<PAGE>

                                                                    Exhibit 10.2



                            AMENDMENT NO. 1 TO THE
                    VENCOR, INC. DEFERRED COMPENSATION PLAN


     This is Amendment No. 1 to the Vencor, Inc. Deferred Compensation Plan
adopted effective April 30, 1998 (the "Plan"), and each amendment shall be
effective as set forth below.

                                    Recitals
                                    --------

     Vencor, Inc.  (the  "Company")  wishes to amend the Plan to eliminate the
termination of the Plan and the consequent acceleration of the payment of
benefits under the Plan pursuant to Section 11.2, entitled "Termination on
Change of Control Event," of the Plan.

     The Company wishes to amend the Plan to suspend the deferrals of Annual
Salary and Annual Bonus elected by Participants.

     The Company wishes to amend the Plan to change time periods in the claims
proce dure.

     The Company wishes to amend the Plan to provide for a one-time distribution
election, allow for the proration of interest credits to a Participant's Account
Balance for a less-than-full-year period prior to a distribution event, and
clarify that an Employee who is eligible to participate in one year, but not
eligible to participate in a later year, remains a Participant with respect to
an existing Account Balance, until distributed.

                                   Amendments
                                   ----------

     1.  All capitalized terms used in this Amendment and not otherwise defined
shall have the meanings given them in the Plan.  Unless otherwise specified
herein, all amendments shall be effective upon the execution of this Amendment.

     2.  The Plan is hereby amended to delete Sections 1.8, 11.2 and 16.15
thereof, each in its entirety, and to delete all references in the Plan to such
Sections 1.8, 11.2 and 16.15 thereby eliminating any change in control
provisions.


     3.  A new section 2.4 of the Plan is hereby added effective as of March 29,
1999, to read in its entirety as follows:

          2.4  Eligibility: Cessation of Deferrals.  Deferrals of Base Annual
               -----------------------------------
          Salary and Annual Bonus under the Plan shall cease upon the earlier of
          (i) termination of an existing Plan Agreement by the Participant, (ii)
          suspension of Plan Agreements by the unilateral action of the
          Committee, which action must apply uniformly to all similarly-situated
          groups of Participants; (iii) determination by the Committee, in its
          sole discretion,
<PAGE>

          with respect to any one or more Participant(s), that that Participant
          shall no longer be an eligible Participant for future deferrals,
          effective at the beginning of the next Plan Year after notice of
          revocation of participation is delivered to the Participant. Cessation
          of deferrals pursuant to this Section shall not be a termination of
          the Plan, and affected Participant(s) rights to interest crediting and
          distribution of their Account Balance shall be unaffected by the
          cessation or suspension of the right to defer.


     4.  Section 5.2 of the Plan is hereby amended to delete the last sentence
thereof (regarding 12-month advance changes in distribution elections) because
that provision was never implemented in operation.

     5.  Section 7.2 is amended so that the second subparagraph (b) shall be
designated as (c).

     6.  Section 14.1 of the Plan is amended so that as amended it shall read in
its entirety as follows:

          Presentation of Claim.  Any Participant or Beneficiary of a deceased
          ---------------------
          Participant (such Participant or Beneficiary being referred to below
          as a "Claimant") may deliver to the Committee a written claim for a
          determination with respect to the amounts distributable to such
          Claimant from the Plan. If such a claim relates to the contents of a
          notice received by the Claimant, the claim must be made within 60 days
          after such notice was received by the Claimant. The claim must state
          with particularity the determination desired by the Claimant. All
          other claims must be made within 180 days of the date on which the
          event that caused the claim to arise occurred. The claim must state
          with particularity the determination desired by the Claimant.

     7.   Section 1.22 of the Plan is hereby amended effective as of May 1, 1998
so that as amended it shall read in its entirety as follows:

          "Participant" shall mean any Employee (i) who is selected to
          participate in the Plan; (ii) who elects to participate in the Plan;
          (iii) who signs a Plan Agreement and an Election Form; (iv) whose
          signed Plan Agreement and Election Form are received by the Committee;
          (v) who commences participation in the Plan; and (vi) whose Plan
          Agreement has not terminated.  A Participant shall also include a
          former Employee or Employee whose Plan Agreement has terminated who
          has an Account Balance hereunder.  By addendum to this Plan, the Board
          or the Committee may permit directors of any of the Employers to
          become Participants hereunder regardless of whether they are
          Employees.

     8.   Section 3.5 of the Plan is hereby amended effective as of May 1, 1998
so that as amended it shall read in its entirety as follows:
<PAGE>

          Interest Crediting Prior to Distribution.  Prior to any distribution
          ----------------------------------------
          of benefits under Articles 4, 5, 6, 7 or 8, interest shall be credited
          and compounded annually on a Participant's Account Balance as if the
          Participant's Annual Deferral Amount and Employer contributions were
          made in two installments, one-half on the first day of the year and
          the balance on the last day of the year.  In the case of a Participant
          who receives a lump sum distribution during a year, a pro rated amount
          of interest shall be credited based on the number of full months of
          the calendar year elapsed prior to distribution, as a percentage of 12
          months, and  as if the Participant's Annual Deferral Amount and
          Employer contributions were made in two installments, one-half on the
          first day of the year and one-half at the end of the month prior to
          distribution.  The rate of interest for crediting shall be the
          Crediting Rate.

     9.   A new Section 7.3 is hereby added effective May 1, 1998 to the Plan to
read in its entirety as follows:

          7.3  One-Time Election to Withdraw.  Due to the substitution of new
               -----------------------------
          Vencor, Inc. as the sponsor and obligor under the Plan, each
          Participant shall have an election to cease participation in the Plan
          and withdraw 90% of his Account Balance, with 10% of the Account
          Balance being forfeited upon the election to withdraw.  Such election
          shall be available during the month of May 1998, and shall expire and
          become unavailable if not made in writing before May 31, 1998. The
          election, if made, shall also constitute a termination of the
          Participant's Plan Agreement for 1998, effective June 1, 1998


     10.  All other provisions of the Plan shall remain unchanged and in full
force and effect.


     IN WITNESS WHEREOF, the Company has caused this Amendment No. 1 to be
executed on the date set forth below.

                                    VENCOR, INC.



                                    By: /s/ Edward L. Kuntz

                                    Title: Chairman of the Board, Chief
                                            Executive Officer and President

                                    Date: February 16, 2001