Community Health Systems, Inc. (CYH) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by and welcome to the Community Health Systems, Inc. Annual Meeting. [Operator Instructions] I would now like to hand the conference over to the Chairman and Chief Executive Officer, Wayne Smith. Thank you. Please go ahead.

Good morning. This is Wayne Smith, Chairman and Chief Executive Officer of Community Health Systems, Inc. It's my pleasure to call to order this 2020 Annual Meeting of Stockholders of Community Health Systems, Inc. On behalf of the Board of Directors, I welcome each of you, and I hope you are all staying safe and healthy during this time. Before we start, I want to say a special thank you to all of our employees and medical staffs. Through their relentless efforts, we've been able to meet the COVID-19 pandemic head on. I have never been more proud of our employees and medical staffs as they bravely worked the front lines to save lives across the communities we serve. And as always, the quality of care and the safety of our patients, employees and medical staffs is a paramount importance to us. Our thoughts and prayers continue to be with you all. Now to turn to the business of our annual meeting. Following the recommendations to limit large gatherings from each of the U.S. Centers for the Disease Control and Prevention and World Health Organization, and to support the health and well-being of our stockholders, employees and community, this annual meeting is being held in a virtual-only format. While we do not expect any technical difficulties today, in the event we lose the audio or the webcast connection and are not able to quickly resolve the issue, please refer to the Investor Relations page on the Community's website for updates. In the event of a technical malfunction or other significant problem that disrupts the annual meeting, I may adjourn, recess or expedite the annual meeting or take such other action as determined to be appropriate in these circumstances. We will proceed by following the agenda provided on the web portal. The meeting will be conducted in accordance with the rules of conduct for the meeting, which are also available on the web portal. During the meeting today, the company may make forward-looking statements within the meaning of the federal securities laws, which involve risks, assumptions and uncertainties. Although the company believes that these forward-looking statements are based on reasonable assumptions, these assumptions are inherently subject to significant regulatory, economic and competitive uncertainties and contingencies, which are difficult or impossible to predict accurately and may be beyond the control of the company. Accordingly, the company cannot give any assurance that its expectations will, in fact, occur and cautions that actual results may differ materially from those in any forward-looking statements. A number of factors could cause the company's actual results and performance to differ materially from those expressed during the meeting. Please refer to the company's SEC filings for a more detailed discussion of risks and uncertainties that could cause such differences. The company undertakes no obligation to revise or update any forward-looking statements or to make any other forward-looking statements, whether as a result of new information, future events or otherwise. During the meeting, stockholders can submit questions in writing through the web portal, consistent with the rules of the conduct for the meeting. Following the adjournment of the business portion of the meeting, the company has allotted time to address questions of a general business nature that are submitted by stockholders. As set forth in the Rules of Conduct for the meeting, we ask that you limit yourself to one question. I will serve as the Chairman of the meeting. And I will be joined by Ben Fordham, Executive Vice President and General Counsel and Assistant Secretary of the company, who will serve as Secretary of the meeting. Also joining us today is Terry Hardesty, a partner for Deloitte & Touche LLP, the company's independent public accountants. Ms. Hardesty will be available to address questions about Deloitte's services to the company during the time allotted for questions following the adjournment of the business portion of the meeting. Let the minutes of the meeting reflect that all of the members of the Board of Directors are with us in the conference. We will now move to the formal business of the meeting. After which, we will adjourn, and I'll be glad to answer questions of a general business nature that you may have about Community Health Systems. Mr. Peter Scheibelein, representing Broadridge Financial Services Inc., is in conference with us and will serve as our inspector of elections for today's meeting. He will determine the presence of a quorum and receive and tabulate all votes and determine results on all matters requiring a stockholder vote. Mr. Fordham will assist him with this function. A listing of all stockholders entitled to vote at this meeting is available for review on the web portal while the polls are open. The inspector of elections and the Secretary have presented me with the evidence that notice of the meeting was properly given to all stockholders of record as the close of business on the record date. Has the inspector of elections determined if a quorum is present for the purposes of this meeting?

I have determined that there are stockholders represented at this meeting, in person or by proxy, holding common stock representing at least 89% of the eligible votes. This is sufficient for a quorum and for transacting the business of this meeting.

Thank you. The inspector of elections has determined that a quorum is present for the purposes of conducting business at this meeting, and I declare that this meeting is legally convened and ready to transact business. All holders of the company's common stock as of the close of business on March 16, 2020, are entitled to vote on all business to come before the meeting, either in person or by proxy. We now move into the voting on the matters before this meeting. Motions and seconds will not be required for proposals, which are listed in your proxy statement and on the agenda. I would now declare the polls for this meeting to be open. A substantial margin of our outstanding shares have already been voted by proxy prior to the meeting. But if you still need to vote your shares or if you wish to change your vote, you may do so now by clicking on Vote Here button on the web portal. If you have already voted your shares, no further action is needed. The first item of business on our agenda is the election of 11 directors. Each member of our Board of Directors stands for election annually. The nominees for Director are: John A. Clerico, Michael Dinkins, James S. Ely III, John A. Fry, Tim L. Hingtgen, Elizabeth T. Hirsch, Dr. William Norris Jennings, Dr. K. Ranga Krishnan; Julia B. North, Dr. James Williams and me, Wayne T. Smith. Each of these individuals is recommended by the Governance and Nominated Committee to serve on the Board of Directors and all are incumbents. The Secretary advises me, there are no nominations submitted by stockholders in accordance with the bylaws prior to this meeting. Therefore, I declare the nominations closed. The next item of business is an advisory vote on compensation of the committee's named executive officers, as disclosed in the proxy statement. The Compensation Committee of the Board of Directors has established the compensation of the company's executive officers to align with industry standards while attracting and retaining qualified leadership. The next item of business is approval of the Community Health Systems' amended and restated 2009 Stock Option and Award Plan. The final item of business is the ratification of the appointment of Deloitte & Touche LLC (sic) [ Deloitte & Touche LLP ] as Community Health Systems' independent public accountants for the year ending December 31, 2020. All stockholders have submitted their proxies or ballots, and now I announce the polls for this meeting closed. Will the inspector of elections please report the results of the vote?

Mr. Chairman, on the question of the election of the 11 nominated directors, Proposal 1, each of the Director nominees received more votes for than votes against. Accordingly, each of Mr. Clerico, Mr. Dinkins, Mr. Ely, Mr. Fry, Mr. Hingtgen; Ms. Hirsch, Dr. Jennings, Dr. Krishnan, Ms. North, Mr. Smith & Dr. Williams was elected by a majority of votes cast to serve for a period of 1 year. On Proposal 2, the advisory vote on the compensation of the company's named executive officers, the current compensation arrangements received the affirmative vote of a majority of the shares entitled to vote. On Proposal 3, the amendment and restatement of the Community Health Systems, Inc. 2009 Stock Option and Award Plan received the affirmative vote of a majority of the votes entitled to vote. On Proposal 4, the appointment of Deloitte & Touche LLP as the company's independent public accountants for the year ending December 31, 2020, has been ratified by a majority of the votes of the shares entitled to vote.

Thank you. The Chair declares that each of the director nominees have been duly elected. The advisory vote on executive officer compensation has been approved. The amendment of the Community Health Systems 2009 Stock Option and Award Plan has been approved. And the appointment of Deloitte & Touche LLP as independent public accountants for fiscal year 2020 has been duly ratified. The final results of the stockholder vote will be available for stockholders to view on our current report on Form 8-K, which will be filed with the Securities and Exchange Commission within 4 business days following this meeting. I hereby direct the results of the voting to be incorporated into the minutes of the meeting. The business, for which this meeting has been held, is now complete. I declare the meeting formally adjourned. At this time, I will address questions of a general business nature that have been submitted by stockholders. Have we received any questions?

Mr. Chairman, there are no questions.

This concludes the question-and-answer session for today. If you have any questions that have not have been addressed, you may contact our Investor Relations department. Their contact information is available in the Rules of Conduct on the web portal as well as on the Investor Relations page of the company's website. Thank you for participating in this annual meeting, and have a good day. That concludes the meeting.