Franklin, Tenn.-based Community Health Systems is doubling down on performance-based compensation for its top executives, tying the majority of pay to financial and operational results, according to a proxy report filed April 2 with the Securities and Exchange Commission.
Kevin Hammons, who became CEO Oct. 1, 2025, following the retirement of Tim Hingtgen, received the above-target payout based on full-year 2025 performance despite serving as chief executive for only one quarter, according to the report. Mr. Hingtgen, who served as CEO through Sept. 30, did not receive a short-term cash incentive for 2025 under the terms of his retirement. Equity awards granted to him in February 2025 were forfeited and cancelled.
The for-profit system cited several performance improvements in 2025, including same-store volume growth across key service lines, continued labor and non-labor expense management and expansion of access points. CHS also said it improved workflows following a major enterprise resource planning system implementation.
CHS said about 81% of its former CEO’s target compensation and about 61% of other named executive officers’ average target compensation was “at risk” in 2025, provided through short-term cash incentives and long-term equity awards.
The structure reflects the 64-hospital system’s broader pay-for-performance philosophy, which links executive compensation to earnings growth, operational efficiency and long-term shareholder value.
Short-term incentives are tied to a mix of financial and strategic goals, including performance across key metrics such as volumes, expense management and quality improvement initiatives. Long-term incentives are weighted even more heavily toward performance, with 75% of target awards tied to performance-based restricted stock or stock options. These awards generate value only if the company meets performance targets or its stock price increases.
The compensation approach is designed to align leadership incentives with long-term organizational performance while supporting executive recruitment and retention in a competitive market, according to the health system.
CHS’ compensation framework includes three primary components: base salary, annual cash incentives and long-term equity awards. While base salary provides fixed compensation, most executive pay is variable and contingent on performance.
The company said it will continue to evaluate its compensation programs based on shareholder feedback, market trends and evolving business conditions.
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