity Awards at December 31, 2023
Outstanding Equity Awards at December 31, 2023
Outstanding Equity Awards at December 31, 2023
| | Option Awards(1.) | | | | | Stock Awards(2.) | | | | | | Number of Securities Underlying Unexercised Options (#) | Number of Securities Underlying Unexercised Options (#) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(5.) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | | Name | Exercisable | Unexercisable | | | | | | | | | Edward H. Sim(4.) | | | | | | 0 | 0 | 10,000 | $1,524,400 | | | 0 | 50,000 | 0 | $145.65 | 01/17/2028 | 0 | 0 | 0 | 0 | | Matthew J. Peterson(3.) | | | | | | 0 | 0 | 6,912 | $1,053,665 | | | | | | | | 0 | 0 | 8,787 | 1,339,490 | | | 50,000 | — | 0 | $151.99 | 09/17/2024 | 0 | 0 | 0 | 0 | | | 12,500 | 6,250 | 0 | $67.69 | 03/17/2025 | 0 | 0 | 0 | 0 | | | 14,805 | 7,402 | 0 | $74.46 | 03/17/2025 | 0 | 0 | 0 | 0 | | | 16,850 | 16,850 | 0 | $138.80 | 03/16/2026 | 0 | 0 | 0 | 0 | | | 18,930 | 18,929 | 0 | $152.68 | 03/16/2026 | 0 | 0 | 0 | 0 | | | 5,436 | 16,309 | 0 | $143.81 | 03/22/2027 | 0 | 0 | 0 | 0 |
Outstanding Equity Awards at December 31, 2023
| 1. | Stock option awards. Except for Mr. Peterson’s stock options issued on September 18, 2019 as noted below, all stock options are scheduled to vest ratably on the first, second, third and fourth anniversary dates from the date of grant. The stock options issued to Mr. Peterson on September 18, 2019 vested in three equal installments on the second, third and fourth anniversaries of the grant date. |
Outstanding Equity Awards at December 31, 2023
The applicable grant dates for the options indicated above are set forth below:
Outstanding Equity Awards at December 31, 2023
| • | On March 20, 2019, stock options were granted with an exercise price of $134.02. |
Outstanding Equity Awards at December 31, 2023
| • | On September 18, 2019, stock options were granted with an exercise price of $151.99 |
Outstanding Equity Awards at December 31, 2023
| • | On March 18, 2020, stock options were granted with an exercise price of $67.69. |
Outstanding Equity Awards at December 31, 2023
| • | On March 18, 2020, stock premium stock options were granted with a 10% premium exercise price of $74.46. |
Outstanding Equity Awards at December 31, 2023
| • | On March 17, 2021, stock options were granted with an exercise price of $138.80. |
Outstanding Equity Awards at December 31, 2023
| • | On March 17, 2021, stock premium stock options were granted with a 10% premium exercise price of $152.68. |
Outstanding Equity Awards at December 31, 2023
| • | On March 23, 2022, stock options were granted with an exercise price of $143.81. |
Outstanding Equity Awards at December 31, 2023
| • | On January 18, 2023, stock options were granted with an exercise price of $145.65 |
Outstanding Equity Awards at December 31, 2023
| • | On March 15, 2023, stock options were granted with an exercise price of $117.65. |
Outstanding Equity Awards at December 31, 2023
| 2. | Performance-Based Restricted Stock Units. On March 15, 2023, 50% of the annual target stock-based compensation awards for our CEO and NEOs, with the exception of Mr. Edward H. Sim who received 10,000 performance-based restricted stock units, were issued in the form of performance-based restricted stock units that will be based upon achievement of a pre-established specified range of target levels based on the three-year growth in our earnings before interest, taxes, depreciation and amortization, and the impacts of other income/expenses and net income attributable to noncontrolling interests. |
Outstanding Equity Awards at December 31, 2023
| 3. | Mr. Peterson was hired by the Company in September 2019 and was awarded stock options upon the commencement of his employment, which vested in three equal installments on the second, third and fourth anniversaries of the grant date. |
Outstanding Equity Awards at December 31, 2023
| 4. | Mr. Sim was hired by the Company in December, 2022 to succeed Mr. Marvin G. Pember. In connection with the commencement of his employment, in January, 2023, Mr. Sim was awarded 50,000 stock options, with an exercise price of $145.65, that are scheduled to vest ratably over four years and expire in five years. |
Outstanding Equity Awards at December 31, 2023
| 5. | Based on the closing sale price of the Class B Common Stock on the New York Stock Exchange on December 29, 2023 of $152.44 per share. |
OPTION EXERCISES AND STOCK VESTED
OPTION EXERCISES AND STOCK VESTED The following table provides information about stock option exercises by, and the vesting of stock for, our named executive officers during fiscal year 2023:
OPTION EXERCISES AND STOCK VESTED
| | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | | Marc D. Miller | 200,000 | $2,254,000 | — | $— | | Alan B. Miller | 785,000 | $10,237,100 | — | $— | | Steve G. Filton | 70,000 | $1,010,800 | — | $— | | Edward H. Sim | — | $— | — | $— | | Matthew J. Peterson | — | $— | — | $— |
PENSION BENEFITS
PENSION BENEFITS
Supplemental Executive Retirement Income Plan
Supplemental Executive Retirement Income Plan In July, 2018, the Board of Directors adopted the Supplemental Executive Retirement Income Plan (“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.
Pension Benefits
Pension Benefits 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. As of December 31, 2023, Mr. Marc Miller’s ERIP conversion balance was unvested while Mr. Filton’s ERIP conversion balance was fully vested. Mr. Peterson, who participates in the SERIP, was not previously an ERIP participant. Mr. Sim was not eligible for participation in the SERIP during 2023. The following tables provide information about pension benefits pursuant to our SERIP for our named executive officers as described below.
Pension Benefits
| | SERIP Beginning Balance 1/1/2023 ($) | 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 ($) | | Name | | | | | Vested | Unvested | | | | Marc D. Miller | $268,765 | $78,003 | $62,416 | $0 | $45,458 | $363,726 | $1,136,438 | $1,545,622 | | Steve G. Filton | $197,094 | $47,194 | $31,482 | $0 | $275,770 | $0 | $919,340 | $1,195,110 | | Edward H. Sim | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | | Matthew J. Peterson | $76,142 | $40,015 | $19,550 | $0 | $0 | $135,707 | $0 | $135,707 |
Pension Benefits
| (1) Amounts represent discretionary contributions made by the Company during 2023 to the SERIP accounts and are considered service costs. |
Pension Benefits
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 investment options in lieu of receiving cash. Under the Deferred Compensation Plan, an employee is deemed eligible if their base compensation for 2023 was $135,000 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 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. 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 as a result of death, disability, or termination, other than for 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. The following table provides information about our Deferred Compensation Plan for our named executive officers.
Pension Benefits
| Name | Executive Contributions in Last Fiscal Year ($)(1.) | Company Contributions in Last Fiscal Year ($) | Aggregate Earnings in Last Fiscal Year ($) | Aggregate Withdrawals / Distributions ($) | Aggregate Balance at Last Fiscal Year-End ($) | | Marc D. Miller | $0 | $0 | $74,211 | $0 | $311,650 | | Alan B. Miller | $0 | $0 | $655,789 | $0 | $3,489,321 | | Steve G. Filton | $0 | $0 | $0 | $0 | $0 | | Edward H. Sim | $0 | $0 | $0 | $0 | $0 | | Matthew J. Peterson | $160,432 | $0 | $171,102 | $0 | $1,050,596 |
Pension Benefits
| (1) Amounts included in “salary” in the Summary Compensation Table. |
Pension Benefits
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
Potential Payments Upon Termination or Change-in-Control
Potential Payments Upon Termination
Potential Payments Upon Termination 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 previous amended and restated employment agreement dated as of July 24, 2013. The New Employment Agreement became effective on 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. Mr. Alan Miller’s Agreement was also amended to make certain changes to narrow the circumstances under which Mr. Alan Miller can resign from employment with good reason and receive acceleration of future long-term incentive awards, including his Performance Based Restricted Stock Units. 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. 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. Additionally, Mr. Alan Miller would be entitled to the accelerated vesting of his unvested long-term stock-based incentive awards granted during or before employment as Executive Chairman. 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. 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, subject to the terms of his 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. 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 following table provides quantitative disclosure of the estimated payments that would be made to Mr. Alan Miller under his New Employment Agreement as of December 31, 2023, the last business day of our fiscal 2023:
Potential Payments Upon Termination
| | Cash Severance Payment ($) | Perquisites/ Benefits ($) | Vesting Acceleration of Previously Granted Stock Based Awards ($)(d.) | Long Term Incentive Plan Awards ($)(e.) | Total Termination Benefits ($) | | Alan B. Miller | | | | | | | Termination by Us for “Cause” | $0 | $0 | $0 | $0 | $0 | | Termination Due to Mr. Alan Miller’s Disability | $540,800(a.) | $0 | $16,449,545 | $6,018,789 | $23,009,134 | | Termination Due to Mr. Alan Miller’s Death | $0 | $0 | $16,449,545 | $6,018,789 | $22,468,334 | | Termination by Mr. Alan Miller for “Breach by the Company” or Termination by the Company Without Cause | $2,195,648(b.) | $1,565,816(c.) | $16,449,545 | $6,018,789 | $26,229,798 |
Potential Payments Upon Termination
| (a) Based upon 50% (6 months) of Mr. Alan Miller’s 2024 base salary. |
Potential Payments Upon Termination
| (b) Assumes (i) continuation of all cash compensation through 2025 (automatic annual renewal termination date), and; (ii) annual base salary increase of 3.0% through 2025. |
Potential Payments Upon Termination
| (c) Assumes (i) continuation of all entitled perquisites through 2025; (ii) continuation of insurance premiums in connection with long-term disability, our 401(k) match and other charges, all of which were based upon the actual 2023 amounts. Additionally, assumes premiums due in connection with split-dollar life insurance agreements through 2025. Please see the Summary Compensation and the All Other Compensation table included herein. |
Potential Payments Upon Termination
| (d) Represents the intrinsic value of the accelerated stock options based upon the closing price per share of the Class B Common Stock on the NYSE on December 29, 2023 of $152.44 per share. The full grant date fair values of these awards were included in the Summary Compensation Table in the year of original grant. |
Potential Payments Upon Termination
| (e) Represents the intrinsic value of the accelerated performance based restricted stock units based upon the closing price per share of the Class B Common Stock on the NYSE on December 29, 2023 of $152.44 per share. The full grant date fair values of these awards were included in the Summary Compensation Table in the year of original grant. |
Potential Payments Upon Termination
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. On March 23, 2022, Mr. Marc Miller’s Agreement was also amended to narrow the circumstances under which Mr. Marc Miller can resign from employment with good reason and receive acceleration of future long-term incentive awards, including his Performance Based Restricted Stock Units. 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. 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. 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. 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, subject to the terms of his 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 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 following table provides quantitative disclosure of the estimated payments that would be made to Mr. Marc Miller under his employment agreement as of December 31, 2023, the last business day of our fiscal 2023:
Potential Payments Upon Termination
| | Cash Severance Payment ($) | Perquisites/ Benefits ($) | Vesting Acceleration of Previously Granted Stock Based Awards ($)(d.) | Long Term Incentive Plan Awards ($)(e.) | Total Termination Benefits ($) | | Marc D. Miller | | | | | | | Termination by Us for “Cause” | $0 | $0 | $0 | $0 | $0 | | Termination Due to Mr. Marc Miller’s Disability | $1,757,668(a.) | $0 | $7,887,286 | $11,445,501 | $21,090,455 | | Termination Due to Mr. Marc Miller’s Death | $0 | $0 | $7,887,286 | $11,445,501 | $19,332,787 | | Termination by Mr. Marc Miller for “Breach by the Company” or Termination by the Company Without Cause | $7,136,130(b.) | $239,088(c.) | $7,887,286 | $11,445,501 | $26,708,005 |
Potential Payments Upon Termination
| (a) Based upon 50% of the targeted 2024 non-equity incentive plan bonus award and 50% (6 months) of Mr. Marc Miller’s 2024 base salary. |
Potential Payments Upon Termination
| (b) Assumes (i) continuation of all cash compensation through 2025 (automatic annual renewal termination date); (ii) annual base salary increase of 3.0% through 2025, and; (iii) an annual bonus award equal to 150% of his estimated base salary through 2025, which assumes the achievement of the bonus opportunity target. |
Potential Payments Upon Termination
| (c) Assumes (i) continuation of insurance premiums in connection with long-term disability, our 401(k) match and other charges, all of which were based upon the actual 2023 amounts, and, (ii) continuation of SERIP plan contributions. |
Potential Payments Upon Termination
| (d) Represents the intrinsic value of the accelerated stock options based upon the closing price per share of the Class B Common Stock on the NYSE on December 29, 2023 of $152.44 per share. The full grant date fair values of these awards were included in the Summary Compensation Table in the year of original grant. |
Potential Payments Upon Termination
| (e) Represents the intrinsic value of the accelerated performance based restricted stock units based upon the closing price per share of the Class B Common Stock on the NYSE on December 29, 2023 of $152.44 per share. The full grant date fair values of these awards were included in the Summary Compensation Table in the year of original grant. |
Potential Payments upon a Change of Control
Potential Payments upon a Change of Control Pursuant to our Third Amended and Restated 2005 Stock Incentive Plan and our 2020 Omnibus Stock and Incentive Plan, (as of December 31, 2023, all unvested awards of our named executive officers were granted under these two plans), all of our employees receive full acceleration of the vesting of any unvested award in the event that such awards 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, 2023, is as follows: Marc D. Miller: $7,887,286; Alan B. Miller: $16,449,545; Steve G. Filton: $3,044,047; Matthew J. Peterson: $2,344,721 and Edward H. Sim: $339,500. Additionally, the intrinsic value of our named executive officers’ performance based restricted stock units 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, 2023 is as follows: Marc D. Miller: $11,445,500; Alan B. Miller: $6,018,789; Steve G. Filton: $2,913,128; Matthew J. Peterson: $2,393,156, and; Edward H. Sim: $1,524,400. Such intrinsic values of the accelerated stock options and accelerated restricted stock units were calculated based upon the closing price per share of our common stock on December 29, 2023 of $152.44 as reported on the NYSE. Vesting acceleration of stock option awards and restricted stock unit 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
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. Marc D. Miller, the current Chief Executive Office and President. 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, 2023 (excluding Mr. Marc Miller) or calculated annualized pay for those who commenced work during 2023 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. Due to the amount of turnover and job status changes that exist in the healthcare industry, we recalculated the median employee in 2023 and determined that person’s total compensation was $50,152. The ratio of CEO pay to median worker pay is 287:1. 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. The following section was prepared in accordance with Item 402(v) of the SEC’s Regulation S-K. The following table provides additional compensation information for the past four fiscal years for our Chief Executive Officer (“CEO”) and our non-CEO Named Executive Officers (“Other NEOs”), as well as total shareholder return, net income attributable to UHS, Inc. and adjusted earnings per share, diluted performance results for our fiscal years ending in 2023, 2022 2021 and 2020:
CEO Pay Ratio
| Year | Summary Compensation Table Total for CEO (1) | Compensation Actually Paid to CEO (2) | Summary Compensation Table Total for CEO 2 (1) | Compensation Actually Paid to CEO 2 (2) | Average Summary Compensation Table Total for other NEOs (1) | Average Compensation Actually Paid for other NEOs (1)(2) | Value of initial fixed $100 investment based on: | | Net Income attributable to UHS ($ in thousands) | Adjusted Earnings per share, diluted (4) | | | | | | | | | Total Shareholder Return (3) | Peer Group Total Shareholder Return (3) | | | | 2023 | $— | $— | $14,407,937 | $14,959,742 | $5,764,662 | $4,627,875 | $108 | $191 | $717,795 | $10.54 | | 2022 | $— | $— | $10,919,976 | $13,476,236 | $3,270,794 | $5,112,238 | $100 | $167 | $675,609 | $9.88 | | 2021 | $— | $— | $14,020,942 | $9,784,532 | $6,684,372 | $995,897 | $91 | $181 | $991,590 | $11.82 | | 2020 | $13,246,214 | $47,969,126 | $— | $— | $1,825,611 | $6,273,018 | $96 | $114 | $943,953 | $11.12 |
CEO Pay Ratio
| (1) Named executive officers included in the above compensation columns reflect the following: |
CEO Pay Ratio
| Year | CEO | Non-CEO NEOs | | 2023 | Marc D. Miller | Alan B. Miller, Filton, Peterson, Sim | | 2022 | Marc D. Miller | Alan B. Miller, Filton, Pember, Peterson, Sim | | 2021 | Marc D. Miller | Alan B. Miller, Filton, Pember, Peterson | | 2020 | Alan B. Miller | Marc D. Miller, Filton, Pember, Peterson |
CEO Pay Ratio
| (2) SEC rules require certain adjustment be made to the Summary Compensation Table (“SCT”) totals to determine “Compensation Actually Paid” (“CAP”) as reported in the Pay Versus Performance Table. CAP does not necessarily represent cash and/or equity value transferred to the applicable NEO without restriction, but rather is a value calculated under applicable SEC rules. In general, CAP is calculated as the total compensation from the SCT, adjusted to include, among other things, the fair market value of equity awards as of December 31 of the applicable year or, if earlier, the vesting date (rather than the grant date). No adjustment is made for dividends or other earnings, since dividends are factored into the fair value of the award. |
CEO Pay Ratio
The following tables detail these adjustments:
CEO Pay Ratio
| Fiscal Year | Executives | SCT (a) | Grant Date Value of New Awards (b) | Year End Value of New Awards (i) | Change in Value of Unvested Prior Awards (ii) | Change in Value of Vested Prior Awards (iii) | Change in Value of Awards that Failed to Meet Vesting Conditions (iv) | Total Equity CAP (c) = (i) + (ii) + (iii) + (iv) | CAP (d) = (a) - (b) + (c) | | 2023 | CEO 1 | $— | $— | $— | $— | $— | $— | $— | $— | | 2023 | CEO 2 | $14,407,937 | $9,888,558 | $13,063,409 | $(131,034) | $(2,492,012) | $— | $10,440,363 | $14,959,742 | | 2023 | Non-CEO NEOs | $5,764,662 | $3,384,852 | $4,123,681 | $349,678 | $(2,225,294) | $— | $2,248,065 | $4,627,875 | | 2022 | CEO 1 | $— | $— | $— | $— | $— | $— | $— | $— | | 2022 | CEO 2 | $10,919,976 | $9,508,078 | $9,680,126 | $430,267 | $1,953,945 | $— | $12,064,338 | $13,476,236 | | 2022 | Non-CEO NEOs | $3,270,794 | $2,342,607 | $1,915,653 | $865,575 | $1,920,853 | $(518,031) | $4,184,050 | $5,112,238 | | 2021 | CEO 1 | $— | $— | $— | $— | $— | $— | $— | $— | | 2021 | CEO 2 | $14,020,942 | $10,104,427 | $8,545,032 | $(2,230,851) | $(446,165) | $— | $5,868,017 | $9,784,532 | | 2021 | Non-CEO NEOs | $6,684,372 | $4,794,552 | $4,054,620 | $(4,194,869) | $(753,674) | $— | $(893,923) | $995,897 | | 2020 | CEO 1 | $13,246,214 | $9,603,667 | $48,125,827 | $9,138,224 | $(12,937,472) | $— | $44,326,579 | $47,969,126 | | 2020 | CEO 2 | $— | $— | $— | $— | $— | $— | $— | $— | | 2020 | Non-CEO NEOs | $1,825,611 | $1,057,222 | $5,664,134 | $1,053,709 | $(1,213,213) | $— | $5,504,630 | $6,273,018 |
CEO Pay Ratio
| (3) Total Shareholder Return (“TSR”) is determined based upon the value of an initial fixed investment of $100. The TSR peer group consists of the industry line peer group reflected in our 2023 Annual Report on Form 10-K pursuant to Item 201(e) of Regulation S-K. The companies in the peer group are as follows: Arcadia Healthcare Company, Inc., Community Health Systems, Inc., HCA Healthcare, Inc., and Tenet Healthcare Corporation. Each year reflects the cumulative total return assuming $100 invested on December 31, 2019 in our common stock and in the our peer group, including subsequent reinvestment of dividends. |
CEO Pay Ratio
| (4) Adjusted earnings per share, diluted, was selected by the Company as the Company-Selected Measure (“CSM”). It is a non-Generally Accepted Accounting Principles (“GAAP”) financial measure. A reconciliation of adjusted earnings per share, diluted, to the most directly comparable financial measure calculated in accordance with GAAP is included in the Company’s Form 8-K filed with the SEC on February 27, 2024. |
CEO Pay Ratio
Changes in pension values for each of the named executives in 2023, 2022, 2021 and 2020 pursuant to the Executive Retirement Income Plan or the Supplemental Executive Retirement Income Plan, as described herein, are considered service costs. No equity awards of the named executives were granted and vest in the same year for 2023, 2022, 2021 and 2020.
Analysis of the Information Presented in the Pay Versus Performance Table
Analysis of the Information Presented in the Pay Versus Performance Table The following charts show the relationship between the Company’s cumulative four-year TSR and that of the industry line peer group reflected in our 2023 Annual Report on Form 10-K pursuant to Item 201(e) of Regulation S-K, as well as the relationships between CAP and the required financial performance measures in the Pay Versus Performance table above – Company TSR, net income and the Company-selected measure of adjusted earnings per share, diluted.
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION 2023 Director Compensation: The following table provides information concerning the compensation of our non-employee Directors for 2023.
DIRECTOR COMPENSATION
| Name | Fees Earned or Paid in Cash ($) | Grant Date Fair Value Stock Awards(1.) ($) | Grant Date Fair Value Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation(2.) ($) | Total ($) | | Nina Chen-Langenmayr | $125,955 | $199,987 | $0 | $0 | $1,124 | $327,066 | | Eileen C. McDonnell | $143,137 | $199,987 | $0 | $0 | $1,344 | $344,468 | | Warren J. Nimetz | $100,000 | $199,987 | $0 | $0 | $1,344 | $301,331 | | Maria R. Singer | $128,750 | $199,987 | $0 | $0 | $1,344 | $330,081 | | Elliot J. Sussman, M.D. | $152,500 | $199,987 | $0 | $0 | $1,344 | $353,831 |
DIRECTOR COMPENSATION
| (1) On May 17, 2023, 1,488 restricted stock units were issued to each of Nina Chen-Langenmayr, Eileen C. McDonnell, Warren J. Nimetz, Maria R. Singer and Elliot J. Sussman, M.D., with a grant date fair value of $199,987, or $134.40 per share. These shares are scheduled to fully vest on the earlier of the one-year anniversary of the date of grant, and the next annual meeting of stockholders which is at least 50 weeks after the immediately preceding year’s annual meeting. |
DIRECTOR COMPENSATION
| (2) Consists of dividend equivalents paid upon the vesting of restricted stock units issued during 2022 and vested during 2023. |
DIRECTOR COMPENSATION
Note: Lawrence S. Gibbs resigned from the Board of Directors effective as of March 31, 2023. Aggregate fees paid in cash to Mr. Gibbs from January 1, 2023 through the date of his resignation amounted to $33,596. Our non-employee directors do not participate in either of our retirement income plans or nonqualified deferred compensation plan. As of December 31, 2023 the following equity awards were outstanding for each active director:
DIRECTOR COMPENSATION
| Name | Option Awards | Stock Awards | | Nina Chen-Langenmayr | — | 1,488 | | Eileen C. McDonnell | 7,500 | 1,488 | | Warren J. Nimetz | 20,000 | 1,488 | | Maria R. Singer | 20,000 | 1,488 | | Elliot J. Sussman, M.D. | 20,000 | 1,488 |
DIRECTOR COMPENSATION
2023 Cash Compensation: All non-employee directors received an annual retainer of $100,000 for service on the Board of Directors. Additionally:
DIRECTOR COMPENSATION
| • | Eileen C. McDonnell, Chairperson of the Audit Committee, received an annual retainer of $25,000 for her services in that capacity. |
DIRECTOR COMPENSATION
| • | Maria R. Singer and Elliott J. Sussman, M.D., as members of the Audit Committee, each received an annual retainer of $12,500 for services in that capacity. |
DIRECTOR COMPENSATION
| • | Eileen C. McDonnell, Chairperson of the Compensation Committee, received an annual retainer of $15,000 for her services in that capacity. |
DIRECTOR COMPENSATION
| • | Elliot J. Sussman, M.D., as a member of the Compensation Committee, received an annual retainer of $7,500, and Nina Chen-Langenmayr received a pro rata annual retainer of $4,705 as a member of the Compensation Committee for part of the year. |
DIRECTOR COMPENSATION
| • | Elliot J. Sussman, M.D., Chairman of the Nominating and Governance Committee, received an annual retainer of $10,000 for his services in that capacity; as well as an annual retainer fee of $22,500 for his services as Chairman of the Quality and Compliance Committee. |
Director Compensation
Director Compensation
Director Compensation
| • | Maria R. Singer and Nina Chen Langenmayr, as members of the Quality and Compliance Committee, each received an annual retainer of $11,250 for their services in that capacity. |
Director Compensation
| • | Maria R. Singer, as a member of the Nominating and Governance Committee, received an annual retainer of $5,000 for her services in that capacity, and Eileen C. McDonnell, as a member of the Nominating and Governance Committee for part of the year, received a pro rata annual retainer of $3,137 for her services in that capacity |
Director Compensation
| • | Nina Chen-Langenmayr, Chairperson of the Special Litigation Committee, received a retainer of $10,000 for her services in that capacity. |
Director Compensation
2023 Restricted Stock Units: As mentioned above, on May 17, 2023, all non-employee directors received 1,488 restricted stock units of our Class B Common Stock. The restricted stock units, which were granted under our 2020 Omnibus Stock and Incentive Plan, had a grant date value of $199,987 or $134.40 per share. These restricted stock unit awards will fully vest on the earlier of the one-year anniversary of the date of grant, and the next annual meeting of stockholders which is at least 50 weeks after the immediately preceding year’s annual meeting.
Board Leadership Structure and Board of Directors
Board Leadership Structure and Board of Directors Mr. Alan B. Miller serves as Executive Chairman of the Board. Eileen C. McDonnell serves as the Lead Independent Director and 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 and is currently Executive Chairman of the Board. 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. 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, a 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). Also served in various roles in our Acute Care Division since 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 oversees all of the Company’s businesses, its operations, development and overall strategy. Nina Chen-Langenmayr: Has been a Director of the Company since 2022. She has served as a Special Projects Consultant at The Welcoming Center in Philadelphia since 2013. Prior thereto, she served as Partner, Client Relationship Management Group at Mercer. Ms. Chen-Langenmayr, a Juris Doctor, has multiple years of experience in the human capital management and outsourcing arena, particularly in the pharmaceutical and healthcare industries. Prior to that, Ms. Chen-Langenmayr practiced law, with emphasis in the areas of employee benefits and compensation law. She is a Founding Member of the Asian Pacific American Bar Association of Pennsylvania and a member of the Forum of Executive Women. Ms. Chen-Langenmayr, an independent director, provides expertise on healthcare and human capital management. Eileen C. McDonnell: Has been a Director of the Company since 2013. Ms. McDonnell currently serves as a Trustee of the Penn Mutual Life Insurance Company. She served as Chairman of Penn Mutual until December 2023. She joined Penn Mutual in 2008 and served as Chief Executive Officer of the company from March 2011 until December 2021. Ms. McDonnell was 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 served as a Director of the Insurance Federation of Pennsylvania and was a national advisor to VisionForward, an initiative of Drexel University College of Medicine Institute for Women’s Health and Leadership. Ms. McDonnell, an independent director, provides expertise on the insurance industry and financial matters. Warren Nimetz: Has been a Director of the Company since January 2018. He has been a Partner at the law firm of Norton Rose Fulbright US 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 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: Has been a Director of the Company since 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, an independent director, provides expertise on financial and strategic advisory matters. Elliot J. Sussman, M.D.: Has been a Director of the Company since 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 was a member of the Board of Directors of Yale New Haven Health System from 2011 to 2023. He has previously chaired the boards of the Council of Teaching Hospitals and of the Association of American Medical Colleges. Dr. Sussman, an independent director, provides expertise on the management of hospitals and health systems and on health care quality and compliance matters. 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, to assist the Board in performing its oversight responsibilities, the Board has established a Compensation Committee, an Audit Committee, a Nominating & Governance Committee, a Quality and Compliance Committee, an Executive Committee and a Finance Committee. 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 report to determine what, if any, actions should be taken to improve the effectiveness of the Board or any committee thereof.
Board of Directors
Board of Directors The members of our Board of Directors are elected by the Company’s stockholders in accordance with the Company’s certificate of incorporation, to oversee management and to assure that the long-term interests of the stockholders are served. The seven-member Board is led by Founder and Executive Chairman, Alan B. Miller. Ms. Eileen McDonnell, one of the four independent Board Members, serves as Lead Director. The Forum of Executive Women recognized the high percentage of women on the UHS Board (43%) and awarded UHS its 2023 Champion of Board Diversity award. In the U.K., Cygnet’s executive management board is responsible for the quality of care delivered across all Cygnet services. The 12-member board has four sub-committees, which meet quarterly to provide governance over Cygnet facilities. The executive management board is supported by an advisory board. Since May 2023, the advisory board welcomed Ms. Sian Jarvis CB, a strategic communications and marketing specialist, and Mr. Ian Brokenshire, a former auditor, who will chair the audit and risk committee. All five Cygnet advisory board members are independent and hold non-executive positions. Twenty-five percent of the executive management board and 40% of the advisory board are women.