Franklin, Tenn.-based CHS wrote in the filing that the cash incentive pay awarded to its executives was higher than in recent years because of improved company performance on net revenue and adjusted earnings before interest, taxes, depreciation and amortization, among other metrics.
CHS' net operating revenue was $14.2 billion in 2018, down 7.8% year-over-year—including the impact of divestitures—but well above its $13.7 billion target for incentive compensation. The company's adjusted EBITDA was $1.64 billion in 2018, down 3.6% year-over-year, but not far below its $1.65 billion target.
Hingtgen's total compensation grew 35% year-over-year, while Chief Financial Officer Thomas Aaron made 8.7% more in 2018, at $1.9 million. General counsel Benjamin Fordham's total compensation was $1.8 million, up 4.6% year-over-year.
CHS' company's stock price fell 34% in 2018, from $4.26 per share on Dec. 31, 2017 to $2.82 on Dec. 31, 2018, according to the proxy. That meant some executives got lower restricted stock awards last year, even though the number of shares awarded to those executives was higher in 2018 than in 2017, according to the proxy. For example, CHS said Smith's grant date fair value of his 2018 restricted stock award was about 30% less than the grant date fair value of his 2017 restricted stock award.
CHS wrote in the proxy that it made progress on lowering its debt load through divestitures last year, having sold 11 hospitals. But the company actually fell far short of its 2018 divestiture target, having generated just $400 million in gross proceeds on those deals, less than half of its $1.3 billion goal.
CHS stockholders will vote on the items in the proxy statement at the company's annual meeting on May 14. The vote on executive pay will be a non-binding, advisory vote. They will also vote to elect 11 directors and to approve a new accounting firm.
Smith has accrued $48.5 million in pension benefits, according to the proxy statement. The plan gives executives one year of benefits for each actual year of service. Smith used to receive two years' worth of benefits for each actual year of service, until the board adopted a policy that limited that allotment to 25 years of actual service. Smith has reached the maximum 30 years of credited service for pension benefits.
In the event of a change in control of the company, Smith would receive $65.7 million. If he's involuntarily terminated without cause, he would receive $56 million.
