<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-K/A-1
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Fiscal Year Ended December 31, 1994
COMMISSION FILE NUMBER 1-11239
----------------
COLUMBIA/HCA HEALTHCARE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
DELAWARE 75-2497104
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
ONE PARK PLAZA
NASHVILLE, TENNESSEE 37203
(Address of Principal Executive (Zip Code)
Offices)
Registrant's Telephone Number, Including Area Code: (615) 327-9551
Securities Registered Pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ----------------------
Common Stock, $.01 Par Value New York Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports re-
quired to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the Reg-
istrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information state-
ments incorporated by reference in Part III of this Form 10-K or any amendment
to this Form 10-K. [_]
As of February 28, 1995, there were outstanding 348,191,828 shares of the
Registrant's Common Stock and 14,118,999 shares of the Registrant's Nonvoting
Common Stock. As of February 28, 1995, the aggregate market value of the Com-
mon Stock held by non-affiliates was approximately $12,505,233,000. For pur-
poses of the foregoing calculation only, the Registrant's directors, executive
officers, and The Columbia/HCA Healthcare Corporation Stock Bonus Plan have
been deemed to be affiliates.
DOCUMENTS INCORPORATED BY REFERENCE
None
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<PAGE>
INTRODUCTION
This report on Form 10-K/A-1 is being filed with the Securities and Exchange
Commission pursuant to General Instruction G(3) of Form 10-K to include the
information required by Part III of Form 10-K. Such Part III information was
previously included in the Proxy Statement of Columbia/HCA Healthcare Corpora-
tion (the "Company") for its 1995 Annual Meeting of Stockholders held June 8,
1995 (the "Annual Meeting"). Although the Annual Meeting took place on June 8,
1995, the information set forth herein speaks as of the date the Proxy State-
ment was filed with the Securities and Exchange Commission.
2
<PAGE>
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
In accordance with the Restated Certificate of Incorporation of the Company,
directors of the Company are divided into three classes, such classes being as
nearly equal in number as possible. The term of office of each class is three
years. The Board of Directors has fixed the number of members of the Board of
Directors at 17, currently consisting of five members whose term of office ex-
pires in 1995 (Class II Directors), six members whose term of office expires
in 1996 (Class III Directors) and six members whose term of office expires in
1997 (Class I Directors).
At the Annual Meeting it is proposed that the nominees listed below be
elected as Class II members of the Board of Directors. Each such director
shall be elected to serve in such capacity until the Annual Meeting of Stock-
holders in 1998 or until his or her respective successor is duly elected and
qualified.
INFORMATION CONCERNING DIRECTORS
Information concerning the five nominees proposed by the Board of Directors
for election as Class II Directors along with information concerning the pres-
ent Class I and Class III Directors, whose terms of office will continue after
the Annual Meeting, is set forth below.
In the event that any of the named nominees for director becomes unable or
unwilling to accept nomination or election, the person or persons voting the
proxy will vote for the election in his or her stead of such person as the
Nominating Committee may recommend. Unless otherwise instructed on the proxy,
the proxy holders will vote the proxies received by them FOR the election of
the nominees shown below:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND DIRECTOR
NAME AGE OFFICES WITH THE COMPANY SINCE
---- --- ------------------------ --------
<C> <C> <S> <C>
NOMINEES
CLASS II--PRESENT TERM EXPIRES 1995
T. Michael Long........... 50 Partner, Brown Brothers Harriman & 1991
Co.
Donald S. MacNaughton..... 77 Retired Chairman of the Executive 1995
Committee, Healthtrust, Inc.
Rodman W. Moorhead III.... 51 Senior Managing Director, E. M. 1993
Warburg Pincus & Co., Inc.
Carl E. Reichardt......... 63 Retired Chairman of the Board and 1994
Chief Executive Officer, Wells
Fargo & Company
William T. Young.......... 76 Chairman of the Board, W. T. Young, 1993
Inc.
DIRECTORS CONTINUING IN OFFICE
CLASS I--PRESENT TERM EXPIRES 1997
Magdalena Averhoff, M.D. . 44 Practicing Physician 1992
Charles J. Kane........... 74 Retired Chairman of the Board, Third 1994
National Corporation
John W. Landrum........... 72 Owner, Springlake Farms 1993
R. Clayton McWhorter...... 61 Chairman of the Board, Columbia/HCA 1995
Healthcare Corporation
Frank S. Royal, M.D....... 55 Practicing Physician 1994
Robert D. Walter.......... 49 Chairman of the Board and Chief 1993
Executive Officer, Cardinal Health,
Inc.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND DIRECTOR
NAME AGE OFFICES WITH THE COMPANY SINCE
---- --- ------------------------ --------
<C> <C> <S> <C>
CLASS III--PRESENT TERM EXPIRES 1996
Thomas F. Frist, Jr., M.D.. 56 Vice Chairman of the Board, 1994
Columbia/HCA Healthcare Corporation
J. David Grissom........... 56 Chairman of the Board, Mayfair 1993
Capital
Richard W. Hanselman....... 67 Private Investor 1995
Darla D. Moore............. 40 Investor 1994
Carl F. Pollard............ 56 Chairman of the Executive Committee, 1993
Columbia/HCA Healthcare Corporation
and former Chairman of the Board,
Columbia Healthcare Corporation
Richard L. Scott........... 42 President and Chief Executive 1990
Officer, Columbia/HCA Healthcare
Corporation
</TABLE>
Magdalena Averhoff, M.D. is a physician specializing in gastroenterology
practicing in Miami, Florida. Dr. Averhoff has practiced medicine in Miami for
more than five years.
Thomas F. Frist, Jr., M.D. has been Vice Chairman of the Board of the Com-
pany since April 1995. From February 1994 to April 1995, he was Chairman of
the Board of the Company. Dr. Frist was Chairman of the Board, President and
Chief Executive Officer of HCA-Hospital Corporation of America ("HCA") from
1988 to February 1994. Dr. Frist, a founder of the predecessor of HCA, was
previously Chairman and Chief Executive Officer of such predecessor from Au-
gust 1985 until September 1987, and in September 1987 he was also named Presi-
dent. Dr. Frist is Chairman of the Board of Governors of the United Way of
America and is a member of the Board of Trustees of Vanderbilt University.
J. David Grissom is Chairman of the Board of Mayfair Capital, a private in-
vestment firm in Louisville, Kentucky, having held such position since March
1989. Prior to that, he was Chairman of the Board and Chief Executive Officer
of Citizens Fidelity Corporation from April 1977 until March 1989. Mr. Grissom
is also a director of Providian Corporation, Churchill Downs Incorporated,
LG&E Energy Corp. and Regal Cinemas.
Richard W. Hanselman is currently a private investor. From 1981 to 1986, he
was Chairman, President and Chief Executive Officer of Genesco, Inc., a diver-
sified footwear and apparel business. Prior thereto, he held senior management
positions with Beatrice Companies, Inc., Samsonite Corporation and RCA Corpo-
ration. Mr. Hanselman is a director of Becton, Dickinson and Company, Arvin
Industries, Inc., The Bradford Funds, IMCO Recycling, Inc., Foundation Health
Corporation, Benson Eye Corp. and Daisy Manufacturing. Mr. Hanselman is also a
Trustee of the Committee for Economic Development.
Charles J. Kane is the retired Chairman of the Board of Third National Cor-
poration (a bank holding company) and was the Senior Chairman and Chief Execu-
tive Officer of Third National Bank in Nashville from 1983 until 1985 and
President and Chief Executive Officer of Third National Bank in Nashville from
1975 to 1983. Mr. Kane is an emeritus director of Third National Bank in Nash-
ville and of American General Corporation.
John W. Landrum is the owner of Springlake Farms, a farm operations and real
estate management company in Harrodsburg, Kentucky.
T. Michael Long is a partner with Brown Brothers Harriman & Co., a private
banking firm, where he has been employed for more than five years. Mr. Long is
also a director of Ekco Group, Inc., Neuvo Energy Company and Gulf Canada Re-
sources, Ltd.
4
<PAGE>
Donald S. MacNaughton served as Chairman of the Executive Committee of
Healthtrust, Inc.--The Hospital Company ("Healthtrust") from 1987 to April
1995. He retired as an employee of Healthtrust in 1991. Mr. MacNaughton joined
Hospital Corporation of America (HCA's predecessor) in 1978 as Chairman and
Chief Executive Officer. He continued to serve as Chief Executive Officer of
Hospital Corporation of America until 1982, Chairman of the Board until 1985
and as Chairman of the Executive Committee until 1987. Prior to 1978, Mr. Mac-
Naughton was Chairman and Chief Executive Officer of The Prudential Insurance
Company of America, where he served in various management capacities for 23
years, including nine years as Chairman and Chief Executive Officer. Mr. Mac-
Naughton is a member of The Business Council, a member of the Board of Trust-
ees of Vanderbilt University and a member of the Board of Directors of Finan-
cial Securities Advisors, Inc.
R. Clayton McWhorter has been Chairman of the Board of the Company since
April 1995. Mr. McWhorter was Chairman and Chief Executive Officer of
Healthtrust from 1987 to April 1995 and was President of Healthtrust from 1991
to April 1995. Mr. McWhorter served as President and Chief Operating Officer
of Hospital Corporation of America (HCA's predecessor) from 1985 to 1987, and
as a Director of Hospital Corporation of America from 1983 to 1987. Mr. Mc-
Whorter is a director of Third National Bank in Nashville and Ingram Indus-
tries, Inc. and is a member of the Board of the Foundation for State Legisla-
tures. He is also past Chairman of the Federation of American Health Systems,
a past member of the Board of Trustees of the American Hospital Association, a
Fellow of the American College of Healthcare Executives and a Trustee of the
Committee for Economic Development.
Darla D. Moore is presently engaged in private investment activities. For
more than five years until January 1994, Ms. Moore was a Managing Director of
Chemical Bank in New York, New York, where she headed the bank's Restructuring
and Reorganization Unit as well as the Retail Industries Group. She is also a
director of the University of South Carolina Educational Endowment Board.
Rodman W. Moorhead III has been employed since 1973 by E.M. Warburg, Pincus
& Co., Inc., a specialized financial services firm in New York, where he cur-
rently serves as Senior Managing Director. He is also a director of Agridyne
Technologies, Inc., Cambridge NeuroScience, Inc., NeXagen, Inc., Value Health,
Inc. and Vestar, Inc.
Carl F. Pollard has served as Chairman of the Executive Committee of the
Board of Directors of the Company since February 1994. Mr. Pollard was Chair-
man of the Board of the Company from September 1993 to February 1994, and was
Chairman and Chief Executive Officer of Galen Health Care, Inc. ("Galen") from
March 1, 1993 to September 1, 1993. Mr. Pollard was President and Chief Oper-
ating Officer of Humana Inc. from March 1991 to March 1993 and held various
other executive positions with Humana prior thereto. He is also a director of
Churchill Downs Incorporated and Vestar, Inc.
Carl E. Reichardt served as the Chairman of the Board and Chief Executive
Officer of Wells Fargo & Company (a bank holding company) and of its subsidi-
ary, Wells Fargo Bank, N.A. from 1983 to December 1994. Mr. Reichardt is cur-
rently a director of Wells Fargo & Company, ConAgra, Inc., Ford Motor Company,
Newhall Management Corporation, which is the managing general partner of the
Newhall Land & Farming Company (a California limited partnership), and of Pa-
cific Gas & Electric Co.
Frank S. Royal, M.D. has been a practicing physician in Richmond, Virginia
for over 20 years. He is Past President/Former Board Chairman of the National
Medical Association. He also serves as a member of the Boards of Directors of
Crestar Financial Corporation (a bank holding
5
<PAGE>
company), Chesapeake Corporation, CXS Corporation, Dominion Resources and Vir-
ginia Electric and Power Company, and is on the Boards of Trustees of Meharry
Medical College (Chairman of the Board), Virginia Union University (Chairman of
the Board) and Richmond Metropolitan YMCA.
Richard L. Scott has been President and Chief Executive Officer of the Com-
pany since September 1993. Mr. Scott was Chairman of the Board and Chief Execu-
tive Officer of the Company or its predecessor entities from October 1987 until
September 1, 1993. Mr. Scott was a founder of the Company and its predecessor
entities. Mr. Scott serves on the Board of Directors of Banc One Corporation.
Robert D. Walter is Chairman of the Board and Chief Executive Officer of Car-
dinal Health, Inc., a pharmaceutical distribution company located in Dublin,
Ohio. Mr. Walter serves on the Board of Directors of Banc One Corporation and
Westinghouse Electric Corporation.
William T. Young is Chairman of the Board of W.T. Young, Inc., a warehousing
company and horse farm located in Lexington, Kentucky.
The Board of Directors of the Company has adopted a mandatory retirement pol-
icy for members of the Company's Board of Directors, with the policy being ef-
fective as of July 1, 1994. Pursuant to the policy, no person may be nominated
to a term of office on the Board of Directors if he or she has attained the age
of 70 before the first day of the proposed term of office. The policy does not
apply to certain present directors of the Company. Donald S. MacNaughton and
William T. Young have been "grandfathered" from the provision. Charles J. Kane
and John W. Landrum each have agreed to resign effective June 30, 1996. The
Board of Directors will then have the power under the Company's Restated Cer-
tificate of Incorporation to appoint successors to fill out the remainder of
Messrs. Kane and Landrum's terms, or to reduce the size of the Board of Direc-
tors.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During 1994, the Company's Board of Directors held seven meetings. Also,
there are five committees of the Board of Directors which assist the Board in
discharging its responsibilities. These committees, their members and functions
are discussed below.
Each incumbent director attended during 1994 at least 75% of the aggregate of
the total number of meetings of the Board of Directors and the total number of
meetings held by all committees on which the individual director served.
The Audit Committee is presently comprised of four directors: Carl E.
Reichardt (Chairman), Magdalena Averhoff, M.D., John W. Landrum and T. Michael
Long, none of whom are officers or employees of the Company. The functions of
this Committee include review of the programs of the Company's internal audi-
tors, the results of their audits, and the adequacy of the Company's system of
internal controls and accounting practices. In addition, the Committee reviews
the scope of the annual audit by the Company's independent auditors prior to
its commencement and reviews the types of services for which the Company re-
tains independent auditors. In 1994, this Committee met three times.
The Compensation Committee is presently comprised of four directors: Darla D.
Moore (Chairman), Charles J. Kane, Robert D. Walter and William T. Young, none
of whom are officers or employees of the Company. Responsibilities of this Com-
mittee include approval of compensation arrangements for executive management,
review of compensation plans relating to officers, grants of options and other
benefits under the Company's employee benefit plans and general review of the
Company's employee compensation policies. In 1994, this Committee met one time.
6
<PAGE>
The Executive Committee is presently comprised of four directors: Carl F.
Pollard (Chairman), Thomas F. Frist, Jr., M.D., R. Clayton McWhorter and Rich-
ard L. Scott. This Committee has the authority to exercise all of the powers
of the full Board of Directors, with certain exceptions relating to major cor-
porate matters. This Committee is available to review with members of manage-
ment certain areas of the Company's operations and to act when it is impracti-
cal to assemble the entire Board for a meeting. In 1994, this Committee did
not meet.
The Investment Committee is presently comprised of three directors: Rodman
W. Moorhead III (Chairman), J. David Grissom and Frank S. Royal, M.D., none of
whom are officers or employees of the Company. The functions of this Committee
are to establish guidelines for and to analyze the investment performance de-
cisions of the various funds, assets and portfolios of the Company. In 1994,
this Committee did not meet.
The Nominating Committee is presently comprised of four directors: Richard
L. Scott (Chairman), Thomas F. Frist, Jr., M.D., J. David Grissom and Carl F.
Pollard. Until September 1, 1996, this Committee will have the exclusive power
to nominate persons on behalf of the Board of Directors to serve as directors
of the Company. The Nominating Committee will consider nominees for the Board
of Directors recommended by stockholders. Directors are selected on the basis
of their demonstrated broad knowledge, experience and ability in their chosen
endeavors and, most importantly, on the basis of their ability to represent
the interests of the stockholders. Recommendations by stockholders for such
nominees, which must include biographical information and the proposed nomi-
nee's written consent to nomination, must be made in writing to the Secretary
of the Company not less than 60 days nor more than 90 days prior to the sched-
uled date of the meeting (or, if less than 70 days' notice or prior public
disclosure of the date of the meeting is given, the 10th day following the
earlier of (i) the day such notice was mailed or (ii) the day such public dis-
closure was made). In 1994, this Committee did not meet.
Directors are elected by a plurality of the votes cast by the holders of the
shares present in person or represented by proxy at a meeting at which a quo-
rum is present. "Plurality" means that the individuals who receive the largest
number of votes cast are elected as directors up to the maximum number of di-
rectors to be chosen at the meeting. Consequently, any shares not voted
(whether by withholding authority or broker non-vote) have no impact in the
election of directors, except to the extent the failure to vote for the indi-
vidual results in another individual receiving a larger number of votes.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1994, the members of the Compensation Committee were responsi-
ble for determining executive compensation and stock option grants to execu-
tive officers. The following directors currently serve on the Compensation
Committee: Darla D. Moore, Charles J. Kane, Robert D. Walter and William T.
Young. Richard L. Scott, the President and Chief Executive Officer of the Com-
pany, submitted recommendations to the Compensation Committee concerning key
executive officer compensation, but did not participate in deliberations re-
garding the compensation of such key executive officers.
On November 22, 1992, the Board of Directors of the Company adopted the Co-
lumbia Hospital Corporation Outside Directors Nonqualified Stock Option Plan
(the "Directors Plan"), which provides for option grants to non-employee di-
rectors, including those directors that serve on the Compensation Committee.
The stockholders of the Company approved the adoption of the Directors Plan on
May 20, 1993. See "Directors' Compensation" above.
Mr. Robert D. Walter, the Chairman, Chief Executive Officer and a principal
stockholder of Cardinal Health, Inc., became a member of the Board of
Directors of the Company on September 1, 1993. Mr. Walter is a member of the
Compensation Committee. A wholly-owned subsidiary of
7
<PAGE>
Cardinal Health, Inc. supplies therapeutic plasma products to certain of the
Company's subsidiaries. During the year ended December 31, 1994, the Company's
subsidiaries purchased approximately $251,000 in supplies from the Cardinal
Health, Inc. subsidiary, which accounted for less than 1/10 of 1% of Cardinal
Health, Inc.'s revenues for the same period.
INFORMATION CONCERNING EXECUTIVE OFFICERS
Information regarding executive officers of the Company is contained in Part
I, Item 1 of the Company's Annual Report on Form 10-K, filed on March 31,
1995, which is incorporated herein by reference.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a regis-
tered class of the Company's equity securities, to file reports of ownership
and changes in ownership with the Securities and Exchange Commission and pro-
vide the Company with copies of such reports. Based solely on its review of
the copies of such forms received by it, or written representations from cer-
tain reporting persons that no Forms 5 were required for those persons, the
Company believes that, during the past fiscal year all filing requirements ap-
plicable to its officers, directors, and greater than ten-percent stockholders
were complied with.
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation
paid during each of the Company's last three fiscal years to the Company's
Chief Executive Officer and each of the Company's four other most highly com-
pensated executive officers, based on salary and bonus earned during 1994.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
---------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------ --------------------- -----------
OTHER ANNUAL RESTRICTED OPTIONS/ ALL OTHER
NAME AND PRINCIPAL FISCAL COMPENSATION STOCK SARS LTIP COMPENSATION
POSITIONS YEAR SALARY ($) BONUS ($)(1) ($)(2) AWARDS ($) (#)(3) PAYOUTS ($) ($)(4)
------------------ ------ ---------- ------------ ------------ ------------ -------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Richard L. Scott........ 1994 599,000 520,000 107,272(5) - 150,000 - 9,240
President and Chief 1993 371,000 350,000 0 - 60,000 - 5,396
Executive Officer 1992 275,000 175,000 0 - 50,000 - 4,364
Thomas F. Frist, Jr.,
M.D.................... 1994 633,000 500,000 0 - - - 7,500
Chairman of the 1993 - - - - - - -
Board(6) 1992 - - - - - - -
David T. Vandewater..... 1994 425,000 360,000 0 2,404,458(7) 125,000 - 9,240
Chief Operating Officer 1993 318,000 300,000 0 3,004,018(8) 50,000 - 5,396
1992 250,000 150,000 0 - 100,000 - 4,364
David C. Colby.......... 1994 288,000 143,000 0 - 50,000 - 9,240
Senior Vice President, 1993 239,000 200,000 0 - 40,000 - 5,396
Chief Financial Officer 1992 175,000 120,000 0 - 60,000 - 4,364
and Treasurer
Stephen T. Braun........ 1994 234,000 125,000 0 - 50,000 - 9,240
Senior Vice President 1993 164,000 250,000 0 - 17,000 - 5,396
and General Counsel 1992 138,000 75,000 0 - 15,000 - 1,719
</TABLE>
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(1) Reflects bonus earned during the fiscal year. In some instances all or a
portion of the bonus was paid during the following fiscal year.
8
<PAGE>
(2) Except as noted in the table, perquisites and other personal benefits did
not exceed the lesser of either $50,000 or 10% of the total of annual sal-
ary and bonus for the named executive officer.
(3) Options to acquire shares of the Common Stock.
(4) Consists of the Company contributions to the Company's Savings and Invest-
ment Plan.
(5) Other annual compensation for Mr. Scott includes Company provided insur-
ance of $1,091, relocation expenses of $10,574 and Company provided trans-
portation of $95,607.
(6) Dr. Frist's employment by the Company commenced February 10, 1994.
(7) On September 15, 1994, Mr. Vandewater received 57,249 shares of the Common
Stock pursuant to the 1992 Stock and Incentive Plan. On such date, the
value of such shares was $2,404,458, which the Company recorded as compen-
sation expense.
(8) On October 11, 1993, Mr. Vandewater received 109,237 shares of the Common
Stock, in a transfer from Richard L. Scott, the President and Chief Execu-
tive Officer of the Company. On such date, the value of such shares was
$3,004,018, which the Company recorded as compensation expense. The shares
were transferred to Mr. Vandewater as an incentive for his continued com-
mitment to the Company.
OPTION GRANTS DURING 1994 FISCAL YEAR
The following table provides information related to options granted to the
named executive officers during fiscal 1994.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES
OF STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(1)
- --------------------------------------------------------------------- -----------------------
% OF TOTAL
OPTIONS/ OPTIONS/SARS
SARS GRANTED TO EXERCISE OR
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION
NAME (#)(2) FISCAL YEAR ($/SH)(3) DATE(4) 0% 5% ($) 10% ($)
- ---- -------- ------------ ----------- ---------- --- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard L. Scott........ 150,000 3% 38.625 2/11/04 - 3,643,658 9,233,745
Thomas F. Frist, Jr.,
M.D.................... - - - - - - -
David T. Vandewater..... 125,000 2.5% 38.625 2/11/04 - 3,036,382 7,694,788
David C. Colby.......... 50,000 1% 38.625 2/11/04 - 1,214,553 3,077,915
Stephen T. Braun........ 50,000 1% 38.625 2/11/04 - 1,214,553 3,077,915
</TABLE>
- --------
(1) The potential realizable value portion of the foregoing table illustrates
value that might be realized upon exercise of the options immediately
prior to the expiration of their term, assuming the specified compounded
rates of appreciation on the Common Stock over the term of the options.
These amounts do not take into account provisions of the options relating
to termination of the option following termination of employment,
nontransferability or vesting over periods of up to five years.
(2) Options to acquire shares of the Common Stock. Each executive officer re-
ceived a single grant of options during the fiscal year.
(3) The option exercise price may be paid in shares of the Common Stock owned
by the executive officer, in cash, or a combination of the foregoing.
(4) The ten-year options become exercisable with respect to 25% of the shares
covered thereby on the second, third, fourth and fifth anniversary dates
following the date of grant. The exercise price was equal to the fair mar-
ket value of the Common Stock on the date of grant.
OPTION EXERCISES DURING 1994 FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
The following table provides information related to options exercised by the
named executive officers during the 1994 fiscal year and the number and value
of options held at fiscal year end. The Company has not issued stock apprecia-
tion rights or warrants to its executive officers.
9
<PAGE>
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT FY-END (#) AT FY-END ($)(2)
------------------------- -------------------------
SHARES ACQUIRED VALUE
NAME ON EXERCISE (#)(1) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard L. Scott........ - - 45,000 215,000 840,000 1,180,000
Thomas F. Frist, Jr.,
M.D.................... - - - 52,500 - 903,751
David T. Vandewater..... 39,375 964,688 64,167 190,833 1,173,961 957,289
David C. Colby.......... 39,375 964,688 73,333 116,677 1,539,161 1,290,839
Stephen T. Braun........ - - 22,541 71,959 457,260 412,991
</TABLE>
- --------
(1) Except as noted in the table, the named executive officers did not exer-
cise any stock options during 1994.
(2) The closing price for the Common Stock as reported by the New York Stock
Exchange, Inc. on December 30, 1994 was $36.50. Value is calculated on the
basis of the difference between the option exercise price and $36.50 mul-
tiplied by the number of shares of Common Stock underlying the option.
DIRECTORS' COMPENSATION
Prior to September 1, 1993, the Company's policy for compensating directors
who were not employees of the Company was to pay each director $1,250 for each
regular Board of Directors meeting which was attended. In addition, the Colum-
bia Hospital Corporation Outside Directors' Nonqualified Stock Option Plan
(the "Directors Plan") was adopted by the Board of Directors on November 12,
1992, which provided for the grant of an initial option for 3,000 shares of
the Common Stock upon election to the Board of Directors (or adoption of the
plan), with the subsequent grant of an option for 2,000 shares each year
thereafter that the director served on the Board (following the Annual Meeting
of Stockholders). The policy for compensating directors was revised on Septem-
ber 9, 1993 and February 10, 1994, in connection with the addition of new di-
rectors from Galen and HCA. The current policy provides that outside directors
are paid an annual retainer of $26,000 for serving on the Board of Directors,
a fee of $1,000 per Board meeting attended and reimbursement of expenses in-
curred relating to attendance at meetings. In addition, committee chairpersons
receive $1,000 per committee meeting attended, and all other committee members
receive a fee of $500 per committee meeting attended, in both cases payable
only with respect to committee meetings which are not held in conjunction with
a meeting of the Board of Directors. On February 10, 1994, the Directors Plan
was amended to provide that new directors will receive an initial option to
acquire shares of the Common Stock (exercisable at the shares' fair market
value on the date of grant of the option) having an aggregate exercise price
equal to two times the outside director's annual retainer fee then in effect,
but in no event more than 3,000 shares. Following each succeeding annual meet-
ing, each outside director who continues in office will receive an option to
acquire shares of the Common Stock (exercisable at the shares' fair market
value on the date of grant of the option) having an aggregate exercise price
equal to the outside director's annual retainer fee then in effect, but in no
event more than 2,000 shares. Finally, for directors who were former directors
of Galen, the Company matches, on an annual basis, up to $20,000 in charitable
contributions and such directors are eligible to participate in the Company's
self-funded medical and dental plans.
EXECUTIVE SEVERANCE PAY AGREEMENTS
The Company has entered into severance pay agreements with thirteen employ-
ees of the Company, including all of the named executive officers other than
Richard L. Scott and Thomas F. Frist, Jr., M.D. Under the terms of such sever-
ance agreements, in the event that at any time prior to September 1, 1995, Mr.
Scott does not retain the position and duties of Chief Executive
10
<PAGE>
Officer of the Company for any reason (a "Scott Constructive Termination") and
at any time prior to 12 months after the Scott Constructive Termination, the
employment of any of such covered individuals with the Company is terminated
for any reason or his or her responsibilities are significantly reduced from
those held just prior to the date of the Scott Constructive Termination (an
"Employee's Constructive Termination"), the Company will pay to any such indi-
vidual a lump sum severance payment. Such severance payment shall be in an
amount equal to the greater of the employee's annual base salary in effect at
September 1, 1993 or the date of the Employee's Constructive Termination mul-
tiplied by two in the case of David T. Vandewater; by one and one-half in the
case of David C. Colby, Samuel A. Greco and Stephen T. Braun; and by one in
the case of all other covered individuals. In addition, upon a Scott Construc-
tive Termination, the severance pay arrangements will allow an employee to re-
ceive, in cash, a proportionate interest in an unfunded bonus pool. The pool
was set at an initial level of approximately $6.3 million and will be in-
creased or decreased by approximately $506,000 each month for each whole dol-
lar increase or decrease in the month-end closing price of the Common Stock
over the August 31, 1993 closing price ($27.625). The employees' proportionate
interests in the fund range between 1.3% and 32.6%.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth as of April 25, 1995, certain information
concerning shares of the Common Stock held by (a) each stockholder owning ben-
eficially at least 5% of the outstanding Common Stock, (b) each director or
nominee for director of the Company, (c) each executive officer of the Company
named in the "Summary Compensation Table" and (d) all directors and executive
officers of the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF
NAME OF INDIVIDUAL OR NUMBER IN GROUP SHARES(1)(2) PERCENT
------------------------------------- ------------ -------
<S> <C> <C>
The Columbia/HCA Healthcare Corporation Stock Bonus
Plan.................................................. 24,859,383(3) 7.1
FMR Corp. and Edward C. Johnson 3d..................... 23,036,193(3)(4) 6.6
Magdalena Averhoff, M.D................................ 5,681(5) *
Thomas F. Frist, Jr., M.D. ............................ 12,392,843(6) 3.5
J. David Grissom....................................... 71,493(7) *
Richard W. Hanselman................................... 8,800 *
Charles J. Kane........................................ 82,635(8) *
John W. Landrum........................................ 204,539(9) *
T. Michael Long........................................ 1,489,655(10) *
Donald S. MacNaughton.................................. 253,054 *
R. Clayton McWhorter................................... 1,488,342(11) *
Darla D. Moore......................................... 190,995(12) *
Rodman W. Moorhead III................................. 10,765(13) *
Carl F. Pollard........................................ 589,781(14) *
Carl E. Reichardt...................................... 168,790(15) *
Frank S. Royal, M.D.................................... 75,901(16) *
Richard L. Scott....................................... 6,077,121(17) 1.7
Robert D. Walter....................................... 32,556(18) *
William T. Young....................................... 724,699(19) *
Stephen T. Braun....................................... 33,844(20) *
David C. Colby......................................... 170,795(21) *
David T. Vandewater.................................... 332,307(22) *
All directors and executive officers as a group (28
persons)............................................ 25,109,258(23) 7.2
</TABLE>
- --------
* Less than one percent.
(1) Unless otherwise indicated, each stockholder shown on the table has sole
voting and investment power with respect to the shares beneficially
owned. The number of shares shown does not include the interest of cer-
tain persons in shares held by family members in their own right.
11
<PAGE>
(2) Each named person or group is deemed to be the beneficial owner of secu-
rities which may be acquired within 60 days through the exercise or con-
version of options, warrants and rights, if any, and such securities are
deemed to be outstanding for the purpose of computing the percentage ben-
eficially owned by such person or group. Such securities are not deemed
to be outstanding for the purpose of computing the percentage of class
beneficially owned by any other person or group. Accordingly, the indi-
cated number of shares includes shares issuable upon conversion of con-
vertible securities or upon exercise of options (including employee stock
options) held by such person or group.
(3) The addresses of the persons known to the Company to be the beneficial
owners of more than five percent of the outstanding Common Stock are as
follows: The Columbia/HCA Healthcare Corporation Stock Bonus Plan--One
Park Plaza, Nashville, Tennessee 37203; and FMR Corp. and Edward C. John-
son 3d--82 Devonshire Street, Boston, Massachusetts 02109.
(4) This information is taken from the most recent Schedule 13G filed with
the Securities and Exchange Commission (dated February 13, 1995). Such
Schedule 13G was filed (1) as if all shares set forth as owned by FMR
Corp. or Edward C. Johnson 3d ("Mr. Johnson") were owned by both such
holders on a joint basis and (2) as if 21,095,286 of such 23,036,193
shares were jointly owned by FMR Corp., Mr. Johnson and Fidelity Manage-
ment & Research Company ("Fidelity"), which is a wholly-owned subsidiary
of FMR Corp. It was reported in such Schedule 13G that Mr. Johnson (i)
owns 24.9% of the outstanding voting common stock of FMR Corp., (ii) is
Chairman of FMR Corp. and (iii) along with various trusts for the benefit
of Johnson family members constitute a controlling group with respect to
FMR Corp. FMR Corp. has reported that it has sole voting power with re-
spect to 981,657 of these 23,036,193 shares and sole dispositive power
with respect to 23,026,085 of these shares. Mr. Johnson has reported that
he has shared voting power with respect to 10,108 of these shares and
also claimed sole dispositive power with respect to 23,026,085 of these
shares.
(5) Includes 5,681 shares issuable upon exercise of options.
(6) Dr. Frist has shared voting and investment power with respect to
1,071,805 of these shares held by a trust of which he is a contingent
beneficiary.
(7) Includes 3,681 shares issuable upon exercise of options.
(8) Includes 1,995 shares issuable upon exercise of options.
(9) Includes 681 shares issuable upon exercise of options.
(10) Includes 400,000 shares issuable upon exercise of the Warrant (hereinaf-
ter defined), and 1,081,162 shares which are held by The 1818 Fund, L.P.
Mr. Long is a co-manager of The 1818 Fund, L.P. and disclaims beneficial
ownership of such shares. Also includes 8,493 shares issuable upon exer-
cise of options.
(11) Includes 879,238 shares issuable upon exercise of options.
(12) Includes 1,995 shares issuable upon exercise of options.
(13) Includes 3,681 shares issuable upon exercise of options.
(14) Includes 419,256 shares issuable upon exercise of options.
(15) Includes 1,995 shares issuable upon exercise of options.
(16) Includes 1,995 shares issuable upon exercise of options.
(17) Includes 77,500 shares issuable upon exercise of options.
(18) Includes 3,681 shares issuable upon exercise of options.
(19) Includes 3,681 shares issuable upon exercise of options. Also includes
272,108 shares with respect to which Mr. Young has sole voting and in-
vestment power and 488,910 shares with respect to which Mr. Young has
shared voting and investment power with other persons. Excludes 625,655
shares held by other family members, and in trusts for their benefit,
with respect to which Mr. Young has no voting or investment power. Also
excludes 498,026 shares held by educational and other non-profit institu-
tions of which Mr. Young serves as a member of the governing boards.
(20) Includes 31,958 shares issuable upon exercise of options.
12
<PAGE>
(21) Includes 101,666 shares issuable upon exercise of options.
(22) Includes 76,667 shares issuable upon exercise of options and 65,024
shares of which Mr. Vandewater is trustee for the minor children of Mr.
Scott, over which Mr. Vandewater has sole voting and investment power.
(23) Includes shares issuable upon exercise of options to purchase 1,850,332
shares of Common Stock and 400,000 shares issuable upon exercise of the
Warrant.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
T. Michael Long, co-manager of The 1818 Fund, L.P. (the "Fund"), became a
member of the Board of Directors of the Company on March 18, 1991, in connec-
tion with the Fund's purchase of a $40 million principal amount 9% Subordi-
nated Mandatory Convertible Note due June 30, 1999 (the "9% Note"). The 9%
Note was converted into Common Stock at a conversion price of $18.50 per share
in two separate transactions on June 16 and July 1, 1994. The Company also is-
sued a warrant to purchase 400,000 shares of Common Stock (the "Warrant") to
the Fund. The Warrant is exercisable at any time prior to March 31, 1998, at
an exercise price of $20.00 per share, subject to adjustment to prevent dilu-
tion in the event of stock splits, recapitalizations and reorganizations. The
Fund was also granted certain incidental and demand registration rights by the
Company with respect to the shares of Common Stock issuable upon conversion of
the 9% Note and exercise of the Warrant (the "Registrable Securities"). As a
result, the Fund is entitled to notice of any registration statement filed by
the Company on Form S-1, S-2, or S-3 with respect to the registration of
shares of Common Stock (other than registration of shares to be issued in ex-
change for partnership interests), and the Company is required, subject to
certain limitations, to use its best efforts to include the Registrable Secu-
rities in such registration at the Company's expense. The registration rights
granted to the Fund may, in certain transactions, adversely affect the market
price of the Common Stock and limit the Company's ability to raise capital
through the public markets. In connection with the purchase of the 9% Note and
the Warrant, the Company agreed that the Fund would have the right to nominate
one director to the Board so long as the Fund owned shares of the Common
Stock, or notes convertible into shares of the Common Stock, representing at
least five percent of the fully-diluted outstanding Common Stock of the Compa-
ny. The Company is no longer obligated to nominate a director on behalf of the
Fund.
See Item 10 "Directors and Executive Officers of the Registrant--Compensa-
tion Committee Interlocks and Insider Participation" concerning certain other
transactions between the Company and certain executive officers, directors and
principal stockholders of the Company.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the un-
dersigned thereunto duly authorized.
Columbia/HCA Healthcare Corporation
By: /s/ Stephen T. Braun
-------------------------------------
Stephen T. Braun Senior Vice
President and General Counsel
Date: November 14, 1995
13
