As acute-care hospital chains saw their stock prices climb last year, more CEOs exercised stock options—leading to a boost in overall compensation despite more modest pay packages.
At 132-hospital Community Health Systems, Franklin, Tenn., President and CEO Wayne Smith saw a 19.7% decrease in annual compensation (excluding the value of option awards), but nevertheless saw his total compensation rise after exercising stock options of $4.5 million.
Smith did not exercise any options in 2011, a year when the company's share price was battered during an unsuccessful takeover attempt of 51-hospital Tenet Healthcare Corp, Dallas. But last year was a better one for Community, when its share price increased 77% between the last trading day of 2011 and the final closing bell of 2012.
Nevertheless, the fallout from the Tenet affair led the company's compensation committee to institute a number of actions to align executive compensation with total shareholder return.