Community Health Systems’ top executives made more money in 2020 than the prior year, despite agreeing to take salary cuts at the outset of the COVID-19 pandemic.
Former CEO Wayne Smith, who stepped down at the end of 2020, made almost $9.1 million last year, up 12.6% from 2019. That’s despite voluntarily lowering his salary from $1.6 million to $1.3 million. Many healthcare C-suite leaders took salary cuts last year as companies trimmed expenses during the pandemic. Salary, however, tends to be a fraction of total compensation, which is heavily weighted toward bonus pay, stock awards and retirement pay.
Franklin, Tenn.-based CHS wrote in its latest proxy filing that the company’s improved performance last year meant top executives took home more incentive pay. In Smith’s case, about half of his 2020 compensation—$4.6 million—came from cash incentive pay.
CHS, which declined to comment for this article, may be turning a corner financially after an aggressive hospital sell-off program that netted about $1.5 billion in proceeds and helped trim the company’s sizable debt. The investor-owned hospital chain posted $511 million in net income in 2020, compared with a $675 million net loss in 2019. CHS’ stock price rebounded, from $2.90 at the end of 2019 to $7.43 at the end of 2020. It was even higher—$13.57—at Friday’s open.
CHS’ new CEO, Tim Hingtgen, made $6.3 million in total compensation last year in his former role as chief operating officer. That’s 52% higher than his 2019 compensation, mostly due to greater stock awards and deferred compensation.
Kevin Hammons made $3.1 million in 2020 during his first year as CHS’ chief financial officer. Benjamin Fordham made $2.7 million for his role as general counsel. His total compensation grew 16.4% year-over-year.
The lowest pay bump among named officers went to Dr. Lynn Simon, CHS’ chief medical officer. Her total compensation grew by 2% year-over-year to $2.8 million.
In April 2020, CHS announced Smith and the other named executive officers had agreed to lower their base salaries by 25% and 10%, respectively, for the remainder of the year. The company’s non-management directors also took 25% pay cuts for the year. The money saved went into a charitable fund that provides financial assistance to CHS employees who have experienced hardships due to catastrophic events, including the COVID-19 pandemic.
Smith, 75, didn’t retire at the end of 2020. He currently serves as CHS’ executive chairman, a position that could net him up to $4 million plus hundreds of thousands of shares in the company this year. Once he does retire, he’ll cash in on a supplemental executive retirement plan worth almost $51 million.
CHS’ top executives make less than their peers at other for-profit hospital companies. The CEO of HCA Healthcare, for example, made $30.4 million in total compensation last year, although HCA is a much larger and more profitable company. HCA drew $51.5 billion in revenue in 2020, compared with CHS’ $11.8 billion. Tenet Healthcare Corp.’s CEO made $16.7 million in 2020. That was 31% less than in 2019, mostly because of a smaller bonus and stock awards.