Kevin A. Stockton
COMMUNITY HEALTH SYSTEMSAbout Kevin A. Stockton
Executive Vice President of Operations and Development at Community Health Systems (CYH), age 54, promoted to EVP in October 2023 after serving as Regional President and earlier market CEO; joined CHS in 2011. He holds a master’s degree in public administration from the University of Arizona and oversees growth, partnerships, value-based care models, and non-acute services . Company 2024 performance improved with net operating revenues up 1.2% to $12.634B, Adjusted EBITDA up 6% to $1.540B, and cash from operations up 128.6% to $480M, supporting higher annual incentive attainment vs. 2023 . His 2022–2024 performance-based restricted stock earned at 21% of target for NEOs due to below-threshold cumulative Adjusted EBITDA growth and 84.5% of target same-store net revenue, demonstrating a tight pay-for-performance link .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Community Health Systems (CYH) | Executive Vice President, Operations & Development | 2023–present | Oversees growth/business development, strategic partnerships, value-based care, non-acute services |
| CYH | Regional President – Region 2 Operations (AK, AZ, AR, MO, NM) | 2017–2023 | Led multi-state operations; advanced margin improvement and provider recruitment programs |
| CYH | Market Chief Executive (Arizona) | 2015–2017 | Expanded local market operations and access points |
| CYH | CEO, Northwest Medical Center (Tucson, AZ) | 2011–2015 | Led hospital operations and performance |
| Prior operators (western U.S.) | Hospital CEO/COO | Pre-2011 | Operating leadership across for-profit hospitals |
External Roles
No public company directorships or disclosed external board roles. Prior hospital executive roles in western U.S. noted above .
Fixed Compensation
| Component | 2023 | 2024 |
|---|---|---|
| Base Salary ($) | $600,000 / $700,000 (reflects increase upon promotion to EVP effective Oct 1, 2023) | $710,000 |
| Retention Cash Award | $0 | $1,000,000 retention award (40% at 18 months, 60% at 36 months; continued employment required; 1-year non-compete and non-solicit post-termination) |
| Perquisites (2024) | — | LTD premiums $2,088; 401(k) match $3,500; life insurance $5,382 |
| SERP Present Value (12/31/2024) | — | $162,488; credited service 3.58 years |
| Deferred Compensation Balance (12/31/2024) | — | $763,116; 2024 plan earnings $128,388; no 2024 contributions |
Performance Compensation
Annual Cash Incentive (EPIP) – 2024 Design and Outcomes
| Metric | Weighting | Company Target | Company Actual | Payout Basis | Stockton Attainment |
|---|---|---|---|---|---|
| Consolidated Adjusted EBITDA | 70% | $1,550M | $1,540M | Scaled vs. target; 0% below 85% | 67.7% of base salary |
| Adjusted EBITDA Margin Improvement | 15% | +0.80% | +0.60% | Scaled; 0% below 0.40% | 11.3% of base salary |
| Consolidated Net Revenues | 20% | $12,500M | $12,634M | Scaled vs. target | 20.0% of base salary |
| Non-Financial Strategic/Operational Goals | — | See program changes (growth, expense control, safety/quality, portfolio refinements) | Achieved | Committee assessment | 20.0% of base salary |
| Overachievement Adders | — | Up to +25% for EVP | Minimal | Formula-based | 1.0% of base salary |
| Total Cash Incentive Paid | — | — | — | — | 120.0% of base salary = $852,036 |
Long-Term Incentive Awards (granted March 1, 2024)
| Award Type | Shares | Vesting / Performance | Grant Price / Valuation |
|---|---|---|---|
| Performance-Based Restricted Stock (PBRS) | 80,000 | 3-year (2024–2026); 50% cumulative Adjusted EBITDA Growth, 50% cumulative Same-Store Net Revenue Growth; 0–200% payout; cliff vest on 3rd anniversary post-certification | Grant-date value $229,600 ($2.87/share) |
| Time-Based Restricted Stock | 40,000 | Vests 1/3 annually over 3 years (Mar 1, 2025/2026/2027) | Grant-date value $114,800 ($2.87/share) |
| Non-Qualified Stock Options | 40,000 | Vests 1/3 annually over 3 years; 10-year term; exercise price $2.87 | Grant-date fair value $87,600 (Black-Scholes $2.19/option) |
Prior PBRS Outcome (2022–2024 cycle)
| Metric | Target | Actual | Vesting for Stockton |
|---|---|---|---|
| Cumulative Same-Store Net Revenue Growth | 12.0% (100%) | 10.1% (84.5%) | 42% of target shares earned: 10,500 of 25,000 |
| Cumulative Consolidated Adjusted EBITDA Growth | 12.0% (100%) | Below 80% threshold | 0% earned (25,000 forfeited) |
| TSR Percentile Rank (CEO/CFO only) | 50th percentile (100%) | Below 25th percentile | Not applicable to Stockton |
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial Ownership (03/03/2025) | 476,863 shares; includes 103,000 options exercisable within 60 days; and 210,000 restricted stock with voting power and unmet performance measures; <1% of shares outstanding |
| Outstanding Awards (12/31/2024) | Unvested time-based RS: 65,001 shares ($194,353 at $2.99); Unearned PBRS at target: 180,000 shares ($538,200 at $2.99); Unexercisable options: 40,000 @ $2.87; plus prior option tranches |
| Stock Ownership Guidelines | EVP required to hold equity equal to 3.0x base salary; 5-year compliance window; 100% net shares from vesting/exercise must be held until guideline met |
| Pledging/Hedging Policy | Prohibited for directors, officers, and designated employees; no holding in margin accounts; no derivatives/shorts |
Employment Terms
| Provision | Terms (Stockton/NEOs) |
|---|---|
| Employment Agreement | At-will; no employment contracts for NEOs |
| Severance (non-CIC) | 24 months base salary; pro-rated annual incentive based on actual results; COBRA benefits at active-employee rates for 24 months |
| Change-in-Control (CIC) Severance | Double-trigger; lump sum 3x (base + greater of highest bonus prior 3 years or current-year target); 36 months health & welfare; $25,000 outplacement; no excise tax gross-up |
| CIC Treatment of Equity | If not assumed/replaced, accelerates at closing; if assumed, accelerates on qualified termination within 2 years; PBRS vests at target on acceleration |
| Potential Payments (12/31/2024) | Involuntary termination: $3,024,925 total ($2,272,036 cash; $732,553 RS acceleration; $20,336 benefits); CIC: $5,474,165 total ($4,686,108 cash; $732,553 RS acceleration; $30,504 benefits; $25,000 outplacement) |
| Clawback | Amended and Restated Clawback Policy compliant with SEC/NYSE; mandatory recovery from Section 16 officers upon restatement; discretionary for misconduct |
| Insider Trading/Grant Timing | Annual equity grants approved mid-Feb, grant date Mar 1, outside blackout; option strike = closing price; no timing around MNPI |
Investment Implications
- Incentive pay is tightly tied to financial performance; 2024 cash bonus paid at 120% of salary reflects improved EBITDA and revenue, while prior PBRS cycle (2022–2024) vesting at 21% for NEOs underscores downside variability when targets aren’t met .
- Retention risk is mitigated by a $1M staged retention award with 1-year non-compete and non-solicit, plus meaningful unvested equity and double-trigger CIC protections; near-term insider selling pressure appears limited by hold-until-guideline and anti-pledging policies .
- Alignment: EVP ownership guideline (3x salary), robust clawback, no tax gross-ups, and no option repricing support governance-friendly compensation; equity mix emphasizes PBRS and options (75% of LTI “at risk”), linking long-term value creation to execution on growth and margin goals .
- Execution focus: Operational priorities embedded in non-financial goals (growth, expense control, safety/quality, portfolio optimization) contributed to improved 2024 results; sustained performance on cumulative growth metrics is required to drive higher PBRS outcomes in 2024–2026 .