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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No.)
 
 
Filed by the Reg
istran
t  
Filed by a Party other than the Registrant  
Check the appropriate box:
 
Preliminary Proxy Statement
 
Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
 
Definitive Proxy Statement
 
Definitive Additional Materials
 
Soliciting Material under
§240.14a-12
Universal Health Services, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check all boxes that apply):
 
No fee required
 
Fee paid previously with preliminary materials
 
Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules
14a-6(i)(1)
and
0-11
 
 
 
 


NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

 

LOGO

UNIVERSAL HEALTH SERVICES, INC.

UNIVERSAL CORPORATE CENTER     367 SOUTH GULPH ROAD     KING OF PRUSSIA, PENNSYLVANIA 19406

 

LOGO  

    

 

    

  LOGO                 LOGO
   

Date and Time

May 17, 2023

10:00 a.m.

 

     

Live Audio Webcast

www.meetnow.global/MRVPLHZ

     

Record Date

March 22, 2023

Items to be Voted On

 

(1)

the election of one director by the holders of Class A and Class C Common Stock (voting together as a single class) and the election of one director by the holders of Class B and Class D Common Stock (voting together as a single class);

 

(2)

to conduct an advisory (nonbinding) vote to approve named executive officer compensation;

 

(3)

to conduct an advisory (nonbinding) vote on the frequency of an advisory stockholder vote to approve named executive officer compensation;

 

(4)

the ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023; and

 

(5)

the transaction of such other business as may properly come before the meeting or any adjournment thereof.

You are entitled to vote at the Annual Meeting only if you were a Company stockholder of record at the close of business on March 22, 2023.

This year we will hold the Annual Meeting in a virtual only format, which will be conducted via live audio webcast. Stockholders will have an equal opportunity to participate at the Annual Meeting online regardless of their geographic location.

WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING ONLINE, PLEASE VOTE BY TELEPHONE OR INTERNET OR, IF YOU RECEIVED PRINTED PROXY MATERIALS AND WISH TO VOTE BY MAIL, MARK YOUR VOTES, THEN DATE AND SIGN THE ENCLOSED FORM OF PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE. YOU MAY REVOKE YOUR PROXY IF YOU DECIDE TO ATTEND THE ANNUAL MEETING AND WISH TO VOTE YOUR SHARES ONLINE AT THE MEETING.

 

Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be held on Wednesday, May 17, 2023:

The Proxy Statement and Annual Report to Stockholders are available at http://www.edocumentview.com/uhs.

BY ORDER OF THE BOARD OF DIRECTORS

 

 

LOGO

Steve G. Filton,

Secretary

King of Prussia, Pennsylvania

April 6, 2023

 

 

Universal Health Services, Inc. 2023 Proxy Statement


A LETTER FROM OUR SENIOR EXECUTIVES

 

LOGO

April 6, 2023

Dear Stockholder:

 

LOGO

You are cordially invited to attend the 2023 Annual Meeting of Stockholders of Universal Health Services, Inc. (the “Company”) to be held on Wednesday, May 17, 2023, beginning at 10:00 a.m. This year’s Annual Meeting will be conducted completely virtually, via a live audio webcast; there will be no physical meeting location. You will be able to attend and participate in the Annual Meeting by visiting www.meetnow.global/MRVPLHZ, where you will be able to listen to the meeting live, submit questions, and vote. The annual meeting is being held for the following purposes:

 

(1)

the election of one director by the holders of Class A and Class C Common Stock (voting together as a single class) and the election of one director by the holders of Class B and Class D Common Stock (voting together as a single class);

 

(2)

to conduct an advisory (nonbinding) vote to approve named executive officer compensation;

 

(3)

to conduct an advisory (nonbinding) vote on the frequency of an advisory stockholder vote to approve named executive officer compensation;

 

(4)

the ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023; and

 

(5)

the transaction of such other business as may properly come before the meeting or any adjournment thereof.

Detailed information concerning these matters is set forth in the Important Notice Regarding the Availability of Proxy Materials (the “Notice”) you received in the mail and in the attached Notice of Annual Meeting of Stockholders and Proxy Statement. We have elected to provide access to our Proxy

Materials over the internet under the Securities and Exchange Commission’s “notice and access” rules. If you want more information, please see the Questions and Answers section of this Proxy Statement.

Your vote is important. Whether or not you plan to attend the meeting online, please either vote by telephone or internet or, if you received printed Proxy Materials and wish to vote by mail, by promptly signing and returning your Proxy card in the enclosed envelope. Please review the instructions on each of your voting options described in this Proxy Statement as well as in the Notice you received in the mail. If you then attend and wish to vote your shares online, you still may do so. In addition to the matters noted above, we will discuss the business of the Company and be available for your questions relating to the Company.

Sincerely,

 

LOGO

Alan B. Miller

Executive Chairman of the Board of Directors

 

LOGO

Marc D. Miller

Chief Executive Officer and President

 

 

 

Universal Health Services, Inc. 2023 Proxy Statement


PROXY STATEMENT

QUESTIONS AND ANSWERS

 

 

LOGO

UNIVERSAL HEALTH SERVICES, INC.

UNIVERSAL CORPORATE CENTER    367 SOUTH GULPH ROAD    KING OF PRUSSIA, PA 19406

 

 

1.

Q: Why am I receiving these materials?

 

  A:

This Proxy Statement and enclosed forms of Proxy (first mailed to the holders of Class A and Class C Common Stock, and to the holders of Class B and Class D Common Stock who requested to receive printed Proxy Materials, on or about April 6, 2023) are furnished in connection with the solicitation by our Board of Directors of Proxies for use at the Annual Meeting of Stockholders, or at any adjournment thereof. A Notice Regarding the Availability of Proxy Materials was first mailed to all of our other stockholders beginning on or about April 6, 2023. The Annual Meeting will be held on Wednesday, May 17, 2023, beginning at 10:00 a.m. The Annual Meeting will be accessible via live audiocast on the internet. To participate at the Annual Meeting online, please visit www.meetnow.global/MRVPLHZ. For additional information on the virtual meeting review the instructions under the Q&A section entitled “How can I attend and vote at the online meeting?” below. As a stockholder, you are invited to attend the Annual Meeting and are requested to vote on the items of business described in this Proxy Statement.

 

2.

Q: What is the purpose of the Annual Meeting?

 

  A:

The Annual Meeting is being held for the following purposes (1) to have the holders of Class A and C Common Stock (voting together as a single class) elect one Class III director and to have the holders of Class B and D Common Stock (voting together as a single class) elect one Class III director, each such director to serve for a term of three years until the annual election of directors in 2026 or the election and qualification of their respective successor; (2) to conduct an advisory (nonbinding) vote to approve named executive officer compensation; (3) to conduct an advisory (nonbinding) vote on the frequency of an advisory stockholder vote to approve named executive officer compensation; (4) the ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023; and (5) the transaction of such other business as may properly come before the meeting or any adjournment thereof. We will also discuss our business and be available for your comments and discussion.

 

3.

Q: Why did holders of Class B and Class D Common Stock receive a notice in the mail regarding the internet availability of Proxy Materials instead of a full set of Proxy Materials?

 

  A:

In accordance with “notice and access” rules adopted by the U.S. Securities and Exchange Commission, or SEC, we may furnish Proxy Materials, including this Proxy Statement and our Annual Report to Stockholders, to our stockholders by providing access to such documents on the internet instead of mailing printed copies. Holders of Class B and Class D Common Stock will not receive printed copies of the Proxy Materials unless they request them. Instead, the Notice, which was mailed to holders of Class B and Class D Common Stock that did not request printed copies of the Proxy Materials, will instruct you as to how you may access and review all of the Proxy Materials on the internet. Please visit http://www.edocumentview.com/uhs. The Notice also instructs you as to how you may submit your Proxy on the internet. If you would like to receive a paper or e-mail copy of our Proxy Materials, you should follow the instructions for requesting such materials in the Notice.

 

4.

Q: Who may attend the Annual Meeting?

 

  A:

All stockholders of record and registered beneficial holders as of the close of business on March 22, 2023, or their duly appointed proxies, may attend the meeting online at www.meetnow.global/MRVPLHZ. For additional information on the virtual meeting review the Q&A below entitled “How can I attend and vote at the online meeting?”

 

 

 

1

Universal Health Services, Inc. 2023 Proxy Statement


Proxy Statement

 

 

 

5.

Q: How can I attend and vote at the online meeting?

 

  A:

For registered stockholders: If on the record date your Shares were registered directly in your name with our transfer agent, Computershare Trust Company, N.A. (“Computershare”), then you are a stockholder of record (also known as a “record holder”). Stockholders of record at the close of business on the record date will be able to attend the Annual Meeting online, ask a question and vote by visiting www.meetnow.global/MRVPLHZ at the meeting date and time and entering the 15-digit control number located in the shaded bar of the proxy card or notice they received. We encourage you to access the Annual Meeting prior to the start time. Online access will begin at 9:45 a.m., Eastern Time.

For beneficial owners: If on the record date your Shares were not registered directly in your name with Computershare but instead held by an intermediary, such as a bank, broker or other nominee, then you are the beneficial owner of shares held in “street name”. The organization holding your account is considered to be the stockholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you must register in advance to attend the Annual Meeting, vote and submit questions. To register in advance you will need to obtain a legal proxy from the bank, broker or other nominee that holds your Shares giving you the right to vote the Shares. Once you have received a legal proxy form from your bank, broker or other nominee, forward the email with your name and the legal proxy attached or send a separate email with your name and legal proxy attached labeled “Legal Proxy” in the subject line to Computershare, at legalproxy@computershare.com. Requests for registration must be received no later than 5:00 p.m., Eastern Time, on May 12, 2023. You will then receive a confirmation of your registration, with a control number, by email from Computershare. At the time of the meeting, go to www.meetnow.global/MRVPLHZ and enter your control number. If you do not have your control number you may attend as a guest (non-stockholder) by going to www.meetnow.global/MRVPLHZ, clicking on the “Guest” link and entering the requested information. Please note that guest access is in listen-only mode and you will not have the ability to ask questions or vote during the Annual Meeting.

 

6.

Q: Do I need to register to attend the Annual Meeting virtually?

 

  A:

Registration is only required if you are a beneficial owner. Beneficial holders may register as set forth above or they may register at the Annual Meeting using the control number received with their voting information form. Beginning in the 2021 proxy season, an industry solution was agreed upon to allow beneficial holders to register online at the Annual Meeting to attend and ask questions. We expect that the vast majority of beneficial holders will be able to fully participate using the control number received with their voting instruction form. Please note, however, that this option is intended to be provided as a convenience to beneficial holders only, and there is no guarantee this option will be available for every type of beneficial holder voting control number. The inability to provide this option to any or all beneficial holders shall in no way impact the validity of the Annual Meeting. Beneficial holders may choose to Register in Advance of the Annual Meeting option above, if they prefer to use this traditional, legal proxy option set forth in #5 above and have the ability to vote. In any event, please go to www.meetnow.global/MRVPLHZ for more information on the available attendance options and registration instructions. The online meeting will begin promptly at 10:00 a.m., EDT. We encourage you to access the meeting prior to the start time leaving ample time for the check in. Please follow the registration instructions as outlined in this proxy statement.

 

7.

Q: What if I have trouble accessing the Annual Meeting virtually?

 

  A:

The virtual meeting platform is fully supported across browsers (MS Edge, Firefox, Chrome and Safari) and devices (desktops, laptops, tablets and cell phones) running the most up-to-date version of applicable software and plugins. Participants should ensure that they have a strong Wi-Fi connection wherever they intend to participate in the meeting. We encourage you to access the meeting prior to the start time. A link on the meeting page will provide further assistance should you need it, or you may call 1-888-724-2416.

 

8.

Q: Who is entitled to vote at the Annual Meeting?

 

  A:

Only stockholders as of the close of business on March 22, 2023 are entitled to vote at the Annual Meeting. On that date, 6,577,100 shares of Class A Common Stock, par value $.01 per share, 661,688 shares of Class C Common Stock, par value $.01 per share, 62,789,877 shares of Class B Common Stock, par value $.01 per share, and 14,100 shares of Class D Common Stock, par value $.01 per share, were outstanding.

 

 

 

2

Universal Health Services, Inc. 2023 Proxy Statement


Proxy Statement

 

 

 

9.

Q: Who is soliciting my vote?

 

  A:

The principal solicitation of Proxies is being made by the Board of Directors by mail. Certain of our officers, directors and employees, none of whom will receive additional compensation therefor, may solicit Proxies by telephone or other personal contact. We will bear the cost of the solicitation of the Proxies, including postage, printing and handling and will reimburse the reasonable expenses of brokerage firms and others for forwarding material to beneficial owners of shares. We have not engaged any third party to assist us in solicitation of proxies at the Annual Meeting, but we may decide to retain the services of a proxy solicitation firm in the future if we believe it is appropriate under the circumstances.

 

10.

Q: What items of business will be voted on at the Annual Meeting?

 

  A:

The holders of Class A and C Common Stock (voting together as a single class) will elect one Class III director and the holders of Class B and D Common Stock (voting together as a single class) will elect one Class III director, each such director to serve for a term of three years until the annual election of directors in 2026 or the election and qualification of their respective successor. The holders of Class A, Class C, Class B and Class D Common Stock (voting together as a single class) will vote on the following matters: an advisory (nonbinding) vote to approve named executive officer compensation; an advisory (nonbinding) vote on the frequency of an advisory stockholder vote to approve named executive officer compensation; and the ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023.

 

11.

Q: How does the Board of Directors recommend that I vote?

 

  A:

The Board of Directors recommends that holders of Class A and Class C Common Stock and Class B and Class D Common Stock vote shares “FOR” the election of the respective nominees to the Board of Directors (Proposal 1).

The Board of Directors recommends that holders of Class A, Class C, Class B and Class D Common Stock vote shares “FOR” the advisory (nonbinding) vote to approve named executive officer compensation (Proposal 2).

The Board of Directors recommends that holders of Class A, Class C, Class B and Class D Common Stock vote shares “FOR” the advisory (nonbinding) vote on the frequency of an advisory stockholder vote to approve named executive officer compensation (Proposal 3).

The Board of Directors recommends that holders of Class A, Class C, Class B and Class D Common Stock vote shares “FOR” the ratification of the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2023 (Proposal 4).

 

12.

Q: How will voting on any other business be conducted?

 

  A:

Other than the items of business described in this Proxy Statement, we know of no other business to be presented for action at the Annual Meeting. As for any business that may properly come before the Annual Meeting, your signed Proxy gives authority to the persons named therein. Those persons may vote on such matters at their discretion and will use their best judgment with respect thereto.

 

13.

Q: What is the difference between a “stockholder of record” and a “street name” holder?

 

  A:

These terms describe how your shares are held. If your shares are registered directly in your name with Computershare, our transfer agent, you are a “stockholder of record.” If your shares are held in the name of a brokerage, bank, trust or other nominee as a custodian, you are a “street name” holder.

 

14.

Q: How do I vote my shares if I am a stockholder of record?

 

  A:

A separate form of Proxy applies to our Class A and Class C Common Stock and a separate form of Proxy applies to our Class B and Class D Common Stock. For specific instructions on how to vote your shares, please refer to the instructions on the Notice Regarding the Availability of Proxy Materials you received in the mail or, if you received printed Proxy Materials, your enclosed Proxy card. If you received printed Proxy Materials, enclosed is a Proxy card for the shares of stock held by you on the record date. If you received printed Proxy Materials, you may vote by signing and dating each Proxy card you receive and returning it in the enclosed prepaid envelope, or you may vote by telephone or internet.

 

 

 

3

Universal Health Services, Inc. 2023 Proxy Statement


Proxy Statement

 

 

 

  Unless otherwise indicated on the Proxy, shares represented by any Proxy will, if the Proxy is properly executed and received by us prior to the Annual Meeting, be voted “FOR” each of the nominees for director, “FOR” the advisory (nonbinding) vote to approve named executive officer compensation, “FOR” the approval, on an advisory (nonbinding) basis, of a triennial advisory vote to approve named executive officer compensation, and “FOR the ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023.

 

15.

Q: How do I vote by telephone or electronically?

 

  A:

Instead of submitting your vote by mail on the enclosed Proxy card (if you received printed Proxy Materials), your vote can be submitted by telephone or electronically, via the internet. Please refer to the specific instructions set forth on the Notice Regarding the Availability of Proxy Materials or, if you received printed Proxy Materials, on the enclosed Proxy card. For security reasons, our electronic voting system has been designed to authenticate your identity as a stockholder.

 

16.

Q: How do I vote my shares if they are held in street name?

 

  A:

If your shares are held in street name, your broker or other nominee will provide you with a form seeking instruction on how your shares should be voted.

 

17.

Q: Can I change or revoke my vote?

 

  A:

Yes. Any Proxy executed and returned to us is revocable by delivering a later signed and dated Proxy or other written notice to our Secretary at any time prior to its exercise. Your Proxy is also subject to revocation by attending the meeting and voting online.

 

18.

Q: How do I vote during the meeting?

 

  A:

If you have not already voted your shares in advance as described above, provided you are a registered stockholder or a registered beneficial stockholder with a control number, you will also be able to vote your shares electronically during the Annual Meeting by clicking on the “Vote” tab on the virtual meeting site. Whether or not you plan to attend the Annual Meeting, we urge you to vote and submit your proxy in advance of or during the Annual Meeting by one of the methods described in the proxy materials.

 

19.

Q: How do I ask questions during the meeting?

 

  A:

If you are attending the meeting as a stockholder of record or registered beneficial owner, questions can be submitted by accessing the virtual meeting site at www.meetnow.global/MRVPLHZ, entering your control number and clicking on the “Q&A” tab. Please note that guest access is in listen-only mode and you will not have the ability to ask questions or vote during the Annual Meeting.

 

20.

Q: What constitutes a “quorum”?

 

  A:

The holders of a majority of the common stock votes issued and outstanding and entitled to vote, either in person or represented by Proxy, constitutes a quorum. Proxies received but marked as abstentions and broker non-votes will be included in the calculation of the number of shares considered to be present at the meeting.

 

21.

Q: What are our voting rights with respect to the election of directors?

 

  A:

Our Restated Certificate of Incorporation provides that, with respect to the election of directors, holders of Class A Common Stock vote as a class with the holders of Class C Common Stock, and holders of Class B Common Stock vote as a class with holders of Class D Common Stock, with holders of all classes of Common Stock entitled to one vote per share.

Each holder of Class A Common Stock may cumulate his or her votes for directors giving one candidate a number of votes equal to the number of directors to be elected, multiplied by the number of shares of Class A Common Stock, or he or she may distribute his or her votes on the same principle among as many candidates as he or she shall see fit. For a holder of Class A Common Stock to exercise his or her cumulative voting rights, the stockholder must give notice at the meeting of such intention to cumulate votes.

 

 

 

4

Universal Health Services, Inc. 2023 Proxy Statement


Proxy Statement

 

 

 

As of March 22, 2023, the shares of Class A and Class C Common Stock constituted 10.3% of the aggregate outstanding shares of our Common Stock, had the right to elect five members of the Board of Directors and constituted 90.4% of our general voting power; and as of that date the shares of Class B and Class D Common Stock (excluding shares issuable upon exercise of options) constituted 89.7% of the outstanding shares of our Common Stock, had the right to elect two members of the Board of Directors and constituted 9.6% of our general voting power.

 

22.

Q: What are our voting rights with respect to matters other than the election of directors?

 

  A:

As to matters other than the election of directors, our Restated Certificate of Incorporation provides that holders of Class A, Class B, Class C and Class D Common Stock all vote together as a single class, except as otherwise provided by law.

Each share of Class A Common Stock entitles the holder thereof to one vote; each share of Class B Common Stock entitles the holder thereof to one-tenth of a vote; each share of Class C Common Stock entitles the holder thereof to 100 votes (provided the holder of Class C Common Stock holds a number of shares of Class A Common Stock equal to ten times the number of shares of Class C Common Stock that holder holds); and each share of Class D Common Stock entitles the holder thereof to ten votes (provided the holder of Class D Common Stock holds a number of shares of Class B Common Stock equal to ten times the number of shares of Class D Common Stock that holder holds).

In the event a holder of Class C or Class D Common Stock holds a number of shares of Class A or Class B Common Stock, respectively, less than ten times the number of shares of Class C or Class D Common Stock that holder holds, then that holder will be entitled to only one vote for every share of Class C Common Stock, or one-tenth of a vote for every share of Class D Common Stock, which that holder holds in excess of one-tenth the number of shares of Class A or Class B Common Stock, respectively, held by that holder. The Board of Directors, in its discretion, may require holders of Class C or Class D Common Stock to provide satisfactory evidence that such owner holds ten times as many shares of Class A or Class B Common Stock as Class C or Class D Common Stock, respectively, if such facts are not apparent from our stock records.

 

23.

Q: Will my shares be voted if I do not sign and return my Proxy card or vote by telephone or internet?

 

  A:

If you are a stockholder of record and you do not sign and return your Proxy card or vote by telephone or internet, your shares will not be voted at the Annual Meeting. If your shares are held in street name and you do not issue instructions to your broker, your broker may vote your shares at its discretion on routine matters, but may not vote your shares on nonroutine matters. Under the New York Stock Exchange rules, each of the proposals other than the ratification of the selection of the Company’s independent registered public accounting firm is deemed to be a nonroutine matter with respect to which brokers and nominees may not exercise their voting discretion without receiving instructions from the beneficial owner of the shares.

 

24.

Q: What is a “broker non-vote”?

 

  A:

“Broker non-votes” are shares held by brokers or nominees which are present in person or represented by Proxy, but which are not voted on a particular matter because instructions have not been received from the beneficial owner. Under the rules of the Financial Industry Regulatory Authority, member brokers generally may not vote shares held by them in street name for customers unless they are permitted to do so under the rules of any national securities exchange of which they are a member. Under the rules of the New York Stock Exchange, New York Stock Exchange-member brokers who hold shares of Common Stock in street name for their customers and have transmitted our Proxy solicitation materials to their customers, but do not receive voting instructions from such customers, are not permitted to vote on nonroutine matters. Under the New York Stock Exchange rules, each of the proposals other than the ratification of the selection of the Company’s independent registered public accounting firm is deemed to be nonroutine matters with respect to which brokers and nominees may not exercise their voting discretion without receiving instructions from the beneficial owner of the shares.

 

25.

Q: What is the effect of a broker non-vote?

 

  A:

Broker non-votes will be counted for the purpose of determining the presence or absence of a quorum but will not be considered present and entitled to vote on any matter for which a broker, bank or other nominee does not have authority.

 

 

 

5

Universal Health Services, Inc. 2023 Proxy Statement


Proxy Statement

 

 

 

  For the Annual Meeting, pursuant to the rules of the New York Stock Exchange, your broker, bank or other nominee will be permitted to vote for you without instruction only with respect to Proposal 4 regarding the ratification of PricewaterhouseCoopers LLP. A broker non-vote will not have any impact on the outcome of any other proposals.

 

26.

Q: What is the vote required to approve each proposal?

 

  A:

        

 

Item of Business   Votes Required for Approval   Abstentions   Withholding
Authority
 

Signed But

Unmarked

Proxy Cards

 

Broker

Non-Votes

 

Proposal 1: Election of Directors

 

 

One Class III director will be elected by the highest number of affirmative votes of the shares of Class A and Class C Common Stock, voting together as a single class, present in person or represented by Proxy and entitled to vote.

 

One Class III director will be elected by the highest number of affirmative votes of the shares of Class B and Class D Common Stock, voting together as a single class, present in person or represented by Proxy and entitled to vote.

 

 

 

No effect

 

 

No effect

 

 

Count as votes FOR

 

 

No effect on voting

Proposal 2: Advisory (nonbinding) Vote of Named Executive Officer Compensation

 

 

Affirmative “FOR” vote of the holders of a majority of the voting power of shares of Class A, B, C, and D Common Stock, present in person or represented by Proxy and entitled to vote, voting together as a single class.

 

  Count as votes AGAINST   Not applicable   Count as votes FOR   No effect on voting

Proposal 3: Advisory (nonbinding) Vote on the Frequency of Future Advisory Votes on Named Executive Officer Compensation

 

 

Number of years (1, 2, or 3) receiving the highest number of votes.

 

  No effect   Not applicable   Count as vote for EVERY THREE YEARS   No effect on voting

Proposal 4: Ratification of Independent Registered Public Accounting Firm

 

 

Majority of the Class A, B, C and D Common Stock votes, present in person or represented by Proxy and entitled to vote.

 

  Count as votes AGAINST   Not applicable   Count as votes FOR   Not applicable

 

27.

Q: Who will count the votes?

 

  A:

The Secretary will count the Class A and Class C votes. Our transfer agent will count the Class B and Class D votes and serve as inspector of elections.

 

 

 

 

6

Universal Health Services, Inc. 2023 Proxy Statement


Proxy Statement

 

 

 

28.

Q: When are stockholder proposals or director nominations due for the 2024 Annual Meeting?

 

  A:

Any stockholder proposal intended to be included in the proxy materials for the 2024 Annual Meeting must be received by us no later than December 8, 2023. Such proposals should be sent in writing by courier or certified mail to our Secretary at Universal Health Services, Inc., Universal Corporate Center, 367 South Gulph Road, P.O. Box 61558, King of Prussia, Pennsylvania 19406. Any stockholder proposal must also be in proper form and substance, as determined in accordance with the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated thereunder.

In addition, our Amended and Restated Bylaws require that the Company be given advanced notice of stockholder proposals containing nominations for election to the Board of Directors or other matters which stockholders wish to present for action at an annual meeting. These requirements are separate from, and in addition to, the requirements discussed above to have the stockholder proposal included in the proxy materials for the 2024 Annual Meeting pursuant to the SEC’s rules. The Company’s Amended and Restated Bylaws separately require that any stockholder proposal intended to be brought before the annual meeting of stockholders, including a proposal nominating one or more persons for election as directors, be received in writing by our Secretary at the address listed above not later than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to the first anniversary of the preceding year’s annual meeting, for the 2024 Annual Meeting being between January 18, 2024 and February 17, 2024, provided, however, that in the event that the date of the 2024 Annual Meeting is advanced by more than 30 days, or delayed by more than 30 days, from the first anniversary of the 2023 Annual Meeting, the notice must be received no earlier than the close of business on the 120th day prior to such meeting and not later than the close of business on the later of the 90th day prior to such meeting or the 10th day following the day on which public announcement of the date of such meeting is first made.

Our Amended and Restated Bylaws set forth certain informational requirements for stockholders’ nominations of directors and other proposals. In addition to satisfying the requirements under our Amended and Restated Bylaws, in order to comply with the new universal proxy rules, stockholders who intend to solicit proxies in support of director nominees, other than the Company’s nominees, must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act.

 

29.

Q: Can I receive more than one set of Annual Meeting materials?

 

  A:

If you share an address with another stockholder, each stockholder may not receive a separate copy of our Annual Report and Proxy Statement. We will promptly deliver a separate copy of either document to any stockholder upon written or oral request to our Secretary at Universal Health Services, Inc., Universal Corporate Center, 367 South Gulph Road, P.O. Box 61558, King of Prussia, Pennsylvania 19406, telephone (610) 768-3300. If you share an address with another stockholder and (i) would like to receive multiple copies of the Proxy Statement or Annual Report to Stockholders in the future, or (ii) if you are receiving multiple copies and would like to receive only one copy per household in the future, please contact your bank, broker, or other nominee record holder, or you may contact us at the above address and phone number.

 

30.

Q: How can I obtain additional information about the Company?

 

  A:

Copies of our annual, quarterly and current reports we file with the SEC, and any amendments to those reports, are available free of charge on our website, which is located at http://www.uhs.com. Copies of these reports will be sent without charge to any stockholder requesting it in writing to our Secretary at Universal Health Services, Inc., Universal Corporate Center, P.O. Box 61558, 367 South Gulph Road, King of Prussia, Pennsylvania 19406. The information posted on our website is not incorporated into this Proxy Statement.

As required by Delaware law, the names of registered shareholders entitled to vote at the virtual Annual Meeting will be available for a period of ten days ending on the day before the date of the Annual Meeting for any purpose germane to the Annual Meeting, between the hours of 9:00 a.m. and 4:00 p.m., at our principal executive offices at Universal Corporate Center, 367 South Gulph Road, P.O. Box 61558, King of Prussia, Pennsylvania 19406.

 

 

 

7

Universal Health Services, Inc. 2023 Proxy Statement


SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth as of March 22, 2023, the number of shares of our equity securities and the percentage of each class beneficially owned, within the meaning of Securities and Exchange Commission Rule 13d-3, and the percentage of our general voting power currently held, by (i) all stockholders known by us to own more than 5% of any class of our equity securities, (ii) all of our directors and nominees who are stockholders (including Lawrence S. Gibbs, who resigned from the Board of Directors effective as of March 31, 2023), (iii) the executive officers named in the Summary Compensation Table and (iv) all directors and executive officers as a group. Except as otherwise specified, the named beneficial owner has sole voting and investment power.

 

     Title of Class        

Name and Address of

Beneficial Owner(1)

 

   Class A
Common
Stock(2)
          Class B
Common
Stock(2)
          Class C
Common
Stock(2)
          Class D
Common
Stock(2)
          Percentage
of General
Voting
Power(3)
 
   Shares     %     Shares     %     Shares     %     Shares     %         

Alan B. Miller

     5,163,885 (6)(16)(19)      78.5     9,043,123 (4)(11)(12)(17)(20)(22)      12.2     661,688       100                 87.0

Marc D. Miller

     1,641,815 (7)(14)(16)(21)      25.0     2,918,231 (4)(11)(13)(17)(18)      4.3                             2.7

Elliot J. Sussman, M.D.
The Villages Health
3619 Kiessel Road
The Villages, FL 32163

                 21,680 (11)(23)         (5)                                 (5) 

Maria R. Singer
245 Park Avenue
New York, NY 10167

                 14,180 (11)(23)         (5)                                 (5) 

Warren J. Nimetz
Norton Rose Fulbright US LLP
1301 Avenue of the Americas
New York, NY 10019

     377,530 (15)(19)            411,710 (4)(11)(23)         (5)                                 (5) 

Lawrence S. Gibbs
48 Crescent Road
Livingston, NJ 07039

                 26,410 (11)(23)         (5)                                 (5) 

Eileen C. McDonnell
179 Ash Way Doylestown, PA 19801

                 23,008 (11)(23)         (5)                                 (5) 

Nina Chen-Langenmayr
The Welcoming Center
211 N 13th Street, 4th Floor Philadelphia, PA 19107

                          (5)                                 (5) 

Steve G. Filton

                 521,243 (8)(11)         (5)                                 (5) 

Edward H. Sim

                          (5)                                 (5) 

Matthew J. Peterson

                 102,218 (11)         (5)                                 (5) 

BlackRock, Inc.
55 East 52nd Street
New York, NY 10055

                 4,625,635 (9)      7.3                                (5) 

First Eagle Investment
Management, LLC
1345 Avenue of the
Americas New York,
NY 10105

                 4,733,178 (10)      7.6                                (5) 

FMR LLC
245 Summer Street
Boston, MA 02210

                 5,689,836 (24)      9.0                                (5) 

Invesco Ltd.
1555 Peachtree Street NE
Suite 1800
Atlanta, GA 30309

                 4,898,383 (25)      7.8                                (5) 

The Vanguard Group
100 Vanguard Blvd.
Malvern, PA 19355

                 7,294,009 (26)      11.6                             1.2

All directors & executive officers as a group (11 persons)(27)

     6,574,600       99.96     12,073,173       16.6     661,688       100.0                 90.5

 

(1)

Unless otherwise shown, the address of each beneficial owner is c/o Universal Health Services, Inc., Universal Corporate Center, 367 South Gulph Road, King of Prussia, PA 19406.

 

(2)

Each share of Class A, Class C and Class D Common Stock is convertible at any time into one share of Class B Common Stock.

 

 

 

8

Universal Health Services, Inc. 2023 Proxy Statement


Security Ownership of Certain Beneficial Owners and Management

 

 

 

(3)

As to matters other than the election of directors, holders of Class A, Class B, Class C and Class D Common Stock vote together as a single class. Each share of Class A Common Stock entitles the holder thereof to one vote; each share of Class B Common Stock entitles the holder thereof to one-tenth of a vote; each share of Class C Common Stock entitles the holder thereof to 100 votes (provided the holder of Class C Common Stock holds a number of shares of Class A Common Stock equal to ten times the number of shares of Class C Common Stock that holder holds); and each share of Class D Common Stock entitles the holder thereof to ten votes (provided the holder of Class D Common Stock holds a number of shares of Class B Common Stock equal to ten times the number of shares of Class D Common Stock that holder holds).

 

(4)

Includes shares issuable upon the conversion of Classes A, C and/or D Common Stock.

 

(5)

Less than 1% of the class of stock or general voting power.

 

(6)

Includes 400,000 shares of Class A Common Stock that are beneficially owned by Mr. Alan Miller and are held by Mr. Alan Miller in trust for the benefit of his spouse.

 

(7)

Includes 337,321 shares of Class A Common Stock which are held by three trusts (the “2002 Trusts”) for the benefit of certain of Alan B. Miller’s family members of which Marc D. Miller (who is the Chief Executive Officer and President, director and the son of Alan B. Miller) and Mr. Nimetz are trustees; and 532,194 shares held by the A. Miller Family, LLC, whose members are the 2002 Trusts. Marc D. Miller is the sole manager of the A. Miller Family, LLC and during his tenure as such, has voting and dispositive power with respect to the Class A Common Stock held by the A. Miller Family, LLC and sole voting and dispositive power with respect to the shares held by the 2002 Trusts. Mr. Nimetz disclaims beneficial interest in all shares held by the 2002 Trusts and the A. Miller Family LLC. Marc D. Miller disclaims beneficial interest in the shares held by the 2002 Trusts and the A Miller Family LLC other than those of which Marc Miller is the beneficiary.

 

(8)

Includes 161,000 shares of Class B Common Stock which are held by two Irrevocable Trusts. Mr. Filton is the Trustee and beneficiary of The Betsy H. Filton 2020 Irrevocable Trust (80,500 shares) and disclaims beneficial ownership of The Steve G. Filton 2020 Irrevocable Trust, of which Mr. Filton’s spouse is the Trustee and beneficiary (80,500 shares).

 

(9)

These securities are held by Blackrock, Inc. and its subsidiaries. Blackrock, Inc. has sole power to vote with respect to 4,237,603 shares of our Class B Common Stock and sole power with respect to 4,625,635 shares to dispose or to direct the disposition of 4,625,635 shares of our Class B Common Stock. Information is based on Amendment No. 14 to Schedule 13G dated January 31, 2023.

 

(10)

These securities are held by First Eagle Investment Management, LLC and its subsidiaries. First Eagle Investment Management, LLC has sole power to vote with respect to 4,294,272 shares of our Class B Common Stock and sole power with respect to 4,733,178 shares to dispose or to direct the disposition of 4,733,178 shares of our Class B Common Stock. Information is based on Amendment No. 1 to Schedule 13G dated February 10, 2023.

 

(11)

Includes 2,502,746 shares issuable pursuant to stock options to purchase Class B Common Stock held by our directors and executive officers and exercisable within 60 days of March 22, 2023 as follows: Elliot J. Sussman, M.D. (20,000); Alan B. Miller (1,609,685); Marc D. Miller (440,628); Lawrence S. Gibbs (22,500); Eileen C. McDonnell (17,500); Steve G. Filton (245,578); Warren Nimetz (32,500); Matthew J. Peterson (101,855); Maria R. Singer (12,500); and Edward H. Sim (0).

 

(12)

Includes 61,344 shares held by the three 2021 Grantor Retained Annuity Trusts. Alan B. Miller has sole dispositive power and sole voting power with respect to these shares.

 

(13)

Includes 171,426 shares held by the three 2011 Family Trusts for the benefit of Alan B. Miller’s three children. Marc D. Miller is a Trustee and has sole voting and dispositive power with respect to these shares. Marc D. Miller disclaims beneficial ownership of the shares held by the Trust for the benefit of Abby Miller King (55,763) and the Trust for the benefit of Marni Spencer (55,763).

 

(14)

Includes 237,800 shares held by the 2012 Family Trust for the benefit of Abby Miller King and Marni Spencer. Marc D. Miller is a Trustee and has sole voting and dispositive power with respect to these shares. Marc D. Miller disclaims beneficial ownership of these shares.

 

(15)

Includes 118,900 shares held by the 2012 Family Trust for the benefit of Marc D. Miller. Warren Nimetz is the sole Trustee of the 2012 Trust for the benefit of Marc D. Miller and Mr. Nimetz has sole voting power with respect to Marc D. Miller’s shares. Mr. Nimetz disclaims beneficial ownership of these shares.

 

(16)

Includes 350,000 shares held by three separate limited liability companies, 100% of the interests of which are held by Alan B. Miller and the three 2002 Trusts for the benefit of Alan B. Miller’s three children. Alan B. Miller has the sole dispositive power and Marc D. Miller has sole voting power with respect to these shares. Marc D. Miller disclaims beneficial ownership of the shares held by the 2002 Trust for the benefit of Abby Miller King (100,000) and the shares held by the 2002 Trust for the benefit of Marni Spencer (100,000).

 

(17)

Includes 400,000 shares held by the three separate limited liability companies, 100% of the interests of which are held by Alan B. Miller and the three 2002 Trusts for the benefit of Alan B. Miller’s three children. Alan B. Miller has the sole dispositive power and Marc D. Miller has sole voting power with respect to these shares. Marc D. Miller disclaims beneficial ownership of the shares held by and the 2002 Trust for the benefit of Abby Miller King (100,000) and the shares held by the 2002 Trust for the benefit of Marni Spencer (100,000).

 

(18)

Includes 110,172 shares held by the three 2002 Trusts for the benefit of Alan B. Miller’s three children. Marc D. Miller is a Trustee and has sole voting and dispositive power with respect to these shares and Marc D. Miller disclaims beneficial ownership interest of the shares held by the 2002 Trust for the benefit of Abby Miller King (22,815) and the shares held by the 2002 Trust for the benefit of Marni Spencer (43,247).

 

(19)

Includes 258,630 shares held by The Alan B. Miller 2002 Trust. Warren Nimetz is the Trustee of the Trust and has sole voting and dispositive power with respect to these shares. Mr. Nimetz disclaims any beneficial interest in the shares.

 

(20)

Excludes 8,623 shares in The Alan and Jill Miller Foundation.

 

(21)

Includes 184,500 shares of Class A Common Stock which are held by three sub-trusts (the “2017 Sub-Trusts”) for the benefit of certain of Alan B. Miller’s family members of which Marc D. Miller is a trustee. Marc D. Miller has sole voting and dispositive power with respect to these shares. Marc D. Miller disclaims beneficial ownership interest of shares held by the 2017 Sub-Trust for the benefit of descendants of Abby Miller King (61,500) and shares held by the 2017 Sub-Trust for the benefit of descendants of Marni Spencer (61,500).

 

(22)

Includes 76,783 shares held by the three 2022 Grantor Retained Annuity Trusts. Alan B. Miller has sole dispositive power and sole voting power with respect to these shares.

 

(23)

Includes 8,400 restricted stock units which will convert to Class B Common Stock upon vesting. These units are held by our directors and scheduled to vest within 60 days of March 22, 2023 as follows: Elliot J. Sussman, M.D. (1,680); Lawrence S. Gibbs (1,680); Eileen C. McDonnell (1,680); Warren Nimetz (1,680); and Maria R. Singer (1,680).

 

 

 

9

Universal Health Services, Inc. 2023 Proxy Statement


Security Ownership of Certain Beneficial Owners and Management

 

 

 

(24)

These securities are held by FMR LLC and its subsidiaries. FMR LLC has sole power to vote with respect to 5,675,774 shares of our Class B Common Stock and sole power with respect to 5,689,836 shares to dispose or to direct the disposition of 5,689,836 shares of our Class B Common Stock. Information is based on Amendment No. 1 to Schedule 13G dated February 9, 2023.

 

(25)

These securities are held by Invesco Ltd. and its subsidiaries. Invesco Ltd. has sole power to vote with respect to 4,760,623 shares of our Class B Common Stock and sole power with respect to 4,898,383 shares to dispose or to direct the disposition of 4,898,383 shares of our Class B Common Stock. Information is based on Amendment No. 1 to Schedule 13G dated February 7, 2023.

 

(26)

These securities are held by The Vanguard Group and its subsidiaries. Vanguard Group has shared power to vote or direct the vote with respect to 100,829 shares of our Class B Common Stock and shared power to dispose with respect to 276,441 shares and sole power with respect to 7,017,568 shares to dispose or to direct the disposition of 7,294,009 shares of our Class B Common Stock. Information is based on Amendment No. 10 to Schedule 13G dated February 9, 2023.

 

(27)

Notes (4)—(8) and (11)—(23) apply to the respective directors and executive officers as further indicated above.

Equity Compensation Plan Information

The table below provides information, as of the end of December 31, 2022, concerning securities authorized for issuance under our equity compensation plans.

 

Plan Category(1.)

   (a)
Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Options,
Warrants
and Rights(2.)
     (b)
Weighted
Average
Exercise Price
of Outstanding
Options,
Warrants
and Rights
     (c)
Number of Securities
Remaining Available
for Future Issuance under
Equity Compensation
Plan (excluding
securities reflected in
column (a))(3.)(4.)
 

Equity compensation plans approved by security holders

     7,875,667      $ 122.04        7,168,146  
  

 

 

    

 

 

    

 

 

 

Total

     7,875,667      $ 122.04        7,168,146  

 

(1)

Shares of Class B Common Stock.

 

(2)

As of March 22, 2023, there were approximately 9,496,549 options outstanding with an approximate weighted-average exercise price of $121.46 and weighted average remaining term of approximately 2.82 years. All current outstanding stock options have terms that do not exceed five years. There were approximately 27,181 full-value shares outstanding as of March 22, 2023. Additionally, as of March 22, 2023, there were approximately 408,384 full-value restricted stock units outstanding and 159,374 performance-based restricted stock units outstanding. The restricted stock units do not have any voting rights.

 

(3)

As of March 22, 2023, the Company’s 2020 Omnibus Stock and Incentive Plan had approximately 3,887,084 shares remaining for future issuance. The shares remaining available for future issuance under the Company’s 2020 Omnibus and Stock Incentive Plan includes a 6.0 million share increase in the number of shares that may be issued under the Plan, as approved by our shareholders on May 18, 2022.

 

(4)

For purposes of determining the remaining number of shares subject to the Company’s 2020 Omnibus and Stock Incentive Plan, each share underlying a stock option or SAR shall be counted as one (1) share, while all other awards, including full-value restricted stock or units, shall be counted as four (4) shares against the reserve balance for future issuance.

 

 

 

10

Universal Health Services, Inc. 2023 Proxy Statement


PROPOSAL NO. 1

ELECTION OF DIRECTORS

Our Restated Certificate of Incorporation provides for a Board of Directors of not fewer than three members nor more than nine members, the exact number to be determined by the Board of Directors. The Board of Directors is currently comprised of eight members, and is divided into three classes, with members of each class serving for a three-year term. At each Annual Meeting of Stockholders, directors are chosen to succeed those in the class whose term expires at such Annual Meeting and, in the case of this Annual Meeting, directors will be elected as Class III directors.

On March 20, 2023, Class III director Lawrence S. Gibbs notified the Board of Directors that he accepted a new employment opportunity which restricts his ability to serve on the Board of Directors. Therefore, Mr. Gibbs resigned from the Board of Directors effective as of March 31, 2023 and accordingly will not stand for reelection at the 2023 Annual Meeting of Stockholders. Mr. Gibbs’ decision to resign was not due to any disagreement with the Company, its management, or the Board of Directors on any matter relating to our operations, policies or practices. Upon Mr. Gibbs’ resignation having become effective on March 31, 2023, the Board of Directors determined to set the number of directors comprising the Board of Directors to seven directors. Thus, after March 31, 2023, the Board of Directors consists of seven directors. Holders of shares of our outstanding Class B and Class D Common Stock (voting together as a single class) are entitled to elect two directors, currently one in Class II and one in Class III, and the holders of Class A and Class C Common Stock (voting together as a single class) are entitled to elect the remaining directors, currently three in Class I, one in Class II, and one in Class III.

The persons listed below include the members of our Board of Directors whose term of office will continue after the meeting and nominees. The terms of the current Class III directors, Mr. Alan B. Miller and Ms. Nina Chen-Langenmayr, expire at the 2023 Annual Meeting. Mr. Alan B. Miller has been nominated to be elected by the holders of Class A and C Common Stock and Ms. Nina Chen-Langenmayr has been nominated to be elected by the holders of Class B and D Common Stock. We have no reason to believe that any of the nominees will be unavailable for election; however, if either nominee becomes unavailable for any reason, the shares represented by the Proxy will be voted for the person, if any, who is designated by the Board of Directors to replace the nominee. All nominees have consented to be named and have indicated their intent to serve if elected. The following information is furnished with respect to each of the nominees for election as a director and each member of the Board of Directors whose term of office will continue after the meeting.

The Board of Directors believes that it is essential that its members represent diverse viewpoints, with a broad array of experiences, professions, skills, geographic representation and backgrounds, including diversity of gender and race that, when considered as a group, provide a sufficient mix of perspectives to allow the Board of Directors to best fulfill its responsibilities to the long-term interests of our stockholders. The Board has refreshed the Board by replacing 50% of the non-management members of the Board within the last five years. The Board has three female members, one of whom, Eileen McDonnell, serves as lead director and one of whom is a member of an underrepresented minority group.

Director Nominees

Class III Directors

 

Alan B. Miller

LOGO

 

Director Since: 1978

Age: 85

 

  

Class of Stockholders Entitled to Vote:

  A Common

  C Common

  

Committee Membership:

  Executive (Chair)

  Finance (Chair)

  

 

Business Experience

Mr. Alan B. Miller, who had previously served as our Chief Executive Officer since our inception in 1978, stepped down from that role effective as of January 1, 2021 and assumed the role of Executive Chairman of the Board. Prior to 1978, Mr. Alan B. Miller was Chairman of the Board, Chief Executive Officer and President of American Medicorp, Inc. Mr. Alan B. Miller continues to serve as Chairman of the Board of Trustees, Chief Executive Officer and President of Universal Health Realty Income Trust. He is the father of Marc D. Miller, a Director, and our Chief Executive Officer and President.

 

 

 

11

Universal Health Services, Inc. 2023 Proxy Statement


Proposal No. 1

 

 

 

Nina Chen-Langenmayr

LOGO

 

Director Since: 2022

Age: 66

 

  

Class of Stockholders Entitled to Vote:

  B Common

  D Common

  

Committee Membership:

  Quality and Compliance

  

 

Business Experience

Special Projects Consultant at The Welcoming Center in Philadelphia since 2013. Previously served as Partner, Client Relationship Management Group at Mercer. Ms. Chen-Langenmayr has multiple years of experience in the human capital management and outsourcing arena, particularly in the pharmaceutical and healthcare industries. She is a Juris Doctor and Founding Member of the Asian Pacific American Bar Association of Pennsylvania and a member of the Forum of Executive Women.

Directors whose Terms Expire in 2024

Class I Directors

 

Elliot J. Sussman, M.D.

LOGO

 

Director Since: 2018

Age: 71

 

  

Class of Stockholders Entitled to Vote:

  A Common

  C Common

  

Committee Membership:

  Audit

  Compensation

  Nominating and Governance (Chair)

  Quality and Compliance (Chair)

  

 

Business Experience

Chairman of The Villages Health. Former President and Chief Executive Officer of Lehigh Valley Hospital and Health Network from 1993 to 2010. A member of the Board of Directors of Yale New Haven Health System since 2011. Chair of Board of Directors of North East Medical Group, a wholly owned subsidiary of Yale New Haven Health System.

 

Marc D. Miller

LOGO

 

Director Since: 2006

Age: 52

 

  

Class of Stockholders Entitled to Vote:

  A Common

  C Common

  

Committee Membership:

  Executive

  Finance

  

 

Business Experience

Appointed as our Chief Executive Officer in January 2021 and continues to serve as President. Previously served as Senior Vice President and Co-Head of our Acute Care Division since 2007 and served as a Vice President since 2004. Also served in various roles in our Acute Care Division since 2003 and served in other management positions at various hospitals from 1999 to 2003. Currently serves as a member of the Board of Trustees of Universal Health Realty Income Trust and as a member of the Board of Directors of Premier, Inc. Son of Alan B. Miller, our Executive Chairman, and former Chief Executive Officer.

 

 

 

12

Universal Health Services, Inc. 2023 Proxy Statement


Proposal No. 1

 

 

 

Eileen C. McDonnell

LOGO

 

Director Since: 2013

Age: 60

 

  

Class of Stockholders Entitled to Vote:

  A Common

  C Common

  

Committee Membership:

  Audit (Chair)

  Compensation (Chair)

  Executive

  

 

Business Experience

Ms. McDonnell currently serves as Chairman of the Board of The Penn Mutual Life Insurance Company. She served as Executive Chairman of Penn Mutual from January 2022 until her retirement in December 2022. Ms. McDonnell joined Penn Mutual in 2008 and previously served as Chief Executive Officer, until December 2021. She was also appointed to The Penn Mutual Board of Trustees in 2010. Ms. McDonnell also served as a Director of the Insurance Federation of Pennsylvania and was a national advisor to VisionForward, an initiative of Drexel University College of Medicine Institute for Women’s Health and Leadership.

Directors whose Terms Expire in 2025

Class II Directors

 

Warren J. Nimetz

LOGO

 

Director Since: 2018

Age: 66

 

  

Class of Stockholders Entitled to Vote:

  A Common

  C Common

  

Committee Membership:

  Executive

  Finance

  

 

Business Experience

Mr. Nimetz is a Partner at the law firm of Norton Rose Fulbright US LLP and has been an attorney since 1979. We utilized during the year ended December 31, 2022, and currently utilize, the services of Norton Rose Fulbright US LLP as outside counsel.

 

Maria R. Singer

LOGO

 

Director Since: 2020

Age: 49

 

  

Class of Stockholders Entitled to Vote:

  B Common

  D Common

  

Committee Membership:

  Audit

  Finance

  Nominating and Governance

  Quality and Compliance

  

 

Business Experience

Ms. Singer is Chief Operating Officer, Corporate Finance at Houlihan Lokey. She previously served as Managing Director and COO of Blackstone Advisory Partners from 2008-2015. She served in various roles at Lehman Brothers, Inc. from 2002-2008, including Senior Vice President, Office of the Chairman and Senior Vice President, Debt Capital Markets.

See the “Corporate Governance” section for additional information about our Board of Directors.

 

 

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF THESE

NOMINEES AS DIRECTORS.

 

 

 

13

Universal Health Services, Inc. 2023 Proxy Statement


PROPOSAL NO. 2

ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION

As discussed in this Proxy Statement, as a result of shareholder feedback (including feedback received in connection with the most recent shareholder advisory vote on executive compensation), as well as review of comparable executive compensation benchmarking comparisons, on March 23, 2022, our Compensation Committee of the Board of Directors (the “Compensation Committee”) approved changes to various elements of compensation for our Chief Executive Officer (“CEO”) and certain of our other named executive officers (“NEOs”).

Below is a general summary of those changes, as compared to 2021:

 

 

Decrease in the weighting of long-term incentives (“LTI”), with accompanying increase in weighting of cash incentives.

 

 

No significant changes in target compensation levels (i.e., changes generally consist of shifts in mix of pay, not pay amounts).

 

 

Continued commitment to significant at-risk, performance-based CEO and NEO compensation programs.

After reviewing market data prepared by FW Cook, a third-party executive compensation consultant, the Compensation Committee determined that the target pay mix for our CEO and certain of our other NEOs could be more closely aligned with the comparable target pay mix at our peer group companies. For example, in 2021, our CEO received 82% of target total direct compensation (“TDC”) in the form of long-term incentives whereas LTI of peer group CEOs accounted for 66% of target TDC. Certain of our other NEOs (on average) received approximately 75% of target TDC in the form of long-term incentives whereas LTI of comparable peer company NEOs (on average) accounted for 56% of target TDC. Conversely, the weighting of annual cash incentives was below that of our peer group.

Due to the differences between our target pay mix and that of our peer group, our Compensation Committee determined that decreases in the weighting of LTI, and accompanying increases in cash incentive pay mix, were warranted for our CEO and certain of our other NEOs. Adjustments to base salaries were also warranted to further align the elements of our executive compensation to the pay mix of our peer group companies.

Commencing in March of 2022, each NEO began receiving their stock-based compensation as fixed dollar awards rather than awards that were denominated in a fixed number of shares. In addition, changes were also implemented in connection with the form of stock-based compensation awards made to our CEO and other NEOs to further align with peer group long-term incentive mix. In March of 2022, our CEO and NEOs each received: (i) 50% of their annual target stock-based compensation awards in the form of options to purchase shares of our Class B Common Stock at the grant date market value, and; (ii) 50% of their annual target stock-based compensation awards in the form of performance-based restricted stock units that will be earned based on the cumulative three-year growth in our earnings before interest, taxes, depreciation & amortization, the impacts of other income/expense and net income attributable to noncontrolling interests, as compared to a range of pre-established three-year growth thresholds. Previously, in 2021, the annual stock-based compensation awards to our CEO and NEOs consisted of: (i) 50% of the target awards were made in the form of options to purchase shares of our Class B Common Stock at the grant date market value, and; (ii) 50% of the target awards were made in the form of option to purchase shares of our Class B Common Stock at 110% of the grant date market value.

We believe the changes to the elements of compensation for each of our NEOs, as outlined above, continue to preserve significant reliance on at-risk, performance-based compensation for our CEO and other NEOs. After giving effect to the changes in the elements of compensation during 2022, as reflected above, approximately 90% of the target pay for our CEO, and approximately 80% of the target pay for our other NEOs’, is comprised of performance-based incentive compensation.

Please see additional disclosure below in Compensation Discussion and Analysis.

Pursuant to Section 14A of the Exchange Act and rules of the Securities and Exchange Commission, we are asking you to approve, on an advisory (non-binding) basis, the compensation paid to our named executive officers as disclosed in the Compensation Discussion and Analysis below, the compensation tables below, and any related narrative discussion contained in

 

 

 

14

Universal Health Services, Inc. 2023 Proxy Statement


Proposal No. 2

 

 

 

this Proxy Statement. This proposal, commonly known as a “say-on-pay” proposal, gives stockholders the opportunity to express their views on the compensation paid to our named executive officers. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this Proxy Statement. Accordingly, we are asking the stockholders to vote “FOR” the following resolution at the Annual Meeting:

“RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation paid to the Company’s named executive officers, as disclosed in the Company’s proxy statement for the 2023 Annual Meeting of Stockholders, pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion contained in this Proxy Statement.”

Vote Required

The affirmative vote of the holders of a majority of the Class A, B, C and D Common Stock votes present in person or represented by proxy and entitled to vote on the matter is required for the approval of this proposal.

If you are a stockholder of record and you do not sign and return your Proxy card or vote by telephone or internet, your shares will not be voted at the Annual Meeting. Under the New York Stock Exchange rules, this proposal is not a routine matter and broker non-votes may occur with respect to this proposal. If your shares are held in street name and you do not issue instructions to your broker, your broker or nominee may not vote your shares on these matters without receiving instructions.

Broker non-votes with respect to this matter will be treated as neither a vote “for” nor a vote “against” the matter, although they will be counted in determining the number of votes required to attain a majority of the shares present or represented at the meeting and entitled to vote. An abstention from voting by a stockholder present in person or by proxy at the meeting has the same legal effect as a vote “against” the matter because it represents a share present or represented at the meeting and entitled to vote, thereby increasing the number of affirmative votes required to approve this proposal.

The “say-on-pay” vote is advisory and will not be binding upon the Company, the Board of Directors or the Compensation Committee. However, the Compensation Committee will take into account the outcome of the vote when considering future named executive officer compensation arrangements.

 

THE BOARD RECOMMENDS STOCKHOLDERS VOTE FOR THE APPROVAL OF THE COMPENSATION PAID TO THE COMPANY’S NAMED EXECUTIVE OFFICERS, AS DISCLOSED PURSUANT TO ITEM 402 OF REGULATION S-K, INCLUDING THE COMPENSATION DISCUSSION AND ANALYSIS, COMPENSATION TABLES AND NARRATIVE DISCUSSION CONTAINED IN THIS PROXY STATEMENT.

 

 

 

15

Universal Health Services, Inc. 2023 Proxy Statement


PROPOSAL NO. 3

ADVISORY VOTE ON THE FREQUENCY OF AN ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION

Pursuant to Section 14A of the Exchange Act and rules of the Securities and Exchange Commission, every six years, the Company is required to provide stockholders with an opportunity to vote, on an advisory (non-binding) basis, as to whether the Company should hold an advisory vote on executive compensation every one, two or three years. Stockholders may also abstain from voting on the matter.

In light of the voting results at our 2017 Annual Meeting of Stockholders with respect to this topic, the Board of Directors has held the “say-on-pay” vote every three years.

After careful consideration, the Board recommends that future advisory votes on compensation of our named executive officers continue to be held every three years (a triennial vote). We ask that you support a frequency period of every three years for future advisory stockholder votes on the compensation of our named executive officers.

Our executive compensation program is designed to support long-term value creation, and a triennial vote will allow stockholders to better judge our executive compensation program in relation to our long-term performance. As described in the Compensation Discussion and Analysis section below, one of the core principles of our executive compensation program is to ensure that management’s interests are aligned with our stockholders’ interests to support long-term value creation. Accordingly, we grant awards with multi-year performance and service periods to encourage our named executive officers to focus on long-term performance, and recommend a triennial vote which would allow our executive compensation programs to be evaluated over a similar time-frame and in relation to our long-term performance.

Additionally, a triennial vote will provide us with the time to thoughtfully respond to the views of our stockholders and implement any necessary changes. We carefully review changes to our executive compensation program to ensure that the program appropriately aligns our named executive officers’ interests with the long-term interests of our stockholders and to ensure that the program appropriately balances risk and reward. We therefore believe that a vote every three years is the appropriate frequency to provide sufficient time to thoughtfully consider stockholders’ input and to implement any appropriate changes to our executive compensation program, in light of the timing that would be required to implement any decisions related to such changes.

Vote Required

The advisory vote on the frequency of the stockholder advisory vote to approve named executive officer compensation will be determined by a plurality of the votes cast.

If you are a stockholder of record and you do not sign and return your Proxy card or vote by telephone or internet, your shares will not be voted at the Annual Meeting. Under the New York Stock Exchange rules, this proposal is not a routine matter and broker non-votes may occur with respect to this proposal. If your shares are held in street name and you do not issue instructions to your broker, your broker or nominee may not vote your shares on these matters without receiving instructions.

Abstentions and broker non-votes represented by submitted proxies will not be taken into account in determining the outcome of this proposal.

 

 

 

16

Universal Health Services, Inc. 2023 Proxy Statement


Proposal No. 3

 

 

 

The “say-on-frequency” vote is advisory and will not be binding upon the Company, the Board of Directors, or the Compensation Committee. The Board may decide that it is in the best interests of our stockholders and the Company to hold an advisory vote on executive compensation more or less frequently than the option approved by our stockholders. However, the Compensation Committee will take into account the outcome of the vote when considering the frequency of future advisory votes on the compensation of our named executive officers.

 

THE BOARD RECOMMENDS A VOTE FOR A FREQUENCY PERIOD OF EVERY THREE YEARS (A TRIENNIAL VOTE) FOR FUTURE ADVISORY STOCKHOLDER VOTES ON NAMED EXECUTIVE OFFICER COMPENSATION.

 

 

 

17

Universal Health Services, Inc. 2023 Proxy Statement


PROPOSAL NO. 4

RATIFICATION OF THE SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS

The Audit Committee of the Board has selected, and as a matter of good corporate governance, is requesting the ratification by the stockholders of the selection of PricewaterhouseCoopers LLP to serve as our independent registered public accountants for the year ending December 31, 2023. PricewaterhouseCoopers LLP has served as our independent registered public accountants since 2007. If a favorable vote is not obtained, the Audit Committee may reconsider the selection of PricewaterhouseCoopers LLP. Even if the selection is ratified, the Audit Committee, in its discretion, may select different independent auditors if it subsequently determines that such a change would be in the best interest of the Company and its stockholders.

PricewaterhouseCoopers LLP representatives will attend the Annual Meeting and respond to questions where appropriate. Such representatives may make a statement at the Annual Meeting should they so desire.

Vote Required

Ratification of the selection of the independent registered public accountants by the stockholders requires that affirmative “FOR” vote of the holders of a majority of the Class A, Class B, Class C and Class D Common Stock votes present in person or represented by proxy and entitled to vote on the matter. Unless marked to the contrary, proxies will be voted FOR the ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accountants.

 

THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE RATIFICATION OF

THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2023.

 

 

 

18

Universal Health Services, Inc. 2023 Proxy Statement


EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

The following Compensation Discussion and Analysis describes the 2022 compensation program for our named executive officers. For 2022, our named executive officers were:

 

 

Marc D. Miller

Chief Executive Officer, President and Director

  

Alan B. Miller

Executive Chairman of the Board and Founder

 

Steve G. Filton

Executive Vice President,
Chief Financial Officer and Secretary

 

Edward H. Sim

New Executive Vice
President,
President of Acute Care Division

 

Marvin G. Pember

Former Executive Vice President,
President of Acute Care Division

 

Matthew J. Peterson

Executive Vice President,
President of Behavior Health Division

Table of Contents

Compensation Discussion and Analysis      19  

Our 2022 Performance and Highlights

     19  

Our Executive Officers

     21  

Compensation Philosophy and Objectives

     24  

Compensation Setting Process

     25  

Elements of Compensation

     25  

Compensation Peer Group

     25  

Annual Base Salary

     25  

Annual Cash Incentives

     26  

Long-Term Incentives

     29  

Deferred Compensation

     32  

Retirement Benefits

     33  

Benefits

     34  

Summary

     35  
Compensation Committee Report      35  
Compensation Committee Interlocks and Insider Participation      35  

Our 2022 Performance and Highlights

 

 

The impact of the COVID-19 pandemic, which began during the second half of March, 2020, has had a material effect on our operations and financial results since that time. The length and extent of the disruptions caused by the COVID-19 pandemic are currently unknown; however, we expect such disruptions to continue into the future. Since the future volumes and severity of COVID-19 patients remain highly uncertain and subject to change, including potential increases in future COVID-19 patient volumes caused by new variants of the virus, as well as related pressures on staffing and wage rates, we are not able to fully quantify the impact that these factors will have on our future financial results. However, developments related to the COVID-19 pandemic could continue to materially affect our financial performance. Even after the COVID-19 pandemic has subsided, we may continue to experience materially adverse impacts on our financial condition and our results of operations as a result of its

 

 

 

19

Universal Health Services, Inc. 2023 Proxy Statement


Executive Compensation

 

 

 

  macroeconomic impact, including the risks of a global recession or a recession in one or more of our key markets, the impact they may have on us and our customers and our assessment of that impact, and any disruptions and inefficiencies in the supply chain, and many of our known risks described in the Risk Factors section of our Annual Report on Form 10-K for the year ended December 31, 2022.

 

 

The nationwide shortage of nurses and other clinical staff and support personnel has been a significant operating issue facing us and other healthcare providers. Like others in the healthcare industry, we continue to experience a shortage of nurses and other clinical staff and support personnel at our acute care and behavioral health care hospitals in many geographic areas. In some areas, the labor scarcity is putting a strain on our resources and staff, which has required us to utilize higher-cost temporary labor and pay premiums above standard compensation for essential workers. This staffing shortage has required us to hire expensive temporary personnel and/or enhance wages and benefits to recruit and retain nurses and other clinical staff and support personnel. At certain facilities, particularly within our behavioral health care segment, we have been unable to fill all vacant positions and, consequently, have been required to limit patient volumes. These factors, which had a material unfavorable impact on our results of operations during 2022, are expected to continue to have an unfavorable material impact on our results of operations for the foreseeable future.

 

 

During 2022, our adjusted net income attributable to UHS (see footnote A. below) was $730.2 million, or $9.88 per diluted share, as compared to $991.7 million, or $11.82 per diluted, share during 2021.

 

 

Our net revenues increased by 6.0% to $13.40 billion during 2022 as compared to $12.64 billion during 2021.

 

 

Net revenues generated from our acute care services, on a same facility basis, increased 4.1% during 2022, as compared to 2021. During 2022, adjusted admissions (adjusted for outpatient activity) at our acute care hospitals, on a same facility basis, increased 3.1% and adjusted patient days increased 0.9%, as compared to 2021.

 

 

Net revenues generated from our behavioral health care services, on a same facility basis, increased 4.2% during 2022, as compared to 2021. During 2022, adjusted admissions at our behavioral health care hospitals, on a same facility basis, increased 0.7% and adjusted patient days increased 1.2%, as compared to 2021.

 

 

We invested more than $524 million in our acute care division, and approximately $207 million in our behavioral health care division, to construct, expand, equip and improve our facilities.

 

 

During 2022, pursuant to our share repurchase program, we repurchased approximately 6.67 million shares at an aggregate cost of approximately $810.9 million, or approximately $122 per share.

 

 

Over the past few years, we have implemented various changes to our long-term incentive program for our named executive officers including the following:

 

   

In March of 2022, we began awarding 50% of the long-term equity awards to our named executive officers in the form of performance based restricted stock units.

 

   

Previously, in March of 2021 and 2020, 50% of the long-term equity awards to our named executive consisted of performance stock options with a premium exercise price.

 

A.

Adjusted net income and adjusted net income per diluted share for 2022 and 2021 were publicly disclosed and reconciled to our reported results for each year on the Schedule of Non-GAAP Supplemental Consolidated Statements of Income Information, included with our earnings for the years ended December 31, 2022 and 2021, as filed on Form 8-K on February 27, 2023. Annex A contains a reconciliation of these non-GAAP financial measures to financial measurements determined in accordance with GAAP.

The following are a few of the quality and patient care highlights achieved in 2022:

Acute Care Services:

 

 

The Leapfrog Group evaluates hospitals’ efforts in protecting patients from harm and meeting national safety standards. Thirteen of our acute care hospitals were awarded an “A” or “B” grade in the spring and/or fall of 2022 Leapfrog Hospital safety grades.

 

 

In 2022, the Centers for Medicare and Medicaid Services awarded Saint Mary’s Regional Medical Center a Five-Star Overall Rating, a designation earned by less than 14% of the hospitals evaluated nationwide. The CMS Five-Star designation is based on performance across various measures of quality including safety of care, readmission rate, mortality, timely and effective care and patient experience.

 

 

 

20

Universal Health Services, Inc. 2023 Proxy Statement


Executive Compensation

 

 

 

 

Lakewood Ranch Medical Center was one of 350 hospitals in the United States named on the 2022 list of America’s Best Maternity Hospitals issued by Newsweek and the data firm, Statista Inc. The evaluation is based on a nationwide online survey in which hospital managers and maternity healthcare professionals were asked to recommend leading maternity hospitals, medical key performance indicator data relevant to maternity care, and patient satisfaction data.

 

 

The ER at Fruitville, an extension of Lakewood Ranch Medical Center, was named a Press Ganey 2022 Human Experience (HX) Guardian of Excellence Award – Patient Experience winner.

 

 

U.S. News & World Report’s 2022-2023 Best Hospital Rankings recognized South Texas Health System Edinburg as Best Regional Hospital in the McAllen Metro area. Six of our acute care hospitals/health systems received “high performing” designations in at least four specialty care areas, including, but not limited to, COPD, heart failure, kidney failure and stroke.

 

 

Based on nearly 14,400 individual Facebook and Google reviews, our acute care hospitals’ collective average rating was 4.0 out of 5.0.

 

 

Risk-adjusted observed to expected mortality (“O:E Ratio”) is another commonly used method to assess acute care quality (an O:E Ratio of 1.0 represents the average mortality rate; less than 1.0 represents a better-than-expected mortality rate). Our acute care hospitals’ 2022 O:E Ratio, using CareScience Standard Practice Methodology, was 0.95 which compared favorably to the expected O:E Ratio.

 

 

Our acute care hospitals delivered nearly $2.3 billion in uncompensated care.

Behavioral Health Care Services:

 

 

The Centers for Medicare and Medicaid Services’ inpatient psychiatric facility quality reporting measures compare our behavioral health care facilities to approximately 1,600 providers in the U.S. Our 2021 behavioral health results exceed the national average in 11 out of 15 indicators. These measures are publicly available.

 

 

In 2022, patients in our behavioral health care facilities rated their overall care, on average, as 4.4 out of 5 in our patient satisfaction surveys. More than 91% indicated they felt better following care at one of our facilities; and 89% of our patients indicated that their treatment goals were met.

 

 

As indicated by our referral source satisfaction survey, 84% of our referral sources consider our behavioral health care facilities as their provider of choice while scoring a 4 out of 5.

 

 

In 2020, our behavioral health care facilities began obtaining Net Promoter Scores (“NPS”) which are utilized by approximately two-thirds of Fortune 1000 companies to gauge customer loyalty. In 2022, the average aggregate score for our behavioral health care facilities was 37.5 which is considered very good by industry standards. Our outpatient programs’ NPS score was 66.1 and our substance use disorder programs’ NPS score was 55.5, both of which are considered excellent.

 

 

In 2022, 173 of our facilities participated in patient reported outcome evaluations. An evidence-based tool is administered at admission and at discharge to determine effectiveness and impact of care provided. 80% of our patients exhibited statistically meaningful improvement. Utilizing these tools in addition to patient satisfaction, publicly reported measures and NPS, provides our facilities the opportunity to benchmark, improve and report on the quality of care provided.

Our Executive Officers

Marc D. Miller – Chief Executive Officer, President and Director: Mr. Marc D. Miller was appointed Chief Executive Officer and President effective January 1, 2021. He has served as President since May, 2009 and prior thereto served as Senior Vice President and co-head of our Acute Care Hospitals since 2007. He was elected a Director in May, 2006 and Vice President in 2005. He has served in various capacities related to our acute care division since 2000. He was elected to the Board of Trustees of Universal Health Realty Income Trust in December, 2008. He also serves as a member of the Board of Directors of Premier, Inc., a publicly traded healthcare performance improvement alliance.

Alan B. Miller – Executive Chairman of the Board and Founder: Mr. Alan B. Miller was appointed Executive Chairman of the Board effective January 1, 2021. He had been Chairman of the Board and Chief Executive Officer since our inception in 1978 and also served as President from inception until 2009. Prior thereto, he was President, Chairman of the Board and Chief Executive Officer of American Medicorp, Inc. He currently serves as Chairman of the Board, Chief Executive Officer and President of Universal Health Realty Income Trust.

 

 

 

21

Universal Health Services, Inc. 2023 Proxy Statement


Executive Compensation

 

 

 

Steve G. Filton – Executive Vice President, Chief Financial Officer and Secretary: Mr. Filton was elected Executive Vice President in 2017 and continues to serve as Chief Financial Officer since his appointment in 2003. He has also served as Secretary since 1999. He had served as Senior Vice President since 2003, as Vice President and Controller since 1991, and as Director of Corporate Accounting since 1985.

Edward H. Sim – Executive Vice President, President of Acute Care Division: Mr. Sim was hired as Executive Vice President, President of our Acute Care Division in December, 2022 to succeed Mr. Marvin G. Pember who retired on December 31, 2022. Mr. Sim was formerly employed as Chief Operating Officer at Centura Health, since 2017. Prior to joining Centura Health, Mr. Sim served in senior leadership roles of increasing responsibility for 11 years at Baptist Health.

Matthew J. Peterson – Executive Vice President, President of Behavioral Health Division: Mr. Peterson’s employment with us commenced in September, 2019 as Executive Vice President and President of our Behavioral Health Division. He was formerly employed at UnitedHealth Group for 11 years serving in various capacities including Chief Operating Officer for OptumGovernment, a health services and technology company, as well as various other Senior Vice President/Vice President roles. In addition to his civilian business career, Mr. Peterson also serves in the Air National Guard (“ANG”), U.S. Airforce, and was recently promoted to Brigadier General. He has also served for over 25 years with the ANG as a Healthcare Executive/Medical Service Corps Officer and has held numerous leadership roles.

Marvin G. Pember – Former Executive Vice President, President of Acute Care Division: Mr. Pember was elected Executive Vice President in 2017 and served as President of our Acute Care Division since commencement of his employment with us in 2011 until his retirement on December 31, 2022.

Summary of Changes Implemented in 2022 to Executive Officer Compensation

As a result of shareholder feedback (including feedback received in connection with the most recent shareholder advisory vote on executive compensation), as well as review of comparable executive compensation benchmarking comparisons, on March 23, 2022, our Compensation Committee of the Board of Directors (the “Compensation Committee”) approved changes to various elements of compensation for our Chief Executive Officer (“CEO”) and certain of our other named executive officers (“NEOs”).

Below is a general summary of those changes, as compared to 2021:

 

 

Decrease in the weighting of long-term incentives (“LTI”), with accompanying increase in weighting of cash incentives.

 

 

No significant changes in target compensation levels (i.e., changes generally consist of shifts in mix of pay, not pay amounts).

 

 

Continued commitment to significant at-risk, performance-based CEO and NEO compensation programs.

After reviewing market data prepared by FW Cook, a third-party executive compensation consultant, the Compensation Committee determined that the target pay mix for our CEO and certain of our other NEOs could be more closely aligned with the comparable target pay mix at our peer group companies. For example, in 2021, our CEO received 82% of target total direct compensation (“TDC”) in the form of long-term incentives whereas LTI of peer group CEOs accounted for 66% of target TDC. Certain of our other NEOs (on average) received approximately 75% of target TDC in the form of long-term incentives whereas LTI of comparable peer company NEOs (on average) accounted for 56% of target TDC. Conversely, the weighting of annual cash incentives was below that of our peer group.

Due to the differences between our target pay mix and that of our peer group, our Compensation Committee determined that decreases in the weighting of LTI, and accompanying increases in cash incentive pay mix, were warranted for our CEO and certain of our other NEOs. Adjustments to base salaries were also warranted to further align the elements of our executive compensation to the pay mix of our peer group companies.

Commencing in March of 2022, each NEO began receiving their stock-based compensation as fixed dollar awards rather than awards that were denominated in a fixed number of shares. In addition, changes were also implemented in connection with the form of stock-based compensation awards made to our CEO and other NEOs to further align with peer group long-term incentive mix. In March of 2022, our CEO and NEOs each received: (i) 50% of their annual target stock-based compensation awards in the

 

 

 

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form of options to purchase shares of our Class B Common Stock at the grant date market value, and; (ii) 50% of their annual target stock-based compensation awards in the form of performance-based restricted stock units that will be earned based upon achievement of a pre-established specified range of target levels based on the three-year growth in our earnings before interest, taxes, depreciation & amortization, and the impacts of other income/expense and net income attributable to noncontrolling interests. Previously, in 2021, the annual stock-based compensation awards to our CEO and NEOs consisted of: (i) 50% of the target awards were made in the form of options to purchase shares of our Class B Common Stock at the grant date market value, and; (ii) 50% of the target awards were made in the form of option to purchase shares of our Class B Common Stock at 110% of the grant date market value.

The base salary changes were retroactively applied in 2022 to correspond to each individual’s historical annual merit increase date which was January 1st for Mr. Marc Miller and March 1st for each of Messrs. Filton, Pember and Peterson.

The cash incentives values reflected below for 2022 were computed at the target bonus awards for each individual, which as a percentage of their base salary, after giving effect to the changes implemented in 2022, amounted to 150% for Mr. Marc Miller and 100% for each of Messrs. Filton, Pember and Peterson. The cash incentives values reflected below for 2021 were computed at the target bonus awards for each individual, which as a percentage of their base salary, before giving effect to the changes implemented in 2022, amounted to 100% for Mr. Marc Miller, 50% for Mr. Filton and 31% for each of Messrs. Pember and Peterson.

As compared to 2021, below is a summary of the primary elements of compensation for our CEO and certain other NEOs, other than our Executive Chairman, Mr. Alan Miller, and Mr. Edward H. Sim who was hired in December 2022, after giving effect to the changes implemented in 2022.

 

($000s)                            

Compensation Elements

 

   M. Miller
(Pres. & CEO)
     S. Filton
(EVP & CFO)
     M. Pember
(Former EVP & Pres.-
Acute Care)
     M. Peterson 
(EVP & Pres.- 
Behavioral 
Health) 
 
   2021      2022      2021      2022      2021      2022      2021      2022  

Base Salary

   $ 1,100      $ 1,300      $ 719      $ 800      $ 740      $ 800      $ 626      $ 675   

Target Cash Incentives

   $ 1,100      $ 1,950      $ 360      $ 800      $ 231      $ 800      $ 196      $ 675   

Equity Comp

   $ 10,105      $ 9,508      $ 3,169      $ 2,420      $ 3,181      $ 2,305      $ 2,724      $ 1,988   

Target Total Direct Comp

   $ 12,305      $ 12,758      $ 4,248      $ 4,020      $ 4,152      $ 3,905      $ 3,546      $ 3,338   

 

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We believe the changes to the elements of compensation for each of our NEOs, as outlined above, continue to preserve significant reliance on at-risk, performance-based compensation for our CEO and other NEOs. After giving effect to the changes in the elements of compensation during 2022, as reflected above, approximately 90% of the target pay for our CEO, and approximately 80% of the target pay for our other NEOs, is comprised of performance-based incentive compensation.

Mr. Alan Miller, our Executive Chairman, receives compensation pursuant to his employment agreement which provides for a base salary of $1.0 million in 2022 (unchanged from 2021), a discretionary cash bonus which was $1.0 million for 2021 and zero for 2022, and discretionary LTIP awards which had grant date market values of approximately $5.0 million in 2022 and $10.1 million in 2021. Mr. Alan Miller’s LTIP awards in each of 2022 and 2021 were consistent with the form of the stock-based awards made to our CEO and other NEOs during each year, as discussed above.

Mr. Edward H. Sim was hired as Executive Vice President, President of our Acute Care Division in December, 2022 to succeed Mr. Marvin G. Pember who retired on December 31, 2022. Mr. Sim has an annual base salary of $775,000. He was not eligible for an annual incentive bonus for 2022.

Compensation Philosophy and Objectives

Our compensation philosophy of strongly aligning pay with performance is grounded in best practices that are regulatory compliant, financially sound and provide long-term value to stockholders. Specifically, we:

 

 

Review peer group market data on an annual basis;

 

 

Discuss financial and operational performance rigorously in determining any base salary and incentive decisions;

 

 

Enforce maximums on incentive payments to limit undue risk;

 

 

Evaluate our compensation practices on an annual basis;

 

 

Retain an independent, outside consultant;

 

 

Do not provide plans generally outside of current market practices, and;

 

 

Do not offer excessive perquisites to our executives.

In designing our compensation programs for our named executive officers, we follow our belief that compensation should reflect the value created for stockholders while supporting our strategic business goals. In doing so, our compensation programs reflect the following objectives:

 

 

Compensation should encourage increases in stockholder value;

 

 

Compensation programs should support our short-term and long-term strategic business goals and objectives;

 

 

Compensation programs should reflect and promote our core values set forth in our mission statement, which includes commitment to excellence, high ethical standards, teamwork and innovation;

 

 

Compensation should reward individuals for outstanding performance and contributions toward business goals, and;

 

 

Compensation programs should enable us to attract, retain and motivate highly qualified professionals.

These objectives govern the decisions that the Compensation Committee and management of the Company make with respect to the amount and type of compensation payable to our named executive officers. The Compensation Committee believes that linking executive compensation to corporate performance results in a strong alignment of compensation with corporate business goals and stockholder value. This belief has been adhered to through the use of incentive pay programs that provide competitive compensation for achieving superior performance and creating value for stockholders. Executives are rewarded commensurately for the achievement of specified business goals and performance objectives, which may increase the value of our stock. Our compensation programs are reviewed annually to ensure that these objectives continue to be met.

 

 

 

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Compensation Setting Process

In late 2021, we retained the services of FW Cook to conduct a full comprehensive review of total direct compensation (base, incentive and equity) for our named executives and market analysis of Board of Director fee and equity award structure. Information was reviewed from two reference points: UHS peer group established and detailed in our 2021 proxy and a secondary reference of size-adjusted (by revenues) data from the broader general industry. Data for the peer reference were drawn from publicly filed proxies. FW Cook’s advice and analysis were used to make decisions on an updated remix of all direct compensation elements, as discussed above. As discussed in “Director Compensation” below, compensation practices for our Board of Directors were modified as well to reflect current peer and market practices.

With the approval of the Compensation Committee, management engaged FW Cook for compensation-related consulting services, substantially all of which related to the review and analysis of the elements and amounts of compensation for our CEO and other named executive officers. FW Cook did not receive more than $120,000 in fees during 2022 from the Company for services other than for work requested by the Compensation Committee with respect to executive compensation. For 2022, the Compensation Committee analyzed whether the work of FW Cook raised any conflicts of interest, taking into consideration all relevant factors, and determined, based on its analysis of all relevant factors, that no conflicts of interest were present.

Elements of Compensation

Our executive compensation is based on six primary components, each of which is intended to serve the overall compensation objectives. These components include:

 

 

annual base salary;

 

 

annual cash incentive;

 

 

long-term incentive awards, and;

 

 

deferred compensation, retirement benefits and other benefits, including perquisites.

Compensation Peer Group

 

 

Acadia Healthcare Company, Inc.

 

 

Brookdale Senior Living, Inc.

 

 

Community Health Systems, Inc.

 

 

DaVita, Inc.

 

 

Encompass Health Corporation

 

 

Genesis Healthcare, Inc.

 

 

HCA Healthcare, Inc.

 

 

Henry Schein, Inc.

 

 

Laboratory Corporation of America Holdings

 

 

Molina Healthcare, Inc.

 

 

Quest Diagnostics Incorporated

 

 

Select Medical Holdings Corporation

 

 

Tenet Healthcare Corporation

Annual Base Salary

Our annual base salary levels are intended to be consistent with competitive pay practices and level of responsibility, with salary increases reflecting competitive trends, our overall financial performance, the performance of each individual executive and general economic conditions.

 

 

 

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In establishing the base salary for our named executive officers, various criteria are reviewed including the following:

 

 

the executive officer’s achievements, performance in his or her position with us, taking into account the tenure of service, the complexity of the position and current job responsibilities;

 

 

company financial performance, and;

 

 

salaries of similar positions in our peer competitor companies and general industry comparisons.

We believe these peer companies, which are indicated above, are comparable peer companies based upon the median revenues of this peer group, which were approximately $11.6 billion in 2022, as compared to our 2022 revenues of approximately $13.4 billion.

For 2022, for our other named executive officers (excluding Mr. Alan Miller), we targeted the median (50th percentile) base salary paid by the peer companies (listed above), along with the median of broader general industry data, to establish our base market rate. We generally consider our base salaries to be competitive if they are approximately within a 15% range of the median market rate. For 2022, Mr. Marc Miller, Mr. Filton and Mr. Peterson’s salaries were within 15% of the data (as assessed relative to our peer and general industry groups). Mr. Pember’s salary was within 20%. However, actual base salaries are not dictated solely by the median market rate. We also take into account an individual’s expertise, tenure in the position, responsibilities and achievements.

Annual Cash Incentives

Cash incentives for our named executive officers are awarded under the Executive Incentive Plan. A new 2022 Executive Incentive Plan was adopted in March, 2022 which contained certain minor updates to our prior plan due to changes in tax laws regarding executive compensation. The Executive Incentive Plan is intended to support our efforts to attract, retain and motivate highly qualified senior management and other executive officers of the Company and its affiliates through the payment of performance-based incentive compensation. Annual incentive compensation may be awarded under the Executive Incentive Plan to our named executive officers and others as selected by the Compensation Committee for any calendar year. The Compensation Committee believes that the payment of cash incentives to our named executive officers under the Executive Incentive Plan is consistent with the objectives for our compensation programs by rewarding such officers for the achievement of specified business goals and performance objectives and that may increase the value of our stock.

The amount of an employee’s cash incentive award for a calendar year is based upon the employee’s target cash incentive and the extent to which the performance goal(s) applicable to the employee are achieved. For each calendar year, an employee’s target cash incentive will be equal to a fixed percentage of the employee’s base salary earned during the year.

The Compensation Committee establishes performance goals for the named executive officers using such business criteria and other measures of performance discussed herein and the Compensation Committee will establish objective performance goals based upon one or more of the following business criteria:

 

 

attainment of certain target levels of, or a specified increase in, after-tax or pre-tax profits;

 

 

attainment of certain target levels of, or a specified increase in, earnings per diluted share or adjusted earnings per diluted share, and;

 

 

attainment of certain target levels of, or a specified increase in, return on capital or return on invested capital.

In the case of an award intended to qualify as “performance-based compensation”, the applicable target cash incentive, performance goals and performance factors with respect to any calendar year will be established in writing by the Compensation Committee no later than 90 days after the commencement of that year. Promptly after the date on which the necessary financial or other information for a particular year becomes available, the Compensation Committee will determine the amount, if any, of the cash incentive compensation payable to each participant for that calendar year and will certify in writing prior to payment that the performance goals for the year were in fact satisfied. The maximum incentive award which any participant may earn under the Executive Incentive Plan for any calendar year shall not exceed $5 million. The Executive Incentive Plan provides the Compensation Committee with the discretion to establish higher or lower performance factors for levels of performance that are more or less than the target levels. Performance goals may be adjusted for changes in accounting methods, corporate transactions and other similar types of events.

 

 

 

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2022 Annual Cash Incentive Formula and Performance Goals:

On March 23, 2022, the Compensation Committee approved specific bonus formulae for the determination of the target annual incentive compensation for the Company’s named executive officers pursuant to the Executive Incentive Plan (the “Plan”) for the year ending December 31, 2022. Under the formulae approved by the Compensation Committee, each of the Company’s named executive officers was assigned a percentage of such executive officer’s 2022 base salary as a target bonus based upon corporate performance criteria. The corporate performance criteria target bonus award indicated below for Mr. Marc D. Miller is stipulated in his employment agreement dated December 23, 2020, which became effective on January 1, 2021. Mr. Marc Miller’s employment agreement was amended in March, 2022, primarily to provide for the changes to the elements of his compensation implemented in 2022, as discussed above.

Mr. Alan B. Miller, who previously served as our Chief Executive Officer and Chairman of the Board of Directors, transitioned to the role of Executive Chairman of the Board of Directors effective January 1, 2021. As part of his compensation in connection with his role as Executive Chairman of the Board, Mr. Alan B. Miller may be entitled to bonuses and other compensation (including annual incentive bonuses) as may be determined by the Board of Directors.

The following table shows each executive officer’s corporate performance criteria target bonus as a percentage of their base salary for 2022.

With respect to:

 

 

Messrs. Marc D. Miller and Steve G. Filton – 100% of their annual incentive target bonus for 2022 was based upon the corporate performance criteria, as described below.

 

 

Messrs. Pember and Peterson – their 2022 annual incentive target bonus was based upon:

 

   

25% of their annual salary based upon the achievement of the corporate performance criteria, and;

 

   

75% of their annual salary based upon the achievement of the divisional income targets, as described below.

 

 

Mr. Edward H. Sim was hired as Executive Vice President and President, Acute Care, succeeding Mr. Marvin Pember, effective December 5, 2022 and therefore was not eligible for an annual incentive bonus for 2022.

 

Name

   Title    Target Incentive
Bonus Award
as a % of salary
 

Marc D. Miller

   Chief Executive Officer and President      150

Steve G. Filton

   Executive Vice President and Chief Financial Officer      100

Marvin G. Pember

   Former Executive Vice President and President-Acute Care Division      100

Matthew J. Peterson

   Executive Vice President and President-Behavioral Health Division      100

As part of our peer company compensation review for executive officers as discussed above in Annual Base Salary, we also target the median (50th percentile) market rate from our healthcare peers and the broader general industry data when determining each officer’s target annual incentive. Actual cash incentive awards, however, appropriately vary from this targeted level based upon performance, consistent with our pay for performance philosophy, and are detailed in the Summary Compensation Table in this Proxy Statement. The Compensation Committee believes that the annual incentive opportunities offered to our named executive officers are appropriate to facilitate our ability to attract, retain, motivate and reward our named executive officers, and that actual incentive payouts appropriately reflect the Company’s performance.

2022 Annual Cash Incentive Targets:

Target Corporate Performance Criteria:

On February 24, 2022, we publicly announced that our initial estimated range of adjusted net income per diluted share attributable to UHS for 2022 was $11.90 to $12.90. In June of 2022, based upon our actual operating results experienced during the first six months of 2022, we publicly disclosed a decrease to our previously disclosed estimated range of adjusted net income per diluted share attributable to UHS for 2022 (decreased the upper end of the range to $10.40 per diluted share from $12.90 per diluted share while the lower end of the range was adjusted to $9.60 per diluted share from $11.90 per diluted share); however, our annual incentive performance targets were not impacted by these publicly disclosed revisions.

 

 

 

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On March 23, 2022, the Compensation Committee approved specific bonus formulae for the determination of annual incentive compensation for our named executive officers pursuant to the 2022 Executive Incentive Plan for the year ending December 31, 2022. For 2022, our named executive officers were eligible to receive the applicable portion of their annual cash incentive (which were based on the corporate performance criteria) at various increments ranging from 0% of their bonus target award (based upon the achievement of a Target of adjusted net income per diluted share attributable to UHS of $11.15 or less, and Return on Capital of 7.7% or less) up to 200% of their annual cash incentive target award (based upon the achievement of a Target of adjusted net income per diluted share attributable to UHS of $13.64 or greater and Return on Capital of 9.5% or greater). The 2022 Target of adjusted net income per diluted share attributable to UHS, which represented the approximate midpoint within the publicly disclosed range of our projected consolidated earnings per diluted share estimate for the year, was $12.40 per diluted share. The 2022 Return on Capital Target was 8.7%

The adjusted net income per diluted share attributable to UHS excludes, among potentially other things if applicable and material and/or nonrecurring or nonoperational in nature, the impact of unrealized gains/losses resulting from changes in the market value of shares of certain equity securities, provision for asset impairments, and the impact on our provision for income taxes and net income attributable to UHS resulting from ASU 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The Targets were adjusted from prior years to correlate to the range of our initial estimated 2022 adjusted net income per diluted share attributable to UHS, as publicly disclosed on February 24, 2022.

Target Divisional Performance Criteria:

Also on March 23, 2022, the Compensation Committee approved the specific bonus formulae based upon the achievement of the divisional income targets pursuant to the 2022 Executive Incentive Plan for the year ended December 31, 2022. Messrs. Pember and Peterson were each entitled to receive between 0% and 200% of their target bonus that was based on the divisional results (75%). The divisional income targets consist of the projected aggregate pre-tax income for our acute care and behavioral health services segments, net of certain deductions which consist primarily of a charge for the estimated cost of capital. The divisional income targets may be adjusted to include or exclude the impact of items, if applicable and material, that are, among other things, nonrecurring or non-operational in nature.

For 2022, the divisional income targets were as follows:

 

 

Acute Care: The divisional income target was determined to be $206.0 million and Mr. Pember was eligible to receive the applicable portion of his cash incentive (75%) at various increments ranging from 0% based upon the achievement of acute care divisional income of $185.3 million, up to 200% based upon the achievement of acute care divisional income of $226.6 million or greater.

 

 

Behavioral Health Care: The divisional income target was determined to be $420.6 million and Mr. Peterson was eligible to receive the applicable portion of his cash incentive (75%) at various increments ranging from 0% based upon the achievement of behavioral health care divisional income of $378.5 million, up to 200% based upon the achievement of behavioral health care divisional income of $462.7 million or greater.

2022 Actual Annual Cash Incentive Results:

On March 15, 2023, the Compensation Committee determined that, based upon our actual corporate and divisional operating results during the year ended December 31, 2022, the minimum thresholds for the corporate performance criteria and the divisional performance criteria were not achieved and therefore no cash incentives were payable to Messrs. Marc D. Miller, Steve G. Filton, Marvin G. Pember or Matthew J. Peterson.

Actual Corporate Performance Criteria:

During 2022, our adjusted net income per diluted share attributable to UHS was $9.88, as compared to a target of $12.40 per diluted share and a minimum threshold of $11.16 per diluted share. This adjusted net income per diluted share attributable to UHS for 2022 was publicly disclosed and reconciled to our reported 2022 net income per diluted share attributable to UHS of $9.14, on the Schedule of Non-GAAP Supplemental Information included with our financial results for the year ended December 31, 2022, as

 

 

 

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filed on Form 8-K on February 27, 2023. The Return on Capital was 7.0% for 2022, as compared to a target of 8.7% and a minimum threshold of 7.8%. The Return on Capital is calculated by dividing our annual adjusted net income attributable to UHS by the consolidated average net capital.

Actual Divisional Performance Criteria:

During 2022, the actual divisional income was as follows:

 

 

Acute Care: The acute care divisional income was a loss of $26.9 million and therefore the minimum income threshold of $185.4 million was not achieved.

 

 

Behavioral Health Care: The behavioral health care divisional income was $354.2 million and therefore the minimum income threshold of $378.6 million was not achieved.

In determining the corporate and divisional performance criteria, various factors are considered, including the projected revenue and earnings growth over the prior year. Since the value received by stockholders is measured, in large part, by an increase in stock price, which is in turn typically influenced by increases in revenues and earnings, our performance criteria are established at reasonably aggressive levels to encourage the attainment of our financial objectives which, if accomplished, may result in an increase to our stock price and increased value to stockholders. As mentioned above, the corporate performance criteria are established annually (except for 2020 due to the impact of the COVID-19 pandemic and no cash incentive bonuses were paid to any of our named executive officers pursuant to the Executive Incentive Plan) and the Target of adjusted net income per diluted share attributable to UHS directly correlates to our annual earnings guidance that is typically publicly disclosed by us in February of each year. The divisional performance criteria are also established annually and represent each segment’s respective portion of the Company’s consolidated estimated earnings.

For each of our named executive officers that had approved specific bonus formulae for the determination of annual incentive compensation pursuant to the Executive Incentive Plan, the following table sets forth the actual 2022 annual incentive bonus awarded as well as the pre-established ranges of potential payouts under our non-equity incentive plan.

 

          2022 Non-Equity Incentive Plan Awards  

Name

   Title    Actual      Minimum      Target      Maximum   

Marc D. Miller

   Chief Executive Officer and President    $      $ 78,003      $ 1,950,075      $ 3,900,150   

Steve G. Filton

   Executive Vice President and Chief Financial Officer    $      $ 31,463      $ 786,574      $ 1,573,148   

Marvin G. Pember

   Former Executive Vice President and President-Acute Care    $      $ 90,856      $ 790,053      $ 1,580,106   

Matthew J. Peterson

   Executive Vice President and President-Behavioral Health Care    $      $ 76,696      $ 666,922      $ 1,333,844   

Mr. Alan B. Miller, our Executive Chairman, receives compensation pursuant to his employment agreement which provided for a base salary of $1.0 million in 2022, and the potential for a discretionary cash bonus, as determined by our Board of Directors. No discretionary cash bonus was paid to Mr. Alan B. Miller for the year ended December 31, 2022.

The performance goals related to the Executive Incentive Plan, as outlined above, are generally based upon the achievement of our business plan financial objectives. Performance goals are established at reasonably aggressive levels to encourage and motivate executive performance and attainment of our financial objectives.

For a further description of the cash incentives and other elements of compensation granted to our named executive officers for 2022, 2021 and 2020, please refer to the Summary Compensation Table in this Proxy Statement.

Long-Term Incentives

The Compensation Committee believes that the grant of equity-based, long-term compensation, primarily in the form of stock options and restricted shares, to our named executive officers is appropriate to attract and retain such individuals and to motivate them to enhance stockholder value.

 

 

 

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Further, long-term incentive awards reward individuals for their performance and achievement of business goals. The Compensation Committee believes that our best interests will be advanced by enabling our named executive officers, who are responsible for our management, growth and success, to receive compensation in the form of long-term incentive awards that may increase in value in conjunction with an increase in the value of our common stock.

As is the case with respect to base salaries, a number of factors are taken into account in calibrating grants of long-term incentive awards, including an individual’s performance in light of his or her position, responsibilities and contribution to our financial performance. In addition, the Compensation Committee takes into account an individual’s potential contribution to our growth and productivity. In determining appropriate long-term incentive grants, there is no other predetermined formula, factors or specified list of criteria that is followed.

For a description of the long-term incentive awards granted to our named executive officers for 2022, please read the Summary Compensation Table and the Grants of Plan-Based Awards Table included in this Proxy Statement.

2020 Stock Incentive Plan:

In May, 2020, at our Annual Meeting, the stockholders approved the 2020 Omnibus Stock and Incentive Plan (“2020 Stock Incentive Plan”), and as a result, as of that date, no additional awards were granted under our previous plan and the reserve for shares that were remaining for future issuance under the previous plan was canceled. The 2020 Stock Incentive Plan provides for the issuance of incentive stock options and non-qualified stock options to purchase shares of our Class B Common Stock, including awards of performance-based stock options with premium exercise prices. Additionally, the 2020 Stock Incentive Plan authorizes awards of restricted stock and restricted stock units, as discussed below, stock appreciation rights and restricted stock units and awards intended to be performance-based awards. The 2020 Stock Incentive Plan is intended to provide a flexible vehicle through which we may offer equity-based compensation incentives to our named executive officers and other eligible personnel in support of our compensation objectives. On March 23, 2022, the Board of Directors adopted an amendment and restatement of our 2020 Omnibus Stock and Incentive Plan, which was approved by our stockholders at our 2022 Annual Meeting, which among other things increased the numbers of shares of our Class B Common Stock that may be issued under the 2020 Stock Incentive Plan by 6.0 million (to 12.1 million shares from 6.1 million shares).

Subject to the provisions of the 2020 Stock Incentive Plan, the Compensation Committee has the responsibility and full power and authority to select the persons to whom awards will be made, to prescribe the terms and conditions of each award and make amendments thereto, to construe, interpret and apply the provisions of the Stock Incentive Plan and of any agreement or other instrument evidencing an award and to make any and all determinations and take any and all other actions as it deems necessary or desirable in order to carry out the terms of the Stock Incentive Plan.

Stock Options: Typically, option awards under the 2020 Stock Incentive Plan are granted by the Compensation Committee on specific dates that are scheduled in advance, which generally coincide with regularly scheduled meetings of the Compensation Committee and the Board of Directors. There is no separate policy with respect to the timing of option awards to our named executive officers. Typically, option awards are granted to our named executive officers at the same time as option awards are granted to our other employees. In certain circumstances, such as new hires or promotions, option awards are granted separately by the Compensation Committee or our Chief Executive Officer and Chief Financial Officer who are duly authorized by the Compensation Committee.

Stock options have such vesting and other terms and conditions as the Compensation Committee, acting in its discretion, may determine. Generally, grants of stock options vest in equal amounts over four years, are scheduled to expire on the fifth anniversary of the date of grant and, unless otherwise determined, employees must be employed by us for such options to vest. We do not have any plan to select option grant dates for our named executive officers in coordination with the release of material non-public information. The exercise price per share of Class B Common Stock covered by an option shall be any price determined by the Compensation Committee, but may not be less than 100% of the fair market value of the underlying Class B Common Stock on the date of grant. The exercise price of incentive stock options shall not be less than 110% of the fair market value on the date of grant if the optionee owns, directly or indirectly, stock possessing more than 10% of the voting power of all classes of our stock. For purposes of the 2020 Stock Incentive Plan, unless otherwise determined by the Compensation Committee, the fair market

 

 

 

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value of a share of Class B Common Stock as of any given date is the closing sale price per share reported on a consolidated basis for securities listed on the principal stock exchange or market on which the Class B Common Stock is traded on the date as of which such value is being determined or, if there is no sale on that day, then on the next day on which a sale was reported.

Restricted Stock and Restricted Stock Units: The 2020 Stock Incentive Plan provides for the grant of shares or units of our Class B Common Stock to eligible personnel for a purchase price equal to par value. Shares of our Class B Common Stock could be granted under the 2020 Incentive Plan to any of our employees or consultants. Historically, our restricted grants have had a scheduled vesting period ranging from one to five years.

Vesting conditions on shares or units issued under the 2020 Incentive Plan may consist of continuing employment for a specified period of time following the purchase date. Alternatively, or in addition, vesting may be tied to the satisfaction of specific performance objectives established by the Compensation Committee based upon any one or more of the business criteria used in determining the bonuses for our named executive officers, as mentioned above. We have the right to repurchase the shares for the same purchase price (par value) if specified vesting conditions are not met.

The Compensation Committee believes restricted stock awards and restricted stock units, at times, can be effective in achieving our compensation objectives because it provides employees with a strong retention incentive and aligns the value of the award or unit with our stock price performance. The Compensation Committee may provide that Restricted Stock Awards and Restricted Stock Units shall earn dividends or dividend equivalents (payable in cash or additional shares, or a combination of cash and shares), however, dividends or dividend equivalents may not be paid with respect to any award or unit until vesting requirements are satisfied. Generally, holders of restricted stock and restricted stock units receive dividend equivalents which are subject to vesting in line with the underlying award to which they relate. We do not have any plan to select restricted stock award or restricted stock unit grant dates for our named executive officers in coordination with the release of material non-public information.

2022 Stock-Based Compensation Awards:

To further enhance our equity awards program toward performance-based equity awards, as discussed below, in March of 2022, our CEO and NEOs, with the exception of Mr. Edward H. Sim who was hired in December, 2022, each received: (i) 50% of their annual target stock-based compensation awards in the form of options to purchase shares of our Class B Common Stock at the grant date market value, and; (ii) 50% of their annual target stock-based compensation awards in the form of performance-based restricted stock units that will be earned based on the three-year growth in our earnings before interest, taxes, depreciation and amortization, the impacts of other income/expense and net income attributable to noncontrolling interests, as compared to a range of pre-established three-year growth thresholds.

On March 23, 2022, our Compensation Committee awarded to our named executive officers:

 

 

Stock options, issued at $143.81 representing the grant date value, which are scheduled to vest in four equal installments on the first, second, third and fourth anniversaries of the grant date and will expire on March 22, 2027, and;

 

 

Performance-based restricted stock units that will be earned based upon the achievement of a pre-established specified range of target levels based on the three-year growth in our earnings before interest, taxes, depreciation and amortization, and the impacts of other income/expense and net income attributable to noncontrolling interests.

The number of stock options and target awards of performance-based restricted stock units awarded to each of our named executive officers on March 23, 2022 were as follows:

 

 

Marc D. Miller - 104,001 stock options and 33,058 performance-based restricted stock units.

 

 

Alan B. Miller - 54,691 stock options and 17,384 performance-based restricted stock units.

 

 

Steve G. Filton - 26,471 stock options and 8,414 performance-based restricted stock units.

 

 

Marvin G. Pember - 25,213 stock options and 8,014 performance-based restricted stock units (these performance based-restricted stock units were canceled upon Mr. Pember’s retirement on December 31, 2022).

 

 

Matthew J. Peterson - 21,745 stock options and 6,912 performance-based restricted stock units.

 

 

 

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In January, 2023, related to the commencement of his employment in December, 2022, Mr. Edward H. Sim was awarded 50,000 stock options, issued at $145.65 representing the grant date value. The stock options are scheduled to vest ratably on each of the first four anniversaries of the grant date and are scheduled to expire on the fifth anniversary.

Mr. Marvin G. Pember retired from the Company effective as of December 31, 2022. Pursuant to his Separation Agreement and General Release: (i) all of Mr. Pember’s performance based restricted stock units awarded on March 23, 2022 with a grant date fair value of $1.2 million, which were scheduled to be earned based on the three-year growth in certain Company financial metrics, were canceled on December 31, 2022, and; (ii) all of Mr. Pember’s unvested stock options granted prior to his termination date will continue to vest until April 1, 2023 and all stock options scheduled to remain unvested as of April 1, 2023 were canceled as of December 31, 2022, (including 75% of options awarded on March 23, 2022).

In determining the number of options to award to our named executive officers, the Compensation Committee reviewed the compensation data and competitive performance data prepared by FW Cook in early 2022, including stock-based compensation, and reviewed historical company practices with respect to stock option and long-term incentive awards. The Committee also considered individual performance in light of a named executive officer’s position, responsibilities and contribution to our financial performance as well as his potential contribution to our growth and productivity.

2021 Stock-Based Compensation Awards

After giving consideration to comments received from investors that our equity award program could be enhanced by including performance-based equity awards, and after undertaking a comprehensive review with our third-party compensation consultant (FW Cook) to identify potential performance-based equity award design alternatives, we decided to modify our stock option award program in 2020. As determined by our Compensation Committee, although not required by the terms of the 2020 Stock Incentive Plan, that a portion of the options awarded to the named executive officers of the Company will be exercisable at 110% of the fair market value on the date of grant. In March of 2021 and March of 2020, we have delivered 50% of the award value to our named executive officers, including Mr. Alan B. Miller (our Chief Executive Officer prior to January 1, 2021) and Mr. Marc D. Miller (our Chief Executive Officer effective as of January 1, 2021), in stock options with a premium exercise price of 10% above grant date market value.

Deferred Compensation

Our Deferred Compensation Plan, which is subject to the applicable provisions of Internal Revenue Code Section 409A, provides that eligible employees may elect to defer a portion of their base salary and bonus award into deferred compensation accounts that accrue earnings based upon the selection of available investment options. Under the Deferred Compensation Plan, an employee is deemed eligible if their base compensation for 2022 was $135,000 or higher and they are performing duties in a qualified position. The base compensation threshold is adjusted from time-to-time for cost-of-living increases. Pursuant to the terms of the Deferred Compensation Plan, the minimum annual amount that can be deferred is 1% of an employee’s base salary. No more than 50% of an employee’s base salary or 95% of an employee’s annual bonus may be deferred under the Deferred Compensation Plan in any calendar year. Employees may allocate a portion of their deferred compensation to be distributed in a lump sum or installments to begin at retirement or a scheduled distribution date. The available investment options consist of certain mutual funds which include: (i) conservative (e.g. money markets or bonds); (ii) moderately conservative (e.g. balanced funds), and; (iii) aggressive (e.g. domestic and international equity).

Our obligation to make payments of amounts credited to participants’ deferred compensation accounts is a general unsecured obligation. In addition, under the Deferred Compensation Plan, we may make discretionary contributions on behalf of an eligible employee. Since inception of the Deferred Compensation Plan, we have not made any discretionary contributions on behalf of employees. Two of our named executive officers deferred a portion of their base salary and/or bonus paid during 2022 to the Deferred Compensation Plan. The Compensation Committee believes that, by offering an alternative savings vehicle for our named executive officers, the Deferred Compensation Plan supports our objectives to attract, retain and motivate talented personnel.

For a further description of the Deferred Compensation Plan, please refer to the Nonqualified Deferred Compensation table and the narrative discussion included in this Proxy Statement.

 

 

 

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Retirement Benefits

Our retirement benefits consist of our Executive Retirement Income Plan, Supplemental Executive Retirement Income Plan and a 401(k) plan. These plans are designed in combination to provide an appropriate level of replacement income upon retirement. The Compensation Committee believes that these retirement benefits provide a balanced and competitive retirement program and support our objectives to attract, retain and motivate talented personnel.

Supplemental Executive Retirement Income Plan (“SERIP”).

In July 2018, the Board of Directors adopted the SERIP. Pursuant to the terms of this plan, a select group of management or other highly compensated employees may be designated as plan participants. Our SERIP, which is subject to the applicable provisions of Internal Revenue Code Section 409A, provides eligible employees with annual employer contributions which are entirely at the Company’s discretion. Generally, each annual contribution vests on the earlier of: (i) the 5th anniversary of the date of funding to the participant’s account, or; (ii) the participant attaining the qualified age of retirement (either age 62 or 65, as stipulated in the SERIP). The SERIP also provides for discretionary alternative vesting schedules for certain supplemental discretionary contributions made on an individual basis. Upon attaining the plan’s qualified age of retirement, distributions are paid in 10 annual installments to the participant. Distributions due to events other than retirement are paid in a lump sum. Our obligation to fund payments to participants’ accounts pursuant to the SERIP is a general unsecured obligation. Four of our named executive officers are participants in the SERIP.

In 2018, upon commencement of the SERIP, certain participants of the ERIP, who had not yet approached their qualified age of retirement, were given the option to remain in the ERIP or convert their participation into the SERIP. ERIP participants that elected to convert to the SERIP have been provided with an unfunded, lump sum conversion balance that was credited to the participant’s SERIP account. The unfunded ERIP conversion balances transferred to the SERIP, which were computed based upon the participant’s 2017 salary and will remain permanently unchanged after conversion, are payable over 60 monthly installments, if the participant attains their qualified age of retirement, as previously stipulated in the ERIP. If the participant does not attain their qualified age of retirement, the ERIP conversion balance is forfeited unless the Board of Directors, in its full discretion, determines otherwise. For ERIP participants who elected to convert to the SERIP, their participation in the ERIP was terminated upon conversion and no future benefits will be earned pursuant to the ERIP. SERIP participants who converted from the ERIP are entitled to future benefits pursuant to the terms of the SERIP.

Executive Retirement Income Plan (“ERIP”).

In October 1993, the Board of Directors adopted the ERIP, which was subsequently closed to new participants effective January 1, 2015. Pursuant to the terms of the ERIP, certain management or other highly compensated employees, who had been previously designated as plan participants by our Board of Directors prior to December 31, 2014, and who had completed at least 10 years of active employment with us, may receive retirement income benefits.

Subject to certain conditions, the monthly benefit is payable to a participant who retires after he or she reaches age 62 (applicable to participants added to the ERIP before 2008) or age 65 (applicable to participants added to the ERIP after January 1, 2008). The benefit is equal to 3% of the employee’s average monthly base salary over the three years preceding retirement multiplied by the number of qualified years (not to exceed 10) of the participant’s employment with us. Payment of the benefit will be made in 60 monthly installments following the participant’s retirement date. If a participant’s employment with us is terminated prior to their qualified age of retirement, no ERIP benefits will be payable unless the Board of Directors, in its full discretion, determines otherwise. In 2018, certain participants were transferred to the SERIP and were provided with an unfunded, lump sum conversion balance pursuant to the SERIP, as discussed above. One of our named executive officers remains a participant in the ERIP.

For a further description of the SERIP and ERIP, please refer to the Pension Benefits included in this Proxy Statement.

401(k) Plan.

We maintain a 401(k) plan for all employees, including our named executive officers, as an additional source of retirement income. Pursuant to the 401(k) plan, in 2022, we made matching contributions (subject to highly compensated employee limits set by the

 

 

 

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Internal Revenue Code) to the 401(k) plan of approximately $72 million. All of the named executive officers with the exception of Mr. Edward H. Sim, participated in the 401(k) plan in 2022. Accordingly, we made matching contributions equal to $9,150 to the 401(k) plan for each of the participating named executives.

Benefits

Our named executive officers are eligible to participate in the benefit plans generally available to all of our employees, which include health, dental, life insurance, vision and disability plans, all of which the Compensation Committee believes are commensurate with plans of other similarly situated public companies in the hospital management industry.

Company Aircraft. We have a partial ownership interest in a fixed wing aircraft that is available for business purpose use by members of our management team, including our named executive officers, and for personal use by Messrs. Marc Miller and Alan Miller. When the aircraft is utilized for personal purposes by either individual and/or their family members, the incremental costs incurred, including the regular hourly charges, variable fuel charges and associated fees and taxes, are directly reimbursed to us by Messrs. Marc Miller and/or Alan Miller and therefore no imputed amounts are included in the Summary Compensation Table.

Automobile. Commencing in 2022, Mr. Marc D. Miller was provided with an auto allowance as reflected on the Summary Compensation Table in “All other compensation”.

During 2019, we purchased a new vehicle which is utilized by Mr. Alan B. Miller. Included in the Summary Compensation Table in “All other compensation” are the amounts related to his personal use of this vehicle.

Reimbursement of Relocation Expenses. In the normal course of business, in an effort to satisfy our staffing needs with high-quality personnel and/or support the career development of an employee by enabling them to assume a position of broader scope and complexity, we may need to place an executive in a position in a geographic location which differs from that in which the individual resides. The relocation benefits for our executives are patterned on standard industry practices and are competitive in design. The provisions for relocation benefits are the same for several of the top layers of management and consistently administered. Included in the relocation benefits are reimbursements or direct payment to vendors for expenses that include items like a short duration house hunting trip, movement of household goods and personal items, short duration of interim living expenses and certain closing costs for the sale and purchase of a house. Relocation reimbursement that is taxable to the individual is typically grossed-up to cover the resulting incremental income tax expense. During 2020, we paid certain relocation expenses, including income tax gross-ups, for Mr. Peterson as disclosed on the Summary Compensation Table contained in this proxy statement.

Other Perquisites. From time to time, we make tickets to cultural and sporting events available to our employees, including our named executive officers, for business purposes. If not utilized for business purposes, the tickets are made available to our employees, including our named executive officers, for personal use.

Split-Dollar Life Insurance Agreements. In December 2010, our Board of Directors approved the Company’s entering into supplemental life insurance plans and agreements on the lives of our Executive Chairman and his wife. As a result of these agreements, as amended in October 2016, based on actuarial tables and other assumptions, during the life expectancies of the insureds, we would pay approximately $28 million in premiums, and certain trusts owned by our Executive Chairman, would pay approximately $9 million in premiums. Based on the projected premiums mentioned above, and assuming the policies remain in effect until the death of the insureds, we will be entitled to receive death benefit proceeds of no less than approximately $37 million representing the $28 million of aggregate premiums paid by us as well as the $9 million of aggregate premiums paid by the trusts. In connection with these policies, we paid approximately $1.0 million in premium payments during each of 2022 and 2021.

Based on these projections, which are subject to the achievement of certain investment income and life expectancy assumptions, the total economic pre-tax cost to the Company (which includes the projected cost of capital net of the income resulting from the Company’s expected future receipt of the $9 million of premiums paid by the Trusts) would be approximately $10 million over the life expectancies of the insureds. We estimate that our share of the premium payments due on these policies will approximate $900,000 in 2023 and decrease annually to approximately $200,000 over the life expectancies of the insureds. Our aggregate premium payments (as well as the Trust’s) are expected to be repaid to us utilizing the death benefit proceeds.

 

 

 

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The Compensation Committee has determined to offer the above-described fringe benefits and perquisites in order to attract and retain our named executive officers by offering compensation opportunities that are competitive. In determining the total compensation payable to our named executive officers, for a given fiscal year, the Compensation Committee considers such fringe benefits and perquisites. However, with the exception of the above-mentioned split dollar life insurance agreements related to Mr. Alan B. Miller, given the fact that such other fringe benefits and perquisites, which are available to our named executive officers, represent a relatively insignificant portion of their total compensation, they do not materially influence the decisions made by the Compensation Committee with respect to other elements of each individual’s total compensation. For a further description of the fringe benefits and perquisites received by our named executive officers during 2022, please refer to the All Other Compensation table included in this Proxy Statement.

Rewards/Compensation Risk Analysis: As part of its oversight of the Company’s executive compensation program, the Compensation Committee considers the impact of the Company’s executive compensation program, and the incentives created by the compensation awards that it administers, on the Company’s risk profile. In addition, the Company reviews all of its compensation policies and procedures, including the incentives that they create and factors that may reduce the likelihood of excessive risk taking, to determine whether they present a significant risk to the Company. The review found that there were no excessive risks encouraged by the Company’s reward programs and the rewards programs do not produce payments that have a material impact on the financial performance of the organization. Approximately 850 employees (including the named executive officers) of our approximate 59,660 full-time employees in the U.S. and U.K. (comprising approximately 1.4% of our full-time employees) have incentive plans that entitle those individuals to larger bonus awards if profitability increases. However, although the plans are based on profitability, the bonus awards for these employees are capped at specific award levels (typically at 125% or less of base salary). Therefore, should our profitability increase, even by significant amounts, we do not believe the additional aggregate bonus awards would have a material unfavorable impact on our future results of operations

Summary

The foregoing discussion describes the compensation objectives and policies that were utilized with respect to our named executive officers during 2022. In the future, as the Compensation Committee continues to review each element of the executive compensation program with respect to our named executive officers, the objectives of our executive compensation program, as well as the methods that the Compensation Committee utilizes to determine both the types and amounts of compensation to award to our named executive officers, may change.

Compensation Committee Report

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management; and based on the review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.

COMPENSATION COMMITTEE

Eileen C. McDonnell (Chairperson)

Elliot J. Sussman, M.D.

Compensation Committee Interlocks and Insider Participation

The Compensation Committee of the Board of Directors is currently composed of Eileen C. McDonnell and Elliot J. Sussman, M.D. All the members of the Compensation Committee are independent directors and no member has ever been one of our officers or employees or had a relationship with us that required disclosure.

 

 

 

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Universal Health Services, Inc. 2023 Proxy Statement


SUMMARY COMPENSATION TABLE

The following table sets forth certain compensation information for our Chief Executive Officer, our Chief Financial Officer and the other most highly compensated executive officers for services rendered to UHS and its subsidiaries during the past three fiscal years. We refer to these officers collectively as our named executive officers:

 

Name and

principal position

  Year    

Salary(6.)

($)

   

Bonus

($)

   

Grant Date

Fair Value

Stock

Awards(1.)

($)

   

Grant Date

Fair Value

Option

Awards(2.)

($)

   

Non-Equity

Incentive Plan

Compensation(3.)

($)

   

Change in

Pension Value

and

Nonqualified

Deferred

Compensation

Earnings(4.)

($)

   

All other

compensation(10.)

($)

   

Total

($)

 

Marc D. Miller,

Chief Executive Officer

and President(7.)

    2022     $ 1,300,050     $ 0     $ 4,754,071     $ 4,754,007     $ 0     $ 66,003     $ 45,845     $ 10,919,976  
    2021       1,100,042       0       0       10,104,427       2,750,105       52,002       14,366       14,020,942  
    2020       823,020       0       0       1,458,238       0       49,519       15,220       2,345,997  

Alan B. Miller,

Executive Chairman(7.)

    2022     $ 1,000,038     $ 0     $ 2,499,993     $ 2,499,990     $ 0     $ 0     $ 1,138,603     $ 7,138,624  
    2021       1,000,038       1,000,000 (5.)            10,104,427       0       0       1,092,036       13,196,501  
    2020       1,446,473       1,000,000 (5.)      1,000,052       8,603,615       0       44,826       1,151,248       13,246,214  

Steve G. Filton,

Executive Vice

President and Chief

Financial Officer

    2022     $ 786,574     $ 0     $ 1,210,017     $ 1,210,020     $ 0     $ 42,881     $ 18,612     $ 3,268,104  
    2021       714,681       0       0       3,168,736       893,351       41,232       18,162       4,836,162  
    2020       652,613       0       0       1,020,766       0       39,656       18,043       1,731,078  
                 

Marvin G. Pember,

Former Executive

Vice President and

President, Acute Care(8.)

    2022     $ 809,364     $ 0     $ 1,152,493     $ 1,152,516     $ 0     $ 44,194     $ 18,011     $ 3,176,578  
    2021       736,568       0       0       3,180,879       782,604       42,907       14,134       4,757,092  
    2020       679,177       0       0       1,020,766       0       41,621       17,549       1,759,113  
                 

Matthew J. Peterson,

Executive Vice

President and

President, Behavioral

Health

    2022     $ 666,922     $ 0     $ 994,015     $ 993,990     $ 0     $ 37,402     $ 19,216     $ 2,711,545  
    2021       623,364       0       0       2,724,166       545,444       36,408       18,351       3,947,733  
    2020       576,397       0       0       729,119       0       10,247       150,492       1,466,255  
                 
                 

Edward H. Sim,

Executive Vice

President and

President, Acute Care(9.)

    2022     $ 59,120     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 59,120  
    2021       N/A       N/A       N/A       N/A       N/A       N/A       N/A       N/A  
    2020       N/A       N/A       N/A       N/A       N/A       N/A       N/A       N/A  
                                                                       

 

(1)

In 2022, performance-based restricted stock units were issued under our 2020 Omnibus Stock and Incentive Plan. In 2022, our CEO and NEOs each received 50% of their annual target stock-based compensation awards in the form of performance-based restricted stock units. The 2022 values represent 100% of the target, with a grant date value of $143.81 per unit. The performance-based restricted stock units will be based upon achievement of a pre-established specified range of target levels based on the three-year growth in our earnings before interest, taxes, depreciation and amortization, and the impacts of other income/expenses and net income attributable to noncontrolling interests. Prior to his transition from Chief Executive Officer to Executive Chairman of the Board, effective as of January 1, 2021, pursuant to his 2013 employment agreement, as amended in November, 2018, Alan B. Miller was entitled to an annual grant of restricted stock having a minimum value of $1.0 million. There are no such awards stipulated in Alan B. Miller’s employment agreement dated December 23, 2020, which became effective on January 1, 2021. Amount reflected in 2020 represents the grant date value of an award made to Alan B. Miller that year which vested in 2022.

 

(2)

In 2022, our CEO and NEOs each received 50% of their annual target stock-based compensation awards in the form of options to purchase shares of our Class B Common Stock at the grant date market value. Amounts in 2022 represent the aggregate fair value of options granted at the market price on the date of grant (grant date fair value of $45.71). Amounts in 2021 represent the aggregate fair value of options granted at the market price on the date of grant (grant date fair value of $40.42) and options granted at 110% of the market price on the date of grant (grant date fair value of $35.98). Options granted in 2022 and 2021 were awarded pursuant to our 2020 Omnibus Stock and Incentive Plan. Amounts in 2020 represent the aggregate fair value of options granted at the market price on the date of grant (grant date fair value of $14.58) and options granted at 110% of the market price on the date of grant (grant date fair value of $12.31). All options granted in 2020 were awarded pursuant to our Amended and Restated 2005 Stock Incentive Plan. For the assumptions used for the fair value valuations, please refer to Note 5—Common Stock, to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the years ended December 31, 2022, 2021 and 2020.

 

 

 

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Universal Health Services, Inc. 2023 Proxy Statement


Summary Compensation Table

 

 

 

(3)

No cash incentive bonuses were paid to any of our executive officers for the year ended December 31, 2022 since the minimum thresholds of the established corporate and divisional performance goals were not achieved and Mr. Alan B. Miller received no discretionary bonus award for the year. The 2021 and 2020 years reflect the dollar value of annual bonuses earned during each of those years pursuant to the terms of our Executive Incentive Plan. In March of 2022 (for 2021) our Compensation Committee approved annual cash incentive bonuses which, as a percentage of each individual’s annual base salary, were as follows: Marc D. Miller 250%; Steve G. Filton 125%; Marvin G. Pember 106%, and; Matthew J. Peterson 88%. As part of his compensation in connection with his role as Executive Chairman of the Board of Directors, which was effective as of January 1, 2021, Mr. Alan B. Miller did not receive an annual incentive bonus pursuant to the Executive Incentive Plan. However, in March, 2022, our Board of Directors awarded Mr. Alan B. Miller a $1.0 discretionary bonus for 2021. No cash incentive bonuses were paid to any of our executive officers pursuant to the Executive Incentive Plan for the year ended December 31, 2020 as a result of the COVID-19 pandemic and its material unfavorable impact on our results of operations.

 

(4)

These amounts represent the aggregate change in pension value for each named executive in 2022, 2021 and 2020 pursuant to the Executive Retirement Income Plan or the Supplemental Executive Retirement Income Plan, as disclosed herein. These amounts are considered service costs. The amounts in this column do not reflect compensation deferrals pursuant to our Nonqualified Deferred Compensation Plan since there are no contributions or benefits provided by us in connection with the plan.

 

(5)

In March, 2022 (for 2021), our Compensation Committee awarded a discretionary bonus of $1.0 million to Mr. Alan B. Miller. Prior to his transition from Chief Executive Officer to Executive Chairman of the Board (effective as of January 1, 2021), pursuant to his 2013 employment agreement, as amended in November, 2018, Alan B. Miller was entitled to minimum annual cash award of $1.0 million for 2020. There are no such awards stipulated in Alan B. Miller’s employment agreement dated December 23, 2020, which became effective on January 1, 2021.

 

(6)

In June of 2020, in response to the COVID-19 pandemic, the Compensation Committee approved reductions to the 2020 base salaries of our executive officers in the following amounts: $289,294 for Alan B. Miller, $43,680 for Marc D. Miller, $34,580 for Steve G. Filton, $35,929 for Marvin G. Pember and $30,407 Matthew J. Peterson. In conjunction with these 2020 base salary reductions, the Company contributed the funds generated from the reductions to the UHS Foundation, our previously established employee assistance fund.

 

(7)

Mr. Alan B. Miller was appointed Executive Chairman of the Board effective January 1, 2021. He had been Chairman of the Board and Chief Executive Officer from our inception through December 31, 2020. Mr. Marc D. Miller was appointed Chief Executive Officer and President effective January 1, 2021. Marc D. Miller had previously served as President since May, 2009.

 

(8)

Mr. Marvin G. Pember retired from the Company effective as of December 31, 2022. Pursuant to his Separation Agreement and General Release: (i) all of Mr. Pember’s performance based restricted stock units awarded on March 23, 2022 with a grant date fair value of $1.2 million, which were scheduled to be earned based on the three-year growth in certain Company financial metrics, were canceled on December 31, 2022, and; (ii) all of Mr. Pember’s unvested stock options granted prior to his termination date will continue to vest until April 1, 2023 and all stock options scheduled to remain unvested as of April 1, 2023 were canceled as of December 31, 2022, (including 75% of options awarded on March 23, 2022 with a grant date fair value of $864,000).

 

(9)

Mr. Edward H. Sim was hired by the Company in December, 2022 to succeed Mr. Marvin G. Pember and has an annual base salary of $775,000.

 

(10)

Components of All Other Compensation are as follows:

 

 

 

37

Universal Health Services, Inc. 2023 Proxy Statement


ALL OTHER COMPENSATION TABLE

 

Name

   Year     

Perquisites

and Other

Personal

Benefits

($)(1.)

    

Tax

Reimbursements

($)(2.)

    

Insurance

Premiums

($)(3.)

    

Company

Contributions

to Retirement

and 401(k)

Plans ($)

    

Dividends

Paid on

Unvested

Stock

    

Total

($)

 

Marc D. Miller

     2022      $ 31,029      $ 0      $ 5,666      $ 9,150      $ 0      $ 45,845  
     2021        0        0        5,666        8,700        0        14,366  
     2020        973        0        5,697        8,550        0        15,220  

Alan B. Miller

     2022      $ 140,172      $ 0      $ 987,804      $ 9,150      $ 1,477      $ 1,138,603  
     2021        49,064        0        1,022,750        8,700        11,522        1,092,036  
     2020        64,819        0        1,071,393        8,550        6,486        1,151,248  

Steve G. Filton

     2022      $ 0      $ 0      $ 9,462      $ 9,150      $ 0      $ 18,612  
     2021        0        0        9,462        8,700        0        18,162  
     2020        0        0        9,493        8,550        0        18,043  

Marvin G. Pember

     2022      $ 4,327      $ 0      $ 4,534      $ 9,150      $ 0      $ 18,011  
     2021        900        0        4,534        8,700        0        14,134  
     2020        900        0        8,099        8,550        0        17,549  

Matthew J. Peterson

     2022      $ 2,979      $ 0      $ 7,087      $ 9,150      $ 0      $ 19,216  
     2021        2,564        0        7,087        8,700        0        18,351  
     2020        96,130        38,695        7,117        8,550        0        150,492  

Edward H. Sim

     2022      $ 0      $ 0      $ 0      $ 0      $ 0      $ 0  
     2021        N/A        N/A        N/A        N/A        N/A        N/A  
       2020        N/A        N/A        N/A        N/A        N/A        N/A  

 

(1)

2022:

Amounts for Mr. Marc Miller consists of the following: (i) $19,602 for payment of country club dues and expenses; (ii) $9,937 auto allowance, and; (iii) $1,490 for sporting event tickets paid for by us.

Amounts for Mr. Alan Miller consists of the following: (i) $75,000 for professional tax services; (ii) $3,986 for accounting services; (iii) $3,687 for maintenance on personal residence, and; (iv) $57,499 for the lease value, fuel, and repairs and maintenance charges incurred in connection with his company-owned automobile.

Amount for Mr. Marvin G. Pember consists of $900 for cell phone stipend and $3,427 in token gifts, grossed up for taxes.

Amount for Mr. Matthew J. Peterson consists of the following: (i) $900 for cell phone stipend; (ii) $1,334 related to the Employee Stock Purchase Plan discount, and; (iii) $745 for sporting event tickets paid for by us.

2021:

Amounts for Mr. Alan Miller consists of the following: (i) $25,000 for professional tax services; (ii) $5,260 for payment of country club dues; (iii) $1,546 for accounting services; (iv) $3,113 for maintenance on personal residence, and; (v) $14,145 for the lease value, fuel and maintenance charges incurred in connection with his company-owned automobile.

Amount for Mr. Marvin G. Pember consists of $900 for cell phone stipend.

Amount for Mr. Matthew J. Peterson consists of the following: (i) $900 for cell phone stipend; (ii) $1,334 related to the Employee Stock Purchase Plan discount, and; (iii) $330 for sporting event tickets paid for by us.

2020:

Amounts for Mr. Alan Miller consists of the following: (i) $25,000 for professional tax services; (ii) $10,789 for payment of country club dues; (iii) $2,573 for accounting services; (iv) $3,022 for maintenance on personal residence; (v) $23,075 for the lease value, fuel and maintenance charges incurred in connection with his company-owned automobile, and; (vi) $360 wireless stipend.

Amount for Mr. Marc D. Miller consists $768 for sporting event tickets paid for by us and $205 for a token gift provided by the Company.

Amount for Mr. Marvin G. Pember consists of $900 for cell phone stipend.

Amount for Mr. Matthew J. Peterson consists of the following: (i) $94,025 of relocation expenses paid for by the Company; (ii) $1,000 related to the Employee Stock Purchase Plan discount; (iii) $900 for cell phone stipend, and; (iv) $205 for a token gift provided by the Company.

 

(2)

Amount represents reimbursement of income taxes incurred by Mr. Peterson in connection with relocation expenses paid by us during 2020.

 

(3)

Amounts for Messrs. Marc. D. Miller, Steve G. Filton, Marvin G. Pember and Matthew J. Peterson consist of premiums paid in connection with long term disability coverage.

Amounts for Mr. Alan B. Miller consist of: (i) $978,296 in 2022, $1,013,242 in 2021 and $1,061,667 in 2020, of premium payments made in connection with split-dollar-life insurance agreements, as discussed in Split Dollar Life Insurance Agreement, included herein, and; (ii) $9,508 in each of 2022 and 2021 and $9,726 in 2020 of premiums paid in connection with long term disability coverage.

 

 

 

38

Universal Health Services, Inc. 2023 Proxy Statement


GRANTS OF PLAN-BASED AWARDS

The following table provides information regarding plan-based awards granted during fiscal year 2022 to our named executive officers who were employed on the grant date of March 23, 2022.

 

    Approval/
Grant
Date
    Estimated Future
Payouts Under
Non-Equity Incentive Plan
Awards(1.)
    Estimated Future
Payouts Under
Equity Incentive Plan
Awards(3.)
    All
Other
Stock
Awards:
Number
of
Shares

of
Stock or
Units(5.)
(#)
    All Other
Option
Awards:
Number of
Securities
Underlying

Options(6.)
(#)
    Exercise
or
Base
Price

of
Option

Awards
($ /Sh)
    Grant
Date

Fair
Value of
Stock

and
Option

Awards(7.)
($)
    Grant
Date

Fair
Value of
Maximum
Stock
and
Option

Awards(8.)
($)
    Closing
Price
on
Grant

Date
($ / Sh)
 

Name

  Threshold
($)(2.)
    Target
($)(2.)
    Maximum
($)(2.)
    Threshold
(#)(4.)
    Target
(#)(4.)
    Maximum
(#)(4.)
 

Marc D. Miller

    3/23/2022     $ 78,003     $ 1,950,075     $ 3,900,150                   104,001     $ 143.81     $ 4,754,007       $ 143.81  
    3/23/2022             16,529       33,058       49,587           $ 4,754,071     $ 7,131,106     $ 143.81  

Alan B. Miller

    3/23/2022     $     $     $               54,691     $ 143.81     $ 2,499,990       $ 143.81  
    3/23/2022             8,692       17,384       26,076               $ 2,499,993     $ 3,749,990     $ 143.81  

Steve G. Filton

    3/23/2022     $ 31,463     $ 786,574     $ 1,573,148               26,471     $ 143.81     $ 1,210,020       $ 143.81  
    3/23/2022             4,207       8,414       12,621               $ 1,210,017     $ 1,815,026     $ 143.81  

Marvin G. Pember

    3/23/2022     $ 90,856     $ 790,053     $ 1,580,106               25,213     $ 143.81     $ 1,152,516       $ 143.81  
    3/23/2022             4,007       8,014       12,021               $ 1,152,493     $ 1,728,740     $ 143.81  

Matthew J. Peterson

    3/23/2022     $ 76,696     $ 666,922     $ 1,333,844               21,745     $ 143.81     $ 993,990       $ 143.81  
      3/23/2022                               3,456       6,912       10,368                           $ 994,015     $ 1,491,022     $ 143.81  

 

(1)

Pursuant to the 2022 Executive Incentive Plan and the formula approved by the Compensation Committee, each named executive officer other than Mr. Alan B. Miller was entitled to receive between 0% and 200% of that executive officer’s target bonus based, either entirely or in part, on our achievement of certain corporate and divisional performance criteria. As discussed in the Compensation Discussion and Analysis, with respect to Messrs. Marc D. Miller and Steve G. Filton, 100% of their target 2022 annual incentive bonus was determined using certain corporate performance criteria, and with respect to each of Messrs. Pember and Peterson, their target 2022 annual incentive bonus was determined utilizing: (i) 25% of their annual salary based upon the achievement of certain corporate performance criteria, and; (ii) 75% of their annual salary based upon the achievement of certain divisional income targets.

 

(2)

Estimates calculated based upon 2022 salaries.

 

(3)

Pursuant to the formula approved by the Compensation Committee, each named executive officer was entitled to receive between 50% and 150% of that executive officer’s target stock-based compensation in the form of performance-based restricted stock units. The performance-based restricted stock units will be based upon achievement of a pre-established specified range of target levels based on the three-year growth in our earnings before interest, taxes, depreciation and amortization, and the impacts of other income/expenses and net income attributable to noncontrolling interests.

 

(4)

Performance-based restricted stock units issued on March 23, 2022 were issued under our 2020 Omnibus Stock and Incentive Plan. In 2022, our CEO and NEOs each received 50% of their annual target stock-based compensation awards in the form of performance-based restricted stock units.

 

(5)

Restricted shares of Class B Common Stock issued under the Company’s 2020 Omnibus Stock and Incentive Plan.

 

(6)

Stock option awards issued on March 23, 2022 were issued under our 2020 Omnibus Stock and Incentive Plan issued with an exercise price equal to the grant date market value.

 

(7)

Represents the full grant date fair value for the option awards, calculated in accordance with ASC 718 as described in our Form 10-K for the year ended December 31, 2022.

 

(8)

Represents the maximum performance-based restricted stock unit value if the maximum award is achieved.

 

(9)

Mr. Edward H. Sim was hired by the Company in December, 2022 to succeed Mr. Marvin G. Pember. He was awarded stock options in January, 2023 related to the commencement of his employment, which are scheduled to vest ratably over four years.

Marc D. Miller’s Employment Agreement as Chief Executive Officer

Mr. Marc D. Miller was appointed Chief Executive Officer (“CEO”) and President effective January 1, 2021. He has served as President since May, 2009 and prior thereto served as Senior Vice President and co-head of our Acute Care Hospitals since 2007.

 

 

 

39

Universal Health Services, Inc. 2023 Proxy Statement


Grants of Plan-Based Awards

 

 

 

Certain elements of Mr. Marc D. Miller’s compensation for 2021 were determined by the terms of his employment agreement that was entered into on December 23, 2020, with an effective date of January 1, 2021. Pursuant to the terms of the employment agreement, Mr. Marc D. Miller will serve as CEO with a term scheduled to end on January 1, 2026, subject, however, to earlier termination, and subject further to automatic renewal for additional one-year periods unless either party elects otherwise. On March 23, 2022, we entered into an amendment to the employment agreement with Mr. Marc D. Miller which increased his annual bonus opportunity and annual base salary, as discussed below.

Pursuant to the terms of his employment agreement, as amended on March 23, 2022, Marc Miller’s salary as our CEO will be $1,352,000 for 2023 which is a 4.0% increase over his 2022 base salary. Mr. Marc D. Miller is also entitled to an annual bonus opportunity target equal to 150% of his salary. Mr. Marc Miller’s Agreement was also amended to narrow the circumstances under which Mr. Marc D. Miller can resign from employment with good reason and receive acceleration of future long-term incentive awards, including his Performance Based Restricted Stock Units. The amount of the annual bonus for any year may be more or less than the target amount and will be determined by the Board of Directors in accordance with pre-established performance measures. Additionally, Mr. Marc D. Miller may also be paid during the term of his employment agreement, bonuses and other compensation as may from time to time be determined by the Board of Directors.

Mr. Marc D. Miller participates in benefit plans and programs that are made available to other employees and will be eligible to receive annual awards under the Company’s long-term incentive plan(s) (“LTIP”) as in effect from time to time, which will be subject to conditions as are consistent with terms and conditions applicable to LTIP awards made to other senior executives of the Company, subject to certain acceleration rights upon a qualifying termination of employment as set forth in his employment agreement.

For a further description of the employment agreement, please refer to the Potential Payments Upon Termination or Change-in-Control section below. For a further description of the compensation setting process with respect to Mr. Marc D. Miller, please refer to the Compensation Discussion and Analysis section above. For a further description of Mr. Marc D. Miller’s benefits under the Company’s Supplemental Executive Retirement Income Plan, please refer to the Pension Benefits section below.

Alan B. Miller’s Employment Agreement as Executive Chairman

Mr. Alan B. Miller was appointed Executive Chairman of the Board effective January 1, 2021. He had been Chairman of the Board and Chief Executive Officer since our inception in 1978 and also served as President from inception until 2009.

Certain elements of Mr. Alan B. Miller’s compensation for 2022 were determined by the terms of his employment agreement that was entered into on December 23, 2020, with an effective date of January 1, 2021. Pursuant to the terms of the employment agreement, as amended on March 23, 2022, Alan B. Miller will serve as Executive Chairman with a term scheduled to end on January 1, 2025, subject, however, to earlier termination, and subject further to automatic renewal for additional one year periods unless either party elects otherwise.

Mr. Alan B. Miller’s salary as our Executive Chairman will be $1,040,000 for 2023 which is a 4.0% increase over his 2022 base salary. Additionally, Mr. Alan Miller may also be entitled to bonuses and other compensation as may from time to time be determined by the Board of Directors. Mr. Alan B. Miller will also be eligible to receive annual awards under the Company’s LTIP as in effect from time to time, which will be subject to conditions as are consistent with terms and conditions applicable to LTIP awards made to other senior executives of the Company, subject to certain acceleration rights upon a qualifying termination of employment as set forth in his employment agreement. Mr. Alan Miller’s Agreement was amended to narrow the circumstances under which Mr. Alan B. Miller can resign from employment with good reason and receive acceleration of future long-term incentive awards, including his Performance Based Restricted Stock Units.

Mr. Alan B. Miller participates in benefit plans and programs that are made available to other employees and he receives certain executive perquisites, including, but not limited to, split dollar life insurance benefits, payment of certain automobile costs, payment of country club dues, tax and accounting services, use of a private plane for personal purposes for up to 60 hours per year, subject to reimbursement by Mr. Alan B. Miller of the incremental costs incurred at market rates, and such other fringe benefits as the Compensation Committee of our Board of Directors may determine (as discussed in the Compensation Discussion and Analysis).

 

 

 

40

Universal Health Services, Inc. 2023 Proxy Statement


Grants of Plan-Based Awards

 

 

 

For a further description of the employment agreement, please refer to the Potential Payments Upon Termination or Change-in-Control section below. For a further description of the compensation setting process with respect to Mr. Alan B. Miller, please refer to the Compensation Discussion and Analysis section above. For a further description of Mr. Alan B. Miller’s benefits under the Company’s Executive Retirement Income Plan, please refer to the Pension Benefits section below.

Restricted Stock Grants in 2020

Pursuant to the terms of Mr. Alan B. Miller’s 2013 Employment Agreement (which has since been replaced by the above-mentioned employment agreement as Executive Chairman), in March of 2020, while Mr. Alan B. Miller was serving as CEO, the Compensation Committee approved the March 18, 2020 issuance of 14,774 restricted shares of our Class B Common Stock pursuant to the Amended and Restated 2010 Employees’ Restricted Stock Purchase Plan. The restricted shares issued in March of 2020, which had a grant date market value of $67.69 per share or $1.0 million in the aggregate, vested ratably at 50% in each of March of 2021 and 2022.    

 

 

 

41

Universal Health Services, Inc. 2023 Proxy Statement


OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2022

The following table provides information about the number of outstanding equity awards held by our named executive officers at December 31, 2022.

 

    Option Awards(1.)     Stock Awards(2.)  
    Number of
Securities
Underlying
Unexercised
Options (#)
    Number of
Securities
Underlying
Unexercised
Options (#)
    Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options

(#)
  Option
Exercise
Price

($)
    Option
Expiration

Date
    Number
of
Shares
or Units
of Stock
That
Have
Not
Vested

(#)
    Market
Value of
Shares or
Units of
Stock
That Have
Not Vested

($)
    Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested

(#)
    Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other Rights
That Have
Not Vested

($)(5.)
 

Name

  Exercisable     Unexercisable  

Marc D. Miller

                  33,058     $ 4,657,542  
    100,000       0     0   $ 119.64         04/12/2023       0       0       0       0  
    75,000       25,000     0   $ 134.02       03/19/2024       0       0       0       0  
    25,000       25,000     0   $ 67.69       03/17/2025       0       0       0       0  
    29,610       29,610     0   $ 74.46       03/17/2025       0       0       0       0  
    31,250       93,750     0   $ 138.80       03/16/2026       0       0       0       0  
    35,106       105,319     0   $ 152.68       03/16/2026       0       0       0       0  
    0       104,001     0   $ 143.81       03/22/2027       0       0       0       0  

Alan B. Miller

              0       0       17,384     $ 2,449,232  
    390,000       0     0   $ 119.64       04/12/2023       0       0       0       0  
    442,500       147,500     0   $ 134.02       03/19/2024       0       0       0       0  
    147,500       147,500     0   $ 67.69       03/17/2025       0       0       0       0  
    174,700       174,699     0   $ 74.46       03/17/2025       0       0       0       0  
    31,250       93,750     0   $ 138.80       03/16/2026       0       0       0       0  
    35,106       105,319     0   $ 152.68       03/16/2026       0       0       0       0  
    0       54,691     0   $ 143.81       03/22/2027       0       0       0       0  

Steve G. Filton

              0       0       8,414     $ 1,185,448  
    70,000           0   $ 119.64       04/12/2023       0       0       0       0  
    52,500       17,500     0   $ 134.02       03/19/2024       0       0       0       0  
    17,500       17,500     0   $ 67.69       03/17/2025       0       0       0       0  
    20,727       20,727     0   $ 74.46       03/17/2025       0       0       0       0  
    9,800       29,400     0   $ 138.80       03/16/2026       0       0       0       0  
    11,009       33,028     0   $ 152.68       03/16/2026       0       0       0       0  
      0       26,471     0   $ 143.81       03/22/2027       0       0       0       0  

 

 

 

42

Universal Health Services, Inc. 2023 Proxy Statement


Outstanding Equity Awards at December 31, 2022

 

 

 

    Option Awards(1.)     Stock Awards(2.)  
    Number of
Securities
Underlying
Unexercised
Options (#)
    Number of
Securities
Underlying
Unexercised
Options (#)
    Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options

(#)
  Option
Exercise
Price

($)
    Option
Expiration

Date
    Number
of
Shares
or Units
of Stock
That
Have
Not
Vested

(#)
    Market
Value of
Shares or
Units of
Stock
That Have
Not Vested

($)(5.)
    Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested

(#)
    Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other Rights
That Have
Not Vested

($)
 

Name

  Exercisable     Unexercisable  

Marvin G. Pember

              0       0       0     $ 0  
    52,500           0   $ 119.64       04/12/2023       0       0       0       0  
    52,500       17,500     0   $ 134.02       03/19/2024       0       0       0       0  
    17,500       8,750     0   $ 67.69       04/01/2024       0       0       0       0  
    20,727       10,364     0   $ 74.46       04/01/2024       0       0       0       0  
    9,838       9,837     0   $ 138.80       04/01/2024       0       0       0       0  
    11,052       11,051     0   $ 152.68       04/01/2024       0       0       0       0  
    0       6,303     0   $ 143.81       04/01/2024       0       0       0       0  

Matthew J. Peterson(3.)

              0       0       6,912     $ 973,832  
    33,334       16,666     0   $ 151.99       09/17/2024       0       0       0       0  
    6,250       12,500     0   $ 67.69       03/17/2025       0       0       0       0  
    7,402       14,805     0   $ 74.46       03/17/2025       0       0       0       0  
    8,425       25,275     0   $ 138.80       03/16/2026       0       0       0       0  
    9,465       28,394     0   $ 152.68       03/16/2026       0       0       0       0  
    0       21,745     0   $ 143.81       03/22/2027       0       0       0       0  

Edward H. Sim(4.)

    0       0     0     N/A       N/A       0       0       0       N/A  

 

1.

Stock option awards. Except for Mr. Peterson’s stock options issued on September 18, 2019 as noted below, all stock options are scheduled to vest ratably on the first, second, third and fourth anniversary dates from the date of grant. The stock options issued to Mr. Peterson on September 18, 2019 are scheduled to vest in three equal installments on the second, third and fourth anniversaries of the grant date.

The applicable grant dates for the options indicated above are set forth below:

 

   

On April 13, 2018, stock options were granted with an exercise price of $119.64.

 

   

On March 20, 2019, stock options were granted with an exercise price of $134.02.

 

   

On September 18, 2019, stock options were granted with an exercise price of $151.99.

 

   

On March 18, 2020, stock options were granted with an exercise price of $67.69.

 

   

On March 18, 2020, stock premium stock options were granted with a 10% premium exercise price of $74.46.

 

   

On March 17, 2021, stock options were granted with an exercise price of $138.80.

 

   

On March 17, 2021, stock premium stock options were granted with a 10% premium exercise price of $152.68.

 

   

On March 23, 2022, stock options were granted with an exercise price of $143.81.

 

2.

Performance-Based Restricted Stock Units. On March 23, 2022, 50% of the annual target stock-based compensation awards for our CEO and NEOs were issued in the form of performance-based restricted stock units that will be based upon achievement of a pre-established specified range of target levels based on the three-year growth in our earnings before interest, taxes, depreciation and amortization, and the impacts of other income/expenses and net income attributable to noncontrolling interests.

 

 

 

43

Universal Health Services, Inc. 2023 Proxy Statement


Outstanding Equity Awards at December 31, 2022

 

 

 

3.

Mr. Peterson was hired by the Company in September 2019 and was awarded stock options upon the commencement of his employment, which are scheduled to vest in three equal installments on the second, third and fourth anniversaries of the grant date.

 

4.

Mr. Sim was hired by the Company in December, 2022 to succeed Mr. Marvin G. Pember. In connection with the commencement of his employment, in January, 2023, Mr. Sim was awarded 50,000 stock options, with an exercise price of $145.65, that are scheduled to vest ratably over four years and expire in five years.

 

5.

Based on the closing sale price of the Class B Common Stock on the New York Stock Exchange on December 30, 2022 of $140.89 per share.

 

 

 

44

Universal Health Services, Inc. 2023 Proxy Statement


OPTION EXERCISES AND STOCK VESTED

The following table provides information about stock option exercises by, and the vesting of stock for, our named executive officers during fiscal year 2022:

 

     Option Awards      Stock Awards  

Name

  

Number of Shares

Acquired on Exercise
(#)

    

Value Realized

on Exercise
($)

    

Number of Shares

Acquired on Vesting
(#)(1.)

    

Value Realized

on Vesting
($)

 

Marc D. Miller

     103,000      $ 2,086,780             $  

Alan B. Miller

     790,000      $ 13,514,550        10,619      $ 1,533,349  

Steve G. Filton

     70,000      $ 1,743,000             $  

Marvin G. Pember

     30,000      $ 607,800             $  

Matthew J. Peterson

          $             $  

Edward H. Sim

          $             $  

 

(1)

Restricted stock for Alan B. Miller vested as follows:

 

   

On January 17, 2022, 3,232 shares at $133.67 per share.

   

On March 18, 2022, 7,387 shares at $149.09 per share.

 

 

 

45

Universal Health Services, Inc. 2023 Proxy Statement


PENSION BENEFITS

Executive Retirement Income Plan

In October 1993, the Board of Directors adopted the Executive Retirement Income Plan (“ERIP”), which was subsequently closed to new participants effective January 1, 2015. Pursuant to the terms of the ERIP, certain management or other highly compensated employees, who had been previously designated as plan participants by our Board of Directors prior to December 31, 2014, and who had completed at least 10 years of active employment with us, may receive retirement income benefits.

Subject to certain conditions, the monthly benefit is payable to a participant who retires after he or she reaches age 62 (applicable to participants added to the plan before 2008) or age 65 (applicable to participants added to the plan after January 1, 2008). The benefit is equal to 3% of the employee’s average monthly base salary over the three years preceding retirement multiplied by the number of qualified years (not to exceed 10) of the participant’s employment with us.

Upon attaining the qualified age of retirement as stipulated in the plan, subject to certain conditions, payment of ERIP benefits are made to participants in 60 monthly installments following their retirement date. In certain circumstances, the participant may elect to receive the present value of the payments in one lump sum or receive payments over a period of 10 years. If a participant’s employment with us is terminated prior to their qualified age of retirement, no ERIP benefits will be payable unless the Board of Directors, in its full discretion, determines otherwise.

In 2018, upon commencement of the Supplemental Executive Retirement Income Plan (“SERIP”), as discussed below, certain participants of the ERIP, who had not yet approached their qualified age of retirement, were given the option to remain in the ERIP or convert their participation into the SERIP. Please see Supplemental Executive Retirement Income Plan below for additional disclosure related to participants who elected to convert from the ERIP to the SERIP.

Mr. Alan B. Miller remains a participant in the ERIP. Mr. Alan B. Miller’s aggregate benefit payable under the ERIP (for the 60 months in which the participant receives benefits), assuming retirement as of December 31, 2022, amounted to approximately $2.6 million. Pursuant to Alan B. Miller’s employment contract dated December 23, 2020, for purposes of the ERIP, the monthly compensation for the three years preceding retirement shall be deemed to be the average monthly compensation for the three years ended immediately prior to January 1, 2021. As discussed below, Marc D. Miller and Steve G. Filton converted their ERIP participation into the SERIP. Marvin G. Pember and Matthew J. Peterson were not previously ERIP participants.

The following tables provide information about pension benefits pursuant to our ERIP for our named executive officer, as described below.

 

Name

   Number
of Years
Credited
Service
(#)
   Value of
Accumulated
Benefit
($) (1.)
     Payments
During
Last Fiscal
Year ($)

Alan B. Miller

   44    $ 2,270,794      0

 

(1)

4% discount rate applied over the projected post-retirement 5-year payout period.

Supplemental Executive Retirement Income Plan

In July, 2018, the Board of Directors adopted the Supplemental Executive Retirement Income Plan (“SERIP”). Pursuant to the terms of the SERIP, a select group of management or other highly compensated employees may be designated as plan participants. Our SERIP, which is subject to the applicable provisions of Internal Revenue Code Section 409A, provides eligible employees with annual employer contributions which are entirely at the Company’s discretion. Generally, each annual contribution vests on the earlier of: (i) the 5th anniversary of the date of funding to the participant’s account, or; (ii) the participant attaining the qualified age of retirement (either age 62 or age 65, as stipulated in the SERIP). The SERIP also provides for discretionary alternative vesting schedules for certain supplemental discretionary contributions made on an individual basis. Upon attaining the SERIP’s qualified age of retirement, distributions are paid in 10 annual installments to the participant upon the participants retirement. Distributions due to events other than retirement are paid in a lump sum. Our obligation to make payments of amounts credited to participants’ accounts is a general unsecured obligation.

 

 

 

46

Universal Health Services, Inc. 2023 Proxy Statement


Pension Benefits

 

 

 

As discussed above, a select group of employees who were previously participants in the ERIP and elected to convert to the SERIP, have been provided with an unfunded, lump sum conversion balance that was credited to the participant’s SERIP account. The unfunded ERIP conversion balances transferred to the SERIP, which were computed based upon the participant’s 2017 salary and will remain permanently unchanged after conversion, are payable over 60 monthly installments, if the participant attains their qualified age of retirement, as previously stipulated in the ERIP. If the participant does not attain their qualified age of retirement, the ERIP conversion balance is forfeited unless the Board of Directors, in its full discretion, determined otherwise. For ERIP participants who elected to convert to the SERIP, their participation in the ERIP was terminated upon conversion and no future benefits will be earned pursuant to the ERIP. SERIP participants who converted from the ERIP are entitled to future benefits pursuant to the terms of the SERIP.

Marc D. Miller and Steve G. Filton elected to convert their ERIP participation into the SERIP. As a result of their elections, their unfunded ERIP conversion balances, which are reflected below and were computed based upon their 2017 salaries, will remain permanently unchanged. Marvin G. Pember and Matthew J. Peterson, who were not previously ERIP participants, also participate in the SERIP.

The following tables provide information about pension benefits pursuant to our SERIP for our named executive officers as described below. Mr. Edward H. Sim was not a participant in the SERIP during 2022.

 

   

SERIP
Beginning
Balance
1/1/2022

($)

 

   

Company SERIP
Contributions in Last
Fiscal Year

($)(1.)

 

 

SERIP
Losses
in Last
Fiscal
Year

($)

 

   

SERIP
Distributions

($)

 

  SERIP Balance
at Last Fiscal
Year-End
($)
   

ERIP
Conversion
Balance to

SERIP

 

   

Aggregate
Balance
at Last
Fiscal
Year-End

($)

 

 

Name

  Vested     Unvested  

Marc D. Miller

  $ 244,412     $66,003   $ (41,650   $0   $ 0     $ 268,765     $ 1,136,438     $ 1,405,203  

Steve G. Filton

  $ 180,842     $42,881   $ (26,629   $0   $ 197,094     $ 0     $ 919,340     $ 1,116,434  

Marvin G. Pember

  $ 363,633