CPSI 2018 Proxy Statement

24 Long-Term Incentive Awards. We have made long-term grants of equity compensation to executive officers in order to align their interests and compensation with the long-term interests of stockholders and provide an incentive for them to maintain their relationship with the Company. Beginning in 2014, in order to further link compensation to Company performance, the Compensation Committee began granting both time-based restricted stock and performance share awards. The Committee considers many factors in determining the appropriate mix of long-term equity awards in order to retain, incentivize and appropriately reward executives for the creation of value for stockholders. Typically the Committee has granted approximately 50% of each NEO’s annual long-term equity award in the form of time-based restricted stock and 50% of each NEO’s annual long-term equity award in the form of performance share awards. As discussed below under “Equity Grant Practices,” the percentage of the long-term equity awards granted to the NEOs in 2017 was weighted more heavily in favor of time-based restricted stock than in past years, however, due to when the equity awards were actually granted in 2017. As discussed under “Compensation Philosophy and Objectives—Compensation Improvements for 2018” and “2018 Compensation Actions,” the Compensation Committee intends to increase the percentage of the long-term equity awards that is granted in performance share awards from 50% to 60% and to decrease the percentage of such awards that is granted in time-based restricted stock from 50% to 40% in order to focus the executives more on long-term performance. Time-Based Restricted Stock At its May 11, 2017 meeting, following the approval by the Company’s stockholders of the amendment to the 2014 Incentive Plan, the Compensation Committee granted time-based restricted stock awards to all of the current executive officers of the Company, including our NEOs, with one-third of the shares vesting on each of the first three anniversaries of the date of grant, commencing on May 11, 2018. The size of the restricted stock awards granted to the executives is based on the subjective determination of the Compensation Committee, which considers each executive’s importance to and tenure with the Company and level of responsibility. In order to vest, the executive must remain employed by us as an executive on each vesting date. The individual grants of time-based restricted stock for the NEOs were as follows: Name Dollar Value of Award Number of Restricted Shares J. Boyd Douglas $573,033 17,391 Matt J. Chambless $429,767 13,043 David A. Dye $573,033 17,391 Christopher L. Fowler $573,033 17,391 Troy D. Rosser $322,350 9,783 Performance Share Awards The Compensation Committee granted performance share awards pursuant to the 2014 Incentive Plan to each executive officer of the Company, including our NEOs. Messrs. Douglas, Chambless, Dye and Fowler received performance share awards at the Compensation Committee’s meeting on March 9, 2017 and Mr. Rosser received performance share awards at the Compensation Committee’s meeting on May 11, 2017. Each NEO was granted a target number of performance shares, with the actual number of performance shares earned and to be issued to be calculated based on the percentage increase in the Company’s Adjusted earnings per share or “EPS” (as hereinafter defined) in 2017 over the Company’s Adjusted EPS in 2016. “Adjusted EPS” is a non-GAAP financial measure and consists of GAAP net income as reported, adjusted for the after-tax effects of (i) acquisition-related amortization; (ii) stock-based compensation expense (including any adjustments for excess or deficient tax benefits); (iii) non-recurring expenses and transaction-related costs; and (iv) non-cash charges to interest expense and other, divided by weighted shares outstanding (diluted) in the applicable period. The Compensation Committee believes that Adjusted EPS is an appropriate metric for aligning executive pay with Company performance and returns to the Company’s stockholders. Under the terms of the performance share awards granted in 2017, the eligible NEOs were entitled to: ▪ 50% of their target share award if the Company’s Adjusted EPS in 2017 was 95% of Adjusted EPS in 2016 (the threshold award); ▪ 100% of their target share award if the Company’s Adjusted EPS in 2017 was 105% of Adjusted EPS in 2016 (the target award); and ▪ 150% of their target share award if the Company’s Adjusted EPS in 2017 was 125% or more of Adjusted EPS in 2016 (the maximum award).