<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
COLUMBIA/HCA HEALTHCARE CORPORATION
- --------------------------------------------------------------------------------
(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 the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials:
----------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
COLUMBIA/HCA HEALTHCARE CORPORATION
ONE PARK PLAZA
NASHVILLE, TENNESSEE 37203
(615) 344-9551
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 25, 2000
---------------------
Dear Stockholder:
On Thursday, May 25, 2000, Columbia/HCA Healthcare Corporation will hold
its 2000 annual meeting of stockholders at the executive offices of Columbia/HCA
located at One Park Plaza, Nashville, Tennessee. The meeting will begin at 1:30
p.m., Central Daylight Time.
Only stockholders that own our common stock at the close of business on
March 31, 2000 can vote at this meeting. A list of our stockholders will be
available at our principal executive offices at One Park Plaza, Nashville,
Tennessee, during ordinary business hours for ten days prior to the annual
meeting. At the meeting, we will consider the following proposals:
1. To elect four Class I and five Class III directors to hold office
until the next annual meeting of stockholders or until their respective
successors have been duly elected and qualified;
2. To approve the Columbia/HCA Healthcare Corporation 2000 Equity
Incentive Plan;
3. To ratify the appointment of Ernst & Young LLP as our independent
auditors; and
4. To transact such other business as may properly come before the
meeting or any postponement or adjournment of the meeting.
Our 1999 Annual Report to Stockholders is being mailed to stockholders with
this proxy statement. The annual report is not part of the proxy solicitation
materials.
We anticipate that a large number of stockholders will attend the annual
meeting. Please note that space limitations make it necessary to limit
attendance to stockholders. Cameras and recording devices are not permitted at
the meeting. "Street name" holders will need to bring a copy of a brokerage
statement reflecting stock ownership as of the record date.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN
AND RETURN AS PROMPTLY AS POSSIBLE THE ENCLOSED PROXY IN THE ACCOMPANYING REPLY
ENVELOPE. STOCKHOLDERS WHO ATTEND THE MEETING MAY REVOKE THEIR PROXIES AND VOTE
IN PERSON.
By Order of the Board of Directors,
John M. Franck II
Vice President and Corporate Secretary
Nashville, Tennessee
April 17, 2000
<PAGE> 3
COLUMBIA/HCA HEALTHCARE CORPORATION
ONE PARK PLAZA
NASHVILLE, TENNESSEE 37203
---------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 25, 2000
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
QUESTIONS AND ANSWERS....................................... 1
STOCK OWNERSHIP............................................. 5
ITEM 1 -- ELECTION OF DIRECTORS............................. 6
Information Concerning Directors............................ 7
Corporate Governance........................................ 9
Section 16(a) Beneficial Ownership Reporting Compliance..... 11
Certain Legal Proceedings................................... 11
ITEM 2 -- APPROVAL OF THE COLUMBIA/HCA HEALTHCARE
CORPORATION 2000 EQUITY INCENTIVE PLAN............ 11
Shares Available for Awards under the Plan.................. 11
Eligibility and Administration.............................. 12
Stock Options and Stock Appreciation Rights................. 12
Restricted Shares and Restricted Share Units................ 12
Performance Awards.......................................... 13
Other Stock-Based Awards.................................... 14
Non-Employee Director Awards................................ 14
Termination of Employment................................... 14
Change in Control........................................... 14
Amendment and Termination................................... 14
Other Terms of Awards....................................... 14
Certain Federal Income Tax Consequences..................... 14
ITEM 3 -- RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG
LLP AS OUR INDEPENDENT AUDITORS................... 16
ITEM 4 -- OTHER MATTERS..................................... 16
EXECUTIVE COMPENSATION...................................... 17
Summary Compensation Table.................................. 17
Option Grants During 1999................................... 19
Aggregate Option Exercises During 1999 and Fiscal Year End
Option Values............................................. 19
Directors' Compensation..................................... 20
Compensation Committee Report on Executive Compensation for
1999...................................................... 20
Employment, Severance and Change in Control Agreements...... 22
Compensation Committee Interlocks and Insider
Participation............................................. 22
Certain Relationships and Related Transactions.............. 22
Company Stock Performance................................... 23
GENERAL INFORMATION......................................... 24
Annual Report............................................... 24
Additional Information...................................... 24
</TABLE>
i
<PAGE> 4
QUESTIONS AND ANSWERS
- --------------------------------------------------------------------------------
1. Q: WHAT IS THE PURPOSE OF THE ANNUAL MEETING?
A: At the Company's annual meeting, stockholders will act upon the matters
outlined in the notice of meeting on the cover page of this proxy
statement, including the election of directors, approval of the
Columbia/HCA Healthcare Corporation 2000 Equity Incentive Plan and
ratification of the Company's independent auditors. In addition, the
Company's management will make a presentation and respond to questions
from stockholders.
- --------------------------------------------------------------------------------
2. Q: WHEN WAS THIS PROXY STATEMENT MAILED TO STOCKHOLDERS?
A: This proxy statement was first mailed to stockholders on or about April
18, 2000.
- --------------------------------------------------------------------------------
3. Q: WHO IS SOLICITING MY VOTE?
A: This proxy solicitation is being made and paid for by Columbia/HCA
Healthcare Corporation. In addition, we have retained Corporate Investor
Communications, Inc. to assist in the solicitation. We will pay Corporate
Investors Communications, Inc. approximately $15,000 plus out-of-pocket
expenses for their assistance. Our directors, officers and other
employees, not specially employed for this purpose, may also solicit
proxies, by personal interview, mail, telephone or facsimile. They will
not be paid additional remuneration for their efforts. We will also
request brokers and other fiduciaries to forward proxy solicitation
material to the beneficial owners of shares of the common stock that the
brokers and fiduciaries hold of record. We will reimburse them for their
reasonable out-of-pocket expenses.
- --------------------------------------------------------------------------------
4. Q: WHAT MAY I VOTE ON?
A: - The election of four Class I and five Class III directors to our board
of directors;
- The proposal to approve the Columbia/HCA Healthcare Corporation 2000
Equity Incentive Plan; and
- The proposal to ratify the appointment of Ernst & Young LLP as our
independent auditors.
- --------------------------------------------------------------------------------
5. Q: HOW DOES THE BOARD RECOMMEND I VOTE ON THE PROPOSALS?
A: The board recommends that you vote:
- FOR each of the nominees;
- FOR the proposal to approve the Columbia/HCA Healthcare Corporation
2000 Equity Incentive Plan; and
- FOR the proposal to ratify the appointment of Ernst & Young LLP as our
independent auditors.
- --------------------------------------------------------------------------------
6. Q: HOW WILL VOTING ON ANY OTHER BUSINESS BE CONDUCTED?
A: We do not know of any business to be considered at the 2000 annual
meeting other than the proposals described in this proxy statement. If
any other business is presented at the annual meeting, your signed proxy
card gives authority to Thomas F. Frist, Jr., M.D., our Chairman and
Chief Executive Officer, Robert A. Waterman, our Senior Vice President
and General Counsel, and John M. Franck II, our Vice President and
Corporate Secretary, to vote on such matters at their discretion.
- --------------------------------------------------------------------------------
1
<PAGE> 5
7. Q: WHO IS ENTITLED TO VOTE?
A: Only stockholders of record at the close of business on March 31, 2000
(the record date) may vote at this meeting. As of the record date, there
were approximately 536,370,000 shares of our voting common stock
outstanding. The shares were held by approximately 18,200 holders of
record. Every stockholder is entitled to one vote for each share of
common stock the stockholder held of record on the record date.
- --------------------------------------------------------------------------------
8. Q: CAN I VOTE THE SHARES I OWN UNDER COLUMBIA/HCA'S RETIREMENT PLANS ON
THESE MATTERS?
A: In accordance with the retirement plans, the shares held under those
plans are voted at the direction of our Retirement Committee, which is
made up of certain members of our management. Even though retirement plan
participants will receive this proxy statement and our 1999 Annual
Report, those shares will still be voted by the members of the Retirement
Committee and not individual participants.
- --------------------------------------------------------------------------------
9. Q: HOW DO I VOTE?
A: You may vote by signing and dating each proxy card you receive and
returning it in the enclosed prepaid envelope. If you return your signed
proxy card but do not mark the boxes showing how you wish to vote, your
shares will be voted FOR the three proposals. You have the right to
revoke your proxy at any time before the meeting by:
- notifying the Corporate Secretary, John M. Franck II, at One Park
Plaza, Nashville, TN 32703;
- voting in person; or
- submitting a later-dated proxy card.
- --------------------------------------------------------------------------------
10. Q: CAN I VOTE BY TELEPHONE OR ELECTRONICALLY?
A: If you are a registered stockholder you may vote by telephone, or
electronically through the Internet, by following the instructions
included with your proxy card.
If your shares are held by your broker, often referred to as in "street
name," please check your proxy card or contact your broker or nominee to
determine whether you will be able to vote by telephone or
electronically.
- --------------------------------------------------------------------------------
11. Q: WHAT IS THE VOTE REQUIRED TO APPROVE EACH PROPOSAL?
A: Each of the director nominees must receive affirmative votes from a
plurality of the shares voting to be adopted. This means that the nine
nominees receiving the greatest number of votes will be elected as
directors. The other two proposals must receive affirmative votes from a
majority of the shares represented in person or by proxy and entitled to
vote.
- --------------------------------------------------------------------------------
12. Q: WHAT IS A "QUORUM"?
A: A "quorum" is a majority of the outstanding shares. They may be present
at the meeting or represented by proxy. There must be a quorum for
business to be conducted at the meeting. 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.
- --------------------------------------------------------------------------------
13. Q: WHAT IF I ABSTAIN FROM VOTING?
A: If you attend the meeting or send in your signed proxy card but abstain
from voting on any proposal, you will be counted for purposes of
determining whether a quorum exists. If you abstain from voting
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<PAGE> 6
on the election of directors, your abstention will have no effect on the
outcome. If you abstain from voting on any of the other proposals, your
abstention will have the same effect as a vote against the proposal.
- --------------------------------------------------------------------------------
14. Q: HOW DO I VOTE MY SHARES IF THEY ARE HELD IN THE NAME OF MY BROKER (STREET
NAME)?
A: If your shares are held by your broker, often referred to as in "street
name," you will receive a form from your broker seeking instruction as to
how your shares should be voted. If you do not issue instructions to your
broker, your broker will vote your shares at its discretion on your
behalf. The New York Stock Exchange rules provide that brokers and
nominees may not exercise their voting discretion on certain non-routine
matters without receiving instructions from the beneficial owner of the
shares. A broker non-vote occurs when a broker holding shares registered
in street name is not permitted to vote without instructions on
non-routine matters, and the broker returns a proxy card with no vote
(the "non-vote") on the non-routine matter.
- --------------------------------------------------------------------------------
15. Q: WHAT IS THE EFFECT OF A BROKER NON-VOTE?
A: A broker non-vote will have no effect on the proposal to approve the
Columbia/HCA Healthcare Corporation 2000 Equity Incentive Plan. Broker
non-votes will be counted as present for purposes of determining whether
there is a quorum.
- --------------------------------------------------------------------------------
16. Q: WHO WILL COUNT THE VOTES?
A: A representative of our transfer agent, National City Bank, will count
the votes and act as an inspector of election.
- --------------------------------------------------------------------------------
17. Q: WHO CAN ATTEND THE ANNUAL MEETING?
A: Stockholders of record on March 31, 2000 may attend the meeting. "Street
name" holders will need to bring a copy of a brokerage statement
reflecting their ownership of our common stock as of the record date.
Space limitations make it necessary to limit attendance to stockholders.
Cameras and recording devices are not permitted at the meeting.
- --------------------------------------------------------------------------------
18. Q: HOW CAN I PARTICIPATE IF I AM UNABLE TO ATTEND?
A: If you are unable to attend the meeting in person, we invite you to
listen to the live Internet broadcast of our annual meeting. The live
broadcast will begin at 1:30 p.m., Central Daylight Time on the day of
the annual meeting. The Internet Address is:
http://www.videonewswire.com/ COLUMBIAHCA/052500/. To listen, simply log
on to the web at the above address. Minimum requirements to listen to the
broadcast are a sound card, the RealPlayer software, downloadable free
from http://www.real.com/products/player/index.html and at least a 14.4
Kbps connection to the Internet. If you experience problems listening to
the broadcast, send an e-mail to [email protected].
- --------------------------------------------------------------------------------
19. Q: WHEN ARE STOCKHOLDER PROPOSALS DUE IN ORDER TO BE INCLUDED IN OUR PROXY
STATEMENT FOR THE 2001 ANNUAL MEETING?
A: Any stockholder proposals to be considered for inclusion in next year's
proxy statement must be submitted in writing to John M. Franck II,
Corporate Secretary, Columbia/HCA Healthcare Corporation, One Park Plaza,
Nashville, Tennessee 37203, prior to the close of business on December
19, 2000.
- --------------------------------------------------------------------------------
3
<PAGE> 7
20. Q: WHEN ARE OTHER STOCKHOLDER PROPOSALS DUE?
A: Our certificate of incorporation contains an advance notice provision
which requires that a stockholder's notice of a proposal to be brought
before an annual meeting must be timely. In order to be timely, the
notice must be addressed to our Corporate Secretary and delivered or
mailed and received at our principal executive offices not less than 60
days nor more than 90 days before the scheduled date of the meeting (or,
if less than 70 days notice or prior public disclosure of the date of the
meeting is given, the tenth day following the earlier of the day the
notice was mailed or the day the public disclosure was made).
- --------------------------------------------------------------------------------
21. Q: HOW CAN I OBTAIN ADDITIONAL INFORMATION ABOUT THE COMPANY?
A: We will provide a copy of our Annual Report on Form 10-K for the year
ended December 31, 1999, excluding certain of its exhibits, without
charge to any stockholder who makes a written request to Investor
Relations Department, Columbia/HCA Healthcare Corporation, One Park
Plaza, Nashville, Tennessee 37203. The Company's Annual Report on Form
10-K and various other filings also may be accessed on the world wide web
at www.sec.gov.
4
<PAGE> 8
STOCK OWNERSHIP
The following table sets forth information regarding the beneficial
ownership of our common stock as of March 31, 2000 (unless otherwise noted),
for:
- certain benefit plans we sponsor that collectively own at least 5% of the
outstanding shares of our common stock;
- each person who is known by us to beneficially own more than 5% of the
outstanding shares of our common stock;
- each of our directors and nominees;
- each of our executive officers named in the Summary Compensation Table;
and
- all of our directors and executive officers as a group.
The percentages of shares outstanding provided in the tables are based on
536,370,000 voting shares outstanding as of March 31, 2000. Beneficial ownership
is determined in accordance with the rules of the Securities and Exchange
Commission and generally includes voting or investment power with respect to
securities. Unless otherwise indicated, each person or entity named in the table
has sole voting and investment power, or shares voting and investment power with
his or her spouse, with respect to all shares of stock listed as owned by that
person. The number of shares shown does not include the interest of certain
persons in shares held by family members in their own right. Shares issuable
upon exercise of options that are exercisable within sixty days of March 31,
2000 are considered outstanding for the purpose of calculating the percentage of
outstanding shares of our common stock held by the individual, but not for the
purpose of calculating the percentage of outstanding shares held by any other
individual. The address of each of our directors, executive officers and benefit
plans listed below is c/o Columbia/HCA Healthcare Corporation, One Park Plaza,
Nashville, Tennessee 37203.
<TABLE>
<CAPTION>
NAME OF INDIVIDUAL OR NUMBER IN GROUP NUMBER OF SHARES PERCENT
------------------------------------- ---------------- -------
<S> <C> <C>
The Columbia/HCA Healthcare Corporation Stock Benefit
Plans..................................................... 36,782,824(1) 6.9
Magdalena H. Averhoff, M.D.................................. 26,849(2) *
Jack O. Bovender, Jr........................................ 316,515(3) *
Richard M. Bracken.......................................... 285,266(4) *
Elaine L. Chao.............................................. 12,216(5) *
J. Michael Cook............................................. 18,755(6) *
Martin Feldstein............................................ 18,787(7) *
Thomas F. Frist, Jr., M.D................................... 17,224,858(8) 3.2
Frederick W. Gluck.......................................... 18,787(9) *
Jay Grinney................................................. 286,312(10) *
Glenda A. Hatchett.......................................... 11,711(11) *
T. Michael Long............................................. 22,678(12) *
John H. McArthur............................................ 19,787(13) *
R. Clayton McWhorter........................................ 554,900(14) *
Thomas S. Murphy............................................ 22,487(15) *
Kent C. Nelson.............................................. 18,787(16) *
Carl E. Reichardt........................................... 183,574(17) *
Frank S. Royal, M.D......................................... 126,549(18) *
Robert A. Waterman.......................................... 193,984(19) *
All directors and executive officers as a group (36
persons).................................................. 22,478,175(20) 4.2
</TABLE>
- ---------------
* Less than one percent.
(1) Represents shares beneficially owned by employees participating in the
Columbia/HCA Healthcare Corporation Stock Bonus Plan, Columbia/HCA
Healthcare Corporation Salary Deferral Plan, EPIC Profit Sharing Plan and
Healthtrust 401(k) Retirement Program and voted at the direction of our
Retirement Committee, which is composed of certain of our officers.
5
<PAGE> 9
(2) Includes 15,402 shares issuable upon exercise of options.
(3) Includes 230,165 shares issuable upon exercise of options and 46 shares
beneficially owned in employee plans but not voted by participant.
(4) Includes 234,143 shares issuable upon exercise of options and 6,520 shares
beneficially owned in employee plans but not voted by participant.
(5) Includes 5,625 shares issuable upon exercise of options.
(6) Includes 9,920 shares issuable upon exercise of options.
(7) Includes 12,589 shares issuable upon exercise of options.
(8) Includes 286,936 shares issuable upon exercise of options and 20,000 shares
beneficially owned in employee plans but not voted by participant. Also
includes 6,161,429 shares with respect to which Dr. Frist has sole voting
and investment power and 10,756,493 shares with respect to which Dr. Frist
has shared voting and investment power.
(9) Includes 12,589 shares issuable upon exercise of options.
(10) Includes 250,506 shares issuable upon exercise of options.
(11) Includes 5,120 shares issuable upon exercise of options.
(12) Includes 15,402 shares issuable upon exercise of options.
(13) Includes 12,589 shares issuable upon exercise of options.
(14) Includes 13,667 shares issuable upon exercise of options.
(15) Includes 12,589 shares issuable upon exercise of options.
(16) Includes 12,589 shares issuable upon exercise of options.
(17) Includes 15,402 shares issuable upon exercise of options.
(18) Includes 15,402 shares issuable upon exercise of options.
(19) Includes 166,373 shares issuable upon exercise of options and 46 shares
beneficially owned in employee plans but not voted by participant.
(20) Includes 3,596,593 shares issuable upon exercise of options. Also includes
86,832 shares beneficially owned in employee plans but not voted by
individual participants.
ITEM 1 -- ELECTION OF DIRECTORS
Our board of directors is currently divided into three classes. The current
board of directors consists of fifteen directors. The board of directors
consists of five Class I directors (Dr. Averhoff, Mr. Bovender, Mr. McWhorter,
Mr. Nelson and Dr. Royal) and five Class III directors (Mr. Feldstein, Dr.
Frist, Ms. Hatchett, Mr. McArthur and Mr. Murphy) whose term of office expires
in 2000, and five Class II directors (Ms. Chao, Mr. Cook, Mr. Gluck, Mr. Long
and Mr. Reichardt) whose term of office expires in 2001. Mr. McWhorter is
retiring from the board of directors effective May 25, 2000 and will not be
seeking reelection.
At the 1998 annual meeting, our stockholders approved an amendment to our
certificate of incorporation to declassify our board of directors and to elect
all directors annually at the annual meeting of stockholders. Under the terms of
the amendment, until the annual meeting of stockholders in 2001, the directors
are divided into three classes designated Class I, Class II and Class III. Each
director elected prior to the effective date of the amendment serves for the
full three-year term for which he or she was elected.
Accordingly, the Class I and Class III directors are now elected annually.
Starting with the annual meeting of stockholders next year, the classification
of the board of directors will end, and all directors will be of one class and
will hold office for a term expiring at the next annual meeting of stockholders,
until their successors are duly elected and qualified, or until they resign or
are removed. The amendment to our certificate of incorporation did not shorten
the term of any incumbent director.
We propose that the nominees listed below be elected as members of the
board of directors at the annual meeting. Each of the nominees shall be elected
to serve as a director until the annual meeting of stockholders in 2001 or until
his or her respective successor is duly elected and qualified. If a nominee
becomes unable or unwilling to accept nomination or election, the person or
persons voting the proxy will vote for such other person or persons as may be
designated by the board of directors.
6
<PAGE> 10
INFORMATION CONCERNING DIRECTORS
Information concerning the nominees proposed by the board of directors for
election as Class I and Class III directors, respectively, along with
information concerning the Class II directors, whose terms of office will
continue after the annual meeting, is set forth below.
CLASS I NOMINEES
MAGDALENA H. AVERHOFF, M.D.
DIRECTOR SINCE 1992
AGE 49
Magdalena H. Averhoff, M.D. is a physician specializing in
gastroenterology. She has practiced in Miami, Florida since 1982. Dr. Averhoff
also currently serves on the Board of Cedars Medical Center. She also has served
as the Chairperson of the Performance Improvement Committee and the Credentials
Committee at Cedars Medical Center. Dr. Averhoff has also served as the
President of Victoria Hospital and the President and Chief of Staff of Cedars
Medical Center.
JACK O. BOVENDER, JR.
DIRECTOR SINCE 1999
AGE 54
Jack O. Bovender, Jr. has served as President and Chief Operating Officer
of the Company since August 1997. From April 1994 to August 1997, he was retired
after serving as Chief Operating Officer of HCA-Hospital Corporation of America
from 1992 until 1994. Prior to 1992, Mr. Bovender held several senior level
positions with HCA.
KENT C. NELSON
DIRECTOR SINCE 1998
AGE 62
Kent C. Nelson served as Chairman and Chief Executive Officer of United
Parcel Service from November 1989 to December 1996. Mr. Nelson held various
positions with United Parcel Service over a 37-year period. Mr. Nelson is
currently a director of United Parcel Service and a member of the Boards of the
CDC Foundation and United Way of America. He also serves on the Boards of
Trustees of Emory University's Carter Center and the Ball State University
Foundation. In addition, Mr. Nelson is the current Chairman of the Annie E.
Casey Foundation Board.
FRANK S. ROYAL, M.D.
DIRECTOR SINCE 1994
AGE 60
Frank S. Royal, M.D. is a physician who has been practicing in Richmond,
Virginia for over 21 years. Dr. Royal served as President and Chairman of the
National Medical Association. Dr. Royal is a director of Chesapeake Corporation,
CSX Corporation, Dominion Resources and SunTrust Banks, Inc. He also serves as
Chairman of the Boards of Trustees of Meharry Medical College and Virginia Union
University.
CLASS III NOMINEES
MARTIN FELDSTEIN
DIRECTOR SINCE 1998
AGE 60
Martin Feldstein has served as a Professor of Economics at Harvard
University since 1967. Mr. Feldstein also has served as the President and Chief
Executive Officer of the National Bureau of Economic Research, a non-profit
economic research firm, since 1977, except for the period from August 1982 to
July 1984 when he
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<PAGE> 11
served as Chairman of the Council of Economic Advisors. Mr. Feldstein is a
director of American International Group, Inc., J.P. Morgan & Co. Incorporated
and TRW Inc.
THOMAS F. FRIST, JR., M.D.
DIRECTOR SINCE 1994
AGE 61
Thomas F. Frist, Jr., M.D. has served as our Chairman and Chief Executive
Officer since July 1997. Dr. Frist served as Vice Chairman of the Board from
April 1995 to July 1997 and as Chairman from February 1994 to April 1995. He was
Chairman, Chief Executive Officer and President of HCA-Hospital Corporation of
America from 1988 to February 1994. From August 1985 until September 1987, Dr.
Frist was Chairman and Chief Executive Officer of Hospital Corporation of
America.
GLENDA A. HATCHETT
DIRECTOR SINCE 2000
AGE 48
Glenda A. Hatchett served as the Chief Judge of Fulton County Juvenile
Court from 1991 until May 1999. Ms. Hatchett served as Judge of Fulton County
Juvenile Court from 1990 until 1991. Prior to that time, Ms. Hatchett held
various leadership positions in Delta Air Lines, Inc.'s legal and public
relations departments. Ms. Hatchett is also a director of The ServiceMaster
Company and The Gap, Inc.
JOHN H. MCARTHUR
DIRECTOR SINCE 1998
AGE 66
John H. McArthur served as Dean of the Faculty of the Harvard University
Graduate School of Business Administration from 1980 to 1995. He was on staff at
the Harvard Business School from 1962 to 1980. Mr. McArthur currently serves as
Senior Advisor to the President of the World Bank. Mr. McArthur is also a
director of AES Corporation, BCE Inc., Cabot Corporation, Glaxo Wellcome plc,
Rohm and Haas Company, Koc Holdings, A.S. and Springs Industries, Inc.
THOMAS S. MURPHY
DIRECTOR SINCE 1998
AGE 74
Thomas S. Murphy served as the Chairman and Chief Executive Officer of
Capital Cities/ABC, Inc. from 1966 to 1990 and from February 1994 until his
retirement in February 1996. Mr. Murphy is also a director of The Walt Disney
Company and Doubleclick Inc. He also serves as Chairman of the Board of Trustees
for Save the Children.
CLASS II DIRECTORS CONTINUING IN OFFICE
ELAINE L. CHAO
DIRECTOR SINCE 1999
AGE 46
Elaine L. Chao has served as a Distinguished Fellow at The Heritage
Foundation since 1996. From 1992 to 1996, she was President and Chief Executive
Officer of United Way of America. Prior to joining United Way, Ms. Chao was
director of the Peace Corps, deputy secretary of the U.S. Department of
Transportation and Chairman of the Federal Maritime Commission. Ms. Chao is a
director of Dole Food Company, Northwest Airlines, C.R. Bard, Inc. and The
Clorox Company.
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<PAGE> 12
J. MICHAEL COOK
DIRECTOR SINCE 1999
AGE 57
J. Michael Cook joined Deloitte & Touche LLP in 1964 and served as its
Chairman and Chief Executive Officer from 1986 through May 1999. He is currently
a member of the Advisory Board of Fidelity Group of Mutual Funds, an Executive
in Residence of Columbia University School of Business, a member of the Board
and Executive Committee of the Center for Strategic and International Studies
and a member of the Board of the National Forum for Health Care Quality. In
addition, he is director of Catalyst, The Dow Chemical Company and ChildrenFIRST
Inc.
FREDERICK W. GLUCK
DIRECTOR SINCE 1998
AGE 64
Frederick W. Gluck has served as a senior counselor to McKinsey & Company,
Inc., an international consulting firm, since July 1998. He worked with Bechtel
Group, Inc. from February 1995 to July 1998, serving as its Vice Chairman and
Director from January 1996 to July 1997. Mr. Gluck held various positions with
McKinsey & Company from 1968 to 1995. During this period he led the firm as
managing director for six years. Mr. Gluck also is currently a director of Amgen
Inc., ACT Networks, Inc. New York Presbyterian Hospital, Thinking Tools, Inc.
and Scient Corporation.
T. MICHAEL LONG
DIRECTOR SINCE 1991
AGE 56
T. Michael Long is a partner with Brown Brothers Harriman & Co., a private
banking firm. Mr. Long has been employed by Brown Brothers Harriman & Co. for
more than the past five years where he is the co-manager of the 1818 Fund II,
L.P. and the 1818 Fund III, L.P. Mr. Long also is a director of Gulf Canada
Resources, Ltd., Gulf Indonesia Resources, Ltd., Nobel Biocare AB and Vaalco
Energy, Inc.
CARL E. REICHARDT
DIRECTOR SINCE 1994
AGE 68
Carl E. Reichardt served as the Chairman and Chief Executive Officer of
Wells Fargo & Company and its subsidiary, Wells Fargo Bank, N.A. from 1983 to
December 1994. Mr. Reichardt is currently a director of ConAgra, Inc., Ford
Motor Company, PG&E Corporation, McKesson HBOC, Inc. and Newhall Management
Corporation. Newhall Management Corporation is the managing partner of the
Newhall Land & Farming Company, a California limited partnership.
CORPORATE GOVERNANCE
Our business is managed under the direction of the board of directors. Our
board delegates the conduct of the business to our senior management team.
During 1999, our board of directors held 8 meetings. All incumbent
directors attended at least seventy-five percent of the board meetings and
meetings of the committees of the board on which the director served. Our
Chairman and Chief Executive Officer usually proposes the agenda for the
meetings. Directors receive the agenda and supporting information in advance of
the meetings. Directors may raise other matters to be included in the agenda or
at the meetings. Our Chief Executive Officer and other members of senior
management make presentations to the board at the meetings and a substantial
portion of the meeting time is devoted to the board's discussion of these
presentations.
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Directors have regular access to senior management. They may also seek
independent, outside advice. The board considers all major decisions. The board
has established six standing committees so that certain areas can be addressed
in more depth than may be possible at a full board meeting.
Audit Committee. Members of the audit committee are Carl E. Reichardt
(Chairman), Martin Feldstein, Frederick W. Gluck and Kent C. Nelson, none of
whom are our officers or employees. This committee reviews the programs of our
internal auditors, the results of their audits, and the adequacy of our system
of internal controls and accounting practices. This committee also reviews the
scope of the annual audit by our independent auditors before its commencement,
reviews the results of the audit and reviews the types of services for which we
retain independent auditors. In 1999, this committee met 4 times.
Compensation Committee. Members of the compensation committee are Frank S.
Royal, M.D. (Chairman), J. Michael Cook, Frederick W. Gluck, and Thomas S.
Murphy, none of whom are our officers or employees. This committee's functions
include approval of compensation arrangements for executive management, review
of compensation plans relating to officers, grants of options and other benefits
under our employee benefit plans and general review of our employee compensation
policies. In 1999, this committee met 3 times.
Ethics, Compliance and Corporate Responsibility Committee. Members of the
ethics, compliance and corporate responsibility committee are J. Michael Cook
(Chairman), Magdalena H. Averhoff, M.D., Martin Feldstein, R. Clayton McWhorter
and Frank S. Royal, M.D., none of whom are our officers or employees. This
committee's functions include review of matters relating to our ethics,
compliance and corporate responsibility functions and review of the adequacy,
scope and results of our ethics, compliance and corporate responsibility
procedures. In 1999, this committee met 3 times.
Executive Committee. Members of the executive committee are Thomas F.
Frist, Jr., M.D., R. Clayton McWhorter and Frank S. Royal, M.D. This committee
has the authority to exercise all of the powers of the full board of directors,
with certain exceptions relating to major corporate matters. This committee is
available to review with members of management certain areas of our operations
and to act when it is impractical to assemble the entire board for a meeting. In
1999, this committee did not meet.
Finance and Investments Committee. Members of the finance and investments
committee are John H. McArthur (Chairman), T. Michael Long, Thomas S. Murphy,
Kent C. Nelson and Carl E. Reichardt, none of whom are our officers or
employees. This committee's functions include review and consideration of
matters relating to our financial and investment strategies. In 1999, this
committee met 2 times.
Nominating Committee. Members of the nominating committee are T. Michael
Long (Chairman), Magdalena H. Averhoff, M.D., John H. McArthur and R. Clayton
McWhorter, none of whom are our officers or employees. This committee considers,
investigates and recommends to the board of directors, qualified candidates for
election to the board of directors. In 1999, this committee met 1 time.
Our board of directors has adopted a retirement policy for its members.
Under 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. An exception to the policy was made with respect to one
director in light of his experience and qualifications.
The board of directors will consider nominees for the board of directors
recommended by stockholders, if stockholders comply with the advance notice
provisions contained in our certificate of incorporation. Directors are selected
based on their demonstrated knowledge, experience and ability in their chosen
endeavors and, most importantly, based on their ability to represent the
interests of all the stockholders. Stockholder recommendations for nominees must
include biographical information and the proposed nominee's written consent to
nomination. The recommendations must be addressed to our Corporate Secretary and
delivered or mailed and received at our principal executive offices not less
than 60 days nor more than 90 days before the scheduled date of the meeting (or,
if less than 70 days' notice or prior public disclosure of the date of the
meeting is given, the tenth day following the earlier of the day the notice was
mailed or the day public disclosure was made).
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
We believe that during the 1999 fiscal year, all SEC filings of directors,
officers and ten-percent stockholders complied with the requirements of Section
16 of the Securities Exchange Act with the exception of Beverly Wallace, one of
our officers, who filed a late Form 3 due to our administrative error. This
belief is based on our review of forms filed, or written notice that no forms
were required.
CERTAIN LEGAL PROCEEDINGS
We are currently a party to several stockholder derivative and class action
lawsuits. The plaintiffs have named several of our current and former directors
and executive officers as defendants in the lawsuits. Our Annual Report on Form
10-K for the year ended December 31, 1999 provides more information with respect
to these and other legal proceedings.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR EACH OF THE NOMINEES.
ITEM 2 -- APPROVAL OF THE COLUMBIA/HCA HEALTHCARE CORPORATION
2000 EQUITY INCENTIVE PLAN
You are being asked to approve the Columbia/HCA Healthcare Corporation 2000
Equity Incentive Plan (the "Plan") to replace the Amended and Restated
Columbia/HCA Healthcare Corporation 1992 Stock and Incentive Plan (the "1992
Plan"). If stockholder approval of the Plan is received at the annual meeting,
no further awards will be granted under the 1992 Plan. The Plan will be
effective as of May 25, 2000, provided it has been approved by the Company's
stockholders. No new awards will be granted under the Plan after the tenth
(10th) anniversary of its effective date.
The purpose of the Plan is to promote the interests of the Company and its
stockholders by, among other things, (i) attracting and retaining key officers,
employees and directors of, and consultants to, the Company and its subsidiaries
and affiliates, (ii) motivating such individuals by means of performance-related
incentives to achieve long-range performance goals, and (iii) linking their
compensation to the long-term interests of the Company and its stockholders.
The following is a brief summary of the principal features of the Plan,
which is qualified in its entirety by reference to the Plan itself, a copy of
which is attached hereto as Exhibit A and incorporated herein by reference.
Shares Available for Awards under the Plan. Under the Plan, awards may be
made in common stock of the Company. Subject to adjustment as provided by the
terms of the Plan, the maximum number of shares of common stock with respect to
which awards may be granted under the Plan is 50,500,000 (which includes 500,000
shares with respect to which awards under the 1992 Plan were authorized but not
granted). Except as adjusted in accordance with the terms of the Plan, no more
than 50,500,000 shares of common stock authorized under the Plan may be
incentive stock options and no more than 10,000,000 shares may be awarded as
awards other than options. The maximum number of shares with respect to which
awards may be granted under the Plan shall be increased by the number of shares
with respect to which options or other awards were granted under the 1992 Plan
as of the effective date of this Plan, but which terminate, expire unexercised,
or are settled for cash, forfeited or cancelled without delivery of the shares
under the terms of the 1992 Plan after the effective date of this Plan.
Shares of common stock subject to an award under the Plan or the 1992 Plan
that are cancelled, expire unexercised, forfeited, settled in cash or otherwise
terminated without a delivery of shares of common stock to the participant,
including shares of common stock withheld or surrendered in payment of any
exercise or purchase price of an award or taxes relating to an award, remain
available for awards under the Plan. Shares of common stock issued under the
Plan may be either newly issued shares or shares which have been reacquired by
the Company. Shares issued by the Company as substitute awards granted solely in
assumption of outstanding awards previously granted by a company acquired by the
Company or with which
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<PAGE> 15
the Company combines ("Substitute Awards") do not reduce the number of shares
available for awards under the Plan.
In addition, the Plan imposes individual limitations on the amount of
certain awards in order to comply with Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code"). Under these limitations, no single
participant may receive options or stock appreciation rights ("SARs") in any
calendar year that relate to more than 2,000,000 shares of common stock, subject
to adjustment in certain circumstances.
With certain limitations, awards made under the Plan may be adjusted by the
Committee in its discretion or to prevent dilution or enlargement of benefits or
potential benefits intended to be made available under the Plan in the event of
any stock dividend, reorganization, recapitalization, stock split, combination,
merger, consolidation, change in laws, regulations or accounting principles or
other relevant unusual or nonrecurring event affecting the Company.
Eligibility and Administration. Current and prospective officers and
employees, and directors of, and consultants to, the Company or its subsidiaries
or affiliates are eligible to be granted awards under the Plan. As of March 31,
2000, approximately 175,000 individuals were eligible to participate in the
Plan. The Committee will administer the Plan, except with respect to awards to
non-employee directors serving on the Committee, for which the Plan will be
administered by the board of directors. The Committee will be composed of not
less than two non-employee directors, each of whom will be a "Non-Employee
Director" for purposes of Section 16 of the Exchange Act and Rule 16b-3
thereunder and an "outside director" within the meaning of Section 162(m) and
the regulations promulgated under the Code. Subject to the terms of the Plan,
the Committee is authorized to select participants, determine the type and
number of awards to be granted, determine and later amend (subject to certain
limitations) the terms and conditions of any award, interpret and specify the
rules and regulations relating to the Plan, and make all other determinations
which may be necessary or desirable for the administration of the Plan.
Stock Options and Stock Appreciation Rights. The Committee is authorized
to grant stock options, including both incentive stock options, which can result
in potentially favorable tax treatment to the participant, and non-qualified
stock options. The Committee may specify the terms of such grants subject to the
terms of the Plan. The Committee is also authorized to grant SARs, either with
or without a related option. The exercise price per share subject to an option
is determined by the Committee, but may not be less than the fair market value
of a share of common stock on the date of the grant, except in the case of
Substitute Awards. The maximum term of each option or SAR, the times at which
each option or SAR will be exercisable, and the provisions requiring forfeiture
of unexercised options at or following termination of employment generally are
fixed by the Committee, except that no option or tandem SAR relating to an
option may have a term exceeding ten years. Incentive stock options or tandem
SARs related thereto that are granted to holders of more than ten percent of the
Company's voting securities are subject to certain additional restrictions,
including a five-year maximum term and a minimum exercise price of 110% of fair
market value. The Committee may also, in its discretion, add an accelerated
ownership feature to any option granted, which is the right to acquire an "AO
Option." The right to acquire an AO Option would be triggered upon exercise of
the original option and payment of the option price for the original option,
subject to certain limitations. The right to acquire an AO Option would allow
the option holder to receive, upon such exercise, another option to purchase, at
fair market value at the date of grant of the AO Option, a number of shares of
common stock equal to the sum of: (i) the number of whole shares delivered by
the option holder in payment of the option price of the original option and (ii)
the number of whole shares, if any, withheld by the Company as payment for
withholding taxes. An AO Option will expire on the same date that the original
option would have expired had it not been exercised. All AO Options will be
non-qualified stock options.
Restricted Shares and Restricted Share Units. The Committee is authorized
to grant restricted shares of common stock and restricted share units.
Restricted shares are shares of common stock subject to transfer restrictions as
well as forfeiture upon certain terminations of employment prior to the end of a
restricted period or other conditions specified by the Committee in the award
agreement. A participant granted restricted shares of common stock generally has
most of the rights of a stockholder of the Company with respect to the
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<PAGE> 16
restricted shares, including the right to receive dividends and the right to
vote such shares. None of the restricted shares may be transferred, encumbered
or disposed of during the restricted period or until after fulfillment of the
restrictive conditions.
Each restricted share unit has a value equal to the fair market value of a
share of common stock on the date of grant. The Committee determines, in its
sole discretion, the restrictions applicable to the restricted share units. A
participant will be credited with dividend equivalents on any vested restricted
share units at the time of any payment of dividends to stockholders on shares of
common stock. Except as determined otherwise by the Committee, restricted share
units may not be transferred, encumbered or disposed of, and such units shall
terminate, without further obligation on the part of the Company, unless the
participant remains in continuous employment of the Company for the restricted
period and any other restrictive conditions relating to the restricted share
units are met.
Performance Awards. A performance award consists of a right that is
denominated in cash or shares of common stock, valued in accordance with the
achievement of certain performance goals during certain performance periods as
established by the Committee, and payable at such time and in such form as the
Committee shall determine. Performance awards may be paid in a lump sum or in
installments following the close of a performance period or on a deferred basis,
as determined by the Committee. Termination of employment prior to the end of
any performance period, other than for reasons of death or total disability,
will result in the forfeiture of the performance award. A participant's rights
to any performance award may not be transferred, encumbered or disposed of in
any manner, except by will or the laws of descent and distribution.
Performance awards are subject to certain specific terms and conditions
under the Plan. Performance goals for Covered Officers (as defined in the Plan)
will be limited to one or more of the following financial performance measures
relating to the Company or any of its subsidiaries, operating units or
divisions: (a) earnings before interest, taxes, depreciation and/or
amortization; (b) operating income or profit; (c) operating efficiencies; (d)
return on equity, assets, capital, capital employed, or investment; (e) after
tax operating income; (f) net income; (g) earnings or book value per share; (h)
cash flow(s); (i) total sales or revenues or sales or revenues per employee; (j)
production (separate work units or SWUs); (k) stock price or total shareholder
return; (l) dividends; or (m) strategic business objectives, consisting of one
or more objectives based on meeting specified cost targets, business expansion
goals, and goals relating to acquisitions or divestitures; or any combination
thereof. Each goal may be expressed on an absolute and/or relative basis, may be
based on or otherwise employ comparisons based on internal targets, the past
performance of the Company or any subsidiary, operating unit or division of the
Company and/or the past or current performance of other companies, and in the
case of earnings-based measures, may use or employ comparisons relating to
capital, shareholders' equity and/or shares outstanding, or to assets or net
assets.
To the extent necessary to comply with Section 162(m), with respect to
grants of performance awards, no later than 90 days following the commencement
of each performance period (or such other time as may be required or permitted
by Section 162(m)), the Committee will, in writing, (1) select the performance
goal or goals applicable to the performance period, (2) establish the various
targets and bonus amounts which may be earned for such performance period, and
(3) specify the relationship between performance goals and targets and the
amounts to be earned by each Covered Officer for such performance period.
Following the completion of each performance period, the Committee will certify
in writing whether the applicable performance targets have been achieved and the
amounts, if any, payable to Covered Officers for such performance period. In
determining the amount earned by a Covered Officer for a given performance
period, subject to any applicable award agreement, the Committee shall have the
right to reduce (but not increase) the amount payable at a given level of
performance to take into account additional factors that the Committee may deem
relevant to the assessment of individual or corporate performance for the
performance period. With respect to any Covered Officer, the maximum annual
number of shares in respect of which all performance awards may be granted under
the Plan is 300,000 and the maximum annual amount of any award settled in cash
is $5,000,000.
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<PAGE> 17
Other Stock-Based Awards. The Committee is authorized to grant any other
type of awards that are denominated or payable in, valued by reference to, or
otherwise based on or related to shares of common stock. The Committee will
determine the terms and conditions of such awards, consistent with the terms of
the Plan.
Non-Employee Director Awards. Our board of directors may provide that all
or a portion of a non-employee director's annual retainer and/or retainer fees
or other awards or compensation as determined by the board be payable in
non-qualified stock options, restricted shares, restricted share units and/or
other stock-based awards, including unrestricted shares, either automatically or
at the option of the non-employee directors. Our board of directors will
determine the terms and conditions of any such awards, including those that
apply upon the termination of a non-employee director's service as a member of
the board of directors. Non-employee directors are also eligible to receive
other awards pursuant to the terms of the Plan, including options and SARs,
restricted shares and restricted share units, and other stock-based awards upon
such terms as the Committee may determine; provided, however, that with respect
to awards made to members of the Committee, the Plan will be administered by the
board of directors.
Termination of Employment. The Committee will determine the terms and
conditions that apply to any award upon the termination of employment with the
Company, its subsidiaries and affiliates, and provide such terms in the
applicable award agreement or in its rules or regulations.
Change in Control. All outstanding awards vest, become immediately
exercisable or payable and have all restrictions lifted immediately upon a
Change in Control (as defined in the Plan). See Exhibit A attached hereto.
Amendment and Termination. The board of directors may amend, alter,
suspend, discontinue or terminate the Plan or any portion of the Plan at any
time, except that stockholder approval must be obtained for any such action if
such approval is necessary to comply with any tax or regulatory requirement with
which the Board deems it desirable or necessary to comply. The Committee may
waive any conditions or rights under, amend any terms of, or alter, suspend,
discontinue, cancel or terminate any award, either prospectively or
retroactively. The Committee does not have the power, however, to amend the
terms of previously granted options to reduce the exercise price per share
subject to such option or to cancel such options and grant substitute options
with a lower exercise price per share than the cancelled options. The Committee
also may not adversely affect the rights of any award holder without the award
holder's consent.
Other Terms of Awards. The Company may take action, including the
withholding of amounts from any award made under the Plan, to satisfy
withholding and other tax obligations. The Committee may provide for additional
cash payments to participants to defray any tax arising from the grant, vesting,
exercise or payment of any award. Awards granted under the Plan generally may
not be pledged or otherwise encumbered and are not transferable except by will
or by the laws of descent and distribution, or as permitted by the Committee in
its discretion.
Certain Federal Income Tax Consequences. The following is a brief
description of the federal income tax consequences generally arising with
respect to awards under the Plan.
Tax consequences to the Company and to participants receiving awards will
vary with the type of award. Generally, a participant will not recognize income,
and the Company is not entitled to take a deduction, upon the grant of an
incentive stock option, a nonqualified option, a reload option, an SAR or a
restricted share award. A participant will not have taxable income upon
exercising an incentive stock option (except that the alternative minimum tax
may apply). Upon exercising an option other than an incentive stock option, the
participant must generally recognize ordinary income equal to the difference
between the exercise price and fair market value of the freely transferable and
non-forfeitable shares of common stock acquired on the date of exercise.
If a participant sells shares of common stock acquired upon exercise of an
incentive stock option before the end of two years from the date of grant and
one year from the date of exercise, the participant must generally recognize
ordinary income equal to the difference between (i) the fair market value of the
shares of common stock at the date of exercise of the incentive stock option
(or, if less, the amount realized upon the disposition of the incentive stock
option shares of common stock), and (ii) the exercise price. Otherwise, a
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participant's disposition of shares of common stock acquired upon the exercise
of an option (including an incentive stock option for which the incentive stock
option holding period is met) generally will result in short-term or long-term
capital gain or loss measured by the difference between the sale price and the
participant's tax basis in such shares of common stock (the tax basis generally
being the exercise price plus any amount previously recognized as ordinary
income in connection with the exercise of the option).
The Company generally will be entitled to a tax deduction equal to the
amount recognized as ordinary income by the participant in connection with an
option. The Company generally is not entitled to a tax deduction relating to
amounts that represent a capital gain to a participant. Accordingly, the Company
will not be entitled to any tax deduction with respect to an incentive stock
option if the participant holds the shares of common stock for the incentive
stock option holding periods prior to disposition of the shares.
Similarly, the exercise of an SAR will result in ordinary income on the
value of the stock appreciation right to the individual at the time of exercise.
The Company will be allowed a deduction for the amount of ordinary income
recognized by a participant with respect to an SAR. Upon a grant of restricted
stock, the participant will recognize ordinary income on the fair market value
of the common stock at the time shares of restricted stock become vested unless
a participant makes an election under Section 83(b) of the Code to be taxed at
the time of grant. The participant also is subject to capital gains treatment on
the subsequent sale of any common stock acquired through the exercise of an SAR
or restricted share award. For this purpose, the participant's basis in the
common stock is its fair market value at the time the SAR is exercised or the
restricted share becomes vested (or is granted, if an election under Section
83(b) is made). Reload options are taxed in the same manner as incentive options
and nonqualified options, depending on the type of option that is issued under
the reload grant. Payments made under performance awards are taxable as ordinary
income at the time an individual attains the performance goals and the payments
are made available to the participant.
Section 162(m) of the Code generally disallows a public company's tax
deduction for compensation paid in excess of $1 million in any tax year to its
five most highly compensated executives. However, compensation that qualifies as
"performance-based compensation" is excluded from this $1 million deduction
limit and therefore remains fully deductible by the company that pays it. The
Company intends that (i) performance awards and (ii) options granted (a) with an
exercise price at least equal to 100% of fair market value of the underlying
shares of common stock at the date of grant and (b) to employees the Committee
expects to be named executive officers at the time a deduction arises in
connection with such awards, qualify as "performance-based compensation" so that
these awards will not be subject to the Section 162(m) deduction limitations.
The foregoing discussion is general in nature and is not intended to be a
complete description of the federal income tax consequences of the Plan. This
discussion does not address the effects of other federal taxes or taxes imposed
under state, local or foreign tax laws. Participants in the Plan are urged to
consult a tax advisor as to the tax consequences of participation.
The Plan is not intended to be a "qualified plan" under Section 401(a) of
the Code.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL OF THE
COLUMBIA/HCA HEALTHCARE CORPORATION 2000 EQUITY INCENTIVE PLAN.
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ITEM 3 -- RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR
INDEPENDENT AUDITORS
The audit committee has recommended, and the board of directors has
appointed, Ernst & Young LLP as our independent auditors. The independent
auditors will audit our consolidated financial statements for the 2000 fiscal
year (January 1, 2000 through December 31, 2000). This appointment is subject to
your ratification. If you do not ratify their appointment, the board of
directors and the audit committee will reconsider their appointment. Ernst &
Young LLP has served as our independent auditors since 1994. Representatives of
Ernst & Young LLP will attend our annual meeting. They will have an opportunity
to speak and respond to your questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE RATIFICATION OF
THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT AUDITORS.
ITEM 4 -- OTHER MATTERS
We do not know of any matter other than those discussed in the foregoing
materials contemplated for action at the annual meeting. The persons named in
the proxies will vote in accordance with the recommendation of the board of
directors on any other matter properly brought before the annual meeting.
Discretionary authority for them to do so is contained in the proxy.
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information for 1999, regarding the
compensation earned by the Chief Executive Officer and the four most highly
compensated executive officers based on salary and bonus earned during 1999
(named executive officers).
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
-------------------------------------------- ---------------------------
AWARDS
---------------------------
OTHER SECURITIES
ANNUAL RESTRICTED UNDERLYING ALL OTHER
NAME AND PRINCIPAL FISCAL SALARY BONUS COMPENSA- STOCK AWARDS OPTIONS/SARS COMPENSA-
POSITIONS YEAR ($)(1) ($)(2) TION ($)(3) ($)(4) (#) (5) TION ($)(6)
------------------ ------ -------- -------- ------------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas F. Frist, Jr., M.D.(7) 1999 $ 2,223 $ -- $ 15,957 $ -- -- $14,407
Chairman and Chief 1998 $ 2,223 $ -- $ 21,548 $ -- -- $ 1,424
Executive Officer 1997 $ 29,000 $ -- $ 18,800 $ -- -- $ 1,969
Jack O. Bovender, Jr. (8) 1999 $750,006 $ -- $ -- $533,344 420,660 $15,345
President and 1998 $791,667 $ -- $ -- $277,764 -- $ 763
Chief Operating Officer 1997 $375,000 $ -- $ -- $ -- 500,000 $ 400
Robert A. Waterman (9) 1999 $468,750 $ -- $ -- $286,460 315,495 $ 6,367
Senior Vice President and 1998 $494,792 $ -- $ -- $173,592 - $ 6,461
General Counsel 1997 $104,167 $ -- $ 58,610 $ -- 350,000 $ --
Jay Grinney 1999 $453,759 $ -- $ 75,338 $277,288 262,912 $11,896
President -- Eastern Group 1998 $478,958 $ -- $ -- $168,050 -- $ 9,448
1997 $376,661 $100,625 $ 66,241 $134,200 340,000 $ 9,538
Richard M. Bracken 1999 $453,759 $ -- $107,018 $277,288 262,912 $14,108
President -- Western Group 1998 $478,958 $ -- $ 97,861 $168,050 -- $14,261
1997 $374,449 $ 61,494 $143,250 $ 20,480 285,000 $14,608
</TABLE>
- ---------------
(1) Salary amounts do not include the value of restricted stock awards granted
pursuant to the Company's Amended and Restated 1995 Management Stock
Purchase Plan in lieu of a portion of annual salary or shares received
pursuant to the Company's Performance Equity Incentive Plan. Such awards are
included in the Restricted Stock Awards column.
(2) Reflects bonus earned during the fiscal year. Pursuant to the Company's 1995
Management Stock Purchase Plan, in 1997 the officers had the option to take
all or part of their bonus in shares of restricted stock at a 25% discount
from the fair market value on the date of grant, which is reflected in the
Restricted Stock Awards column. The bonus plan was discontinued in August
1997.
(3) 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 salary
and bonus for the named executive officer. 1999 other annual compensation
for Dr. Frist represents personal usage of corporate aircraft. 1999 other
annual compensation for Mr. Grinney includes $70,321 in relocation benefits.
1999 other annual compensation for Mr. Bracken includes $98,203 in
relocation benefits. Relocation benefits do not reflect any gain (loss) to
the Company upon the sale of a participant's former residence.
(4) Restricted Stock Awards include the following:
- Shares awarded pursuant to the Management Stock Purchase Plan. Prior to
1998, pursuant to the 1995 Management Stock Purchase Plan, officers could
elect to receive, in lieu of all or a portion of a cash bonus, restricted
shares purchased at a 25% discount from the average of the closing price
on the five trading days prior to the grant date. 1997 amounts represent
the dollar value on the date of grant of shares granted in lieu of all or
a portion of a cash bonus. Pursuant to the Amended and Restated
Management Stock Purchase Plan, beginning in 1998, officers may elect to
receive restricted shares in lieu of up to 25% of base salary purchased
at a 25% discount from the average market price of the stock during the
deferral period. With respect to shares issued pursuant to the plan in
lieu of a portion of annual salary, 1999 and 1998 amounts in the table
represent the dollar value of the shares based on the average of the
closing prices of Columbia/HCA shares during the two semi-annual deferral
periods. With respect to the first semi-annual deferral period in 1999,
Messrs. Bovender, Waterman, Grinney
17
<PAGE> 21
and Bracken received 7,961, 4,975, 4,816 and 4,816 shares, respectively,
at the average closing price of $20.93391 for a total of $166,655,
$104,146, $100,818 and $100,818, respectively. With respect to the second
semi-annual deferral period, Messrs. Bovender, Waterman, Grinney and
Bracken received 6,866, 4,292, 4,154 and 4,154 shares, respectively, in
1999 at the average closing price of $24.275 for a total of $166,672,
$104,188, $100,838 and $100,838, respectively. Subject to certain
exceptions, the restrictions on the shares lapse 3 years after the grant
date.
- Shares awarded pursuant to the Company's Performance Equity Incentive
Plan. 1999 amounts include restricted shares awarded pursuant to the
Performance Equity Incentive Plan based on the closing price per share of
Columbia/HCA common stock on the date of grant ($17.8125). Pursuant to
the plan, Messrs. Bovender, Waterman, Grinney and Bracken were awarded
11,229, 4,386, 4,246 and 4,246 restricted shares with a value as of the
grant date of $200,017, $78,126, $75,632 and $75,632, respectively.
Subject to certain exceptions, the restrictions lapse on 50% of the
shares each year over the 2 years following the grant.
As of December 31, 1999, Messrs. Frist, Bovender, Waterman, Grinney and
Bracken held an aggregate of 8,607, 36,538, 20,204, 24,158 and 21,997 shares
of restricted stock, respectively. Pursuant to SEC rules, after deducting
the consideration paid therefore, the shares held by Messrs. Bovender,
Waterman, Grinney and Bracken had a net pre-tax value as of December 31,
1999 of $612,706, $305,787, $330,243 and $295,877, respectively, and the
value of the shares held by Dr. Frist was below the consideration paid.
Dividends will be payable on shares of restricted stock if and to the extent
paid on Columbia/HCA's common stock generally, regardless of whether or not
the shares are vested. Pursuant to the anti-dilution provisions of the
plans, awards of restricted shares made prior to May 11, 1999, were adjusted
to reflect the impact of the spin-offs of Triad Hospitals, Inc. ("Triad")
and LifePoint Hospitals, Inc. ("LifePoint") to our stockholders on May 11,
1999. The holders of the awards received one share of Triad common stock and
one share of LifePoint common stock for each 19 restricted shares of
Columbia/HCA common stock held by the participant. These anti-dilution
adjustments were intended to preserve the economic value of the restricted
stock grants at the time of the spin-offs. The amounts presented do not
include shares awarded in March 2000 pursuant to the Performance Equity
Incentive Plan.
(5) Represents options to acquire shares of our common stock. The exercise
prices and number of shares covered by then outstanding options were
adjusted, pursuant to the anti-dilution provisions of the plan, to reflect
the impact of the spin-offs of Triad and LifePoint to our stockholders on
May 11, 1999. These anti-dilution adjustments were intended to preserve the
economic value of the options at the time of the spin-offs.
(6) Consists of contributions to our Savings and Investment Plan, Money Purchase
Plan and Stock Bonus Plan.
(7) Dr. Frist was appointed Chairman and Chief Executive Officer effective July
25, 1997. His salary covers the cost of benefits only. Otherwise he elected
to serve without salary and bonus.
(8) On August 4, 1997, the Company named Jack O. Bovender, Jr. President and
Chief Operating Officer.
(9) On November 1, 1997, the Company named Robert A. Waterman Senior Vice
President and General Counsel.
18
<PAGE> 22
OPTION GRANTS DURING 1999
The following table presents additional information concerning the option
awards shown in the Summary Compensation Table for 1999. These options to
purchase our common stock were granted to the named executive officers under the
Amended and Restated Columbia/HCA Healthcare Corporation 1992 Stock and
Incentive Plan, as amended, at exercise prices equal to the fair market value of
our common stock on the date of grant.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
% OF TOTAL AT ASSUMED ANNUAL
OPTIONS RATES OF STOCK PRICE
NUMBER OF GRANTED TO APPRECIATION FOR OPTION
SHARES EMPLOYEES IN EXERCISE TERM(1)
UNDERLYING LAST FISCAL PRICE PER EXPIRATION ---------------------------
NAME OPTIONS(2) YEAR SHARE DATE 5% ($) 10% ($)
---- ---------- ---------------- --------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Thomas F. Frist Jr., M.D.... 0 0% N/A N/A N/A N/A
Jack O. Bovender, Jr........ 420,660 2.53% $17.116 3/4/09 $4,528,052 $11,474,972
Robert A. Waterman.......... 315,495 1.89% $17.116 3/4/09 $3,396,039 $ 8,606,229
Jay Grinney................. 262,912 1.58% $17.116 3/4/09 $2,830,027 $ 7,171,844
Richard M. Bracken.......... 262,912 1.58% $17.116 3/4/09 $2,830,027 $ 7,171,844
</TABLE>
- ---------------
(1) The potential realizable value portion of the foregoing table represents a
hypothetical 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 vesting, non-transferability or termination of the option
following termination of employment.
(2) As explained in Note 5 to the Summary Compensation Table, the number of
shares reflects adjustments made at the time of the spin-offs of LifePoint
and Triad to preserve the economic value in the awards at that time.
Consistent with accounting principles governing such conversions, the
adjusted options retain the same term and vesting provisions as the original
options.
AGGREGATE OPTION EXERCISES DURING 1999 AND FISCAL YEAR END OPTION VALUES
The following table provides information related to options exercised by
the named executive officers during the 1999 fiscal year and the number and
value of options held at fiscal year end. We have not issued stock appreciation
rights or warrants to our executive officers.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-
UNDERLYING UNEXERCISED THE-MONEY OPTIONS/SARS
OPTIONS/SARS (#)(1) AT FISCAL YEAR-END ($)(2)
SHARES --------------------------- ---------------------------
ACQUIRED ON VALUE
NAME EXERCISE (#)(3) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Thomas F. Frist, Jr.,
M.D.................. -- $ -- 228,750 76,936 $1,781,677 $ 152,866
Jack O. Bovender, Jr... -- $ -- 125,000 795,660 $ 313,675 $6,071,605
Robert A. Waterman..... -- $ -- 87,500 577,995 $ 219,573 $4,506,652
Jay Grinney............ -- $ -- 147,623 547,568 $ 308,193 $3,679,413
Richard M. Bracken..... -- $ -- 144,375 502,452 $ 690,876 $3,700,047
</TABLE>
- ---------------
(1) As explained in Note 5 to the Summary Compensation Table, the number of
shares reflects adjustments made at the time of the spin-offs of LifePoint
and Triad to preserve the economic value in the awards at that time.
Consistent with accounting principles governing such conversions, the
adjusted options retain the same term and vesting provisions as the original
options.
(2) The closing price for the common stock as reported by the New York Stock
Exchange on December 31, 1999 was $29.3125. Value is calculated on the basis
of the difference between the option exercise price and $29.3125 multiplied
by the number of shares of common stock underlying the option.
(3) The named executive officers did not exercise any stock options during 1999.
19
<PAGE> 23
DIRECTORS' COMPENSATION
Under the Columbia/HCA Outside Directors Stock and Incentive Plan,
established in 1998, our outside directors (those directors who are not our
officers or employees) may choose to receive an annual retainer of $40,000
payable in restricted stock that vests one year from the date of the grant or to
receive a five-year retainer of $200,000 in restricted stock units that vest
annually over a 5-year period at a rate of 20% per year. In May 1998, pursuant
to the plan, we granted outside directors stock options (exercisable at the
shares' fair market value on the date of the grant) having an aggregate exercise
price equal to 12.5 times the annual retainer. This grant vests annually over a
5-year period at a rate of 20% per year, commencing on the date of the grant.
Directors joining the board after 1998 may choose to receive the annual $40,000
restricted stock grant or a prorated restricted share unit award, plus a
prorated option allocation under the 5-year plan. In 1999, the board meeting fee
was $1,200 per meeting. Committee chairpersons received $1,200 per committee
meeting, and other committee members received $1,000 per committee meeting.
Committee fees are payable only for attendance at committee meetings not held in
conjunction with a meeting of the board of directors. Additionally, we
reimbursed directors for expenses incurred relating to attendance at meetings.
The Company paid the expenses of the directors' spouses in the aggregate amount
of approximately $39,000 when they accompanied the directors to a board
strategic planning session held in July 1999. Effective in 1997, we matched
charitable contributions by directors up to an aggregate $15,000 annually. In
September 1999, each director received a grant of 15,000 options at fair market
value, except for Ms. Chao, who received 4503 options, and Mr. Cook, who
received 5,500 options. These options vest annually at a rate of 25% per year,
commencing on the date of the grant.
In connection with Mr. McWhorter's retirement from our board in May 2000,
and in consideration of his long and dedicated service to the Company and its
predecessors, Mr. McWhorter will retire from our board with options and
restricted stock containing substantially the same terms and conditions as his
current awards; provided, however, his options will remain exercisable at any
time through their stated expiration date, and his shares of restricted stock or
restricted stock units will vest as though he had remained on our board. The
Company will continue to allow Mr. McWhorter the personal use of a Company
aircraft (the value of which was $24,900 during 1999) until his retirement from
our board.
Employee directors are not eligible for any additional compensation for
service on the board or its committees.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION FOR 1999
Decisions on compensation for our executives are made by the compensation
committee of the board of directors. Each member of the compensation committee
is a non-employee director. No member of the compensation committee is a current
or former employee or officer of the Company or any of its affiliates.
Responsibilities of the compensation committee include approval of compensation
arrangements for executive management, review of compensation plans relating to
officers, grants of options and other benefits under employee benefit plans and
general review of employee compensation policy. Pursuant to certain rules of the
Securities and Exchange Commission designed to enhance disclosure of corporate
policies toward executive compensation, set forth below is a report submitted by
the compensation committee.
COMPENSATION PHILOSOPHY AND POLICIES FOR EXECUTIVE OFFICERS
We believe the most effective executive compensation program aligns the
interests of stockholders and executives. The Company's primary objective is to
provide quality health care while enhancing long-term shareholder value. We are
committed to a strong, positive link between strategic business goals and
compensation and benefit goals. Generally, there are no contractual agreements
of employment with executive officers, and executive officers receive a minimal
number of perquisites. The executive compensation program is consistent with the
overall compensation philosophy for all management levels.
20
<PAGE> 24
1999 COMPENSATION PROGRAM
Cash Compensation
The base salaries of the named executive officers are listed in the Summary
Compensation Table found under "Executive Compensation" in this Proxy Statement.
These salaries and the salaries of other executive officers are evaluated
annually. In determining appropriate salary levels and salary increases, we
consider level of responsibility, individual performance, internal equity and
external pay practices. Beginning in 1998, we eliminated annual cash bonuses.
Accordingly, executive officer base salaries are targeted between the median
cash compensation (i.e., base salary and annual incentive) paid by two groups of
companies. The first group consists of other comparable health care companies,
including the companies included in the Standard & Poor's Hospital Management
Index (see the Performance Graph on page 23). The second group consists of 38
companies widely recognized for excellence, with revenues comparable to our
Company.
Equity-Based Compensation
Equity-based compensation is provided in the form of non-qualified stock
options and restricted shares of common stock.
Stock option grants provide an incentive that focuses the executive's
attention on managing the business of our company from the perspective of an
owner with an equity stake in the business and helps ensure that operating
decisions are based on long-term results that benefit the business and
ultimately our stockholders. Specifically, the option grants to executive
officers provide the right to purchase shares of common stock at the fair market
value on the date of the grant. Usually, each stock option becomes vested and
exercisable only over a period of time. The number of shares covered by each
grant reflects the executive's level of responsibility and past and anticipated
contributions.
To continue to ensure the retention and motivation of key executives, a
total of 1,200,000 options to purchase the Company's common stock were granted
in March 1999 to the named executive officers other than Dr. Frist. These
options provide the right to purchase shares of common stock at the fair market
value on the date of grant and become vested and exercisable over a period of
four years. Additionally, the named executive officers other than Dr. Frist were
granted a total of 125,000 options to purchase common stock in each of LifePoint
and Triad at the time of their spin-off. Those options were vested immediately
at the time of the grant, but remain subject to certain registration statement
requirements.
Executives, including named executive officers other than Dr. Frist, also
have an annual opportunity to earn restricted shares of common stock based on
individual performance and the achievement of annual financial goals. The award
opportunity is 40% of base salary for the President and 25% of base salary for
all other named officers. To encourage continued focus on the longer term, the
award vests over a two-year period at 50% per year. Based on our assessment of
individual performance and considering that the Company's 1998 financial goals
were not met, each executive officer other than Dr. Frist received an award of
restricted shares in March 1999 equal to 50% of his or her award opportunity
under this plan.
Finally, officers may elect to receive up to 25% of their base salary in
restricted shares of common stock. These restricted shares are granted at a 25%
discount from the fair market value of the common stock on the date of the
grant. The restricted period is generally three years from the date of grant.
With certain exceptions, if employment is terminated during the restricted
period, the employee receives a cash payment equal to the lesser of (a) the
then-current fair market value of the restricted shares or (b) the aggregate
salary foregone by the employee as a condition to receiving the restricted
shares. Any additional value is forfeited.
CHIEF EXECUTIVE OFFICER COMPENSATION
Since he assumed the responsibilities of Chairman of the Board and Chief
Executive Officer in July 1997, Dr. Frist has not accepted any salary for his
services as Chief Executive Officer or fees for his services as a director, nor
has he participated in any incentive compensation programs. While we firmly
believe that the value of Dr. Frist's services is extraordinary, we nevertheless
continue to accept and respect his decision.
21
<PAGE> 25
EXECUTIVE COMPENSATION TAX DEDUCTIBILITY
Under Section 162(m) of the Internal Revenue Code, compensation paid by a
publicly-held corporation to the chief executive officer and the four most
highly paid other executive officers in excess of $1 million per year per
executive is deductible only if paid pursuant to qualifying performance-based
compensation plans approved by our stockholders. The determination of which
executives, including the chief executive officer, are subject to this provision
is made as of the last day of the fiscal year. Because we establish individual
compensation based primarily upon Company performance and competitive
considerations, executive officer compensation may exceed $1 million in a given
year. No executive officer whose compensation is subject to this limit on
deductibility was considered to receive, for 1999 federal income tax purposes,
base salary and other nonperformance-based compensation in excess of $1 million.
The foregoing report is submitted by the members of the 1999 compensation
committee of the board of directors whose members were as follows:
Frank S. Royal, M.D. (Chairman)
J. Michael Cook
Frederick W. Gluck
Thomas S. Murphy
The foregoing report of the compensation committee shall not be deemed
incorporated by reference by any general statement incorporating by reference
the Proxy Statement into any filing under the Securities Act of 1933 or the
Securities Exchange Act of 1934, except to the extent that we specifically
incorporate this information by reference, and shall not otherwise be deemed
filed under such acts.
EMPLOYMENT, SEVERANCE AND CHANGE IN CONTROL AGREEMENTS
Our employment agreement with Mr. Waterman provides that if he is
terminated without cause, we will pay him severance equal to one to three years'
salary depending upon the date of termination.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the compensation committee were responsible for determining
executive compensation and stock option grants to executive officers. During
1999, the following directors served on the compensation committee: Frank S.
Royal, M.D., J. Michael Cook, Frederick W. Gluck and Thomas S. Murphy. Thomas F.
Frist, Jr., M.D., our Chairman and Chief Executive Officer, submitted
recommendations to the compensation committee concerning executive officer
compensation for 1999, but did not participate in deliberations regarding the
compensation of such officers. Each committee member purchased shares of
restricted stock in BNA Associates, Inc. during fiscal year 1999. See "Certain
Relationships and Related Transactions."
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
BNA Associates, Inc., a Delaware corporation doing business as
empactHealth.com ("empactHealth"), was formed by the Company in June 1999 for
the purpose of exploring Internet-based opportunities in the healthcare
industry. In October 1999, the Company extended a line of credit of up to $5
million to empactHealth to provide working capital to empactHealth and to fund
the creation and development of its business plan. Amounts borrowed under the
line of credit accumulate interest at the rate of 10% per annum and are payable
on demand. As of December 31, 1999, $1,250,000 was outstanding under the line of
credit. In order to provide entrepreneurial support for the Company's initial
strategic Internet initiative and to demonstrate the commitment of the
leadership of the Company to develop and execute an Internet business strategy,
during the summer of 1999, the Company's directors and executive officers
purchased an aggregate of 857,250 shares of restricted stock in empactHealth.
The restricted stock contains a four year vesting schedule based upon the
purchaser's continued service or employment with the Company. The following
directors and executive officers of the Company serve as directors of
empactHealth: Jack O. Bovender, Jr., James A. Fitzgerald, Jr., Thomas F. Frist,
Jr., M.D., and Noel Brown Williams.
22
<PAGE> 26
COMPANY STOCK PERFORMANCE
The following Performance Graph shall not be deemed incorporated by
reference by any general statement incorporating by reference the proxy
statement into any filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent that we specifically incorporate this
information by reference, and shall not otherwise be deemed filed under such
acts.
The graph below compares the cumulative total stockholder return on our
common stock for the past five years, with the cumulative total return of
companies on the Standard & Poor's 500 Index (S&P 500 Index) and the Standard &
Poor's Hospital Management Index (Hospital Index) over the same period (assuming
the investment of $100 in our common stock, the S&P 500 Index and the Hospital
Index on December 31, 1994 and reinvestment of all dividends).
COLUMBIA/HCA HEALTHCARE CORPORATION
COMPARISON OF CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
COLUMBIA/HCA S&P 500 INDEX HOSPITAL INDEX
------------ ------------- --------------
<S> <C> <C> <C>
1994 100.00 100.00 100.00
1995 139.42 137.58 139.72
1996 168.30 169.17 164.22
1997 122.65 225.60 143.47
1998 102.78 290.08 117.97
1999 129.07 351.12 132.95
</TABLE>
23
<PAGE> 27
GENERAL INFORMATION
ANNUAL REPORT
Our 1999 Annual Report to Stockholders is being mailed to stockholders with
this proxy statement. The Annual Report is not part of the proxy solicitation
materials.
ADDITIONAL INFORMATION
A copy of our Annual Report on Form 10-K for the year ended December 31,
1999, excluding certain of the exhibits thereto, may be obtained without charge
by writing to Columbia/HCA Healthcare Corporation, Investor Relations
Department, One Park Plaza, Nashville, Tennessee 37203.
By Order of the Board of Directors,
John M. Franck II
Vice President and Corporate Secretary
Nashville, Tennessee
April 17, 2000
24
<PAGE> 28
EXHIBIT A
COLUMBIA/HCA HEALTHCARE CORPORATION
2000 EQUITY INCENTIVE PLAN
<PAGE> 29
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
Section 1. Purpose..................................................... 1
Section 2. Definitions................................................. 1
Section 3. Administration.............................................. 4
Section 4. Shares Available For Awards................................. 5
Section 5. Eligibility................................................. 6
Section 6. Stock Options And Stock Appreciation Rights................. 6
Section 7. Restricted Shares And Restricted Share Units................ 8
Section 8. Performance Awards.......................................... 9
Section 9. Other Stock-Based Awards.................................... 10
Section 10. Non-Employee Director And Outside Director Awards........... 10
Section 11. Provisions Applicable To Covered Officers And Performance
Awards...................................................... 10
Section 12. Termination Of Employment................................... 11
Section 13. Change In Control........................................... 11
Section 14. Amendment And Termination................................... 11
Section 15. General Provisions.......................................... 12
Section 16. Term Of The Plan............................................ 14
</TABLE>
<PAGE> 30
COLUMBIA/HCA HEALTHCARE CORPORATION
2000 EQUITY INCENTIVE PLAN
SECTION 1. PURPOSE
This plan shall be known as the "Columbia/HCA Healthcare Corporation 2000
Equity Incentive Plan" (the "Plan"). The purpose of the Plan is to promote the
interests of Columbia/HCA Healthcare Corporation, a Delaware corporation (the
"Company") and its stockholders by (i) attracting and retaining key officers,
employees, and directors of, and consultants to, the Company and its
Subsidiaries and Affiliates; (ii) motivating such individuals by means of
performance-related incentives to achieve long-range performance goals, (iii)
enabling such individuals to participate in the long-term growth and financial
success of the Company, (iv) encouraging ownership of stock in the Company by
such individuals, and (v) linking their compensation to the long-term interests
of the Company and its stockholders. With respect to any awards granted under
the Plan that are intended to comply with the requirements of "performance-based
compensation" under Section 162(m) of the Code, the Plan shall be interpreted in
a manner consistent with such requirements.
SECTION 2. DEFINITIONS
As used in the Plan, the following terms shall have the meanings set forth
below:
(a) "AFFILIATE" shall mean (i) any entity that, directly or
indirectly, is controlled by the Company, (ii) any entity in which the
Company has a significant equity interest, (iii) an affiliate of the
Company, as defined in Rule 12b-2 promulgated under Section 12 of the
Exchange Act, and (iv) any entity in which the Company has at least twenty
percent (20%) of the combined voting power of the entity's outstanding
voting securities, in each case as designated by the Board as being a
participating employer in the Plan.
(b) "AO OPTION" shall mean an Option to purchase, at Fair Market
Value at the date of grant of the AO Option, a number of Shares equal to
the sum of the number of whole Shares delivered by the Option holder in
payment of the Option Price of the original Option and the number of whole
Shares, if any, withheld by the Company as payment for withholding taxes.
(c) "AWARD" shall mean any Option, Stock Appreciation Right,
Restricted Share Award, Restricted Share Unit, Performance Award, Other
Stock-Based Award or other award granted under the Plan, whether singly, in
combination, or in tandem, to a Participant by the Committee (or the Board)
pursuant to such terms, conditions, restrictions and/or limitations, if
any, as the Committee (or the Board) may establish.
(d) "AWARD AGREEMENT" shall mean any written agreement, contract, or
other instrument or document evidencing any Award, which may, but need not,
be executed or acknowledged by a Participant.
(e) "BOARD" shall mean the board of directors of the Company.
(f) "CAUSE" shall mean, unless otherwise defined in the applicable
Award Agreement, (i) the engaging by the Participant in willful misconduct
that is injurious to the Company or its Subsidiaries or Affiliates, or (ii)
the embezzlement or misappropriation of funds or property of the Company or
its Subsidiaries or Affiliates by the Participant. For purposes of this
paragraph, no act, or failure to act, on the Participant's part shall be
considered "willful" unless done, or omitted to be done, by the Participant
not in good faith and without reasonable belief that the Participant's
action or omission was in the best interest of the Company. Any
determination of Cause for purposes of the Plan or any Award shall be made
by the Committee in its sole discretion. Any such determination shall be
final and binding on a Participant.
(g) "CHANGE IN CONTROL" shall mean, unless otherwise defined in the
applicable Award Agreement, any of the following events:
(i) An acquisition (other than directly from the Company) of any
voting securities of the Company (the "Voting Securities") by any
"Person" (as the term Person is used for purposes of Section 13(d) or
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
1
<PAGE> 31
Act")) immediately after which such Person has "Beneficial Ownership"
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
twenty percent (20%) or more of the combined voting power of the then
outstanding Voting Securities; provided, however, that in determining
whether a Change in Control has occurred, Voting Securities which are
acquired in a "Non-Control Acquisition" (as hereinafter defined) shall
not constitute an acquisition which would cause a Change in Control. A
"Non-Control Acquisition" shall mean an acquisition by (i) an employee
benefit plan (or a trust forming a part thereof) maintained by (A) the
Company or (B) any Subsidiary or (ii) the Company or any Subsidiary;
(ii) The individuals who, as of the date hereof, are members of the
Board (the "Incumbent Board"), cease for any reason to constitute at
least two-thirds of the Board; provided, however, that if the election
or nomination for election by the Company's stockholders of any new
director was approved by a vote of at least two-thirds of the Incumbent
Board, such new director shall, for purposes of this Agreement, be
considered as a member of the Incumbent Board; provided, further,
however, that no individual shall be considered a member of the
Incumbent Board if (1) such individual initially assumed office as a
result of either an actual or threatened "Election Contest" (as
described in Rule 14a-11 promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board (a "Proxy Contest") including by reason
of any agreement intended to avoid or settle any Election Contest or
Proxy Contest or (2) such individual was designated by a Person who has
entered into an agreement with the Company to effect a transaction
described in clause (i) or (iii) of this paragraph; or
(iii) Approval by stockholders of the Company of:
(A) A merger, consolidation or reorganization involving the
Company, unless,
(1) The stockholders of the Company, immediately before such
merger, consolidation or reorganization, own, directly or
indirectly immediately following such merger, consolidation or
reorganization, at least seventy-five percent (75%) of the
combined voting power of the outstanding Voting Securities of the
corporation (the "Surviving Corporation") in substantially the
same proportion as their ownership of the Voting Securities
immediately before such merger, consolidation or reorganization;
(2) The individuals who were members of the Incumbent Board
immediately prior to the execution of the agreement providing for
such merger, consolidation or reorganization constitute at least
two-thirds of the members of the board of directors of the
Surviving Corporation; and
(3) no Person (other than the Company, any Subsidiary, any
employee benefit plan (or any trust forming a part thereof)
maintained by the Company, the Surviving Corporation or any
Subsidiary, or any Person who, immediately prior to such merger,
consolidation or reorganization, had Beneficial Ownership of
twenty percent (20%) or more of the then outstanding Voting
Securities) has Beneficial Ownership of twenty percent (20%) or
more of the combined voting power of the Surviving Corporation's
then outstanding Voting Securities.
(B) A complete liquidation or dissolution of the Company; or
(C) An agreement for the sale or other disposition of all or
substantially all of the assets of the Company to any Person (other
than a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be deemed
to occur solely because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted amount of the outstanding
Voting Securities as a result of the acquisition of Voting Securities by
the Company which, by reducing the number of Voting Securities outstanding,
increased the proportional number of shares Beneficially Owned by the
Subject Person, provided that if a Change in Control would occur (but for
the operation of this sentence) as a result of the acquisition of Voting
Securities by the Company, and after
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<PAGE> 32
such share acquisition by the Company, the Subject Person becomes the
Beneficial Owner of any additional Voting Securities Beneficially Owned by
the Subject Person, then a Change in Control shall occur.
(h) "CODE" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(i) "COMMITTEE" shall mean a committee of the Board composed of not
less than two Non-Employee Directors, each of whom shall be a "Non-Employee
Director" for purposes of Exchange Act Section 16 and Rule 16b-3 thereunder
and an "outside director" for purposes of Section 162(m) and the
regulations promulgated under the Code.
(j) "CONSULTANT" shall mean any consultant to the Company or its
Subsidiaries or Affiliates.
(k) "COVERED OFFICER" shall mean at any date (i) any individual who,
with respect to the previous taxable year of the Company, was a "covered
employee" of the Company within the meaning of Section 162(m); provided,
however, that the term "Covered Officer" shall not include any such
individual who is designated by the Committee, in its discretion, at the
time of any Award or at any subsequent time, as reasonably expected not to
be such a "covered employee" with respect to the current taxable year of
the Company and (ii) any individual who is designated by the Committee, in
its discretion, at the time of any Award or at any subsequent time, as
reasonably expected to be such a "covered employee" with respect to the
current taxable year of the Company or with respect to the taxable year of
the Company in which any applicable Award will be paid.
(l) "DIRECTOR" shall mean a member of the Board.
(m) "DISABILITY" shall mean, unless otherwise defined in the
applicable Award Agreement, a disability that would qualify as a total and
permanent disability under the Company's then current long-term disability
plan.
(n) "EMPLOYEE" shall mean a current or prospective officer or
employee of the Company or of any Subsidiary or Affiliate.
(o) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(p) "FAIR MARKET VALUE" with respect to the Shares, shall mean, for
purposes of a grant of an Award as of any date, (i) the closing sales price
of the Shares on the New York Stock Exchange, or any other such exchange on
which the shares are traded, on such date, or in the absence of reported
sales on such date, the closing sales price on the immediately preceding
date on which sales were reported or (ii) in the event there is no public
market for the Shares on such date, the fair market value as determined, in
good faith, by the Committee in its sole discretion, and for purposes of a
sale of a Share as of any date, the actual sales price on that date.
(q) "INCENTIVE STOCK OPTION" shall mean an option to purchase Shares
from the Company that is granted under Section 6 of the Plan and that is
intended to meet the requirements of Section 422 of the Code or any
successor provision thereto.
(r) "NON-QUALIFIED STOCK OPTION" shall mean an option to purchase
Shares from the Company that is granted under Sections 6 or 10 of the Plan
and is not intended to be an Incentive Stock Option.
(s) "NON-EMPLOYEE DIRECTOR" shall mean a member of the Board who is
not an officer or employee of the Company or any Subsidiary or Affiliate.
(t) "OPTION" shall mean an Incentive Stock Option or a Non-Qualified
Stock Option.
(u) "OPTION PRICE" shall mean the purchase price payable to purchase
one Share upon the exercise of an Option.
(v) "OTHER STOCK-BASED AWARD" shall mean any Award granted under
Sections 9 or 10 of the Plan.
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(w) "OUTSIDE DIRECTOR" means, with respect to the grant of an Award,
a member of the Board then serving on the Committee.
(x) "PARTICIPANT" shall mean any Employee, Director, Consultant or
other person who receives an Award under the Plan.
(y) "PERFORMANCE AWARD" shall mean any Award granted under Section 8
of the Plan.
(z) "PERSON" shall mean any individual, corporation, partnership,
limited liability company, associate, joint-stock company, trust,
unincorporated organization, government or political subdivision thereof or
other entity.
(aa) "RESTRICTED SHARE" shall mean any Share granted under Sections 7
or 10 of the Plan.
(bb) "RESTRICTED SHARE UNIT" shall mean any unit granted under
Sections 7 or 10 of the Plan.
(cc) "RETIREMENT" shall mean, unless otherwise defined in the
applicable Award Agreement, retirement of a Participant from the employ or
service of the Company or any of its Subsidiaries or Affiliates in
accordance with the terms of the applicable Company retirement plan or, if
a Participant is not covered by any such plan, retirement on or after such
Participant's 65th birthday.
(dd) "SEC" shall mean the Securities and Exchange Commission or any
successor thereto.
(ee) "SECTION 16" shall mean Section 16 of the Exchange Act and the
rules promulgated thereunder and any successor provision thereto as in
effect from time to time.
(ff) "SECTION 162(M)" shall mean Section 162(m) of the Code and the
regulations promulgated thereunder and any successor or provision thereto
as in effect from time to time.
(gg) "SHARES" shall mean shares of the common stock, $0.01 par value,
of the Company.
(hh) "STOCK APPRECIATION RIGHT OR SAR" shall mean a stock appreciation
right granted under Sections 6 or 10 of the Plan that entitles the holder
to receive, with respect to each Share encompassed by the exercise of such
SAR, the amount determined by the Committee and specified in an Award
Agreement. In the absence of such a determination, the holder shall be
entitled to receive, with respect to each Share encompassed by the exercise
of such SAR, the excess of the Fair Market Value on the date of exercise
over the Fair Market Value on the date of grant.
(ii) "SUBSIDIARY" shall mean any Person (other than the Company) of
which a majority of its voting power or its equity securities or equity
interest is owned directly or indirectly by the Company.
(jj) "SUBSTITUTE AWARDS" shall mean Awards granted solely in
assumption of, or in substitution for, outstanding awards previously
granted by a company acquired by the Company or with which the Company
combines.
(kk) "TANDEM SAR" shall mean an SAR that is granted under Sections 6
or 10 of the Plan in relation to a particular Option and that can be
exercised only upon the surrender to the Company, unexercised, of that
portion of the Option to which the SAR relates.
SECTION 3. ADMINISTRATION
3.1 Authority of Committee. The Plan shall be administered by the
Committee, which shall be appointed by and serve at the pleasure of the Board;
provided, however, with respect to Awards to Outside Directors, all references
in the Plan to the Committee shall be deemed to be references to the Board.
Subject to the terms of the Plan and applicable law, and in addition to other
express powers and authorizations conferred on the Committee by the Plan, the
Committee shall have full power and authority in its discretion to: (i)
designate Participants; (ii) determine the type or types of Awards to be granted
to a Participant; (iii) determine the number of Shares to be covered by, or with
respect to which payments, rights, or other matters are to be calculated in
connection with Awards; (iv) determine the timing, terms, and conditions of
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any Award; (v) accelerate the time at which all or any part of an Award may be
settled or exercised; (vi) determine whether, to what extent, and under what
circumstances Awards may be settled or exercised in cash, Shares, other
securities, other Awards or other property, or canceled, forfeited, or suspended
and the method or methods by which Awards may be settled, exercised, canceled,
forfeited, or suspended; (vii) determine whether, to what extent, and under what
circumstances cash, Shares, other securities, other Awards, other property, and
other amounts payable with respect to an Award shall be deferred either
automatically or at the election of the holder thereof or of the Committee;
(viii) interpret and administer the Plan and any instrument or agreement
relating to, or Award made under, the Plan; (ix) except to the extent prohibited
by Section 6.2, amend or modify the terms of any Award at or after grant with
the consent of the holder of the Award; (x) establish, amend, suspend, or waive
such rules and regulations and appoint such agents as it shall deem appropriate
for the proper administration of the Plan; and (xi) make any other determination
and take any other action that the Committee deems necessary or desirable for
the administration of the Plan, subject to the exclusive authority of the Board
under Section 14 hereunder to amend or terminate the Plan.
3.2 Committee Discretion Binding. Unless otherwise expressly provided in
the Plan, all designations, determinations, interpretations, and other decisions
under or with respect to the Plan or any Award shall be within the sole
discretion of the Committee, may be made at any time and shall be final,
conclusive, and binding upon all Persons, including the Company, any Subsidiary
or Affiliate, any Participant and any holder or beneficiary of any Award.
3.3 Action by the Committee. The Committee shall select one of its
members as its Chairperson and shall hold its meetings at such times and places
and in such manner as it may determine. A majority of its members shall
constitute a quorum. All determinations of the Committee shall be made by not
less than a majority of its members. Any decision or determination reduced to
writing and signed by all of the members of the Committee shall be fully
effective as if it had been made by a majority vote at a meeting duly called and
held. The exercise of an Option or receipt of an Award shall be effective only
if an Award Agreement shall have been duly executed and delivered on behalf of
the Company following the grant of the Option or other Award. The Committee may
appoint a Secretary and may make such rules and regulations for the conduct of
its business as it shall deem advisable.
3.4 Delegation. Subject to the terms of the Plan and applicable law, the
Committee may delegate to one or more officers or managers of the Company or of
any Subsidiary or Affiliate, or to a Committee of such officers or managers, the
authority, subject to such terms and limitations as the Committee shall
determine, to grant Awards to, or to cancel, modify or waive rights with respect
to, or to alter, discontinue, suspend, or terminate Awards held by Participants
who are not officers or directors of the Company for purposes of Section 16 or
who are otherwise not subject to such Section.
3.5 No Liability. No member of the Board or Committee shall be liable for
any action taken or determination made in good faith with respect to the Plan or
any Award granted hereunder.
SECTION 4. SHARES AVAILABLE FOR AWARDS
4.1 Shares Available. Subject to the provisions of Section 4.2 hereof,
the stock to be subject to Awards under the Plan shall be the Shares of the
Company and the maximum number of Shares with respect to which Awards may be
granted under the Plan shall be 50,500,000 (which includes 500,000 Shares with
respect to which awards under the Amended and Restated Columbia/HCA Healthcare
Corporation 1992 Stock and Incentive Plan (the "1992 Plan") were authorized but
not granted), of which (i) the number of Shares with respect to which Incentive
Stock Options may be granted shall be no more than 50,500,000 and (ii) no more
than 10,000,000 shall be Shares with respect to which Awards other than Options
may be granted. Notwithstanding the foregoing and subject to adjustment as
provided in Section 4.2, the maximum number of Shares with respect to which
Awards may be granted under the Plan shall be increased by the number of Shares
with respect to which Options or other Awards were granted under the 1992 Plan
as of the effective date of this Plan, but which terminate, expire unexercised,
or are settled for cash, forfeited or cancelled without the delivery of Shares
under the terms of the 1992 Plan after the effective date of this Plan.
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If, after the effective date of the Plan, any Shares covered by an Award granted
under this Plan, or to which such an Award relates, are forfeited, or if such an
Award is settled for cash or otherwise terminates, expires unexercised, or is
canceled without the delivery of Shares, then the Shares covered by such Award,
or to which such Award relates, or the number of Shares otherwise counted
against the aggregate number of Shares with respect to which Awards may be
granted, to the extent of any such settlement, forfeiture, termination,
expiration, or cancellation, shall again become Shares with respect to which
Awards may be granted. In the event that any Option or other Award granted
hereunder is exercised through the delivery of Shares or in the event that
withholding tax liabilities arising from such Award are satisfied by the
withholding of Shares by the Company, the number of Shares available for Awards
under the Plan shall be increased by the number of Shares so surrendered or
withheld. Notwithstanding the foregoing and subject to adjustment as provided in
Section 4.2 hereof, no Participant may receive Options or SARs under the Plan in
any calendar year that relate to more than 2,000,000 Shares.
4.2 Adjustments. In the event that the Committee determines that any
dividend or other distribution (whether in the form of cash, Shares, other
securities, or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of Shares or other securities of the Company, issuance
of warrants or other rights to purchase Shares or other securities of the
Company, or other similar corporate transaction or event affects the Shares such
that an adjustment is determined by the Committee, in its sole discretion, to be
appropriate, then the Committee shall, in such manner as it may deem equitable
(and, with respect to Incentive Stock Options, in such manner as is consistent
with Section 422 of the Code and the regulations thereunder): (i) adjust any or
all of (1) the aggregate number of Shares or other securities of the Company (or
number and kind of other securities or property) with respect to which Awards
may be granted under the Plan; (2) the number of Shares or other securities of
the Company (or number and kind of other securities or property) subject to
outstanding Awards under the Plan; and (3) the grant or exercise price with
respect to any Award under the Plan, provided that the number of shares subject
to any Award shall always be a whole number; (ii) if deemed appropriate, provide
for an equivalent award in respect of securities of the surviving entity of any
merger, consolidation or other transaction or event having a similar effect; or
(iii) if deemed appropriate, make provision for a cash payment to the holder of
an outstanding Award.
4.3 Substitute Awards. Any Shares issued by the Company as Substitute
Awards in connection with the assumption or substitution of outstanding grants
from any acquired corporation shall not reduce the Shares available for Awards
under the Plan.
4.4 Sources of Shares Deliverable Under Awards. Any Shares delivered
pursuant to an Award may consist, in whole or in part, of authorized and
unissued Shares or of issued Shares which have been reacquired by the Company
SECTION 5. ELIGIBILITY
Any Employee, Director or Consultant shall be eligible to be designated a
Participant; provided, however, that Outside Directors shall only be eligible to
receive Awards granted consistent with Section 10.
SECTION 6. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
6.1 Grant. Subject to the provisions of the Plan, the Committee shall
have sole and complete authority to determine the Participants to whom Options
and SARs shall be granted, the number of Shares subject to each Award, the
exercise price and the conditions and limitations applicable to the exercise of
each Option and SAR. An Option may be granted with or without a Tandem SAR. An
SAR may be granted with or without a related Option. The Committee shall have
the authority to grant Incentive Stock Options, or to grant Non-Qualified Stock
Options, or to grant both types of Options. In the case of Incentive Stock
Options or Tandem SARs related to such Options, the terms and conditions of such
grants shall be subject to and comply with such rules as may be prescribed by
Section 422 of the Code, as from time to time amended, and any regulations
implementing such statute. A person who has been granted an Option or SAR under
this Plan may be granted additional Options or SARs under the Plan if the
Committee shall so determine; provided,
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however, that to the extent the aggregate Fair Market Value (determined at the
time the Incentive Stock Option or Tandem SAR related thereto is granted) of the
Shares with respect to which all Incentive Stock Options or Tandem SARs related
to such Option are exercisable for the first time by an Employee during any
calendar year (under all plans described in subsection (d) of Section 422 of the
Code of the Employee's employer corporation and its parent and Subsidiaries)
exceeds $100,000, such Options shall be treated as Non-Qualified Stock Options.
6.2 Price. The Committee in its sole discretion shall establish the
Option Price at the time each Option is granted. Except in the case of
Substitute Awards, the Option Price of an Option may not be less than 100% of
the Fair Market Value of the Shares with respect to which the Option is granted
on the date of grant of such Option. Notwithstanding the foregoing and except as
permitted by the provisions of Section 4.2 and Section 14 hereof, the Committee
shall not have the power to (i) amend the terms of previously granted Options to
reduce the Option Price of such Options, or (ii) cancel such Options and grant
substitute Options with a lower Option Price than the cancelled Options. Except
with respect to Substitute Awards, SARs may not be granted at a price less than
the Fair Market Value of a Share on the date of grant.
6.3 Term. Subject to the Committee's authority under Section 3.1 and the
provisions of Section 6.6, each Option and SAR and all rights and obligations
thereunder shall expire on the date determined by the Committee and specified in
the Award Agreement. The Committee shall be under no duty to provide terms of
like duration for Options or SARs granted under the Plan. Notwithstanding the
foregoing, no Option or Tandem SAR that relates to such Option shall be
exercisable after the expiration of ten (10) years from the date such Option or
SAR was granted.
6.4 Exercise.
(a) Each Option and SAR shall be exercisable at such times and subject
to such terms and conditions as the Committee may, in its sole discretion,
specify in the applicable Award Agreement or thereafter. The Committee
shall have full and complete authority to determine, subject to Section 6.6
herein, whether an Option or SAR will be exercisable in full at any time or
from time to time during the term of the Option or SAR, or to provide for
the exercise thereof in such installments, upon the occurrence of such
events and at such times during the term of the Option or SAR as the
Committee may determine.
(b) The Committee may impose such conditions with respect to the
exercise of Options, including without limitation, any relating to the
application of federal, state or foreign securities laws or the Code, as it
may deem necessary or advisable. The exercise of any Option granted
hereunder shall be effective only at such time as the sale of Shares
pursuant to such exercise will not violate any state or federal securities
or other laws.
(c) An Option or SAR may be exercised in whole or in part at any time,
with respect to whole Shares only, within the period permitted thereunder
for the exercise thereof, and shall be exercised by written notice of
intent to exercise the Option or SAR, delivered to the Company at its
principal office, and payment in full to the Company at the direction of
the Committee of the amount of the Option Price for the number of Shares
with respect to which the Option is then being exercised. A Tandem SAR that
is related to an Incentive Stock Option may be exercised only to the extent
that the related Option is exercisable and only when the Fair Market Value
exceeds the Option Price of the related Option. The exercise of either an
Option or Tandem SAR shall result in the termination of the other to the
extent of the number of Shares with respect to which either the Option or
Tandem SAR is exercised.
(d) Payment of the Option Price shall be made in cash or cash
equivalents, or, at the discretion of the Committee, (i) in whole Shares
valued at the Fair Market Value of such Shares on the date of exercise (or
next succeeding trading date, if the date of exercise is not a trading
date), together with any applicable withholding taxes, or (ii) by a
combination of such cash (or cash equivalents) and such Shares; provided,
however, that the optionee shall not be entitled to tender Shares pursuant
to successive, substantially simultaneous exercises of an Option or any
other stock option of the Company. Subject to applicable securities laws,
an Option may also be exercised by delivering a notice of exercise of the
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Option and simultaneously selling the Shares thereby acquired, pursuant to
a brokerage or similar agreement approved in advance by proper officers of
the Company, using the proceeds of such sale as payment of the Option
Price, together with any applicable withholding taxes. Until the optionee
has been issued the Shares subject to such exercise, he or she shall
possess no rights as a stockholder with respect to such Shares.
(e) At the Committee's discretion, the amount payable as a result of
the exercise of an SAR may be settled in cash, Shares, or a combination of
cash and Shares. A fractional Share shall not be deliverable upon the
exercise of a SAR but a cash payment will be made in lieu thereof.
6.5 Accelerated Ownership Feature. An Option may, in the discretion of
the Committee, include the right to acquire an AO Option. An Option which
provides for the grant of an AO Option shall entitle the Option holder upon
exercise of that Option and payment of the appropriate Option Price in Shares
that have been owned by such Option holder for not less than six (6) months
prior to the date of exercise, to receive an AO Option. An AO Option shall
expire on the same date that the original Option would have expired had it not
been exercised. All AO Options shall be Non-Qualified Stock Options.
6.6 Ten Percent Stock Rule. Notwithstanding any other provisions in the
Plan, if at the time an Option or SAR is otherwise to be granted pursuant to the
Plan the optionee or rights holder owns directly or indirectly (within the
meaning of Section 424(d) of the Code) Shares of the Company possessing more
than ten percent (10%) of the total combined voting power of all classes of
Stock of the Company or its parent or Subsidiary or Affiliate corporations
(within the meaning of Section 422(b)(6) of the Code), then any Incentive Stock
Option or Tandem SAR to be granted to such optionee or rights holder pursuant to
the Plan shall satisfy the requirement of Section 422(c)(5) of the Code, and the
Option Price shall be not less than 110% of the Fair Market Value of the Shares
of the Company, and such Option by its terms shall not be exercisable after the
expiration of five (5) years from the date such Option is granted.
SECTION 7. RESTRICTED SHARES AND RESTRICTED SHARE UNITS
7.1 Grant.
(a) Subject to the provisions of the Plan, the Committee shall have
sole and complete authority to determine the Participants to whom
Restricted Shares and Restricted Share Units shall be granted, the number
of Restricted Shares and/or the number of Restricted Share Units to be
granted to each Participant, the duration of the period during which, and
the conditions under which, the Restricted Shares and Restricted Share
Units may be forfeited to the Company, and the other terms and conditions
of such Awards. The Restricted Share and Restricted Share Unit Awards shall
be evidenced by Award Agreements in such form as the Committee shall from
time to time approve, which agreements shall comply with and be subject to
the terms and conditions provided hereunder and any additional terms and
conditions established by the Committee that are consistent with the terms
of the Plan.
(b) Each Restricted Share and Restricted Share Unit Award made under
the Plan shall be for such number of Shares as shall be determined by the
Committee and set forth in the Award Agreement containing the terms of such
Restricted Share or Restricted Share Unit Award. Such agreement shall set
forth a period of time during which the grantee must remain in the
continuous employment of the Company in order for the forfeiture and
transfer restrictions to lapse. If the Committee so determines, the
restrictions may lapse during such restricted period in installments with
respect to specified portions of the Shares covered by the Restricted Share
or Restricted Share Unit Award. The Award Agreement may also, in the
discretion of the Committee, set forth performance or other conditions that
will subject the Shares to forfeiture and transfer restrictions. The
Committee may, at its discretion, waive all or any part of the restrictions
applicable to any or all outstanding Restricted Share and Restricted Share
Unit Awards.
7.2 Delivery of Shares and Transfer Restrictions. At the time of a
Restricted Share Award, a certificate representing the number of Shares awarded
thereunder shall be registered in the name of the grantee. Such certificate
shall be held by the Company or any custodian appointed by the Company for the
account of the grantee subject to the terms and conditions of the Plan, and
shall bear such a legend setting
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forth the restrictions imposed thereon as the Committee, in its discretion, may
determine. The grantee shall have all rights of a stockholder with respect to
the Restricted Shares, including the right to receive dividends and the right to
vote such Shares, subject to the following restrictions: (i) the grantee shall
not be entitled to delivery of the stock certificate until the expiration of the
restricted period and the fulfillment of any other restrictive conditions set
forth in the Award Agreement with respect to such Shares; (ii) none of the
Shares may be sold, assigned, transferred, pledged, hypothecated or otherwise
encumbered or disposed of during such restricted period or until after the
fulfillment of any such other restrictive conditions; and (iii) except as
otherwise determined by the Committee at or after grant, all of the Shares shall
be forfeited and all rights of the grantee to such Shares shall terminate,
without further obligation on the part of the Company, unless the grantee
remains in the continuous employment of the Company for the entire restricted
period in relation to which such Shares were granted and unless any other
restrictive conditions relating to the Restricted Share Award are met. Any
Shares, any other securities of the Company and any other property (except for
cash dividends) distributed with respect to the Shares subject to Restricted
Share Awards shall be subject to the same restrictions, terms and conditions as
such restricted Shares.
7.3 Termination of Restrictions. At the end of the restricted period and
provided that any other restrictive conditions of the Restricted Share Award are
met, or at such earlier time as otherwise determined by the Committee, all
restrictions set forth in the Award Agreement relating to the Restricted Share
Award or in the Plan shall lapse as to the restricted Shares subject thereto,
and a stock certificate for the appropriate number of Shares, free of the
restrictions and restricted stock legend, shall be delivered to the Participant
or the Participant's beneficiary or estate, as the case may be.
7.4 Payment of Restricted Share Units. Each Restricted Share Unit shall
have a value equal to the Fair Market Value of a Share. Restricted Share Units
shall be paid in cash, Shares, other securities or other property, as determined
in the sole discretion of the Committee, upon the lapse of the restrictions
applicable thereto, or otherwise in accordance with the applicable Award
Agreement. A Participant shall be credited with dividend equivalents on any
vested Restricted Share Units credited to the Participant's account at the time
of any payment of dividends to stockholders on Shares. The amount of any such
dividend equivalents shall equal the amount that would have been payable to the
Participant as a stockholder in respect of a number of Shares equal to the
number of vested Restricted Share Units then credited to the Participant. Any
such dividend equivalents shall be credited to the Participant's account as of
the date on which such dividend would have been payable and shall be converted
into additional Restricted Share Units (which shall be immediately vested) based
upon the Fair Market Value of a Share on the date of such crediting. No dividend
equivalents shall be paid in respect of Restricted Share Units that are not yet
vested. Except as otherwise determined by the Committee at or after grant,
Restricted Share Units may not be sold, assigned, transferred, pledged,
hypothecated or otherwise encumbered or disposed of, and all Restricted Share
Units and all rights of the grantee to such Restricted Share Units shall
terminate, without further obligation on the part of the Company, unless the
grantee remains in continuous employment of the Company for the entire
restricted period in relation to which such Restricted Share Units were granted
and unless any other restrictive conditions relating to the Restricted Share
Unit Award are met.
SECTION 8. PERFORMANCE AWARDS
8.1 Grant. The Committee shall have sole and complete authority to
determine the Participants who shall receive a Performance Award, which shall
consist of a right that is (i) denominated in cash or Shares, (ii) valued, as
determined by the Committee, in accordance with the achievement of such
performance goals during such performance periods as the Committee shall
establish, and (iii) payable at such time and in such form as the Committee
shall determine. All Performance Awards shall be subject to the terms and
provisions of Section 11 hereof.
8.2 Terms and Conditions. Subject to the terms of the Plan and any
applicable Award Agreement, the Committee shall determine the performance goals
to be achieved during any performance period, the length of any performance
period, the amount of any Performance Award and the amount and kind of any
payment or transfer to be made pursuant to any Performance Award, and may amend
specific provisions of the
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Performance Award; provided, however, that such amendment may not adversely
affect existing Performance Awards made within a performance period commencing
prior to implementation of the amendment.
8.3 Payment of Performance Awards. Performance Awards may be paid in a
lump sum or in installments following the close of the performance period or, in
accordance with the procedures established by the Committee, on a deferred
basis. Termination of employment prior to the end of any performance period,
other than for reasons of death or Disability, will result in the forfeiture of
the Performance Award, and no payments will be made. A Participant's rights to
any Performance Award may not be sold, assigned, transferred, pledged,
hypothecated or otherwise encumbered or disposed of in any manner, except by
will or the laws of descent and distribution, and/or except as the Committee may
determine at or after grant.
SECTION 9. OTHER STOCK-BASED AWARDS
The Committee shall have the authority to determine the Participants who
shall receive an Other Stock-Based Award, which shall consist of any right that
is (i) not an Award described in Sections 6 and 7 above and (ii) an Award of
Shares or an Award denominated or payable in, valued in whole or in part by
reference to, or otherwise based on or related to, Shares (including, without
limitation, securities convertible into Shares), as deemed by the Committee to
be consistent with the purposes of the Plan. Subject to the terms of the Plan
and any applicable Award Agreement, the Committee shall determine the terms and
conditions of any such Other Stock-Based Award.
SECTION 10. NON-EMPLOYEE DIRECTOR AND OUTSIDE DIRECTOR AWARDS
10.1 The Board may provide that all or a portion of a Non-Employee
Director's annual retainer, meeting fees and/or other awards or compensation as
determined by the Board, be payable (either automatically or at the election of
a Non-Employee Director) in the form of Non-Qualified Stock Options, Restricted
Shares, Restricted Share Units and/or Other Stock-Based Awards, including
unrestricted Shares. The Board shall determine the terms and conditions of any
such Awards, including the terms and conditions which shall apply upon a
termination of the Non-Employee Director's service as a member of the Board, and
shall have full power and authority in its discretion to administer such Awards,
subject to the terms of the Plan and applicable law.
10.2 The Board may also grant Awards to Outside Directors pursuant to the
terms of the Plan, including any Award described in Sections 6, 7 and 9 above.
With respect to such Awards, all references in the Plan to the Committee shall
be deemed to be references to the Board.
SECTION 11. PROVISIONS APPLICABLE TO COVERED OFFICERS AND PERFORMANCE AWARDS
11.1 Notwithstanding anything in the Plan to the contrary, Performance
Awards shall be subject to the terms and provisions of this Section 11.
11.2 The Committee may grant Performance Awards to Covered Officers based
solely upon the attainment of performance targets related to one or more
performance goals selected by the Committee from among the goals specified
below. For the purposes of this Section 11, performance goals shall be limited
to one or more of the following Company, Subsidiary, operating unit or division
financial performance measures:
(a) earnings before interest, taxes, depreciation and/or amortization;
(b) operating income or profit;
(c) operating efficiencies;
(d) return on equity, assets, capital, capital employed, or
investment;
(e) after tax operating income;
(f) net income;
(g) earnings or book value per Share;
(h) cash flow(s);
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(i) total sales or revenues or sales or revenues per employee;
(j) production (separate work units or SWUs);
(k) stock price or total shareholder return;
(l) dividends; or
(m) strategic business objectives, consisting of one or more
objectives based on meeting specified cost targets, business expansion
goals, and goals relating to acquisitions or divestitures;
or any combination thereof. Each goal may be expressed on an absolute
and/or relative basis, may be based on or otherwise employ comparisons
based on internal targets, the past performance of the Company or any
Subsidiary, operating unit or division of the Company and/or the past or
current performance of other companies, and in the case of earnings-based
measures, may use or employ comparisons relating to capital, shareholders'
equity and/or Shares outstanding, or to assets or net assets.
11.3 With respect to any Covered Officer, the maximum annual number of
Shares in respect of which all Performance Awards may be granted under Section 8
of the Plan is 300,000 and the maximum annual amount of any Award settled in
cash is $5,000,000.
11.4 To the extent necessary to comply with Section 162(m), with respect
to grants of Performance Awards, no later than 90 days following the
commencement of each performance period (or such other time as may be required
or permitted by Section 162(m) of the Code), the Committee shall, in writing,
(1) select the performance goal or goals applicable to the performance period,
(2) establish the various targets and bonus amounts which may be earned for such
performance period, and (3) specify the relationship between performance goals
and targets and the amounts to be earned by each Covered Officer for such
performance period. Following the completion of each performance period, the
Committee shall certify in writing whether the applicable performance targets
have been achieved and the amounts, if any, payable to Covered Officers for such
performance period. In determining the amount earned by a Covered Officer for a
given performance period, subject to any applicable Award Agreement, the
Committee shall have the right to reduce (but not increase) the amount payable
at a given level of performance to take into account additional factors that the
Committee may deem relevant to the assessment of individual or corporate
performance for the performance period.
SECTION 12. TERMINATION OF EMPLOYMENT
The Committee shall have the full power and authority to determine the
terms and conditions that shall apply to any Award upon a termination of
employment with the Company, its Subsidiaries and Affiliates, including a
termination by the Company with or without Cause, by a Participant voluntarily,
or by reason of death, Disability or Retirement, and may provide such terms and
conditions in the Award Agreement or in such rules and regulations as it may
prescribe.
SECTION 13. CHANGE IN CONTROL
Upon a Change in Control, all outstanding Awards shall vest, become
immediately exercisable or payable or have all restrictions lifted.
SECTION 14. AMENDMENT AND TERMINATION
14.1 Amendments to the Plan. The Board may amend, alter, suspend,
discontinue, or terminate the Plan or any portion thereof at any time; provided
that no such amendment, alteration, suspension, discontinuation or termination
shall be made without stockholder approval if such approval is necessary to
comply with any tax or regulatory requirement for which or with which the Board
deems it necessary or desirable to comply.
14.2 Amendments to Awards. Subject to the restrictions of Section 6.2,
the Committee may waive any conditions or rights under, amend any terms of, or
alter, suspend, discontinue, cancel or terminate, any Award
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theretofore granted, prospectively or retroactively; provided that any such
waiver, amendment, alteration, suspension, discontinuance, cancellation or
termination that would adversely affect the rights of any Participant or any
holder or beneficiary of any Award theretofore granted shall not to that extent
be effective without the consent of the affected Participant, holder, or
beneficiary.
14.3 Adjustments of Awards Upon the Occurrence of Certain Unusual or
Nonrecurring Events. The Committee is hereby authorized to make adjustments in
the terms and conditions of, and the criteria included in, Awards in recognition
of unusual or nonrecurring events (including, without limitation, the events
described in Section 4.2 hereof) affecting the Company, any Subsidiary or
Affiliate, or the financial statements of the Company or any Subsidiary or
Affiliate, or of changes in applicable laws, regulations, or accounting
principles, whenever the Committee determines that such adjustments are
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan.
SECTION 15. GENERAL PROVISIONS
15.1 Limited Transferability of Awards. Except as otherwise provided in
the Plan, no Award shall be assigned, alienated, pledged, attached, sold or
otherwise transferred or encumbered by a Participant, except by will or the laws
of descent and distribution and/or as may be provided by the Committee in its
discretion, at or after grant, in the Award Agreement. No transfer of an Award
by will or by laws of descent and distribution shall be effective to bind the
Company unless the Company shall have been furnished with written notice thereof
and an authenticated copy of the will and/or such other evidence as the
Committee may deem necessary or appropriate to establish the validity of the
transfer.
15.2 Dividend Equivalents. In the sole and complete discretion of the
Committee, an Award may provide the Participant with dividends or dividend
equivalents, payable in cash, Shares, other securities or other property on a
current or deferred basis. All dividend or dividend equivalents which are not
paid currently may, at the Committee's discretion, accrue interest, be
reinvested into additional Shares, or in the case of dividends or dividend
equivalents credited in connection with Performance Awards, be credited as
additional Performance Awards and paid to the Participant if and when, and to
the extent that, payment is made pursuant to such Award. The total number of
Shares available for grant under Section 4 shall not be reduced to reflect any
dividends or dividend equivalents that are reinvested into additional Shares or
credited as Performance Awards.
15.3 No Rights to Awards. No Person shall have any claim to be granted
any Award, and there is no obligation for uniformity of treatment of
Participants or holders or beneficiaries of Awards. The terms and conditions of
Awards need not be the same with respect to each Participant.
15.4 Share Certificates. All certificates for Shares or other securities
of the Company or any Subsidiary or Affiliate delivered under the Plan pursuant
to any Award or the exercise thereof shall be subject to such stop transfer
orders and other restrictions as the Committee may deem advisable under the Plan
or the rules, regulations and other requirements of the SEC or any state
securities commission or regulatory authority, any stock exchange or other
market upon which such Shares or other securities are then listed, and any
applicable Federal or state laws, and the Committee may cause a legend or
legends to be put on any such certificates to make appropriate reference to such
restrictions.
15.5 Withholding. A Participant may be required to pay to the Company or
any Subsidiary or Affiliate and the Company or any Subsidiary or Affiliate shall
have the right and is hereby authorized to withhold from any Award, from any
payment due or transfer made under any Award or under the Plan, or from any
compensation or other amount owing to a Participant the amount (in cash, Shares,
other securities, other Awards or other property) of any applicable withholding
or other taxes in respect of an Award, its exercise, or any payment or transfer
under an Award or under the Plan and to take such other action as may be
necessary in the opinion of the Company to satisfy all obligations for the
payment of such taxes. The Committee may provide for additional cash payments to
holders of Options to defray or offset any tax arising from the grant, vesting,
exercise or payment of any Award.
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15.6 Award Agreements. Each Award hereunder shall be evidenced by an
Award Agreement that shall be delivered to the Participant and may specify the
terms and conditions of the Award and any rules applicable thereto. In the event
of a conflict between the terms of the Plan and any Award Agreement, the terms
of the Plan shall prevail.
15.7 No Limit on Other Compensation Arrangements. Nothing contained in
the Plan shall prevent the Company or any Subsidiary or Affiliate from adopting
or continuing in effect other compensation arrangements, which may, but need
not, provide for the grant of Options, Restricted Shares, Restricted Share
Units, Other Stock-Based Awards or other types of Awards provided for hereunder.
15.8 No Right to Employment. The grant of an Award shall not be construed
as giving a Participant the right to be retained in the employ of the Company or
any Subsidiary or Affiliate. Further, the Company or a Subsidiary or Affiliate
may at any time dismiss a Participant from employment, free from any liability
or any claim under the Plan, unless otherwise expressly provided in an Award
Agreement.
15.9 No Rights as Stockholder. Subject to the provisions of the Plan and
the applicable Award Agreement, no Participant or holder or beneficiary of any
Award shall have any rights as a stockholder with respect to any Shares to be
distributed under the Plan until such person has become a holder of such Shares.
Notwithstanding the foregoing, in connection with each grant of Restricted
Shares hereunder, the applicable Award Agreement shall specify if and to what
extent the Participant shall not be entitled to the rights of a stockholder in
respect of such Restricted Shares.
15.10 Governing Law. The validity, construction and effect of the Plan
and any rules and regulations relating to the Plan and any Award Agreement shall
be determined in accordance with the laws of the State of Delaware without
giving effect to conflicts of laws principles.
15.11 Severability. If any provision of the Plan or any Award is, or
becomes, or is deemed to be invalid, illegal, or unenforceable in any
jurisdiction or as to any Person or Award, or would disqualify the Plan or any
Award under any law deemed applicable by the Committee, such provision shall be
construed or deemed amended to conform to the applicable laws, or if it cannot
be construed or deemed amended without, in the determination of the Committee,
materially altering the intent of the Plan or the Award, such provision shall be
stricken as to such jurisdiction, Person or Award and the remainder of the Plan
and any such Award shall remain in full force and effect.
15.12 Other Laws. The Committee may refuse to issue or transfer any
Shares or other consideration under an Award if, acting in its sole discretion,
it determines that the issuance or transfer of such Shares or such other
consideration might violate any applicable law or regulation (including
applicable non-U.S. laws or regulations) or entitle the Company to recover the
same under Exchange Act Section 16(b), and any payment tendered to the Company
by a Participant, other holder or beneficiary in connection with the exercise of
such Award shall be promptly refunded to the relevant Participant, holder, or
beneficiary.
15.13 No Trust or Fund Created. Neither the Plan nor any Award shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Subsidiary or Affiliate and a
Participant or any other Person. To the extent that any Person acquires a right
to receive payments from the Company or any Subsidiary or Affiliate pursuant to
an Award, such right shall be no greater than the right of any unsecured general
creditor of the Company or any Subsidiary or Affiliate.
15.14 No Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall determine
whether cash, other securities, or other property shall be paid or transferred
in lieu of any fractional Shares or whether such fractional Shares or any rights
thereto shall be canceled, terminated or otherwise eliminated.
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15.15 Headings. Headings are given to the sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision thereof.
SECTION 16. TERM OF THE PLAN
16.1 Effective Date. The Plan shall be effective as of May 25, 2000
provided it has been approved by the Board and by the Company's stockholders.
16.2 Expiration Date. No new Awards shall be granted under the Plan after
the tenth (10th) anniversary of the Effective Date. Unless otherwise expressly
provided in the Plan or in an applicable Award Agreement, any Award granted
hereunder may, and the authority of the Board or the Committee to amend, alter,
adjust, suspend, discontinue, or terminate any such Award or to waive any
conditions or rights under any such Award shall, continue after the tenth (10th)
anniversary of the Effective Date.
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APPENDIX A
DETACH CARD
COLUMBIA/HCA HEALTHCARE CORPORATION
ONE PARK PLAZA
NASHVILLE, TENNESSEE 37203
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby (1) acknowledges receipt of the notice of the
annual meeting of the stockholders of Columbia/HCA Healthcare Corporation
to be held at the executive offices of Columbia/HCA located at One Park
Plaza, Nashville, Tennessee on May 25, 2000 beginning at 1:30 p.m.,
Central Daylight Time, and the proxy statement and (2) appoints Thomas F.
Frist, Jr., M.D., Robert A. Waterman and John M. Franck II, and each of
them, attorney, agent and proxy of the undersigned, with full power of
substitution to vote all shares of common stock of the Company that the
undersigned would be entitled to cast if personally present at the
meeting and at any adjournment(s) or postponement(s) thereof. The
undersigned directs that this proxy be voted as follows:
1. ELECTION OF DIRECTORS:
<TABLE>
<S> <C>
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for all nominees
(except as marked to the contrary below) listed below
</TABLE>
Magdalena H. Averhoff, M.D. Jack O. Bovender, Jr. Martin Feldstein
Thomas F. Frist, Jr., M.D. Glenda A. Hatchett John H. McArthur
Thomas S. Murphy Kent C. Nelson Frank S. Royal, M.D.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW)
-------------------------------------------------------------------------
2. APPROVAL OF THE COLUMBIA/HCA HEALTHCARE CORPORATION 2000 EQUITY
INCENTIVE PLAN, AS DESCRIBED IN THE PROXY STATEMENT.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. RATIFICATION OF ERNST & YOUNG LLP AS THE COMPANY'S AUDITORS, AS
DESCRIBED IN THE PROXY STATEMENT.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE> 45
DETACH CARD
4. IN THE DISCRETION OF THE PROXIES, ON ANY OTHER MATTER THAT MAY PROPERLY COME
BEFORE THE MEETING.
THIS PROXY WILL BE VOTED AS SPECIFIED ABOVE. IF NO SPECIFICATION IS MADE,
THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3.
The undersigned hereby revokes any proxy heretofore given to vote or act with
respect to the common stock of the Company and hereby ratifies and confirms all
that the proxies, their substitutes, or any of them may lawfully do by virtue
hereof.
If one or more of the proxies named shall be present in person or by
substitute at the meeting or at any adjournment(s) or postponement(s) thereof,
the proxies so present and voting, either in person or by substitute, shall
exercise all of the powers hereby given.
Please date, sign exactly as your name appears on the form and promptly mail
this proxy in the enclosed envelope. No postage is required.
Dated , 2000
----------------------
Signature of Stockholder
----------------------------------
Signature of Stockholder
----------------------------------
Please date this proxy and sign
your name exactly as it appears on
this form. Where there is more
than one owner, each should sign.
When signing as an attorney,
administrator, executor, guardian,
or trustee, please add your title
as such. If executed by a
corporation, the proxy should be
signed by a duly authorized
officer. If a partnership, please
sign in partnership name by an
authorized person.
