{
  "docId": "019dd923-622b-71dc-a6dc-0b4b29bc87ea",
  "docSlug": "ad16f67f6f75",
  "documentTitle": "Health Management Associates (HMA)",
  "authorId": "12_Glenview",
  "authorName": "Larry Robbins",
  "documentKindSlug": "activist-deck",
  "documentKindLabel": "Activist deck",
  "sourceTypeSlug": "activist_investor",
  "sourceTypeLabel": "Activist investor",
  "presentationDate": "2013-07-01 00:00:00",
  "orientation": "landscape",
  "aspectRatio": 1.2941177,
  "pageNumber": 21,
  "pageCount": 54,
  "prevPage": 20,
  "nextPage": 22,
  "slideType": "expose_contradiction",
  "function": "expose_contradiction",
  "density": "overcrowded",
  "nDataPoints": 2,
  "notes": "Uses a contradiction between internal compensation metrics and external shareholder communication to critique board governance.",
  "elementsJson": [
    "headline_text",
    "subtitle_text",
    "bullet_list",
    "callout_box",
    "footnote"
  ],
  "metadataConfidence": 1,
  "imagePath": null,
  "slideHref": "/slides/019dd923-622b-71dc-a6dc-0b4b29bc87ea/21",
  "deckHref": "/decks/019dd923-622b-71dc-a6dc-0b4b29bc87ea",
  "deckJsonHref": "/decks/019dd923-622b-71dc-a6dc-0b4b29bc87ea.json",
  "deckAnchorHref": "/decks/019dd923-622b-71dc-a6dc-0b4b29bc87ea#slide-21",
  "components": [
    {
      "bbox": null,
      "kind": "callout",
      "text": "It is noteworthy that in HMA's Annual Letters to Shareholders and Partners it makes no mention of this all-important EBITDA metric.",
      "attrs": null,
      "subkind": null,
      "toolName": "Visual emphasis",
      "toolSlug": "visual-emphasis",
      "confidence": null,
      "componentId": "019dd953-25b3-7229-bef3-15a84d9dca7e",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.04,
        "w": 0.82,
        "x": 0.12,
        "y": 0.39
      },
      "kind": "list",
      "text": "However, despite 86% EBITDA growth – through an acquisition led strategy – HMA’s total shareholder return (TSR) suffered (<1% versus the Hospital Group’s TSR of 39%)",
      "attrs": null,
      "subkind": "bullet",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "7f1b0691-db29-4679-918b-b12c06fa349b",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.04,
        "w": 0.85,
        "x": 0.09,
        "y": 0.44
      },
      "kind": "list",
      "text": "Aggregate growth metrics are not appropriate to be the key or sole performance metric for incentive compensation",
      "attrs": null,
      "subkind": "bullet",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "b2f19fdc-f83d-4504-97ab-04a68145789b",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.06,
        "w": 0.85,
        "x": 0.09,
        "y": 0.25
      },
      "kind": "list",
      "text": "Board has misguided view that aggregate measures like EBITDA growth drive share price performance, whereas they place no emphasis on per share measures like EPS and FCF per share",
      "attrs": null,
      "subkind": "bullet",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "c5366d57-8745-4ae8-a075-df1c928d5165",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.07,
        "w": 0.82,
        "x": 0.12,
        "y": 0.32
      },
      "kind": "list",
      "text": "2012 Proxy – “For 2012, the compensation committee used Adjusted EBITDA as the sole performance metric under the annual and long-term incentive compensation programs because it believes that Adjusted EBITDA provides a simple and understandable measure of our recurring profitability and it is highly correlated to our stock price performance”",
      "attrs": null,
      "subkind": "bullet",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "f9e0516a-5390-452f-ad45-3579e4e4805e",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.15,
        "w": 0.78,
        "x": 0.12,
        "y": 0.57
      },
      "kind": "paragraph",
      "text": "It is noteworthy that in HMA’s Annual Letters to Shareholders and Partners it makes no mention of this all-important EBITDA metric. Rather, in the one communication directly from the CEO and Chairman each year to shareholders, the only operating data that they speak to is Revenue, Operating Income, EPS, and Cash from Continuing Operations – no mention at all to EBITDA growth – the sole metric used to pay incentive compensation",
      "attrs": null,
      "subkind": "paragraph",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "39cee28e-7677-4e61-8e26-d3fe2b25ed8b",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": null,
      "kind": "quote",
      "text": "“For 2012, the compensation committee used Adjusted EBITDA as the sole performance metric under the annual and long-term incentive compensation programs because it believes that Adjusted EBITDA provides a simple and understandable measure of our recurring profitability and it is highly correlated to our stock price performance” — 2012 Proxy",
      "attrs": null,
      "subkind": null,
      "toolName": "Authority citation",
      "toolSlug": "authority-citation",
      "confidence": null,
      "componentId": "019dd953-25b3-7229-bef3-19a66883145a",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.05,
        "w": 0.65,
        "x": 0.06,
        "y": 0.87
      },
      "kind": "source-note",
      "text": "Source: Bloomberg total shareholder return analysis assuming dividends reinvested in security. 1. “Hospital Group” includes HCA, THC, CYH, LPNT, and UHS except where indicated. HCA reflects total compounded shareholder return from 1/1/03 to 11/17/06 (leveraged buyout date) and 3/10/11 (initial public offering date) to 12/31/12 per Bloomberg analysis.",
      "attrs": null,
      "subkind": null,
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "31cffa51-9c08-4dba-961c-69c2e01fa7d8",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.05,
        "w": 0.88,
        "x": 0.06,
        "y": 0.14
      },
      "kind": "title",
      "text": "The Board's misaligned executive incentive compensation structure has been tied exclusively to aggregate EBITDA growth – as opposed to any per share metrics",
      "attrs": null,
      "subkind": "action-title",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "52c3cdce-3eb0-4aeb-bfcd-ef157e047e5d",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.03,
        "w": 0.88,
        "x": 0.06,
        "y": 0.09
      },
      "kind": "title",
      "text": "BOARD'S EXECUTIVE INCENTIVE COMPENSATION PLAN IS MISALIGNED",
      "attrs": null,
      "subkind": "headline",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "11178b56-ef17-40b9-b962-5bbf8b9ccb9a",
      "frameworkName": null,
      "frameworkSlug": null
    }
  ],
  "metrics": [],
  "tools": [],
  "frameworks": [
    {
      "name": "ceo-quote-contradiction",
      "slug": null,
      "matchId": "ae8cc60a-6da4-4a47-a348-4a4d75b2162c",
      "evidence": "Contrasts board's compensation metric (EBITDA) with CEO's own shareholder communication metrics (Revenue, EPS, etc.)",
      "confidence": 0.9
    }
  ],
  "arcBeats": [
    {
      "to": 35,
      "from": 6,
      "beatId": "aefe9b7f-8290-44ea-8ca4-6cdc1d4ec4b4",
      "arcName": "Problem-Agitate-Solution",
      "arcSlug": "problem-agitate-solution",
      "beatName": "Agitate",
      "beatSlug": "problem-agitate-solution-agitate-make-it-worse",
      "evidence": "The document agitates the issues, highlighting the consequences of the current board and management's actions, including multiple investigations, inconsistent financial management, and misaligned executive incentive compensation.",
      "position": 1,
      "confidence": 0.8,
      "parentBeatName": "Development",
      "parentBeatSlug": "development"
    }
  ],
  "loops": [],
  "imagePathAlt": null,
  "thumbSrc": null,
  "thumbSrcAlt": null,
  "locked": true
}