Community Health Systems CEO Wayne Smith's total compensation was nearly cut in half in 2016 as the hospital chain recorded a net loss of $1.7 billion on the year, according to financial results posted Friday.
Smith's total compensation decreased to $5.8 million in fiscal year 2016, down from $10.4 million in fiscal year 2015 and $26.4 million in 2014. If he chose to leave the company, he would receive $52.4 million in severance and other benefits, according to documents filed with the U.S. Securities and Exchange Commission.
The Franklin, Tenn.-based hospital chain posted revenue of $18.4 billion in 2016, down from $19.4 billion in 2015 due to asset divestitures. CHS agreed to sell 25 hospitals and spun off 38 rural hospitals into Quorum Health.
CHS reported a net income of $158 million in 2015 compared to a net loss of $1.7 billion in 2016.
“The company did not meet several of its financial expectations in 2016,” the company wrote in the filing, describing 2016 as a “transitional year.” Its stock price dropped nearly 75 percent from 2015 to 2016.
CHS will hold its annual hospital stockholder meeting on May 16 where stockholders will vote on eight board of directors for 2017, executive compensation and a shareholder proposal, among other items.
Larry Cash, the long-time chief financial officer at CHS, will announce his retirement at the meeting after serving as the right-hand executive to Smith for 20 years. He had the second-highest total compensation in 2016 at $2.8 million, down from $5.2 million in 2015. Cash will advise the company on finance and operations and current vice president of finance Thomas Aaron will take his role.
The board of directors unanimously recommended to vote against a shareholder proposal that would force executives' unvested stock bonuses to vest at a pro rata basis when they leave the company.
The board argued that the rigid “one-size fits all” proposal would limit the company's ability to attract retain talented executives. It is atypical to only allow for pro rata vesting with a change in control, the board said.
Since the start of 2016, CHS has reduced its debt from $16.6 billion to $14.8 billion. It estimates that the sale of its 25 hospitals will net $1.5 billion that will be used to pay down debt.
