Columbia/HCA Healthcare Corp. executives got lush stock options last year, and another federal agency joined the nationwide investigation of whether the company broke state and or federal laws, Columbia disclosed last week.
In two separate Securities and Exchange Commission filings, the nation's largest healthcare company detailed executive pay, the status of federal investigations and other items.
In the March 27 preliminary proxy statement, Nashville-based Columbia said because of the government investigation into its billing practices and its internal reorganization, it was important to substantially alter its executive compensation program to retain "executives whose performance is critical to the company's ability to respond successfully to the challenges it faces."
Columbia President and Chief Operating Officer Jack Bovender Jr. received an annual $900,000 salary plus an option to buy 500,000 shares of company stock at $28.19 each. The company's stock closed at $32.19 per share April 2 on the New York Stock Exchange.
Receiving 250,000 shares each in stock options were David White, president of the Atlantic Group; James Shelton, president of the Pacific Group; and Jay Grinney, president of the Eastern Group. In a reorganization, Columbia will spin off 107 hospitals, leaving the Atlantic Group with 45 hospitals, the Pacific Group with 41 and the Eastern Group with 119.
Although Columbia Chairman and Chief Executive Officer Thomas Frist Jr., M.D., is not taking a salary for his current position, he received $47,800 for his work as vice chairman before the July 1997 federal raids. And despite the company's poor financial performance, employees and executives received full bonuses in 1997.
Columbia lost $305 million, or 46 cents per share, on revenues of $18.8 billion in 1997.
Executive Daniel Moen will receive three years' salary, set at $400,000 in 1997, plus other benefits if he resigns. Moen was supposed to lead the merger of ValueHealth into Columbia, but Columbia decided to sell a majority of the company soon after its August 1997 acquisition. Moen then agreed to return to Columbia's managed-care division, where he had worked since March 1996. Previously, Moen had headed Columbia's Florida and South Florida operations, in which three executives were indicted last July on charges of Medicare fraud.
Moen has not made any public statement on whether he will resign, and a Columbia spokesman said he hasn't decided.
According to Columbia's 10-K document, filed March 31, the SEC has been investigating whether the company violated any of its laws. Columbia said the investigation includes "the anti-fraud, periodic reporting and internal accounting control provisions" of SEC law. The agency joins the U.S. Justice Department and a number of state agencies examining Columbia's practices.