2015-09-28T09:38:22-05:00 2014-12-31 134008324 PRICEWATERHOUSECOOPERS LLP 76 S LAURA STREET SUITE 2100 JACKSONVILLE FL 32202 990 2014-01-01 592317607 SANTAFE HEALTHCARE INC SANT 3523728400 POBOX 749 GAINESVILLE FL 326270749 RANDALL L STUART ASSISTANT TREASURER 3523378730 2015-09-25 1 MICHAEL J MULDOON P00889797 9043540671 2014 2016-02-25 16:41:14Z MICHAEL P GALLAGHER POBOX 749 GAINESVILLE FL 326270749 19290477 0 X WWW.SANTAFEHEALTHCAREFL.ORG X 1982 FL TO IMPROVE THE HEALTH AND WELL-BEING OF PEOPLE IN THE COMMUNITIES WE SERVE. 17 16 4 0 0 0 21380000 114814 6213352 4683724 237204 768994 2039 1725 27832595 5569257 3648575 0 0 0 17605704 3918758 0 0 0 2383824 2488101 23638103 6406859 4194492 -837602 68422933 65924589 31341017 69029024 37081916 -3104435 X THE MISSION OF SANTAFE HEALTHCARE, INC. IS TO SERVE AS THE NOT-FOR-PROFIT SYSTEM PARENT FOR ITS FAMILY OF NOT-FOR-PROFIT, MISSION-DRIVEN AFFILIATE ORGANIZATIONS. SEE SCHEDULE O FOR CONTINUATION OF THE ORGANIZATION'S MISSION.(CONTINUED FROM PAGE 2, PART III) SANTAFE HEALTHCARE DELIVERS ITS MISSION BY PROVIDING FINANCIAL MANAGEMENT AND OVERSIGHT, AND STRATEGIC MANAGEMENT AND EXPERTISE TO ITS AFFILIATES, WHILE PROMOTING THE EFFECTIVE PROVISION OF HEALTHCARE, HOSPICE AND PALLIATIVE CARE, AND SENIOR HOUSING AND RELATED SERVICES THROUGH ITS AFFILATES. THIS MISSION IS GOVERNED THROUGH A LOCAL, COMMUNITY-BASED BOARD WHICH PROVIDES STRATEGIC DIRECTION AND VALUES-BASED OVERSIGHT AND SUPPORT. 0 0 2721933 4683724 SANTAFE HEALTHCARE PROVIDED GOVERNANCE AND OVERSIGHT TO THE FOLLOWING AFFILIATED CHARITABLE, TAX-EXEMPT AND NOT-FOR-PROFIT ORGANIZATIONS: NORTH CENTRAL FLORIDA HOSPICE, INC.; SANTAFE SENIOR LIVING, INC.; NORTH FLORIDA RETIREMENT VILLAGE, INC.; BVG ACQUISITION, INC.; BONITA SPRINGS RETIREMENT VILLAGE, INC.; EAST RIDGE RETIREMENT VILLAGE, INC.; SANTAFE SENIOR LIVING FOUNDATION, INC.; AVMED, INC.; AND SF HOLDING CORP., INC. TOTAL PROGRAM SERVICES EXPENSES FOR THESE AFFILIATED ORGANIZATIONS REPRESENTED APPROXIMATELY $879 MILLION IN 2014. 2721933 1 1 0 0 0 0 0 0 0 0 1 0 0 1 1 1 0 1 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 0 1 64 0 1 4 1 0 0 0 0 0 0 0 0 0 0 X 17 16 0 0 1 0 0 0 0 1 1 0 0 1 1 1 1 1 1 1 1 0 X RANDALL L STUART ASST TREASURER 3523378730 4300 NW 89TH BLVD GAINESVILLE FL 326065688 X SCOTTIE J BUTLER CHAIRMAN/DIRECTOR 0.90 2.10 X X 72757 0 0 JOE G DUNLAP VICE CHAIRMAN/DIRECTOR 0.50 1.00 X X 0 56643 0 ROBERT L EPLING TREASURER/DIRECTOR 0.50 1.00 X X 0 57624 0 ALBERT E DOTSON PHD SECRETARY/DIRECTOR 0.50 1.00 X X 49890 1500 0 RICHARD M ANDERSON MD DIRECTOR 0.50 1.00 X 53132 0 0 JOSEPH W DAVIS DIRECTOR 0.50 1.00 X 0 55420 0 BEN I DOERR JR DIRECTOR 0.90 2.10 X 58059 0 0 GEORGE E FLETCHER DIRECTOR 0.50 1.00 X 53112 0 0 HUGH J FLOYD DIRECTOR 0.50 1.00 X 0 53920 0 GLENDA E HOOD DIRECTOR 0.50 1.00 X 56316 500 0 ROBERT C HUDSON DIRECTOR 0.50 1.00 X 0 52459 0 GORDON L JOHNSON DIRECTOR - THROUGH 12/10/2014 0.50 1.00 X 0 55663 0 PAMELA J MOONEY PHD DIRECTOR 0.50 1.00 X 0 49236 0 THOMAS A NATIELLO PHD DIRECTOR 0.50 1.00 X 54113 0 0 PAUL R PHILIP DIRECTOR 0.50 1.00 X 0 55420 0 JACKSON N SASSER PHD DIRECTOR 0.50 1.00 X 56316 0 0 JAMES L STRINGFELLOW SR DIRECTOR 0.50 1.00 X 54267 0 0 MICHAEL P GALLAGHER CEO/PRESIDENT/DIRECTOR 6.00 54.00 X X 2790372 0 280950 RANDALL L STUART ASSISTANT TREASURER 2.00 58.00 X 768166 0 154160 CATHERINE E AYERS ASSISTANT SECRETARY 13.00 47.00 X 0 890578 68183 STEVEN M ZIEGLER ASSISTANT SECRETARY 0.90 62.10 X 0 606113 140971 TIMOTHY J BOWEN PRESIDENT - HAVEN HOSPICE 0.10 50.00 X 569190 0 92617 JAMES A SIMPSON VP - CHIEF ASSURANCE EXECUTIVE 2.50 47.50 X 205781 0 38664 4841471 1935076 775545 4 0 1 0 AVMED INC PO BOX 749 GAINESVILLE FL 326270749 MANAGEMENT & ADMINISTRATIVE SERVICES 1433423 DELOITTE & TOUCHE LLP 201 EAST KENNEDY BOULEVARD TAMPA FL 336024940 AUDIT SERVICES 506200 C DAVID COFFEY PA 5346 SW 91ST TERRACE GAINESVILLE FL 32608 LEGAL 180000 CAPITAL RESEARCH & CONSULTING 15 SOUTH RAYMOND AVENUE STE 200 PASADENA CA 91105 CONSULTING 133226 AKERMAN LLP PO BOX 4906 ORLANDO FL 32802 LEGAL 120361 5 114814 114814 MANAGEMENT FEES 561000 4683724 4683724 4683724 885214 885214 13605000 13721220 -116220 -116220 -116220 REBATE 900099 1725 1725 1725 5569257 4683724 0 770719 3145207 3145207 874093 874093 -219006 99585 -318591 13677 13677 104787 27100 77687 1464096 1464096 126468 126468 92514 92514 120187 120187 356591 221282 135309 75549 75549 43174 43174 131256 131256 11515 11515 44651 44651 COMMUNITY SPONSORSHIPS 22100 22100 6406859 2721933 3684926 0 22762717 2603444 100000 101973 66250 985967 23590 890079 962377 1520514 24283319 15342130 15342130 27741243 22631346 68422933 65924589 3173158 1421528 28167859 67607496 31341017 69029024 X 37081916 -3104435 37081916 -3104435 68422933 65924589 X -837602 77292 27 -39426068 X X 0 1 X 1 0 X X 6 NORTH CENTRAL FLORIDA HOSPICE 592490893 9 1 0 0 NORTH FLORIDA RETIREMENT VILLAGE 591912330 9 1 0 0 SANTAFE SENIOR LIVING FOUNDATION INC 264464727 7 1 0 0 BVG ACQUISITION INC 203701186 9 1 0 0 EAST RIDGE RETIREMENT VILLAGE INC 590903331 9 1 0 0 BONITA SPRINGS RETIREMENT VILLAGE INC 262386152 9 1 0 0 6 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED 738448 738448 247519 23590 223929 962377 DUE FROM AFFILIATES 15749283 LIQUIDITY SUPPORT AGREEMENT INVESTMENT 5083602 ACCRUED INTEREST RECEIVABLE 90042 DEFERRED COMPENSATION ASSETS 1708419 22631346 ACCRUED PENSION LIABILITY 63919180 OTHER LIABILITIES 259171 BENEFITS PAYABLE 2884182 DUE TO AFFILIATES 544963 67607496 X 5454443 0 5454443 114814 114814 5569257 6406859 0 6406859 0 6406859 PART X, LINE 2: EXPLANATION FOR UNCERTAIN TAX POSITIONS UNDER ASC 740: SANTAFE HEALTHCARE, INC. AND THE AFFILIATES HAVE NO UNCERTAIN TAX POSITIONS AS OF DECEMBER 31, 2014. SANTAFE HEALTHCARE, INC. AND AFFILIATES INCURRED NO INTEREST EXPENSE OR PENALTIES RELATED TO UNCERTAIN INCOME TAX PROVISIONS IN 2014 OR 2013. TAX YEARS 2011 THROUGH 2013 ARE SUBJECT TO EXAMINATION BY FEDERAL AND STATE TAXING AUTHORITIES. THERE ARE NO INCOME TAX EXAMINATIONS IN PROCESS AS OF THE DATE OF THIS REPORT. PART XI, LINE 4B - OTHER ADJUSTMENTS: CONTRIBUTION FROM SANTAFE SENIOR LIVING, INC. RECOGNIZED FOR TAX PURPOSES 114,814. X X 1 1 X X X X X 0 1 0 0 0 0 0 0 0 MICHAEL P GALLAGHER CEO/PRESIDENT/DIRECTOR 925247 0 1326646 0 538479 0 254966 0 25984 0 3071322 0 207121 0 RANDALL L STUART ASSISTANT TREASURER 384984 0 237560 0 145622 0 131130 0 23030 0 922326 0 71484 0 CATHERINE E AYERS ASSISTANT SECRETARY 0 320919 0 203097 0 366562 0 35900 0 32283 0 958761 0 191352 STEVEN M ZIEGLER ASSISTANT SECRETARY 0 325228 0 202887 0 77998 0 110220 0 30751 0 747084 0 61592 TIMOTHY J BOWEN PRESIDENT - HAVEN HOSPICE 305724 0 209689 0 53777 0 69731 0 22886 0 661807 0 29022 0 JAMES A SIMPSON VP - CHIEF ASSURANCE EXECUTIVE 187448 0 861 0 17472 0 12060 0 26604 0 244445 0 0 0 PART I, LINE 1A CERTAIN DIRECTORS AND THEIR COMPANIONS ATTENDED COMPANY PAID INDUSTRY SEMINARS AND TRADE CONVENTIONS AT THE REQUEST OF SANTAFE HEALTHCARE, INC. ALL BUSINESS COSTS, INCLUDING TRAVEL COSTS, PAID DIRECTLY BY THE ORGANIZATION OR REIMBURSED TO THE LISTED PERSON, WERE ACCOUNTED FOR UNDER AN ACCOUNTABLE PLAN UTILIZED BY THE ORGANIZATION. NO PART OF ANY TRAVEL COST WAS DEEMED A BENEFIT FOR ANY PERSON LISTED IN FORM 990, PART VII. INCIDENTAL EXPENSES ARE NOT REIMBURSED BY THE ORGANIZATION. TAX GROSS-UP PAYMENTS OCCUR FOR GROUP VARIABLE LIFE INSURANCE PREMIUMS PAID ON BEHALF OF THE LISTED AND OTHER EMPLOYEES. EMPLOYER PAID PREMIUMS ARE DEEMED TO BE TAXABLE COMPENSATION AND ARE GROSSED-UP FOR THE TAX IMPACT PRIOR TO BEING ADDED AS IMPUTED INCOME TO AN EMPLOYEE'S YEAR-END FORM W-2. TAX GROSS-UP PAYMENTS ARE PROVIDED FOR VESTED DISTRIBUTIONS FROM THE DEFINED CONTRIBUTION AND (NOW FROZEN) DEFINED BENEFIT PENSION RESTORATION PLANS. PART I, LINE 3 MICHAEL P GALLAGHER IS THE PRESIDENT AND CHIEF EXECUTIVE OFFICER (CEO) OF SANTAFE HEALTHCARE, INC. MR. GALLAGHER IS DIRECTLY COMPENSATED BY SANTAFE HEALTHCARE, INC. SANTAFE HEALTHCARE, INC. UTILIZES THE FOLLOWING PROCESS TO ESTABLISH THE CEO'S COMPENSATION AND BENEFITS: THE BOARD OF DIRECTORS ANNUALLY RETAINS AN INDEPENDENT THIRD PARTY COMPENSATION AND BENEFITS CONSULTING FIRM (FIRM) TO CONDUCT A MARKET COMPETITIVENESS REVIEW OF THE CEO'S TOTAL DIRECT COMPENSATION (BASE SALARY, ANNUAL INCENTIVES AND LONG TERM INCENTIVES) AND BENEFITS. THE COMPETITIVE ANALYSIS INCLUDES COMPARISON TO SIMILAR POSITIONS IN COMPANIES OF SIMILAR SIZE WITHIN THE SAME OR SIMILAR INDUSTRY. THE FIRM MAKES RECOMMENDATIONS, IF ANY, DIRECTLY TO THE BOARD OF DIRECTORS. THE BOARD OF DIRECTORS ESTABLISHES THE FINAL COMPENSATION AND BENEFIT PACKAGE FOR THE CEO TAKING INTO CONSIDERATION THE MARKET COMPETITIVENESS REVIEW AND FINAL RECOMMENDATION OF THE FIRM. THE FIRM PROVIDES AN OPINION LETTER REGARDING THE REASONABLENESS OF THE FINAL COMPENSATION AND BENEFITS PACKAGE. THE ACTIONS OF THE BOARD ARE DOCUMENTED IN THE MINUTES OF THE BOARD MEETING. PART I, LINE 4B (RELATES TO PART I, LINE 4A): LISTED PERSONS RECEIVING A SEVERANCE PAYMENT OR CHANGE OF CONTROL PAYMENT IN THE YEAR: LISTED PERSONS ARE EMPLOYEES OF SANTAFE HEALTHCARE, INC. OR RELATED ORGANIZATIONS AND ARE COVERED UNDER A SEVERANCE POLICY FOR THEIR RESPECTIVE RELATED ORGANIZATION. THE SEVERANCE POLICY INCLUDES MONTHLY PAYMENTS UP TO A MAXIMUM OF 12 - 36 MONTHS UNDER QUALIFYING CIRCUMSTANCES DEPENDING ON POSITION. NO ONE LISTED RECEIVED SEVERANCE OR CHANGE OF CONTROL PAYMENTS DURING 2014. PART I, LINE 4B: LISTED PERSONS PARTICIPATING IN A SUPPLEMENTAL NONQUALIFIED RETIREMENT PLAN IN THE YEAR: SANTAFE HEALTHCARE, INC. MAINTAINS TWO ACTIVE NONQUALIFIED DEFERRED COMPENSATION RETIREMENT PLANS FOR A CERTAIN GROUP OF EXECUTIVES TO INCLUDE THOSE LISTED EMPLOYEES OF SANTAFE HEALTHCARE, INC. OR RELATED ORGANIZATIONS. ONE PLAN RESTORES RETIREMENT BENEFITS EQUIVALENT TO QUALIFIED 401(K) BENEFITS ON INCOME EARNED IN EXCESS OF INTERNAL REVENUE SERVICE CODE SECTION 401(A)(17) RECOGNIZABLE PAY LIMITS (A DEFINED CONTRIBUTION RESTORATION PLAN). VESTING FOR THIS PLAN IS ACHIEVED AT AGE 55 AND 10 YEARS OF SERVICE OR AT AGE 65 AND 5 YEARS OF SERVICE. THE SECOND SUPPLEMENTAL DEFINED CONTRIBUTION PLAN PROVIDES ADDITIONAL RETIREMENT INCOME BASED ON A PERCENTAGE OF BASE SALARY AND VESTS AT THREE AND FIVE YEARS OF SERVICE. MR. GALLAGHER VESTED AND RECEIVED $437,059 FROM SUPPLEMENTAL NONQUALIFIED RETIREMENT PLANS IN 2014. MR. STUART VESTED AND RECEIVED $109,740 FROM A SUPPLEMENTAL NONQUALIFIED RETIREMENT PLAN IN 2014. CATHERINE E AYERS AND STEVEN M ZIEGLER ARE EMPLOYEES OF AVMED, INC., A RELATED TAX-EXEMPT ORGANIZATION. THEY PARTICIPATE IN TWO NONQUALIFIED DEFERRED COMPENSATION RETIREMENT PLANS SPONSORED BY AVMED, INC. FOR A CERTAIN GROUP OF EXECUTIVES. ONE PLAN RESTORES RETIREMENT BENEFITS EQUIVALENT TO QUALIFIED 401(K) BENEFITS ON INCOME EARNED IN EXCESS OF INTERNAL REVENUE SERVICE CODE SECTION 401(A)(17) RECOGNIZABLE PAY LIMITS (A DEFINED CONTRIBUTION RESTORATION PLAN). VESTING IS ACHIEVED AT AGE 55 AND 10 YEARS OF SERVICE OR AT AGE 65 AND 5 YEARS OF SERVICE. THE SECOND SUPPLEMENTAL DEFINED CONTRIBUTION PLAN PROVIDES ADDITIONAL RETIREMENT INCOME BASED ON A PERCENTAGE OF BASE SALARY AND VESTS AT THREE AND FIVE YEARS OF SERVICE. MS. AYERS VESTED AND RECEIVED $339,470 FROM SUPPLEMENTAL NONQUALIFIED RETIREMENT PLANS IN 2014. MR. ZIEGLER VESTED AND RECEIVED $66,343 FROM A SUPPLEMENTAL NONQUALIFIED RETIREMENT PLAN IN 2014. PART II: CERTAIN SENIOR EXECUTIVES ARE ACCOUNTABLE FOR AND PERFORM SERVICES FOR SANTAFE HEALTHCARE, INC. AND EACH OF ITS AFFILIATES. SANTAFE HEALTHCARE, INC. AND AFFILIATES REPRESENT A DIVERSIFIED FAMILY OF NOT-FOR-PROFIT ORGANIZATIONS WITH $2 BILLION IN GROSS RECEIPTS AND APPROXIMATELY 2,000 EMPLOYEES. THESE SENIOR EXECUTIVES ARE PAID DIRECTLY BY EITHER SANTAFE HEALTHCARE, INC. OR AVMED, INC. AND THEIR COMPENSATION AND BENEFITS ARE APPORTIONED AND CHARGED TO THE RESPECTIVE AFFILIATE BASED ON THE ESTIMATED AMOUNT OF TIME SPENT ON EACH AFFILIATE'S ACTIVITIES. FOR 2014, THE FOLLOWING PERCENTAGES OF EACH EXECUTIVE'S COMPENSATION AND BENEFITS (FOR THOSE SENIOR EXECUTIVES PAID BY A RELATED ORGANIZATION) ARE APPORTIONED AND CHARGED TO SANTAFE HEALTHCARE, INC. AS FOLLOWS: 21% - CATHERINE E AYERS 1% - STEVEN M ZIEGLER FOR 2014, THE FOLLOWING PERCENTAGES OF EACH EXECUTIVE'S COMPENSATION AND BENEFITS FOR THOSE SENIOR EXECUTIVES PAID BY SANTAFE HEALTHCARE, INC. ARE APPORTIONED AND CHARGED TO CERTAIN AFFILIATES AS FOLLOWS: 90% - MICHAEL P GALLAGHER, PRESIDENT & CEO 97% - RANDALL L STUART, SENIOR VICE PRESIDENT & CFO FORM 990, PART VI, SECTION A, LINE 4 IN 2014, THE BOARD OF DIRECTORS FOR SANTAFE HEALTHCARE, INC. AMENDED AND RESTATED THE ARTICLES OF INCORPORATION AND BYLAWS. THE CHANGES WERE MADE FOR THE PURPOSES OF (I) STANDARDIZING THE GOVERNANCE PROVISIONS FOR ALL OF THE AFFILIATES OF SANTAFE HEALTHCARE, INC.; (II) ADOPTING A UNIFIED BOARD STRUCTURE IN WHICH THE MEMBERS OF THE BOARD OF DIRECTORS OF SANTAFE HEALTHCARE, INC. ALSO SERVE AS THE BOARD OF DIRECTORS FOR ALL OF THE AFFILIATES OF SANTAFE HEALTHCARE, INC.; AND (III) ADOPTING A UNIFIED BOARD COMMITTEE STRUCTURE IN WHICH THE BOARD COMMITTEES FOR SANTAFE HEALTHCARE, INC. SERVE AS THE BOARD COMMITTEES FOR ALL OF THE AFFILIATES. FORM 990, PART VI, SECTION B, LINE 11 THE ORGANIZATION'S PROCESS FOR ENSURING THE ACCURATE PREPARATION, REVIEW AND APPROVAL OF THE 2014 FORM 990 BEGAN WITH PROFESSIONAL DEVELOPMENT OF STAFF (SEVERAL OF WHICH ARE CPAS) WHICH WERE INVOLVED IN THE PREPARATION OF THE 2014 FORM 990. IN ADDITION TO STAFF DEVELOPMENT, WHICH INCLUDED ATTENDING TAX SEMINARS AND CLASSES, MANAGEMENT ALSO CONSULTED WITH INDEPENDENT ACCOUNTING FIRMS AND TAX LEGAL COUNSEL REGARDING THE IRS FORM 990 CODE AND FILING REQUIREMENTS. THE ORGANIZATION ALSO PREVIOUSLY EDUCATED ITS MANAGEMENT TEAM, OFFICERS AND DIRECTORS, WITH THE ASSISTANCE OF PRICEWATERHOUSECOOPERS LLP, REGARDING THE FORM 990 AND THEIR INVOLVEMENT IN REVIEWING THE RETURN. FOLLOWING MANAGEMENT'S PREPARATION OF THE 2014 FORM 990, PRICEWATERHOUSECOOPERS LLP REVIEWED THE 2014 FORM 990. A COPY OF THE 2014 FORM 990 AND ATTACHMENTS WERE PROVIDED TO THE ORGANIZATION'S CURRENT BOARD OF DIRECTORS FOR THEIR REVIEW AND COMMENT. EXECUTIVE MANAGEMENT ADDRESSED ANY QUESTIONS RAISED BY THE BOARD MEMBERS PRIOR TO FILING THE 2014 FORM 990 AND ATTACHMENTS WITH THE IRS. FORM 990, PART VI, SECTION B, LINE 12C SANTAFE HEALTHCARE, INC. HAS A PROCEDURE FOR MONITORING AND ENFORCING COMPLIANCE WITH ITS CORPORATE CONFLICT OF INTEREST POLICY (POLICY). EACH COVERED PERSON SHALL RECEIVE A COPY OF THE POLICY FOR REVIEW, SUBMIT AN AFFIRMATION, AND COMPLETE A QUESTIONNAIRE WHICH IS ATTACHED TO THE CODE OF ETHICAL BUSINESS CONDUCT. THE PROCEDURE DETAILS THAT THE CORPORATE SECRETARY HAS RESPONSIBILITY FOR DELIVERY OF THE POLICY TO DIRECTORS AND OFFICERS AND RECEIPT OF THEIR AFFIRMATIONS AND QUESTIONNAIRES. THE HUMAN RESOURCES DEPARTMENT SHALL OBTAIN THE AFFIRMATION AND QUESTIONNAIRE FROM EVERY NEW EMPLOYEE AT ORIENTATION AND FROM ALL EMPLOYEES ANNUALLY. MEMBERS OF CORPORATE ADVISORY BOARDS SUBMIT THE AFFIRMATION AND QUESTIONNAIRE TO THE CHIEF COMPLIANCE OFFICER. ANNUAL CONFLICT OF INTEREST STATEMENTS ARE REVIEWED BY INTERNAL STAFF TO ENSURE RECORDS ARE COMPLETE. AS PART OF THE CORPORATE CONTRACT REVIEW PROCESS, CONSIDERATION IS GIVEN TO ANY POTENTIAL CONFLICTS OF INTEREST INVOLVING OPERATIONAL OR FINANCIAL TRANSACTIONS. ALL EMPLOYEES ARE EXPECTED TO DISCLOSE ANY POTENTIAL OR ACTUAL CONFLICT. INITIAL REVIEW OF EMPLOYEE QUESTIONNAIRES WILL BE PERFORMED BY THE HUMAN RESOURCES DEPARTMENT WITH REVIEW OF ANY DISCLOSURES BY THE CHIEF COMPLIANCE OFFICER WHO WILL EVALUATE, MAKE NECESSARY INQUIRIES, AND INVESTIGATE ALTERNATIVES. BOARD MEMBERS SHALL DISCLOSE ANY POTENTIAL OR ACTUAL CONFLICT TO THE CHAIRMAN OF THE SANTAFE HEALTHCARE, INC. BOARD, AND THE CHAIRMAN OR CHIEF COMPLIANCE OFFICER SHALL EVALUATE CONFLICT DISCLOSURES AND, IF APPROPRIATE, INVESTIGATE ALTERNATIVES AND REPORT TO DISINTERESTED BOARD MEMBERS FOR RESOLUTION. THE MINUTES OF THE BOARD OR ANY COMMITTEE MEETING AT WHICH A POTENTIAL OR ACTUAL CONFLICT OF INTEREST IS DISCLOSED OR DISCUSSED SHALL REFLECT THE NAME OF THE INTERESTED PARTY, THE NATURE OF THE CONFLICT, THE DELIBERATIONS AND THE RESOLUTION OF THE CONFLICT. IF IT IS DETERMINED THAT A COVERED PERSON HAS FAILED TO COMPLY WITH THE POLICY, THE CHIEF COMPLIANCE OFFICER OR THE CHAIRMAN SHALL TAKE APPROPRIATE ACTION, WHICH MAY INCLUDE REMOVAL FROM OFFICE OR TERMINATION OF EMPLOYMENT. FORM 990, PART VI, SECTION B, LINE 15 MICHAEL P GALLAGHER IS THE PRESIDENT AND CHIEF EXECUTIVE OFFICER (CEO) OF SANTAFE HEALTHCARE, INC. MR. GALLAGHER IS DIRECTLY COMPENSATED BY SANTAFE HEALTHCARE, INC. SANTAFE HEALTHCARE, INC. UTILIZES THE FOLLOWING PROCESS TO ESTABLISH THE CEO'S COMPENSATION AND BENEFITS: THE BOARD OF DIRECTORS ANNUALLY RETAINS AN INDEPENDENT THIRD PARTY COMPENSATION AND BENEFITS CONSULTING FIRM (FIRM) TO CONDUCT A MARKET COMPETITIVENESS REVIEW OF THE CEO'S TOTAL DIRECT COMPENSATION (BASE SALARY, ANNUAL INCENTIVES AND LONG TERM INCENTIVES) AND BENEFITS. THE COMPETITIVE ANALYSIS INCLUDES COMPARISON TO SIMILAR POSITIONS IN COMPANIES OF SIMILAR SIZE WITHIN THE SAME OR SIMILAR INDUSTRY. THE FIRM MAKES RECOMMENDATIONS, IF ANY, DIRECTLY TO THE BOARD OF DIRECTORS. THE BOARD OF DIRECTORS ESTABLISHES THE FINAL COMPENSATION AND BENEFIT PACKAGE FOR THE CEO TAKING INTO CONSIDERATION THE MARKET COMPETITIVENESS REVIEW AND FINAL RECOMMENDATION OF THE FIRM. THE FIRM PROVIDES AN OPINION LETTER REGARDING THE REASONABLENESS OF THE FINAL COMPENSATION AND BENEFITS PACKAGE. THE ACTIONS OF THE BOARD ARE DOCUMENTED IN THE MINUTES OF THE BOARD MEETING. FORM 990, PART VI, SECTION B, LINE 15B: PROCESS FOR DETERMINING COMPENSATION FOR ALL EMPLOYEE OFFICERS, KEY EMPLOYEES, AND DIRECTORS FOR SANTAFE HEALTHCARE, INC. IS AS FOLLOWS: THE SANTAFE HEALTHCARE, INC. BOARD OF DIRECTORS ANNUALLY RETAINS AN INDEPENDENT THIRD PARTY COMPENSATION AND BENEFITS FIRM (FIRM) TO CONDUCT A MARKET COMPETITIVENESS REVIEW OF ALL EXECUTIVES' TOTAL DIRECT COMPENSATION (BASE SALARY, ANNUAL INCENTIVES, AND LONG-TERM INCENTIVES) AND BENEFITS. THE COMPETITIVE ANALYSIS INCLUDES COMPARISONS TO SIMILAR POSITIONS IN COMPANIES OF SIMILAR SIZE WITHIN THE SAME OR SIMILAR INDUSTRY. AFTER COMPLETION OF ITS REVIEW, THE FIRM MAKES RECOMMENDATIONS, IF ANY, DIRECTLY TO THE BOARD OF DIRECTORS. THE FIRM PROVIDES AN OPINION LETTER REGARDING THE REASONABLENESS OF TOTAL DIRECT COMPENSATION AND EXECUTIVE BENEFITS. THE ACTIONS OF THE BOARD ARE DOCUMENTED IN THE MINUTES OF THE BOARD MEETING. THE BOARD OF DIRECTORS RETAINS AN INDEPENDENT THIRD PARTY CONSULTANT TO CONDUCT A MARKET COMPETITIVENESS REVIEW OF THE BOARD OF DIRECTORS' (INCLUDING OFFICER POSITIONS) COMPENSATION EVERY TWO TO THREE YEARS. THE COMPETITIVENESS ANALYSIS INCLUDES COMPARISONS TO BOTH NOT-FOR-PROFIT AND PUBLIC COMPANY (EXCLUDING EQUITY COMPONENT) DATA FOR COMPANIES WITHIN THE SAME OR SIMILAR INDUSTRY. ANY COMPENSATION CHANGES ARE APPROVED BY THE BOARD OF DIRECTORS BASED ON THE MARKET COMPETITIVENESS STUDY. A MARKET COMPETITIVENESS STUDY WAS CONDUCTED IN NOVEMBER 2012 FOR CHANGES MADE EFFECTIVE JANUARY 1, 2013. FORM 990, PART VI, SECTION C, LINE 19 SANTAFE HEALTHCARE'S PROCEDURE FOR MAKING VARIOUS DOCUMENTS AVAILABLE TO THE PUBLIC: SANTAFE HEALTHCARE, INC. MAKES ITS GOVERNING DOCUMENTS AVAILABLE TO THE PUBLIC ON A CASE BY CASE BASIS IF REQUESTED DIRECTLY FROM THE ORGANIZATION. THE ARTICLES OF INCORPORATION CAN BE ACCESSED DIRECTLY THROUGH THE FLORIDA DEPARTMENT OF STATE, DIVISION OF CORPORATIONS WEBSITE AT WWW.SUNBIZ.ORG. THE CORPORATE CONFLICT OF INTEREST POLICY AND AUDITED COMBINED FINANCIAL STATEMENTS, WHICH INCLUDE SANTAFE HEALTHCARE, CAN BE OBTAINED DIRECTLY FROM THE ORGANIZATION UPON WRITTEN REQUEST. FORM 990, PART VII, SECTION A, LINE 1A: COMPENSATION PAID BY RELATED ORGANIZATIONS: CERTAIN SENIOR EXECUTIVES ARE ACCOUNTABLE FOR AND PERFORM SERVICES FOR SANTAFE HEALTHCARE, INC. AND EACH OF ITS AFFILIATES. SANTAFE HEALTHCARE, INC. AND AFFILIATES REPRESENT A DIVERSIFIED FAMILY OF NOT-FOR-PROFIT ORGANIZATIONS WITH $2 BILLION IN GROSS RECEIPTS AND APPROXIMATELY 2,000 EMPLOYEES. THESE SENIOR EXECUTIVES ARE PAID DIRECTLY BY EITHER SANTAFE HEALTHCARE, INC. OR AVMED, INC. AND THEIR COMPENSATION AND BENEFITS ARE APPORTIONED AND CHARGED TO THE RESPECTIVE AFFILIATE BASED ON THE ESTIMATED AMOUNT OF TIME SPENT ON EACH AFFILIATE'S ACTIVITIES. FOR 2014, THE FOLLOWING PERCENTAGES OF EACH EXECUTIVE'S COMPENSATION AND BENEFITS (FOR THOSE SENIOR EXECUTIVES PAID BY A RELATED ORGANIZATION) ARE APPORTIONED AND CHARGED TO SANTAFE HEALTHCARE, INC. AS FOLLOWS: 21% - CATHERINE E AYERS 1% - STEVEN M ZIEGLER FOR 2014, THE FOLLOWING PERCENTAGES OF EACH EXECUTIVE'S COMPENSATION AND BENEFITS FOR THOSE SENIOR EXECUTIVES PAID BY SANTAFE HEALTHCARE, INC. ARE APPORTIONED AND CHARGED TO CERTAIN AFFILIATES AS FOLLOWS: 90% - MICHAEL P GALLAGHER, PRESIDENT & CEO 97% - RANDALL L STUART, SENIOR VICE PRESIDENT & CFO FORM 990, PART XI, LINE 9: CHANGE IN MINIMUM LIABILITY FOR QUALIFIED PENSION PLAN -39,426,068. FORM 990, PART XII, LINE 2C: AUDIT COMMITTEE OVERSIGHT OF THE FINANCIAL STATEMENT AUDIT: THERE HAS BEEN NO CHANGE FROM THE PRIOR YEAR TO THE PROCESS RELATED TO AUDIT OVERSIGHT AND SELECTION OF THE INDEPENDENT ACCOUNTANT FOR THE ORGANIZATION. FORM 990, PART VII, SECTION B, INDEPENDENT CONTRACTORS: COMPENSATION TO INDEPENDENT CONTRACTORS IN THIS SECTION INCLUDE BOTH PAYMENTS MADE BY SANTAFE HEALTHCARE, INC. FOR ITS SOLE BENEFIT AND ALSO PAYMENTS MADE FOR THE BENEFIT OF RELATED ENTITIES. AVMED INC PO BOX 749 GAINESVILLE FL 326270749 592742907 HEALTH CARE FL 501(C)(4) N/A SANTAFE HEALTHCARE INC 1 NORTH FLORIDA RETIREMENT VILLAGE INC PO BOX 749 GAINESVILLE FL 326270749 591912330 RETIREMENT COMMUNITY FL 501(C)(3) 9 SANTAFE HEALTHCARE INC 1 NORTH CENTRAL FLORIDA HOSPICE INC PO BOX 749 GAINESVILLE FL 326270749 592490893 HOSPICE CARE FL 501(C)(3) 9 SANTAFE HEALTHCARE INC 1 SANTAFE SENIOR LIVING INC PO BOX 749 GAINESVILLE FL 326270749 203700526 MANAGEMENT AND FINANCIAL SUPPORT FOR NOT-FOR-PROFIT AFFILIATES FL 501(C)(3) 11A TYPE I SANTAFE HEALTHCARE INC 1 BVG ACQUISITION INC PO BOX 749 GAINESVILLE FL 326270749 203701186 RETIREMENT COMMUNITY FL 501(C)(3) 9 SANTAFE HEALTHCARE INC 1 EAST RIDGE RETIREMENT VILLAGE INC PO BOX 749 GAINESVILLE FL 326270749 590903331 RETIREMENT COMMUNITY FL 501(C)(3) 9 SANTAFE HEALTHCARE INC 1 BONITA SPRINGS RETIREMENT VILLAGE INC PO BOX 749 GAINESVILLE FL 326270749 262386152 RETIREMENT COMMUNITY FL 501(C)(3) 9 SANTAFE HEALTHCARE INC 1 SANTAFE SENIOR LIVING FOUNDATION INC PO BOX 749 GAINESVILLE FL 326270749 264464727 CHARITABLE & EDUCATIONAL PURPOSES FL 501(C)(3) 7 SANTAFE HEALTHCARE INC 1 SF HOLDING CORPINC PO BOX 749 GAINESVILLE FL 326270749 592903901 HOLDING COMPANY FL SANTAFE HEALTHCARE INC C 1.00000 1 0 0 1 0 0 0 0 0 0 0 1 1 1 1 0 1 1 1 0 SANTAFE SENIOR LIVING INC C 114814 ACTUAL CASH CONTRIBUTED NORTH CENTRAL FLORIDA HOSPICE INC L 1117290 FMV OF SERVICES AVMED INC L 2571595 FMV OF SERVICES SANTAFE SENIOR LIVING INC L 988673 FMV OF SERVICES AVMED INC M 1458061 FMV OF SERVICES AVMED INC P 227933 ACTUAL INVOICES NORTH CENTRAL FLORIDA HOSPICE INC Q 858631 ACTUAL INVOICES EAST RIDGE RETIREMENT VILLAGE INC Q 6883157 ACTUAL INVOICES & RECEIPTS AVMED INC Q 774804 ACTUAL INVOICES NORTH FLORIDA RETIREMENT VILLAGE INC Q 531378 ACTUAL INVOICES BONITA SPRINGS RETIREMENT VILLAGE INC Q 290965 ACTUAL INVOICES SANTAFE SENIOR LIVING INC R 1910000 ACTUAL CASH TRANSFERRED