TENET HEALTHCARE CORPTHC
TENET HEALTHCARE CORP Stock Compensation Disclosure
EMPLOYEE BENEFIT PLANS
In October 2024, USPI repurchased all outstanding non-voting shares at their estimated fair value. The accompanying Consolidated Statements of Operations for the years ended December 31, 2024 and 2023 included $6 million and $20 million, respectively, of pre-tax compensation costs related to USPI’s management equity plan. We did not incur any expenses related to the USPI Management Equity Plan during the year ended December 31, 2025
Share-Based Compensation Plans
We have granted stock options and restricted stock units (“RSUs”) to certain of our employees and directors pursuant to our stock incentive plans. Stock options have an exercise price equal to the fair market value of our shares on the date of grant and generally expire 10 years from the date of grant. An RSU is a contractual right to receive one share of our common stock in the future, and the fair value of the RSU is based on our share price on the grant date. Typically, stock options and time‑based RSUs vest one‑third on each of the first anniversary dates of the grant; however, certain special retention awards may have different vesting terms. Shares underlying vested RSUs are generally distributed to participants (settled) immediately after the vesting date. We also grant RSUs to our non‑employee directors as part of their annual compensation. Previously, these grants vested immediately and were settled on the third anniversary of the date of grant. Beginning in 2024, annual compensation grants to our non-employee directors vest on the first anniversary of the date of grant. Compensation cost is measured by the fair value of the awards on their grant dates and is recognized over the requisite service period of the awards, whether or not the awards had any intrinsic value during the period.
We also grant performance‑based RSUs that vest subject to the achievement of specified performance goals within a pre‑established time frame. The performance‑based RSUs may contain provisions that increase or decrease the number of RSUs that ultimately vest, depending upon the level of achievement. For certain of our performance‑based awards, the number of RSUs that ultimately vest is also subject to adjustment based on the achievement of a market‑based condition. In aggregate, these adjustments range from 0% to a maximum of 250% of the number of RSUs initially granted for awards made in 2025 and 2024, and from 0% to 225% for awards granted in 2023. The fair value of awards that contain a market‑based condition is estimated using a discrete model to analyze the fair value of the subject shares. The discrete model utilizes multiple stock paths, through the use of a Monte Carlo simulation, which paths are then analyzed to determine the fair value of the subject shares.
Pursuant to the terms of our stock‑based compensation plans, awards granted under the plan vest and may be exercised as determined by the human resources committee of our board of directors. In the event of a change in control, the human resources committee of our board of directors may, at its sole discretion without obtaining shareholder approval, accelerate the vesting or performance periods of the awards.
At December 31, 2025, assuming outstanding performance‑based RSUs for which performance has not yet been determined will achieve target performance, approximately 8,264 thousand shares of common stock were available under our 2019 Stock Incentive Plan for future stock option grants and other equity incentive awards, including RSUs. The accompanying
Consolidated Statements of Operations include pre-tax compensation costs related to our stock‑based compensation arrangements of $104 million, $67 million and $66 million for the years ended December 31, 2025, 2024 and 2023, respectively.
Stock Options
The following table presents information about our stock option activity during the years ended December 31, 2025, 2024 and 2023:
| Number of Options | Wtd. Avg. Exercise Price Per Share | Aggregate Intrinsic Value | Wtd. Avg. Remaining Contractual Life | |||||||||||||||||||||||
| (In Millions) | ||||||||||||||||||||||||||
| Outstanding at December 31, 2022 | 460,947 | $ | 23.33 | |||||||||||||||||||||||
| Exercised | (76,507) | $ | 26.07 | |||||||||||||||||||||||
| Outstanding at December 31, 2023 | 384,440 | $ | 22.79 | |||||||||||||||||||||||
| Exercised | (197,943) | $ | 21.86 | |||||||||||||||||||||||
| Outstanding at December 31, 2024 | 186,497 | $ | 23.76 | |||||||||||||||||||||||
| Exercised | (41,816) | $ | 22.39 | |||||||||||||||||||||||
| Outstanding at December 31, 2025 | 144,681 | $ | 24.16 | $ | 25 | 2.5 years | ||||||||||||||||||||
The stock options exercised during the year ended December 31, 2025, 2024 or 2023 had an aggregate intrinsic values of $7 million, $19 million and $4 million, respectively. We did not grant any stock options during the years ended December 31, 2025, 2024 or 2023, and all outstanding options were vested and exercisable at December 31, 2025.
The following table presents additional information about our outstanding stock options at December 31, 2025:
| Options Outstanding and Exercisable | ||||||||||||||||||||
| Range of Exercise Prices | Number of Options | Wtd. Avg. Remaining Contractual Life | Wtd. Avg. Exercise Price Per Share | |||||||||||||||||
$18.99 to $20.609 | 86,469 | 2.2 years | $ | 20.60 | ||||||||||||||||
$20.61 to $35.430 | 58,212 | 3.1 years | $ | 29.44 | ||||||||||||||||
| 144,681 | 2.5 years | $ | 24.16 | |||||||||||||||||
As of December 31, 2025, 26.0% of all our outstanding options were held by current employees and 74.0% were held by former employees. All of our outstanding options were in‑the‑money, that is, they had exercise price less than the $198.72 market price of our common stock on December 31, 2025.
Restricted Stock Units
The following table presents information about our RSU activity during the years ended December 31, 2025, 2024 and 2023:
| Number of RSUs | Wtd. Avg. Grant Date Fair Value Per RSU | |||||||||||||
| Unvested at December 31, 2022 | 1,520,418 | $ | 66.36 | |||||||||||
| Granted | 759,590 | $ | 60.88 | |||||||||||
| Performance-based adjustment | 185,901 | $ | 48.97 | |||||||||||
| Vested | (954,401) | $ | 48.75 | |||||||||||
| Forfeited | (90,445) | $ | 64.61 | |||||||||||
| Unvested at December 31, 2023 | 1,421,063 | $ | 66.46 | |||||||||||
| Granted | 573,033 | $ | 94.70 | |||||||||||
| Performance-based adjustment | 205,075 | $ | 66.51 | |||||||||||
| Vested | (684,268) | $ | 65.64 | |||||||||||
| Forfeited | (32,904) | $ | 80.91 | |||||||||||
| Unvested at December 31, 2024 | 1,481,999 | $ | 83.84 | |||||||||||
| Granted | 596,913 | $ | 138.06 | |||||||||||
| Performance-based adjustment | 255,386 | $ | 80.85 | |||||||||||
| Vested | (872,894) | $ | 81.41 | |||||||||||
| Forfeited | (21,025) | $ | 105.02 | |||||||||||
| Unvested at December 31, 2025 | 1,440,379 | $ | 111.02 | |||||||||||
During the year ended December 31, 2025, we granted 289,780 RSUs that will vest over periods ranging from to four years. In addition, we granted 307,133 performance-based RSUs, the vesting of which is contingent on our achievement of specified performance goals for the years 2025 to 2027. Provided the goals are achieved, the performance‑based RSUs that could vest will range from 0% to 250% of the 307,133 units granted, depending on our level of achievement with respect to the performance goals. During the same period, we issued an additional 255,386 RSUs that vested immediately as a result of our level of achievement with respect to previously awarded performance-based RSUs.
During the year ended December 31, 2024, we granted 275,694 RSUs that vest over periods ranging from to three years. In addition, we granted 297,339 performance-based RSUs, the vesting of which is contingent on our achievement of specified performance goals for the years 2024 to 2026. Provided the goals are achieved, the performance‑based RSUs that could vest will range from 0% to 250% of the 297,339 units granted, depending on our level of achievement with respect to the performance goals. During the same period, we issued an additional 205,075 RSUs that vested immediately as a result of our level of achievement with respect to previously awarded performance-based RSUs.
During the year ended December 31, 2023, we granted 429,601 RSUs that vest over periods ranging from to five years and 20,707 RSUs that vested upon the relocation of one of our executive officers. In addition, we granted 309,282 performance‑based RSUs, the vesting of which is contingent on our achievement of specified performance goals for the years 2023 to 2025. Provided the goals are achieved, the performance‑based RSUs that could vest will range from 0% to 225% of the 297,339 units granted, depending on our level of achievement with respect to the performance goals. During the same period, we issued an additional 185,901 RSUs that vested immediately as a result of our level of achievement with respect to previously awarded performance-based RSUs.
For certain of the performance-based RSU grants, the number of units that will ultimately vest is subject to adjustment based on the achievement of a market-based condition. The fair value of these RSUs is estimated through the use of a Monte Carlo simulation. Significant inputs used in our valuation of these RSUs included the following:
| Years Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Expected volatility | 36.6% - 48.0% | 34.9% - 52.1% | 53.6% - 65.6% | |||||||||||||||||
| Risk-free interest rate | 4.1% - 4.3% | 4.4% - 4.9% | 4.2% - 4.8% | |||||||||||||||||
USPI Management Equity Plan
USPI maintained a separate restricted stock plan (the “USPI Management Equity Plan”) under which it has granted RSUs representing a contractual right to receive one share of USPI’s non‑voting common stock in the future. The vesting of
RSUs granted under the plan varied based on the terms of the underlying award agreement. The following table presents information about RSU activity under the USPI Management Equity Plan during the years ended December 31, 2024 and 2023.
| Number of RSUs | Wtd. Avg. Grant Date Fair Value Per RSU | |||||||||||||
| Unvested at December 31, 2022 | 922,840 | $ | 34.13 | |||||||||||
| Vested | (303,171) | $ | 34.13 | |||||||||||
| Forfeited | (11,685) | $ | 34.13 | |||||||||||
| Unvested at December 31, 2023 | 607,984 | $ | 34.13 | |||||||||||
| Vested | (598,846) | $ | 34.13 | |||||||||||
| Forfeited | (1,997) | $ | 34.13 | |||||||||||
| Cancelled | (7,141) | $ | 34.13 | |||||||||||
| Unvested at December 31, 2024 | — | $ | 34.13 | |||||||||||
Other Employee Benefit and Retirement Plans
Employee Stock Purchase Plan
We have an employee stock purchase plan under which we are currently authorized to issue up to 4,070 thousand shares of common stock to our eligible employees. As of December 31, 2025, there were approximately 2,444 thousand shares available for issuance under our employee stock purchase plan. Under the terms of the plan, eligible employees may elect to have between 1% and 10% of their base earnings withheld each quarter to purchase shares of our common stock. Shares are purchased at a price equal to 95% of the closing price on the last day of the quarter. The plan requires a one‑year holding period for all shares issued. The holding period does not apply upon termination of employment. Under the plan, no individual may purchase, in any year, shares with a fair market value in excess of $25,000. The plan is currently not considered to be compensatory.
We issued the following numbers of shares under our employee stock purchase plan:
| Years Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Number of shares (in thousands) | 25 | 33 | 69 | |||||||||||||||||
| Weighted average price | $ | 160.90 | $ | 121.76 | $ | 65.62 | ||||||||||||||
Defined Contribution Retirement Plans
We maintain various other defined contribution plans for the benefit of our employees. During the years ended December 31, 2025, 2024 and 2023, we incurred total expenses from these plans of $165 million, $128 million and $126 million, respectively, primarily related to our contributions to the plans.
Substantially all of our employees, upon qualification, are eligible to participate in our defined contribution 401(k) plans. Under the plans, employees may contribute a portion of their eligible compensation, which we may match with employer contributions at our discretion. Employer matching contributions will vary depending on which of our subsidiaries employs the participant and whether the employee is covered under a collective bargaining agreement.
Defined Benefit Retirement Plans
We maintain three frozen non‑qualified defined benefit pension plans (“SERPs”) that provide supplemental retirement benefits to certain of our current and former executives. These plans are not funded, and plan obligations for these plans are paid from our working capital. Pension benefits are generally based on years of service and compensation. Upon completing the acquisition of Vanguard Health Systems, Inc. on October 1, 2013, we assumed a frozen qualified defined benefit plan (“DMC Pension Plan”) covering substantially all of the employees of our Detroit market that were hired prior to June 1, 2003. The benefits paid under the DMC Pension Plan are primarily based on years of service and final average earnings. During the year ended December 31, 2021, the Society of Actuaries issued the MP‑2021 mortality improvement scale, which we incorporated into the estimates of our defined benefit plan obligations at December 31, 2025 and 2024.
The following tables summarize the balance sheet impact, as well as the benefit obligations, funded status and rate assumptions associated with the SERPs and the DMC Pension Plan based on actuarial valuations prepared:
| December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Reconciliation of funded status of plans and the amounts included in the Consolidated Balance Sheets: | ||||||||||||||
Projected benefit obligations(1) | ||||||||||||||
| Beginning obligations | $ | (895) | $ | (951) | ||||||||||
| Interest cost | (49) | (49) | ||||||||||||
| Actuarial gain (loss) | (18) | 22 | ||||||||||||
| Benefits paid | 82 | 83 | ||||||||||||
| Annuity purchase | 33 | — | ||||||||||||
| Ending obligations | (847) | (895) | ||||||||||||
| Fair value of plans assets | ||||||||||||||
| Beginning plan assets | 573 | 592 | ||||||||||||
| Gain (loss) on plan assets | 35 | (3) | ||||||||||||
| Employer contribution | 61 | 42 | ||||||||||||
| Benefits paid | (58) | (58) | ||||||||||||
| Annuity purchase | (33) | — | ||||||||||||
| Ending plan assets | 578 | 573 | ||||||||||||
| Funded status of plans | $ | (269) | $ | (322) | ||||||||||
| Amounts recognized in the Consolidated Balance Sheets consist of: | ||||||||||||||
| Other current liability | $ | (24) | $ | (24) | ||||||||||
| Other long-term liability | $ | (245) | $ | (298) | ||||||||||
| Accumulated other comprehensive loss | $ | 228 | $ | 225 | ||||||||||
| SERP Assumptions: | ||||||||||||||
| Discount rate | 5.50 | % | 5.75 | % | ||||||||||
| Compensation increase rate | 3.00 | % | 3.00 | % | ||||||||||
| Measurement date | December 31, 2025 | December 31, 2024 | ||||||||||||
| DMC Pension Plan Assumptions: | ||||||||||||||
| Discount rate | 5.42 | % | 5.69 | % | ||||||||||
| Compensation increase rate | Frozen | Frozen | ||||||||||||
| Measurement date | December 31, 2025 | December 31, 2024 | ||||||||||||
(1)The accumulated benefit obligation at December 31, 2025 and 2024 was approximately $847 million and $895 million, respectively.
The components of net periodic benefit costs and related assumptions are as follows:
| Years Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Interest costs | $ | 49 | $ | 49 | $ | 53 | ||||||||||||||
| Expected return on plan assets | (29) | (29) | (36) | |||||||||||||||||
| Amortization of net actuarial loss | 8 | 8 | 7 | |||||||||||||||||
| Special termination benefit costs | — | — | 1 | |||||||||||||||||
| Net periodic benefit cost | $ | 28 | $ | 28 | $ | 25 | ||||||||||||||
| SERP Assumptions: | ||||||||||||||||||||
| Discount rate | 5.75 | % | 5.50 | % | 5.75 | % | ||||||||||||||
| Compensation increase rate | 3.00 | % | 3.00 | % | 3.00 | % | ||||||||||||||
| Measurement date | January 1, 2025 | January 1, 2024 | January 1, 2023 | |||||||||||||||||
| Census date | January 1, 2025 | January 1, 2024 | January 1, 2023 | |||||||||||||||||
| DMC Pension Plan Assumptions: | ||||||||||||||||||||
| Discount rate | 5.69 | % | 5.25 | % | 5.51 | % | ||||||||||||||
| Long-term rate of return on assets | 5.25 | % | 5.00 | % | 5.75 | % | ||||||||||||||
| Compensation increase rate | Frozen | Frozen | Frozen | |||||||||||||||||
| Measurement date | January 1, 2025 | January 1, 2024 | January 1, 2023 | |||||||||||||||||
| Census date | January 1, 2025 | January 1, 2024 | January 1, 2023 | |||||||||||||||||
Net periodic benefit costs for the current year are based on assumptions determined at the valuation date of the prior year for the SERPs and the DMC Pension Plan. We recorded loss adjustments of $3 million, $1 million and $2 million in other comprehensive income in the years ended December 31, 2025, 2024 and 2023, respectively, to recognize changes in the funded status of our SERPs and the DMC Pension Plan. Changes in the funded status are recorded as a direct increase or decrease to shareholders’ equity through accumulated other comprehensive loss. Net actuarial losses of $11 million during the year ended December 31, 2025 and $9 million during each of the years ended December 31, 2024 and 2023, and the amortization of net actuarial loss of $8 million during each of the years ended December 31, 2025 and 2024 and $7 million during the year ended December 31, 2023 were recognized in other comprehensive income. Actuarial gains (losses) affecting the benefit obligation during the years ended December 31, 2025 and 2024 were primarily attributable to the return on plan assets for the DMC Pension Plan and changes in the discount rate utilized for the SERP and DMC Pension Plan. Actuarial gains during the year ended December 31, 2023 were primarily attributable to changes in the discount rate utilized for the SERP and DMC Pension Plan. Cumulative net actuarial losses totaled $228 million, $225 million and $224 million as of December 31, 2025, 2024 and 2023, respectively. There were no unrecognized prior service costs at December 31, 2025, 2024 and 2023 that had not yet been recognized as components of net periodic benefit cost.
To develop the expected long‑term rate of return on plan assets assumption, the DMC Pension Plan considers the current level of expected returns on risk‑free investments (primarily government bonds), the historical level of risk premium associated with the other asset classes in which the portfolio is invested and the expectations for future returns on each asset class. The expected return for each asset class is then weighted based on the target asset allocation to develop the expected long‑term rate of return on assets assumption for the portfolio.
The weighted‑average asset allocations by asset category as of December 31, 2025, were as follows:
| Target | Actual | |||||||||||||
| Cash and cash equivalents | — | % | 11 | % | ||||||||||
| Equity securities | 11 | % | 8 | % | ||||||||||
| Debt securities | 70 | % | 62 | % | ||||||||||
| Alternative investments | 19 | % | 19 | % | ||||||||||
The DMC Pension Plan assets are invested in public commingled vehicles, segregated separately managed accounts, and private commingled vehicles, all of which are managed by professional investment management firms. The objective for all asset categories is to maximize total return without assuming undue risk exposure. The DMC Pension Plan maintains a well‑diversified asset allocation that meets these objectives. The DMC Pension Plan assets are largely comprised of cash and cash equivalents, including but not limited to money market funds and repurchase agreements secured by U.S. Treasury or federal agency obligations, equity securities, including but not limited to the publicly traded shares of U.S. companies with
various market capitalizations in addition to international and convertible securities, debt securities including, but not limited to, domestic and foreign government obligations, corporate bonds, and mortgage‑backed securities, and alternative investments. Alternative investments is a broadly defined asset category with the objective of diversifying the overall portfolio, complementing traditional equity and fixed‑income securities and improving the overall performance consistency of the portfolio. Alternative investments may include, but are not limited to, diversified hedge funds in the form of professionally managed pooled limited partnership investments and investments in private markets via professionally managed pooled limited partnership interests.
In each investment account, the DMC Pension Plan investment managers are responsible for monitoring and reacting to economic indicators, such as gross domestic product, consumer price index and U.S. monetary policy that may affect the performance of their account. The performance of all managers and the aggregate asset allocation are formally reviewed on a quarterly basis. The current asset allocation objective is to maintain a certain percentage within each asset class allowing for deviation within the established range for each asset class. The portfolio is rebalanced on an as‑needed basis to keep these allocations within the accepted ranges.
In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. We consider a security that trades at least weekly to have an active market. Fair values determined by Level 2 inputs utilize data points that are observable, such as quoted prices for similar assets, interest rates and yield curves. Fair values determined by Level 3 inputs utilize unobservable data points for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability.
The following table presents the DMC Pension Plan assets measured at fair value on a recurring basis as of December 31, 2025 and 2024, aggregated by the level in the fair value hierarchy within which those measurements are determined:
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||
As of December 31, 2025: | ||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 64 | $ | 64 | $ | — | $ | — | ||||||||||||||||||
| Equity securities | 49 | 49 | — | — | ||||||||||||||||||||||
| Fixed income funds | 356 | 356 | — | — | ||||||||||||||||||||||
| Alternative investments: | ||||||||||||||||||||||||||
| Private equity securities | 99 | — | — | 99 | ||||||||||||||||||||||
| Hedge funds | 10 | — | — | 10 | ||||||||||||||||||||||
| $ | 578 | $ | 469 | $ | — | $ | 109 | |||||||||||||||||||
As of December 31, 2024: | ||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 22 | $ | 22 | $ | — | $ | — | ||||||||||||||||||
| Equity securities | 66 | 66 | — | — | ||||||||||||||||||||||
| Fixed income funds | 376 | 376 | — | — | ||||||||||||||||||||||
| Alternative investments: | ||||||||||||||||||||||||||
| Private equity securities | 106 | — | — | 106 | ||||||||||||||||||||||
| Hedge funds | 3 | — | — | 3 | ||||||||||||||||||||||
| $ | 573 | $ | 464 | $ | — | $ | 109 | |||||||||||||||||||
The following table presents the estimated future benefit payments to be made from the SERPs and the DMC Pension Plan, a portion of which will be funded from plan assets, for the next five years and in the aggregate for the five years thereafter:
| Years Ending December 31, | Five Years Thereafter | |||||||||||||||||||||||||||||||||||||||||||
| Total | 2026 | 2027 | 2028 | 2029 | 2030 | |||||||||||||||||||||||||||||||||||||||
| Estimated benefit payments | $ | 732 | $ | 81 | $ | 80 | $ | 79 | $ | 77 | $ | 75 | $ | 340 | ||||||||||||||||||||||||||||||
The SERP and DMC Pension Plan obligations of $269 million at December 31, 2025 are classified in the accompanying Consolidated Balance Sheet as an other current liability of $24 million and defined benefit plan obligations of $245 million based on an estimate of the expected payment patterns. We expect to make total contributions to the plans of approximately $24 million for the year ending December 31, 2026.
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.