Item 5.02 Departure of Directors and Certain Officers; Election of Directors,
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
As previously announced, the Board of Directors of Universal Health Services,
Inc. (the "Company") has appointed Marc D. Miller, currently President of the
Company, to assume the role of Chief Executive Officer while continuing to serve
as President and a member of the Board of Directors and Alan B. Miller as
Executive Chairman of the Board, in each case effective on January 1, 2021.
Marc D. Miller Chief Executive Officer Employment Agreement
On December 23, 2020, the Company and Marc D. Miller entered into an employment
agreement ("MDM Employment Agreement"). The MDM Employment Agreement provides
for the employment of Mr. Miller as Chief Executive Officer for an initial term
beginning January 1, 2021 and ending on January 1, 2026, subject to earlier
termination in accordance with its terms, and subject to automatic annual
renewal for additional one-year periods unless either party elects to terminate
the term of Mr. Miller's employment at the end of the initial term or at the end
of a renewal term by giving one year's advance written notice of such
termination. At all times during the term of employment, Mr. Miller shall be
nominated to serve as a member of the Board of Directors.
During the term of Mr. Miller's active employment as Chief Executive Officer, he
will earn a base salary of $1,100,000 for the calendar year ending December 31,
2021 and each calendar year thereafter unless increased by the Board in its
discretion. In no event will the salary be reduced from one year to another.
For each year during the term of his employment as Chief Executive Officer, Mr.
Miller will have an annual bonus opportunity target equal to 100% of his salary
for the year. The amount of the annual bonus for any year may be more or less
than the target amount and will be determined by the Board, consistent with past
practice and based upon such performance measures as are established and
communicated to Mr. Miller within ninety days of the beginning of the year.
During the period of his service as Chief Executive Officer, Mr. Miller will be
eligible to receive annual awards under the Company's long-term incentive
plan(s) ("LTIP") as in effect from time to time, subject to such vesting and
other conditions as are consistent with terms and conditions applicable to LTIP
awards made to other senior executives of the Company.
Vesting of Mr. Miller's LTIP awards will accelerate upon the occurrence of any
of the following events and circumstances: (1) termination of his employment or
other service due to disability or death; (2) termination of his employment or
other service by the Company without cause; or (3) the termination of his
employment or other service at any time by Mr. Miller or the Company under
circumstances relating to a breach by the Company of the MDM Employment
Agreement. If Mr. Miller's employment as Chief Executive Officer ends due to
nonrenewal of the initial or a renewal term, then, at the time such employment
ends, Mr. Miller will be fully vested in all then outstanding LTIP awards that
were made to him during or before the term of his employment.
Mr. Miller is also entitled to receive certain fringe benefits, including
health, disability and accident insurance as presently in force or as may be
improved by the Board.
The MDM Employment Agreement will terminate upon the death of Mr. Miller and may
be terminated upon the long term disability of Mr. Miller, subject to certain
base salary and pro rata bonus payments to Mr. Miller or his estate as described
in the MDM Employment Agreement.
Mr. Miller may be discharged only for "cause," as defined in the MDM Employment
Agreement.
In the event that Mr. Miller shall be discharged for cause, all salary and other
benefits payable by the Company under this Agreement in respect of periods after
such discharge shall terminate upon such discharge, but any benefits payable to
or earned by Mr. Miller with respect to any period of his employment or other
service prior to such discharge shall be paid by the Company.
If Mr. Miller terminates his employment or other service with the Company
because of a material change in the duties of his office or any other breach by
the Company of its obligations under the MDM Employment Agreement, or in the
event of the termination of Mr. Miller's employment by the Company without cause
or otherwise in breach of the MDM Employment Agreement, Mr. Miller shall
continue to receive all of the cash compensation and minimum long term incentive
compensation and all of the benefits otherwise provided under the MDM Employment
Agreement notwithstanding such termination for the remainder of the stated term.
The MDM Employment Agreement also contains customary non-disparagement,
non-solicitation and non-competition provisions.
Alan B. Miller Executive Chairman Employment Agreement
On December 23, 2020, the Company and Alan B. Miller entered into an employment
agreement ("ABM Employment Agreement"), which supersedes Mr. Miller's previous
employment agreement that is dated July 24, 2013, as amended on November 5,
2018. The
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ABM Employment Agreement provides for the employment of Mr. Miller as Executive
Chairman for an initial term beginning January 1, 2021 and ending on January 1,
2022, subject to earlier termination in accordance with its terms, and subject
to automatic annual renewal for additional one-year periods unless either party
elects to terminate the term of Mr. Miller's employment at the end of the
initial term or at the end of a renewal term by giving one year's advance
written notice of such termination.
During the term of Mr. Miller's active employment as Executive Chairman, he will
earn a base salary of $1,000,000 for the calendar year ending December 31, 2021
and each calendar year thereafter unless increased by the Board in its
discretion. In no event will the salary be reduced from one year to another.
During the period of his service as Executive Chairman, Mr. Miller will be
eligible to receive annual awards under the Company's long-term incentive
plan(s) ("LTIP") as in effect from time to time, subject to such vesting and
other conditions as are consistent with terms and conditions applicable to LTIP
awards made to other senior executives of the Company.
Vesting of Mr. Miller's LTIP awards will accelerate upon the occurrence of any
of the following events and circumstances: (1) termination of his employment or
other service due to disability or death; (2) termination of his employment or
other service by the Company without cause; or (3) the termination of his
employment or other service at any time by Mr. Miller or the Company under
circumstances relating to a breach by the Company of the ABM Employment
Agreement. If Mr. Miller's employment as Executive Chairman ends due to
nonrenewal of the initial or a renewal term, then, at the time such employment
ends, Mr. Miller will be fully vested in all then outstanding LTIP awards that
were made to him during or before the term of his employment.
Mr. Miller is also entitled to receive perquisites including, but not limited to
split dollar life insurance payments (as permitted by applicable law), use of a
Company automobile and certain automobile costs and certain other fringe
benefits and compensation. In addition, Mr. Miller may use a private plane for
personal purposes for up to 60 hours per year, subject to reimbursement by Mr.
Miller, at market rates, of the incremental costs incurred.
The ABM Employment Agreement will terminate upon the death of Mr. Miller and may
be terminated upon the long term disability of Mr. Miller, subject to certain
base salary payments to Mr. Miller or his estate as described in the ABM
Employment Agreement.
Mr. Miller may be discharged only for "cause," as defined in the ABM Employment
Agreement.
In the event that Mr. Miller shall be discharged for cause, all salary and other
benefits payable by the Company under this Agreement in respect of periods after
such discharge shall terminate upon such discharge, but any benefits payable to
or earned by Mr. Miller with respect to any period of his employment or other
service prior to such discharge shall be paid by the Company.
If Mr. Miller terminates his employment or other service with the Company
because of a material change in the duties of his office or any other breach by
the Company of its obligations under the ABM Employment Agreement, or in the
event of the termination of Mr. Miller's employment by the Company without cause
or otherwise in breach of the ABM Employment Agreement, Mr. Miller shall
continue to receive all of the cash compensation and minimum long term incentive
compensation and all of the benefits otherwise provided under the ABM Employment
Agreement notwithstanding such termination for the remainder of the stated term.
The ABM Employment Agreement also contains customary non-disparagement,
non-solicitation and non-competition provisions.
The foregoing description of the MDM Employment Agreement and the ABM Employment
Agreement does not purport to be complete and is qualified in its entirety by
reference to the full text of the employment agreements, copies of which are
filed as Exhibit 10.1 and 10.2, respectively, hereto and is incorporated herein
by reference.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
10.1 Employment Agreement between Universal Health Services, Inc. and Marc
D. Miller dated as of December 23, 2020
10.2 Employment Agreement between Universal Health Services, Inc. and Alan
B. Miller dated as of December 23, 2020
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Universal Health Services, Inc.
By: /s/ Steve Filton
Name: Steve Filton
Title: Executive Vice President and
Chief Financial Officer
Date: December 28, 2020
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