| SCHEDULE J; PART I; QUESTION 4B |
THE AMOUNT REFLECTED IN COLUMN B(III) FOR THE FOLLOWING INDIVIDUALS INCLUDES PARTICIPATION IN A SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN ("SERP") AS THE AMOUNTS WERE NO LONGER SUBJECT TO A SUBSTANTIAL RISK OF COMPLETE FORFEITURE. THE AMOUNTS OUTLINED HEREIN WERE INCLUDED IN EACH INDIVIDUAL'S 2020 FORM W-2 AS TAXABLE WAGES: ROBERT C. GARRETT, FACHE, $715,088; NANCY CORCORAN-DAVIDOFF, $601,132; ROBERT L. GLENNING, $337,931; TIMOTHY J. HOGAN, $299,264; ANN B. GAVZY, ESQ., $275,280; AUDREY C. MURPHY, ESQ., MSN, RN, $244,452; MARK STAUDER, $210,000; IHOR S. SAWCZUK, M.D., $200,896; KENNETH N. SABLE, M.D., $165,598; PATRICK YOUNG, $157,275; JAMES BLAZAR, $131,990; JOSEPH E. STAMPE, $116,645; CATHERINE AINORA, $113,095; ANDREW L. PECORA, M.D., $110,781; MARK D. SPARTA, M.D., $106,475; JOSEPH E. PARRILLO, M.D., $87,500; JEFFREY BOSCAMP, $81,784; DANIEL VARGA, MD, $71,250; GUSTA A. PRITCHETT, $62,337; JOYCE HENDRICKS, $43,875; HELEN A. CUNNING, $36,157; AND MANUEL ALVAREZ, M.D., $10,075. The amounts listed in column B(iii) for the following individuals includes a payment of benefits under a long-term incentive plan. THE AMOUNTS OUTLINED HEREIN WERE INCLUDED IN EACH INDIVIDUAL'S 2020 FORM W-2 AS TAXABLE WAGES: Robert C. Garrett, FACHE; $1,309,744; Robert L. Glenning, $566,555; Joseph M. Lemaire, $520,603; Andrew L. Pecora,, MD, $435,994; Patrick Young, $407,896; James Blazar, $383,519; Ann B. Gavzy, Esq., $342,607; AUDREY C. MURPHY, ESQ., MSN, RN, $342,607; Catherine Ainora, $333,134; Nancy Corcoran-Davidoff, $310,728; Mark Stauder, $224,000. The amounts listed in column B(iii) for John K. Lloyd, FACHE includes a payment of benefits under a long-term incentive plan in the amount $760,312 as well as an annuity payout of $45,816 from the nonqualified supplemental executive retirement plan provided by Jersey Shore Medical Center to Mr. Lloyd for his past services as CEO, and which is paid in annuity form. HUMC SERP is a Defined Benefit (DB) executive retirement benefit plan under which benefits have been frozen since 2011. FICA taxes on a participant's DB SERP benefits are not due until the full and final benefit becomes "reasonably ascertainable", which happens when the participant terminates employment. IRS regulations permit DB SERP plan sponsors to pay FICA taxes on the accrued benefits before participants terminate employment ("Early Inclusion") even though the benefit is not yet finally calculated and paid to the participant. This can be done as many times as the plan sponsor wishes before the actual termination date. Per the "non-duplication rule", once FICA tax is paid on the value of a benefit, no further FICA tax is owed on the same benefit value. HMH complied with this special rule by paying applicable FICA tax on the accrued benefits in 2020. The individuals listed below had amounts reported on their W-2s in box 3 and box 5 (solely for the purpose of paying FICA tax under the early inclusion rule), but the individuals did not actually receive the amounts. The taxable amounts had already been included in box 1 of their W-2s in 2010 and prior years. As a result, the amounts were not included in the compensation amounts reported in Part VII and in Schedule J again for 2020. The excess of the amounts reported in box 3 and box 5 of the 2020 Forms W-2 over the amounts reported in box 1 of the 2020 Form W-2 are as follows for the individuals reported in Part VII: ROBERT C. GARRETT, FACHE, $4,520,514; JEFFREY BOSCAMP, $1,804,507; IHOR S. SAWCZUK, $1,258,660; NANCY CORCORAN-DAVIDOFF, $1,191,920; AUDREY C. MURPHY, ESQ., MSN, RN, $797,963; MANUEL ALVAREZ, M.D., $755,468; ANDREW L. PECORA, M.D., $672,252; GUSTA A. PRITCHETT, $550,508; ROBERT L. GLENNING, $449,592; MARK D. SPARTA, M.D., $18,274. The highest compensated employees listed in Part VII were determined separately using both box 1 and box 5, with all individuals who are highest compensated under either method being listed. Upon retirement of a participant, and as required by the DB SERP plan, HMH provides a full tax gross-up on the benefits earned by the participant. HMH provides reimbursement of the tax so that the benefit is provided without cost to the individual. THE DEFERRED COMPENSATION AMOUNT REFLECTED IN COLUMN (C) FOR THE FOLLOWING INDIVIDUALS INCLUDES A RETENTION BONUS WHICH IS SUBJECT TO A SUBSTANTIAL RISK OF FORFEITURE. ACCORDINGLY, THE INDIVIDUALS MAY NEVER ACTUALLY RECEIVE THIS AMOUNT. THE AMOUNTS WERE NOT INCLUDED IN EACH INDIVIDUAL'S 2020 FORM W-2 AS TAXABLE WAGES: ROBERT C. GARRETT AND PATRICK YOUNG. THE DEFERRED COMPENSATION AMOUNTS REFLECTED IN COLUMN (C) FOR THE FOLLOWING INDIVIDUALS INCLUDE BENEFITS IN AN INTERNAL REVENUE CODE SECTION 457(F) PLAN (NON-QUALIFIED DEFERRED COMPENSATION PLAN). THESE AMOUNTS ARE SUBJECT TO A SUBSTANTIAL RISK OF FORFEITURE. THESE INDIVIDUALS WILL NOT EARN THE RIGHT TO RECEIVE THE DEFERRED COMPENSATION AMOUNTS UNLESS AND UNTIL THEY PROVIDE SUBSTANTIAL FUTURE SERVICES TO THE ORGANIZATION. WHEN THE FUTURE SERVICES REQUIREMENT IS MET, THE AMOUNTS WILL BECOME VESTED, WILL BE TAXED, WILL BE INCLUDED ON THE W-2, AND WILL BE REPORTED AGAIN ON THIS SCHEDULE. JOSEPH E. STAMPE, MARK D. SPARTA, M.D., HELEN A. CUNNING, KENNETH N. SABLE, M.D., AUDREY C. MURPHY, ESQ., MSN, RN, PATRICK YOUNG, TODD WAY, DONNA SNIDER, AMIE THORNTON, AND MANUEL ALVAREZ, M.D. |