LIFEPOINT HOSPITALS, INC.
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A
(RULE 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
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Preliminary proxy statement. |
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Confidential, for use of the Commission Only (as permitted by Rule 14a-6(e)(2)). |
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Definitive Proxy Statement. |
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Definitive Additional Materials. |
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Soliciting Material Pursuant to § 240.14a-12. |
LIFEPOINT HOSPITALS, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Per unit price or other underlying value of transaction computed pursuant to
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Proposed maximum aggregate value of transaction: |
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Fee paid previously with preliminary materials. |
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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. |
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Amount Previously Paid: |
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Form, Schedule or Registration Statement No.: |
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April 5, 2006
Dear Stockholders:
You are cordially invited to attend the 2006 Annual Meeting of Stockholders of LifePoint
Hospitals, Inc., which is to be held on Monday, May 8, 2006 at 3:00 p.m. local time at 511 Union
Street, Suite 2700, Nashville, Tennessee 37219. The following pages contain the formal notice of
the Annual Meeting and the Companys Proxy Statement which describe the specific business to be
considered and voted upon at the Annual Meeting.
The Annual Meeting will be simultaneously broadcast over the Internet. The listen-only
web-simulcast of the Annual Meeting will be available on the Investor Information-News Releases
section of the Companys website, www.lifepointhospitals2.com, and will be available for replay for
30 days after the Annual Meeting.
It is important that your shares be represented at the Annual Meeting. Whether or not you
expect to attend in person, the Company would greatly appreciate your efforts to return the proxy
card in the enclosed postage-paid envelope as soon as possible. If you decide to attend the Annual
Meeting, you may withdraw your proxy should you wish to vote in person.
We look forward to seeing you at the Annual Meeting.
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Sincerely yours, |
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/s/ Kenneth C. Donahey |
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KENNETH C. DONAHEY |
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Chairman of the Board,
Chief Executive Officer and President |
YOUR VOTE IS IMPORTANT.
PLEASE COMPLETE, SIGN AND DATE THE
ENCLOSED PROXY CARD AND RETURN IT PROMPTLY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
LIFEPOINT HOSPITALS, INC.
103 Powell Court, Suite 200
Brentwood, Tennessee 37027
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On Monday, May 8, 2006
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To the Stockholders of LifePoint Hospitals, Inc.:
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April 5, 2006 |
Notice is hereby given that the 2006 Annual Meeting of Stockholders of LifePoint Hospitals,
Inc. (the Company) will be held on Monday, May 8, 2006 at 3:00 p.m. local time at 511 Union
Street, Suite 2700, Nashville, Tennessee 37219 (the Annual Meeting) for the following purposes:
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To elect three nominees as Class I directors of the Company; |
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To ratify the selection of Ernst & Young LLP as the Companys
independent registered public accounting firm for 2006; and |
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To transact such other business as may properly come before the
Annual Meeting or any adjournments or postponements thereof. |
Only stockholders of record at the close of business on March 17, 2006 will be entitled to
notice of and to vote at the Annual Meeting or any adjournment or postponement thereof.
The enclosed Proxy Statement contains more information regarding matters to be voted on at the
Annual Meeting. Please read the Proxy Statement carefully.
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By Order of the Board of Directors, |
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/s/ William F. Carpenter III |
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WILLIAM F. CARPENTER III
Secretary |
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, TO ASSURE THE PRESENCE OF A QUORUM,
YOU ARE URGED TO COMPLETE, SIGN AND DATE THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE. IF YOU DECIDE TO ATTEND THE ANNUAL MEETING, YOU MAY WITHDRAW YOUR
PROXY SHOULD YOU WISH TO VOTE IN PERSON.
LIFEPOINT HOSPITALS, INC.
103 Powell Court, Suite 200
Brentwood, Tennessee 37027
PROXY STATEMENT
Annual Meeting of Stockholders
to be held on May 8, 2006
INTRODUCTION
This Proxy Statement is furnished to the holders of common stock (Common Stock) of LifePoint
Hospitals, Inc. (the Company) in connection with the solicitation by the Board of Directors of
the Company of proxies to be voted at the 2006 Annual Meeting of Stockholders of the Company to be
held on Monday, May 8, 2006 at 3:00 p.m. local time at 511 Union Street, Suite 2700, Nashville,
Tennessee 37219, and at any adjournments or postponements thereof (the Annual Meeting). This
Proxy Statement and the accompanying proxy are first being mailed on
or about April 5, 2006.
Record Date and Voting by Proxy
Only the holders of Common Stock of record at the close of business on March 17, 2006 will be
entitled to vote at the Annual Meeting. On such date, 55,492,025 shares of Common Stock were
outstanding and entitled to vote. Each stockholder is entitled to one vote per share held of record
on the record date.
All shares of Common Stock represented at the Annual Meeting by properly completed proxies
received prior to or at the Annual Meeting and not properly revoked will be voted at the Annual
Meeting in accordance with the instructions indicated thereon. If no specification is made, the
proxies will be voted in the following manner:
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FOR the election of the nominees as Class I directors of the Company; and |
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FOR ratification of the selection of Ernst & Young LLP as independent
registered public accounting firm of the Company. |
Any stockholder voting by proxy may revoke the proxy at any time before it is exercised by
doing any one of the following: (i) delivering a written notice of the revocation to the Secretary
of the Company at 103 Powell Court, Suite 200, Brentwood, Tennessee 37027 prior to the Annual
Meeting; (ii) submitting a valid proxy with a later date; or (iii) attending the Annual Meeting and
voting in person by written ballot.
Quorum and Voting Requirements
A majority of the shares of Common Stock entitled to vote, represented in person or by proxy,
is required to constitute a quorum. If a quorum is not present at the time of the Annual Meeting,
the stockholders entitled to vote, present in person or represented by proxy, shall have the power
to adjourn the Annual Meeting until a quorum shall be present or represented by proxy. The Annual
Meeting may be adjourned from time to time, whether or not a quorum is present, by the affirmative
vote of a majority of the votes present and entitled to be cast at the Annual Meeting, by the
officer of the Company presiding over the Annual Meeting, or by the Board of Directors.
Directors shall be elected by a plurality of the votes cast by the shares of Common Stock
entitled to vote at the Annual Meeting, if a quorum is present. Abstentions and broker non-votes
will be counted for purposes of determining the presence of a quorum at the Annual Meeting but will
not have the effect of voting in opposition to a director.
All matters other than the election of directors shall be determined based upon the vote
specified in the description of the respective proposal. Abstentions will have the effect of a vote
against such proposals. If a broker
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does not receive voting instructions from the beneficial owner of shares on a particular
matter and indicates on the proxy that it does not have discretionary authority to vote on that
matter, those shares may not be voted on that matter and will not be counted in determining the
number of shares necessary for approval.
Expenses and Solicitation
The Company will pay all expenses of the Annual Meeting, including the cost of soliciting
proxies. The Company may reimburse persons holding shares in their names for others, or holding
shares for others who have the right to give voting instructions, such as brokers, banks,
fiduciaries and nominees, for such persons reasonable expenses in forwarding the proxy materials
to their principals.
Annual Report to Stockholders
A copy of the Companys 2005 Annual Report to Stockholders is enclosed. Upon the written
request of any stockholder entitled to vote at the Annual Meeting, the Company will furnish,
without charge, a copy of the Companys Annual Report on Form 10-K for the year ended December 31,
2005 filed with the United States Securities and Exchange Commission (the SEC). Requests should
be directed to LifePoint Hospitals, Inc., 103 Powell Court, Suite 200, Brentwood, Tennessee 37027,
Attention: Investor Relations, (615) 372-8500. The Companys 2005 Annual Report to Stockholders and
Form 10-K for the year ended December 31, 2005 are also available on the Investor Information
SEC Filings section of the Companys website at www.lifepointhospitals2.com. The Companys Annual
Report to Stockholders and Form 10-K are not proxy soliciting materials.
Code of Conduct, Code of Ethics and Corporate Governance
The Companys Code of Conduct provides guidance to all employees and assists in carrying out
the Companys daily activities with appropriate ethical and legal standards. The Code of Conduct
governs all of the Companys employees, including the Companys Chief Executive Officer and senior
financial officers. The Company has taken a number of additional steps to promote and protect the
interests of stockholders. In light of the requirement contained in the Sarbanes-Oxley Act of 2002
(Sarbanes-Oxley) that each public company disclose whether it has adopted a code of ethics for
senior financial officers, the Companys Board of Directors adopted the Code of Ethics for Senior
Financial Officers and the Chief Executive Officer (the Code of Ethics). The Companys Code of
Ethics specifically addresses the unique role of these officers in corporate governance. The Code
of Ethics incorporates principles to which these officers are expected to adhere and which they are
expected to advocate. Many of the topics covered in the Code of Ethics are also addressed in the
Companys Code of Conduct, and each of the officers subject to the Code of Ethics is subject to,
and has agreed to abide by, the Code of Conduct.
The Company takes its corporate governance responsibilities very seriously and has adopted
Corporate Governance Standards for the Company and appointed a Corporate Governance Officer. The
Company has published the Corporate Governance Standards in the Corporate Governance section of
the Companys website at www.lifepointhospitals2.com. In addition, the Company has published its
Code of Conduct, Code of Ethics and Board committee charters on its website. As discussed in this
Proxy Statement, the Companys Corporate Governance and Nominating Committee regularly reviews
corporate governance developments and adopts appropriate practices as warranted.
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PROPOSAL 1: ELECTION OF DIRECTORS
The Companys amended and restated certificate of incorporation provides that the Board of
Directors shall be divided into three classes of as nearly equal size as possible. Approximately
one-third of the directors are elected each year. In evaluating and determining whether to nominate
a candidate who is recommended for a position on the Board of Directors, the Corporate Governance
and Nominating Committee considers the criteria outlined in the Companys Corporate Governance
Standards, which include the highest professional ethics, integrity and values and a commitment to
representing the long-term interests of the stockholders of the Company. Nominees must also have an
inquisitive and objective perspective, practical wisdom and mature judgment. Further, nominees
should know how to read and understand fundamental financial statements and understand the use of
financial ratios and information in evaluating the financial performance of the Company. A nominee
who also serves as a senior officer of a company or in an equivalent position should not serve on
more than two boards of public companies in addition to the Company and other nominees should not
serve on more than four other boards of public companies in addition to the Company. The Corporate
Governance and Nominating Committee will consider nominations by stockholders of the Company that
comply with the provisions of the Amended and Restated By-laws of the Company (the By-laws), as
outlined in the section entitled General Information Stockholder Nominations and Proposals in
this Proxy Statement.
The Corporate Governance and Nominating Committee regularly assesses the size of the Board of
Directors, whether any vacancies are expected because of retirement or otherwise, and the need for
particular expertise on the Board of Directors. Candidates may come to the attention of the
Corporate Governance and Nominating Committee from current Board members, stockholders,
professional search firms (upon request), management or others. The Corporate Governance and
Nominating Committee reviews all candidates in the same manner regardless of the source of the
recommendation. This assessment includes a review of the nominees judgment, experience,
independence, understanding of the Companys business or related industries, and such other factors
as the Corporate Governance and Nominating Committee concludes are pertinent in light of the
current needs of the Board of Directors. Nominees must be willing to devote sufficient time to
carrying out their duties and responsibilities effectively, and should be committed to serve on the
Board of Directors for an extended period of time. The Board of Directors believes that its
membership should reflect a diversity of experience, gender, race, ethnicity and age. The Corporate
Governance and Nominating Committee selects qualified nominees and proposes its recommendations to
the Board of Directors.
The Corporate Governance and Nominating Committee conducted an annual evaluation of the Board,
its committees and the directors in order to evaluate their performance prior to recommending any
nominees to the Board for additional terms as directors. Upon the recommendation of the Corporate
Governance and Nominating Committee, which consists entirely of independent directors, the Board of
Directors has nominated the three individuals named below under the caption Nominees for Election
for election as directors to serve until the Annual Meeting of Stockholders in 2009 or until their
successors have been elected and qualified.
Required Vote
Directors are elected by a plurality of the votes cast by the shares of Common Stock entitled
to vote in the election at the Annual Meeting, if a quorum is present. The Companys amended and
restated certificate of incorporation does not provide for cumulative voting and, accordingly, the
stockholders do not have cumulative voting rights with respect to the election of directors.
Consequently, each stockholder may cast one vote per share of Common Stock held of record for each
nominee. Unless a proxy specifies otherwise, the persons named in the proxy will vote the shares
covered thereby FOR the nominees designated by the Board of Directors listed below. Should any
nominee become unavailable for election, an event not now anticipated, shares covered by a proxy
will be voted for a substitute nominee recommended by the Corporate Governance and Nominating
Committee and selected by the current Board of Directors.
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Nominees for Election
CLASS I DIRECTORS TERM WILL EXPIRE IN 2009
Ricki Tigert Helfer
Age 61
Director since May 1999
Ricki Tigert Helfer currently serves as Chair of the Companys Corporate Governance and
Nominating Committee. Since June 1997, Ms. Helfer has been an independent consultant on financial
regulatory issues and banking system reform in emerging market countries with Financial Regulation
and Reform International. Prior to that time, Ms. Helfer held several positions including Governor
of the Philadelphia Stock Exchange and Chairman of its audit committee; Chairman of the Board of
Directors and Chief Executive Officer of the Federal Deposit Insurance Corporation; and partner in
the law firm of Gibson, Dunn & Crutcher. Ms. Helfer is a member of the Board of Directors of
American Express Bank, a wholly owned subsidiary of the American Express Company. Ms. Helfer also
serves as Vice-Chair of the Board of Directors of the Womens Housing and Economic Development
Corporation and as a member of the Board of Directors for the Citizens Committee for Children of
New York City.
John E. Maupin, Jr., D.D.S.
Age 59
Director since May 1999
John E. Maupin, Jr., D.D.S. has served as the President of Meharry Medical College since July
1994 and will begin serving as President of Morehouse School of Medicine, effective July 1, 2006.
Dr. Maupin is a director of HealthSouth Corporation, a publicly-traded provider of healthcare
services, and serves as a director/trustee for the VALIC family of funds, a fund complex. Dr. Maupin has notified Pinnacle Financial Partners, Inc., a publicly-traded bank holding company, that he will be resigning as a member of its Board
of Directors prior to the end of the 2006 second quarter.
Owen G. Shell, Jr.
Age 69
Director since December 2002
Owen G. Shell, Jr. currently serves as the Companys lead director for non-management
executive sessions of the Board of Directors. Mr. Shell has over 40 years of executive management
experience in the banking industry. He served as President of the Asset Management Group of Bank of
America Corporation from November 1996 until his retirement in June 2001. From 1986 through 1996,
Mr. Shell served as the President of Bank of America for the Tennessee region. Prior to that, Mr.
Shell held several positions, including Chairman, President and Chief Executive Officer of First
American National Bank in Nashville, Tennessee. Mr. Shell is a director of Central Parking
Corporation, a publicly-traded company that owns, leases and manages parking facilities.
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Continuing Directors
The persons named below will continue to serve as directors until the Annual Meeting of
Stockholders in the year indicated or until their successors are elected and take office.
Stockholders are not voting at this Annual Meeting on the election of Class II and Class III
directors. The following biographies include the name, age and principal occupations of each
continuing director and the year in which each was first elected to the Board of Directors.
CLASS II DIRECTORS TERM WILL EXPIRE IN 2007
DeWitt Ezell, Jr.
Age 67
Director since May 1999
DeWitt Ezell, Jr. served as State President of Tennessee, BellSouth Corporation, a
communications services company, from January 1990 until his retirement on April 30, 1999. Prior to
that time, Mr. Ezell served in various engineering, regulatory and public relations positions
during his 37-year tenure with BellSouth. Mr. Ezell is the Chairman of the Board of
BlueCross/BlueShield of Tennessee, a non-profit health insurance company.
William V. Lapham
Age 67
Director since May 1999
William V. Lapham currently serves as Chair of the Companys Audit and Compliance Committee.
From 1962 until his retirement in 1998, Mr. Lapham was associated with Ernst & Young LLP and its
predecessors, serving as a partner for the last 26 years of his tenure, and as a member of Ernst &
Youngs International Council for eight years ending in December 1997. Mr. Lapham is a director of
Renal Care Group, Inc., a publicly-traded kidney dialysis services company and is the chair of its
audit committee. Mr. Lapham is a past director of Avado Brands, Inc., a proprietary brand
management company, prior to its going private and was chair of its audit committee.
CLASS III DIRECTORS TERM WILL EXPIRE IN 2008
Kenneth C. Donahey
Age 55
Director since June 2001
Kenneth C. Donahey has been the Chairman, Chief Executive Officer and President of the Company
since his appointment to those positions in June 2001. Mr. Donahey served as Chief Financial
Officer of the Company from its formation on May 11, 1999 until his appointment as Chairman, Chief
Executive Officer and President. Prior to that time, Mr. Donahey served in various financial
positions, including Senior Vice President and Controller, with HCA Inc. (HCA) and its
predecessor. Mr. Donahey recently served as the Chairman of the Federation of American Hospitals.
Richard H. Evans
Age 61
Director since June 2000
Richard H. Evans currently serves as the Chair of the Companys Compensation Committee. Mr.
Evans has been the Chairman of Evans Holdings, a real estate investment and real estate services
company, since April 1999. Prior to that time, Mr. Evans served as Chief Executive Officer of
Huizenga Sports, Entertainment Group, Madison Square Garden Corporation and Radio City Music Hall
Productions, Chief Operating Officer of Gaylord Entertainment Company and Chief Operating Officer
and Corporate Director of Florida Panther Holdings. Mr. Evans previously served as a member of the
Board of Governors of the National Basketball Association, the National Hockey League, Major League
Baseball and the National Football League.
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Michael P. Haley
Age 55
Director since April 2005
Mr. Haley has been a director of the Company since April 2005. Mr. Haley was a director of
Province Healthcare Company (Province) from February 2004 until the closing of the business
combination with Province in April 2005. From January 1, 2005 to June 1, 2005, Mr. Haley served as
Chairman of MW Manufacturers, Inc., a producer and distributor of window and door products for the
residential construction industry, and as Senior Vice President of Sales and Marketing for Ply Gem
Industries, Inc., a manufacturer of residential exterior building products. From 2001 to June 1,
2005, Mr. Haley served as President and Chief Executive Officer of MW Manufacturers, Inc. Prior to
that time, Mr. Haley served in various management capacities with American of Martinsville, Inc, a
manufacturer of commercial contract furniture and subsidiary of La-Z-Boy Incorporated, and
Loewenstein Furniture Group. Mr. Haley is a director of Ply Gem Industries, Inc., American National
Bankshares, Inc., a publicly-traded bank holding company and Stanley Furniture Company, a
publicly-traded furniture manufacturer.
INFORMATION REGARDING THE BOARD OF DIRECTORS
Director Independence
Historically, the Board of Directors has been comprised entirely of outside, independent
directors, except for the Companys Chairman and Chief Executive Officer. According to the
Companys Corporate Governance Standards, the Board of Directors shall be composed of a substantial
majority of independent directors. No director will be deemed independent unless the Board of
Directors affirmatively determines that the director has no material relationship with the Company,
whether directly or indirectly, and meets the independence requirements of The Nasdaq Stock Market,
Inc. (Nasdaq) and applicable law. Currently, only one director, Mr. Donahey, is a part of
management and not independent. The Company requires that the lead director and all members of the
Audit and Compliance Committee, the Compensation Committee and the Corporate Governance and
Nominating Committee be independent directors.
Attendance at Meetings
The Board of Directors held four meetings during 2005. Directors are expected to attend all
meetings of the Board of Directors, the annual meeting of stockholders and all meetings of the
committees on which they serve, with the understanding that on occasion a director may be unable to
attend a meeting. During 2005, all directors attended the annual meeting of stockholders and each
director attended at least 75% of the aggregate of the total number of meetings of the Board of
Directors and the total number of meetings held by all committees on which the director served.
Non-Management Executive Sessions
Routinely, the Board of Directors meets in executive sessions in which Kenneth C. Donahey, the
sole management director, and other members of management do not participate. Owen G. Shell, Jr. is
the Companys lead director and responsible for chairing the non-management executive sessions of
the Board of Directors.
Committees of the Board of Directors
The Board of Directors has three standing committees: an Audit and Compliance Committee, a
Compensation Committee and a Corporate Governance and Nominating Committee. All of the members of
each committee of the Board of Directors are independent directors (as independence is defined in
Rule 4200(a)(15) of the National Association of Securities Dealers (NASD) listing standards.
Although not required by law or the NASD listing standards, the Board of Directors believes that an
effort should be made to change committee chairs from time to time, as needed. The Board has
maintained a strong preference that all independent directors serve on all Board committees. The
following table shows the current membership of each committee:
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Corporate Governance and |
Director |
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Audit and Compliance |
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Compensation |
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Nominating |
Kenneth C. Donahey |
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Richard H. Evans |
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Chair |
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DeWitt Ezell, Jr. |
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Michael P. Haley |
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Ricki Tigert Helfer |
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Chair |
William V. Lapham |
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Chair |
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John E. Maupin, Jr., D.D.S. |
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Owen G. Shell, Jr. |
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X |
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X |
Audit and Compliance Committee
Pursuant to its Charter, the Audit and Compliance Committee selects the Companys independent
registered public accounting firm and oversees the arrangements for, and approves the scope of, the
audits to be performed by the independent registered public accounting firm. The Audit and
Compliance Committee has adopted a procedure to pre-approve all services performed and fees to be
incurred by the independent registered public accounting firm. For more information on this
procedure, please refer to the section entitled Ratification of Selection of Independent
Registered Public Accounting Firm in this Proxy Statement. The Audit and Compliance Committee
monitors the Companys systems of internal controls regarding finance, accounting, legal and
corporate compliance, monitors compliance with the Companys Code of Conduct and Code of Ethics,
monitors adherence to the Companys regulatory compliance program, reviews and approves the
Companys internal audit activities, reviews the Companys accounting procedures and controls and
reviews the Companys annual consolidated financial statements. During 2005, the Audit and
Compliance Committee held eleven meetings, including quarterly meetings held to review the
Companys quarterly financial results and its quarterly earnings releases, in each case prior to
public release. The Board has determined that William V. Lapham, Chair of the Audit and Compliance
Committee, is an audit committee financial expert, as defined by rules adopted by the SEC. The
report of the Audit and Compliance Committee begins on page 21.
Compensation Committee
The Compensation Committee is responsible for approving compensation arrangements for
executive management of the Company, including the Chief Executive Officer, reviewing compensation
plans relating to officers, approving grants of options, restricted stock and other benefits under
the Companys employee benefit plans and reviewing generally the Companys employee compensation
policy. During 2005, the Compensation Committee held six meetings. The report of the Compensation
Committee begins on page 24.
Corporate Governance and Nominating Committee
The Corporate Governance and Nominating Committee reviews the qualifications of prospective
Board members and recommends nominations to the Board of Directors for election of directors at
each annual meeting of stockholders; conducts an annual evaluation of the Board, its committees and
its directors; conducts an annual evaluation of the Chairman and the Chief Executive Officer; and
reviews at least annually the Corporate Governance Standards. The Corporate Governance and
Nominating Committee will consider all nominees recommended by stockholders who comply with the
procedures set forth under General Information-Stockholder Nominations and Proposals in this
Proxy Statement. During 2005, there were no material changes to the procedures by which a
stockholder may recommend nominees to the Board of Directors. During 2005, the Corporate Governance
and Nominating Committee held five meetings. The report of the Corporate Governance and Nominating
Committee begins on page 29.
Compensation of Directors
The Companys Chairman of the Board of Directors, Mr. Donahey, receives no additional
compensation, beyond that which he receives as an officer of the Company, for serving on the
Companys Board of Directors. Mr. Donahey does not serve on any committee of the Board of
Directors. On July 1, 2005, the Board of Directors approved an annual retainer of $35,000 for
outside directors who were neither officers nor employees of the
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Company. Prior to July 1, 2005, the annual retainer for outside directors who were neither
officers nor employees of the Company was $30,000. In addition, the outside directors receive
$1,500 for each Board meeting attended. Committee members receive a fee of $1,000 for attendance at
each committee meeting that is not held on the same day as a meeting of the Board of Directors;
provided, that the maximum amount payable to a committee member for attending committee meetings on
any single day is $1,000 without regard to the number of committee meetings held on that day. The
chair of each committee receives an annual retainer in recognition of the additional duties
involved in serving as the chair, with the chair of the Audit and Compliance Committee receiving
$5,000, the chair of the Compensation Committee receiving $4,000 and the chair of the Corporate
Governance and Nominating Committee receiving $4,000. At the meeting of the Board of Directors to
be held on May 9, 2006, the Board will determine the amount of the annual retainer the lead
director will receive in recognition of the additional duties involved in serving as lead director
of the Board of Directors. Directors are also reimbursed for expenses incurred relating to
attendance at meetings.
Under the LifePoint Hospitals, Inc. Outside Directors Stock and Incentive Compensation Plan
(the Outside Directors Plan), each non-employee director may elect to receive deferred stock
units in lieu of all or any portion of such directors annual retainer, the payout of which, at the
election of the director, may be deferred for two years or until such director ceases to be a
member of the Board of Directors. The payment of deferred stock units will be made through the
issuance of a stock certificate for a number of shares of Common Stock equal to the number of
deferred stock units.
Pursuant to the Outside Directors Plan, each non-employee director has historically received
an annual grant of options to acquire a number of shares of Common Stock determined by the Board of
Directors, exercisable at the fair market value of Common Stock on the date of grant, which date is
selected by the Board of Directors. All outstanding options became fully vested upon the closing of
the business combination with Province on April 15, 2005. The Outside Directors Plan also provides
for the issuance of restricted stock. On July 1, 2005, each non-employee director received 3,500
shares of restricted stock in lieu of an annual grant of options. The shares of restricted stock
were issued subject to forfeiture in their entirety unless the non-employee director continues to
serve as a director of the Company on the third anniversary of the date of grant.
The Board of Directors unanimously recommends that the stockholders
vote FOR the election of the proposed
Class I nominees to the Board of Directors.
8
PROPOSAL 2: RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Companys Audit and Compliance Committee has selected Ernst & Young LLP as the Companys
independent registered public accounting firm for 2006. Ernst & Young LLP has audited the Companys
financial statements since 1999 and is considered by management to be well qualified.
Representatives of Ernst & Young LLP are expected to be present at the Annual Meeting and will have
an opportunity to make any statement they consider appropriate and to respond to any appropriate
stockholders questions at that time.
Required Vote
Stockholder ratification of the Audit and Compliance Committees selection of Ernst & Young
LLP as the Companys independent registered public accounting firm is not required by the By-laws
or otherwise; however, the Board of Directors has elected to submit the selection of Ernst & Young
LLP to the Companys stockholders for ratification. The Company is seeking an affirmative vote of a
majority of the shares of Common Stock present, in person or by proxy, and entitled to vote at the
Annual Meeting, if a quorum is present, in order to ratify the appointment of the independent
registered public accounting firm. If the appointment of Ernst & Young LLP is not ratified by the
stockholders, the selection of an independent registered public accounting firm will be determined
by the Audit and Compliance Committee after careful consideration of any information submitted by
the stockholders.
Fees
The table below provides information concerning fees for services rendered by Ernst & Young
LLP during the last two fiscal years (including an estimate of fees for 2005, some of which have
not yet been billed):
|
|
|
|
|
|
|
|
|
|
|
Amount of Fees |
|
Description of Fees |
|
2004 |
|
|
2005 |
|
Audit Fees |
|
$ |
1,201,474 |
|
|
$ |
1,887,640 |
|
Audit-Related Fees |
|
|
329,400 |
|
|
|
76,054 |
|
Tax Fees: |
|
|
|
|
|
|
|
|
Compliance |
|
|
20,900 |
|
|
|
142,700 |
|
Other Tax Advice and Consultation |
|
|
105,600 |
|
|
|
236,605 |
|
All Other Fees: |
|
|
|
|
|
|
|
|
Independent Review Organization Services |
|
|
53,500 |
|
|
|
47,600 |
|
Total |
|
$ |
1,710,874 |
|
|
$ |
2,390,599 |
|
|
|
|
|
|
|
|
Audit Fees These fees were primarily for professional services rendered by Ernst & Young LLP
in connection with the audit of the Companys consolidated annual financial statements, audit of
internal controls over financial reporting (pursuant to Section 404 of Sarbanes-Oxley), reviews of
the interim condensed consolidated financial statements included in the Companys quarterly reports
on Form 10-Q for the first three fiscal quarters of the fiscal years ended December 31, 2004 and
2005, and the audit of the LifePoint Hospitals, Inc. Retirement Plan (the Retirement Plan). The
fees also include audits of certain subsidiaries, as well as comfort letters and consents related
to securities offerings and SEC filings, including fees for SEC filings associated with the
business combination with Province.
Audit-Related Fees These fees were primarily for services rendered by Ernst & Young LLP for
matters such as internal control audit planning, due diligence services, audit of the employee
welfare benefit plan, agreed-upon procedures and consultation on accounting standards or
transactions.
Tax Fees These fees were for services rendered by Ernst & Young LLP for assistance with tax
compliance regarding tax filings and also for other tax planning and tax advice services.
All Other Fees Other fees paid to Ernst & Young LLP were primarily consulting fees relating
to independent review organization billing and compliance services.
9
Pre-approval of Independent Registered Public Accounting Firm Services
The Audit and Compliance Committee has implemented procedures to ensure the pre-approval of
all audit, audit-related, tax and other services performed by the Companys independent registered
public accounting firm. These procedures require that the Audit and Compliance Committee approve
all services prior to the commencement of work. Unless the specific service has been pre-approved
with respect to that year, the Audit and Compliance Committee must approve the permitted service
before the independent registered public accounting firm is engaged to perform it. The Audit and
Compliance Committee has delegated to Mr. Lapham, the Chair of the Audit and Compliance Committee,
pre-approval authority with respect to audit or permitted non-audit services (in an amount not to
exceed $20,000 in each instance) to be provided by Ernst & Young LLP, subject to ratification of
such pre-approval by the Audit and Compliance Committee at its next scheduled meeting. On a
quarterly basis, the Audit and Compliance Committee reviews a summary listing of all service fees,
along with a reasonably detailed description of the nature of the engagement of Ernst & Young LLP.
The Audit and Compliance Committee pre-approved in accordance with the regulations of the SEC all
audit, audit-related, tax and other services performed by Ernst & Young LLP during 2005. The Audit
and Compliance Committee considered and determined that the provision of non-audit services by
Ernst & Young LLP during 2005 was compatible with maintaining auditor independence.
The Audit and Compliance Committee has reviewed the fees detailed above and considers the
provision of the described services to be compatible with maintaining the independence of Ernst &
Young LLP. None of these services are of a type that was prohibited under the independent
registered public accounting firm independence standards of the SEC.
The Audit and Compliance Committee and the Board of Directors unanimously recommend
that the stockholders vote FOR the ratification of Ernst & Young LLP
as the Companys independent registered public accounting firm for 2006.
10
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth certain information as of December 31, 2005 (unless otherwise
indicated) regarding beneficial ownership of Common Stock by (i) each director, nominee for
director and executive officer of the Company who owns Common Stock, (ii) each person known by the
Company to be the beneficial owner of more than 5% of the outstanding Common Stock of the Company
and (iii) all directors and executive officers as a group. As of December 31, 2005, there were
57,102,882 shares of Common Stock outstanding. Except as otherwise indicated, the beneficial
owners listed below have sole voting and investment power with respect to all shares owned by them,
except to the extent such power is shared by a spouse under applicable law.
|
|
|
|
|
|
|
|
|
|
|
Shares |
|
|
|
|
Beneficially |
|
Percent of |
Name of Beneficial Owner |
|
Owned |
|
Class |
Janus Capital Management, LLC (1)
|
|
|
3,683,890 |
|
|
|
6.4 |
% |
U.S. Trust Corporation (2)
|
|
|
3,034,813 |
|
|
|
5.32 |
|
Kenneth C. Donahey (3)(4)(5)(6)
|
|
|
1,012,836 |
|
|
|
1.75 |
|
William F. Carpenter III (3)(4)(5)(6)
|
|
|
609,335 |
|
|
|
1.06 |
|
William M. Gracey (3)(4)(5)(6)(7)
|
|
|
392,739 |
|
|
|
* |
|
Michael J. Culotta (3)(4)(5)(6)
|
|
|
387,002 |
|
|
|
* |
|
Joné Law Koford (3)(4)(5)(6)
|
|
|
100,549 |
|
|
|
* |
|
DeWitt Ezell, Jr. (3)(8)
|
|
|
39,855 |
|
|
|
* |
|
William V. Lapham (3)(9)
|
|
|
37,070 |
|
|
|
* |
|
John E. Maupin, Jr., D.D.S. (3)(8)
|
|
|
31,136 |
|
|
|
* |
|
Ricki Tigert Helfer (3)(8)
|
|
|
24,906 |
|
|
|
* |
|
Richard H. Evans (3)(8)
|
|
|
24,686 |
|
|
|
* |
|
Owen G. Shell (3)(8)
|
|
|
23,742 |
|
|
|
* |
|
Michael P. Haley (10)
|
|
|
11,083 |
|
|
|
* |
|
All directors and executive officers as a group
(12 persons) (3)(4)(5)(6)(7)(8)(9)(10)
|
|
|
2,694,939 |
|
|
|
4.56 |
|
|
|
|
* |
|
Less than one percent. |
|
(1) |
|
The ownership for Janus Capital Management, LLC is based on information contained in the
Schedule 13G filed with the SEC on February 14, 2006. Janus Capital Management, LLC has sole
voting power with respect to 1,033,271 shares, shared voting power with respect to 2,650,619
shares, sole dispositive power with respect to 1,033,271 shares and shared dispositive power
with respect to 2,650,619 shares. The address of Janus Capital Management, LLC is 151 Detroit
Street, Denver, Colorado 80206. |
|
(2) |
|
The ownership for U.S. Trust Corporation and its affiliates on behalf of the Employee Stock
Ownership Plan (ESOP) component of the Retirement Plan is based on information contained in
the Schedule 13G filed with the SEC on February 15, 2006. U.S. Trust Corporation has shared
voting power with respect to 2,383,820 shares (2,342,110 ESOP) and shared dispositive power
with respect to 2,383,820 shares (2,342,110 ESOP). U.S. Trust Corporation has sole voting
power with respect to 197,858 shares and sole dispositive power with respect to 636,298
shares. The address of U.S. Trust Corporation is 114 W. 47th Street, New York, New York 10036. |
|
11
(3) |
|
In computing the number of shares beneficially owned by a person and the percentage ownership
of that person, shares of Common Stock subject to options held by that person that are
currently exercisable, or will become exercisable within 60 days from December 31, 2005, are
deemed outstanding. The total number of options, pursuant to which such persons have rights to
acquire beneficial ownership of Common Stock within 60 days, is as follows: |
|
|
|
|
|
|
|
|
|
Name |
|
|
|
|
|
Options |
Kenneth C. Donahey |
|
|
|
|
|
|
704,756 |
|
William F. Carpenter III |
|
|
|
|
|
|
452,756 |
|
William M. Gracey |
|
|
|
|
|
|
305,613 |
|
Michael J. Culotta |
|
|
|
|
|
|
300,000 |
|
Joné Law Koford |
|
|
|
|
|
|
70,000 |
|
DeWitt Ezell, Jr. |
|
|
|
|
|
|
24,640 |
|
William V. Lapham |
|
|
|
|
|
|
24,640 |
|
Ricki Tigert Helfer |
|
|
|
|
|
|
12,835 |
|
John E. Maupin, Jr., D.D.S. |
|
|
|
|
|
|
24,640 |
|
Richard H. Evans |
|
|
|
|
|
|
16,606 |
|
Owen G. Shell, Jr. |
|
|
|
|
|
|
11,000 |
|
(4) |
|
The ownership given for each individual includes shares indirectly owned through the
Retirement Plan as set forth in the table below. Share amounts are estimates based on unit
accounting and based upon a December 30, 2005 value of $37.50 per share. |
|
|
|
|
|
|
|
|
|
Name |
|
|
|
|
|
Shares |
Kenneth C. Donahey |
|
|
|
|
|
|
2,776 |
|
William F. Carpenter III |
|
|
|
|
|
|
1,031 |
|
William M. Gracey |
|
|
|
|
|
|
2,222 |
|
Michael J. Culotta |
|
|
|
|
|
|
2,109 |
|
Joné Law Koford |
|
|
|
|
|
|
549 |
|
(5) |
|
The ownership for each individual includes restricted stock awards granted in 2005 under the
Amended and Restated 1998 Long-Term Incentive Plan (Incentive Plan) as set forth in the
table below. Generally, such shares will be forfeited in their entirety unless the individual
continues to be an employee of the Company on April 22, 2008. |
|
|
|
|
|
|
|
|
|
Name |
|
|
|
|
|
Shares |
Kenneth C. Donahey |
|
|
|
|
|
|
40,000 |
|
William F. Carpenter III |
|
|
|
|
|
|
18,000 |
|
William M. Gracey |
|
|
|
|
|
|
18,000 |
|
Michael J. Culotta |
|
|
|
|
|
|
18,000 |
|
Joné Law Koford |
|
|
|
|
|
|
10,000 |
|
(6) |
|
The ownership for each individual includes restricted stock awards granted in 2005 under the
Incentive Plan as set forth in the table below. Generally, these shares become unrestricted in
three equal installments on April 22, 2008, April 22, 2009 and April 22, 2010 and, with
respect to Messrs. Donahey, Culotta, Carpenter and Gracey, upon realization of certain
predetermined performance criteria. |
|
|
|
|
|
|
|
|
|
Name |
|
|
|
|
|
Shares |
Kenneth C. Donahey |
|
|
|
|
|
|
80,000 |
|
William F. Carpenter III |
|
|
|
|
|
|
36,000 |
|
William M. Gracey |
|
|
|
|
|
|
36,000 |
|
Michael J. Culotta |
|
|
|
|
|
|
36,000 |
|
Joné Law Koford |
|
|
|
|
|
|
20,000 |
|
(7) |
|
The ownership for Mr. Gracey includes options to purchase 52 shares of Common Stock held by
Mr. Graceys wife, as to which he disclaims beneficial ownership. |
|
12
(8) |
|
The ownership for each individual includes deferred stock units, granted under the Outside
Directors Plan, payable in shares of Common Stock as follows: |
|
|
|
|
|
|
|
|
|
Name |
|
|
|
|
|
Deferred Stock Units |
DeWitt Ezell, Jr. |
|
|
|
|
|
|
1,488 |
|
Ricki Tigert Helfer |
|
|
|
|
|
|
5,024 |
|
John E. Maupin, Jr., D.D.S. |
|
|
|
|
|
|
2,832 |
|
Richard H. Evans |
|
|
|
|
|
|
1,082 |
|
Owen G. Shell, Jr. |
|
|
|
|
|
|
744 |
|
(9) |
|
The ownership for Mr. Lapham includes 2,250 shares held by Mr. Laphams wife and 380 shares
held by Mr. Laphams daughter, as to which he disclaims beneficial ownership. |
|
(10) |
|
The ownership for Mr. Haley includes 7,000 shares of restricted stock granted under the
Outside Directors Plan. Generally, these shares will be forfeited in their entirety unless Mr.
Haley continues to serve as a director of the company on April 22, 2008. |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the Exchange Act),
requires the Companys executive officers, directors and persons who beneficially own more than ten
percent (10%) of the Companys Common Stock to file reports of ownership and changes in ownership
with the SEC. Such executive officers, directors and beneficial owners are also required to furnish
the Company with copies of all Section 16(a) reports they file. Based solely on a review of the
applicable filings on the SECs EDGAR website and written representations from the Companys
executive officers and directors, the Company believes that all reports were filed in a timely
manner during 2005, except that (i) Mr. Gracey failed to report in a timely manner the exercise of
his wifes options that were set to expire on February 9, 2005, for which he disclaims beneficial
ownership, but reported such exercise on his Form 5 that was filed February 14, 2005; (ii) Mr.
Raplee inadvertently failed to report on his Form 3 filed on March 1, 2004 certain options that
were originally issued by HCA and converted into options of the Company in the Companys spin-off
from HCA in 1999, but reported such options on his Form 4 that was filed March 11, 2005; and (iii)
Messrs. Carpenter, Culotta, Donahey, Gracey, Raplee, Weiss and Wiechart and Ms. Koford failed to
report in a timely manner the shares withheld and sold to pay taxes on restricted stock awards
and/or shares issued under the Management Stock Purchase Plan as a result of the business
combination with Province that occurred on April 15, 2005, but reported such shares on their
respective Forms 4 filed May 6, 2005. All Section 16(a) reports are posted on the Investor
Information SEC Filings section of the Companys website, www.lifepointhospitals2.com, by the
end of the business day after filing and remain accessible for at least 12 months.
13
EXECUTIVE COMPENSATION
Summary Compensation Table
Decisions on compensation for the Companys executive officers are made by the Compensation
Committee of the Board of Directors. No member of the Compensation Committee is a current or former
employee or officer of the Company or any of its affiliates. The Compensation Committee is
responsible for approving compensation arrangements for executive management of the Company,
including the Chief Executive Officer, reviewing compensation plans relating to officers, approving
equity-based compensation grants, reviewing other benefits under the Companys employee benefit
plans and reviewing generally the Companys employee compensation policy.
The table below sets forth the compensation of the Companys Chief Executive Officer and the
four other most highly compensated executive officers for the last three fiscal years. These
individuals may be referred to in this Proxy Statement as the Named Executive Officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted |
|
|
|
|
|
|
|
|
|
|
Annual Compensation (1) |
|
Stock |
|
Securities |
|
All Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Award(s) |
|
Underlying |
|
Compensation |
Name and Principal Position |
|
Year |
|
Salary ($) |
|
Bonus ($)(2) |
|
($) (3)(4) |
|
Options (#) |
|
($)(5) |
Kenneth C. Donahey |
|
|
2005 |
|
|
$ |
755,769 |
|
|
$ |
984,625 |
|
|
$ |
5,112,000 |
|
|
|
100,000 |
|
|
$ |
13,948 |
|
Chairman, Chief Executive |
|
|
2004 |
|
|
|
670,192 |
|
|
|
708,750 |
|
|
|
1,308,000 |
|
|
|
75,000 |
|
|
|
12,837 |
|
Officer and President |
|
|
2003 |
|
|
|
640,385 |
|
|
|
346,125 |
|
|
|
|
|
|
|
150,000 |
|
|
|
9,051 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael J. Culotta |
|
|
2005 |
|
|
$ |
445,192 |
|
|
$ |
494,312 |
|
|
|
2,300,400 |
|
|
|
45,000 |
|
|
$ |
6,951 |
|
Chief Financial Officer |
|
|
2004 |
|
|
|
412,500 |
|
|
|
357,000 |
|
|
|
981,000 |
|
|
|
50,000 |
|
|
|
7,163 |
|
|
|
|
2003 |
|
|
|
356,154 |
|
|
|
127,800 |
|
|
|
|
|
|
|
50,000 |
|
|
|
5,201 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William F. Carpenter III |
|
|
2005 |
|
|
$ |
445,192 |
|
|
$ |
494,312 |
|
|
$ |
2,300,400 |
|
|
|
45,000 |
|
|
$ |
5,588 |
|
Executive Vice
President, General |
|
|
2004 |
|
|
|
412,500 |
|
|
|
357,000 |
|
|
|
654,000 |
|
|
|
40,000 |
|
|
|
5,315 |
|
Counsel and, Secretary;
Corporate Governance
Officer |
|
|
2003 |
|
|
|
356,154 |
|
|
|
127,800 |
|
|
|
|
|
|
|
50,000 |
|
|
|
4,076 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William M. Gracey |
|
|
2005 |
|
|
$ |
445,192 |
|
|
$ |
494,312 |
|
|
$ |
2,300,400 |
|
|
|
45,000 |
|
|
$ |
10,884 |
|
Chief Operating Officer |
|
|
2004 |
|
|
|
410,577 |
|
|
|
357,000 |
|
|
|
981,000 |
|
|
|
50,000 |
|
|
|
11,920 |
|
|
|
|
2003 |
|
|
|
346,154 |
|
|
|
144,375 |
|
|
|
|
|
|
|
50,000 |
|
|
|
7,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joné Law Koford |
|
|
2005 |
|
|
$ |
353,077 |
|
|
$ |
159,395 |
|
|
$ |
1,278,000 |
|
|
|
20,000 |
|
|
$ |
5,684 |
|
Division President |
|
|
2004 |
|
|
|
342,115 |
|
|
|
230,201 |
|
|
|
490,500 |
|
|
|
25,000 |
|
|
|
5,733 |
|
|
|
|
2003 |
|
|
|
327,115 |
|
|
|
117,150 |
|
|
|
|
|
|
|
50,000 |
|
|
|
5,095 |
|
|
|
|
(1) |
|
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 any Named Executive Officer. |
|
(2) |
|
In 2005, certain Named Executive Officers received special cash bonus payments in recognition
of their significant contributions to the business combination with Province that were paid in
2005. The Named Executive Officers also received annual bonus payments for 2005 that were paid
in 2006. |
|
|
|
|
|
|
|
|
|
Name |
|
Special Bonus |
|
Annual Bonus |
Kenneth C. Donahey |
|
$ |
337,500 |
|
|
$ |
647,125 |
|
Michael J. Culotta |
|
|
212,500 |
|
|
|
281,812 |
|
William F. Carpenter III |
|
|
212,500 |
|
|
|
281,812 |
|
William M. Gracey |
|
|
212,500 |
|
|
|
281,812 |
|
Joné Law Koford |
|
|
0 |
|
|
|
159,395 |
|
(3) |
|
The amounts for 2005 represent the market value of restricted stock awarded based on a per
share price of $42.60, the fair market value of the Companys Common Stock on the date of
award. The annual restricted |
14
|
|
stock award shares are subject to forfeiture in their entirety unless the officer continues to
be employed by the Company on April 22, 2008, at which time the shares will become fully
vested. A one-time, special grant of restricted stock awards, in recognition of significant
contributions to the completion of the business combination with Province, vests in three
equal installments on the third, fourth and fifth anniversaries of the date of grant. With
respect to the special restricted stock awarded to Messrs. Donahey, Culotta, Carpenter and
Gracey, the vesting of the restricted shares also requires the realization of certain
predetermined performance criteria. As set forth in the table below, the aggregate market
value of the shares of restricted stock awarded in 2005 to each of the Named Executive
Officers is based on a per share price of $37.50, the closing market price of the Companys
Common Stock on December 30, 2005. Holders of shares of restricted stock have all rights of a
stockholder, including the right to vote the shares. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005 |
|
2005 |
|
Aggregate Market |
|
|
Annual Restricted |
|
Special Restricted |
|
Value as of |
Name |
|
Stock Award |
|
Stock Award |
|
December 30, 2005 |
Kenneth C. Donahey |
|
|
40,000 |
|
|
|
80,000 |
|
|
$ |
4,500,000 |
|
Michael J. Culotta |
|
|
18,000 |
|
|
|
36,000 |
|
|
|
2,025,000 |
|
William F. Carpenter III |
|
|
18,000 |
|
|
|
36,000 |
|
|
|
2,025,000 |
|
William M. Gracey |
|
|
18,000 |
|
|
|
36,000 |
|
|
|
2,025,000 |
|
Joné L. Koford |
|
|
10,000 |
|
|
|
20,000 |
|
|
|
1,125,000 |
|
(4) |
|
The amounts for 2004 represent the market value of restricted stock awarded based on a per
share price of $32.70, the fair market value of the Companys Common Stock on the date of
award. When issued, the shares were subject to forfeiture in their entirety unless the officer
continued to be employed by the Company on February 20, 2007. The shares became fully vested
upon closing of the business combination with Province on April 15, 2005. As set forth in the
table below, the aggregate market value of the shares of restricted stock awarded in 2004 to
each of the Named Executive Officers is based on a per share price of $44.42, the closing
market price of the Companys Common Stock on April 15, 2005. Holders of shares of restricted
stock have all rights of a stockholder, including the right to vote the shares. |
|
|
|
|
|
|
|
|
|
|
|
2004 |
|
Aggregate Market |
|
|
Annual Restricted |
|
Value as of |
Name |
|
Stock Award |
|
April 15, 2005 |
Kenneth C. Donahey |
|
|
40,000 |
|
|
$ |
1,776,800 |
|
Michael J. Culotta |
|
|
30,000 |
|
|
|
1,332,600 |
|
William F. Carpenter III |
|
|
20,000 |
|
|
|
888,400 |
|
William M. Gracey |
|
|
30,000 |
|
|
|
1,332,600 |
|
Joné L. Koford |
|
|
15,000 |
|
|
|
666,300 |
|
15
(5) |
|
Details of the amounts reported as All Other Compensation are as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group Life |
|
Long- |
|
Opting |
|
|
|
|
|
|
|
|
|
|
Insurance |
|
Term |
|
Out of the |
|
Retirement |
|
|
|
|
|
|
|
|
in Excess of |
|
Disability |
|
Dental |
|
Plan |
|
|
Name |
|
Year |
|
$50,000 |
|
Insurance |
|
Plan |
|
Contribution |
|
Total |
Kenneth C. Donahey |
|
|
2005 |
|
|
$ |
4,216 |
|
|
$ |
2,060 |
|
|
$ |
52 |
|
|
$ |
7,620 |
|
|
$ |
13,948 |
|
|
|
|
2004 |
|
|
|
2,255 |
|
|
|
3,060 |
|
|
|
52 |
|
|
|
7,470 |
|
|
|
12,837 |
|
|
|
|
2003 |
|
|
|
2,255 |
|
|
|
2,442 |
|
|
|
52 |
|
|
|
4,302 |
|
|
|
9,051 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael J. Culotta |
|
|
2005 |
|
|
$ |
1,996 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
4,955 |
|
|
$ |
6,951 |
|
|
|
|
2004 |
|
|
|
1,004 |
|
|
|
2,160 |
|
|
|
0 |
|
|
|
3,999 |
|
|
|
7,163 |
|
|
|
|
2003 |
|
|
|
910 |
|
|
|
1,720 |
|
|
|
0 |
|
|
|
2,571 |
|
|
|
5,201 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William F. Carpenter III |
|
|
2005 |
|
|
$ |
2,208 |
|
|
$ |
2,060 |
|
|
$ |
0 |
|
|
$ |
1,320 |
|
|
$ |
5,588 |
|
|
|
|
2004 |
|
|
|
1,835 |
|
|
|
2,160 |
|
|
|
0 |
|
|
|
1,320 |
|
|
|
6,635 |
|
|
|
|
2003 |
|
|
|
1,054 |
|
|
|
1,720 |
|
|
|
0 |
|
|
|
1,302 |
|
|
|
4,076 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William M. Gracey |
|
|
2005 |
|
|
$ |
1,446 |
|
|
$ |
2,060 |
|
|
$ |
0 |
|
|
$ |
7,378 |
|
|
$ |
10,884 |
|
|
|
|
2004 |
|
|
|
1,446 |
|
|
|
3,060 |
|
|
|
0 |
|
|
|
7,414 |
|
|
|
11,920 |
|
|
|
|
2003 |
|
|
|
1,378 |
|
|
|
1,720 |
|
|
|
0 |
|
|
|
4,302 |
|
|
|
7,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joné L. Koford |
|
|
2005 |
|
|
$ |
2,304 |
|
|
$ |
2,060 |
|
|
$ |
0 |
|
|
$ |
1,320 |
|
|
$ |
5,684 |
|
|
|
|
2004 |
|
|
|
2,253 |
|
|
|
2,160 |
|
|
|
0 |
|
|
|
1,320 |
|
|
|
5,733 |
|
|
|
|
2003 |
|
|
|
2,073 |
|
|
|
1,720 |
|
|
|
0 |
|
|
|
1,302 |
|
|
|
5,095 |
|
Option Grants In Last Fiscal Year
Certain information concerning the stock options granted to the Named Executive Officers in
2005 under the Incentive Plan is set forth in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individual Grants |
|
|
|
|
Number of |
|
Percent of |
|
|
|
|
|
|
|
|
|
Potential Realizable |
|
|
Securities |
|
Total Options |
|
|
|
|
|
|
|
|
|
Value at Assumed |
|
|
Underlying |
|
Granted to |
|
|
|
|
|
|
|
|
|
Annual Rates of Stock |
|
|
Options |
|
Employees in |
|
Exercise of |
|
|
|
|
|
Price Appreciation for |
|
|
Granted |
|
Fiscal Year |
|
Base Price |
|
|
|
|
|
Option Term (3) |
Name |
|
(#) |
|
(1) |
|
($/Sh) (2) |
|
Expiration Date |
|
5% ($) |
|
10% ($) |
Kenneth C. Donahey |
|
|
100,000 |
|
|
|
12.7 |
% |
|
$ |
42.60 |
|
|
|
4/22/2015 |
|
|
$ |
2,679,000 |
|
|
$ |
6,789,000 |
|
Michael J. Culotta |
|
|
45,000 |
|
|
|
5.7 |
|
|
|
42.60 |
|
|
|
4/22/2015 |
|
|
|
1,205,550 |
|
|
|
3,055,050 |
|
William F. Carpenter III |
|
|
45,000 |
|
|
|
5.7 |
|
|
|
42.60 |
|
|
|
4/22/2015 |
|
|
|
1,205,550 |
|
|
|
3,055,050 |
|
William M. Gracey |
|
|
45,000 |
|
|
|
5.7 |
|
|
|
42.60 |
|
|
|
4/22/2015 |
|
|
|
1,205,550 |
|
|
|
3,055,050 |
|
Joné Law Koford |
|
|
20,000 |
|
|
|
2.5 |
|
|
|
42.60 |
|
|
|
4/22/2015 |
|
|
|
535,800 |
|
|
|
1,357,800 |
|
|
|
|
(1) |
|
Based on 786,813 options granted to all employees during 2005. |
|
(2) |
|
Based on the fair market value of the shares of Common Stock underlying the options on the
date of grant. Options become exercisable in three equal installments on April 22, 2006, April
22, 2007 and April 22, 2008. |
|
(3) |
|
Amounts represent hypothetical gains that could be achieved for the respective options if
exercised at the end of the option term and based upon assumed rates of appreciation in the
market price of the Common Stock of 5% and 10% compounded annually from the date of grant to
the expiration date. The actual value, if any, that will be realized by each Named Executive
Officer upon the exercise of any option will depend upon the difference between the exercise
price of the option and the market price of the Common Stock on the date that the option is
exercised. There can be no assurance that amounts reflected in this table will be achieved. |
16
Aggregated Option Exercises In Last Fiscal Year And Fiscal Year-End Option Values
The following table provides certain information regarding the exercise of stock options by
Named Executive Officers during 2005, as well as the assumed value of unexercised options held by
such officers as of the end of 2005:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities |
|
Value of Unexercised |
|
|
Shares |
|
|
|
|
|
Underlying Unexercised |
|
In-the-Money Options |
|
|
Acquired on |
|
Value |
|
Options at Fiscal Year End (#) |
|
at Fiscal Year-End ($)(1) |
Name |
|
Exercise (#) |
|
Realized ($) |
|
Exercisable |
|
Unexercisable |
|
Exercisable |
|
Unexercisable |
Kenneth C. Donahey |
|
|
0 |
|
|
$ |
0 |
|
|
|
704,756 |
|
|
|
100,000 |
|
|
$ |
8,601,388 |
|
|
$ |
0 |
|
Michael J. Culotta |
|
|
0 |
|
|
|
0 |
|
|
|
300,000 |
|
|
|
45,000 |
|
|
|
1,977,500 |
|
|
|
0 |
|
William F. Carpenter III |
|
|
0 |
|
|
|
0 |
|
|
|
452,756 |
|
|
|
45,000 |
|
|
|
8,646,295 |
|
|
|
0 |
|
William M. Gracey |
|
|
59 |
(2) |
|
|
1,024 |
|
|
|
305,613 |
(3) |
|
|
45,000 |
|
|
|
4,476,114 |
|
|
|
0 |
|
Joné Law Koford |
|
|
155,000 |
|
|
|
2,026,074 |
|
|
|
70,000 |
|
|
|
20,000 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
(1) |
|
The closing price for the Companys Common Stock, as reported by the Nasdaq National Market,
on December 30, 2005 was $37.50. Value of in-the-money options is calculated on the basis of
the difference between the exercise price of each such option and $37.50, multiplied by the
number of shares of Common Stock underlying each such option. |
|
(2) |
|
Mr. Graceys wife exercised options to purchase 59 shares of Common Stock, as to which Mr.
Gracey disclaims beneficial ownership. |
|
(3) |
|
Includes options to purchase 52 shares of Common Stock owned by Mr. Graceys wife, as to
which Mr. Gracey disclaims beneficial ownership. |
Equity Compensation Plan Information
The following table provides aggregate information as of December 31, 2005 with respect to
shares of Common Stock that may be issued under the Companys existing equity compensation plans,
including the Incentive Plan, the Outside Directors Plan, the LifePoint Hospitals Inc. Management
Stock Purchase Plan (the Management Stock Purchase Plan) and the LifePoint Hospitals, Inc.
Employee Stock Purchase Plan (the Employee Stock Purchase Plan):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities |
|
|
|
Number of Securities |
|
|
|
|
|
|
Available for Future |
|
|
|
to be Issued Upon |
|
|
Weighted-Average |
|
|
Issuance Under Equity |
|
|
|
Exercise of Outstanding |
|
|
Exercise Price of |
|
|
Compensation Plans |
|
|
|
Options, Warrants and |
|
|
Outstanding Options, |
|
|
(Excluding Securities |
|
Plan Category |
|
Rights |
|
|
Warrants and Rights |
|
|
Reflected in Column (a) |
|
|
|
(a) |
|
|
(b) |
|
|
(c) |
|
Equity Compensation
Plans Approved by
Security Holders |
|
|
3,571,730 |
(1) |
|
$ |
30.00 |
(2) |
|
|
4,539,889 |
(3) |
Equity Compensation
Plans not Approved by
Security Holders |
|
None |
|
None |
|
None |
|
|
|
|
|
|
|
|
|
|
Total |
|
|
3,571,730 |
|
|
$ |
30.00 |
|
|
|
4,539,889 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes the following: |
|
|
|
3,446,213 shares of Common Stock to be issued upon exercise of outstanding
stock options granted under the Incentive Plan; |
|
|
|
|
114,361 shares of Common Stock to be issued upon exercise of outstanding
stock options granted under the Outside Directors Plan; and |
|
|
|
|
11,156 shares of Common Stock to be issued upon the vesting of deferred stock
units outstanding under the Outside Directors Plan. |
17
(2) |
|
Upon vesting, deferred stock units are settled for shares of Common Stock on a one-for-one
basis. Accordingly, the deferred stock units have been excluded for purposes of computing the
weighted-average exercise price. |
|
(3) |
|
Includes the following: |
|
|
|
4,147,518 shares of Common Stock available for issuance under the Incentive Plan; |
|
|
|
105,128 shares of Common Stock available for issuance under the Management Stock Purchase Plan; |
|
|
|
|
179,266 shares of Common Stock available for issuance under the Outside Directors Plan; and |
|
|
|
|
107,977 shares of Common Stock available for issuance under the Employee Stock Purchase Plan. |
Employment, Retirement, Termination and Change in Control Arrangements
Employment Agreement of Kenneth C. Donahey
The Company entered into an employment agreement with Kenneth C. Donahey, the Companys
Chairman of the Board of Directors, Chief Executive Officer and President, effective as of June 25,
2001 and amended as of December 31, 2004 (the Employment Agreement). The Employment Agreement
provides for a term of employment of three years with automatic one-year renewals beginning on the
second anniversary of the effective date, absent notice of non-extension. Effective February 27,
2005, Mr. Donahey received an annual base salary of $775,000 pursuant to this agreement, which
amount is subject to review at least annually. Mr. Donahey had an opportunity to earn a bonus of up
to 150% of his base salary for 2005. A bonus is only paid to Mr. Donahey if the Company achieves
certain pre-determined performance goals set by the Compensation Committee pursuant to the
LifePoint Hospitals, Inc. Executive Performance Incentive Plan (the Executive Performance
Incentive Plan).
Retirement and Termination Arrangements
The Company maintains certain compensatory arrangements that are intended to provide payments
to the Named Executive Officers upon their resignation or retirement. These include the Retirement
Plan, which is a defined contribution retirement plan that is intended to be qualified under
section 401(a) of the Internal Revenue Code of 1986, as amended (the Code). Eligible employees
may elect to contribute a portion of their compensation to the Retirement Plan and the Company
provides certain matching and other contributions. The retirement benefit is based solely on the
contributions to each employees account and the investment of those contributions in the
Retirement Plan. The Company also maintains a severance policy for all of its full-time corporate
employees, including the Named Executive Officers. The policy provides that if an employee is
involuntarily terminated, except for cause or in certain other circumstances, the employee is
entitled to receive severance payments of up to one years base compensation. The amount of the
payments is based on the employees compensation at the time of termination and the number of
completed years of continuous employment.
Change in Control Arrangements
The Company maintains the LifePoint Hospitals, Inc. Change in Control Severance Plan for
certain corporate employees, including the Named Executive Officers. This plan provides benefits to
eligible corporate employees of the Company whose employment is terminated within 18 months of a
change in control by the successor entity without cause or by the employee because the position
offered by the successor is not substantially equivalent to the one held with the Company. These
benefits include a severance payment of either 150% of annual compensation or 300% of annual
compensation, based upon the participants position with the Company. In addition, each participant
is indemnified against excise taxes that are imposed on change in control payments under Section
4999 of the Code. Benefits under this plan are offset by any other payments that the participant is
entitled to receive under any other agreement, plan or arrangement upon a change in control of the
Company.
The Incentive Plan provides for full vesting of outstanding awards granted to employees,
including those granted to Named Executive Officers, under certain circumstances following a change
in control. In 2005, the Company took action to amend the Incentive Plan in order to limit the
circumstances in which full vesting will occur following a change in control. As amended, full
vesting will only occur if the successor entity does not provide equity incentives to replace the
awards issued under the Incentive Plan or if employment is terminated by the successor entity
without cause or by the employee because the position offered by the successor is not substantially
equivalent to the one held with the Company. Under the Executive Performance Incentive Plan, the
Compensation
18
Committee may authorize payment of all any portion of awards to the Named Executive
Officers that are outstanding at the time of the change in control.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Board of Directors during 2005 consisted of Ms. Helfer, Dr.
Maupin and Messrs. Evans, Ezell, Haley, Lapham and Shell. Mr. Haley became a member of the
Compensation Committee on April 15, 2005. None of the members of the Compensation Committee have at
any time been an officer or employee of the Company nor have any of the members had any
relationship with the Company requiring disclosure by the Company.
Executive Officers of the Company
The following list identifies the name, age and position(s) of the executive officers of the
Company:
|
|
|
|
|
|
|
Name |
|
Age |
|
Position |
Kenneth C. Donahey
|
|
|
55 |
|
|
Chairman, Chief Executive Officer and President |
Michael J. Culotta
|
|
|
51 |
|
|
Chief Financial Officer |
William F. Carpenter III
|
|
|
51 |
|
|
Executive Vice President, General Counsel and Secretary;
Corporate Governance Officer |
William M. Gracey
|
|
|
52 |
|
|
Chief Operating Officer |
Jess N. Judy
|
|
|
56 |
|
|
Division President |
Robert N. Klein
|
|
|
45 |
|
|
Division President |
Joné Law Koford
|
|
|
49 |
|
|
Division President |
Thomas M. Weiss
|
|
|
51 |
|
|
Division President |
Michael A. Wiechart
|
|
|
40 |
|
|
Division President |
R. Scott Raplee
|
|
|
40 |
|
|
Senior Vice President, Operations Chief Financial Officer |
Gary D. Willis
|
|
|
41 |
|
|
Senior Vice President and Chief Accounting Officer |
The term of each executive officer runs until his or her successor is elected and qualified,
or until his or her earlier death, resignation or removal. The following is a biographical summary
of the experience of the executive officers of the Company who are not members of the Companys
Board of Directors:
Michael J. Culotta has served as Chief Financial Officer of the Company since November 2001.
Prior to joining the Company, Mr. Culotta served as a partner and healthcare area industry leader
for the southeast area at Ernst & Young LLP. Mr. Culotta was affiliated with Ernst & Young LLP for
over 24 years. Mr. Culotta is a director of Evolved Digital Systems, Inc., a provider of IT
services to clients in the healthcare industry, and is the chair of its audit committee.
William F. Carpenter III was named Executive Vice President of the Company in February 2004.
Mr. Carpenter has been General Counsel and Secretary of the Company since May 11, 1999 and
Corporate Governance Officer since February 2003. Mr. Carpenter also serves as the Companys Chief
Development Officer. From May 11, 1999 to February 2004, Mr. Carpenter served as Senior Vice
President of the Company. From November 23, 1998 until May 11, 1999, Mr. Carpenter served as
General Counsel of the America Group of HCA. Mr. Carpenter was a member of the law firm of Waller
Lansden Dortch & Davis, LLP through December 31, 1998. Mr. Carpenter is a director of Psychiatric
Solutions, Inc., a behavioral health services company and is chair of its corporate governance
committee.
William M. Gracey has been Chief Operating Officer of the Company since February 2004. From
May 11, 1999 until February 2004, Mr. Gracey was a Division President of the Company. From July
1998 until May 11, 1999, Mr. Gracey served as a Division President of the America Group of HCA.
Prior to that time, Mr. Gracey served in various operations positions with HCA. Mr. Gracey is the
current Chairman of the Tennessee Hospital Association.
19
Jess N. Judy has been a Division President of the Company since February 2006. From October
2003 to January 2006, Mr. Judy served as the President and Chief Executive Officer of Austin
Surgical Hospital in Austin, Texas. For seven years prior to that time, Mr. Judy served as Senior
Vice President, Operations for Aveta Health, Inc. Prior to that time, Mr. Judy served in various
operations positions with Heritage Health Systems, Inc., Community Cardiac Services, Inc. and HCA.
Robert N. Klein has been a Division President of the Company since November 2005. From
November 1997 to October 2005, Mr. Klein served as the Chief Executive Officer for HCAs Skyline
Medical Center in Nashville, Tennessee and HCAs Hendersonville Medical Center in Hendersonville,
Tennessee. Prior to that time, Mr. Klein served in various other hospital executive positions with
HCA and Baptist Medical Centers in Birmingham, Alabama.
Joné Law Koford has been a Division President of the Company since September 2001. From May
2001 until August 2001, Ms. Koford served as Vice President of Development for the Company. Prior
to that, Ms. Koford served in various operations positions with Altius Health Plans, Strategic
Health Initiatives, Arcon Healthcare, Inc., HCA and HealthTrust, Inc. The Hospital Company.
Thomas M. Weiss has been a Division President of the Company since September 2003. From August
2001 to August 2003, Mr. Weiss served as the Chief Executive Officer of the Companys Lake
Cumberland Regional Hospital in Somerset, Kentucky. For 10 years prior to that time, Mr. Weiss
served as the Chief Executive Officer of Crestview Medical Center in Huntsville, Alabama.
Michael A. Wiechart has been a Division President of the Company since March 2004. From May
1999 until February 2004, Mr. Wiechart served as a Division Chief Financial Officer of the Company.
From 1998 to 1999, Mr. Wiechart served as Vice President/Operations Controller of Province. Prior
to that time, Mr. Wiechart served in various financial positions with HCA.
R. Scott Raplee has been Senior Vice President, Operations Chief Financial Officer of the
Company since March 2004. From May 1999 until February 2004, Mr. Raplee served as a Division Chief
Financial Officer of the Company. Prior to that time, Mr. Raplee served in various financial
positions with HCA.
Gary D. Willis has served as Senior Vice President and Chief Accounting Officer of the Company
since February 2006. From December 2002 to February 2006, Mr. Willis served as Vice President and
Controller of the Company. From April 2002 to December 2002, Mr. Willis served as Chief Accounting
Officer of Central Parking Corporation, a company that owns, leases and manages parking facilities.
From 1995 to March 2002, Mr. Willis held various positions, including Chief Accounting Officer,
with Gaylord Entertainment Company.
20
AUDIT AND COMPLIANCE COMMITTEE REPORT
The Audit and Compliance Committee of the Board of Directors consists entirely of directors
who are independent as determined by the Board of Directors and meet Nasdaqs independence and
experience requirements. The Board has determined that William V. Lapham, Chair of the Audit and
Compliance Committee, is an audit committee financial expert, as defined by rules adopted by the
SEC. The Audit and Compliance Committee reviews and reassesses the adequacy of its Charter on an
annual basis. On September 19, 2005, the Audit and Compliance Committee adopted, and the Board of
Directors approved, amendments to the Audit and Compliance Committee Charter, which outlines the
practices followed by the Audit and Compliance Committee. The Charter of the Audit and Compliance
Committee is attached as Appendix A and is also available on the Corporate Governance section of
the Companys website, www.lifepointhospitals2.com.
In performing its functions, the Audit and Compliance Committee acts primarily in an oversight
capacity. The Audit and Compliance Committee relies on the work and assurances of the Companys
management, which has the primary responsibility for preparing financial statements and reports and
implementing internal controls over financial reporting, and the work and assurances of the
Companys independent registered public accounting firm, which performs timely reviews of the
Companys quarterly financial statements. In addition, the Audit and Compliance Committee relies on
the Companys independent registered public accounting firm, which expresses an opinion on the
conformity of the Companys annual financial statements to generally accepted accounting
principles, an opinion on managements assessment of internal control over financial reporting and
an opinion on the effectiveness of internal control over financial reporting.
The Audit and Compliance Committee selected Ernst & Young LLP as the Companys independent
registered public accounting firm for 2005. This selection was subsequently approved by the Board
of Directors and was ratified by the Companys stockholders at the annual meeting held on June 30,
2005.
At each of its meetings during 2005, the Audit and Compliance Committee met with the senior
members of the Companys financial management team, the General Counsel and either the Senior Vice
President, Audit and Compliance or the Director, Internal Audit, and representatives of the
Companys independent registered public accounting firm. The Audit and Compliance Committee had
eight private sessions with the Companys Senior Vice President, Audit and Compliance, one private
session with the Companys Director, Internal Audit, and eight private meetings with
representatives of the Companys independent registered public accounting firm. At these private
meetings, candid discussions regarding financial management, accounting and internal controls took
place. In addition, the Audit and Compliance Committee took the following actions:
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Reviewed and discussed with management the Companys audited financial
statements for the year ended December 31, 2005, including a discussion of the quality
(rather than just the acceptability) of the accounting principles and policies, the
reasonableness of significant judgments and the clarity of disclosures in the financial
statements. Regarding managements accounting judgments, members of the Audit and
Compliance Committee asked for managements representations that the audited financial
statements of the Company have been prepared in conformity with generally accepted
accounting principles and that the financial statements present fairly the Companys
financial position and results of operations, and have expressed to both management and
Ernst & Young LLP their general preference for conservative judgments. |
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Reviewed and discussed with management the quarterly financial results of the
Company and discussed any significant changes to the Companys accounting principles. |
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Discussed with Ernst & Young LLP the matters required to be communicated to the
Audit and Compliance Committee under Statement on Auditing Standards No. 61, as modified or
supplemented, and such other matters relating to the conduct of the audit, including their
judgments as to the quality (rather than just the acceptability) of the Companys
accounting principles and policies. |
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Received the written disclosures and the letter from Ernst & Young LLP
regarding the independence of Ernst & Young LLP as required by Independence Standards Board
Standard No. 1, as modified or |
21
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supplemented, and discussed with Ernst & Young LLP its independence from the Company and
management. |
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When evaluating the independence of Ernst & Young LLP, the Audit and Compliance
Committee considered carefully, among other things, the former relationship between Ernst &
Young LLP and each of Michael J. Culotta, the Companys Chief Financial Officer,
Christopher J. Monte, the Companys Vice President, Tax, and William V. Lapham, the
Chairman of the Audit and Compliance Committee and a director of the Company. After
significant and detailed discussion regarding these and other factors, including steps
taken to preserve the ongoing independence of Ernst & Young LLP, and based upon the Audit
and Compliance Committees understanding of the relevant facts and circumstances, the Audit
and Compliance Committee concluded that Ernst & Young LLP is qualified to serve as the
Companys independent registered public accounting firm. |
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Considered the competence, quality of controls and the national reputation of
Ernst & Young LLP in addition to the competence of the individual auditors performing the
Companys audit on behalf of Ernst & Young LLP. |
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Pre-approved specific audit, audit-related, tax and other services and fees to
be provided by Ernst & Young LLP. |
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Reviewed and approved the Companys annual internal audit and compliance plans. |
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Reviewed and discussed with management Ernst & Young LLPs opinion including
reports on managements assessment of internal controls over the financial reporting
processes. |
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Ensured that procedures are in place for the receipt, retention and treatment
of complaints received by the Company regarding accounting, financial reporting, internal
controls, auditing, legal or compliance matters. |
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Reviewed regularly all related party transactions for potential conflicts of
interest and discussed with management, prior to the filing of the Companys annual and
quarterly reports with the SEC, any disclosure relating to directors and officers related
party transactions and potential conflicts of interest. |
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Monitored the Companys compliance with the provisions of Sarbanes-Oxley during
the testing of internal controls. |
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Reviewed and discussed with management on a regular basis certain identified
risk areas, including enterprise risk management. |
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Reviewed and discussed with management on a regular basis any errors,
irregularities, fraud or illegal acts that may have a material or non-material impact on
the Companys financial statements, policies or reporting requirements. |
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Reviewed the Public Company Accounting Oversight Board report with respect to
Ernst & Young LLP. |
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Performed an annual review of the Audit and Compliance Committees Charter and
the Companys Code of Ethics. |
In reliance on these reviews and discussions, and the report of Ernst & Young LLP, the Audit
and Compliance Committee recommended to the Board of Directors, and the Board of Directors
determined, that the audited financial statements be included for filing with the SEC in the
Companys Annual Report on Form 10-K for the year ended December 31, 2005.
The Audit and Compliance Committee also oversees the Companys internal compliance activities
and is responsible for the review of matters related to the Companys ethics and compliance
program, Corporate Integrity Agreement, Code of Conduct, Code of Ethics and compliance with federal
healthcare program requirements.
22
In performing its compliance-related functions during 2005, the Audit and Compliance
Committee, among other things, met privately with the Companys Senior Vice President, Audit and
Compliance, and the Companys Director, Internal Audit, and reviewed and assessed the efforts of
management to monitor the Companys compliance with the Corporate Integrity Agreement and other
requirements.
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AUDIT AND COMPLIANCE COMMITTEE |
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William V. Lapham, Chair |
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Richard H. Evans |
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DeWitt Ezell, Jr. |
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Michael P. Haley (1) |
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Ricki Tigert Helfer |
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John E. Maupin, Jr., D.D.S. |
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Owen G. Shell, Jr. |
Dated: March 24, 2006
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(1) |
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Mr. Haley joined the Audit and Compliance Committee effective April 15, 2005. |
23
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors consists entirely of directors who are
independent as determined by the Board of Directors and meet Nasdaqs independence and experience
requirements. The Compensation Committee reviews and reassesses the adequacy of the Compensation
Committee Charter on an annual basis. On September 19, 2005, the Compensation Committee adopted,
and the Board of Directors approved, amendments to the Compensation Committee Charter, which
outlines the practices followed by the Compensation Committee. The Charter of the Compensation
Committee is available on the Corporate Governance section of the Companys website,
www.lifepointhospitals2.com.
Decisions on compensation for the Companys executive officers are made by the Compensation
Committee. No member of the Compensation Committee is a current or former employee or officer of
the Company or any of its affiliates. The Compensation Committee is responsible for approving
compensation arrangements for executive management of the Company, including the Chief Executive
Officer, reviewing compensation plans relating to officers, approving equity-based and performance
grants, reviewing other benefits under the Companys employee benefit plans and reviewing generally
the Companys employee compensation policy.
Compensation Philosophy and Strategy for Executive Officers
This report is submitted by the Compensation Committee pursuant to the rules adopted by the
SEC that require disclosure with respect to compensation policies applicable to the Companys
executive officers (including the Named Executive Officers) and with respect to the basis for the
compensation paid for the 2005 fiscal year to Kenneth C. Donahey, the Companys Chief Executive
Officer.
During 2005, the Compensation Committee engaged an independent compensation consultant (the
Committee Consultant) solely to advise the Compensation Committee on matters of executive
compensation. The Committee Consultant worked with an executive compensation consultant engaged by
Company management on executive compensation matters (the Company Consultant) to provide guidance
for Compensation Committee members when making decisions about executive compensation.
The Compensation Committees general philosophy is that executive compensation should:
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Link rewards paid to executive officers to corporate and individual performance standards; |
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Put a substantial portion of executive compensation at risk and establish
objectives that encourage stretch performance; |
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Be competitive within the Companys industry and community and responsive
to the needs of our executive officers; |
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Attract, retain, motivate and reward individuals of the highest quality in
the industry with the experience, skills and integrity necessary to promote the
Companys success and to align their interest with the long-term interests of the
Companys stockholders by providing appropriate, competitive compensation and financial
rewards; |
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Comply with all applicable laws and Nasdaq member rules and guidelines, and
be appropriate in light of reasonable and sensible standards of good corporate
governance; and |
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Be monitored periodically to assess the cost of compensation programs in
comparison to stockholder value and Company and executive performance. |
Consistent with these objectives, the Company adopted its current executive compensation
programs. During 2005, the Compensation Committee received a report from the Company Consultant
that included a comprehensive analysis of compensation and its individual components relative to
competitive market data for
certain of the Companys executive officer positions. The Compensation Committee considered
and relied on this
24
report, along with input from and evaluation by the Committee Consultant, when
making its compensation decisions regarding officers covered by the analysis.
To evaluate executive officer compensation, the Committee Consultant and the Company
Consultant, working together, gather information from a database composed of companies that operate
in the United States in the health services industry, that are comparable to the Companys size
when considering revenue, market capitalization and other appropriate indicators, as well as other
relevant information, surveys and data. The Compensation Committee selected the comparable
companies used for purposes of the Compensation Committees consideration of executive
compensation. The Compensation Committee also reviews market pay information from other sources,
including published compensation surveys. The Compensation Committee reviews information on
comparable companies relating to the aggregate cost of equity-based compensation plans in its
evaluation of the total number of equity awards granted by the Company each year.
During 2005, the Compensation Committee directed the Committee Consultant and the Company
Consultant to prepare total compensation tally sheets for the Chief Executive Officer, Chief
Financial Officer, Chief Operating Officer and Executive Vice President. These tally sheets, which
were reviewed during the Compensation Committees first meeting in 2006, also included a summary of
all equity grants made to these executive officers as well as the estimated obligations that would
be payable to each executive officer in the event of termination of employment under various
scenarios.
Compensation payable to executive officers under the Companys executive compensation program
is linked to organization performance, both short-term and long-term. The Compensation Committee
expects a close correlation between compensation paid to Company executive officers and the
tactical and strategic success of the Company.
Components of Compensation for Executive Officers
The Companys executive compensation program consists of several elements that support the
Companys compensation objectives, including base salary, annual incentives in the form of cash
bonuses, and long-term incentives paid pursuant to the Incentive Plan. In 2005, the Company also
provided a one-time, special cash bonus and a one-time, special grant of restricted stock awards to
certain individuals in recognition of their significant contributions to the completion of the
business combination with Province, to enhance retention and to provide strong incentives relating
to successful integration of the business combination with Province.
Base Salaries. The base salaries of the Named Executive Officers are listed in the Summary
Compensation Table found under Executive Compensation in this Proxy Statement. The salaries of
executive officers and other senior officers are evaluated annually. The Compensation Committee
believes that base salary ranges should reflect the competitive employment market for comparable
positions in comparable organizations.
The Compensation Committee believes that the mid-point of each range for base salaries should
be based on the median of the market, modified to reflect relevant factors, such as any unique
roles and responsibilities and/or individual long-term performance and experience. Accordingly, the
base salary of any particular individual may be above or below the mid-point of the applicable
range.
Annual Incentives. Annual cash bonuses are intended to motivate executive officers to achieve
pre-determined near-term financial and qualitative non-financial objectives consistent with the
Companys overall business strategies. These bonus opportunities are structured as potential cash
awards under the LifePoint Hospitals, Inc. Executive Annual Cash Bonus Plan (the Bonus Plan) for
senior officers of the Company. These bonus opportunities were structured as potential cash awards
under the Executive Performance Incentive Plan for the Chief Executive Officer, Chief Financial
Officer, Chief Operating Officer and Executive Vice President. The Bonus Plan is designed so that
individuals can earn the target amount only if pre-determined performance goals are attained and
can earn well above the target amount when individual and Company performance are also at
comparably high levels. With respect to the Executive Performance Incentive Plan, the Compensation
Committee, in its sole discretion, can reduce the final bonus amount that is paid to an individual
pursuant to the terms of the plan. Target
award opportunities for the executive officers of the Company for 2005 ranged from 40% to 100%
of their respective base salary levels. For 2005, actual awards for executive officers ranged from
33% to 84% of base salary.
25
Long-Term Incentives. The Compensation Committee believes that the interests of executive
officers should be aligned with the interests of stockholders through the use of equity-based
compensation. Accordingly, the Compensation Committee has made periodic grants of nonqualified
options and issued restricted stock to executive officers in order to reflect competitive
practices, promote management retention and align managements interest with the long-term
interests of the Companys stockholders. In 2005, the Compensation Committee approved the grant to
each of the Named Executive Officers of options to purchase shares of Common Stock that were
exercisable at $42.60 per share, the fair market value of Common Stock on the date of grant. In
addition, the Compensation Committee approved an annual grant of restricted stock awards to each of
the Named Executive Officers and a one-time, special grant of restricted stock awards to each of
the Named Executive Officers in recognition of significant contributions to the completion of the
business combination with Province. The total equity granted for fiscal 2005 to the Named Executive
Officers is set forth in the table below. Details of the restricted stock awards and option grants
can be found under Executive Compensation.
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Annual Restricted |
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Special Restricted |
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Stock Options |
Name |
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Stock Award |
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Stock Award |
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Granted |
Kenneth C. Donahey |
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40,000 |
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80,000 |
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100,000 |
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Michael J. Culotta |
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18,000 |
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36,000 |
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45,000 |
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William F. Carpenter III |
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18,000 |
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36,000 |
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45,000 |
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William M. Gracey |
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18,000 |
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36,000 |
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45,000 |
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Joné L. Koford |
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10,000 |
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20,000 |
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20,000 |
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Basis for Compensation of Executive Officers in 2005
The Compensation Committees judgments regarding executive compensation in 2005 were based
upon the Compensation Committees assessment of the executive officers leadership performance and
their potential to enhance long-term stockholder value. The Compensation Committee relied upon
judgment and not upon rigid guidelines or formulas in determining the amount and mix of
compensation elements for each executive officer. The Compensation Committee also considered the
report provided by the Company Consultant with respect to competitive market data, as well as
advice received from the Committee Consultant.
Key factors that the Compensation Committee considered regarding executive compensation in
2005 included the recommendations of the Chief Executive Officer, the nature and scope of each
executive officers responsibilities, his or her effectiveness in leading the Companys initiatives
to increase productivity and growth and his or her success in creating a culture of integrity and
compliance with applicable law and the Companys ethics policies. Bonus payments made to the Chief
Executive Officer, Chief Financial Officer, Chief Operating Officer and Executive Vice President
pursuant to the Executive Performance Incentive Plan were based on actual achievement of targeted
goals and performance criteria. Bonus payments made to senior officers pursuant to the Bonus Plan
were based on specific performance measures including constituency satisfaction, financial
performance of the Company and other objective goals identified by executive management. In 2005,
senior officers bonus payments were made in accordance with the objective criteria of the Bonus
Plan. The Compensation Committee did not use its discretion to award larger bonuses based on
subjective criteria of the Bonus Plan. While the maximum amount payable under the Executive
Performance Incentive Plan would have been higher, the Compensation Committee determined to reduce
such payments in its discretion pursuant to the terms of the Executive Performance Incentive Plan.
The Compensation Committee undertakes such an analysis each year with respect to the Bonus Plan and
the Executive Performance Incentive Plan.
Chief Executive Officer Compensation in 2005
The compensation program for the Chief Executive Officer falls under the general compensation
strategy, framework and guidelines established for all executive officers of the Company, with
specific compensation levels and award opportunities established by the Compensation Committee and
approved by the Board of Directors.
As Chairman, Chief Executive Officer and President of the Company, Mr. Donaheys base annual
salary was $675,000, effective February 2004 through February 2005, and was set at $775,000,
effective March 2005. In addition, Mr. Donahey received a grant of options to purchase 100,000
shares of Common Stock at an exercise price
26
equal to $42.60, the fair market value on the date of
grant, and an annual bonus payment of $647,125, which was paid in 2006. Mr. Donahey also received a
special bonus payment of $337,500 in 2005 in recognition of his significant contributions to the
business combination with Province. In addition, Mr. Donahey received an annual restricted stock
award for 40,000 shares of Common Stock and a special restricted stock award for 80,000 shares of
Common Stock. Details of the option grant and restricted stock awards can be found under Executive
Compensation.
The Compensation Committee evaluated the performance of the Chief Executive Officer based on
the Companys achievement of its financial and non-financial objectives. Some of the financial
factors that the Compensation Committee considered include stock price performance, operating
profit and earnings per share growth, revenue growth and cash flow. Some of the non-financial
factors that the Compensation Committee considered include developing a strong senior management
team, assembling strong talent in core jobs within the Company and developing, monitoring, updating
and implementing long-term business strategies. The Compensation Committee did not assign relative
weights or rankings to these factors but made a subjective determination based upon a consideration
of all such factors. The bonus paid to the Chief Executive Officer for 2005 was based on an award
made under the Executive Performance Incentive Plan. This award included targeted levels of net
revenue and pre-tax income (expressed as EBITDA), with payment limited to the level of
achievement of these financial factors. After calculating the amount available to be paid pursuant
to the awards financial formula, the Compensation Committee exercised its rights under the award
to reduce the final bonus amount that was actually paid. The Compensation Committee believes that
Mr. Donaheys total compensation for 2005 properly reflects the Companys performance as measured
against all appropriate factors.
Tax Deductibility of Executive Compensation
Section 162(m) of the Code generally limits the corporate tax deduction available to public
companies for compensation in excess of $1 million that is paid to a Named Executive Officer.
However, compensation that is paid under a performance-based compensation plan, as defined in
Section 162(m) of the Code, is fully deductible without regard to this limit. Section 162(m) also
permits full deductibility for certain pension contributions and other payments. The Compensation
Committee considers the impact of Section 162(m) in establishing and administering the Companys
compensation policies and plans, and endeavors, when possible, to design compensation programs that
are within an exception to the Section 162(m) limits on deductibility.
The Companys executive compensation strategy is intended to be cost- and tax-effective. The
Company has taken appropriate actions with respect to certain of its compensation plans in order to
qualify for the performance-based compensation exception to Section 162(m). These actions include
maintaining the Incentive Plan in a manner to qualify certain equity awards as performance-based
compensation and maintaining the Executive Performance Incentive Plan to provide performance-based
annual bonus compensation. Except for compensation earned on the vesting of restricted stock awards
that occurred on April 15, 2005, as explained in footnote 4 to the Summary Compensation Table in
this Proxy Statement, all compensation that the Named Executive Officers earned in 2005 under
current compensation programs will be fully deductible. During 2005, the Section 162(m) limits on
deductibility would have been applicable to the cash bonus payment to Messrs. Donahey, Culotta,
Gracey and Carpenter and Ms. Koford, all of whom were covered by the Executive Performance
Incentive Plan.
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COMPENSATION COMMITTEE |
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Richard H. Evans, Chair |
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DeWitt Ezell, Jr. |
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Michael P. Haley (1) |
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Ricki Tigert Helfer |
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William V. Lapham |
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John E. Maupin, Jr., D.D.S. |
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Owen G. Shell, Jr. |
Dated: March 24, 2006
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(1) |
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Mr. Haley joined the Compensation Committee effective April 15, 2005. |
27
CORPORATE GOVERNANCE AND NOMINATING COMMITTEE REPORT
The Corporate Governance and Nominating Committee of the Board of Directors consists entirely
of directors who are independent as determined by the Board of Directors and meet Nasdaqs
independence and experience requirements. The Corporate Governance and Nominating Committee reviews
and reassesses the adequacy of the Charter on an annual basis. On September 19, 2005, the Corporate
Governance and Nominating Committee adopted, and the Board of Directors approved, amendments to the
Corporate Governance and Nominating Committee Charter, which outlines the practices followed by the
Corporate Governance and Nominating Committee. The Charter of the Corporate Governance and
Nominating Committee is available on the Corporate Governance section of the Companys website,
www.lifepointhospitals2.com. William F. Carpenter III, the Companys General Counsel, serves as the
Companys Corporate Governance Officer.
Since its formation, the Company has been committed to building long-term stockholder value.
The Company believes that sound corporate governance practices contribute to stockholder value. The
Companys directors have been, and continue to be, interested in establishing and maintaining a
culture of proper governance. For example, Mr. Donahey is the only inside director and each of the
committees of the Board of Directors is composed exclusively of independent directors. Directors
have also been compensated with equity securities to align their interests with those of the
Companys stockholders.
The Companys Corporate Governance and Nominating Committee is charged with, among other
things:
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Identifying persons qualified to become members of the Board of Directors
and recommending to the Board of Directors proposed nominees for Board membership; |
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Evaluating the performance of existing directors before recommending to the
Board of Directors nominations for additional terms as directors; |
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Reviewing any candidates recommended by stockholders in accordance with the
By-laws and providing a process for receipt and consideration of any such
recommendations; |
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Recommending to the Board of Directors the directors to serve on each
standing committee of the Board of Directors and periodically reviewing the structure
and respective functions of the committees; |
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Annually reviewing the composition of the Board of Directors to ensure that
a majority of the members are independent in accordance with the Nasdaq Marketplace
Rules; |
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Ensuring that succession planning takes place for the position of Chief
Executive Officer and other senior management positions; |
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Leading the Board of Directors in its annual review of the performance of
the Board, its committees and its directors; |
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Annually evaluating the Companys Corporate Governance Standards which set
forth the key practices of the Corporate Governance and Nominating Committee and the
Board of Directors; and |
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Identifying a person qualified to be the Companys Corporate Governance
Officer and recommending to the Board of Directors the appointment of such person as an
officer of the Company. |
Pursuant to the authority granted in its Charter, the Corporate Governance and Nominating
Committee continually monitors the best practices of corporate governance of public companies and
those that develop in the Companys industry. Certain of these best practices, together with the
strong standards already established by the Company, were adopted by the Corporate Governance and
Nominating Committee as the Companys Corporate Governance Standards. The Corporate Governance and
Nominating Committee, as well as the Board of Directors, reviews these standards at least annually.
On February 23, 2006, the Corporate Governance and Nominating
Committee recommended, and the Board of Directors approved, amendments to the Companys
Corporate
28
Governance Standards to reflect the appointment of a lead director, Owen G. Shell, Jr.,
who will chair non-management executive sessions of the Board of Directors and serve as a liaison
for communication between the Chairman and independent members of the Board of Directors and to
limit the number of boards of other public companies on which a director who also serves as a
senior officer of a company, or in an equivalent position, may serve to two boards, in addition to
the Companys Board. The Companys Corporate Governance Standards, as amended, are available on the Corporate
Governance section of the Companys website, www.lifepointhospitals2.com.
During the past year, the Corporate Governance and Nominating Committee reviewed, with the
Corporate Governance Officer and outside counsel, many governance issues including director
independence; the size of the Board; limits on Board service; the practice of all independent
directors serving on all committees; rotation of committee chairs; the need for a separate Chairman
of the Board who is different from the Chief Executive Officer or, alternatively, a lead director
of the Board; the Companys staggered Board terms; succession issues; Board and management stock
ownership guidelines; poison pills; and potential Board liability issues. After thorough
consideration, the Corporate Governance and Nominating Committee determined that a lead director
should be named and adjustments to the limits on Board service as set forth above should be made
and otherwise determined generally that, at this time, the Companys Corporate Governance Standards
and the Charter of the Corporate Governance and Nominating Committee are sufficient to protect and
enhance stockholder value.
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CORPORATE GOVERNANCE AND NOMINATING COMMITTEE |
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Ricki Tigert Helfer, Chair |
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Richard H. Evans |
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DeWitt Ezell, Jr. |
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Michael P. Haley (1) |
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William V. Lapham |
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John E. Maupin, Jr., D.D.S. |
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Owen G. Shell, Jr. |
Dated: March 24, 2006
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(1) |
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Mr. Haley joined the Corporate Governance and Nominating Committee effective April 15, 2005. |
29
COMPARATIVE PERFORMANCE
The graph below compares the percentage change of cumulative total stockholder return on
the Common Stock with (a) the performance of a broad equity market indicator, the Nasdaq Stock
Market (United States) Index (the Broad Index) and (b) the performance of an industry index, the
S&P Health Care Facilities (Hospital Management) Index (the Industry Index). The graph begins on
December 31, 2000, and the comparison assumes the investment of $100 on such date in each of the
Common Stock, the Broad Index and the Industry Index and assumes the reinvestment of all dividends,
if any. The table following the graph presents the corresponding data for December 31, 2000 and
each subsequent fiscal year end.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among LifePoint Hospitals, Inc., the Nasdaq Stock Market (U.S.) Index,
and the S&P Health Care Facilities Index
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Cumulative Total Return |
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12/31/00 |
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12/31/01 |
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12/31/02 |
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12/31/03 |
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12/31/04 |
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12/31/05 |
LifePoint Hospitals, Inc. |
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$ |
100 |
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$ |
67.91 |
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$ |
59.71 |
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$ |
58.75 |
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$ |
69.47 |
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$ |
74.81 |
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NASDAQ Stock Market (U.S.) Index |
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100 |
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|
79.08 |
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55.95 |
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83.35 |
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90.64 |
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92.73 |
|
S&P Health Care Facilities Index |
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100 |
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102.20 |
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73.79 |
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77.75 |
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69.90 |
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77.91 |
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THE STOCK PRICE PERFORMANCE GRAPH AND FISCAL YEAR END SUMMARY ARE PURELY HISTORICAL INFORMATION AND
SHOULD NOT BE RELIED UPON AS INDICATIVE OF FUTURE PRICE PERFORMANCE.
30
CERTAIN TRANSACTIONS
There were no reportable relationships or transactions for any director or executive officer
of the Company. None of the Companys directors or executive officers had any reportable
indebtedness to the Company or any of its subsidiaries during 2005.
GENERAL INFORMATION
Other Matters
At the date hereof, there are no other matters that the Board of Directors intends to present,
or has reason to believe others will present, at the Annual Meeting. If other matters come before
the Annual Meeting, the persons named in the accompanying form of proxy will have discretionary
authority to vote all proxies with respect to such matters in accordance with their best judgment.
Incorporation by Reference
To the extent that this Proxy Statement is incorporated by reference into any other filing by
the Company under the Exchange Act, the sections of this Proxy Statement entitled Compensation
Committee Report on Executive Compensation, Audit and Compliance Committee Report and Corporate
Governance and Nominating Committee Report (to the extent permitted by the rules of the SEC) and
Comparative Performance, as well as the appendices to this Proxy Statement, will not be deemed
incorporated, unless specifically provided otherwise in such filing.
Policy on Reporting of Concerns Regarding Accounting Matters
The Audit and Compliance Committee has adopted a policy on the reporting of concerns regarding
accounting or auditing matters. Any person, whether or not an employee, who has a concern about the
conduct of the Company or any of the Companys people, including with respect to the Companys
accounting, internal accounting controls or auditing matters, may, in a confidential and anonymous
manner, communicate that concern via a compliance hotline, (877) 508-5433, the Companys designated
external contact for these purposes. The hotline services are available 24 hours a day, seven days
a week. Such complaints will be handled on an expedited basis and, under certain circumstances,
will be communicated directly to the Chairman of the Audit and Compliance Committee.
Stockholder Nominations and Proposals
The By-laws provide that nominations of persons for election as directors (other than persons
nominated by or at the direction of the Board of Directors) and proposals of business to be
transacted by the stockholders (other than proposals submitted by or at the direction of the Board
of Directors) at an annual meeting of stockholders may be made by any stockholder of record who is
entitled to vote and who provides proper notice. In order for any such nomination or submission to
be proper, the notice must contain certain information concerning the nominating or proposing
stockholder and the nominee or the proposal, as the case may be, and must be delivered to the
Secretary of the Company at the Companys principal executive offices not less than 90 days prior
to the first anniversary of the preceding years annual meeting of stockholders. If, however, the
date of the annual meeting is advanced more than 30 days prior to or delayed more than 60 days
after such anniversary date, notice by the stockholder to be timely must be delivered not later
than the close of business on the later of the 90th day prior to such annual meeting or the tenth
day following the day on which the public announcement of the date of such meeting is first made.
In the event that the number of directors to be elected to the Board of Directors is increased
and there is no public announcement naming all of the nominees for director or specifying the size
of the increased Board of Directors made by the Company at least 100 days prior to the first
anniversary of the preceding years annual meeting, a stockholders notice required by the By-laws
shall also be considered timely, but only with respect to nominees for any new positions created by
such increase, if it is delivered not later than the close of business on the tenth day following
the day on which such public announcement is first made by the Company.
31
Nominations by stockholders of persons for election to the Board of Directors may be made at a
special meeting of stockholders if the stockholders notice required by the By-laws is delivered
not later than the close of business on the later of 90 days prior to such special meeting or the
tenth day following the day on which public announcement is first made of the date of the special
meeting and of the nominees proposed by the Board of Directors to be elected at such meeting.
If a stockholder wishes to have a proposal considered for inclusion in the Companys proxy
materials for the next annual meeting of stockholders, the proposal must comply with the SECs
proxy rules, be stated in writing and be received by the Company on or before the close of business
on February 7, 2007. Any proposals should be mailed to the Company at 103 Powell Court, Suite 200,
Brentwood, Tennessee 37027, Attention: Corporate Secretary.
Stockholder Communication with the Board of Directors
Stockholders who wish to communicate with the Board of Directors (or specified individual
directors), including the non-management directors as a group, may do so by addressing their
correspondence to the appropriate member(s) of the Board of Directors, c/o the Corporate Secretary,
LifePoint Hospitals, Inc., 103 Powell Court, Suite 200, Brentwood, Tennessee 37027. All written
communications received in such manner from stockholders of the Company shall be forwarded to the
members of the Board of Directors to whom the communication is directed or, if the communication is
not directed to any particular member(s) of the Board of Directors, the communication shall be
forwarded to all members of the Board of Directors.
Important Notice Regarding Delivery of Stockholder Documents
In December 2000, the SEC adopted rules permitting companies and intermediaries (e.g.,
brokers) to satisfy the delivery requirements for annual reports and proxy statements sent to
stockholders of record who have the same address by delivering a single annual report and proxy
statement to that address. This practice, known as householding, is designed to reduce a
companys printing costs and postage fees.
Brokers with account holders who are stockholders of the Company may be householding the
Companys proxy materials. Only one copy of this Proxy Statement and the Companys 2005 Annual
Report to Stockholders may be delivered to multiple stockholders sharing the same address unless
the broker has received contrary instructions from one or more of the stockholders. After a
stockholder receives a notice from his or her broker that householding will be used for delivery of
communications to such address, householding will continue until further notification or until the
stockholders consent is revoked. However, if you reside at such an address and wish to receive a
separate annual report and proxy statement in the future, you should notify your broker. Any
stockholder who currently receives multiple copies of this Proxy Statement and the Companys 2005
Annual Report to Stockholders at such an address may request householding in the future by
contacting your broker. Stockholders who participate in householding will continue to receive
separate proxy cards.
32
Available Information
The Company files annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any reports, statements or other information filed
at the SECs public reference room at 450 Fifth Street, N.W., Washington, D.C. Please call the SEC
at 1-800-SEC-0330 for further information on the public reference rooms. The SEC filings are also
available to the public from commercial document retrieval services and at the Internet website
maintained by the SEC at www.sec.gov. If you are a stockholder of the Company and would like to
request any of the documents the Company has filed with the SEC, please request them in writing at
103 Powell Court, Suite 200 Brentwood, Tennessee 37027, Attention: Investor Relations. You can also
obtain copies of these documents on the Investor Information SEC Filings section of the
Companys website at www.lifepointhospitals2.com.
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By Order of the Board of Directors, |
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/s/ William F. Carpenter III |
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William F. Carpenter III
Secretary |
Brentwood, Tennessee
Dated: April 5, 2006
33
Appendix A
CHARTER
OF THE
AUDIT AND COMPLIANCE COMMITTEE
OF THE BOARD OF DIRECTORS
ARTICLE I. PURPOSE
The primary function of the Audit and Compliance Committee (the Committee) is to
oversee the accounting, audit, financial reporting and compliance processes of LifePoint Hospitals,
Inc. (the Company) and to assist the Board of Directors (the Board) of the Company in
fulfilling its oversight responsibilities by reviewing: the financial reports and other financial
information provided by the Company to any governmental body or the public; the Companys and its
subsidiaries systems of internal controls regarding financial reporting, accounting, legal and
corporate compliance; the Companys compliance with appropriate policies and ethical standards; the
Companys compliance with the Corporate Integrity Agreement; and the Companys internal and
external audit processes. Consistent with this function, the Committee should encourage continuous
improvement of, and should foster adherence to, the Companys finance, accounting, legal and
corporate policies, procedures and practices at all levels. The Committees primary duties and
responsibilities are to:
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Serve as an independent and objective party to monitor the Companys financial
reporting process and internal control system regarding finance, accounting, legal and
corporate compliance, and from time to time report on these matters to the Board; |
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Select and appoint on behalf of the Company, oversee the work of and fix the
compensation of a firm of independent auditors whose duties it shall be to audit the
books and accounts of the Company for the fiscal year in which they are appointed, and
who shall report directly to the Committee; |
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Review and appraise the independence and performance of, and the services provided
and fees charged by, the Companys independent auditors, including a review of, and the
pre-approval of, any audit services, audit-related services and, where appropriate, any
non-audit services proposed to be performed by the Companys independent auditors, and
from time to time report on these matters to the Board; |
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Serve as an independent and objective party to monitor the Companys compliance with
any Corporate Integrity Agreement to which the Company is a party; |
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Insure that procedures are in place for the receipt, retention and treatment of
complaints received by the Company regarding accounting, financial reporting, internal
controls, auditing, legal or compliance matters; |
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|
Insure that an open avenue exists for communication among the independent auditors,
management, the internal auditing department and the Board and be responsible for and
oversee resolution of disagreements that may arise between management and the
independent auditors regarding financial reporting; and |
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|
Perform such other duties and responsibilities within the scope of the Committees
purpose as may be delegated by the Board, from time to time. |
The Committee will primarily fulfill these responsibilities by carrying out the activities
enumerated in Article IV of this Audit and Compliance Committee Charter (Charter). The
Committee is empowered to conduct any investigation appropriate to fulfilling its responsibilities
contained in this Charter, and it shall have the authority to communicate directly with the
independent auditors as well as any employee of the Company. The Committee shall have the authority
to retain, at the Companys expense, independent accounting, legal or other advisers or
A-1
experts it deems necessary in the performance of its duties. The Committee shall determine and
direct the Company to pay appropriate compensation to the independent auditors engaged by the
Committee and to any independent advisers or experts retained by the Committee.
The Committee is not responsible for preparing the financial statements, implementing or
maintaining the effectiveness of internal controls or auditing the financial statements. Management
of the Company has the responsibility for preparing the financial statements and implementing
internal controls, and the independent auditors have the responsibility for auditing the financial
statements. The Committees role is to review and monitor these processes.
ARTICLE II. COMPOSITION
Each Committee member shall meet the independence and financial literacy requirements of
The Nasdaq Stock Market, Inc. (Nasdaq). The Committee shall be comprised of no fewer than three
directors, the exact number to be determined by the Board.
Independence Requirements
Except as provided below, each member of the Committee must be an independent director, and be
free from any relationship that, in the opinion of the Board, would interfere with the exercise of
his or her independent judgment as a member of the Committee. A member of the Committee may not,
other than in his or her capacity as a member of the Committee, the Board or another committee of
the Board, accept any consulting, advisory or other compensatory fee from the Company or be an
affiliated person of the Company or any subsidiary of the Company. In addition, the independence of
a Committee member is determined according to the Marketplace Rules of Nasdaq, as follows:
An Independent director means a person other than an officer or employee of the Company or
its subsidiaries or any other individual having a relationship which, in the opinion of the
Companys Board, would interfere with the exercise of independent judgment in carrying out the
responsibilities of a director. The following persons shall not be considered Independent:
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a director who is or has been employed by the Company or by any parent or subsidiary
of the Company at any time during the past three years; |
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a director who accepted or who has a non-employee Family Member who accepted any
payments from the Company or any parent or subsidiary of the Company in excess of
$60,000 during the current fiscal year or any of the past three fiscal years, other
than (i) compensation for service on the Board or any committee of the Board, (ii)
payments arising solely from investments in the Companys securities, (iii)
compensation paid to a Family Member who is a non-executive employee of the Company or
a parent or subsidiary of the Company, (iv) benefits under a tax-qualified retirement
plan or non-discretionary compensation, or (v) loans permitted under Section 13(k) of
the Securities Exchange Act of 1934, as amended (the Exchange Act). Family Member
means a persons spouse, parents, children and siblings, whether by blood, marriage or
adoption, or anyone residing in such persons home; |
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a director who is a Family Member of an individual who is, or at any time during the
past three years was, employed by the Company or by any parent or subsidiary of the
Company as an executive officer; |
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a director who is, or has a Family Member who is, a partner in, or a controlling
shareholder or an executive officer of, any organization to which the Company made, or
from which the Company received, payments for property or services (other than those
arising solely from investments in the Companys securities or under non-discretionary
charitable contribution matching programs) in the current or any of the past three
fiscal years that exceed 5% of the recipients consolidated gross revenue for that
year, or $200,000, whichever is more; |
A-2
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a director who is, or has a Family Member who is, employed as an executive officer
of another entity for which at any time during the past three years any of the
executive officers of the Company served on the compensation committee of such other
entity; |
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a director who is, or has a Family Member who is, a current partner of the Companys
outside auditor, or was a partner or employee of the Companys outside auditor who
worked on the Companys audit at any time during the past three years; or |
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any other director who does not qualify as independent as determined under the
Marketplace Rules of Nasdaq. |
In addition, each member of the Committee must meet the criteria for independence set forth in
Rule 10A-3(b)(1) under the Exchange Act (subject to the exemptions provided in Rule 10A-3(c)) and
must not have participated in the preparation of the financial statements of the Company at any
time during the past three years.
Financial Literacy Requirements
Each member of the Committee must have a working familiarity with basic finance and accounting
practices. This working familiarity with basic finance and accounting practices must be determined
in accordance with the Marketplace Rules of Nasdaq, as follows:
At a minimum, each member of the Committee must be able to read and understand fundamental
financial statements, including the Companys balance sheet, income statement and cash flow
statement.
The Company will certify to Nasdaq that it has, and will continue to have, at least one member
of the Committee who is an audit committee financial expert. An audit committee financial
expert means a person who has past employment experience in finance or accounting, requisite
professional certification in accounting or any other comparable experience or background which
results in the individuals financial sophistication and which results in the individual meeting
the qualification of an audit committee financial expert as specified in rules and regulations
established or approved by the Securities and Exchange Commission (the SEC) under the
Sarbanes-Oxley Act of 2002.
Election Procedure
The members of the Committee shall be elected by the Board to serve until the Companys next
annual meeting or until their successors are duly elected and qualified. Unless a Chair of the
Committee is designated by the full Board, the members of the Committee may designate a Chair by
majority vote of the full Committee membership.
ARTICLE III. MEETINGS
The Committee will meet at least four times annually and more frequently if circumstances
dictate. As part of its job to foster open communication, the Committee should meet regularly, but
in no event less than at least annually, with management, the Senior Vice President of Audit and
Compliance and the independent auditors in separate executive sessions to discuss any matters that
the Committee or any of these persons believe should be discussed privately. In addition, the
Committee shall communicate with the independent auditors and management quarterly to review the
Companys financial statements and significant findings consistent with Article IV.3 below.
This communication with the independent auditors may be held in conjunction with the regular
meetings of the Committee or otherwise. The Committee shall, prior to the Companys public release
of its earnings, hold quarterly meetings to review the Companys quarterly financial results and
quarterly earnings releases. These meetings can be in person, by teleconference or otherwise. A
majority of the members shall constitute a quorum for the transaction of business.
A-3
ARTICLE IV. RESPONSIBILITIES AND DUTIES
The following functions shall be the common recurring activities of the Committee in
carrying out its oversight responsibility. These functions are set forth as a guide with the
understanding that the Committee may diverge from this guide as appropriate given the
circumstances.
Documents/Reports Preparation and Review
1. |
|
Review and reassess the adequacy of this Charter periodically, and at least annually, as
conditions dictate. If the Committee determines that the Charter needs amendment, it will
submit its proposals for amendments to the Board for approval. |
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2. |
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Review, prior to the filing of the Companys Form 10-K, the annual audited financial
statements of the Company. Review and resolve any disagreements among management and the
independent auditors or the internal auditing department in connection with the preparation of
the annual audited financial statements. This review should also include discussion with
management and the independent auditors of significant issues regarding critical accounting
policies, practices and judgments. |
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3. |
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Review and discuss with management the quarterly financial results of the Company. Discuss
any significant changes to the Companys accounting principles and any matters required to be
communicated to the Committee by the independent auditors as required by Statement of Auditing
Standards No. 61 (SAS 61). Review and resolve any disagreements among management and the
independent auditors or the internal auditing department in connection with the preparation of
the quarterly financial statements. |
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4. |
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Annually prepare, in conjunction with the Companys legal counsel and Chief Financial
Officer, a report of the Committee to stockholders as required by the SEC. This report must be
included in the Companys annual proxy statement. At a minimum, this report must include
disclosure that the Committee performed or received the following: |
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Reviewed and discussed with management the Companys annual audited financial
statements and recommended to the Board that such audited financial statements be
included in the Annual Report on Form 10-K for the preceding fiscal year for filing
with the SEC; |
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Discussed with the independent auditors the matters required to be discussed by SAS
61, as may be modified or supplemented; and |
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Received from the independent auditors the written disclosures and the letter from
the independent auditors regarding the auditors independence as required by
Independent Standards Board Statement No. 1 (ISB 1), as may be modified or
supplemented, and has discussed with the independent auditors the auditors
independence. |
5. |
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In connection with each annual or quarterly report filed with the SEC, review and discuss
with management and the independent auditors the maintenance and effectiveness of the
Companys internal controls relating to its ability to record, process, summarize and report
financial data, keeping the Companys critical accounting policies in mind. This review should
include a discussion of any significant deficiencies in the design or operation of internal
controls and any fraud, whether or not material, that includes management or other employees
who have a significant role in the Companys internal controls. On an annual basis, the
Committee shall obtain a written report from management that describes managements own
assessment of the effectiveness of the Companys internal control over financial reporting
along with the independent auditors attestation report on managements assessment. |
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6. |
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Cooperate with management, the Board and the Companys legal counsel to certify to Nasdaq
that the Committee has adopted a written charter, that the Committee complies with Nasdaqs
structure and membership requirements, and that the Committee has performed its annual review
and reassessment of the adequacy of the Charter. |
Independent Auditors
7. |
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Select and engage on behalf of the Company, fix the compensation of, and report to the Board
annually as to the selection of the Companys independent auditors, who are ultimately
accountable to the Committee. |
A-4
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The Committee has the ultimate authority and responsibility to select, evaluate and, where
appropriate, dismiss and replace the independent auditors. |
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8. |
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Consider the independence and effectiveness of the independent auditors, and approve the fees
to be paid to the independent auditors. In connection with considering the independence of the
independent auditors, the Committee shall (i) request detail on any matters that may affect
the auditors independence as well as the role and status of any individual at the audit firm
whose independence may be in question, and (ii) inquire whether the independent auditors have
reasonable quality control procedures to ensure compliance by them with all independence
requirements. |
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9. |
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On an annual basis, ensure the receipt of, and review and discuss with the independent
auditors all significant relationships included in, the report of the independent auditors to
the Committee, as required under ISB 1, that the auditors have with the Company to determine
if these relationships may impair the independent auditors independence. In response to the
report of the independent auditors to the Committee required under ISB 1, the Committee will
review the independence and performance of the independent auditors. |
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10. |
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Consider whether the proposed provision of any non-audit services by the independent auditors
(those services not related to the audit of the annual financial statements or the review of
the interim financial statements included in the Companys quarterly reports on Form 10-Q for
such year) is compatible with maintaining the auditors independence. If the Committee
determines that such proposed non-audit services are compatible with the independent auditors
independence, it may approve the provision of such services, subject to restrictions under
applicable law or Nasdaq rules. |
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11. |
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Pre-approve all audit, audit-related and non-audit services to be performed for the Company
by the independent auditors. In performing this function, the Committee shall consult with
management prior to the Companys engagement of the independent auditors for such services.
The Committee may delegate its authority to pre-approve audit, audit-related and non-audit
services to the Chair of the Committee, provided that the pre-approval decisions of the Chair
are subsequently presented to the Committee at the next Committee meeting. |
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12. |
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Regularly consult with the independent auditors out of the presence of management about
internal controls, the completeness and accuracy of the Companys financial statements, and
other appropriate matters. |
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13. |
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Prior to the filing of the Companys Form 10-K, discuss certain matters with the independent
auditors required to be communicated by the independent auditors to the Committee in
accordance with SAS 61, as well as the results of the audit. |
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14. |
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Discuss with management and the independent and internal auditors the Companys major
financial risk exposure and the steps management and the independent and internal auditors
have taken to monitor and control such exposure, including the Companys risk assessment and
risk management policies. |
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15. |
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Ensure that the independent auditors either (i) have received an external quality control
review by an independent public accountant (peer review) that determines whether the
auditors system of quality control is in place and operating effectively and whether
established policies and procedures and applicable auditing standards are being followed; or
(ii) are enrolled in a peer review program and within 18 months receives a peer review that
meets acceptable guidelines. |
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16. |
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Review any public reports available from the Public Company Accounting Oversight Board
(PCAOB) with respect to the Companys independent registered public accounting firm. |
A-5
Financial Reporting Process
17. |
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In consultation with the independent auditors and the internal auditors, review the integrity
of the Companys financial reporting processes, both internal and external. |
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18. |
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Consider the independent auditors judgments about the quality and appropriateness of the
Companys accounting principles as applied in its financial reporting. |
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19. |
|
Consider any significant changes to the Companys accounting principles and practices as
recommended by the independent auditors, management or the internal auditing department.
Review any required disclosure to the Companys financial statements of significant changes in
accounting principles and practices. |
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20. |
|
Discuss with management and the independent auditors the quality of the accounting principles
and underlying estimates used in the preparation of the Companys financial statements. |
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21. |
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Discuss with the independent auditors the clarity of the financial disclosure practices used
or proposed by the Company. |
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22. |
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Inquire as to the independent auditors views about whether managements choices of
accounting principles appear reasonable from the perspective of income, asset and liability
recognition, and whether those principles are common practices or are minority practices. |
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23. |
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Discuss with management and the independent auditors the effect of off-balance sheet
structures, if any such arrangements exist, on the Companys financial statements. |
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24. |
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Review and discuss with management prior to release, the Companys earnings press releases,
including the use of pro forma or adjusted non-GAAP financial information, as well as
financial information and earnings guidance provided to analysts and rating agencies. |
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25. |
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Review and discuss with management any audit opinion including reports on managements
assessment of internal controls over the financial reporting processes provided by the
independent auditors. If any such audit opinion contains a qualification, advise management to
make a public announcement, as appropriate, disclosing the receipt of such qualification not
later than seven calendar days following the filing of such audit opinion in a filing with the
SEC and, prior to such announcement, provide the text of such announcement to the StockWatch
section of Nasdaqs MarketWatch Department. |
Process Improvement
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Following completion of the annual audit, review separately with each of management, the
independent auditors and the internal auditing department any significant difficulties
encountered during the course of the audit if raised by the independent auditors, management
or the internal auditing department, including any restrictions on the scope of work or access
to required information. |
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Review with the independent auditors and management the extent to which changes or
improvements in financial or accounting practices, as approved by the Committee, have been
implemented. (This review should be conducted at an appropriate time subsequent to
implementation of changes or improvements, as decided by the Committee.) |
Corporate and Legal Compliance
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At least annually, meet with the Senior Vice President of Audit and Compliance with oversight
of the Companys ethics, compliance and corporate responsibility programs, for a report on the
Companys ethics and compliance programs, including a review of any significant issues that
may affect the financial reporting process and internal control system of the Company. |
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Review managements monitoring of the Companys compliance with any Corporate Integrity
Agreement to which the Company is a party. |
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Review, assess and make recommendations, if deemed necessary, regarding legal and regulatory
issues that may have a material impact on the Companys financial statements, policies, and
reporting requirements. |
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Review all reports concerning any fraud or significant regulatory noncompliance that occurs
at the Company. This review should include at a minimum consideration of the internal controls
that should be |
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strengthened to reduce the risk of a similar event in the future and the impact on
previously issued financial statements and reports filed with governmental authorities. |
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Review, assess and make recommendations, if deemed necessary, regarding managements
compliance with applicable legal and regulatory requirements or findings and with the policies
and decisions of the Board. |
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Review, with the Companys legal counsel, legal compliance matters including corporate
securities trading policies. |
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Engage independent legal counsel and other advisors as the Committee determines necessary to
carry out its duties. |
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Meet separately with each of management and the independent auditors regarding any
significant judgments made in managements preparation of the financial statements and the
view of each as to appropriateness of such judgments. |
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Cooperate with management, the Board and the Companys legal counsel to ensure that the
Charter is filed with the SEC at least every three years as an appendix to the Companys proxy
statement for its annual meeting of stockholders in accordance with SEC rules and regulations. |
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Cooperate with management, the Board and the Companys legal counsel to ensure that the
Company discloses in its proxy statement for its annual meeting of stockholders whether the
Committee members are Independent as defined in Article II of this Charter, rules and
regulations of the SEC and Nasdaq listing standards, and disclose certain information
regarding any director of the Committee who is not Independent. |
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Review, with the Companys legal counsel, as necessary, any legal matter that could have a
significant impact on the Companys financial statements, financial reporting process, and
internal control systems, including the Companys compliance with applicable laws and
regulations and inquiries received from regulators or governmental agencies. |
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Perform any other activities consistent with this Charter, the Companys Bylaws and Delaware
General Corporation Law, as the Committee or the Board deems necessary or appropriate. |
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Receive reports from the Senior Vice President of Audit and Compliance in charge of the
Companys internal audit department and review the internal audit plan at least annually. |
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Maintain minutes of meetings and periodically report to the Board on significant results of
the foregoing activities. |
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Annually review the Committees own performance. The Committee, however, shall not be
required to review its own performance for any year in which the entire Board or an
appropriate Board committee has conducted a review of the Committees performance for that
year. |
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Review financial and accounting personnel succession planning within the Company. |
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Review all related-party transactions for potential conflicts of interest on an ongoing
basis, which must be approved by the Committee or another independent body of the Board. In
connection with each annual or quarterly report filed with the SEC, review with management any
disclosure relating to directors and officers related party transactions and potential
conflicts of interest. Annually review policies and procedures as well as audit results
associated with directors and officers expense accounts and perquisites. |
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Insure that procedures are in place for the receipt, retention and treatment of complaints
received by the Company regarding accounting, financial reporting, internal controls or
auditing matters. Such procedures shall include measures to provide for the confidential and
anonymous submission of concerns by Company employees regarding questionable accounting,
financial reporting, or auditing matters. |
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Ensure that the Companys Code of Ethics for Senior Financial Officers and Chief Executive
Officer (Code of Ethics) applies to the Companys Chief Executive Officer and Chief
Financial Officer, complies with the definition of a code of ethics as set out in the
Sarbanes-Oxley Act of 2002 and the regulations promulgated thereunder, is publicly available
and provides for an appropriate enforcement mechanism. |
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Annually review the Companys Code of Ethics applicable to the Companys principal
executive officer, principal financial officer, principal accounting officer or controller or
persons performing similar functions and recommend to the Board, as appropriate, any proposed
changes to the requirements therein. |
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48. |
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Recommend to the Board for its consideration and approval or disapproval any request for a
waiver of the Code of Ethics and appropriate disclosure as required by law or regulation of an
applicable securities exchange automated quotation system. |
A-8
LIFEPOINT HOSPITALS, INC.
ANNUAL MEETING OF STOCKHOLDERS
May 8, 2006
The undersigned hereby authorizes and appoints William F. Carpenter III and Michael J.
Culotta, or either of them, with power of substitution, as proxies to vote all shares of common
stock of LifePoint Hospitals, Inc. (the Company) owned by the undersigned at the Annual Meeting
of Stockholders to be held at 511 Union Street, Suite 2700, Nashville, Tennessee 37219, at 3:00
p.m. local time on May 8, 2006, and any adjournment thereof, on the following matters as indicated
below and such other business as may properly come before the Annual Meeting:
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FOR the election of the nominees listed as Class I directors of the Company: Ricki
Tigert Helfer, John E. Maupin, Jr. and Owen G. Shell, Jr. (except as marked to the
contrary below). |
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WITHHOLD AUTHORITY to vote for all nominees listed: Ricki Tigert Helfer, John E.
Maupin, Jr. and Owen G. Shell, Jr. |
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INSTRUCTION: To withhold authority to vote for an individual nominee, write his or
her name in the space provided below: |
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Ratification of the selection of Ernst & Young LLP as the independent registered
public accounting firm of the Company for 2006. |
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o FOR |
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In their discretion, the proxies named above may vote upon such other matters as may properly
come before the Annual Meeting or any adjournment thereof.
THIS PROXY MUST BE DATED AND SIGNED ON THE REVERSE SIDE
This Proxy is solicited on behalf of the Companys Board of Directors.
This Proxy, when properly executed, will be voted in the manner directed herein by the
undersigned stockholder. A vote against any of the proposals will not count as a vote for
adjournment of the Annual Meeting. If no direction is made, this proxy will be voted (i) FOR the
election of the nominees as Class I directors of the Company; and (ii) FOR ratification of the
selection of Ernst & Young LLP as the independent registered public accounting firm of the Company
for 2006.
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Dated:
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, 2006 |
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Signature of stockholder
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Signature if held jointly
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Please sign exactly as your name appears on this
Proxy Card. When signing as attorney, executor,
administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full
corporate name by President or other authorized
officer. If a partnership, please sign in partnership
name by authorized person. |
PLEASE mark, sign, date and return the Proxy Card promptly using the enclosed envelope.