Health Care REIT, Inc. DEF 14A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment
No. )
Filed by the Registrant þ
Filed by a Party other than the
Registrant o
Check the appropriate box:
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o Preliminary
Proxy Statement |
o Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)) |
þ Definitive Proxy
Statement |
o Definitive
Additional Materials |
o Soliciting
Material Pursuant to Section 240.14a-12 |
HEALTH CARE REIT, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
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No fee required. |
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(4) and 0-11. |
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Title of each class of securities to which transaction applies: |
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Aggregate number of securities to which transaction applies: |
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on
which the filing fee is calculated and state how it was
determined): |
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Proposed maximum aggregate value of transaction: |
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Fee paid previously with preliminary materials. |
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Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing. |
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Amount Previously Paid: |
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Form, Schedule or Registration Statement No.: |
HEALTH CARE REIT, INC.
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
and
PROXY STATEMENT
Meeting Date
May 5, 2005
YOUR VOTE IS IMPORTANT!
You are urged to sign, date, and return your proxy in the
enclosed envelope.
HEALTH CARE REIT, INC.
One SeaGate
Suite 1500
P.O. Box 1475
Toledo, Ohio 43603-1475
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 5, 2005
To The Stockholders of
Health Care REIT, Inc.:
The Annual Meeting of Stockholders of Health Care REIT, Inc.
will be held on May 5, 2005 at 10:00 a.m. in the
Auditorium of One SeaGate, Toledo, Ohio, for the purpose of
considering and acting upon:
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The election of three Directors for a term of three years; |
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The approval of the Health Care REIT, Inc. 2005 Long-Term
Incentive Plan; |
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The ratification of the appointment of Ernst & Young
LLP as independent registered public accounting firm for the
fiscal year 2005; and |
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The transaction of such other business as may properly come
before the meeting or any adjournment thereof. |
Stockholders of record at the close of business on
March 11, 2005 will be entitled to notice of, and to vote
at, the Annual Meeting or any adjournment thereof. Information
relating to the matters to be considered and voted on at the
Annual Meeting is set forth in the Proxy Statement accompanying
this Notice.
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BY ORDER OF THE BOARD OF DIRECTORS |
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Erin C. Ibele
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Vice President and Corporate Secretary |
Toledo, Ohio
March 24, 2005
PLEASE COMPLETE AND SIGN THE ENCLOSED PROXY AND RETURN IT
PROMPTLY IN THE ENVELOPE PROVIDED WHETHER OR NOT YOU PLAN TO
ATTEND THE ANNUAL MEETING. In lieu of mailing your proxy card,
you may choose to submit a proxy via the Internet or by
telephone by following the procedures provided on your proxy
card. The proxy may be revoked by you at any time, and giving
your proxy will not affect your right to vote in person if you
attend the Annual Meeting.
HEALTH CARE REIT,
INC.
One SeaGate
Suite 1500
P.O. Box 1475
Toledo, Ohio 43603-1475
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
May 5, 2005
GENERAL
This Proxy Statement is furnished to the stockholders of Health
Care REIT, Inc. (the Company) by its Board of
Directors in connection with the solicitation of proxies in the
enclosed form to be used in voting at the Annual Meeting of
Stockholders (the Annual Meeting), which is
scheduled to be held on Thursday, May 5, 2005 at
10:00 a.m. as set forth in the foregoing notice. At the
Annual Meeting, the stockholders will be asked to elect three
Directors, approve the Health Care REIT, Inc. 2005 Long-Term
Incentive Plan, ratify the appointment of Ernst & Young
LLP as the Companys independent registered public
accounting firm and transact such other business as may properly
come before the Annual Meeting or any adjournment thereof.
A share cannot be voted at the Annual Meeting unless the holder
thereof is present or represented by proxy. When proxies in the
accompanying form are returned properly executed and dated or
the appropriate procedures for submitting a proxy via the
Internet or by telephone are followed, the shares represented
thereby will be voted at the Annual Meeting. If a choice is
specified in the proxy, the shares represented thereby will be
voted in accordance with such specification. If no specification
is made, the proxy will be voted FOR the action proposed. Any
stockholder giving a proxy has the right to revoke it any time
before it is voted by filing a written revocation with the Vice
President and Corporate Secretary of the Company, by filing a
duly executed proxy bearing a later date, or by attending the
Annual Meeting and voting in person. The revocation of a proxy
will not be effective until notice thereof has been received by
the Vice President and Corporate Secretary of the Company.
The cost of solicitation of proxies will be borne by the
Company. In addition to solicitation by mail, Directors and
officers of the Company may solicit proxies in writing or by
telephone, electronically, by personal interview, or by other
means of communication. The Company will reimburse Directors and
officers for their reasonable out-of-pocket expenses in
connection with such solicitation. The Company will request
brokers and nominees who hold shares in their names to furnish
this proxy material to the persons for whom they hold shares and
will reimburse such brokers and nominees for their reasonable
out-of-pocket expenses in connection therewith. The Company has
hired Mellon Investor Services LLC to solicit proxies for a fee
not to exceed $7,500, plus expenses and other customary charges.
The presence at the Annual Meeting, in person or by proxy, of
the holders of a majority of the total number of shares of
voting securities outstanding on the record date shall
constitute a quorum for the transaction of business by such
holders at the Annual Meeting.
The executive offices of the Company are located at One SeaGate,
Suite 1500, Toledo, Ohio 43604, and its mailing address is
One SeaGate, Suite 1500, P.O. Box 1475, Toledo, Ohio
43603-1475. The telephone number is (419) 247-2800. The
approximate date on which this material was first sent to
stockholders was March 31, 2005. A COPY OF THE
COMPANYS ANNUAL REPORT ON FORM 10-K FOR THE YEAR
ENDED DECEMBER 31, 2004, INCLUDING THE FINANCIAL STATEMENTS
AND THE SCHEDULES THERETO, AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION, IS AVAILABLE ON OUR WEB SITE AT
www.hcreit.com OR MAY BE OBTAINED WITHOUT CHARGE BY WRITING TO
THE VICE PRESIDENT AND CORPORATE SECRETARY, HEALTH CARE REIT,
INC., AT THE ABOVE MAILING ADDRESS.
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VOTING SECURITIES OUTSTANDING
As of March 11, 2005, the Company had outstanding
53,348,907 shares of common stock, $1.00 par value per
share. The common stock constitutes the only class of voting
securities of the Company entitled to vote at the Annual
Meeting. Stockholders of record at the close of business on
March 11, 2005 are entitled to notice of, and to vote at,
the Annual Meeting and any adjournment thereof. Each share of
common stock is entitled to one vote on all matters to come
before the Annual Meeting.
PROPOSAL 1 ELECTION OF THREE DIRECTORS
The Company is currently authorized to have nine Directors. The
By-Laws divide the Board into three classes: Class I,
Class II and Class III. The Directors are elected to
serve for a three-year term and until the election and
qualification of their respective successors. Proxies received
will be voted to elect the three Directors named below to serve
for a three-year term and until their respective successors are
elected and qualified or until their earlier resignation or
removal.
If any nominee declines or is unable to accept such nomination
to serve as a Director, events which the Board does not now
expect, the proxies reserve the right to substitute another
person as a Board nominee, or to reduce the number of Board
nominees, as they shall deem advisable. The proxy solicited
hereby will not be voted to elect more than three Directors.
CLASS I
Directors to be Elected
William C. Ballard, Jr., age 64.
Mr. Ballard is Of Counsel to Greenebaum Doll &
McDonald PLLC (law firm), a position he has held since 1992.
From 1970 to 1992, Mr. Ballard was Executive Vice
President, Chief Financial Officer and Director of Humana Inc.
(provider of integrated health care services). Mr. Ballard
also serves as a Director of UnitedHealth Group Incorporated
(managed care company). Mr. Ballard has served as a
Director of the Company since 1996 and is a member of the
Boards Compensation, Executive, Investment, Nominating/
Corporate Governance and Planning Committees.
Peter J. Grua, age 51. Mr. Grua is a Managing
Partner of HLM Venture Partners (registered investment adviser),
an affiliate of HLM Management Company, Inc., where he has held
various positions since 1992. Mr. Grua also serves as a
Director of Renal Care Group, Inc. (specialized dialysis
services company) and DrugMax, Inc. (specialty pharmacy and drug
distribution provider). Mr. Grua has served as a Director
of the Company since 1999 and is a member of the Boards
Executive, Investment, Nominating/ Corporate Governance and
Planning Committees.
R. Scott Trumbull, age 56. Mr. Trumbull is
Chairman and Chief Executive Officer of Franklin Electric Co.,
Inc. (manufacturer of electric motors), a position he has held
since January 2003. From October 2001 through December 2002,
Mr. Trumbull was Executive Vice President and Chief
Financial Officer of Owens-Illinois, Inc. (manufacturer of glass
and plastic packaging products). From 1993 to October 2001,
Mr. Trumbull served as Executive Vice President,
International Operations & Corporate Development of
Owens-Illinois, Inc. Mr. Trumbull has served as a Director
of the Company since 1999 and is a member of the Boards
Audit, Investment and Planning Committees.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS
THAT YOU VOTE FOR THE ELECTION OF THE ABOVE
NOMINEES. The three nominees who receive the highest number
of votes at the Annual Meeting shall be elected as Directors.
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CLASS II
Directors Whose Terms Continue (1)
Pier C. Borra, age 65. Mr. Borra is Chairman
and Chief Executive Officer of CORA Health Services, Inc.
(outpatient rehabilitation services), a position he has held
since January 1998. Mr. Borra has served as a Director of
the Company since 1991 and is a member of the Boards
Compensation, Investment and Planning Committees.
George L. Chapman, age 57. Mr. Chapman is
Chairman and Chief Executive Officer of the Company, positions
he has held since October 1996, and served as President of the
Company from September 1995 to May 2002. From January 1992 to
September 1995, Mr. Chapman served as Executive Vice
President and General Counsel of the Company. Mr. Chapman
has served as a Director of the Company since 1994 and is a
member of the Boards Executive, Investment and Planning
Committees.
Sharon M. Oster, age 56. Ms. Oster is Professor
of Management and Entrepreneurship, Yale University School of
Management. Ms. Oster also serves as a Director of The
Aristotle Corporation (holding company for a manufacturer and
distributor of educational, health and agricultural products)
and Transpro, Inc. (designer and manufacturer of precision
transportation products). Ms. Oster has served as a
Director of the Company since 1994 and is a member of the
Boards Audit, Investment and Planning Committees.
CLASS III
Directors Whose Terms Continue (2)
Thomas J. DeRosa, age 47. Mr. DeRosa is the
former Vice-Chairman and Chief Financial Officer of The Rouse
Company (real estate development and operations), a position he
held from September 2002 until November 2004 when The Rouse
Company merged with General Growth Properties, Inc. From 1992 to
September 2002, Mr. DeRosa held various positions at
Deutsche Bank and Alex. Brown & Sons (Deutsche Bank
AG), including Global Co-Head of the Health Care Investment
Banking Group of Deutsche Bank and Managing Director in the Real
Estate Investment Banking Group of Alex. Brown & Sons.
Mr. DeRosa has served as a Director of the Company since
2004 and is a member of the Boards Audit, Investment,
Nominating/ Corporate Governance and Planning Committees.
Jeffrey H. Donahue, age 58. Mr. Donahue is the
President and Chief Executive Officer of The Enterprise Social
Investment Corporation (provider of affordable housing), a
position he has held since January 2003. Mr. Donahue was
Executive Vice President and Chief Financial Officer of The
Rouse Company (real estate development and operations) from
December 1998 to September 2002. Mr. Donahue has served as
a Director of the Company since 1997 and is a member of the
Boards Compensation, Investment and Planning Committees.
Bruce G. Thompson, age 75. Mr. Thompson is the
President of First Toledo Corporation (developer of health care
facilities), a position he has held since June 1994.
Mr. Thompson is also a Director of Kingston HealthCare
Company (owner and manager of health care facilities).
Mr. Thompson has served as a Director of the Company since
1971 and is a member of the Boards Investment and Planning
Committees.
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The terms of Messrs. Borra and Chapman and Ms. Oster
expire in 2006. |
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The terms of Messrs. DeRosa, Donahue and Thompson expire in
2007. |
BOARD AND COMMITTEES
Independence and Meetings
The Board has adopted Corporate Governance Guidelines that meet
the listing standards adopted by the New York Stock Exchange and
a Code of Business Conduct and Ethics that meets the New York
Stock Exchanges listing standards and complies with the
rules of the Securities and Exchange Commission. The Corporate
Governance Guidelines and Code of Business Conduct and Ethics
are available on our Web site at www.hcreit.com and from the
Company upon written request sent to the Vice President and
Corporate Secretary, Health Care REIT, Inc., One SeaGate,
Suite 1500, P.O. Box 1475, Toledo, Ohio, 43603-1475.
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Pursuant to the Corporate Governance Guidelines, the Board
undertook a review of Director independence in March 2005.
During this review, the Board considered transactions and
relationships between each Director or any member of his or her
immediate family and the Company and its subsidiaries and
affiliates, including those described below under Certain
Relationships and Related Transactions. The purpose of
this review was to determine whether any relationships or
transactions were inconsistent with a determination that a
Director is independent.
The Board determined that other than Mr. Chapman, all of
the Directors of the Company (Ms. Oster and
Messrs. Ballard, Borra, DeRosa, Donahue, Grua, Thompson and
Trumbull) meet the specific minimum independence requirements of
the New York Stock Exchange. The Board also determined that,
other than Messrs. Chapman and Thompson, all of the
Directors of the Company (Ms. Oster and
Messrs. Ballard, Borra, DeRosa, Donahue, Grua and Trumbull)
have no material relationship with the Company (either directly
or as a partner, stockholder or officer of an organization that
has a relationship with the Company) and are therefore
independent under the general independence standards of the New
York Stock Exchange and the Corporate Governance Guidelines.
In evaluating the independence of Mr. Borra, the Board
considered Mr. Borras former relationship with a
customer of the Company. Mr. Borra held a small interest in
the customer and served as one of its directors until 2001. The
Board determined that this prior relationship was not material
to Mr. Borra, the Company, or the customer from a financial
perspective or otherwise. With respect to Mr. DeRosa, the
Board considered Mr. DeRosas former employment
relationship with Deutsche Bank and its affiliates from 1992 to
2002. Although Deutsche Bank provided investment banking
services to the Company during this period, and continues to
provide such services, the Board determined that the
relationship is not material because Mr. DeRosa has not
been affiliated with Deutsche Bank since 2002. The Board has
determined that these former relationships will not affect the
ability of Mr. Borra or Mr. DeRosa to exercise
independent judgment.
Although Mr. Thompson meets the minimum independence
requirements of the New York Stock Exchange, the Board
determined that he is not independent under the general
independence standards of the New York Stock Exchange. The loan
and credit enhancement provided to First Toledo Corporation by
the Company (as described in the section Certain
Relationships and Related Transactions) could be
considered as evidence of a material relationship between
Mr. Thompson and the Company. Because
Mr. Thompsons relationship with the Company (through
First Toledo Corporation and otherwise) could be viewed as
material, a finding that he is not independent under
the general independence standards of the NYSE was determined to
be appropriate.
The Board also determined that all of the members of the Audit
Committee (Ms. Oster and Messrs. DeRosa and Trumbull)
are independent under the above standards and under the separate
independence standards for audit committee members under
Rule 10A-3 of the Securities Exchange Act of 1934, as
amended. Additionally, the Board determined that all of the
members of the Compensation Committee (Messrs. Ballard,
Borra and Donahue) are independent, non-employee and outside
directors, as the case may be, under the rules of the New York
Stock Exchange, Securities and Exchange Commission and Internal
Revenue Service. Finally, the Board determined that all of the
members of the Nominating/ Corporate Governance Committee
(Messrs. Ballard, DeRosa and Grua) are independent under
the rules of the New York Stock Exchange.
The Board also determined that all three of the Directors
nominated for election at the Annual Meeting
(Messrs. Ballard, Grua and Trumbull) are independent from
the Company and its Management under the standards set forth in
the Corporate Governance Guidelines.
The Board met four times during the year ended December 31,
2004. It is our policy to schedule a meeting of the Board on the
date of the annual meeting of stockholders and all of our
Directors are encouraged to attend that meeting. Eight Directors
attended last years annual meeting of stockholders.
The Board has standing Audit, Executive, Compensation,
Investment, Nominating/ Corporate Governance and Planning
Committees. In 2004, all incumbent Directors attended at least
75% of the aggregate of the meetings of the Board and the
committees on which they served.
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Executive sessions of non-Management Directors are held after
regularly scheduled meetings of the Board and an executive
session of independent directors is held at least once each
year. The presiding Director of these executive sessions is the
Chair of the Nominating/ Corporate Governance Committee,
currently Mr. Ballard.
Audit Committee
The Audit Committee has the authority and responsibility to
engage and discharge the independent registered public
accounting firm, pre-approve all audit and non-audit services to
be provided by such firm, review the plan and results of the
auditing engagement, review Managements evaluation of the
adequacy of the Companys system of internal control over
financial reporting, direct and supervise investigations into
matters within the scope of its duties, and perform the duties
set forth in its written charter and such other duties as are
required by applicable laws or securities exchange rules. The
members of the Audit Committee are Ms. Oster and
Messrs. DeRosa and Trumbull, with Ms. Oster serving as
Chair. The Audit Committee met five times during the year ended
December 31, 2004.
The Audit Committee is comprised solely of Directors who are not
officers or employees of the Company and who we believe have the
requisite financial literacy to serve on the Audit Committee.
Additionally, they have no relationship to us that might
interfere with the exercise of their independence from
Management and they meet the standards of independence for
members of an audit committee established by the Securities and
Exchange Commission and the New York Stock Exchange. See
Independence and Meetings above for a discussion of
independence determinations.
The Board, after reviewing all of the relevant facts,
circumstances and attributes, has determined that
Mr. Trumbull is the designated audit committee
financial expert on the Audit Committee.
The Audit Committee is governed by a written charter approved by
the Board of Directors. The charter is available on our Web site
at www.hcreit.com and from the Company upon written request sent
to the Vice President and Corporate Secretary, Health Care REIT,
Inc., One SeaGate, Suite 1500, P.O. Box 1475, Toledo,
Ohio, 43603-1475.
Compensation Committee
The Compensation Committee is responsible for determining the
nature and amount of compensation for Executive Officers. The
members of the Compensation Committee are Messrs. Ballard,
Borra and Donahue, with Mr. Borra serving as Chair. The
Compensation Committee met five times during the year ended
December 31, 2004. The Compensation Committee is governed
by a written charter approved by the Board of Directors. The
charter is available on our Web site at www.hcreit.com and from
the Company upon written request sent to the Vice President and
Corporate Secretary, Health Care REIT, Inc., One SeaGate,
Suite 1500, P.O. Box 1475, Toledo, Ohio, 43603-1475.
See Remuneration Report of the Compensation
Committee for additional information regarding the
Compensation Committee.
Executive Committee
The function of the Executive Committee is to exercise all the
powers of the Board (except any powers specifically reserved to
the Board) between meetings of the Board. The Executive
Committee is also responsible for reviewing and approving the
Companys investments between meetings of the Investment
Committee. The members of the Executive Committee are
Messrs. Ballard, Chapman and Grua. The Executive Committee
met twice during the year ended December 31, 2004.
Investment Committee
The function of the Investment Committee is to review and
approve the Companys investments in health care
facilities. During the year ended December 31, 2004, the
Investment Committee met four times. Each member of the Board is
a member of the Investment Committee. The Executive Committee is
responsible for reviewing and approving the Companys
investments between meetings of the Investment Committee.
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Nominating/ Corporate Governance Committee
Responsibilities and Members. The Nominating/ Corporate
Governance Committee is responsible for reviewing and
interviewing qualified candidates to serve on the Board, to make
nominations to fill vacancies on the Board and to select the
nominees for the Directors to be elected by our stockholders at
each annual meeting. In addition, the Committee is responsible
for evaluating, implementing and overseeing the standards and
guidelines for the governance of the Company, including
monitoring compliance with those standards and guidelines, as
well as evaluating the performance of the Board. The members of
the Nominating/ Corporate Governance Committee are
Messrs. Ballard, DeRosa and Grua, with Mr. Ballard
serving as Chair. The Nominating/ Corporate Governance Committee
met twice during the year ended December 31, 2004.
The Committee is comprised solely of Directors who are not
officers or employees of the Company. The Board has determined
that no member of the Committee has any material relationship
with the Company that might interfere with the members
exercise of his independent judgment. The Board has also
determined that each member meets the standards of independence
established by the New York Stock Exchange.
The Nominating/ Corporate Governance Committee is governed by a
written charter approved by the Board of Directors. The charter
is available on our Web site at www.hcreit.com and from the
Company upon written request sent to the Vice President and
Corporate Secretary, Health Care REIT, Inc., One SeaGate,
Suite 1500, P.O. Box 1475, Toledo, Ohio, 43603-1475.
Consideration of Director Nominees. The Board believes
that a nominee for Director should be or have been a senior
manager, chief operating officer, chief financial officer or
chief executive officer of a complex organization such as a
corporation, university, foundation or governmental entity or
unit or, if in a professional capacity, be accustomed to dealing
with complex problems, or otherwise have obtained and excelled
in a position of leadership. In addition, Directors and nominees
for Director should have the education, experience,
intelligence, independence, fairness, reasoning ability,
practical wisdom and vision to exercise sound business judgment
and should have high personal and professional ethics, strength
of character, integrity and values. Also, Directors and nominees
for Director should be available and willing to attend regularly
scheduled meetings of the Board and its committees and otherwise
able to contribute a reasonable amount of time to our affairs,
with participation on other boards of directors encouraged to
provide breadth of experience to the Board. The age at the time
of election of any nominee for Director should be such to assure
a minimum of three years of service as a Director.
In identifying and evaluating nominees for Director, the
Committee first looks at the overall size and structure of the
Board each year to determine the need to add or remove
Directors. Second, taking into consideration the characteristics
mentioned above, the Committee determines if there are any
specific qualities or skills that would complement the existing
strengths of the Board.
The Committee uses multiple sources for identifying and
evaluating nominees for Directors, including referrals from
current Directors and Management, and may seek input from third
party executive search firms retained at the Companys
expense. If the Committee retains one or more search firms, such
firms may be asked to identify possible nominees, interview and
screen such nominees and act as a liaison between the Committee
and each nominee during the screening and evaluation process.
The Committee will review the résumé and
qualifications of each candidate and determine whether the
candidate would add value to the Board. With respect to
candidates that are determined by the Committee to be potential
nominees, the Committee will obtain such background and
reference checks as it deems necessary, and the Chair of the
Committee and the Chairman of the Board will interview qualified
candidates. Once it is determined that a candidate is a good
prospect, the candidate will be invited to meet the other
members of the Committee. If the candidate is approved by the
Committee, the candidate will have an opportunity to meet with
the remaining Directors and the senior Management team. At the
end of this process, if the Committee determines that the
candidate will be able to add value to the Board and the
candidate expresses his or her interest in serving on the Board,
the Committee will then recommend to the Board that the
candidate stand for election by the stockholders or fill a
vacancy or newly created position on the Board.
The Committee will consider qualified nominees recommended by
stockholders who may submit recommendations to the Committee in
care of the Vice President and Corporate Secretary, Health Care
REIT, Inc., One
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SeaGate, Suite 1500, P.O. Box 1475, Toledo, Ohio,
43603-1475. To be considered by the Committee for inclusion in
the Companys proxy materials for the 2006 Annual Meeting,
stockholder nominations must be submitted by November 24, 2005
and must be accompanied by: (1) the name, age, business
address and, if known, residence address of the nominee;
(2) the principal occupation or employment of the nominee
for at least the last five years and a description of the
qualifications of the nominee; (3) the class or series and
number of shares of our stock that are owned beneficially or of
record by the nominee; and (4) any other information
relating to the nominee that is required to be disclosed in
solicitations for proxies for election of Directors under
Regulation 14A of the Securities Exchange Act of 1934, as
amended, together with a written statement from the nominee that
he or she is willing to be nominated and desires to serve, if
elected. Also, the stockholder making the nomination should
include: (1) his or her name and record address, together
with the name and address of any other stockholder known to be
supporting the nominee; and (2) the class or series and
number of shares of our stock that are owned beneficially or of
record by the stockholder making the nomination and by any other
supporting stockholders. Nominees for Director who are
recommended by stockholders will be evaluated in the same manner
as any other nominee for Director.
In addition, the By-Laws provide that a stockholder entitled to
vote for the election of Directors may make nominations of
persons for election to the Board at a meeting of stockholders
by complying with required notice procedures. Those procedures
include, but are not limited to, making the nomination by
written notice and delivering it to our Vice President and
Corporate Secretary not more than 120 days prior to the
meeting and not less than 45 days before the date on which
the Company first mailed or otherwise gave notice for the prior
years annual meeting of stockholders.
We may require that the proposed nominee furnish other
information as we may reasonably request to assist in
determining the eligibility of the proposed nominee to serve as
a Director. At any meeting of stockholders, the Chairman of the
Board may disregard the purported nomination of any person not
made in compliance with these procedures.
Planning Committee
The function of the Planning Committee is to assist Management
with identifying strategic opportunities for the Company. The
Planning Committee met once during the year ended
December 31, 2004. Each member of the Board is a member of
the Planning Committee.
COMMUNICATIONS WITH THE BOARD
Stockholders and other parties interested in communicating with
the Board of Directors or any specific Directors, including the
presiding Director of executive sessions, or the non-Management
Directors as a group, may do so by writing to the Board of
Directors, Health Care REIT, Inc., One SeaGate, Suite 1500,
P.O. Box 1475, Toledo, Ohio 43603-1475. The
Nominating/ Corporate Governance Committee has approved a
process for handling letters received by the Company and
addressed to members of the Board. Under that process, the Vice
President and Corporate Secretary of the Company reviews all
such correspondence and regularly forwards to the Board a
summary of the correspondence (with copies of the correspondence
attached) that, in the opinion of the Vice President and
Corporate Secretary, relates to the functions of the Board or
committees thereof or that she otherwise determines requires
their attention (for example, if the communication received
relates to questions, concerns or complaints regarding
accounting, internal control over financial reporting and
auditing matters, it will be summarized and forwarded to the
Chair of the Audit Committee for review). Directors may at any
time review a log of all correspondence received by the Company
that is addressed to members of the Board and request copies of
any such correspondence.
7
EXECUTIVE OFFICERS
The following information is furnished as to the Executive
Officers of the Company:
George L. Chapman, age 57. Mr. Chapman has
served as Chairman and Chief Executive Officer of the Company
since October 1996 and served as President of the Company from
September 1995 to May 2002. As described above, since 1992,
Mr. Chapman has served in various executive capacities with
the Company.
Raymond W. Braun, age 47. Mr. Braun has served
as President of the Company since May 2002, as well as Chief
Financial Officer since July 2000. Since January 1993,
Mr. Braun has served in various capacities, including Chief
Operating Officer, Executive Vice President, Assistant Vice
President and Assistant General Counsel of the Company.
Charles J. Herman, Jr., age 39. Mr. Herman
has served as Vice President and Chief Investment Officer of the
Company since May 2004 and served as Vice President of
Operations from August 2000 to May 2004. From 1998 to August
2000, Mr. Herman was a founding member and President of
Herman/ Turner Group, LLC, a health care consulting company.
Prior to that date, Mr. Herman was a founder and Chief
Operating Officer of Capital Valuation Group, a health care
consulting firm founded in 1991.
Scott A. Estes, age 34. Mr. Estes has served as
Vice President of Finance of the Company since April 2003. From
January 2000 to April 2003, Mr. Estes served as a Senior
Research Analyst and Vice President with Deutsche Bank
Securities. From January 1998 to December 1999, Mr. Estes
served as a Senior Equity Analyst and Vice President with Bank
of America Securities.
Michael A. Crabtree, age 48. Mr. Crabtree has
served as Treasurer of the Company since July 2000.
Mr. Crabtree served as Controller of the Company from 1996
to September 2002. From July 1993 to July 1996,
Mr. Crabtree was Chief Financial Officer of Westhaven
Services Co., a provider of pharmaceutical services to nursing
homes.
Erin C. Ibele, age 43. Ms. Ibele has served as
Vice President and Corporate Secretary of the Company since
January 1993. Since 1986, Ms. Ibele has served in various
capacities with the Company.
Jeffrey H. Miller, age 45. Mr. Miller has
served as Vice President and General Counsel of the Company
since July 2004. From 1996 to June 2004, Mr. Miller was a
partner in the real estate practice group of the law firm of
Shumaker, Loop & Kendrick, LLP.
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
The table below sets forth, as of March 11, 2005, unless
otherwise specified, certain information with respect to the
beneficial ownership of the Companys shares of common
stock by each person who is a Director of the Company, each
Named Executive Officer (as defined below in the section
Remuneration Compensation of Executive
Officers), and the Directors and Executive Officers of the
Company as a group. Unless noted below, each person has sole
voting and investment power regarding the Companys shares.
Also, unless noted below, the beneficial ownership of each
person represents less than 1% of the outstanding shares of
common stock of the Company.
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock | |
|
|
| |
|
|
Shares Held | |
|
Options Exercisable | |
|
Total Shares | |
Name of Beneficial Owner |
|
of Record(1) | |
|
Within 60 Days | |
|
Beneficially Owned | |
|
|
| |
|
| |
|
| |
William C. Ballard, Jr.
|
|
|
25,307 |
|
|
|
8,334 |
|
|
|
33,641 |
(2) |
Pier C. Borra
|
|
|
65,000 |
|
|
|
11,667 |
|
|
|
76,667 |
|
Raymond W. Braun
|
|
|
110,627 |
|
|
|
56,268 |
|
|
|
166,895 |
(3) |
George L. Chapman
|
|
|
235,343 |
|
|
|
78,332 |
|
|
|
313,675 |
(4) |
Michael A. Crabtree
|
|
|
36,339 |
|
|
|
66,920 |
|
|
|
103,259 |
|
Thomas J. DeRosa
|
|
|
4,607 |
|
|
|
3,334 |
|
|
|
7,941 |
|
Jeffrey H. Donahue
|
|
|
16,757 |
|
|
|
3,333 |
|
|
|
20,090 |
|
Scott A. Estes
|
|
|
12,553 |
|
|
|
1,203 |
|
|
|
13,756 |
|
Peter J. Grua
|
|
|
17,007 |
|
|
|
6,667 |
|
|
|
23,674 |
|
Charles J. Herman, Jr.
|
|
|
26,205 |
|
|
|
1,331 |
|
|
|
27,536 |
|
Sharon M. Oster
|
|
|
12,007 |
|
|
|
8,334 |
|
|
|
20,341 |
|
Bruce G. Thompson
|
|
|
196,710 |
|
|
|
38,334 |
|
|
|
235,044 |
|
R. Scott Trumbull
|
|
|
24,160 |
|
|
|
20,000 |
|
|
|
44,160 |
|
All Directors and Executive Officers as a group (15 persons)
|
|
|
836,965 |
|
|
|
314,676 |
|
|
|
1,151,641 |
(5) |
|
|
(1) |
Includes all restricted shares granted under the Companys
1995 Stock Incentive Plan or Stock Plan for Non-Employee
Directors beneficially owned by such Directors and Named
Executive Officers and all Directors and Executive Officers as a
group as of March 11, 2005. |
|
(2) |
Mr. Ballards total shares beneficially owned include
5,000 shares owned by his spouse. |
|
(3) |
Mr. Brauns total shares beneficially owned include
30,570 shares owned by his spouses revocable trust. |
|
(4) |
Mr. Chapmans total shares beneficially owned include
8,905 shares held in his sons names. |
|
(5) |
Total beneficial ownership represents 2.16% of the outstanding
shares of common stock of the Company. |
Based upon filings made with the Securities and Exchange
Commission in 2005, the only stockholders known to the Company
to be the beneficial owners of more than 5% of the
Companys common stock at March 11, 2005 are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent of | |
|
|
Common Stock | |
|
Outstanding | |
Beneficial Owner |
|
Beneficially Owned | |
|
Common Stock(4) | |
|
|
| |
|
| |
Cohen & Steers Capital Management, Inc.
|
|
|
4,885,425 |
(1) |
|
|
9.16% |
|
|
757 Third Avenue
New York, NY 10017 |
|
|
|
|
|
|
|
|
Barclays Global Investors, NA
|
|
|
3,435,038 |
(2) |
|
|
6.44% |
|
|
45 Fremont Street
San Francisco, CA 94105 |
|
|
|
|
|
|
|
|
Clarion CRA Securities, L.P.
|
|
|
3,267,677 |
(3) |
|
|
6.13% |
|
|
259 N. Radnor-Chester Road, Suite 205
Radnor, PA 19087 |
|
|
|
|
|
|
|
|
|
|
(1) |
Includes 4,855,425 shares over which Cohen &
Steers Capital Management, Inc., a wholly-owned subsidiary of
Cohen & Steers, Inc., has sole voting power and
4,885,425 shares over which it has sole dispositive power.
Cohen & Steers Capital Management, Inc. and
Cohen & Steers, Inc. made a joint filing with the
Securities and Exchange Commission. |
|
(2) |
Includes 384,798 shares beneficially owned by Barclays
Global Fund Advisors and 145,287 shares beneficially owned
by Barclays Global Investors, Ltd. In the aggregate, Barclays
Global Investors, NA and these related parties have sole voting
power over 3,058,531 shares and sole dispositive power over
3,435,038 shares. |
9
|
|
(3) |
Includes 2,953,160 shares over which Clarion CRA
Securities, L.P. has sole voting power and 3,267,677 shares
over which it has sole dispositive power. |
|
(4) |
The percentages set forth in the filings of these beneficial
owners have been revised to reflect their percentage ownership
as of March 11, 2005. |
Section 16(a) Compliance
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires the Companys Directors and Executive
Officers, and persons who own beneficially more than 10% of the
shares of common stock of the Company, to file reports of
ownership and changes of ownership with the Securities and
Exchange Commission and the New York Stock Exchange. Copies of
all filed reports are required to be furnished to the Company
pursuant to Section 16(a). Based solely on the reports
received by the Company and on written representations from
reporting persons, the Company believes that the Directors and
Executive Officers complied with all applicable filing
requirements during the fiscal year ended December 31, 2004.
REMUNERATION
Compensation of Executive Officers
The table below presents the total compensation awarded to,
earned by, or paid to the Chief Executive Officer of the Company
during 2002, 2003 and 2004 and the total compensation awarded,
earned, or paid during 2002, 2003 and 2004 to the Companys
four other most highly compensated Executive Officers who were
serving at the end of 2004, and whose total annual salary and
bonus exceeded $100,000 (together with the Chief Executive
Officer, the Named Executive Officers). Long-Term
Compensation includes long-term incentives, consisting of an
aggregate of 45,672 shares of restricted stock and stock
options to purchase 42,561 shares, which were granted
on January 24, 2005 to the Named Executive Officers for
performance during the fiscal year ended December 31, 2004.
Summary Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term Compensation | |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
Restricted | |
|
Securities | |
|
|
|
|
|
|
Annual Compensation | |
|
Stock | |
|
Underlying | |
|
|
Name and |
|
|
|
| |
|
Awards | |
|
Options | |
|
All Other | |
Principal Position |
|
Year | |
|
Salary ($) | |
|
Bonus ($) | |
|
($)(1) | |
|
(#) | |
|
Compensation ($) | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
George L. Chapman
|
|
|
2004 |
|
|
$ |
496,350 |
|
|
$ |
518,189 |
|
|
$ |
868,303 |
|
|
|
23,198 |
|
|
$ |
140,878 |
(2) |
|
Chairman and |
|
|
2003 |
|
|
|
481,893 |
|
|
|
534,667 |
|
|
|
950,109 |
|
|
|
42,262 |
|
|
|
137,075 |
|
|
Chief Executive Officer |
|
|
2002 |
|
|
|
467,857 |
|
|
|
502,122 |
|
|
|
963,189 |
|
|
|
104,395 |
|
|
|
128,221 |
|
|
Raymond W. Braun
|
|
|
2004 |
|
|
|
285,402 |
|
|
|
273,130 |
|
|
|
374,297 |
|
|
|
10,000 |
|
|
|
83,570 |
(3) |
|
President and |
|
|
2003 |
|
|
|
277,089 |
|
|
|
281,814 |
|
|
|
408,847 |
|
|
|
18,187 |
|
|
|
82,094 |
|
|
Chief Financial Officer |
|
|
2002 |
|
|
|
269,018 |
|
|
|
264,660 |
|
|
|
512,191 |
|
|
|
60,779 |
|
|
|
78,167 |
|
|
Charles J. Herman, Jr.
|
|
|
2004 |
|
|
|
218,545 |
|
|
|
259,289 |
|
|
|
133,276 |
|
|
|
3,561 |
|
|
|
28,000 |
(4) |
|
Vice President and |
|
|
2003 |
|
|
|
212,180 |
|
|
|
165,058 |
|
|
|
149,558 |
|
|
|
6,653 |
|
|
|
28,000 |
|
|
Chief Investment Officer |
|
|
2002 |
|
|
|
206,000 |
|
|
|
109,945 |
|
|
|
175,499 |
|
|
|
29,397 |
|
|
|
29,000 |
|
|
Scott A. Estes
|
|
|
2004 |
|
|
|
141,750 |
|
|
|
76,758 |
|
|
|
117,476 |
|
|
|
3,139 |
|
|
|
5,592 |
(5) |
|
Vice President Finance |
|
|
2003 |
|
|
|
91,558 |
(6) |
|
|
100,000 |
|
|
|
339,970 |
|
|
|
6,015 |
|
|
|
0 |
|
|
|
|
|
2002 |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
Michael A. Crabtree
|
|
|
2004 |
|
|
|
142,757 |
|
|
|
68,737 |
|
|
|
99,687 |
|
|
|
2,663 |
|
|
|
38,055 |
(7) |
|
Treasurer |
|
|
2003 |
|
|
|
138,599 |
|
|
|
65,982 |
|
|
|
98,618 |
|
|
|
4,386 |
|
|
|
43,405 |
|
|
|
|
|
2002 |
|
|
|
134,562 |
|
|
|
63,744 |
|
|
|
153,009 |
|
|
|
20,352 |
|
|
|
43,813 |
|
10
|
|
(1) |
The restricted stock awards vest ratably over five years. The
restricted stock awards set forth in the table are valued at the
time of grant. The table below shows the aggregate number of
shares of restricted stock held at December 31, 2004 plus
those granted on January 24, 2005 for performance during
the fiscal year ended December 31, 2004. The value of the
restricted stock held at December 31, 2004 is calculated by
multiplying the number of shares thereof by the closing market
price of $38.15 on the last trading day of 2004, and the value
of the restricted stock granted on January 24, 2005 is
calculated by multiplying the number of shares thereof by the
closing market price of $34.88 on the date of grant. Dividends
are paid on the restricted shares at the same rate as on all
other shares of common stock of the Company. Such dividends are
not included in the Summary Compensation Table. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of | |
|
|
|
|
|
|
|
|
January 24, 2005 | |
|
|
Number of Shares of | |
|
Value of Restricted | |
|
Restricted Stock | |
|
Restricted Stock | |
|
|
Restricted Stock at | |
|
Stock at | |
|
Grants on | |
|
Awards at Time | |
|
|
December 31, 2004 | |
|
December 31, 2004 | |
|
January 24, 2005 | |
|
of Grant | |
|
|
| |
|
| |
|
| |
|
| |
George L. Chapman
|
|
|
81,001 |
|
|
$ |
3,090,188 |
|
|
|
24,894 |
|
|
$ |
868,303 |
|
Raymond W. Braun
|
|
|
40,453 |
|
|
|
1,543,282 |
|
|
|
10,731 |
|
|
|
374,297 |
|
Charles J. Herman, Jr.
|
|
|
13,880 |
|
|
|
529,522 |
|
|
|
3,821 |
|
|
|
133,276 |
|
Scott A. Estes
|
|
|
9,165 |
|
|
|
349,645 |
|
|
|
3,368 |
|
|
|
117,476 |
|
Michael A. Crabtree
|
|
|
12,329 |
|
|
|
470,351 |
|
|
|
2,858 |
|
|
|
99,687 |
|
|
|
(2) |
All Other Compensation includes $28,000 that is
estimated to be contributed in connection with the
Companys Retirement Plan and Trust (RPT),
$5,100 of term life insurance premiums paid by the Company on
behalf of Mr. Chapman in 2004 and $107,778 of principal
otherwise payable to the Company that was forgiven in 2004
pursuant to the terms of the Companys Executive Loan
Program (ELP) established in connection with the
1995 Stock Incentive Plan. See Certain Relationships and
Related Transactions Executive Loan Program. |
|
(3) |
All Other Compensation includes $28,000 that is
estimated to be contributed in connection with the RPT, $2,260
of term life insurance premiums paid by the Company on behalf of
Mr. Braun in 2004 and $53,310 of principal otherwise
payable to the Company that was forgiven in 2004 pursuant to the
terms of the ELP. See Certain Relationships and Related
Transactions Executive Loan Program. |
|
(4) |
All Other Compensation includes $28,000 that is
estimated to be contributed in connection with the RPT. |
|
(5) |
All Other Compensation includes $5,592 that is
estimated to be contributed in connection with the RPT. |
|
(6) |
Mr. Estes joined the Company as Vice President of Finance
in April 2003 at an annual base salary of $135,000. |
|
(7) |
All Other Compensation includes $20,750 that is
estimated to be contributed in connection with the RPT, $775 of
term life insurance premiums paid by the Company on behalf of
Mr. Crabtree in 2004 and $16,530 of principal otherwise
payable to the Company that was forgiven in 2004 pursuant to the
terms of the ELP. See Certain Relationships and Related
Transactions Executive Loan Program. |
Employment Agreements
The Company and Mr. Chapman have entered into an employment
agreement that expires January 31, 2006, subject to
optional successive three-year renewal terms. Mr. Chapman
serves as the Companys Chairman and Chief Executive
Officer. Mr. Chapmans annual base salary was
increased to $516,204, effective January 1, 2005, and he is
eligible for discretionary annual bonuses and stated fringe
benefits. If Mr. Chapman is terminated without cause, he
would receive severance pay for the remaining term of the
agreement or for 24 months, whichever is greater. If he
resigns during the 12 months following a change in
corporate control (as defined in the employment
agreement), he would receive severance pay for 36 months.
These severance benefits would be made in a series of monthly
payments, in an amount equal to one-twelfth of the sum of his
annual base salary and the greater of the average of his annual
bonuses for the two fiscal years immediately preceding the
termination or change in corporate control or a minimum bonus
equal to 60% of his annual base salary. At
Mr. Chapmans election, the Company may instead be
required to make an immediate lump sum payment equal to the
present
11
value of such monthly payments, calculated using a discount rate
equal to the interest rate on 90-day Treasury Bills reported at
the date the election is delivered. Mr. Chapmans
stock option and restricted stock awards under the 1995 Stock
Incentive Plan would become vested and immediately exercisable
in the event of a change in corporate control, or upon his
death, disability or termination without cause. In addition, if
it is determined that any payment by the Company to
Mr. Chapman would be a golden parachute subject to excise
tax, the amount of the payments to him would be increased to
cover such excise tax.
The Company has entered into similar employment agreements with
certain other Executive Officers of the Company that expire
January 31, 2007, and provide for optional successive
two-year renewal terms, minimum annual salaries, stated
benefits, and severance payments in the event of a termination
without cause or a change in corporate control.
For those Executive Officers who have an employment agreement
with the Company, if any amounts forgiven under the Executive
Loan Program are subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code, the Company will
make a gross-up payment to the Executive Officers consistent
with the formula set forth in the Executive Officers then
current employment agreement with respect to excise taxes, if
any. See Certain Relationships and Related
Transactions Executive Loan Program below for
additional information about these loans.
1995 Stock Incentive Plan
The Companys 1995 Stock Incentive Plan authorizes the
Compensation Committee of the Board to grant eligible officers
and key employees of the Company awards consisting of options to
purchase shares of common stock, stock appreciation rights,
dividend equivalent rights, shares of restricted stock or
performance shares. The Compensation Committee has the
discretion to select the particular officers and key employees
who will receive awards.
Option Grants
The table below provides information regarding options to
purchase shares of common stock granted to the Named Executive
Officers. These option grants consist of stock options to
purchase 42,561 shares that were granted on
January 24, 2005 to the Named Executive Officers for
performance during the fiscal year ended December 31, 2004.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of | |
|
% of Total | |
|
|
|
|
|
|
|
|
Shares | |
|
Options | |
|
|
|
|
|
|
|
|
Underlying | |
|
Granted to | |
|
Exercise | |
|
|
|
|
|
|
Options | |
|
Employees | |
|
or Base | |
|
|
|
Grant | |
|
|
Granted | |
|
in Fiscal | |
|
Price | |
|
Expiration | |
|
Date | |
Name |
|
(#)(1)(2) | |
|
Year(3) | |
|
($/SH) | |
|
Date | |
|
Value($)(4) | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
George L. Chapman
|
|
|
23,198 |
|
|
|
38 |
% |
|
$ |
34.88 |
|
|
|
1/24/15 |
|
|
$ |
289,432 |
|
Raymond W. Braun
|
|
|
10,000 |
|
|
|
16 |
% |
|
|
34.88 |
|
|
|
1/24/15 |
|
|
|
124,766 |
|
Charles J. Herman, Jr.
|
|
|
3,561 |
|
|
|
6 |
% |
|
|
34.88 |
|
|
|
1/24/15 |
|
|
|
44,429 |
|
Scott A. Estes
|
|
|
3,139 |
|
|
|
5 |
% |
|
|
34.88 |
|
|
|
1/24/15 |
|
|
|
39,164 |
|
Michael A. Crabtree
|
|
|
2,663 |
|
|
|
4 |
% |
|
|
34.88 |
|
|
|
1/24/15 |
|
|
|
33,225 |
|
|
|
(1) |
All of the options granted vest in five, substantially equal
installments, commencing in January 2006 and ending in January
2010. |
|
(2) |
The options were granted on January 24, 2005. The terms of
the options permit broker assisted cashless exercises and
payment of the option exercise price by delivery of previously
owned shares. The options include dividend equivalent rights
(DERs) which provide for the accrual of deferred
cash payments equivalent to dividends on the shares covered by
such options, at the same rate as dividends are paid on the
Companys common stock for each dividend payment date
between the date the options were granted and the date the
options are exercised or expire. Such DERs will be paid out in
cash only after the corresponding option has become vested. |
12
|
|
(3) |
Option grants consist of stock options to
purchase 42,561 shares that were granted on
January 24, 2005 to the Named Executive Officers for
performance during the fiscal year ended December 31, 2004. |
|
(4) |
The options were granted on January 24, 2005 and the
Black-Scholes option valuation methodology was used based on
estimates as of such date. In using such methodology, the
following variables were used: risk-free interest rate of 4.25%,
dividend yields of 0.00%, expected lives of seven years, and
expected volatility of 22.82%. The actual value, if any, that a
Named Executive Officer may realize will depend upon the excess
of the closing market price over the exercise price on the date
the option is exercised and, because the options include DERs,
the total dividends paid by the Company. There is no assurance
that the value realized by a Named Executive Officer will be at
or near the value estimated by this calculation. |
Aggregated Option Exercises in Last Fiscal Year and Fiscal
Year End Option Values*
The following table provides information regarding option
exercises with respect to shares of common stock by each of the
Named Executive Officers and the values of such Named Executive
Officers unexercised options:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares | |
|
|
|
Number of Shares Underlying | |
|
Value of Unexercised | |
|
|
Acquired | |
|
|
|
Unexercised Options | |
|
In-The-Money Options | |
|
|
on | |
|
Value | |
|
at Fiscal Year End | |
|
at Fiscal Year End(2) | |
|
|
Exercise | |
|
Realized | |
|
| |
|
| |
Name |
|
(#) | |
|
($)(1) | |
|
Exercisable(#) | |
|
Unexercisable(#) | |
|
Exercisable($) | |
|
Unexercisable($) | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
George L. Chapman
|
|
|
251,398 |
|
|
$ |
3,325,101 |
|
|
|
84,000 |
|
|
|
235,297 |
|
|
$ |
1,226,025 |
|
|
$ |
2,858,771 |
|
Raymond W. Braun
|
|
|
127,156 |
|
|
|
1,438,904 |
|
|
|
51,000 |
|
|
|
124,560 |
|
|
|
903,535 |
|
|
|
1,559,837 |
|
Charles J. Herman, Jr.
|
|
|
37,130 |
|
|
|
548,426 |
|
|
|
21,000 |
|
|
|
61,670 |
|
|
|
368,235 |
|
|
|
810,016 |
|
Scott A. Estes
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
6,015 |
|
|
|
0 |
|
|
|
6,917 |
|
Michael A. Crabtree
|
|
|
12,000 |
|
|
|
233,880 |
|
|
|
61,971 |
|
|
|
45,867 |
|
|
|
1,017,929 |
|
|
|
615,709 |
|
|
|
(1) |
Value at exercise is the difference between the closing market
price on the date of exercise less the exercise price per share,
multiplied by the number of shares acquired on exercise. |
|
(2) |
Calculated based on the closing market price on the last trading
day of 2004 multiplied by the number of applicable shares
covered by in-the-money options, less the total exercise price
for such shares. |
|
|
* |
Options at fiscal year end do not include stock options to
purchase 42,561 shares that were granted on
January 24, 2005 to the Named Executive Officers for
performance during the fiscal year ended December 31, 2004. |
Supplemental Executive Retirement Plan
Effective January 1, 2001, the Compensation Committee of
the Board of Directors adopted a Supplemental Executive
Retirement Plan (the SERP), a non-qualified defined
benefit pension plan that provides certain executives selected
by the Compensation Committee with supplemental deferred
retirement benefits. The SERP provides an opportunity for
participants to receive retirement benefits that cannot be paid
under the Companys tax-qualified 401(k) Profit Sharing
Plan because of the restrictions imposed by ERISA and the
Internal Revenue Code of 1986, as amended.
The SERP benefit is designed to provide a benefit payable at
retirement at age 65 or older equal to 35% of the
participants average compensation at retirement, offset by
the actuarial equivalent of the benefit provided by the
Companys qualified plan. Since the SERP benefit accrues
over the career of the participant, if the participant retires
before his or her 65th birthday, the benefit will be subject to
a reduction for proration of length of participation and a
further reduction based upon the number of months the
participants retirement occurs prior to his or her 65th
birthday. Average compensation is defined under the SERP to mean
the average of the three highest years of salary and bonus
compensation considering all years completed prior to the date
of retirement.
The actuarial equivalent of the benefit provided by the
Companys qualified plan represents the value of Company
contributions to the participants qualified retirement
plan accounts projected to age 65 and expressed as a
monthly benefit payable for life. The projected value of Company
contributions is determined by using all
13
contributions made on behalf of the participant for plan years
completed prior to the date of retirement and a 7.5% interest
rate compounded annually.
In the event of a change in control of the Company, if the
employment of the chief executive officer of the Company is
terminated, either voluntarily or involuntarily for any reason,
he or she will be entitled to receive the full retirement
benefit, unreduced by the proration for length of participation
or the early retirement reduction. With respect to other
participants, if their employment is terminated after a change
in control, either voluntarily or involuntarily for any reason,
they will be entitled to receive their early retirement benefits
as of the date of termination calculated by adding an additional
five years of participation (up to but not beyond age 65)
to the length of their participation proration, but with no
reduction for early retirement.
The SERP is unfunded and all benefits will be paid from the
general assets of the Company. Eligibility is limited to a
select group of Management or highly compensated employees whose
qualified plan benefits are limited by ERISA and the Internal
Revenue Code of 1986, as amended. The Compensation Committee has
selected George L. Chapman and Raymond W. Braun to participate
in the SERP. The following table illustrates, for a range of
average compensation, the anticipated annual benefit if the
participant retired and chose to receive benefits at age 65
calculated prior to any offset for the Company contributions to
the participants qualified plan:
|
|
|
|
|
Average Compensation |
|
Age 65 | |
|
|
| |
$ 500,000
|
|
$ |
175,000 |
|
$ 600,000
|
|
$ |
210,000 |
|
$ 700,000
|
|
$ |
245,000 |
|
$ 800,000
|
|
$ |
280,000 |
|
$ 900,000
|
|
$ |
315,000 |
|
$1,000,000
|
|
$ |
350,000 |
|
$1,100,000
|
|
$ |
385,000 |
|
$1,200,000
|
|
$ |
420,000 |
|
$1,300,000
|
|
$ |
455,000 |
|
$1,400,000
|
|
$ |
490,000 |
|
Based on current compensation, ages and years of participation,
if Mr. Chapman and Mr. Braun would have elected early
retirement at the end of 2004, Mr. Chapman and
Mr. Braun would have been eligible for an annual benefit of
$73,845 and $0, respectively, prior to any offset from their
qualified retirement plan accounts.
Compensation of Directors
Each Director receives an annual fee of $20,000 for his or her
services. In addition, each Director receives a fee of $1,500
for each Board meeting attended. Members of the Audit,
Compensation, Executive and Nominating/ Corporate Governance
Committees receive $1,000 for each meeting attended and members
of the Investment and Planning Committees receive $1,200 and
$1,500, respectively, for each such committee meeting attended.
The Chairs of the Audit, Compensation and Nominating/ Corporate
Governance Committees receive an additional fee of
$5,000 per year.
Directors fees are not paid to Mr. Chapman. The fees
paid to all other Directors totaled $303,000 in 2004.
During 1997, the Company adopted the Stock Plan for Non-Employee
Directors. Pursuant to this Plan, each continuing Director not
employed by the Company was granted 1,000 shares of
restricted stock and options to purchase 5,000 shares
of common stock in 2002. In 2003, each non-employee Director
received stock options to purchase 5,000 shares and a
grant of 1,500 shares of restricted stock. In 2004, each
non-employee Director received a grant of 2,000 shares of
restricted stock and no stock options and, upon joining the
Board, Mr. DeRosa received an option to
purchase 10,000 shares of common stock. On
January 24, 2005, each non-employee Director received a
grant of restricted stock worth $70,000 and no stock options.
All of the options have an option exercise price equal to the
fair value of the shares at the time the options were granted.
The options granted to a Director under this Plan may not be
exercised more than 10 years after the
14
date the options are granted. Option awards generally become
exercisable in three equal installments on the first three
anniversaries of the date of grant, so that one-third of the
shares subject to the options will first become available for
purchase by the Director on each of these anniversaries.
Restricted stock awards granted prior to January 24, 2005
generally become vested on the six month anniversary of the date
of the grant. The restricted stock awards granted on
January 24, 2005 vest in three equal installments on the
first three anniversaries of the date of the grant. The other
terms of these awards are set forth in detail in the Stock Plan
for Non-Employee Directors.
Equity Compensation Plan Information
The following table sets forth certain information, as of
December 31, 2004, concerning shares of common stock
authorized for issuance under all of the Companys equity
compensation plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) | |
|
|
|
|
|
|
Number of Securities | |
|
|
|
|
|
|
Remaining Available for | |
|
|
(a) | |
|
(b) | |
|
Future Issuance Under | |
|
|
Number of Securities to | |
|
Weighted Average | |
|
Equity Compensation Plans | |
|
|
be Issued Upon Exercise | |
|
Exercise Price of | |
|
(Excluding Securities | |
|
|
of Options | |
|
Outstanding Options | |
|
Reflected in Column (a)) | |
|
|
| |
|
| |
|
| |
Equity compensation plans approved by stockholders
|
|
|
1,014,511 |
|
|
$ |
24.86 |
|
|
|
734,069 |
(1) |
Equity compensation plans not approved by stockholders
|
|
|
None |
|
|
|
N/A |
|
|
|
None |
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
|
1,014,511 |
|
|
$ |
24.86 |
|
|
|
734,069 |
(1) |
|
|
(1) |
This number includes 624,320 shares of common stock
reserved for future issuance under the 1995 Stock Incentive
Plan, as amended, and 109,749 shares of common stock
reserved for future issuance under the Stock Plan for
Non-Employee Directors, as amended. The number of shares
reserved for future issuance under the 1995 Stock Incentive Plan
may increase automatically each year if the total number of
outstanding shares of common stock increases by more than 5%
during any 12 calendar months by reason of equity offerings. The
number of shares reserved for future issuance under the Stock
Plan for Non-Employee Directors increases automatically each
year by a number of shares equal to the number of non-employee
Directors serving on the Board of Directors each January 1 times
6,000 shares (up to a maximum of 90,000 shares). If
the Health Care REIT, Inc. 2005 Long-Term Incentive Plan is
approved by the Companys stockholders at the Annual
Meeting, no future awards will be granted under the 1995 Stock
Incentive Plan or the Stock Plan for Non-Employee Directors and
no shares of common stock reserved for future issuance under
such plans will be granted under the 2005 Long-Term Incentive
Plan. See Proposal 2 Approval of the
Health Care REIT, Inc. 2005 Long-Term Incentive Plan.
There are no shares of common stock reserved for future issuance
under the Health Care REIT, Inc. 1985 Incentive Stock Option
Plan, as amended. |
Report of the Compensation Committee
The Compensation Committee of the Board is responsible for
determining the nature and amount of compensation for the
Companys seven Executive Officers. The Committee currently
consists of three non-employee Directors, Pier C. Borra, William
C. Ballard, Jr. and Jeffrey H. Donahue. During the year
ended December 31, 2004, the Compensation Committee of the
Board met five times, and also met twice in January 2005.
The Compensation Committee has developed the Companys
executive compensation program to have a strong
pay-for-performance foundation. The Compensation Committee
believes that compensation for the Chief Executive Officer and
other Executive Officers should be generally competitive with
other REITs, in order to retain and attract top management
talent, and should be linked to the achievement of the
Companys short and long-term financial and strategic
goals. The Compensation Committee utilizes the services of
Frederic W. Cook & Co., a nationally recognized
executive compensation consulting firm, to assist the
Compensation Committee in reviewing and developing the
Companys executive compensation program.
15
The Compensation Committee annually assesses the competitiveness
of compensation for the Companys Executive Officers by
reviewing competitive market data compiled by the independent
consultant from companies in multiple peer groups. This year,
the compensation of the Executive Officers was compared to
executive compensation practices within a group of REITs
focusing in the health care industry, as well as a group of
REITs in a variety of asset classes of similar size to the
Company. The Compensation Committee confirmed that the
Companys executive compensation program is appropriate
relative to the market.
The three key components of the Companys Executive Officer
compensation program are annual base salaries, annual incentive
compensation and long-term incentive awards under the
Companys 1995 Stock Incentive Plan.
Base Salaries. The Executive Officers base salaries
are established in their employment agreements and the
Compensation Committee may adjust those base salaries from time
to time, as it deems appropriate. For 2004, following
discussions with the Chief Executive Officer and the
Companys compensation consultant, the Compensation
Committee approved 4% salary increases for the Executive
Officers, with larger increases for Messrs. Braun and Estes
and Ms. Ibele, to keep the compensation levels of the
Executive Officers competitive with the pay levels that other
peer-group REITs provide for similar executive officer positions.
Annual Incentive Compensation. Annual incentive
compensation payments to Executive Officers are based on the
achievement of pre-established corporate and individual goals
for the performance year. Eighty percent of the incentive
compensation opportunity for Messrs. Chapman and Braun, and
60% of the incentive compensation opportunity for the other
Executive Officers, are based on objective corporate performance
goals, such as the Companys overall performance against
its business plan and changes in stockholder value. The
remainder of each executives incentive compensation
opportunity is based on other pre-established performance
factors. For each executive, a range of earnings opportunity is
established at the beginning of the performance period
corresponding to three levels of performance (a threshold,
target and high performance level) for the annual cash bonus. In
January 2004, the Compensation Committee approved a set of
corporate performance goals to be used in setting incentive
compensation for Executive Officers. The 2004 corporate
performance goals set by the Compensation Committee for the
annual incentive program related to (1) funds from
operations (FFO) per share (a standard measure of financial
earnings performance for REITs); (2) net real estate
investments; and (3) maintenance of credit ratings. The
Companys 2004 performance met or exceeded the target level
for each of these performance measures.
Long-Term Incentive Compensation. The 1995 Stock
Incentive Plan has been the Companys primary vehicle for
providing long-term incentive compensation to Executive
Officers, and is intended to enable the Company to provide its
Executive Officers and other key employees with competitive
equity-based compensation in order to align Management and
stockholder interests, enhance focus on the creation of
stockholder value, and support the long-term retention of key
contributors. Under the terms of the Companys 1995 Stock
Incentive Plan, the Compensation Committee has authority to
approve stock option, restricted stock or other equity-based
incentive awards to Executive Officers and key employees and to
determine the terms of these awards.
Similar to the annual incentive program, long-term incentive
awards for Executive Officers are based on the achievement of
pre-established corporate and individual goals for the
performance years. For all Executive Officers, 75% of the value
of the long-term incentive compensation award is based on
corporate performance goals set by the Compensation Committee
for the long-term incentive program, which related to
(1) three-year total stockholder return relative to the
NAREIT Index; (2) net real estate investments; and
(3) dividend payout ratio. The remaining 25% of the value
of the long-term award is based on a qualitative assessment of
individual performance. The Companys 2004 performance met
or exceeded the target level for each of the above-mentioned
corporate performance measures.
At its January 2005 meeting, the Compensation Committee approved
long-term incentive awards for Executive Officers of the
Company. The Compensation Committee determined that 75% of the
value of the long-term incentive compensation earned by each
Executive Officer for 2004 should be granted in the form of
shares of restricted stock, with the remainder delivered as
stock options with dividend equivalent rights, valued at
$12.48 per share. Dividend equivalent rights entitle the
holder to receive a cash payment equal to the dividend paid on a
share of the Companys stock. Options with dividend
equivalent rights are effective long-term
16
incentives and are especially appropriate for a REIT, since they
reward total stockholder return, not just share price
appreciation. Based on the attainment of performance goals
during the year, the Committee approved a specific dollar amount
of long-term incentive compensation value for each executive,
and then converted these dollar amounts into a number of
restricted shares and a number of options with dividend
equivalent rights, based on the 75%/25% mix discussed above and
the share price at the time of grant. For 2004 performance, the
Committee granted 48,359 options with dividend equivalent
rights, each valued at $12.48 per share, and
51,893 shares of restricted stock, each valued at
$34.88 per share, to the Executive Officers. Both the
options and restricted shares vest ratably over five years, and
cash payments attributable to dividend equivalent rights will
accrue and be paid out only when the corresponding option has
vested.
CEO Compensation. The Compensation Committee increased
Mr. Chapmans annual base salary for 2005 from
$496,350 to $516,204 effective January 1, 2005. In addition
to his base salary, Mr. Chapman was eligible to receive an
annual bonus for 2004 based on a percentage of his annual base
salary, with the percentage earned to depend on achievement of
the performance goals established by the Committee at its
January 2004 meeting. Based upon the Companys achievement
of the pre-established annual incentive goals, as well as the
achievement of individual goals, Mr. Chapman was awarded an
annual bonus of $518,189 (104.4% of his 2004 annual base
salary). Mr. Chapman was also eligible to receive long-term
incentive compensation for 2004 based on the achievement of the
long-term incentive goals, as outlined above. In January 2005,
Mr. Chapman was granted 23,198 options with dividend
equivalent rights and 24,894 restricted shares. The Compensation
Committee believes that the amount of Mr. Chapmans
compensation is consistent with general compensation levels
within the health care REIT sector, as well as the broader
public REIT industry, and appropriate in view of the
Companys performance in 2004.
Section 162(m). The Compensation Committee has
considered the anticipated tax treatment to the Company
regarding the compensation and benefits paid to the Executive
Officers of the Company under Section 162(m) of the
Internal Revenue Code of 1986, as amended. Although the Company
does not pay corporate income taxes because it is a real estate
investment trust, the Compensation Committee will strive to
provide Executive Officers with attractive, well-designed
compensation packages that will generally preserve the
deductibility of such payments for the Company. Certain types of
compensation payments and their deductibility depend upon the
timing of an Executive Officers vesting or exercise of
previously granted rights. Moreover, interpretations of any
changes in the tax laws and other factors beyond the
Compensation Committees control may affect the
deductibility of certain compensation payments. As mentioned
above, however, since the Company does not pay corporate income
taxes, the loss of this deduction would not have adverse
consequences for the Company. If deductibility becomes an issue,
the Compensation Committee will consider various alternatives to
preserve the deductibility of compensation payments to Executive
Officers and benefits to the extent reasonably practical and to
the extent consistent with its other compensation objectives,
but reserves the right to make incentive-based awards not exempt
from these limits where such awards are appropriate and will not
have a material impact on stockholder value.
The Compensation Committee is committed to maintaining a
compensation program that appropriately aligns the
Companys executive compensation with corporate performance
and the interests of its stockholders. The Compensation
Committee periodically reviews its program in order to make any
further changes it considers necessary to achieve such
objectives.
Pier C. Borra, Compensation Committee Chair
William C. Ballard, Jr., Compensation Committee Member
Jeffrey H. Donahue, Compensation Committee Member
March 11, 2005
Stockholder Return Performance Presentation
Set forth below is a line graph comparing the yearly percentage
change and the cumulative total stockholder return on the
Companys shares against the cumulative total return of the
S & P Composite-500 Stock Index and the NAREIT Equity
Index. One hundred fifty four companies comprise the NAREIT
Equity Index. The Index consists of REITs identified by NAREIT
as equity (those REITs which have at least 75% of equity
investments).
17
Upon written request sent to the Vice President and Corporate
Secretary, Health Care REIT, Inc., One SeaGate, Suite 1500,
P.O. Box 1475, Toledo, Ohio, 43603-1475, the Company will
provide stockholders with the names of the component issuers.
The data are based on the closing prices as of December 31
for each of the five years. 1999 equals $100 and dividends are
assumed to be reinvested.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/31/99 | |
|
12/31/00 | |
|
12/31/01 | |
|
12/31/02 | |
|
12/31/03 | |
|
12/31/04 | |
|
S & P 500
|
|
|
100.00 |
|
|
|
90.90 |
|
|
|
80.09 |
|
|
|
62.39 |
|
|
|
80.29 |
|
|
|
89.02 |
|
|
Company
|
|
|
100.00 |
|
|
|
124.16 |
|
|
|
206.43 |
|
|
|
249.32 |
|
|
|
358.88 |
|
|
|
405.95 |
|
|
NAREIT Equity
|
|
|
100.00 |
|
|
|
126.37 |
|
|
|
143.97 |
|
|
|
149.47 |
|
|
|
204.98 |
|
|
|
269.70 |
|
|
Except to the extent the Company specifically incorporates this
information by reference, the foregoing Report of the
Compensation Committee and Stockholder Return Performance
Presentation shall not be deemed incorporated by reference by
any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933, as
amended, or under the Securities Exchange Act of 1934, as
amended. This information shall not otherwise be deemed filed
under such acts.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Executive Loan Program
Pursuant to the provisions of the Companys 1995 Stock
Incentive Plan, the Company instituted an Executive Loan Program
in 1999, pursuant to which the Company made six recourse loans
to each of Messrs. Chapman, Braun and Crabtree and
Ms. Ibele, Executive Officers of the Company, to assist
them with paying taxes related to the vesting of restricted
stock awards made under the 1995 Stock Incentive Plan. The
Executive Loan Program was discontinued on July 30, 2002 as
a result of the passage of the Sarbanes-Oxley Act of 2002. No
additional loans will be made to the Executive Officers. The
passage of this act did not affect any of the features of the
existing loans.
At March 11, 2005, the balance of the loans made to
Messrs. Chapman, Braun and Crabtree and Ms. Ibele were
$146,357, $73,170, $23,914 and $29,694, respectively. The
highest amount due during 2004 by each of Messrs. Chapman,
Braun and Crabtree and Ms. Ibele, was $276,762, $137,794,
$43,051 and $57,143, respectively.
Each loan is evidenced by a promissory note, is secured by a
pledge of the shares of the common stock of the Company that
vested and gave rise to the tax liability with respect to which
the loan was made to the Executive Officer and bears interest at
the mid-term applicable federal rate established by the Internal
Revenue
18
Service at the time of the loan. The interest rates for the six
loans range from 3.94% to 6.21% and interest is payable
annually. Each note becomes due and payable five years after the
date of the note; however, on each anniversary date of each
note, if the Executive Officer continues to be employed by the
Company, one-fifth of the original principal amount due under
the note is forgiven. If the Executive Officers employment
is involuntarily terminated for cause before a note is fully
paid or if the Executive Officer voluntarily terminates his or
her employment with the Company (other than by reason of death,
disability or as a result of a change in corporate control)
before a note is fully paid, the outstanding balance becomes due
and payable in 90 days. The entire outstanding amount due
under the note will be forgiven in the event of a change in
corporate control in the Company or the death, disability or
involuntary termination of the Executive Officer by the Company
without cause.
Finally, if any amounts forgiven are subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code, the
Company will make a gross-up payment to the Executive Officers
consistent with the formula set forth in the Executive
Officers then current employment agreement with respect to
excise taxes. In 2004, $199,409 was forgiven pursuant to the
terms of the Executive Officers existing loans.
Other Relationships and Related Transactions
In 1984, the Company provided a direct loan and a credit
enhancement to a partnership in connection with an assisted
living facility. Mr. Thompson, a Director of the Company,
owns 50% of First Toledo Corporation, which serves as a general
partner of the partnership. An affiliate of Mr. Thompson,
Kingston HealthCare Company, operates the facility. The
partnership structure facilitated industrial development bond
financing, and a credit enhancement was provided in the form of
the Companys agreement to purchase the facility or the
bonds in the event of default by the partnership. At
December 31, 2004, the Companys contingent obligation
under the agreement to purchase totaled $3,195,000. For the
fiscal year ended 2004, the Company received $87,000 in
connection with its contingent obligation pursuant to the
agreement to purchase. For the fiscal year ended 2004, the
Company recorded $682,400 of interest income.
At the time this transaction was entered into, it was approved
by a majority of Directors unaffiliated with the transaction.
For the fiscal year ended December 31, 2004, revenues from
related parties totaled $769,400, or 0.03%, of the revenues
(including the revenues from discontinued operations) of the
Company.
PROPOSAL 2 APPROVAL OF THE HEALTH CARE REIT,
INC.
2005 LONG-TERM INCENTIVE PLAN
The Board adopted the Health Care REIT, Inc. 2005 Long-Term
Incentive Plan (the 2005 Incentive Plan) on
January 24, 2005, subject to approval by the stockholders
of the Company at the Annual Meeting. If approved by the
stockholders of the Company, the 2005 Incentive Plan will
replace the Companys 1995 Stock Incentive Plan and the
Stock Plan for Non-Employee Directors (the Current
Plans).
The Board is unanimously recommending this proposal because it
believes strongly in encouraging officers, key employees and
non-employee directors of the Company to acquire a proprietary
interest in the growth, development and financial success of the
Company. Through stock-based and other performance-based
compensation, participants will be motivated to contribute to
the Companys future success and prosperity, thus enhancing
the value of the Company for the benefit of all stockholders.
The 2005 Incentive Plan will also enable the Company to continue
to attract and retain individuals of exceptional managerial
talent upon whom, in large measure, the sustained progress,
growth, and profitability of the Company depends.
The 2005 Incentive Plan reserves 2,200,000 shares of common
stock for issuance. As of March 11, 2005, there were
653,933 shares of common stock reserved for future issuance
under the Current Plans. If the 2005 Incentive Plan is not
approved, the 1995 Stock Incentive Plan will terminate on
May 8, 2005 and the Stock Plan for Non-Employee Directors
will expire on January 20, 2007, and no awards may be
granted under these plans on or after such dates. If the 2005
Incentive Plan is approved, no future awards will be granted
under the Current Plans and no shares of common stock reserved
for future issuance under the Current Plans will be granted
under the 2005 Incentive Plan.
19
The 2005 Incentive Plan is more flexible and contemporary than
the Current Plans. For example, the 1995 Stock Incentive Plan
does not permit the Company to issue Other Stock Unit Awards (as
defined below). In addition, the 2005 Incentive Plan permits
awards to non-employee directors, officers and key employees,
whereas the 1995 Stock Incentive Plan only permits awards to
officers and employees and the Stock Plan for Non-Employee
Directors only permits awards to non-employee directors. The
Company believes that a consolidated plan will make it easier
for stockholders to review and approve the Companys equity
incentive program.
The following is a summary of the material terms of the 2005
Incentive Plan and is qualified in its entirety by reference to
the 2005 Incentive Plan, a copy of which is attached to this
Proxy Statement as Appendix A.
Summary of the 2005 Incentive Plan
Administration. The Compensation Committee of the Board
of Directors (the Committee) will administer the
2005 Incentive Plan. The Committee may make grants to
participants under any or a combination of the various types of
awards that are authorized under the 2005 Incentive Plan. The
Committee will have full power and authority to determine when
and to whom awards will be granted, including the type, amount,
form of payment, limitations, restrictions, exercise periods and
other terms and conditions of each award, consistent with the
provisions of the 2005 Incentive Plan. In addition, the
Committee has the authority to establish rules and regulations
for the administration of the 2005 Incentive Plan. The Committee
may delegate to a committee of one or more directors, or to the
extent permitted by law, to one or more officers, the right to
grant awards to participants who are neither officers nor
non-employee directors of the Company.
The Committee consists of at least three directors, each of whom
is (1) a non-employee director within the meaning of
Rule 16b-3 under the Securities Exchange Act of 1934, as
amended (the Exchange Act), (2) an
outside director within the meaning of
Section
162(m)(4)(C)(i) of the Internal Revenue Code (the
Code), and (3) an independent
director for purposes of the rules and regulations of the
New York Stock Exchange.
Shares Available Under the 2005 Incentive Plan. The
number of shares of common stock of the Company reserved for
issuance under the 2005 Incentive Plan will be
2,200,000 shares, which may be authorized and unissued
shares or shares held by the Company as treasury stock. As
described below under the heading Adjustments, this
maximum number of shares is subject to adjustment to reflect any
change or changes in the outstanding common stock of the Company
by reason of any stock dividend, recapitalization,
reorganization, merger, consolidation, split-up, combination or
any similar transaction, in order to prevent substantial
dilution or enlargement of the rights intended to be provided
under the 2005 Incentive Plan.
If any shares of common stock subject to any award or to which
an award relates, granted under the Current Plans or the 2005
Incentive Plan, are forfeited, cancelled or surrendered, or
terminate unexercised, except by reason of the exercise of a
related SAR (as defined below in Types of Awards),
the shares of common stock previously set aside for such awards
will again be available for future issuance under the 2005
Incentive Plan. In addition, shares of common stock tendered or
withheld to exercise options and shares of common stock withheld
or tendered to satisfy tax liabilities arising from option
exercise or vesting of other awards will again be available for
future issuance under the 2005 Incentive Plan. However, no
shares of common stock reserved for future issuance under the
Current Plans will be granted under the 2005 Incentive Plan.
The market value of a share of common stock of the Company was
$33.25 on March 11, 2005, which was the closing price of
the common stock on the New York Stock Exchange on that date.
Eligibility. Any officer, key employee or non-employee
director of the Company, who is selected by the Committee or its
designee, is eligible to receive an award under the 2005
Incentive Plan. The Company currently has eight non-employee
directors and 40 full-time employees.
Types of Awards. The 2005 Incentive Plan authorizes the
grant of options to purchase shares of common stock, stock
appreciation rights (SARs), dividend equivalent
rights, restricted stock, performance awards and other stock
unit awards. Awards may be granted alone, in addition to, or in
combination with any other award granted under the 2005
Incentive Plan. All such awards will be evidenced by a written
award agreement.
20
Options. The Committee may grant a participant options
that entitle the participant to purchase a specified number of
shares of common stock at a price equal to or greater than the
fair market value of a share of common stock on the date of
grant (Options). The option price is payable at the
time of exercise (1) in cash, (2) by tendering shares
of common stock currently owned by the participant with a fair
market value equal to the option price, (3) if permitted by
the applicable award agreement, by delivery of an irrevocable
notice of exercise, payment of the option price by the
participants broker and an irrevocable instruction to the
Company to deliver the shares of common stock promptly to the
broker for the participants account, or (4) in any
other form acceptable to the Company. The Committee has the
discretion to determine when each Option granted will become
exercisable and to prescribe any vesting schedule limiting the
exercisability of the Options. The vesting schedule may be
subject to certain exceptions, including, without limitation,
exceptions relating to retirement, disability, or death of a
participant or a change in corporate control of the Company.
Except as provided in the award agreement, Options will not be
exercisable before one year from the date of grant and may not
be exercised more than ten years from the date of grant.
Without the approval of the Companys stockholders, no
Option may be amended to reduce its option price, no Option may
be cancelled and replaced with an Option having a lower option
price or another award, and no other action may be taken with
respect to an Option that would be treated as a
repricing under New York Stock Exchange rules and
regulations.
Options granted under the 2005 Incentive Plan may be Options to
employee participants that are intended to qualify as
Incentive Stock Options within the meaning of
Section 422 of the Code or Options that are not intended to
so qualify (Nonstatutory Options). The aggregate
fair market value of the shares of the Companys common
stock subject to Incentive Stock Options that first become
exercisable by a participant during any calendar year may not
exceed $100,000. The maximum number of shares of common stock
that may be granted as Incentive Stock Options under the 2005
Incentive Plan is 2,200,000. In addition, for any Incentive
Stock Option granted to a participant who owns more than 10% of
the voting power of all classes of capital stock of the Company,
the option price may not be less than 110% of the fair market
value of a share of common stock on the date of grant and the
Option may not be exercised more than five years after the date
of grant.
Dividend Equivalent Rights. A recipient of an award may,
in the discretion of the Committee, be entitled to receive cash,
stock or other property dividends, or cash payments in amounts
equivalent to cash, stock or other property dividends on shares
of common stock (Dividend Equivalent Rights) with
respect to the number of shares of common stock covered by the
award, and the Committee may provide that such amounts, if any,
will be deemed to have been reinvested in additional shares of
common stock or otherwise reinvested.
SARs. Participants may be granted tandem SARs (consisting
of SARs with related Options), SARs in connection with any other
award and stand-alone SARs. Upon exercise of an SAR, a
participant is entitled to an amount equal to the excess of the
fair market value of a share of common stock on the date of
exercise over the grant price of the SAR (or the option price of
the related Option). This amount may be paid in cash, shares of
common stock, other property or any combination of the
foregoing, as determined by the Committee. Tandem SARs may be
exercised only at the time and only to the extent that the
related Option is exercisable and the exercise of an SAR will
result in the surrender of the related Option. Except as
provided in an award agreement, SARs will not be exercisable
before the expiration of one year from the date of grant and the
exercise price of an SAR will not be less than 100% of the fair
market value of a share of common stock on the date of grant.
The Committee generally will not be allowed to lower the
exercise price of an SAR after it is granted.
Restricted Stock. The holder of restricted stock will own
shares of common stock subject to restrictions imposed by the
Committee (Restricted Stock). The participant is
entitled immediately to voting, dividend and other ownership
rights in the shares. The grant of Restricted Stock may be made
without any payment by the participant other than the rendering
of services.
During a period established by the Committee and set forth in
the participants award agreement, the participant will not
be permitted to sell, transfer, pledge or assign shares of
Restricted Stock. Generally, awards of Restricted Stock will
have a restriction period of not less than three years. However,
the Committee may provide for the lapse of such restrictions in
installments where deemed appropriate. Upon termination of a
participants service during the restriction period, any
unvested shares of Restricted Stock may be cancelled,
accelerated, or
21
continued, as provided in the applicable award agreement, or, in
the absence of such a provision, as the Committee may determine.
The participants award agreement or the participants
employment agreement, if any, may provide that in the event of a
participants retirement, disability, or death, or in the
event of a change in corporate control, the restrictions imposed
on the shares of Restricted Stock will lapse immediately.
Performance Awards. The Committee may grant performance
awards that become payable to a participant upon the achievement
of specified management objectives during a period of time
established by the Committee (Performance Awards).
The performance period may not be shorter than twelve months or
longer than five years. To the extent earned, the Performance
Awards will be paid to the participant at the time and in the
manner determined by the Committee, but not before the end of
the relevant performance period, in cash or in shares of common
stock or any combination thereof. The specified performance
period may be subject to earlier termination in the event of a
change in corporate control of the Company or other similar
event. Management objectives will be utilized in order to
satisfy the requirements of Section 162(m) of the Code.
Other Stock Unit Awards. Other awards of shares of common
stock and other awards that are valued or based on shares of
common stock or other property may be granted to participants
under the 2005 Incentive Plan either alone, in addition to, or
as a form of payment in settlement of other awards under the
2005 Incentive Plan (Other Stock Unit Awards). Other
Stock Unit Awards will be paid only in shares of common stock
and will otherwise be subject to the discretion of the
Committee. Except for certain limited situations, Other Stock
Unit Awards to participants will be subject to restrictions
imposed by the Committee for a period of not less than three
years from the date of grant (but permitting pro rata vesting
over such time); provided, however, that such restrictions will
not be applicable to any grants of Other Stock Unit Awards in
payment of Performance Awards, or grants of Other Stock Unit
Awards on a deferred basis.
Change in Corporate Control. The terms of an award
agreement may provide that, in the event of a change in
corporate control (as defined in the 2005 Incentive Plan and
subject to certain limitations and restrictions described in the
2005 Incentive Plan), (1) Options and SARs immediately vest
and become fully exercisable, (2) the restrictions on
Restricted Stock will lapse immediately and the Restricted Stock
will become free of all restrictions and limitations and become
fully vested, (3) all Performance Awards will be considered
to be earned and payable, and any deferral or other restriction
will lapse and such Performance Awards will be immediately
settled or distributed, and (4) the restrictions and
deferral limitations and other conditions applicable to any
other awards will lapse, and such other awards shall become free
of all restrictions, limitations or conditions and become fully
vested and transferable.
Section 162(m) of the Internal Revenue Code. Awards
of Restricted Stock, Performance Awards or Other Stock Unit
Awards that are intended to qualify as performance-based
compensation within the meaning of Section 162(m) of
the Code will be subject to the attainment of certain management
objectives established by the Committee. These management
objectives must be based on one or any combination of the
following performance measures: gross real estate investments;
net real estate investments; net revenues; dividend payout
ratio; dividend growth; dividend yield; dividend payments;
maintenance of credit ratings; pre-tax income before allocation
of corporate overhead and bonus; earnings per share; net income;
funds from operations; funds available for distribution; cash
available for distribution; division, group or corporate
financial goals; return on stockholders equity; return on
assets; attainment of strategic and operational initiatives;
total stockholder return; market share; gross profits; earnings
before taxes; earnings before interest and taxes; earnings
before interest, taxes, depreciation and amortization; economic
value-added models; comparisons with various stock market
indices; reductions in costs; and/or return on invested capital
of the Company or any division or business unit of the Company.
These performance goals may be based solely upon the performance
of the Company or a division or business unit of the Company, or
based upon the performance of the Company relative to the
performance of other companies or upon comparisons of any of the
indicators of performance relative to other companies. The
Committee may also exclude the impact of an event or occurrence
which the Committee determines should appropriately be excluded,
including (a) restructurings, discontinued operations,
extraordinary items, and other unusual or non-recurring charges,
(b) an event either not directly related to the operations
of the Company or not within the reasonable control of the
Companys Management, or (c) a change in accounting
standards required by generally accepted accounting principles.
22
Award Limitations. No participant may be granted
(1) Options or SARs during any 36-month period with respect
to more than 500,000 shares of common stock or
(2) Restricted Stock, Performance Awards and/or Other Stock
Unit Awards that are denominated in shares of common stock in
any 36-month period with respect to more than
200,000 shares (the Limitations). In addition,
the maximum dollar value payable to any participant in any
12-month period with respect to Performance Awards and/or Other
Stock Unit Awards that are valued with reference to property
other than shares of common stock is $4,000,000. If an award is
cancelled, the cancelled award will continue to be counted
toward the applicable Limitations.
Transferability. Except as provided in the 2005 Incentive
Plan or in an award agreement, no award under the 2005 Incentive
Plan is transferable by a participant except by will or the laws
of descent and distribution or pursuant to a qualified domestic
relations order, and such award may be exercised during the life
of the participant only by the participant or the
participants guardian or legal representative. The
Committee may, in its discretion, permit a participant to
transfer all or a portion of his or her awards to members of his
or her immediate family, to trusts established for the benefit
of members of his or her immediate family, or to family limited
partnerships in which the participant and immediate family
members are the only partners, provided that the participant may
receive no consideration for such transfers, and that such
transferred award shall be subject to all of the terms and
conditions of the 2005 Incentive Plan and the award agreement
relating to the transferred award.
Adjustments. The Committee will adjust the number of
shares of common stock that may be issued under the 2005
Incentive Plan, the number of shares of common stock subject to
Options granted, the option price of such Options, the amount
credited to a participants account pursuant to Dividend
Equivalent Rights, the number of SARs granted in conjunction
with an Option and the number of shares of Restricted Stock
granted, and make any and all other adjustments deemed
appropriate by the Committee in such manner as the Committee
deems appropriate to prevent substantial dilution or enlargement
of the rights granted to a participant in the event of changes
in the outstanding common stock resulting from stock dividends,
stock splits, combinations of shares, recapitalizations,
mergers, consolidations, spin-offs, reorganizations,
liquidations, the issuance of additional shares (including
private placements), issuances of rights or warrants, and
similar transactions or events.
Amendments. The 2005 Incentive Plan may be amended from
time to time by the Board of Directors. The Board of Directors
will obtain stockholder approval of any amendment for which
stockholder approval is required under Section 422 of the
Code, Rule 16b-3 under the Exchange Act, or the stockholder
approval requirements imposed on the Company by the rules and
regulations of the New York Stock Exchange, including an
amendment that would (1) increase the aggregate number of
shares of common stock that may be issued under the 2005
Incentive Plan, (2) extend the term of the 2005 Incentive
Plan, or (3) extend the period during which an Option may
be exercised.
Term. The 2005 Incentive Plan will terminate on the tenth
anniversary of the date the Companys stockholders approve
the 2005 Incentive Plan, unless terminated earlier by the Board,
or extended by an amendment approved by the Companys
stockholders. No awards may be granted under the 2005 Incentive
Plan after the termination date. However, unless otherwise
expressly provided in an applicable award agreement, any award
granted under the 2005 Incentive Plan prior to termination may
extend beyond the end of such period through the awards
normal expiration date.
Federal Income Tax Consequences
The following discussion briefly summarizes certain United
States federal income tax aspects of Options, SARs, Restricted
Stock, Performance Awards, Other Stock Unit Awards and Dividend
Equivalent Rights granted pursuant to the 2005 Incentive Plan.
The summary is not intended to be exhaustive, and state, local
and foreign tax consequences may differ.
Incentive Stock Options. A participant who is granted an
Incentive Stock Option will not recognize income on the grant or
exercise of the Option. However, the difference between the
exercise price and the fair market value of the common stock on
the date of exercise is an adjustment item for purposes of the
alternative minimum tax. If a participant does not exercise an
Incentive Stock Option within certain specified periods after
termination of employment, the participant will recognize
ordinary income on the exercise of the Incentive Stock Option in
the same manner as on the exercise of a Nonstatutory Option, as
described below.
23
Nonstatutory Options, SARs, Performance Awards and Dividend
Equivalent Rights. A participant generally is not required
to recognize income on the grant of a Nonstatutory Option, SAR,
Performance Award or Dividend Equivalent Right. Instead,
ordinary income generally is required to be recognized on the
date the Nonstatutory Option or SAR is exercised, or in the case
of a Performance Award or Dividend Equivalent Right, on the date
of payment of such award in cash and/or shares of common stock
or other property. In general, the amount of ordinary income
required to be recognized is: (i) in the case of a
Nonstatutory Option, an amount equal to the excess, if any, of
the fair market value of the shares of common stock on the date
of exercise over the exercise price; and (ii) in the case
of an SAR, Performance Award or Dividend Equivalent Right, the
amount of cash and the fair market value of any shares of common
stock or other property received.
Restricted Stock. Shares of Restricted Stock awarded
under the 2005 Incentive Plan will be subject to a substantial
risk of forfeiture for the period of time specified in the award
agreement. Unless a participant who is granted shares of
Restricted Stock makes an election under Section 83(b) of
the Code as described below, the participant generally is not
required to recognize ordinary income on the award of Restricted
Stock. Instead, on the date the substantial risk of forfeiture
lapses, the participant will be required to recognize ordinary
income in an amount equal to the excess, if any, of the fair
market value of the shares of Restricted Stock on such date over
the amount, if any, paid for such shares. If a participant makes
a Section 83(b) election to recognize ordinary income on
the date the shares of Restricted Stock are awarded, the amount
of ordinary income required to be recognized is an amount equal
to the excess, if any, of the fair market value of the shares on
the date of award over the amount, if any, paid for such shares.
In such case, the participant will not be required to recognize
additional ordinary income when the substantial risk of
forfeiture lapses.
Other Stock Unit Awards. The tax consequences of a grant
of an Other Stock Unit Award will depend on the nature of the
award. Generally, a participant will be required to include in
ordinary income the amount of cash or stock that is paid to the
participant pursuant to the award in the year of payment (less
any amount paid by the participant in respect of the award).
Gain or Loss on Sale or Exchange of Shares. In general,
gain or loss from the sale or exchange of shares of common stock
granted or awarded under the 2005 Incentive Plan will be treated
as capital gain or loss, provided that the shares are held as
capital assets at the time of the sale or exchange. However, if
certain holding period requirements are not satisfied at the
time of a sale or exchange of shares of common stock acquired
upon exercise of an Incentive Stock Option (a
disqualifying disposition), a participant generally
will be required to recognize ordinary income upon such
disposition.
Deductibility by Company. The Company generally is not
allowed a deduction in connection with the grant or exercise of
an Incentive Stock Option. However, if a participant is required
to recognize ordinary income as a result of a disqualifying
disposition, the Company will be entitled to a deduction equal
to the amount of ordinary income so recognized. In general, in
the case of a Nonstatutory Option (including an Incentive Stock
Option that is treated as a Nonstatutory Option, as described
above), an SAR, a Performance Award, a Dividend Equivalent
Right, a Restricted Stock award, or an Other Stock Unit Award,
the Company will be allowed a deduction in an amount equal to
the amount of ordinary income recognized by the participant.
Performance-Based Compensation. Subject to certain
exceptions, Section 162(m) of the Code disallows federal
income tax deductions for compensation paid by a publicly-held
corporation to certain executives to the extent the amount paid
to an executive exceeds $1,000,000 for the taxable year. The
2005 Incentive Plan has been designed to allow the grant of
awards that qualify under an exception to the deduction limit of
Section 162(m) for performance-based
compensation.
New Tax Rules Affecting Nonqualified Deferred
Compensation Plans. Awards under the 2005 Incentive Plan may
be subject to new federal income tax rules that apply to
nonqualified deferred compensation plans that were
enacted as part of the American Jobs Creation Act of 2004, and
which became effective on January 1, 2005. Failure to
comply with the new rules or qualify for an exemption in respect
of an award under the 2005 Incentive Plan could result in
significant adverse tax results to the grantee of such award,
including immediate taxation of the award upon vesting (and
immediate taxation upon vesting of the grantees awards
under certain other plans), a penalty tax of 20% of the amount
of income so recognized, plus a special interest payment. The
2005 Incentive
24
Plan is designed to allow, but does not require, the grant of
awards which are intended to comply with the new deferred
compensation rules or qualify for an exemption.
New Plan Benefits
No awards have been authorized under the 2005 Incentive Plan and
no awards will be made under the 2005 Incentive Plan before the
Annual Meeting. The 2005 Incentive Plan contains many rights and
features that are similar to those in effect during 2004 under
the Current Plans. However, as noted above, the 2005 Incentive
Plan authorizes the use of Other Stock Unit Awards that have not
been previously authorized under the Current Plans. In 2005, the
Committee will conduct a full review of the executive
compensation program, including the use of equity and
performance awards, and may decide to use a different mix of
awards than it did in 2004. Thus, grants made under the Current
Plans in 2004 would not be an accurate measure of the types and
amounts of awards that would be available under the 2005
Incentive Plan. Consequently, it is not reasonably possible to
provide the data required to be included in a New Plan Benefits
Table.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS
THAT YOU VOTE FOR THE APPROVAL OF THE 2005 INCENTIVE
PLAN. The affirmative vote of a majority of the shares of
voting securities present in person or by proxy at the Annual
Meeting will be required for such approval.
PROPOSAL 3 RATIFICATION OF THE APPOINTMENT
OF THE
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The firm of Ernst & Young LLP served as the
Companys independent registered public accounting firm for
the year ended December 31, 2004 and has been selected by
the Company to serve in such capacity for the year ending
December 31, 2005. Ernst & Young LLP has served as
the Companys independent registered public accounting firm
since the Companys inception in 1970. Although the
submission of this matter for approval by stockholders is not
legally required, the Board believes that such submission
follows sound business practice and is in the best interests of
the stockholders. If this appointment is not ratified by the
holders of a majority of the shares of voting securities present
in person or by proxy at the Annual Meeting, the Directors will
consider the selection of another accounting firm. If such a
selection were made, it may not become effective until 2006
because of the difficulty and expense of making a substitution.
Representatives of the firm of Ernst & Young LLP are
expected to be present at the Annual Meeting and will have an
opportunity to make a statement if they so desire and will be
available to respond to appropriate questions.
Fees for professional services provided by Ernst &
Young LLP in each of the last two fiscal years, in each of the
following categories, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31 | |
|
|
| |
|
|
2004 | |
|
2003 | |
|
|
| |
|
| |
Audit Fees
|
|
$ |
451,400 |
|
|
$ |
271,945 |
|
Audit-Related Fees
|
|
|
43,609 |
|
|
|
35,705 |
|
Tax Fees:
|
|
|
|
|
|
|
|
|
|
Tax Compliance
|
|
|
199,927 |
|
|
|
90,014 |
|
|
Tax Planning and Tax Advice
|
|
|
168,819 |
|
|
|
126,069 |
|
All Other Fees
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
|
Totals
|
|
$ |
863,755 |
|
|
$ |
523,733 |
|
Audit Fees include fees associated with the annual audit, the
review of the Companys quarterly reports on Form 10-Q
and services that generally only the independent registered
public accounting firm can provide such as comfort letters,
consents and assistance with review of documents to be filed
with or furnished to the Securities and Exchange Commission.
Audit-Related Fees include fees associated with assurance and
related services that are traditionally performed by an
independent accountant, including advisory services related to
readiness for Sarbanes-Oxley Section 404 internal control
requirements and consultations concerning financial accounting
and
25
reporting standards. Tax Fees include fees for tax compliance
and tax planning and tax advice services. Tax compliance
involves the preparation of original and amended tax returns,
claims for refund and tax payment-planning services. Tax
planning and tax advice encompass a diverse range of services,
including assistance with tax audits and appeals, tax advice
related to mergers and acquisitions, and requests for rulings or
technical advice from taxing authorities. None of the foregoing
fees were paid for services, the sole business purpose of which
was tax avoidance, or the tax treatment of which would not be
supported by the Internal Revenue Code and related regulations.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS
THAT YOU VOTE FOR THE RATIFICATION OF
ERNST & YOUNG LLP. The affirmative vote of a
majority of the shares of voting securities present in person or
by proxy at the Annual Meeting will be required for such
ratification.
PRE-APPROVAL POLICIES AND PROCEDURES
The Audit Committee has developed policies and procedures
concerning its pre-approval of the performance of audit and
non-audit services for the Company by Ernst & Young
LLP. At its annual January planning meeting, the Audit Committee
gives its prior approval and establishes annual fee limits for
the following categories of services that it desires the
independent registered public accounting firm to undertake:
audit services, audit-related services, tax compliance services
and tax planning and tax advice services. Further, particular
subcategories of audit-related services, tax compliance services
and tax planning and tax advice services, by type of activity,
are identified and annual fee estimates specified for each
activity. Subcategories of service and annual fee limits may
also be specified for subcategories of audit services if desired
by the Committee. To the extent that the limits established for
any of these categories or subcategories of service are not
sufficient, the Audit Committee reviews and approves additional
services as necessary or appropriate in advance of the service
being provided. All other non-audit services must be
pre-approved on an individual engagement basis. If there is any
question as to whether a proposed service has been pre-approved,
Management and the independent registered public accounting firm
together must contact the Audit Committee to obtain
clarification or, if necessary, pre-approval.
All of the audit services, audit-related services, tax
compliance services and tax planning and tax advice services
provided to the Company by Ernst & Young LLP during the
year ended December 31, 2004 were pre-approved by the Audit
Committee.
Where specific Audit Committee approval of services is required,
for services with a cost of less than $25,000, the Chair of the
Audit Committee may pre-approve the engagement subject to a
presentation to the full Audit Committee at its next regularly
scheduled meeting. For such services with a cost exceeding
$25,000, the full Audit Committee is required to pre-approve the
services in advance of the activity.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee oversees the Companys financial
reporting process on behalf of the Board of Directors.
Management has the primary responsibility for the financial
statements and the reporting process, including the system of
internal controls. In fulfilling its oversight responsibilities
this past year, the Committee reviewed the audited financial
statements with Management, including a discussion of the
quality, not just the acceptability, of the accounting
principles, the reasonableness of significant judgments and the
clarity of disclosures in the financial statements.
The Committee reviewed with the independent registered public
accounting firm, which is responsible for expressing an opinion
on the conformity of the audited financial statements with
generally accepted accounting principles, its judgments as to
the quality, not just the acceptability, of the Companys
accounting principles and such other matters as are required to
be discussed with the Committee under generally accepted
auditing standards (including Statement on Auditing Standards
No. 61, as amended by Statement on Auditing Standards Nos.
89 and 90). In addition, the Committee has discussed with the
independent registered public accounting firm such firms
independence from Management and the Company, including the
matters in the written disclosures
26
required by the Independence Standards Board (including
Independence Standards Board Standard No. 1), and
considered the compatibility of non-audit services with such
firms independence.
The Committee discussed with the Companys independent
registered public accounting firm the overall scope and plans
for its audit. The Committee met with such firm, with and
without Management present, to discuss the results of its
examinations, its evaluations of the Companys internal
controls, and the overall quality of the Companys
financial reporting. The Committee held five meetings during the
year ended December 31, 2004.
In reliance on the reviews and discussions referred to above,
the Committee recommended to the Board of Directors (and the
Board has approved) that the audited financial statements be
included in the Annual Report on Form 10-K for the year
ended December 31, 2004 for filing with the Securities and
Exchange Commission. The Committee and the Board have also
recommended, subject to stockholder ratification, the selection
of Ernst & Young LLP as the Companys independent
registered public accounting firm.
Sharon M. Oster, Audit Committee Chair
Thomas J. DeRosa, Audit Committee Member
R. Scott Trumbull, Audit Committee Member
March 11, 2005
VOTING PROCEDURES
All votes will be tabulated by the inspector of election
appointed for the meeting, who will separately tabulate
affirmative and negative votes, abstentions and broker
non-votes. Abstentions will be counted as present or represented
for purposes of determining the presence or absence of a quorum
for the Annual Meeting and will be included in vote totals.
Accordingly, abstentions will have the same effect as negative
votes. A broker non-vote occurs when a broker or
other nominee holding shares for a beneficial owner votes on one
proposal, but does not vote on another proposal because the
broker does not have discretionary voting power for the other
proposal and has not received instructions from the beneficial
owner. Broker non-votes will be counted as present or
represented for purposes of determining the presence or absence
of a quorum for the Annual Meeting, but will not be counted for
purposes of determining the number of shares entitled to vote
with respect to any proposal for which the broker lacks
discretionary authority.
OTHER MATTERS
Management is not aware of any matters to be presented for
action at the Annual Meeting other than the matters set forth
above. If any other matters do properly come before the meeting
or any adjournment thereof, it is intended that the persons
named in the proxy will vote in accordance with their judgment
on such matters.
STOCKHOLDERS SHARING THE SAME ADDRESS
In accordance with a notice sent to stockholders who share a
single address, we are sending only one Annual Report and one
Notice of Meeting and Proxy Statement to that address unless we
receive contrary instructions from any stockholder at that
address. This procedure, known as householding, is
designed to reduce printing costs, mailing costs and fees.
Stockholders residing at such an address who wish to receive
separate copies of the Annual Report or Proxy Statement in the
future and stockholders who are receiving multiple copies of
these materials now and wish to receive just one set of
materials in the future, should write to the Vice President and
Corporate Secretary, Health Care REIT, Inc., One SeaGate,
Suite 1500, P.O. Box 1475, Toledo, Ohio, 43603-1475 or
call (419) 247-2800 to request a change. The Annual Report
and Proxy Statement are also available on the Companys Web
site at www.hcreit.com.
27
STOCKHOLDER PROPOSALS FOR PRESENTATION AT THE 2006 ANNUAL
MEETING
The Board of Directors requests that any stockholder proposals
intended for inclusion in the Companys proxy materials for
the 2006 Annual Meeting be submitted to Erin C. Ibele, Vice
President and Corporate Secretary of the Company, in writing no
later than November 24, 2005. Unless the Company has been
given written notice by February 14, 2006 of a stockholder
proposal to be presented at the 2006 Annual Meeting other than
by means of inclusion in the Companys proxy materials for
the Meeting, persons named in the proxies solicited by the Board
of Directors for the Meeting may use their discretionary voting
authority to vote against the proposal.
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BY THE ORDER OF THE BOARD OF DIRECTORS |
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Erin C. Ibele |
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Vice President and Corporate Secretary |
28
APPENDIX A
HEALTH CARE REIT, INC.
2005 LONG-TERM INCENTIVE PLAN
The purpose of this Health Care REIT, Inc. 2005 Long-Term
Incentive Plan is to promote the growth and profitability of
Health Care REIT, Inc. (the Company) by providing
officers, key employees and non-employee directors of the
Company with incentives to achieve long-term corporate
objectives, to assist the Company in attracting and retaining
officers, key employees and non-employee directors of
outstanding competence, and to provide such individuals with an
opportunity to acquire an equity interest in the Company.
The Plan was approved by the Board of Directors on
January 24, 2005. The Plan shall be effective on the date
it is approved by the Companys stockholders at the Annual
Meeting of Stockholders currently scheduled to be held in May
2005.
2.1 Award Agreement
shall mean any written agreement, contract or other
instrument or document evidencing any Option, Dividend
Equivalent Right, SAR, Restricted Stock award, Performance
Share, Other Stock Unit Award, or any other right, interest or
option relating to Common Stock granted by the Committee
hereunder.
2.2 Board shall
mean the Board of Directors of the Company.
2.3 Change in Corporate
Control shall mean any event described in
Section 10.1.
2.4 Code shall
mean the Internal Revenue Code of 1986, as the same shall be
amended from time to time.
2.5 Committee
shall mean the Compensation Committee of the Board,
consisting of no fewer than three directors, each of whom is
(a) a Non-Employee Director within the meaning
of Rule 16b-3 (or any successor rule) of the Exchange Act,
(b) an outside director within the meaning of
Section 162(m)(4)(C)(i) of the Code, and (c) an
independent director for purposes of the rules and
regulations of the New York Stock Exchange.
2.6 Common Stock
shall mean the common stock, par value $1.00 per share,
of the Company, except as provided in Section 11.2 of the
Plan.
2.7 Covered Employee
shall mean a covered employee within the meaning
of Section 162(m)(3) of the Code, or any successor
provision thereto.
2.8 Date of Grant
shall mean the date specified by the Committee on which a
grant of Options, Dividend Equivalent Rights, SARs, Performance
Shares or Other Stock Unit Awards or a grant or sale of
Restricted Stock shall become effective, which shall not be
earlier than the date on which the Committee takes action with
respect thereto.
2.9 Disability
shall mean the inability of a Participant to engage in any
substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected
to result in death or which has lasted or can be expected to
last for a continuous period of not less than 12 months,
and the permanence and degree of which shall be supported by
medical evidence satisfactory to the Committee.
2.10 Dividend Equivalent
Rights shall mean the Dividend Equivalent Rights which
may be granted pursuant to Article V of the Plan.
2.11 Exchange Act
shall mean the Securities Exchange Act of 1934, as amended
from time to time.
2.12 Fair Market
Value shall mean the fair market value of a share of
Common Stock as determined by the Committee by reference to the
closing price on the New York Stock Exchange on the Date of
Grant, or the
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trading day preceding the Date of Grant (or if there were no
reported prices on such date, on the last preceding date on
which the prices were reported) or, if the Company is not then
listed on the New York Stock Exchange, the Fair Market Value
shall be determined by the Committee in its sole discretion
using appropriate criteria.
2.13 ISOs shall
mean stock options granted by the Company that have been
designated and are intended to qualify as incentive stock
options under Section 422 of the Code.
2.14 Management
Objectives shall mean the achievement of performance
objectives established by the Committee pursuant to this Plan
for Participants who have received awards where such performance
objectives are utilized in order to satisfy the requirements of
Section 162(m) of the Code.
2.15 Nonstatutory
Options shall mean stock options that are not intended
to qualify as ISOs.
2.16 Option Price
shall mean, with respect to any Option, the amount
designated in a Participants Award Agreement as the price
per share he or she will be required to pay to exercise the
Option and acquire the shares subject to such Option.
2.17 Options
shall mean the rights to purchase shares of Common Stock
granted pursuant to Article IV of this Plan, including both
ISOs and Nonstatutory Options.
2.18 Parent
shall mean any corporation which, on the date of
determination, qualifies as a parent corporation of the Company
under Section 425(e) of the Code.
2.19 Participant
shall mean any officer, key employee or non-employee
director of the Company who is selected by the Committee to
receive an award under the Plan.
2.20 Performance
Award shall mean any Award of Performance Shares or
Performance Units granted pursuant to Article VIII of this
Plan.
2.21 Performance
Period shall mean, with respect to a Performance
Award, a period of time established pursuant to
Article VIII of this Plan within which the Management
Objectives relating thereto are to be achieved.
2.22 Performance
Share shall mean any grant pursuant to
Article VIII of a unit valued by reference to a designated
number of shares of Common Stock, which value may be paid to the
Participant by delivery of such property as the Committee shall
determine, including cash, shares of Common Stock, other
property, or any combination thereof, upon achievement of such
Management Objectives during the Performance Period as the
Committee shall establish at the time of grant or thereafter.
2.23 Performance
Unit shall mean any grant pursuant to
Article VIII of a unit valued by reference to a designated
amount of property (including cash) other than shares of Common
Stock, which value may be paid to the Participant by delivery of
such property as the Committee shall determine, including cash,
shares of Common Stock, other property, or any combination
thereof, upon achievement of such Management Objectives during
the Performance Period as the Committee shall establish at the
time of such grant or thereafter.
2.24 Plan shall
mean this Health Care REIT, Inc. 2005 Long-Term Incentive Plan,
as the same may be amended from time to time.
2.25 Prior Plans
shall mean, collectively, the 1985 Incentive Stock Option
Plan of the Company, as amended, the 1995 Stock Incentive Plan
of the Company, as amended, and the Stock Plan for Non-Employee
Directors of the Company, as amended.
2.26 Restricted
Stock shall mean shares of Common Stock that are
issued to Participants and made subject to restrictions in
accordance with Article VII of the Plan.
2.27 Rule 16b-3
shall mean Rule 16b-3 promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act.
2.28 SARs shall
mean stock appreciation rights granted pursuant to
Article VI of the Plan.
2.29 Subsidiary
shall mean any corporation which, on the date of
determination, qualifies as a subsidiary corporation of the
Company under Section 425(f) of the Code.
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2.30 Substitute
Awards shall mean awards granted or shares of Common
Stock issued by the Company in assumption of, or in substitution
or exchange for, awards previously granted, or the right or
obligation to make future awards, by a corporation acquired by
the Company or any Subsidiary or with which the Company or any
Subsidiary combines.
2.31 Ten Percent
Stockholder shall mean any Participant who at the time
an ISO is granted owns (within the meaning of
Section 425(d) of the Code) more than ten percent of the
voting power of all classes of capital stock of the Company.
3.1 ADMINISTRATION.
(a) The Plan shall be administered by the Committee. As
provided in the Companys Amended and Restated By-Laws, the
members of the Committee shall be designated by the Board of
Directors and shall serve at the discretion of the Board of
Directors.
(b) The Committee shall have the authority, subject to the
provisions of the Plan, in its sole discretion, from time to
time: (i) to grant awards to Participants, as provided for
in this Plan; (ii) to prescribe such limitations,
restrictions and conditions upon any such awards as the
Committee shall deem appropriate; (iii) to determine the
periods during which Options may be exercised; (iv) to
modify, cancel, or replace any prior Options or other awards and
to amend the relevant Award Agreements with the consent of the
affected Participants, including amending such Award Agreements
to amend vesting schedules, or extend exercise periods as it may
deem necessary (provided that, the Committee shall not have the
authority, unless stockholder approval is obtained, to reprice
Options currently outstanding and Options that may be
outstanding in the future, either directly, by lowering the
Option Price for a previously granted Option award, or
indirectly, by canceling outstanding Options and subsequently
replacing or regranting such Options with a lower Option Price);
and (v) to interpret the Plan, to adopt, amend and rescind
rules and regulations relating to the Plan, and to make all
other determinations and to take all other action necessary or
advisable for the implementation and administration of the Plan.
(c) All actions taken by the Committee shall be final,
conclusive and binding upon any Participant. Notwithstanding the
foregoing or anything else to the contrary in the Plan, any
action or determination by the Committee specifically affecting
or relating to an award to a non-employee director shall require
the approval of the Board of Directors.
(d) The Committee may delegate to a committee of one or
more directors of the Company, or to the extent permitted by
law, to one or more officers, including, without limitation, the
chief executive officer of the Company, or a committee of
officers, the right to grant awards to Participants who are
neither officers nor non-employee directors of the Company and
to cancel or suspend awards to Participants who are neither
officers nor non-employee directors of the Company.
(e) In granting awards and determining their form and
amount, the Committee shall give consideration to the functions
and responsibilities of the Participant, his or her potential
contributions to the profitability and sound growth of the
Company and such other factors as the Committee may, in its
discretion, deem relevant.
4.1 TERMS AND CONDITIONS. Options
may be granted hereunder to Participants either alone or in
addition to other awards granted under the Plan. The grant of an
Option to a Participant shall be evidenced by a written Award
Agreement in substantially the form approved by the Committee.
Such Option shall be subject to the terms and conditions of the
Award Agreement, the Participants employment agreement, if
any, the following express terms and conditions, and to such
other terms and conditions, not inconsistent with the terms of
this Plan, as the Committee may deem appropriate.
(a) Shares Covered. The Committee, or its designee pursuant
to Section 3.1(d), shall, in its discretion, determine the
number of shares of Common Stock to be covered by the Options
granted to any Participant.
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(b) Exercise Period. The term of each Option shall be for
such period as the Committee shall determine, but for not more
than ten years from the Date of Grant thereof, except in the
event of death or Disability (as set forth in an Award
Agreement); provided, however, that the foregoing exception
shall not apply to Options designated as ISOs. The Committee
shall also have the discretion to determine when each Option
granted hereunder shall become exercisable, and to prescribe any
vesting schedule limiting the exercisability of such Options as
it may deem appropriate. The vesting schedule may be subject to
certain exceptions, including, without limitation, exceptions
relating to retirement, Disability, or death of a Participant or
a Change in Corporate Control.
(c) Option Price. Other than in connection with Substitute
Awards, the Option Price shall not be less than 100% of the Fair
Market Value of a share of Common Stock on the Date of Grant.
Other than as provided in Section 11.2, the Committee shall
not be permitted, without stockholder approval, to
(i) lower the Option Price per share of an Option after it
is granted, (ii) cancel an Option when the Option Price per
share exceeds the Fair Market Value of the underlying shares in
exchange for another award (other than in connection with
Substitute Awards), or (iii) take any other action with
respect to an Option that may be treated as a repricing under
the rules and regulations of the New York Stock Exchange.
(d) Exercise of Options. A Participant may exercise his or
her Options from time to time by written notice to the Company
of his or her intent to exercise the Options with respect to a
specified number of shares. The specified number of shares will
be issued and transferred to the Participant upon receipt by the
Company of (i) such notice and (ii) payment in full
for such shares in the manner provided in the Award Agreement,
and (iii) receipt of any payments required to satisfy the
Companys tax withholding obligations pursuant to
Section 13.3. Except under certain circumstances
contemplated by Article VIII or as may be set forth in an
Award Agreement with respect to retirement after age 65,
Disability, death of a Participant, or a Change in Corporate
Control, Options will not be exercisable before the expiration
of one year from the Date of Grant.
(e) Payment of Option Price upon Exercise. Each Award
Agreement shall provide that the Option Price for the shares
with respect to which an Option is exercised shall be paid to
the Company at the time the notice of exercise is delivered to
the Company. Such payment may be made (i) in cash,
(ii) by tendering of shares of Common Stock (either
actually or by attestation) currently owned by the Participant
with a Fair Market Value equal to the Option Price,
(iii) if permitted by the Award Agreement, by delivery of a
signed, irrevocable notice of exercise, accompanied by payment
in full of the Option Price by the Participants
stockbroker and an irrevocable instruction to the Company to
deliver the shares of Common Stock issuable upon exercise of the
Option promptly to the Participants stockbroker for the
Participants account, provided that at the time of such
exercise, such exercise would not subject the Participant to
liability under Section 16(b) of the Exchange Act, or, in
the alternative, such exercise would be exempt pursuant to
Rule 16b-3 or another exemption from such liability, or
(iv) in any other form acceptable to the Company.
(f) Dividend Equivalent Rights. Any grant of Options may,
at the Committees discretion, also provide that the
Participant shall have Dividend Equivalent Rights with respect
to the Options as permitted under Article V of this Plan.
4.2 DESIGNATION OF OPTIONS AS
INCENTIVE STOCK OPTIONS. The Committee may, in its discretion,
specify that any Options granted to a Participant who is an
employee of the Company shall be ISOs qualifying under
Section 422 of the Code. Each Award Agreement that provides
for the grant of ISOs shall designate that such Options are
intended to qualify as ISOs. Each provision of the Plan and of
each Award Agreement relating to an Option designated as an ISO
shall be construed so that such Option qualifies as an ISO, and
any provision that cannot be so construed shall be disregarded.
Any Options granted under this Plan that are designated as ISOs
shall comply with the following terms:
(a) The aggregate Fair Market Value (determined at the time
an ISO is granted) of the shares of Common Stock (together with
all other stock of the Company and all stock of any Parent or
Subsidiary) with respect to which the ISOs may first become
exercisable by an individual Participant during any calendar
year, under all stock option plans of the Company (or any Parent
or Subsidiaries) shall not exceed $100,000. To the extent this
limitation would otherwise be exceeded, the Option shall be
deemed to consist of an ISO for the maximum
A-4
number of shares that may be covered by ISOs pursuant to the
preceding sentence, and a Nonstatutory Option for the remaining
shares subject to the Option.
(b) The Option Price payable upon the exercise of an ISO
shall not be less than the Fair Market Value of a share of
Common Stock on the Date of Grant.
(c) In the case of an ISO granted to a Participant who is a
Ten Percent Stockholder, the period of the Option shall not
exceed five years from the Date of Grant, and the Option Price
shall not be less than 110 percent of the Fair Market Value
of Common Stock on the Date of Grant.
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V. |
DIVIDEND EQUIVALENT RIGHTS |
5.1 DIVIDEND EQUIVALENT RIGHTS.
Subject to the provisions of the Plan and any Award Agreement,
the recipient of an award (including any deferred award) may, if
so determined by the Committee, be entitled to receive cash,
stock or other property dividends, or cash payments in amounts
equivalent to cash, stock or other property dividends on shares
of Common Stock (Dividend Equivalent Rights) with
respect to the number of shares of Common Stock covered by the
award, as determined by the Committee, in its sole discretion,
and the Committee may provide that such amounts, if any, shall
be deemed to have been reinvested in additional shares of Common
Stock or otherwise reinvested.
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VI. |
STOCK APPRECIATION RIGHTS |
6.1 GRANT OF SARs. Participants may
receive a grant of SARs (a) in connection with Options
granted under this Plan (Tandem SAR), (b) in
connection with all or part of any award other than an Option
granted under the Plan or at any subsequent time during the term
of such award, or (c) without regard to any Option or other
award.
6.2 TANDEM SARs. SARs shall entitle
the Participant holding the related Option, upon exercise, in
whole or in part, of the SARs, to receive payment in the amount
and form determined pursuant to Paragraph 6.3(c). SARs may
be exercised only to the extent that the related Option has not
been exercised. The exercise of SARs shall result in a pro rata
surrender of the related Option to the extent that the SARs have
been exercised.
6.3 TERMS AND CONDITIONS. The grant
of SARs shall be evidenced by including provisions with respect
to such SARs in the Participants Award Agreement in a form
approved by the Committee. Such SARs shall be subject to the
following express terms and conditions and to such other terms
and conditions, not inconsistent with the terms of the Plan,
which the Committee may deem appropriate.
(a) Tandem SARs related to an Option shall be exercisable
at such time or times and to the extent, but only to the extent,
that the Option to which they relate shall be exercisable.
(b) SARs (and any Option related thereto) shall in no event
be exercisable before the expiration of one year from the Date
of Grant, except under certain circumstances as may be set forth
in an Award Agreement with respect to retirement after
age 65, Disability, death of a Participant, or a Change in
Corporate Control.
(c) Upon exercise of SARs, the Participant shall be
entitled to receive an amount equal in value to the excess of
(i) the Fair Market Value of one share of Common Stock on
the date of exercise over (ii) the grant price of the right
on the Date of Grant, or in the case of a Tandem SAR, the Option
Price of the related Option, multiplied by the number of shares
in respect of which the SARs shall have been exercised. Such
amount shall be paid in the form of cash, shares of Common
Stock, other property, or any combination thereof, as determined
by the Committee.
(d) In no event shall a SAR be exercisable at a time when
the Option Price of the underlying Option is greater than the
Fair Market Value of the shares subject to the related Option.
(e) Other than in connection with Substitute Awards, the
exercise price of an SAR shall not be less than 100% of the Fair
Market Value of a share of Common Stock on the Date of Grant.
Other than as provided in Section 11.2, the Committee shall
not be permitted to lower the exercise price of an SAR after it
is granted.
A-5
7.1 RIGHTS AS A STOCKHOLDER. Awards
of Restricted Stock may be issued hereunder to Participants
either alone or in addition to other awards granted under the
Plan. At the time of the award, the Committee shall cause the
Company to deliver to the Participant, or to a custodian or an
escrow agent designated by the Committee, a certificate or
certificates for such shares of Restricted Stock, registered in
the name of the Participant. The Participant shall have all the
rights of a stockholder with respect to such Restricted Stock,
subject to the terms and conditions, including forfeiture or
resale to such Company, if any, as the Committee may determine
to be desirable pursuant to Section 7.3 of the Plan. The
Committee may designate the Company or one or more of its
executive officers to act as custodian or escrow agent for the
certificates.
7.2 AWARDS
AND CERTIFICATES.
(a) A Participant granted an award of Restricted Stock
shall not be deemed to have become a stockholder of the Company,
or to have any rights with respect to such shares of Restricted
Stock, until and unless such Participant shall have executed and
delivered to the Company an Award Agreement and shall have
otherwise complied with the then applicable terms and conditions
of such award.
(b) When a Participant is granted shares of Restricted
Stock, the Company shall issue a stock certificate or
certificates in respect of shares of Restricted Stock. Such
certificates shall be registered in the name of the Participant,
and shall bear an appropriate legend referring to the terms,
conditions and restrictions applicable to such award
substantially in the following form:
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The transferability of the shares of stock represented by
this Certificate are subject to the terms and conditions
(including forfeiture) of an Award Agreement entered into
between the registered owner and Health Care REIT, Inc. A copy
of such Award Agreement is on file in the offices of the
Corporate Secretary of the Company, One SeaGate, Toledo Ohio
43604. |
(c) Except as may be otherwise determined by the Committee
(or as required in order to satisfy the tax withholding
obligations imposed under Section 13.3 of this Plan),
Participants granted awards of Restricted Stock under this Plan
will not be required to make any payment or provide
consideration to the Company other than the rendering of
services.
7.3 RESTRICTIONS AND FORFEITURES.
Restricted Stock awarded to a Participant pursuant to this
Article VII shall be subject to the following restrictions
and conditions:
(a) During a period established by the Committee and set
forth in the Participants Award Agreement, which commences
with the date of an award of Restricted Stock (the
Restriction Period), the Participant will not be
permitted to sell, transfer, pledge or assign shares of
Restricted Stock awarded to him or her. Within these limits, the
Committee may provide for the lapse of such restrictions in
installments where deemed appropriate.
(b) Except as provided in Section 7.3(a), the
Participant shall have with respect to the Restricted Stock all
of the rights of a stockholder of the Company, including the
right to vote the shares and receive dividends and other
distributions.
(c) Except as otherwise provided in Section 7.3(e) or
in the Participants employment agreement, if any, upon
termination of a Participants employment during the
Restriction Period, any unvested shares of Restricted Stock may
be cancelled, accelerated, or continued, as provided in the
applicable Award Agreement, or, in the absence of such
provision, as the Committee may determine.
(d) Except as otherwise provided in Section 7.3(e) or
in the Participants employment agreement, if any, awards
of Restricted Stock shall have a Restriction Period of not less
than three years from the Date of Grant (as provided in the
Participants Award Agreement, but permitting pro rata
vesting over such time); provided, however, that the provisions
of this Section 7.3(d) shall not be applicable to any
Substitute Awards or grants of Restricted Stock in payment of
Performance Shares pursuant to Article VIII.
A-6
(e) The Participants Award Agreement or the
Participants employment agreement, if any, may provide
that in the event of a Participants retirement,
Disability, or death, or in the event of a Change in Corporate
Control, the restrictions imposed on the shares of Restricted
Stock shall lapse immediately.
(f) Notwithstanding the other provisions of this
Section 7.3, the Committee may adopt rules that would
permit a gift by a Participant of shares of Restricted Stock to
a spouse, child, stepchild, grandchild or to a trust the
beneficiary or beneficiaries of which shall be either such a
person or persons or the Participant, provided that the
Restricted Stock so transferred shall be similarly restricted.
(g) Any attempt to dispose of shares of Restricted Stock in
a manner contrary to the restrictions set forth herein shall be
ineffective.
(h) Nothing in this Section 7.3 shall preclude a
Participant from exchanging any Restricted Stock for any other
shares of the Common Stock that are similarly restricted.
8.1 TERMS OF PERFORMANCE AWARDS.
The Committee may, in its discretion, grant Performance Awards
to Participants, which shall become payable to the Participant
upon the achievement of specified Management Objectives, upon
such terms and conditions as the Committee may determine in
accordance with the following provisions:
(a) The Management Objectives to be achieved during any
Performance Period and the length of the Performance Period
shall be determined by the Committee on the Date of Grant of
each Performance Award; provided, however, that a Performance
Period shall not be shorter than twelve months nor longer
than five years.
(b) Except as provided in Article X or as may be
provided in an Award Agreement, Performance Awards will be
distributed only after the end of the relevant Performance
Period.
(c) Each Participants award shall specify the time
and manner of payment of Performance Awards that have been
earned. No payment shall be made, with respect to a
Participants Performance Awards unless the Committee has
certified in writing that the Management Objectives with respect
to such Performance Awards have been met. Any award may specify
that any such amount may be paid by the Company in cash, shares
of Common Stock or any combination thereof and may either grant
to the Participant or reserve to the Committee the right to
elect among those alternatives; provided, however, that no form
of consideration or manner of payment that would cause
Rule 16b-3 to cease to apply to this Plan shall be
permitted.
(d) On or after the Date of Grant of Performance Awards,
the Committee may provide for the payment to the Participant of
Dividend Equivalents Rights, as described in Article V
above.
(e) Each Participants award under this
Article VIII shall be evidenced by an Award Agreement,
which shall be executed on behalf of the Company by any officer
thereof and delivered to and accepted by the Participant and
shall contain such terms and provisions as the Committee may
determine consistent with this Plan.
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IX. |
OTHER STOCK UNIT AWARDS |
9.1 STOCK AND ADMINISTRATION. Other
awards of shares of Common Stock and other awards that are
valued in whole or in part by reference to, or are otherwise
based on, shares of Common Stock or other property (Other
Stock Unit Awards) may be granted hereunder to
Participants, either alone or in addition to other awards
granted under the Plan, and such Other Stock Unit Awards may
also be available as a form of payment in the settlement of
other awards granted under the Plan to the extent provided in
any Award Agreement. Other Stock Unit Awards shall be paid only
in shares of Common Stock. Subject to the provisions of the
Plan, the Committee shall have sole and complete authority to
determine the individuals to whom and the time or times at which
such Other Stock Unit Awards shall be made, the number of shares
of Common Stock to be granted pursuant to such Other Stock Unit
Awards, and all other conditions of the Other Stock Unit Awards,
including the achievement of specified Management Objectives, if
any. The provisions of Other Stock Unit Awards need not be the
same with respect to each Participant. Except for certain
limited situations (including retirement, Disability, or death
of the Participant, or a Change in Corporate Control), Other
Stock Unit Awards to Participants shall be
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subject to restrictions imposed by the Committee for a period of
not less than three years from the Date of Grant (but permitting
pro rata vesting over such time); provided, however, that such
restrictions shall not be applicable to any grants of Other
Stock Unit Awards in payment of Performance Awards pursuant to
Article VIII, or grants of Other Stock Unit Awards on a
deferred basis.
9.2 TERMS AND CONDITIONS. Shares of
Common Stock (including securities convertible into shares of
Common Stock) subject to awards granted under this
Article IX may be issued for no consideration or for such
minimum consideration as may be required by applicable law.
Shares of Common Stock (including securities convertible into
shares of Common Stock) purchased pursuant to a purchase right
awarded under this Article IX shall be purchased for such
consideration as the Committee shall determine in its sole
discretion.
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X. |
CHANGE IN CORPORATE CONTROL |
10.1 CHANGE IN CORPORATE CONTROL.
For purposes of the Plan, a Change in Corporate
Control shall mean an event described in a
Participants employment agreement, if any, or an Award
Agreement evidencing the award.
10.2 EFFECT OF CHANGE IN CORPORATE
CONTROL. The terms of any award may provide in a
Participants employment agreement, if any, or the
applicable Award Agreement that, upon a Change in Corporate
Control (a) Options and SARs outstanding as of the date of
the Change in Corporate Control immediately vest and become
fully exercisable; (b) the restrictions on Restricted Stock
shall lapse immediately and the Restricted Stock shall become
free of all restrictions and limitations and become fully
vested; (c) all Performance Awards shall be considered to
be earned and payable (either in full or pro rata based on the
portion of Performance Period completed as of the date of the
Change in Corporate Control), and any deferral or other
restriction shall lapse and such Performance Awards shall be
immediately settled or distributed; (d) the restrictions
and deferral limitations and other conditions applicable to any
other awards shall lapse, and such other awards shall become
free of all restrictions, limitations or conditions and become
fully vested and transferable to the full extent of the original
grant; and (e) such other additional benefits as the
Committee deems appropriate shall apply, subject in each case to
any terms and conditions contained in the Award Agreement
evidencing such award.
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XI. |
AGGREGATE LIMITATION ON SHARES OF COMMON STOCK |
11.1 NUMBER
OF SHARES OF COMMON STOCK.
(a) Shares of Common Stock that may be issued under the
Plan may be either authorized and unissued shares of Common
Stock or shares of Common Stock held by the Company as treasury
stock. The number of shares of Common Stock reserved for
issuance under this Plan shall be 2,200,000 shares of
Common Stock, subject to such future adjustments as may be made
pursuant to Section 11.2. The maximum number of shares of
Common Stock that may be granted as ISOs is 2,200,000, subject
to such future adjustments as may be made pursuant to
Section 11.2.
(b) For purposes of Section 11.1(a), upon the exercise
of an Option or SAR, the number of shares of Common Stock
available for future issuance under the Plan shall be reduced by
the number of shares actually issued to the optionee, exclusive
of any shares surrendered to the Company as payment of the
Option Price.
(c) Any shares of Common Stock subject to an Option granted
under the Plan or the Prior Plans which for any reason is
cancelled, terminates unexercised or expires, except by reason
of the exercise of a related SAR, shall again be available for
issuance under the Plan.
(d) In the event that any Restricted Stock award or any
Other Stock Unit Award granted under the Plan or the Prior Plans
is forfeited, cancelled or surrendered for any reason, the
shares of Common Stock constituting such Restricted Stock award
or Other Stock Unit Award shall again be available for issuance
under the Plan.
(e) In the event that (i) any Option or other award
granted hereunder is exercised through the tendering of shares
of Common Stock (either actually or by attestation) or by the
withholding of shares of Common Stock by the Company, or
(ii) withholding tax liabilities arising from such Option
or other award are satisfied by the
A-8
tendering of shares of Common Stock (either actually or by
attestation) or by the withholding of shares of Common Stock by
the Company, then only the number of shares issued net of the
shares tendered or withheld shall be counted for purposes of
determining the maximum number of shares of Common Stock
available for grant under the Plan. In the event that
(i) any option or award granted under the Prior Plans is
exercised through the tendering of shares of Common Stock
(either actually or by attestation) or by the withholding of
shares of Common Stock by the Company, or (ii) withholding
tax liabilities arising from such options or awards are
satisfied by the tendering of shares of Common Stock (either
actually or by attestation) or by the withholding of shares of
Common Stock by the Company, then the shares so tendered or
withheld shall again be available for issuance under the Plan.
(f) Substitute Awards shall not reduce the shares of Common
Stock authorized for grant under the Plan or authorized for
grant to a Participant in any calendar year. Additionally, in
the event that a corporation acquired by the Company or any
Subsidiary, or with which the Company or any Subsidiary
combines, has shares available under a pre-existing plan
approved by stockholders and not adopted in contemplation of
such acquisition or combination, the shares available for grant
pursuant to the terms of such pre-existing plan (as adjusted, to
the extent appropriate, using the exchange ratio or other
adjustment or valuation ratio or formula used in such
acquisition or combination to determine the consideration
payable to the holders of common stock of the entities party to
such acquisition or combination) may be used for awards under
the Plan and shall not reduce the shares of Common Stock
authorized for grant under the Plan; provided, however, that
awards using such available shares shall not be made after the
date awards or grants could have been made under the terms of
the pre-existing plan, absent the acquisition or combination,
and shall only be made to individuals who were not officers,
employees or directors of the Company or any Parent or
Subsidiary prior to such acquisition or combination.
11.2 ADJUSTMENTS OF STOCK. In the
event of any change or changes in the outstanding Common Stock
of the Company by reason of any stock dividend,
recapitalization, reorganization, merger, consolidation,
split-up, combination or any similar transaction, the Committee
shall adjust the number of shares of Common Stock that may be
issued under this Plan, the number of shares of Common Stock
subject to Options theretofore granted under this Plan, the
Option Price of such Options, the amount credited to a
Participants account pursuant to Dividend Equivalent
Rights, the number of SARs theretofore granted in conjunction
with an Option and the number of shares of Restricted Stock
granted, and make any and all other adjustments deemed
appropriate by the Committee in such manner as the Committee
deems appropriate to prevent substantial dilution or enlargement
of the rights granted to a Participant.
New option rights may be substituted for the Options granted
under the Plan, or the Companys obligations with respect
to Options, SARs, Restricted Stock, Dividend Equivalent Rights,
Performance Awards and Other Stock Unit Awards outstanding under
the Plan may be assumed by a Parent or Subsidiary, by another
corporation or by a parent or subsidiary (within the meaning of
Section 425 of the Code) of such other corporation, in
connection with any merger, consolidation, acquisition,
separation, reorganization, liquidation or like occurrence in
which the Company is involved. In the event of such substitution
or assumption, the term Common Stock shall thereafter include
the stock of the corporation granting such new option rights or
assuming the Companys obligations as to such Options,
SARs, Restricted Stock, Dividend Equivalent Rights, Performance
Awards and Other Stock Unit Awards.
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XII. |
CODE SECTION 162(m) PROVISIONS |
12.1 COVERED EMPLOYEES.
Notwithstanding any other provision of the Plan, if the
Committee determines at the time Restricted Stock, a Performance
Award or an Other Stock Unit Award is granted to a Participant
that the Participant is, or is likely to be, as of the end of
the tax year in which the Company would claim a tax deduction in
connection with such award, a Covered Employee, then the
Committee may provide that the lapsing of restrictions thereon
and the distribution of cash, shares of Common Stock, or other
property pursuant thereto, as applicable, shall be subject to
the achievement of one or more Management Objectives established
by the Committee, which shall be based on the attainment of
specified levels of or growth in one or any combination of the
following: gross real estate investments; net real estate
investments; net revenues; dividend payout ratio; dividend
growth; dividend yield; dividend payments; maintenance of credit
ratings; pre-tax income before allocation of corporate overhead
and bonus; earnings per share; net income; funds from
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operations; funds available for distribution; cash available for
distribution; division, group or corporate financial goals;
return on stockholders equity; return on assets;
attainment of strategic and operational initiatives; total
stockholder return; market share; gross profits; earnings before
taxes; earnings before interest and taxes; earnings before
interest, taxes, depreciation and amortization; economic
value-added models; comparisons with various stock market
indices; reductions in costs; and/or return on invested capital
of the Company or any division or business unit of the Company
for or within which the Participant is primarily employed. Such
performance goals also may be based solely upon the performance
of the Company or a division or business unit of the Company, or
based upon the performance of the Company relative to the
performance of other companies or upon comparisons of any of the
indicators of performance relative to other companies. The
Committee may also exclude the impact of an event or occurrence
which the Committee determines should appropriately be excluded,
including (a) restructurings, discontinued operations,
extraordinary items, and other unusual or non-recurring charges,
(b) an event either not directly related to the operations
of the Company or not within the reasonable control of the
Companys management, or (c) a change in accounting
standards required by generally accepted accounting principles.
Such performance goals shall be set by the Committee within the
time period prescribed by, and shall otherwise comply with the
requirements of, Section 162(m) of the Code, or any
successor provision thereto, and the regulations thereunder.
12.2 ADJUSTMENTS. Notwithstanding
any provision of the Plan (other than Article X), with
respect to any Restricted Stock, Performance Award or Other
Stock Unit Award that is subject to this Article XII, the
Committee may adjust downwards, but not upwards, the amount
payable pursuant to such award, and the Committee may not waive
the achievement of the applicable performance goals, except in
the case of the death or Disability of the Participant.
12.3 RESTRICTIONS. The Committee
shall have the power to impose such other restrictions on awards
subject to this Article XII as it may deem necessary or
appropriate to ensure that such awards satisfy all requirements
for performance-based compensation within the
meaning of Section 162(m)(4)(C) of the Code, or any
successor provision thereto.
12.4 LIMITATIONS ON GRANTS TO
INDIVIDUAL PARTICIPANTS. Subject to adjustment as provided in
Section 11.2, no Participant may be granted
(i) Options or SARs during any 36-month period with respect
to more than 500,000 shares of Common Stock or
(ii) Restricted Stock, Performance Awards and/or Other
Stock Unit Awards that are denominated in shares of Common Stock
in any 36-month period with respect to more than
200,000 shares (the Limitations). In addition,
the maximum dollar value payable to any Participant in any
12-month period with respect to Performance Awards and/or Other
Stock Unit Awards that are valued with reference to property
other than shares of Common Stock is $4,000,000. If an award is
cancelled, the cancelled award shall continue to be counted
toward the applicable Limitations.
13.1 GENERAL RESTRICTION. Any
Option, SAR, or share of Restricted Stock or Performance Award
or Other Stock Unit Award granted under this Plan shall be
subject to the award requirement that, if at any time the
Committee shall determine that any registration of the shares of
Common Stock, or any consent or approval of any governmental
body, or any other agreement or consent, is necessary as a
condition of the granting of an Option or other award, or the
issuance of Common Stock in satisfaction thereof, such Common
Stock will not be issued or delivered until such requirement is
satisfied in a manner acceptable to the Committee.
13.2 TRANSFERABILITY OF AWARDS.
Except as provided below, and except as otherwise authorized by
the Committee in an Award Agreement, no award and no shares of
Common Stock subject to awards that have not been issued or as
to which any applicable restriction, performance or deferral
period has not lapsed, may be sold, assigned, transferred,
pledged or otherwise encumbered, other than by will or the laws
of descent and distribution, or pursuant to a qualified domestic
relations order, and such award may be exercised during the life
of the Participant only by the Participant or the
Participants guardian or legal representative.
Notwithstanding the foregoing, the Committee may, in its
discretion, permit a Participant to transfer all or a portion of
his or her awards to members of his or her immediate family, to
trusts established for the benefit of members of his or her
immediate family, or to family limited partnerships in which the
Participant and immediate family members are
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the only partners, provided that the Participant may receive no
consideration for such transfers, and that such transferred
award shall be subject to all of the terms and conditions of the
Plan and the Award Agreement relating to the transferred award.
13.3 WITHHOLDING TAXES.
(a) The Committee shall have the right to require
Participants to remit to the Company an amount sufficient to
satisfy any federal, state and local withholding tax
requirements prior to the delivery of any shares of Common Stock
under the Plan.
(b) The Company shall have the right to withhold from
payments made in cash to a Participant under the terms of the
Plan, an amount sufficient to satisfy any federal, state and
local withholding tax requirements imposed with respect to such
cash payments.
(c) Amounts to which the Company is entitled pursuant to
Section 13.3(a) or (b), may be paid to the Company, at the
election of the Participant as provided in the applicable Award
Agreement, through one or any combination of the following
methods: (i) payment in cash, (ii) withholding from
the Participants compensation payable by the Company,
including cash payments made under this Plan,
(iii) withholding from the shares of Common Stock otherwise
issuable to the Participant upon exercise of an Option or SAR,
that have a Fair Market Value on the date on which the amount of
tax to be withheld is determined (the Tax Date) not
greater than the minimum amount of tax the Company is required
to withhold, (iv) the Participants delivery to the
Company of shares of Common Stock already held by the
Participant (including newly vested shares of Restricted Stock
issued to the Participant under this Plan) that have a Fair
Market Value on the Tax Date not greater than the minimum amount
of tax the Company is required to withhold, or (v) in any
other form mutually satisfactory to the Committee and the
Participant, provided that such method of satisfying the
Participants obligation does not violate any federal or
state law. A Participants election to have shares of
Common Stock withheld that are otherwise issuable shall be in
writing, shall be irrevocable upon approval by the Committee,
and shall be delivered to the Company prior to the Tax Date with
respect to the exercise of an Option or SAR, vesting of
Restricted Stock, or earn out of Performance Awards.
13.4 INVESTMENT REPRESENTATION. If
the Committee determines that a written representation is
necessary in order to secure an exemption from registration
under the Securities Act of 1933, the Committee may demand that
the Participant deliver to the Company at the time of any
exercise of any Option, SAR, or other award, or at time of the
transfer of shares of Restricted Stock or other award, any
written representation that Committee determines to be necessary
or appropriate for such purpose, including but not limited to a
representation that the shares to be issued are to be acquired
for investment and not for resale or with a view to the
distribution thereof. If the Committee makes such a demand,
delivery of a written representation satisfactory to the
Committee shall be a condition precedent to the right of the
Participant to acquire such shares of Common Stock.
13.5 NO RIGHT TO EMPLOYMENT.
Nothing in this Plan or in any agreement (including an Award
Agreement) entered into pursuant to it shall confer upon any
participating employee the right to continue in the employment
of the Company or affect any right which the Company may have to
terminate the employment of such participating employee.
13.6 NON-UNIFORM DETERMINATIONS.
The Committees determinations under this Plan (including
without limitation its determinations of the persons to receive
Options, SARs, Dividend Equivalent Rights or awards of
Restricted Stock, Performance Shares or Other Stock Unit Awards,
the form, amount and timing of such awards and the terms and
provisions of such awards) need not be uniform and may be made
by it selectively among Participants who receive, or are
eligible to receive, awards under this Plan, whether or not such
Participants are similarly situated.
13.7 NO RIGHTS AS STOCKHOLDERS.
Participants granted Options, SARs, Dividend Equivalent Rights,
Performance Shares or Other Stock Unit Awards under this Plan
shall have no rights as stockholders of the Company as
applicable with respect thereto unless and until certificates
for shares of Common Stock are issued to them.
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13.8 TRANSFER RESTRICTIONS. The
Committee may determine that any Common Stock to be issued by
the Company upon the exercise of Options or SARs, or in
settlement of Dividend Equivalent Rights, Performance Shares or
Other Stock Unit Awards, shall be subject to such further
restrictions upon transfer as the Committee determines to be
appropriate.
13.9 FRACTIONAL SHARES. The Company
shall not be required to issue any fractional shares of Common
Stock pursuant to this Plan. The Committee may provide for the
elimination of fractions or for the settlement thereof in cash.
13.10 TERMINATION OF EMPLOYMENT.
The Committee shall determine and set forth in the
Participants employment agreement, if any, and the
applicable Award Agreement, whether any awards granted in such
Award Agreement will continue to be exercisable, and the terms
of such exercise, on and after the date that a Participant
ceases to be employed by or to provide services to the Company
(including as a director), whether by reason of death,
Disability, voluntary or involuntary termination of employment
or services, or otherwise.
13.11 DEFERRAL. The Committee shall
be authorized to establish procedures pursuant to which the
payment of any award may be deferred in a manner consistent with
Section 409A of the Code.
XIV. AMENDMENT AND
TERMINATION
14.1 AMENDMENT OR TERMINATION OF
THE PLAN. The Board of Directors may at any time terminate this
Plan or any part thereof and may from time to time amend this
Plan as it may deem advisable; provided, however the Board of
Directors shall obtain stockholder approval of any amendment for
which stockholder approval is required under Section 422 of
the Code, Rule 16b-3, or the stockholder approval
requirements imposed on the Company by the rules and regulations
of the New York Stock Exchange, including an amendment that
would (i) increase the aggregate number of shares of Common
Stock that may be issued under this Plan (other than increases
permitted under Section 11.2), (ii) extend the term of
this Plan, or (iii) extend the period during which an
Option may be exercised. The termination or amendment of this
Plan shall not, without the consent of the Participant, affect
such Participants rights under an award previously granted.
14.2 TERM OF THE PLAN. Unless
previously terminated pursuant to Section 14.1, the Plan
shall terminate on the tenth anniversary of the date on which
the Plan became effective, and no awards may be granted under
the Plan on or after such date.
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THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR ALL OF THE FOLLOWING.
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Please Mark Here for Address Change or Comments SEE REVERSE SIDE |
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1.
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Election of three Directors for
a term of three years:
01 William C. Ballard, Jr., 02 Peter J. Grua
and 03 R. Scott Trumbull.
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Ratification of the appointment of Ernst &
Young LLP as Independent Registered Public
Accounting Firm for the fiscal year 2005.
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FOR
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AGAINST
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ABSTAIN
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FOR ALL
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WITHHOLD
FOR ALL
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To withhold authority to vote for any |
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With discretionary authority on any other business that may properly
come |
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individual nominee, please write the persons name in the following space: |
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before the meeting or any adjournment thereof. |
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Choose MLinkSM for fast, easy and secure 24/7 online access to your future proxy
materials, investment plan statements, tax documents and more. Simply log on
to Investor ServiceDirect® at www.melloninvestor.com/isd where step-by-step
instructions will prompt you through enrollment. |
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FOR
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AGAINST
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ABSTAIN |
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2.
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Approval of the Health
Care REIT, Inc. 2005 Long-Term Incentive Plan.
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PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE. PLEASE MARK YOUR CHOICE LIKE THIS
X IN BLUE OR BLACK INK. |
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Please sign exactly as your name appears
herein. Joint owners should each sign. When
signing as attorney, executor,
administrator, trustee or guardian, please
give full title as such. Corporate or
partnership proxies should be signed by an
authorized person with the persons title
indicated. |
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Dated:
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, 2005 |
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Signature |
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Signature if Held Jointly |
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Ù FOLD AND DETACH HERE Ù
Vote by Internet or Telephone or Mail
24 Hours a Day, 7 Days a Week
Internet and telephone voting is available through 11:59 PM Eastern Time
the day prior to annual meeting day.
Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner
as if you marked, signed and returned your proxy card.
Internet
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http://www.proxyvoting.com/hcn
Use the Internet to vote your
proxy. Have your proxy card in hand
when you access the Web site. |
OR
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Telephone
1-866-540-5760
Use any touch-tone telephone to
vote your proxy. Have your proxy
card in hand when you call.
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OR |
Mail
Mark, sign and date
your proxy card and
return it in the
enclosed postage-paid
envelope. |
If you vote your proxy by Internet or by telephone,
you do NOT need to mail back your proxy card.
P R O X Y
PROXY FOR COMMON STOCK
HEALTH CARE REIT, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints George L. Chapman and William C. Ballard, Jr., and each
of them, as proxies for the undersigned, with full power of substitution, to vote all shares of
common stock, $1.00 par value per share, of Health Care REIT, Inc. (the Company), that the
undersigned is entitled to vote at the Annual Meeting of the Stockholders of the Company to be held
on Thursday, May 5, 2005, or any adjournments thereof.
YOU MAY REVOKE THIS PROXY AT ANY TIME PRIOR TO THE
TAKING OF A VOTE ON THE MATTERS HEREIN.
Returned proxy cards will be voted: (1) as specified on the matters listed; (2) in accordance
with the Directors recommendations where a choice is not specified; and (3) in accordance with the
judgment of the proxies on any other matters that may properly come before the meeting.
(Over)
Address Change/Comments (Mark the corresponding box on the reverse side)
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Ù FOLD AND DETACH HERE Ù