2019-05-14T13:43:09-05:00 2018-06-30 135565207 KPMG LLP 303 PEACHTREE STREET NE SUITE 2000 ATLANTA GA 303083210 990 2017-07-01 810801296 ARKANSAS CHILDREN'S INC ARKA 5013648000 1 CHILDRENS WAY LITTLE ROCK AR 72202 MARCELLA DODERER PRESIDENT/CEO 5013648000 2019-05-14 1 WHITNEY BLAIR P01226647 4042223000 71.29.92.22 2019-05-14 13:42:24 CD P BB12664BE1E3D4BC08488640412F20C0F7A39D48 AB8BD5A88D4BA927D2DA994192B6818756100B67 2017 2019-02-21 02:37:17Z ARKANSAS CHILDREN'S MARCELLA DODERER 1 CHILDRENS WAY LITTLE ROCK AR 72202 25433439 0 X WWW.ARCHILDRENS.ORG X 2015 AR WE CHAMPION CHILDREN BY MAKING THEM BETTER TODAY AND HEALTHIER TOMORROW. 15 14 0 0 7054 6054 0 0 19927883 23340402 0 -923644 200091 216681 20127974 22633439 0 10500 0 0 14606688 18324124 0 0 0 6008722 5644866 20615410 23979490 -487436 -1346051 1513570 2329489 11820388 26561927 -10306818 -24232438 X WE CHAMPION CHILDREN BY MAKING THEM BETTER TODAY AND HEALTHIER TOMORROW.ARKANSAS CHILDREN'S WILL FUNDAMENTALLY TRANSFORM HEALTHCARE DELIVERY FOR THE CHILDREN OF ARKANSAS AND BEYOND. ARKANSAS CHILDREN'S CORE VALUES ARE THE ORGANIZATIONAL PRINCIPLES THAT HIGHLIGHT OUR REGARD FOR EACH OTHER AND THOSE WE SERVE:SAFETY: WE ARE VIGILANT ABOUT CREATING AN ERROR-FREE ENVIRONMENT FOR PATIENTS, FAMILIES, AND TEAM MEMBERS.TEAMWORK: WE DEMONSTRATE ACTIONABLE CARE AND CONCERN FOR PATIENTS, FAMILIES, AND TEAM MEMBERS.COMPASSION: WE COORDINATE, COMMUNICATE, COOPERATE, AND COLLABORATE TO ENSURE THE HIGHEST LEVEL OF SERVICE FOR OUR PATIENTS, FAMILIES, AND TEAM MEMBERS.EXCELLENCE: WE ACHIEVE THE HIGHEST OF STANDARDS AND SERVE WITH DISTINCTION IN ORDER TO BE THE BEST.SAFETY AND EXCELLENCE FRAME OUR WORK. TEAMWORK AND COMPASSION PLACE PEOPLE AT THE CENTER OF ALL WE DO. 0 0 10500 10500 23340402 THE CORPORATION IS ORGANIZED, AND SHALL BE OPERATED, EXCLUSIVELY FOR THE BENEFIT OF, TO PERFORM THE FUNCTIONS OF AND TO CARRY OUT THE PURPOSES OF ARKANSAS CHILDREN'S HOSPITAL, ARKANSAS CHILDREN'S NORTHWEST INC., ARKANSAS CHILDREN'S FOUNDATION, INC., ARKANSAS CHILDREN'S RESEARCH INSTITUTE, ARKANSAS CHILDREN'S CARE NETWORK, AND OTHER AFFILIATES AND THEREBY TO IMPROVE AND PROMOTE THE HEALTH AND WELFARE OF THE COMMUNITIES SERVED BY THE SUPPORTED ORGANIZATIONS AND TO SUPPORT AND PROMOTE SCIENTIFIC AND MEDICAL RESEARCH AND KNOWLEDGE FOR THE BENEFIT OF THE GENERAL PUBLIC, INCLUDING BY:A. SERVING AS THE DIRECT OR INDIRECT MEMBER OF THE SUPPORTED ORGANIZATIONS;B. OVERSEEING AND COORDINATING THE GOVERNANCE, POLICY MAKING AND STRATEGIC PLANNING OF THE SUPPORTED ORGANIZATIONS;C. PROVIDING ADMINISTRATIVE AND/OR OTHER SUPPORT AND SERVICES FOR THE BENEFIT OF THE SUPPORTED ORGANIZATIONS;D. SERVING AS THE DIRECT OR INDIRECT MEMBER OF ONE OR MORE OTHER NONPROFIT CORPORATIONS, AND AS THE DIRECT OR INDIRECT SHAREHOLDER, MEMBER OR OTHER OWNER OF FOR-PROFIT BUSINESS CORPORATIONS OR OTHER ENTITIES, THAT OPERATE IN FURTHERANCE AND SUPPORT OF THE SECTION 501(C)(3) TAX-EXEMPT PURPOSES OF THE CORPORATION AND THE SUPPORTED ORGANIZATIONS; AND E. SUBJECT TO THE LIMITATIONS SET FORTH HEREIN, ENGAGING IN ANY AND ALL ACTS OR ACTIVITIES, AND EXERCISING ALL SUCH POWERS, RIGHTS AND PRIVILEGES THAT ARE INCIDENTAL TO AND IN FURTHERANCE OF ACCOMPLISHING THE FOREGOING PURPOSES.THE ORGANIZATION PROVIDES LONG-RANGE PLANNING, MANAGEMENT, AND SUPPORT SERVICES FOR ITS AFFILIATES IN FURTHERANCE OF THEIR MISSIONS. 10500 1 0 0 1 0 0 0 0 0 0 0 0 0 1 0 1 0 1 0 0 1 0 0 0 0 0 0 1 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 0 0 1 52 0 1 0 1 1 0 0 0 0 0 0 0 0 0 X 15 14 0 0 1 0 0 0 0 1 1 0 0 1 1 1 1 1 1 1 1 0 X GENA WINGFIELD 5013642555 1 CHILDRENS WAY LITTLE ROCK AR 72202 MARCELLA DODERER PRESIDENT/CEO 11.00 44.00 X X 0 1011240 133113 JOHN BALE TRUSTEE/DIRECTOR 0.28 0.27 X 0 0 0 TOM BAXTER TRUSTEE/DIRECTOR 0.27 0.21 X 0 0 0 RON CLARK VICE CHAIR 0.24 0.13 X X 0 0 0 HARRY CHUCK ERWIN TRUSTEE/DIRECTOR 0.24 0.43 X 0 0 0 SHARILYN GASAWAY TRUSTEE/DIRECTOR 0.35 0.04 X 0 0 0 GARY GEORGE TRUSTEE/DIRECTOR 0.16 0.13 X 0 0 0 PAUL HART TRUSTEE/DIRECTOR 0.18 0.00 X 0 0 0 SONJA YATES HUBBARD TRUSTEE/DIRECTOR 0.00 0.04 X 0 0 0 MARK MCCASLIN TREASURER 0.53 0.00 X X 0 0 0 JEFF NOLAN TRUSTEE/DIRECTOR 0.44 0.15 X 0 0 0 JAMES L SKIP RUTHERFORD TRUSTEE/DIRECTOR 0.24 0.00 X 0 0 0 MARK SAVIERS CHAIR 0.47 0.10 X X 0 0 0 PATRICK SCHUECK TRUSTEE/DIRECTOR 0.40 0.00 X 0 0 0 CHARLES WHITESIDE TRUSTEE/DIRECTOR 0.44 0.71 X 0 0 0 GENA WINGFIELD EVP/CFO 24.00 24.00 X 0 613936 81411 CHANDA CHACON EVP/COO 5.00 45.00 X 0 511282 20476 ANDREE TROSCLAIR SVP HUMAN RESOURCES 40.00 10.00 X 0 310447 23776 JONATHAN GOLDBERG SVP CIO 50.00 0.00 X 0 425369 58591 MICHAEL HART VP IT APPLICATIONS 0.00 50.00 X 0 247308 22302 RHONDA MCKINNIS SVP/CHIEF LEGAL OFFICER 40.00 10.00 X 0 352159 20490 FRED SCARBOROUGH SVP/CDO 22.00 33.00 X 0 468431 59940 ROBERT STEELE SVP/CSO 25.00 25.00 X 0 612905 74489 0 4553077 494588 0 0 1 0 WORKFORCE INSIGHT LLC 1401 17TH STREET SUITE 850 DENVER CO 80202 CONSULTING 561347 PRESIDIO NETWORKED SOLUTIONS PO BOX 822169 PHILADELPHIA PA 19182 IT NETWORK SERVICES 430836 KPMG LLP PO BOX 120608 DALLAS TX 75312 AUDIT & TAX SERVICES 375464 MEDICAL INFORMATION TECHNOLOGY PO BOX 74569 CHICAGO IL 60696 IT CONTRACTED SERVICES 363798 SIEMENS MEDICAL SOLUTIONS PO BOX 120001 DEPT 0733 DALLAS TX 75312 IT CONTRACTED SERVICES 238494 14 MGMT FEES FROM AFFILIA 900099 23340402 23340402 23340402 1876356 2800000 -923644 -923644 -923644 PURCHASING CARD REBATE 900099 209627 209627 DEEMED UBTI FROM QUALI 900099 7054 7054 216681 22633439 23340402 7054 -714017 10500 10500 2849587 2849587 11104341 11104341 4370196 4370196 409583 409583 392341 392341 92500 92500 269282 269282 787494 787494 530967 530967 149000 149000 44117 44117 6903 6903 2962679 2962679 23979490 10500 23968990 0 938116 973669 575454 1355820 1513570 2329489 11820388 26561927 11820388 26561927 X -10306818 -24232438 -10306818 -24232438 1513570 2329489 X -1346051 -12579569 X X 0 1 X 1 0 X X X 5 ARKANSAS CHILDREN'S HOSPITAL 710236857 3 1 0 18835259 ARKANSAS CHILDREN'S FOUNDATION 710568795 7 1 0 1000158 ARKANSAS CHILDREN'S RESEARCH INSTITUTE 710694931 7 1 0 2366054 ARKANSAS CHILDREN'S NORTHWEST 810817660 3 1 0 2492036 ARKANSAS CHILDREN'S MEDICAL GROUP 820771462 3 0 0 68266 5 0 24761773 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 SCHEDULE A, PART I, LINE 12G, COLUMN (VI) ARKANSAS CHILDREN'S, INC. PROVIDES THE FOLLOWING SERVICES TO ALL SUPPORTED ORGANIZATIONS: ADMINISTRATIVE AND FISCAL OVERSIGHT; ACCOUNTING; HUMAN RESOURCE AND EMPLOYEE BENEFIT MANAGEMENT; CORPORATE COMPLIANCE; INTERNAL AUDIT; INFORMATION SYSTEM ADMINISTRATION; LEGAL; RISK ASSESSMENT; AND STRATEGIC PLANNING. SCHEDULE A, PART IV, SECTION A, LINE 1 FOUR OF THE ORGANIZATIONS LISTED ON SCHEDULE A, PAGE 1 ARE LISTED IN THE ORGANIZATION'S GOVERNING DOCUMENTS. HOWEVER, OTHER SUPPORTED ORGANIZATIONS ARE DESCRIBED BY CLASS OR PURPOSE IN THE GOVERNING DOCUMENTS. THEY ARE REFERRED TO AS "AFFILIATES" WITHIN SUCH DOCUMENTATION. DUE TO THE FACT THAT THERE ARE CURRENTLY MULTIPLE AFFILIATES, AND SHOULD ADDITIONAL AFFILIATES BE ADDED IN THE FUTURE, SPECIFIC NAMES ARE NOT INCLUDED IN THE GOVERNING DOCUMENTS. ARKANSAS CHILDREN'S, INC. IS NAMED AS SOLE MEMBER IN EACH AFFILIATE'S GOVERNING DOCUMENTS. PER THE BYLAWS, THE DEFINITION OF "AFFILIATE" IS AS FOLLOWS: THE TERM "AFFILIATE" SHALL MEAN, INDIVIDUALLY, EACH LEGAL ENTITY THAT IS CONTROLLED, DIRECTLY OR INDIRECTLY, BY THE CORPORATION. AS USED IN THIS DEFINITION, "CONTROL" SHALL MEAN: (I) THE STATUS OF SOLE CORPORATE MEMBER OF A LEGAL ENTITY; (II) AUTHORITY TO APPOINT, ELECT,OR REPLACE A MAJORITY OF THE SHAREHOLDERS OF ANY CORPORATION OR THE MEMBERS OF ANY LIMITED LIABILITY COMPANY; OR (III) THE AUTHORITY TO APPOINT, ELECT OR APPROVE AT LEAST A MAJORITY OF THE GOVERNING BODY OF A LEGAL ENTITY. ALL PROVISIONS HEREOF REGARDING THE POWERS OR RIGHTS OF THE CORPORATION WITH RESPECT TO ANY AFFILIATE SHALL APPLY TO THE EXTENT PERMITTED BY APPLICABLE LAW AND THE RESPECTIVE GOVERNING DOCUMENTS OF EACH SUCH AFFILIATE. SCHEDULE A, PART IV, SECTION C THE TYPE II SUPPORTING ORGANIZATION'S CONTROL IS ESTABLISHED IN TWO WAYS: FIRST, THE CORPORATION'S BYLAWS INDICATE THE FOLLOWING CLAUSE FOR OVERLAPPING LEADERSHIP OF ITS AFFILIATED ENTITIES: "THE BOARD SHALL INCLUDE INDIVIDUALS WHO SERVE AS DIRECTORS OR OFFICERS OF ITS DIRECT AND INDIRECT SUBSIDIARIES THAT QUALIFY AS EXEMPT FROM FEDERAL INCOME TAX PURSUANT TO SECTION 501(C)(3) OF THE CODE AND AS PUBLIC CHARITIES PURSUANT TO SECTIONS 509(A)(1) OR 509(A)(2) OF THE CODE, AND WHICH ARE IDENTIFIED AS THE CORPORATION'S SUPPORTED ORGANIZATIONS IN THE CORPORATION'S ARTICLES OF INCORPORATION. NOTWITHSTANDING THE FOREGOING, THE BOARD SHALL AT ALL TIMES INCLUDE AT LEAST THREE (3) INDIVIDUALS WHO DO NOT ALSO SERVE ON THE BOARD OF DIRECTORS OF ANY AFFILIATE." SECOND, IN EACH AFFILIATE'S BYLAWS, ARKANSAS CHILDREN'S ESTABLISHES CERTAIN RESERVED POWERS WHICH INCLUDE FIXING THE SIZE OF THE BOARDS OF DIRECTORS AND APPOINTING AND/OR REMOVING MEMBERS OF ITS AFFILIATES; RATIFYING ELECTION AND REMOVAL OF OFFICERS OF THE BOARDS OF DIRECTORS OF ITS AFFILIATES; AUTHORIZING AMENDMENT AND RESTATEMENT AND/OR REPEAL OF GOVERNANCE DOCUMENTS OF ITS AFFILIATES; AND APPROVAL OF ANY SIGNIFICANT OPERATIONAL TRANSACTION, TO INCLUDE FINANCIAL AND STRATEGIC PLANNING, BUDGETS, CAPITAL EXPENDITURES, AMONG OTHERS. 0 1 0 0 0 1 130238 1 0 1 522844 653082 0 PART II-B, LINE 1: IN ORDER TO EFFECTIVELY ADVOCATE FOR AND ASSIST WITH THE IMPROVEMENT OF CHILDREN'S HEALTH, ARKANSAS CHILDREN'S HAS AN OFFICE OF GOVERNMENT RELATIONS THAT WORKS WITH OTHER ORGANIZATIONS, ON A STATE AND NATIONAL LEVEL, TO FORMULATE POLICY AND TO ARTICULATE THE CONTINUUM'S PUBLIC POLICY AGENDA. IN ADDITION, A PERCENTAGE OF DUES PAID TO THE AMERICAN HOSPITAL ASSOCIATION, ARKANSAS HOSPITAL ASSOCIATION, ASSOCIATION OF AMERICAN MEDICAL COLLEGES, CHILDREN'S HOSPITAL ASSOCIATION, LITTLE ROCK REGIONAL CHAMBER OF COMMERCE AND THE ARKANSAS STATE CHAMBER OF COMMERCE WAS FOR LOBBYING. 0 OTHER RECEIVABLES 1355820 1355820 X PART X, LINE 2: NOTE: THE AUDIT WAS COMPRISED OF THE CONSOLIDATED FINANCIAL STATEMENTS OF ARKANSAS CHILDREN'S, INC., ARKANSAS CHILDREN'S HOSPITAL, ARKANSAS CHILDREN'S FOUNDATION, ARKANSAS CHILDREN'S RESEARCH INSTITUTE, ARKANSAS CHILDREN'S NORTHWEST, ARKANSAS CHILDREN'S CARE NETWORK, AND SACOVA INSURANCE COMPANY (COLLECTIVELY, ARKANSAS CHILDREN'S). FOOTNOTE: ARKANSAS CHILDREN'S APPLIES FINANCIAL ACCOUNTING STANDARDS BOARD (FASB) ASC TOPIC 740 (TOPIC 740), ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES. TOPIC 740 CLARIFIES THE ACCOUNTING FOR UNCERTAINTY IN INCOME TAX POSITIONS AND PROVIDES GUIDANCE ON WHEN TAX POSITIONS ARE RECOGNIZED IN AN ENTITY'S FINANCIAL STATEMENTS AND HOW THE VALUES OF THESE POSITIONS ARE DETERMINED. MANAGEMENT HAS ANALYZED THE TAX POSITIONS TAKEN BY ARKANSAS CHILDREN'S AND HAS CONCLUDED THAT AS OF JUNE 30, 2018 AND 2017, THERE ARE NO UNCERTAIN POSITIONS TAKEN OR EXPECTED TO BE TAKEN THAT WOULD REQUIRE RECOGNITION OF A LIABILITY (OR ASSET) OR DISCLOSURE IN THE CONSOLIDATED FINANCIAL STATEMENTS. CENTRAL AMERICA AND THE CARIBBEAN 0 0 INVESTMENT - CAPTIVE INSURANCE COMPANY 400000 0 0 0 0 0 0 400000 0 400000 1 0 1 0 0 0 SCHEDULE F, PART I, LINE 3 SACOVA INSURANCE COMPANY, LTD., A SINGLE PARENT CAPTIVE INSURANCE COMPANY, WAS ORGANIZED IN THE CAYMAN ISLANDS IN MAY 2018. THE PRIMARY INVESTING SHAREHOLDER/MEMBER IS ARKANSAS CHILDREN'S, INC. SACOVA HAD NO OPERATING ACTIVITY IN FISCAL YEAR 2018. 1 AMERICAN ACADEMY OF PEDIATRICS 141 NORTHWEST POINT BLVD ELK GROVE VILLAGE IL 60007 362275597 501(C)(3) 10000 GENERAL SUPPORT 1 0 PART I, LINE 2: ARKANSAS CHILDREN'S (AC) CONSIDERS REQUESTS FROM NON-PROFIT OR GOVERNMENTAL ENTITIES FOR PROGRAMS OR ACTIVITIES THAT ALIGN WITH ITS PLAN TO ADDRESS CHILDREN'S NEEDS OR THAT OTHERWISE SUPPORT AND IMPROVE CHILDREN'S HEALTH. AC ENTRUSTS THAT THESE NON-PROFIT OR GOVERNMENTAL ENTITIES WILL MONITOR THE USE OF FUNDS IN ACCORDANCE WITH NON-PROFIT OR GOVERNMENTAL REQUIREMENTS. X X 1 1 X X X X 0 1 0 0 0 0 0 0 0 MARCELLA DODERER PRESIDENT/CEO 0 738882 0 178350 0 94008 0 129485 0 3628 0 1144353 0 89615 GENA WINGFIELD EVP/CFO 0 461191 0 98450 0 54295 0 75668 0 5743 0 695347 0 50519 CHANDA CHACON EVP/COO 0 434775 0 76127 0 380 0 15827 0 4649 0 531758 0 0 ANDREE TROSCLAIR SVP HUMAN RESOURCES 0 259768 0 48465 0 2214 0 19972 0 3804 0 334223 0 0 JONATHAN GOLDBERG SVP CIO 0 351212 0 73644 0 513 0 53343 0 5248 0 483960 0 0 MICHAEL HART VP IT APPLICATIONS 0 209177 0 37783 0 348 0 16614 0 5688 0 269610 0 0 RHONDA MCKINNIS SVP/CHIEF LEGAL OFFICER 0 295587 0 55881 0 691 0 17038 0 3452 0 372649 0 0 FRED SCARBOROUGH SVP/CDO 0 347683 0 91959 0 28789 0 54785 0 5155 0 528371 0 27025 ROBERT STEELE SVP/CSO 0 463812 0 99774 0 49319 0 69334 0 5155 0 687394 0 46755 PART I, LINE 1A CHARTER TRAVEL IS USED BY ARKANSAS CHILDREN'S AND AFFILIATED ENTITIES' BOARD MEMBERS AND STAFF (AND OCCASIONALLY ACCOMPANYING SPOUSES/COMPANIONS) WHEN IT IS DEEMED THE MOST EFFICIENT METHOD OF TRAVEL TO DISTANT AREAS WITHIN THE STATE OR TO SURROUNDING STATES FOR PURPOSES RELATED TO ARKANSAS CHILDREN'S BUSINESS. SEPARATE TRAVEL (NON-CHARTER) FOR COMPANIONS IS REIMBURSED BY THE EMPLOYEE IF SUCH TRAVEL IS ON AN INDIVIDUAL BASIS; THUS, SUCH TRAVEL IS NOT CONSIDERED TAXABLE COMPENSATION TO THE EMPLOYEE. FIVE OFFICERS/EMPLOYEES AND TWO BOARD MEMBERS USED CHARTER TRAVEL DURING THE CALENDAR YEAR. BECAUSE THE CHARTER TRAVEL WAS USED FOR ARKANSAS CHILDREN'S BUSINESS PURPOSES, IT WAS NOT CONSIDERED AS TAXABLE WAGES. PART I, LINE 3 COMPENSATION FOR ANY ARKANSAS CHILDREN'S EXECUTIVE OR SENIOR OFFICER (PRESIDENT; EXECUTIVE VICE PRESIDENT; SENIOR VICE PRESIDENT) WHO IS NOT A CONTRACTED UAMS EMPLOYEE IS REVIEWED BY THE ARKANSAS CHILDREN'S HUMAN RESOURCES AND COMPENSATION COMMITTEE WHICH IS ESTABLISHED THROUGH THE BYLAWS OF ARKANSAS CHILDREN'S, INC. THE HUMAN RESOURCES AND COMPENSATION COMMITTEE HAS THE FULL AUTHORITY AND SPECIFIC RESPONSIBILITY FOR REVIEWING AND APPROVING COMPENSATION POLICIES, BASE SALARY AND INCENTIVE COMPENSATION LEVELS, EXECUTIVE RETIREMENT AND OTHER EXECUTIVE BENEFIT PLANS FOR HEALTH SYSTEM SENIOR MANAGEMENT, INCLUDING OFFICERS OF THE CORPORATION AND AFFILIATES WHO ARE "DISQUALIFIED PERSONS" UNDER SECTION 4958 OF THE CODE. THE POLICIES AND PROGRAMS REVIEWED AND APPROVED BY THE HUMAN RESOURCES AND COMPENSATION COMMITTEE SHALL BE DESIGNED TO ENSURE THAT THE CORPORATION AND ITS AFFILIATES REMAIN COMPETITIVE AND REASONABLE RELATIVE TO THE COMPENSATION AND BENEFITS PRACTICES OF SIMILARLY SITUATED HEALTH SYSTEMS LOCALLY AND NATIONALLY, AND TO PERMIT THE CORPORATION AND SUCH AFFILIATES TO ATTRACT AND RETAIN SUPERIOR SENIOR MANAGEMENT, IN FURTHERANCE OF THE CORPORATION'S AND AFFILIATES PURPOSES. THE HUMAN RESOURCES AND COMPENSATION COMMITTEE SHALL HAVE, TO THE FULLEST EXTENT OF THE LAW, THE AUTHORITY TO APPROVE THE COMPENSATION PACKAGES FOR SENIOR MANAGEMENT OF THE CORPORATION AND THE AFFILIATES. IN ITS PROCESS, THE COMMITTEE SHALL OBTAIN AND MUST RELY UPON APPROPRIATE DATA AS TO COMPARABILITY PRIOR TO MAKING ITS DETERMINATION OF REASONABLENESS WITH RESPECT TO THE COMPENSATION ARRANGEMENTS OF DISQUALIFIED PERSONS. APPROPRIATE DATA INCLUDES, BUT IS NOT LIMITED TO, COMPENSATION LEVELS PAID BY SIMILARLY SITUATED ORGANIZATIONS, BOTH TAXABLE AND TAX-EXEMPT, FOR FUNCTIONALLY COMPARABLE POSITIONS; THE AVAILABILITY OF SIMILAR SERVICES IN THE GEOGRAPHIC AREA OF THE CORPORATION, CURRENT COMPENSATION SURVEYS COMPILED BY INDEPENDENT FIRMS; AND ACTUAL WRITTEN OFFERS FROM SIMILAR INSTITUTIONS COMPETING FOR THE SERVICES OF THE DISQUALIFIED PERSON. THE COMMITTEE MAY RELY UPON OPINIONS OF QUALIFIED LEGAL, ACCOUNTING, VALUATION AND EXECUTIVE COMPENSATION EXPERTS. CONTEMPORANEOUSLY WITH MAKING ITS DETERMINATION OF REASONABLENESS WITH RESPECT TO THE COMPENSATION ARRANGEMENT OF THE CEO AND DISQUALIFIED PERSONS, THE COMMITTEE SHALL DOCUMENT IN A WRITTEN REPORT THE BASIS FOR ITS DECISIONS AND FORWARD THE REPORT TO THE BOARD. PART I, LINE 4B AC'S DEFERRED COMPENSATION PLAN (DCP), WAS INSTITUTED ON 6/30/2014. THE DCP IS A 457(F) NONQUALIFIED SUPPLEMENTAL RETIREMENT PLAN, PROVIDING ANNUAL CONTRIBUTIONS TO CERTAIN EXECUTIVES AT A PERCENTAGE OF THEIR BASE SALARY IN EFFECT ON JUNE 30 OF THE PLAN YEAR. THE SUPPLEMENTAL COMPENSATION SERVES TO ENCOURAGE CONTINUED EMPLOYMENT WITH ARKANSAS CHILDREN'S AND ITS AFFILIATES. THE PLAN PROVIDES THAT DEFERRED AMOUNTS ARE PAID AS SOON AS ADMINISTRATIVELY POSSIBLE AFTER BEING VESTED. IT IS INTENDED THAT SUCH PAYMENTS QUALIFY FOR THE "SHORT-TERM DEFERRAL" EXEMPTION FROM IRC SECTION 409A, AND FOR TAX DEFERRAL UNDER IRC SECTION 457(F). PER THE PLAN DOCUMENT, EACH DCP CONTRIBUTION FOR A PLAN YEAR AND ITS ASSOCIATED EARNINGS VEST AS FOLLOWS, ON THE EARLIER OF: - (SUBACCOUNT); THE FIRST DAY OF THE PLAN YEAR FOLLOWING THREE (3) CONTINUOUS PLAN YEARS OF EMPLOYMENT BY THE PARTICIPANT WITH ARKANSAS CHILDREN'S OR AFFILIATE, WHICH BEGINS ON THE FIRST DAY OF THE PLAN YEAR FOR WHICH THE CONTRIBUTION IS CREDITED. - (PRIMARY ACCOUNT, INCLUDING SUBACCOUNTS) - ATTAINMENT OF AGE 65 AND AT LEAST 3 YEARS OF SERVICE AS A DCP PARTICIPANT - (PRIMARY ACCOUNT, INCLUDING SUBACCOUNTS) - DEATH OR PERMANENT DISABILITY - (PRIMARY ACCOUNT, INCLUDING SUBACCOUNTS) - INVOLUNTARY TERMINATION (OTHER THAN FOR CAUSE) - (PRIMARY ACCOUNT, INCLUDING SUBACCOUNTS) - PLAN TERMINATION FOR TAX YEAR 2017 (FISCAL YEAR 2018), THE FOLLOWING AC REPORTABLE EMPLOYEES WERE ELIGIBLE AND PARTICIPATING IN THE DEFERRED COMPENSATION PLAN: - MARCELLA DODERER: AC/ACH/ACNW PRESIDENT/CEO - JONATHAN GOLDBERG: AC (CONTINUUM) SVP AND CIO - ROBERT STEELE: AC (CONTINUUM) SVP AND CSO - FRED SCARBOROUGH: AC (CONTINUUM) SVP AND CDO; ACF PRESIDENT - GENA WINGFIELD: AC (CONTINUUM) EVP AND CFO PER THE PLAN DOCUMENT, UPON BECOMING VESTED IN A PLAN YEAR SUBACCOUNT AND AS SOON AS ADMINISTRATIVELY PRACTICABLE AFTER SUCH VESTING DATE, BUT NO LATER THAN THE END OF THE CALENDAR YEAR IN WHICH SUCH VESTING DATE OCCURRED, INDIVIDUAL PARTICIPANTS WILL BE PAID A LUMP SUM PAYMENT EQUAL TO THE PLAN YEAR SUBACCOUNT BALANCE AS OF THE JUNE 30 IMMEDIATELY PRECEDING SUCH VESTING DATE. FOUR AC REPORTABLE EMPLOYEES ELIGIBLE AND PARTICIPATING IN THE PLAN RECEIVED PAYMENT IN FY18, DISTRIBUTED AS PER THE PLAN DOCUMENT. SUCH AMOUNTS ARE NOTED IN SCHEDULE J, PART II, COLUMN F AS PREVIOUSLY EARNED. FORM 990, SCHEDULE J, PART I, LINES 5-7 THE INCENTIVE PLANS FOR ALL ENTITIES HAVE SPECIFIC RULES AND CALCULATIONS FOR BONUSES. NONE ARE CONTINGENT ON REVENUES OR NET EARNINGS OF THE ORGANIZATIONS (ANY), AND SINCE THEY ARE CALCULATED BASED ON A SPECIFIC FORMULA, THEY ARE NOT "NON-FIXED". THE QUESTIONS 5, 6, AND 7 IN PART I TO SCHEDULE J ARE ALL CORRECTLY ANSWERED "NO". FORM 990, PART VI, SECTION A, LINE 4 IN FY18, ARKANSAS CHILDREN'S, INC. MADE A REVISION TO ITS BYLAWS TO REFLECT THE HUMAN RESOURCES AND COMPENSATION COMMITTEE WILL MEET "AT LEAST ANNUALLY", CHANGING FROM "AT LEAST QUARTERLY." NO OTHER CHANGES WERE MADE TO THE ARKANSAS CHILDREN'S, INC. GOVERNING DOCUMENTS. FORM 990, PART VI, SECTION B, LINE 11B THE DRAFT FORM 990 IS PROVIDED TO THE ARKANSAS CHILDREN'S PLANNING AND OVERSIGHT COMMITTEE FOR ITS REVIEW PRIOR TO FILING. IF THE REVIEW RESULTS IN REVISIONS TO THE FORM 990, THOSE REVISIONS ARE MADE. THE FORM 990 TO BE FILED IS THEN PROVIDED TO THE ENTIRE BOARD PRIOR TO FILING. FORM 990, PART VI, SECTION B, LINE 12C ARKANSAS CHILDREN'S, INC. MAINTAINS A CONFLICT OF INTEREST POLICY WHICH PERTAINS TO ALL RELATED ENTITIES. FOLLOWING ARE THE DETAILS REGARDING MONITORING AND COMPLIANCE: A. CONSISTENT WITH THE ARKANSAS CHILDREN'S CODE OF CONDUCT, ALL EMPLOYEES OR THOSE SERVING ON ARKANSAS CHILDREN'S-RELATED COMMITTEES MUST DISCLOSE ANY EMPLOYMENT, TRANSACTION, OR OTHER ARRANGEMENT THAT MAY CAUSE A CONFLICT OF INTEREST. ALL PERSONS COVERED BY THIS POLICY MUST DISCLOSE POSSIBLE CONFLICTS OF INTEREST CAUSED BY THEIR WORK, OR A FAMILY MEMBER ASSOCIATED WITH ARKANSAS CHILDREN'S. ALL PARTIES MUST FURTHER AGREE TO MANAGE SUCH CONFLICTS IN ACCORDANCE WITH THIS POLICY AND ASSOCIATED PROCEDURES. B. EACH EMPLOYEE AND VOLUNTEER MUST COMPLETE THE CONFLICT OF INTEREST STATEMENT AT THE TIME OF THEIR ANNUAL EVALUATION. C. MEDICAL STAFF MEMBERS WILL COMPLETE AN INITIAL CONFLICT OF INTEREST STATEMENT DURING THE CREDENTIALING PROCESS AND THEN BI-ANNUALLY DURING THE REAPPOINTMENT APPLICATION PROCESS. THE MEDICAL STAFF OFFICE WILL FORWARD ANY STATEMENT THAT INCLUDES A CONFLICT TO THE COMPLIANCE OFFICER FOR REVIEW AND FURTHER ACTION, IF NEEDED. D. IT IS THE RESPONSIBILITY OF EACH INDIVIDUAL TO IMMEDIATELY NOTIFY THEIR SUPERVISOR OF ANY CONFLICT AND REMOVE THEMSELVES FROM ANY DISCUSSION, EVALUATION, DELIBERATION THAT INVOLVES THEIR CONFLICT OF INTEREST. E. THE COMPLIANCE OFFICER WILL REVIEW COMPLETED STATEMENTS AND IF NEEDED TAKE FURTHER ACTION, IN CONSULTATION WITH APPROPRIATE MANAGEMENT. F. UPON REQUEST, PATIENTS OR THEIR LEGAL REPRESENTATIVES WILL BE GIVEN INFORMATION REGARDING PHYSICIAN CONFLICTS OF INTEREST RELATED TO THE PATIENT'S CARE. THIS INFORMATION CAN BE REQUESTED FROM THE CORPORATE COMPLIANCE OFFICE. REGARDING BOARD CONFLICTS, THE ARKANSAS CHILDREN'S BOARD HAS ADOPTED, AND REQUIRES THE DIRECTORS, NON-DIRECTOR COMMITTEE MEMBERS, OFFICERS AND KEY EMPLOYEES OF THE CORPORATION TO ADHERE TO, A CONFLICT OF INTEREST POLICY THAT IS SUBSTANTIALLY CONSISTENT WITH THE PRINCIPLES AND STANDARDS ESTABLISHED FOR ADDRESSING CONFLICTS OF INTEREST BY APPLICABLE LAW, REGULATION OR ADMINISTRATIVE GUIDANCE AND WITH PREVAILING BEST PRACTICES FOR SECTION 501(C)(3) TAX-EXEMPT ORGANIZATIONS. THE BOARD OF DIRECTORS CONFLICT OF INTEREST POLICY IS ISSUED TO AND REVIEWED WITH ALL NEW BOARD MEMBERS DURING THEIR BOARD ORIENTATION. IN ADDITION, IN-HOUSE COUNSEL WILL PERIODICALLY REVIEW THE POLICY WITH THE FULL BOARD DURING A REGULAR BOARD MEETING. A DIRECTOR SHALL DISCLOSE IN WRITING TO THE BOARD OF DIRECTORS ANY ACTUAL OR POTENTIAL CONFLICT OF INTEREST WHEN THE SITUATION DEVELOPS, INCLUDING THE FACTS THAT MAKE IT AN ACTUAL OR POTENTIAL CONFLICT. EACH DIRECTOR SHALL SIGN AN INITIAL CONFLICT OF INTEREST DISCLOSURE STATEMENT UPON ELECTION TO THE BOARD OF DIRECTORS. EACH DIRECTOR ALSO SHALL SIGN AN ANNUAL CONFLICT OF INTEREST DISCLOSURE STATEMENT. IF AN ACTUAL OR POTENTIAL CONFLICT OF INTEREST DEVELOPS AFTER THE DIRECTOR'S INITIAL AND ANNUAL STATEMENTS ARE SIGNED, THE DIRECTOR SHALL IMMEDIATELY SIGN A NEW DISCLOSURE STATEMENT TO ADDRESS THE NEW SITUATION OR TRANSACTION. CONFLICT OF INTEREST DISCLOSURE STATEMENTS OR DECLARED CONFLICTS WILL BE REVIEWED BY THE DIRECTOR BOARD OFFICERS. REVIEW WILL RESULT IN ONE OF THE FOLLOWING ACTIONS BY MAJORITY VOTE: (1) DETERMINED NOT TO BE A CONFLICT; (2) CONFLICT IS ACCEPTED; OR (3) CONFLICT IS NOT ACCEPTED AND THE DIRECTOR WILL NEED TO ABSTAIN FROM PARTICIPATION IN CERTAIN VOTES. CONFLICT DISCLOSURES, FACTS AND ACTIONS WILL BE DOCUMENTED IN THE APPROPRIATE COMMITTEE OR BOARD MINUTES. A DIRECTOR WITH A CONFLICT OF INTEREST WILL NOT PARTICIPATE IN DELIBERATIONS OR VOTE BY THE BOARD OF DIRECTORS, OR COMMITTEE THEREOF, ON THE MATTER GIVING RISE TO THE CONFLICT. HE OR SHE MAY PRESENT RELEVANT INFORMATION ABOUT THE MATTER AND ALSO MAY RESPOND TO REQUESTS FOR FACTS NEEDED BY THE BOARD TO REACH AN INFORMED DECISION. AFTER ANY DISCUSSION, THE INTERESTED DIRECTOR SHALL EITHER ABSTAIN FROM VOTE OR RECUSE COMPLETELY AND BE ABSENT DURING FURTHER DELIBERATIONS AND ACTION ON THE MATTER, AS DETERMINED BY THE DIRECTOR BOARD OFFICERS OF THE ENTITY. FORM 990, PART VI, SECTION B, LINE 15 COMPENSATION FOR ANY ARKANSAS CHILDREN'S EXECUTIVE OR SENIOR OFFICER (PRESIDENT; EXECUTIVE VICE PRESIDENT; SENIOR VICE PRESIDENT) WHO IS NOT A CONTRACTED UAMS EMPLOYEE IS REVIEWED BY THE ARKANSAS CHILDREN'S HUMAN RESOURCES AND COMPENSATION COMMITTEE WHICH IS ESTABLISHED THROUGH THE BYLAWS OF ARKANSAS CHILDREN'S, INC. THE HUMAN RESOURCES AND COMPENSATION COMMITTEE HAS THE FULL AUTHORITY AND SPECIFIC RESPONSIBILITY FOR REVIEWING AND APPROVING COMPENSATION POLICIES, BASE SALARY AND INCENTIVE COMPENSATION LEVELS, EXECUTIVE RETIREMENT AND OTHER EXECUTIVE BENEFIT PLANS FOR HEALTH SYSTEM SENIOR MANAGEMENT, INCLUDING OFFICERS OF THE CORPORATION AND AFFILIATES WHO ARE "DISQUALIFIED PERSONS" UNDER SECTION 4958 OF THE CODE. THE POLICIES AND PROGRAMS REVIEWED AND APPROVED BY THE HUMAN RESOURCES AND COMPENSATION COMMITTEE SHALL BE DESIGNED TO ENSURE THAT THE CORPORATION AND ITS AFFILIATES REMAIN COMPETITIVE AND REASONABLE RELATIVE TO THE COMPENSATION AND BENEFITS PRACTICES OF SIMILARLY SITUATED HEALTH SYSTEMS LOCALLY AND NATIONALLY, AND TO PERMIT THE CORPORATION AND SUCH AFFILIATES TO ATTRACT AND RETAIN SUPERIOR SENIOR MANAGEMENT, IN FURTHERANCE OF THE CORPORATION'S AND AFFILIATES PURPOSES. THE HUMAN RESOURCES AND COMPENSATION COMMITTEE SHALL HAVE, TO THE FULLEST EXTENT OF THE LAW, THE AUTHORITY TO APPROVE THE COMPENSATION PACKAGES FOR SENIOR MANAGEMENT OF THE CORPORATION AND THE AFFILIATES. IN ITS PROCESS, THE COMMITTEE SHALL OBTAIN AND MUST RELY UPON APPROPRIATE DATA AS TO COMPARABILITY PRIOR TO MAKING ITS DETERMINATION OF REASONABLENESS WITH RESPECT TO THE COMPENSATION ARRANGEMENTS OF DISQUALIFIED PERSONS. APPROPRIATE DATA INCLUDES, BUT IS NOT LIMITED TO, COMPENSATION LEVELS PAID BY SIMILARLY SITUATED ORGANIZATIONS, BOTH TAXABLE AND TAX-EXEMPT, FOR FUNCTIONALLY COMPARABLE POSITIONS; THE AVAILABILITY OF SIMILAR SERVICES IN THE GEOGRAPHIC AREA OF THE CORPORATION, CURRENT COMPENSATION SURVEYS COMPILED BY INDEPENDENT FIRMS; AND ACTUAL WRITTEN OFFERS FROM SIMILAR INSTITUTIONS COMPETING FOR THE SERVICES OF THE DISQUALIFIED PERSON. THE COMMITTEE MAY RELY UPON OPINIONS OF QUALIFIED LEGAL, ACCOUNTING, VALUATION AND EXECUTIVE COMPENSATION EXPERTS. CONTEMPORANEOUSLY WITH MAKING ITS DETERMINATION OF REASONABLENESS WITH RESPECT TO THE COMPENSATION ARRANGEMENT OF THE CEO AND DISQUALIFIED PERSONS, THE COMMITTEE SHALL DOCUMENT IN A WRITTEN REPORT THE BASIS FOR ITS DECISIONS AND FORWARD THE REPORT TO THE BOARD. FORM 990, PART VI, SECTION C, LINE 18 ARKANSAS CHILDREN'S FORM 990 IS AVAILABLE TO THE PUBLIC UPON REQUEST. FORM 990, PART VI, SECTION C, LINE 19 ARKANSAS CHILDREN'S GOVERNING DOCUMENTS, CONFLICT OF INTEREST POLICY, AND FINANCIAL STATEMENTS ARE AVAILABLE TO THE PUBLIC UPON REQUEST AS REQUIRED. FORM 990, PART XI, LINE 9: ALLOCATION OF ADDITIONAL COSTS - ACH -12,572,515. DEEMED UBTI FROM QUALIFIED PARKING FRINGE BENEFIT -7,054. FORM 990, PART XII, LINE 2C IT IS PART OF THE RESERVED POWERS OF ARKANSAS CHILDREN'S, INC. TO RETAIN, OVERSEE AND TERMINATE INDEPENDENT EXTERNAL AUDITORS TO AUDIT THE FINANCIAL STATEMENTS OF ACH OR OF ANY AFFILIATE. ONE OF THE STANDING COMMITTEES OF ARKANSAS CHILDREN'S, THE FINANCIAL PLANNING AND OVERSIGHT COMMITTEE, SHALL UNDERTAKE THE FOLLOWING DUTIES IN THE AREAS OF FINANCE AND AUDITS: (I) CAUSING TO BE PREPARED, AND SUBMIT TO THE BOARD OF DIRECTORS AT ITS LAST MEETING BEFORE THE END OF THE FISCAL YEAR, THE CAPITAL AND OPERATING BUDGETS OF THE CORPORATION, AS WELL AS THE CAPITAL AND OPERATING BUDGETS OF AFFILIATES; (II) EXAMINING THE MONTHLY FINANCIAL REPORTS OF THE HEALTH SYSTEM; (III) REVIEWING THE INTERNAL AUDITING FUNCTIONS OF THE HEALTH SYSTEM; (IV) ENGAGING AN EXTERNAL AUDIT FIRM, SUBJECT TO APPROVAL BY THE BOARD OF DIRECTORS; (V) REVIEWING WITH THE INDEPENDENT AUDITOR THE SCOPE AND PLANNING OF THE AUDIT PRIOR TO THE COMMENCEMENT OF THE AUDIT, AS WELL AS UPON COMPLETION OF THE AUDIT, REVIEWING AND DISCUSSING WITH THE INDEPENDENT AUDITOR ANY MATERIAL RISKS OR WEAKNESSES IN INTERNAL CONTROLS IDENTIFIED BY THE AUDITOR, ANY RESTRICTIONS ON THE SCOPE OF THE AUDITOR'S ACTIVITIES OR ACCESS TO REQUESTED INFORMATION, ANY SIGNIFICANT DISAGREEMENTS BETWEEN THE AUDITOR AND MANAGEMENT, AND THE ADEQUACY OF THE HEALTH SYSTEM'S ACCOUNTING AND FINANCIAL REPORTING PROCESSES; (VI) ANNUALLY CONSIDERING THE PERFORMANCE AND INDEPENDENCE OF THE INDEPENDENT AUDITOR; (VII) REVIEWING AND REPORTING TO THE BOARD ON THE ANNUAL AUDITED FINANCIAL STATEMENT OF THE HEALTH SYSTEM CERTIFIED BY THE CORPORATION'S CERTIFIED PUBLIC ACCOUNTANTS, TOGETHER WITH SUCH CERTIFIED PUBLIC ACCOUNTANTS' MANAGEMENT LETTER TO THE CORPORATION WHICH THE COMMITTEE SHALL REVIEW AND REPORT ON TO THE BOARD OF DIRECTORS; (VIII) SUGGESTING MEANS TO IMPROVE FISCAL ACCOUNTABILITY AND INTERNAL AUDIT PROCEDURES FOR THOSE AREAS IDENTIFIED AS REQUIRING IMPROVEMENT; (IX) PROVIDING OVERSIGHT FOR THE HEALTH SYSTEM'S CORPORATE COMPLIANCE PROGRAM, INCLUDING CORPORATE ETHICS AND COMPLIANCE WITH LEGAL AND REGULATORY REQUIREMENTS; AND (X) REPORTING ON THE FINANCIAL PLANNING AND OVERSIGHT COMMITTEE'S ACTIVITIES TO THE FULL BOARD. 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