Kevin J. Hammons
COMMUNITY HEALTH SYSTEMSAbout Kevin J. Hammons
Kevin J. Hammons, 59, is President and Chief Financial Officer of Community Health Systems (CYH). He joined CYH in 1997 after nine years in Assurance & Advisory at Ernst & Young (1988–1997), rising through financial reporting and accounting leadership before becoming EVP & CFO in 2020 and President & CFO in 2021 . CYH’s 2024 net operating revenues grew 1.2% YoY to $12.634B and Adjusted EBITDA rose 6.0% to $1.540B, while the company reported a net loss of $516M; management highlights operational improvements and debt refinancing progress . For the 2022–2024 performance share cycle, CYH’s three-year TSR percentile was below the 25th percentile and cumulative Adjusted EBITDA growth was below threshold; cumulative same‑store net revenue growth reached 84.5% of target, leading to Hammons’ PSU vesting at 16.8% of target shares .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Community Health Systems | President & Chief Financial Officer | 2021–present | Lead corporate finance, capital markets, ERP modernization, portfolio refinements and margin improvement programs . |
| Community Health Systems | Executive Vice President & Chief Financial Officer | 2020–2021 | Oversaw capital market transactions and treasury; advanced operational and financial performance initiatives . |
| Community Health Systems | Senior VP & Chief Accounting Officer; Assistant CFO; Treasurer | 2012–2020 | Led SEC reporting, accounting, budgeting, systems/processes design; treasury management . |
| Community Health Systems | VP Financial Reporting; Assistant VP Financial Reporting | 2002–2012 | Directed financial reporting and SEC compliance . |
| Ernst & Young LLP | Assurance & Advisory Services | 1988–1997 | Served public and private clients; foundational audit/controls experience . |
External Roles
| Organization | Role | Years |
|---|---|---|
| Malone University (Canton, OH) | Board of Trustees (member) | Not disclosed |
Fixed Compensation
| Metric | 2023 | 2024 |
|---|---|---|
| Base Salary ($) | $772,500 | $795,675 |
| Perquisites and Other ($) | $17,474 | $17,474 |
| Perquisites breakout (2024) | LTD premiums $3,912; 401(k) match $3,500; Life insurance $10,062 |
Performance Compensation
| Component (2024 EPIP) | Weight (% of base, Target) | Target Metric | Attainment (% of base) | Notes |
|---|---|---|---|---|
| Consolidated Adjusted EBITDA | 80% | $1.55B | 77.3% | Linear scale with partial credit; EBITDA actual $1.540B . |
| EBITDA Margin Improvement | 20% | +0.80% | 15.0% | Target scale; actual +0.60% . |
| Consolidated Net Revenues | 15% | $12.5B | 15.0% | Actual $12.634B . |
| Adjusted EPS | 10% | $(0.30) | 0.0% | Actual $(1.03) . |
| Strategic & Operational Performance Improvement | 35% | Multi-factor goals | 35.0% | Includes growth, cost control, safety, workforce, portfolio refinements. |
| Over‑achievement adders | Up to 25% | Scaled per metric | 1.0% | Modest over‑achievement credit. |
- Total cash incentive earned: 143.3% of base salary, equating to $1,140,291 for 2024 .
- Say‑on‑pay support: 97% approval at 2024 AGM .
Performance Compensation — Long‑Term Incentives (LTI)
| Award (granted 3/1/2024) | Number | Vesting | Strike/Terms | Performance Conditions |
|---|---|---|---|---|
| Non‑Qualified Stock Options | 90,000 | 1/3 annually over 3 yrs | $2.87 strike; 10‑yr term to 2/28/2034 | N/A |
| Time‑Based Restricted Stock | 90,000 | 1/3 annually over 3 yrs | N/A | N/A |
| Performance‑Based Restricted Stock | 180,000 | Cliff vest at 3 years (2024–2026 cycle) | N/A | CFO weighting: 40% Cumulative Adjusted EBITDA Growth; 40% Cumulative Same‑Store Net Revenue Growth; 20% 3‑yr TSR Percentile vs S&P Health Care Services Select Industry Index (ex payors/distributors). Payout scale: <80% = 0%; 80% = 25%; 100% = 100%; 120% = 200% . |
2022–2024 PSU outcomes for Hammons:
| PSU Portion | Granted Shares | Vested Shares | Payout % |
|---|---|---|---|
| Cumulative Adjusted EBITDA Growth | 60,000 | 0 | 0% |
| Cumulative Same‑Store Net Revenue Growth | 60,000 | 25,200 | 42% (84.5% of target) |
| TSR Percentile Rank | 30,000 | 0 | 0% (<25th percentile) |
| Total | 150,000 | 25,200 | 16.8% |
Equity Ownership & Alignment
| Item | Amount | Detail/Status |
|---|---|---|
| Beneficial ownership (as of 3/3/2025) | 1,481,701 shares (1.1%) | Includes 305,500 options currently exercisable or within 60 days; and 540,000 restricted stock awards with voting power but performance measures not met . |
| Options — exercisable | 18,000; 47,500; 75,000; 50,000; 30,000 (various strikes/maturities) | Legacy grants prior to 2024 . |
| Options — unexercisable | 90,000 (2024 grant) | Vesting 1/3 annually; $2.87 strike . |
| Time‑Based RS (unvested) | 175,000 | March 2022–2024 grants vest 1/3 annually . |
| Performance‑Based RS (target unearned) | 510,000 | 2022 vests 3/1/2025, 2023 vests 3/1/2026, 2024 vests 3/1/2027, subject to performance . |
| Stock ownership guidelines | 3.0x base salary for NEOs | Must hold 100% of net shares until guideline met; time‑based RS and in‑the‑money options count . |
| Hedging/pledging | Prohibited for directors/officers | No pledges disclosed for Hammons . |
Insider selling pressure considerations:
- Upcoming scheduled vests (time‑based RS through 2026–2027) and PSU outcomes could add supply; 175,000 time‑based RS unvested and 510,000 PSU at target remain subject to performance/vesting .
- 2024 options at $2.87 strike begin vesting; exercisability depends on price levels .
- No 2024 option exercises reported for Hammons; 200,000 restricted stock vested in 2024 .
Employment Terms
| Topic | Terms |
|---|---|
| Employment agreement | At‑will; no individual employment contract . |
| Severance policy | If terminated without cause: 24 months base salary; pro‑rated annual bonus based on actual results; COBRA at employee premium for severance period . |
| Change‑in‑control (CIC) | Double‑trigger (CoC + qualifying termination). Lump sum 3× (base + higher of last 3 yrs actual cash bonus or target bonus); 36 months health benefits; up to $25,000 outplacement; no excise tax gross‑ups . |
| CIC equity treatment | If awards not assumed, immediate vesting at target for performance awards; if assumed and terminated within 2 yrs post‑CoC, accelerated vesting . |
| Clawback | SEC/NYSE‑compliant policy; mandatory recovery of erroneously awarded incentive comp for Section 16 officers upon restatement (no misconduct requirement); discretionary recovery for misconduct‑caused restatements . |
Potential payments as of 12/31/2024:
| Scenario | Cash Severance ($) | Equity Acceleration ($) | SERP ($) | Health/Welfare ($) | Outplacement ($) | Total ($) |
|---|---|---|---|---|---|---|
| Involuntary termination (no CoC) | $2,731,641 | $2,048,150 | $5,269,263 | $23,462 | — | $10,072,516 |
| Change‑in‑control + qualifying termination | $5,807,898 | $2,048,150 | $7,524,679 | $35,193 | $25,000 | $15,440,920 |
Retirement and deferred compensation:
- SERP present value: $3,626,612; credited service 12.83 years .
- Deferred Compensation Plan balance: $1,178,763; 2024 contribution $79,574; earnings $134,630 .
Compensation Structure Analysis
- Mix and risk: 2024 target pay for NEOs emphasizes at‑risk comp; Hammons’ LTI split 50% PSUs, 25% stock options, 25% time‑based RS aligns with long‑term performance and share price appreciation .
- Short‑term rigor: 2024 financial targets tied to budget and guidance; Hammons earned 143.3% of base, led by EBITDA, margin and revenue attainment; EPS component paid zero .
- Long‑term outcomes: 2022–2024 PSU payout at 16.8% reflects below‑threshold three‑year EBITDA growth and TSR underperformance despite partial revenue growth target achievement (84.5% of target), evidencing pay‑for‑performance .
- Governance and safeguards: No employment agreement; double‑trigger CIC; no option repricing; hedging/pledging banned; broad clawback .
Investment Implications
- Alignment: Low PSU vesting (16.8%) and zero EPS payout in 2024 reinforce pay‑for‑performance discipline; equity mix ties value realization to sustained EBITDA growth, same‑store revenue progress, and relative TSR .
- Retention vs. dilution: Material unvested equity (time‑based RS 175k; PSUs 510k at target) supports retention but creates potential supply from vesting; options at $2.87 provide upside‑aligned leverage .
- Risk controls: Robust clawback, prohibition on pledging/hedging, and no excise tax gross‑ups reduce governance risk; CIC is double‑trigger with structured equity treatment .
- Financial context: 2024 revenue and Adjusted EBITDA improved (1.2% and 6.0%), but net loss and three‑year TSR percentile below peer median drove depressed PSU outcomes; ongoing margin programs and portfolio refinements are focus areas for value creation .