Community Health Systems is squaring up to two prominent proxy advisory firms that are encouraging investors to vote against the hospital chain's executive compensation package.

In separate recent reports, Institutional Shareholder Services and Glass Lewis have criticized a number of parts of CHS' pay philosophy and said shareholders should voice their so-called 'say on pay' in a negative way. In return, CHS leaders fired off a letter to its investors Tuesday saying unusual events last year depressed their stock price and that voters should take into consideration changes that were made early this year.

"We believe the events of April 2011 (the Tenet lawsuit and the accelerant it provided to an early-stage government investigation) could not have been anticipated by the Compensation Committee or executive management when the 2011 compensation decisions were made," CHS wrote. "The Compensation Committee’s changes made in early 2012 with respect to both 2011 compensation and 2012 compensation should be given greater weight in making your voting decision."

But for ISS and Glass Lewis, the issues run deeper than taking into account the large 2011 drop in CHS shares and the tweaks — mostly in the area of pension benefits and lowering stock performance unit and option awards — made since. Both firms' analysts point out that Chairman, President and CEO Wayne Smith's pay package is well above that of his peers and that executive pay isn't properly aligned with the company's performance.

Among the main issues for the advisors: The peer group by which CHS measures its pay plans is, in the words of ISS, "aspirational." Glass Lewis' analyst uses the term "already ambitiously constructed peer group" and, like ISS, points out that CHS on top of that benchmarks Smith's pay to 75 percent of that group, which includes much larger companies such as UnitedHealth Group, J.C. Penney and General Mills.

That sets the stage, they say, for pay levels well above the median for CHS' peers. Smith's total compensation, Glass Lewis says, ranks in the 97th percentile of one of CHS' peer groups even though its five-year shareholder return ranks last in the group and its market capitalization is in the 7th percentile.

Also of concern to the advisors is the "lack of rigorous performance formulas" in handing out long-term incentives, many of which are awarded in full if the company meets a simple performance hurdle. Both companies say such benchmarks should feature some sort of relative measures. Plus, says Glass Lewis, the performance-based awards are based only on a one-year window.

"As such, shareholders can not be sure that the Company's long-term plan sufficiently promotes a long-term focus among executives," the firm wrote.

In their response, company officials also remind investors that 87 percent of them voted in favor of their 2011 pay package and — arguing that point-in-time stock price data can't be the only value metric considered in say-on-pay — point out that CHS' shares price has rallied 34 percent this year. But the stock (Ticker: CYH) is still down 36 percent since the beginning of 2011 as well as over the past five years.