1. Valley Medical Center Executive Compensation Study November 23, 2009 Presented by: John Hankerson 1301 Fifth Avenue, Suite 3800 Seattle, Washington 98101-2605 206/504.5965 or 206/504.5545

2. 2 Scope of Analysis  Milliman evaluated the total compensation of the Chief Executive Officer:  Milliman’s assessment included a comprehensive analysis of total compensation and its components (base salary, annual incentives, long-term incentives and major benefits) for this position. NamePosition Current Base Salary Last Annual Incentive Actual Total Cash Rich RoodmanCEO$587,800$0$587,800

3. 3 SAO Summary Data 75.9%86.4%98.3%$774.8$680.0$597.7$587.8Total Cash Compensation $182.9 $161.9$143.5 $0.0Actual Annual Incentive 30.9%31.2%31.6%0.0% Actual Annual Incentive as a % of base 99.3%113.5%129.4%$591.9$518.1$454.2$587.8Base Salary 75th %50th %25th % Mkt 75th % Mkt 50th % Mkt 25th % 2009 CompCEO - Valley ($309.3M) Systems Overall CompetitivenessBase Salary

4. 4 Data Sources  Milliman used the following published surveys to evaluate CEO compensation:  Mercer Executive  MSA Healthcare Executive  Hay Hospital Report  Mercer Integrated Health Networks  Sullivan Cotter Healthcare Management  Clark Consulting Healthcare Executive  In addition Milliman collected information on CEO compensation from the following  “regional” organizations:  Evergreen Medical CenterSouthwest Washington Medical Center  Multicare Health SystemVirginia Mason Medical Center  University of Washington Medical CenterLegacy Health System

5. 5 Base Salary Comparisons

6. 6 Total Cash Comparisons

7. 7 Cash Comparison Table Base pay among the regional organizations ranges from a low of $477,372 to a high of $895,000. Total cash (base plus annual incentive only) ranges from a low of $477,372 to a high of $1,326,061. VMC Market MedianMarket 75th VMC vs. Market Median VMC vs. Market 75thVMC Market MedianMarket 75th VMC vs. Market Median VMC vs. Market 75th $587,000$502,768$596,330117%98%$587,000$619,484$762,18895%77% Regional Organizations:$662,500$771,09889%76%$807,700$1,139,02873%52% CEO Valley Medical Center vs. Published Market Data Total Cash CompensationBase Salary

8. 8 Annual Incentive Comparisons

9. 9 Annual Incentives  VMC establishes a target bonus of ~32% (of base salary) for the CEO and all other executives. The table below contains typical market incentive levels in the industry for the CEO: – Annual incentive opportunity should always be calibrated with base salary to produce competitive total cash compensation, appropriate for the individual’s and the organization’s performance. – In addition, total cash compensation should be aligned with the board’s pay philosophy and the magnitude of any long-term compensation. Position TargetMaximum CEO40%80%

10. 10 Other Compensation  It is our experience that several factors should play a prominent role in the  process used to develop appropriate compensation and benefit plans for  executives. Market practice information can provide a useful frame of reference but  prevalence of a particular practice does not determine appropriateness. In other  words, doing what everyone else is doing is not necessarily the best approach for a  particular organization or situation. We believe that:  Specific plans should be adopted because they meet a critical business need  Plans should always work to further the short and long-term objectives of the organization  Plans should reflect good business judgment of the situation and integration with market practices  Plans together should create a total compensation package that: – Improves performance – Improves retention – Aligns with short and long-term business strategies – Assists with attracting executive talent

11. 11 Total Compensation Comparison VMCMkt 75th* Base salary$587,000$596,330 Last bonus$0$259,420 Car allowance$7,212$9,000 Retention$239,717N/A SERP$157,342$89,449 Life insurance$7,835$8,500 Disability$4,603$5,000 Long-term incentive$0$238,532 Financial assistance$17,315$20,000 Total$1,021,024$1,226,231 *The numbers reflected here are individual values for each element and do not reflect the actual aggregate practice of specific organizations or executives

12. 12 Detailed Market Data Chief Executive Officer Survey NameSurvey Job TitleScopeBase 25thBase 50thBase AvgBase 75thTCC 50thTCC 75thTCC 90th 17. Mercer ExecutiveCEOHealthcare; <5000 ees$402,302$413,912$465,292 ---$483,223$556,097 --- 18. MSA Healthcare ExecutiveCEO SystemNet Rev: $300-$500M$488,510$507,016$517,361 ---$600,580$699,776 --- 19. Hay Hospital ReportCEONet Rev: $250-$500M$546,236$541,295$581,920$632,426$541,295$765,938$892,313 20. Mercer Integrated Health NetworksCEONet Rev: <$400M$551,729$717,823$852,421 ---$878,399$1,162,424 --- 21. Sullivan Cotter Healthcare MgmtCEONet Rev: <$500M$460,085$463,085$515,936 ---$535,438$602,945 --- 25. Clark Consulting Healthcare ExecCEONet Rev: $250-$750M$567,747$577,522$645,049 ---$677,970$785,947 --- Average:$502,768$536,775$596,330$632,426$619,484$762,188$892,313