CPSI 2018 Proxy Statement

38 Non-Management Director Compensation Our director compensation program is designed to attract and retain highly qualified non-employee directors and to address the time, effort, expertise and accountability required of active board membership. Our Compensation Committee believes that annual compensation for non-employee directors should consist of both cash to compensate members for their services on the Board and its committees, and equity to align the interest of directors and stockholders. Highlights of our director compensation program include: • Emphasis on equity in the overall compensation mix • Full-value equity grants under a fixed-value annual grant policy • Fees for committee service to differentiate individual pay based on workload • A robust stock ownership guideline set at five times the annual cash retainer to support stockholder alignment In accordance with its charter, the Compensation Committee reviews and makes recommendations to the Board of Directors regarding the compensation of our non-employee directors. In making such recommendations, the Compensation Committee takes into consideration the director compensation practices of peer companies and whether such recommendation align with the interests of our stockholders. Like compensation for our executive officers, the Compensation Committee reviews the total compensation of our non-employee directors and each element of our director compensation program annually. At the direction of the Compensation Committee, FW Cook, the Compensation Committee’s independent compensation consultant, analyzes the competitive position of the Company’s director compensation program against the peer group used for executive compensation purposes (see pages 20 to 21 for more information about the Company’s peer group). FW Cook’s analysis in January 2017 showed that overall compensation for non- employee directors was below the peer group median. Despite this below market positioning, our Compensation Committee did not recommend that any changes be made to our director compensation program for 2017, except as noted below. In 2017, each of our non-employee directors received an annual cash retainer (paid quarterly in advance) of $60,000 for service as a director. Each director who was a member of the Audit Committee received an additional $5,000, each director who was a member of the Compensation Committee received an additional $4,000 and each director who was a member of the Nominating and Corporate Governance Committee (the “Nominating Committee”) received an additional $1,000. Based upon advice received from FW Cook, the Compensation Committee recommended to the Board, and the Board approved on November 9, 2017, an increase in the additional fee paid to members of the Nominating Committee from $1,000 per year to $4,000 per year to reflect the increasing duties of the directors who serve on the Nominating Committee and the increasing complexity of matters being addressed by the Nominating Committee. The three directors who were elected to the Board on November 9, 2017 received the pro rata amounts of the annual cash retainer and committee fees described above for their service during 2017. The Board also approved, based on the Compensation Committee’s recommendation, an additional retainer to be paid to the Lead Director of the Board in the amount of $15,000 per year in order to reflect the additional duties and responsibilities to be performed by the Lead Director. Mr. Huffman, as the Company’s newly-elected Lead Director, received the pro rata amount of this fee in 2017 based on his service as Lead Director beginning November 9, 2017. Directors who are employees of the Company receive no compensation for their service as directors. Directors are also reimbursed for their expenses incurred in attending any meeting of directors. Additionally, each non-employee director typically receives a grant of approximately $100,000 of shares of restricted stock under the Computer Programs and Systems, Inc. 2012 Restricted Stock Plan for Non-Employee Directors (the “2012 Restricted Stock Plan for Non-Employee Directors”). In 2017, each non-employee director (except for Dr. Benjamin, Mr. Tobin and Ms. Warren, who were elected to the Board effective November 9, 2017) received a grant of restricted shares having a fair market value of approximately $143,000 due to the grants not occurring until May 11, 2017, instead of earlier in the spring as in prior years. The Compensation Committee chose to make the grants to the non-employee directors under the 2012 Restricted Stock Plan for Non- Employee Directors at the same time as the Committee made restricted stock grants to the executive officers and key employees under the 2014 Incentive Plan. These grants were made on May 11, 2017, after the amendment to the 2014 Incentive Plan was approved by the stockholders at the 2017 Annual Meeting to increase the number of shares available under such Plan. The Compensation Committee determined the number of shares that the non-employee directors were entitled to receive in early spring, and then granted that same number of shares on May 11, 2017. This resulted in the non-employee directors receiving restricted stock with a higher grant date fair value due to the Company’s share price increasing from early spring to May 2017, and the Compensation Committee determined that it was appropriate to grant these higher amounts in order to compensate the directors for receiving the grants later than in prior years and missing out on the stock price appreciation during such period. The Compensation Committee has returned to granting approximately $100,000 of shares of restricted stock to each non-employee director.