LifePoint Health could pay out nearly $120 million to four of its top executives after private equity firm Apollo Global Management closes its acquisition later this year, according to a new securities filing.
Chairman and CEO Bill Carpenter III stands to get more than half of that money, $69.7 million, according to a proxy statement filed Thursday with the Securities and Exchange Commission. He announced earlier this week plans to retire once the Tennessee-based for-profit hospital completes the deal.
David Dill, the president and COO of LifePoint, will become the new CEO. He is also listed to receive more than $25.3 million. LifePoint is a health-care provider that operates mostly in rural communities.
Given the size of the company — a $2.5 billion market cap — the compensation is a little on the high side, Brian Tanquilut, health-care services equity researcher at Jefferies, told CNBC.
However, Tanquilut said shareholders are expected to receive a "pretty decent premium" when the deal is expected to close later this year, so "if you're a shareholder you'd probably vote for it."
LifePoint shareholders will receive $65 per share in cash for each share of LifePoint common stock, a premium of about 36 percent over LifePoint's closing price on July 20, 2018, the last trading day prior to the announcement.
The deal values LifePoint at about $5.6 billion, which includes $2.9 billion of debt and other interests.
LifePoint's severance plan has a "double-trigger" that provides golden parachutes for its top four executives if there's a so-called change in control as in the case of the acquisition, the company said. To receive the maximum severance, the executive will also have to leave the company, generally in good standing, within 18 months after the deal closes.
Shareholders will get a nonbinding vote on the compensation package, which the board is recommending for approval.
LifePoint didn't return a request for comment.
U.S. health-care companies have been criticized for paying their executives sky-high salaries and other benefits as many Americans struggle to pay their medical bills due to high health-care costs. That includes the nonprofit sector.
According to a study in the Clinical Orthopaedics and Related Research, salary increases for nonprofit hospital CEOs outpaced those for surgeons and other health-care workers by 93 percent over a 10-year period.
The deal brings together LifePoint and Apollo's RCCH HealthCare Partners, two hospital companies that operate mainly in the rural United States.