<PAGE>
================================================================================
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
HEALTH CARE PROPERTY INVESTORS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) 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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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] 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.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
HEALTH CARE PROPERTY INVESTORS, INC.
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 12, 1998
The Annual Meeting of Stockholders of Health Care Property Investors, Inc.
(the "Company") will be held in the Cabrillo Room of the Four Seasons Hotel,
690 Newport Center Drive, Newport Beach, California 92660 on Tuesday, May 12,
1998, at 9:30 a.m., California time, for the purposes of (1) electing two
Directors, (2) ratifying the selection of Arthur Andersen LLP as independent
accountants for the fiscal year ending December 31, 1998, and (3) transacting
such other business as may properly come before the meeting.
Only Stockholders whose names appear of record on the books of the Company
at the close of business on March 18, 1998, are entitled to notice of, and to
vote at, such Annual Meeting or any adjournment or adjournments thereof.
You are cordially invited to attend the meeting in person. Whether or not
you expect to attend this meeting, please sign and date the enclosed proxy and
return it as promptly as possible in the enclosed self-addressed, postage-
prepaid envelope. If you attend the Annual Meeting and wish to vote in person,
your proxy will not be used.
By Order of the Board of Directors
[LOGO of SIGNATURE]
Edward J. Henning
Corporate Secretary
Newport Beach, California
March 30, 1998
<PAGE>
HEALTH CARE PROPERTY INVESTORS, INC.
----------------
PROXY STATEMENT
This proxy statement is furnished to the Stockholders of Health Care
Property Investors, Inc., a Maryland corporation (the "Company"), in
connection with the solicitation of proxies by the Board of Directors of the
Company for use at the Annual Meeting of Stockholders to be held on May 12,
1998, and at any and all adjournments thereof. The principal executive offices
of the Company are located at 4675 MacArthur Court, Suite 900, Newport Beach,
California, 92660. The approximate date on which this proxy statement and form
of proxy solicited on behalf of the Board of Directors will be sent to the
Company's Stockholders is March 30, 1998.
On March 18, 1998, the record date for the determination of Stockholders
entitled to notice of, and to vote at, the Annual Meeting, the Company had
30,246,169 shares of common stock, par value $1.00 per share (the "Shares" or
the "Common Stock"), outstanding. Each such Share is entitled to one vote on
all matters properly brought before the meeting. Stockholders are not
permitted to cumulate their Shares for the purpose of electing Directors or
otherwise.
A person giving the enclosed proxy has the power to revoke it at any time
before it is exercised. The power of the proxy is suspended if the person
giving it attends the meeting and elects to vote in person.
PRINCIPAL STOCKHOLDERS
The following table sets forth information as of March 1, 1998, with respect
to each person who is known by the Company to own beneficially more than 5% of
its Shares and with respect to Shares owned beneficially by all Directors and
executive officers of the Company as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
--------------------------------
AMOUNT AND NATURE OF PERCENT
NAME OF BENEFICIAL OWNER ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) OF CLASS
- ------------------------ --------------------------- ----------------------- --------
<S> <C> <C> <C>
Loomis, Sayles &
Company, L.P........... One Financial Center 2,683,770(2) 9.3%
Boston, MA 02111
Scudder, Stevens &
Clark, Inc............. 345 Park Avenue 1,834,388(2) 6.4%
New York, NY 10154
All Directors and
executive officers as a
group (11 persons)..... 1,011,325 3.3%(3)
</TABLE>
- --------
(1) Nature of beneficial ownership is voting and/or investment power.
(2) Based on information as of December 31, 1997 obtained by the Company from
public filings made by the beneficial owners listed.
(3) Includes 647,380 Shares purchasable within 60 days upon exercise of
outstanding stock options.
1
<PAGE>
ELECTION OF DIRECTORS
(PROXY ITEM NO. 1)
Pursuant to the Company's Articles of Incorporation, as amended and restated
to date (the "Articles of Incorporation"), the Directors have been divided
into three classes, each being elected to hold office for a term of three
years and until their respective successors have been duly elected and
qualified. At the Annual Meeting, two Directors will be elected in one class
to hold office for a term of three years and, in each case, until their
respective successors have been duly elected and qualified. The remaining
Directors shall continue in office until their respective terms expire and
until successors have been duly elected and qualified.
The nominees for election to the two positions of Director to be voted upon
at the Annual Meeting are Paul V. Colony and Peter L. Rhein. Unless authority
to vote for the election of Directors has been specifically withheld, the
persons named in the accompanying proxy intend to vote for the election of
Messrs. Colony and Rhein to hold office as Directors for a term of three years
each and until their respective successors have been duly elected and
qualified.
If any nominee becomes unavailable for any reason (which event is not
anticipated), the Shares represented by the enclosed proxy may (unless such
proxy contains instructions to the contrary) be voted for such other person or
persons as may be determined by the holders of such proxies. In no event will
the proxy be voted for more than two nominees.
BOARD OF DIRECTORS AND OFFICERS
The executive officers of the Company, nominees for election as Directors of
the Company and the other persons whose terms as Directors continue after the
meeting, and their principal occupations for the past five years or more,
their ages, their positions and offices with the Company, information as to
their terms in office as Directors, and the number of Shares of the Company
owned beneficially by them on March 1, 1998, are as follows:
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
(1)
-------------------------------
NUMBER
NUMBER OF PERCENT
FIRST TERM OF OPTION OF
NAME AGE ELECTED EXPIRES SHARES SHARES (2) CLASS (3)
---- --- ------- ------- ------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Paul V. Colony.......... 58 1988 1998 10,600 21,000 (4)
Robert R. Fanning, Jr. . 55 1985 2000 1,293 49,000 (4)
Devasis Ghose........... 44 -- -- 17,045 28,620 (4)
Edward J. Henning....... 44 -- -- 12,475 21,150 (4)
Stephen R. Maulbetsch... 40 -- -- 14,520 23,870 (4)
Michael D. McKee........ 52 1989 2000 2,600 25,000 (4)
Orville E. Melby........ 76 1985 1999 5,400 38,500 (4)
Harold M. Messmer, Jr. . 52 1985 2000 44,500(5) 7,000 (4)
James G. Reynolds....... 46 -- -- 42,240 87,600 (4)
Peter L. Rhein.......... 56 1985 1998 27,400 31,000 (4)
Kenneth B. Roath........ 62 1986 1999 185,872 314,640 1.64%
</TABLE>
2
<PAGE>
- --------
(1) Except as otherwise noted below, all Shares are owned beneficially by the
individual listed with voting and/or investment power.
(2) Consists of Shares purchasable within 60 days upon exercise of outstanding
stock options.
(3) For purposes of computing the percentages, the number of Shares
outstanding includes Shares purchasable by such individual within 60 days
upon exercise of outstanding stock options.
(4) Less than 1%.
(5) Includes 7,600 Shares held as custodian for his children.
Mr. Colony is a Director and has been associated in various capacities with
the insurance firm of Alexander & Alexander, Inc., now Aon Worldwide
Resources, for over 30 years. He is presently Vice Chairman of Aon Worldwide
Resources and Chairman, Advisory Board of Aon Risk Services Companies, Inc.
Mr. Fanning is a Director and has been President of Northeast Health
Systems, Inc. since July 1983 and Beverly Hospital Corporation since 1980. Mr.
Fanning has been a member of the Massachusetts Health and Educational
Facilities Authority since 1985 and Chairman of the Authority since 1993. He
currently serves as a Director of Warren Bancorp, Inc. and is a past Chairman
of the American College of Healthcare Executives.
Mr. Ghose has been Senior Vice President-Finance and Treasurer of the
Company since January 1995 and has been in various positions with the Company
since 1986.
Mr. Henning became Senior Vice President, General Counsel and Corporate
Secretary of the Company in January 1995 and joined the Company in May 1994 as
Vice President, Senior Legal Counsel and Corporate Secretary. Mr. Henning was
Vice President and Legal Counsel for Weyerhaeuser Mortgage Company from 1992
to 1994 and prior thereto was an attorney with the law firm of Latham &
Watkins from 1984 to 1992.
Mr. Maulbetsch has been employed by the Company since September 1985 and
became Senior Vice President-Property and Acquisition Analysis in January
1995, which title changed to Senior Vice President- Acquisitions in January
1998.
Mr. McKee is a Director and has been Executive Vice President of The Irvine
Company since April 1994 where he also serves as its Chief Financial Officer
and a member of its Board of Directors. Prior thereto, he was a partner with
the law firm of Latham & Watkins from January 1986 to April 1994. Mr. McKee is
a Director of Irvine Apartment Communities, Inc., Realty Income Corporation
and Circus Circus Enterprises, Inc.
Mr. Melby is a Director and a retired Vice Chairman of Rainier National Bank
(which was subsequently acquired by Bank of America) where he served from 1974
through 1986. Prior to his service with Rainier, Mr. Melby was Treasurer and
later Vice President of Sales and Contracts of the Boeing Company.
Mr. Messmer is a Director and has been Chairman, Chief Executive Officer and
President of Robert Half International Inc. since July 1986. Mr. Messmer is
also a Director of Airborne Freight Corporation and Spieker Properties, Inc.
Mr. Reynolds became Executive Vice President of the Company in January 1995
and also serves as its Chief Financial Officer. He has been employed with the
Company since its inception in 1985 and served as Senior Vice President
beginning in 1988.
3
<PAGE>
Mr. Rhein is a Director and has been a general partner of Sarlot and Rhein,
a real estate investment and development partnership, since 1967. Mr. Rhein is
a Director of Oasis Residential, Inc.
Mr. Roath is Chairman of the Board of Directors and became President and
Chief Executive Officer of the Company in May 1988, having previously served
as President and Chief Operating Officer since the inception of the Company in
1985. Mr. Roath is a past Chairman of the National Association of Real Estate
Investment Trusts, Inc. and also serves as a member of its Board of Governors
and is a former member of the Executive Committee. He is a Director of
Franchise Finance Corporation of America and Arden Realty, Inc. Mr. Roath also
serves as Chairman for the Burnham Institute (formerly the La Jolla Cancer
Research Foundation) and as a Trustee of the California Museum of Science and
Industry.
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The Board of Directors held four meetings during 1997. During that period,
no incumbent Director attended fewer than 75% of the total number of meetings
of the Board and of committees of the Board on which he served.
The Board of Directors has an Audit Committee, an Investment Committee and a
Compensation Committee.
The Audit Committee is comprised of Messrs. Colony, Messmer and Rhein. The
Audit Committee held two meetings during 1997. The Audit Committee is
authorized to select the independent accountants to serve the Company for the
ensuing year, subject to Stockholder approval; review with the independent
accountants the scope and results of the audit; review management's evaluation
of the Company's system of internal controls; and review non-audit
professional services provided by the independent accountants and the range of
audit and non-audit fees. To ensure independence of the audit, the Audit
Committee consults separately and jointly with the independent accountants and
management.
The Investment Committee is comprised of Messrs. Fanning, Melby, Rhein and
Roath. The Investment Committee held nine meetings during 1997. The Investment
Committee is authorized to approve all real estate acquisitions and other
investments.
The Compensation Committee is comprised of non-employee, outside Directors
of the Board. The Compensation Committee is currently comprised of Messrs.
McKee, Melby and Messmer. The Compensation Committee held one meeting during
1997. The Compensation Committee is responsible for the administration of the
Company's employee benefit plans. The Compensation Committee is authorized to
determine the persons eligible to participate in any of the plans, the extent
of such participation and the terms and conditions under which benefits may be
vested, received or exercised. The Compensation Committee also reviews and
approves the compensation of the Company's executive officers and determines
the general compensation policy for the Company.
BOARD OF DIRECTORS COMPENSATION
The Company currently pays each non-employee outside Director a fee of
$18,000 per year for services as a Director, plus $1,000 for attendance in
person at each meeting of the Board of Directors or any committee meeting, and
$400 for participation in any telephonic Board of Directors meeting or
committee meeting, when such meeting lasts longer than a specified time
period. In addition, the Company reimburses the outside Directors for travel
expenses incurred in connection with their duties as Directors of the Company.
Inside Directors, who are employees of the Company, do not receive any fees
for serving on the Board or for attending meetings.
4
<PAGE>
Non-employee outside Directors also participate in the Second Amended and
Restated Directors Stock Incentive Plan (the "Directors Stock Plan"), which
was adopted by the Company and approved by stockholders in April, 1997. Under
the Directors Stock Plan, on the last Thursday of April of each year, all
outside Directors are granted 400 shares of restricted Common Stock
("Directors Restricted Stock") and non-qualified options ("Directors Options")
to acquire 7,000 shares of Common Stock at an exercise price equal to the per
share market value of the Company's Common Stock on the date of grant. In
addition, for any year in which the Company exceeds certain performance goals,
outside Directors will be granted an additional 3,000 options to purchase
Common Stock ("Performance Options"). Directors Options and Performance
Options, if any, are exercisable one year after the date of grant and expire
not later than 10 years from the date of grant. The Directors Restricted Stock
vests over four years and is subject to forfeiture if the outside Director's
membership on the Board is terminated other than under certain circumstances.
During 1997, outside Directors Colony, Fanning, McKee, Melby, Messmer and
Rhein were each granted 400 shares of Directors Restricted Stock and Directors
Options for 7,000 shares of Common Stock at an exercise price of $33.125. No
Performance Options were granted in 1997.
Concurrently with the adoption of the Directors Stock Plan, the Company
terminated the Retirement Plan for Outside Directors (the "Directors
Retirement Plan") and Messrs. Colony, Fanning, McKee, Melby, Messmer and
Rhein, each having accumulated benefits under the Directors Retirement Plan,
designated that such benefits be directed to an account under the Directors
Deferred Compensation Plan (defined below). Each of such Directors designated
that his benefits be directed to a "Retirement Benefit Stock Account," in
which the amount designated is treated as if it were invested in the Common
Stock of the Company, on terms identical to the Deferred Compensation Stock
Account described below. No additional benefits have accrued under the
Directors Retirement Plan.
Amended and Restated Director Deferred Compensation Plan. In January 1996,
the Company adopted an Amended and Restated Director Deferred Compensation
Plan (the "Deferred Compensation Plan") which permits the outside Directors to
elect to defer fees and retainers. Compensation deferred under the Deferred
Compensation Plan is payable to a participating Director upon his or her
retirement, death, disability or upon the occurrence of a substantial hardship
in the sole discretion of the Compensation Committee or at such earlier date
as may be designated by the Director at the time of election to participate in
the Plan. Each Director participating in the Deferred Compensation Plan elects
the amount of deferred compensation to be credited to (i) an interest rate
account ("Deferred Compensation Interest Account") wherein the deferred amount
will accrue interest at a rate equal to the prime rate of Bank of New York
minus one percent or (ii) a stock credit account ("Deferred Compensation Stock
Account") wherein the deferred amount is treated as if it were invested in the
Common Stock of the Company with the account increasing for dividends paid,
and increasing or decreasing with changes in the price of the Company's Common
Stock. In 1997 the Deferred Compensation Plan was amended to provide for the
creation of a "Retirement Benefit Stock Account" and "Retirement Benefit
Interest Account" in order to accommodate the transfer of the Directors'
accrued benefits under the Directors Retirement Plan into the Deferred
Compensation Plan. The Retirement Benefit Stock Account and Retirement Benefit
Interest Account are substantially identical to the Deferred Compensation
Stock Account and the Deferred Compensation Interest Account, respectively,
except that amounts available in the Retirement Benefit Stock Account and in
the Retirement Benefit Interest Account will be paid only after the Director's
retirement from the Board of Directors. Under the Deferred Compensation Plan,
amounts may periodically be transferred by the Directors beneficiary between
the Retirement Benefit Stock Account and Retirement Benefit Interest Account
or between the Deferred Compensation Stock Account and the Deferred
Compensation Interest Account.
5
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
--------------------------------------
ANNUAL COMPENSATION RESTRICTED
NAME AND PRINCIPAL ---------------------- STOCK STOCK ALL OTHER
POSITION YEAR SALARY BONUS(1) AWARDS(2)(3) OPTIONS COMPENSATION(4)
------------------ ---- -------- -------- ------------ ------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth B. Roath 1997 $422,800 $428,000 $ 635,000(5) 100,000 $28,000
Chairman, President 1996 422,800 410,000 402,900 75,000 29,000
and Chief Executive
Officer 1995 422,800 408,000 1,430,600(6) 100,000 30,000
James G. Reynolds 1997 261,200 200,000 135,200 38,000 18,000
Executive Vice
President 1996 251,200 184,000 109,900 24,000 15,000
and Chief Financial
Officer 1995 239,200 159,000 198,600(6) 32,000 21,000
Edward J. Henning 1997 182,200 63,000 106,200 30,000 16,000
Senior Vice President, 1996 175,200 61,000 96,100 20,250 12,000
General Counsel and 1995 166,800 53,000 125,100(6) 27,000 9,000
Corporate Secretary
Devasis Ghose 1997 147,500 46,000 88,800 28,000 16,000
Senior Vice President-- 1996 141,800 36,000 68,700 15,000 15,000
Finance and Treasurer 1995 135,000 25,000 96,900(6) 20,000 21,000
Stephen R. Maulbetsch 1997 130,000 43,370 77,300 20,000 15,000
Senior Vice President-- 1996 117,900 28,000 54,900 11,250 15,000
Acquisitions 1995 110,000 26,000 97,800(6) 20,000 13,000
</TABLE>
- --------
(1) Bonuses are paid at the end of a fiscal year or beginning of the following
fiscal year for the indicated year's performance.
(2) Other than Mr. Roath's May 1997 restricted stock grant discussed in
footnote 5 below and the May 1995 restricted stock grants discussed in
footnote 6 below, restricted stock awards vest ratably over five years.
The table below shows the amounts of restricted stock held at December 31,
1997, the value of such restricted stock (calculated by multiplying the
amount of restricted stock by the closing market price of $38.125 on the
last trading day of 1997) and total restricted stock awards granted for
the past three years. 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.
<TABLE>
<CAPTION>
RESTRICTED STOCK
NUMBER OF SHARES VALUE OF GRANTS WITH RESPECT
OF RESTRICTED RESTRICTED TO INDICATED YEAR
STOCK AT STOCK AT --------------------
DECEMBER 31, 1997 DECEMBER 31, 1997 1995 1996 1997
----------------- ----------------- ------ ------ ------
<S> <C> <C> <C> <C> <C>
Kenneth B. Roath........ 59,292 $2,260,500 45,000 11,000 15,000
James G. Reynolds....... 14,860 566,500 5,800 3,000 3,500
Edward J. Henning....... 9,525 363,100 3,600 2,625 2,750
Devasis Ghose........... 7,475 285,000 2,820 1,875 2,300
Stephen R. Maulbetsch... 6,980 266,000 2,850 1,500 2,000
</TABLE>
(3) Long-term incentive stock award amounts have been calculated based upon
the closing market price as of the date of grant.
6
<PAGE>
(4) These amounts represent the Company's contributions to the Company's
401(k) Plan (as defined below) and, for Mr. Roath only, also includes the
value of $10,000 of premiums paid in 1997 by the Company for term life
insurance of which the Company is not the beneficiary and which premiums
are taxable income to Mr. Roath.
(5) On May 1, 1997, the Compensation Committee awarded 1,692 shares of
restricted stock to Mr. Roath, having a market value on the grant date of
$55,800. This restricted stock grant vests May 1, 1998. The remainder of
the amount reported reflects the January 1998 grants of restricted stock
for 1997 performance in connection with the annual year-end review of
compensation.
(6) In May 1995, the Compensation Committee made special grants of restricted
stock to Messrs. Roath, Reynolds, Henning, Ghose and Maulbetsch of 30,000,
800, 100, 320 and 350 shares respectively, having market value on the
grant date of $907,500, $24,200, $3,025, $9,680 and $10,590, respectively.
Mr. Roath's special restricted stock grant vests 40% after two years and
20% per year thereafter and the grants for Messrs. Reynolds, Henning,
Ghose and Maulbetsch vested November 1, 1995. The remainder of the amounts
reported reflects the January 1996 grants of restricted stock for 1995
performance in connection with the annual year-end review of compensation.
These grants were of 15,000, 5,000, 3,500, 2,500 and 2,500 shares to
Messrs. Roath, Reynolds, Henning, Ghose and Maulbetsch, respectively, and
had market values on the grant date of $523,100, $174,400, $122,100,
$87,200 and $87,200, respectively.
Employment Agreement. On April 28, 1988, the Company entered into an
employment agreement (the "Agreement") with Kenneth B. Roath which was amended
as of January 31, 1991. The Agreement is for a term of three years and will
automatically be extended for an additional year on the last day of January of
each year unless earlier terminated pursuant to the terms of the Agreement.
The Agreement provides for a base salary to be adjusted annually at the
discretion of the Board of Directors, but at a minimum to reflect increases in
the Consumer Price Index. The Agreement also provides for bonus compensation.
Mr. Roath is also entitled to the payment by the Company for the term of the
Agreement of premiums for a term life insurance policy in the amount of
$2,000,000 insuring Mr. Roath's life with a beneficiary named by Mr. Roath. If
Mr. Roath's employment is terminated by a change in control or without cause,
he is entitled to receive in severance pay either (i) his annual base salary
at the time of termination plus an amount equal to two times the average
annual bonus earned by Mr. Roath in the two years immediately preceding the
date of termination, subject to a reduction by the amount of compensation that
he receives from a new employer during what would have been the remainder of
his term of employment with the Company, or (ii) upon thirty (30) days'
written notice, a lump sum equal to the present value of the flow of cash
payments that he would otherwise have been paid, but in no event shall payment
be less than 2.5 or 1.5 times base salary for the applicable period for
termination due to change in control or without cause, respectively.
COMPENSATION PURSUANT TO PLANS
Section 401(k) Plan. In 1988, the Company adopted a tax-qualified cash or
deferred profit-sharing plan (the "401(k) Plan"). Under the 401(k) Plan, which
covers all Company employees after they have completed one year of service,
employees may elect to reduce their current compensation up to a maximum of
$9,500 for 1997 and $10,000 for 1998 and have the amount of the reduction
contributed to the 401(k) Plan. The Company also contributes to the 401(k)
Plan an amount equal to the lesser of $6,400 for 1997 and 1998 or 4% of such
employee's compensation if such employee's contribution is at least the lesser
of 3% of his compensation or the maximum contribution allowable by law. The
employee's right to retain the Company's contributions vests at the rate of
20% per year, beginning after the employee has been with the Company for two
years. The 401(k) Plan is intended to qualify under Section 401 of the
Internal Revenue Code so that contributions by
7
<PAGE>
employees or by the Company are not taxable to employees until withdrawn from
the 401(k) Plan, and so that contributions by the Company will be deductible
by the Company when made. For the fiscal year ended December 31, 1997 the
Company made contributions pursuant to the 401(k) Plan including Section
401(a) contributions discussed further below as follows: $82,700 on behalf of
its five most highly compensated executive officers each of whose total
remuneration exceeded $60,000 during such fiscal year; and $153,100 on behalf
of all employees as a group. At December 31, 1997, 17 of the 26 employees of
the Company were participants in the 401(k) Plan.
In 1993, the Compensation Committee adopted an amendment to the Company's
401(k) Plan to provide for a Section 401(a) profit sharing contribution as
provided for and set forth in the Internal Revenue Code. Contributions under
the 401(k) Plan are subject to various limitations under the Internal Revenue
Code and maximum combined employee and employer 401(k) and 401(a)
contributions were limited to the lesser of 25% of taxable compensation or
$30,000 per person in 1997.
Supplemental Executive Retirement Plan. On May 1, 1988, the Board of
Directors adopted a Supplemental Executive Retirement Plan (the "SERP"),
amended effective January 1, 1993, which provides certain executives selected
by the Compensation Committee with supplemental deferred benefits in the form
of retirement payments for life. Currently, the Compensation Committee has
selected Kenneth B. Roath to be a participant.
The annual retirement benefit available to a participant under the SERP
varies according to (i) the age of the participant at retirement, with the
youngest retirement age being 55, and (ii) the number of years the participant
has served the Company, with minimum service being five years. The normal
retirement benefit payable to a participant will equal 30% of his final
average earnings plus 4% of his final average earnings multiplied by years of
service after age 60 (not to exceed five years). Final average earnings are
defined under the plan to mean the average of the three highest, not
necessarily consecutive, years' earnings. A participant's earnings include
total annual cash compensation, including base salary and bonus incentive
awards, and deferred cash compensation including 401(a) contributions made by
the Company under the 401(k) Plan described above. If a participant retires
before age 65, his benefits may be subject to reduction for early retirement.
The SERP benefit is reduced by 100% of any retirement employee benefit
received from any other Company retirement plan available to a participant
(other than Section 401(a) and employee Section 401(k) contributions) and
Social Security. In the event of death of a participant after retirement, 50%
of the benefit earned by the participant will be paid to the surviving spouse
for life and if survived by dependent children, each such child will receive a
benefit equal to $1,500 per month until age 18, or age 25 if a full time
student. In the event of a participant's death prior to retirement, the
participant's surviving spouse will be paid the participant's retirement
benefit as if the participant had retired the day before his or her death.
The table below indicates for a range of final average earnings, anticipated
annual benefits payable if Mr. Roath retired and chose to receive benefits at
various ages between age 62 and age 65:
ANTICIPATED ANNUAL BENEFITS
AT AGES LISTED BELOW
<TABLE>
<CAPTION>
FINAL
AVERAGE
EARNINGS 62 63 64 65
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
$835,000 $260,000 $304,000 $343,000 $393,000
885,000 323,000 365,000 418,000
935,000 342,000 387,000 443,000
</TABLE>
8
<PAGE>
A life insurance policy has been purchased on the life of Mr. Roath naming
the Company as sole beneficiary to provide for a portion of the obligations
under the SERP. The policy is designed so that the Company will recover a
portion of its SERP payments plus a factor for the use of its money.
The Company believes that the SERP aids in the ability to attract, retain,
motivate and provide financial security to management employees who render
valuable services to the Company.
OPTION GRANTS IN JANUARY 1998 WITH RESPECT TO 1997 PERFORMANCE
<TABLE>
<CAPTION>
PERCENTAGE
OPTIONS OF TOTAL EXERCISE PRICE(1) EXPIRATION
NAME GRANTED OPTIONS GRANTED ($/SH) DATE VALUATION(2)
---- ------- --------------- ----------------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Kenneth B. Roath........ 100,000 38.99% $38.625 1/28/08 $319,000
James G. Reynolds....... 38,000 14.82% 38.625 1/28/08 121,220
Edward J. Henning....... 30,000 11.70% 38.625 1/28/08 95,700
Devasis Ghose........... 28,000 10.92% 38.625 1/28/08 89,320
Stephen R. Maulbetsch... 20,000 7.80% 38.625 1/28/08 63,800
</TABLE>
- --------
(1) The market price on the date of the grant was the same as the exercise
price.
(2) Calculated using the Black Scholes option valuation methodology, as
recommended by Shuman, an executive compensation consulting firm. In using
such methodology, the following variables were utilized: risk-free rate of
return of 5.68%; .1664 five year volatility factor; 6.37% dividend yield;
3% termination discount factor; ten-year option term; which yields a
discount Black Scholes value for such stock options of $3.19. The actual
value, if any, that an 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 so that there is no assurance that the value realized
by an executive officer will be at or near the value estimated by the
Black Scholes model.
AGGREGATED OPTION EXERCISES IN 1997 AND OPTION VALUES AT DECEMBER 31, 1997
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT DECEMBER IN-THE-MONEY OPTIONS AT
VALUE 31, 1997 DECEMBER 31, 1997(3)
SHARES ACQUIRED AT ------------------------------- -------------------------
NAME ON EXERCISE EXERCISE(1) EXERCISABLE(2) UNEXERCISABLE(2) EXERCISABLE UNEXERCISABLE
---- --------------- ----------- -------------- ---------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth B. Roath........ 0 -- 314,640 152,000 $3,689,654 $599,210
James G. Reynolds....... 34,000 $605,608 87,600 48,400 882,344 190,244
Edward J. Henning....... 0 -- 21,150 36,600 87,947 101,100
Devasis Ghose........... 0 -- 28,620 26,680 244,213 78,769
Stephen R. Maulbetsch... 8,500 $131,559 23,870 23,580 184,911 73,044
</TABLE>
- --------
(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) In January 1995, 30,000, 5,000, 3,000, 2,700 and 2,700 options were
granted to Messrs. Roath, Reynolds, Henning, Ghose and Maulbetsch,
respectively, which included dividend share rights, providing for the
accrual of dividends between the time the options were granted and their
exercise date. At December 31, 1997, 12,000, 2,000, 1,200, 1080 and 1080
of these options were exercisable by Messrs. Roath, Reynolds,
9
<PAGE>
Henning, Ghose and Maulbetsch, respectively, and 18,000, 3,000, 1,800,
1,620 and 1,620, respectively, were unexercisable. The dividend shares are
only collectible if an option is exercised, and then only after the
participant has held the underlying shares for two years following
exercise. Dividend share rights accrue on such options at the same rate as
dividends on the Common Stock.
(3) Calculated based on the closing market price on the last trading day of
1997 multiplied by the number of applicable Shares in-the-money, less the
total exercise price for such Shares. No additional value has been
assigned to the dividend shares discussed above.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate future
filings, including this Proxy Statement, in whole or in part, the following
report and the Stock Performance Graph shall not be incorporated by reference
into any such filings.
COMPENSATION COMMITTEE REPORT TO STOCKHOLDERS
The Compensation Committee of the Board of Directors, comprised of three
outside, non-employee members of the Board, is responsible for establishing
and governing the compensation and benefit practices of the Company. The
Compensation Committee establishes the general compensation policies of the
Company, reviews and approves compensation of the executive officers of the
Company and administers all of the Company's employee benefit plans. The
Compensation Committee conducts an annual review of the executive compensation
program of the Company to ensure that it (i) is reasonable and consistent with
practices of comparably sized Real Estate Investment Trusts ("REITs") and real
estate development organizations, (ii) adequately rewards performance which
creates Stockholder value, and (iii) achieves the Company's goals of promoting
financial and operational success by attracting, motivating and facilitating
the retention of key employees with outstanding talent and ability. The
Compensation Committee believes that the primary focus of the Company's
compensation program should be to reward excellent performance as measured by
the creation of value for Stockholders. To this end, the Compensation
Committee has committed to a program that emphasizes both short and long-term
incentive compensation tied directly to Stockholder value creation. In
addition, the compensation program is designed to promote teamwork, initiative
and resourcefulness on the part of key employees whose performance and
responsibilities directly affect Company profits. The Compensation Committee
reviews with the Board of Directors all aspects of compensation for the
Company's executive officers.
The Compensation Committee bases its compensation decisions on an analysis
of the Company's performance and an evaluation of comparative compensation
information. To assist it in this regard, the Compensation Committee has
retained the services of Shuman Management Consulting ("Shuman"). The
Compensation Committee reviews survey and other data supplied by Shuman in the
course of its deliberations relating to compensation decisions and Shuman
provides advice to the Compensation Committee with respect to the
reasonableness of the compensation paid to its executive officers. The surveys
provided by Shuman compare the Company's performance and compensation program
with the performance and compensation programs of REITs and predominantly real
estate organizations which have characteristics in common with the Company
such as assets, market capitalization and performance ("Competitive
Practices"). Some, but not all, of the companies included in the Stock Price
Performance Graph are included in such compensation surveys.
Among other information, the Compensation Committee took into consideration
Shuman's report with respect to the Company's performance in 1997 as compared
to 17 well-established REITs, including health care
10
<PAGE>
REITs, with assets and market capitalization over $500 million and sufficient
performance history to provide fair comparative analysis (the "REIT Peer
Group") and the National Association of Real Estate Investment Trusts, Inc.
("NAREIT") equity health care segment. The Compensation Committee noted that
the Company's total return to shareholders for 1997 of 15.06% approximated the
50th percentile of both the REIT Peer Group and the NAREIT equity health care
segment, in each case a significant improvement over 1996 performance and that
the Company's total returns to shareholders over the last eight years as
compared to the REIT Peer Group have approximated the 50th percentile or
better. In addition, the Compensation Committee took into account that the
Company's investment activity for 1997 was more than twice that of any
previous year and the improvement in the portfolio (including lease roll-overs
of expiring leases and mortgages), each of which is directly attributable to
the efforts and performance of the executive officers. The Compensation
Committee also took into consideration that in 1997, the Company's funds from
operations ("FFO"), the generally accepted measure of REIT operating
performance, on a per share basis, was 5.8% greater than last year's levels
(adjusting for an extraordinary gain in 1996). The Compensation Committee
noted that although this growth was below the median for the REIT Peer Group,
the 1997 levels represent the twelfth straight year of increased FFO.
COMPENSATION MIX
The Company's executive compensation is based on three components, base
salary, annual cash incentive bonuses and long-term stock incentive awards,
designed in each case to accomplish the Company's compensation philosophy. The
Compensation Committee targets base salary levels at approximately the 50th
percentile of Competitive Practices and rewards excellent performance through
incentive compensation tied to Stockholder value creation, which has resulted
in total compensation in the upper quartile of Competitive Practices. The
Compensation Committee has also committed to a highly leveraged program that
is intended to result in 55% to 75% (depending on position) of total direct
compensation comprised of incentives tied directly to Stockholder value
creation.
Base Salary. Salaries for executive officers are reviewed by the
Compensation Committee on an annual basis. The Compensation Committee
generally targets base salary levels at approximately the 50th percentile of
Competitive Practices. Salaries may be increased based upon an assessment of
competitive pay levels or the individual's contribution to the asset and
financial growth of the Company. The Compensation Committee has reviewed the
base salary for each of the executive officers for 1997 and based upon the
information provided by Shuman, has concluded that each of the executive
officers' base compensation, including the chief executive officer's,
approximated the 50th percentile of Competitive Practices and believes that
the base compensation levels of the executive officers generally is reasonable
in view of Competitive Practices, the Company's performance and the
contribution of those officers to that performance.
Annual Cash Incentive Awards. Annual cash bonus incentive awards are
generally designed to promote Stockholder interests by establishing an "FFO
target," an objective criterion which is an industry standard measurement of
the Company's performance, and an objective "business development target"
(collectively, the "Performance Targets"). The Performance Targets are
established by the Compensation Committee at the beginning of each year at a
level considered to provide Stockholders with an acceptable rate of return,
and to enable an acceptable rate of return to be sustained. In addition to
satisfying the Performance Targets, bonus awards are also based on personal
performance measured by the extent to which personal goals are achieved.
Personal performance goals necessarily vary between executive officers based
upon their specific roles within the Company and specific objectives
established each year for each executive officer by the Company's Chief
Executive Officer. The annual cash bonus incentive awards are heavily weighted
toward satisfaction of the
11
<PAGE>
Performance Targets, consistent with the Compensation Committee's focus on
tying incentive compensation to Stockholder value creation.
A target award is established for each executive officer other than the
Chief Executive Officer based on the level of his position, the
responsibilities and duties involved therein and on Competitive Practices. The
Compensation Committee approves each executive officer's target award. The
target award is expressed as a percentage of base salary and ranged between
25% and 60% of base salaries in 1997. For the executive officers other than
the Chief Executive Officer, no actual award can exceed 150% of an executive
officer's target award. The business development target was significantly
exceeded and the FFO target was substantially achieved in 1997 and target
awards were approved by the Compensation Committee.
Long-Term Incentive Stock Plans. The Compensation Committee administers the
Company's benefits and stock plans, including the Company's Amended and
Restated Stock Incentive Plan (the "Employee Stock Plan"). Pursuant to the
Employee Stock Plan, annual stock grants and stock options have been awarded
in order to retain and motivate executives to improve long-term stock market
performance. Stock options generally are granted at 100% of the current fair
market value of the Company's stock. Generally, stock option grants and
restricted stock awards vest over a five-year period, and the executive must
be employed by the Company at the time of vesting in order to exercise the
options. The Compensation Committee may make grants based on a number of
factors, including (i) the executive officer's position in the Company, (ii)
performance of his responsibilities, (iii) equity participation levels of
comparable executives at competitive companies, and (iv) individual
contribution to the success of the Company's financial performance. In
addition, the size, frequency and type of long-term incentive grants may be
determined on the basis of tax consequences of the grants to the individual
and the Company, accounting impact and the number of shares available for
issuance. For 1997, each of the executive officers received stock options
which were based on his responsibilities and relative position in the Company.
The Compensation Committee did not consider the amount of options and
restricted stock currently held by the officers in determining the size of
current awards.
Overall total cash compensation (base salary plus cash bonuses paid in
January 1998 for 1997 performance) for the executive officers other than the
chief executive officer approximated the 55th percentile of Competitive
Practices and total direct compensation (cash compensation plus stock option
grants in January 1998 for 1997 performance) approximated the 75th percentile
of Competitive Practices. The executive officers' compensation mix for 1997
was leveraged 55% toward incentive based compensation and 45% comprised of
base salary.
CHIEF EXECUTIVE COMPENSATION
Mr. Roath's compensation in 1997 was leveraged 75% toward compensation based
upon the Company's performance and 25% comprised of a base salary component.
Mr. Roath's base salary approximated the 50th percentile of Competitive
Practices and his total direct compensation approximated the 90th percentile
of Competitive Practices. Mr. Roath received a base salary of $422,800 in 1997
which represents no increase from his base salary in 1996. For 1998, the
Compensation Committee recommended a 4% increase, to $440,000 in Mr. Roath's
base salary over 1997 levels in order to ensure that his base salary is at
about the 50th percentile of Competitive Practices while maintaining his total
compensation leveraged toward performance based incentives. The Compensation
Committee believes that this compensation package both recognizes Mr. Roath's
contributions to the success of the Company and appropriately leverages his
compensation toward components directly linked to Stockholder value creation.
The Compensation Committee also awarded Mr. Roath a cash bonus incentive award
of $428,000, restricted stock grants of 15,000 shares of Common Stock and
100,000 stock option grants at an exercise price of $38.625. These awards are
consistent with the Company's pay-for-
12
<PAGE>
performance philosophy, reflecting Mr. Roath's consistent contribution to the
financial success of the Company since its inception, his continued
contribution to the expansion of the Company's investment portfolio and the
resulting superior total return to Stockholders.
The other benefits received by Mr. Roath that are reported in the Summary
Compensation Table are provided pursuant to his Employment Agreement. See
"Executive Compensation--Employment Agreement."
Based upon the foregoing, the Compensation Committee has reviewed and
approved the total compensation for 1997 of the five most highly compensated
executive officers of the Company.
POLICY WITH RESPECT TO SECTION 162(M)
Section 162(m) of the Internal Revenue Service Code denies deduction for
certain compensation in excess of $1,000,000 paid to executive officers,
unless certain performance, disclosure, Stockholder approval and other
requirements are met. The Compensation Committee will continue to review the
effects of its compensation programs with regard to Internal Revenue Code
Section 162(m). A substantial portion of the compensation program will be
exempted from the $1,000,000 deduction limitation. The Company will continue
to evaluate alternatives to ensure executive compensation is reasonable,
performance-based, and consistent with the Company's overall compensation
objectives. The Compensation Committee reserves the right to design programs
that recognize a full range of performance criteria important to the Company's
success, even where compensation payable under such programs may not be
deductible.
Compensation Committee
Orville E. Melby Michael D. McKee Harold M. Messmer, Jr.
Chairman
13
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The graph below compares cumulative total return of the Company, the S&P 500
Index and the Equity REIT Index of the National Association of Real Estate
Investment Trusts, Inc., from January 1, 1993 to December 31, 1997. Total
return assumes quarterly reinvestment of dividends before consideration of
income taxes.
Assumes $100 Invested January 1, 1993 in HCPI, S&P 500 Index and NAREIT Equity
Reit Index
HEALTH CARE PROPERTY INVESTORS, INC.
RATE OF RETURN TREND COMPARISON
JANUARY 1, 1994-DECEMBER 31, 1997
(DECEMBER 31, 1993=100)
EQUITY
DATE S&P500 REITS HCPI
- ---- ------ ------ ----
Dec-93 100.00 100.00 100.00
Mar-94 96.23 103.40 114.26
Jun-94 96.61 105.31 116.98
Sep-94 101.32 103.15 115.51
Dec-94 101.27 103.17 118.70
Mar-95 111.12 102.99 118.77
Jun-95 121.73 109.05 130.49
Sep-95 131.41 114.18 140.46
Dec-95 139.32 118.92 148.12
Mar-96 146.80 121.62 135.03
Jun-96 148.93 131.14 147.19
Sep-96 158.88 136.00 144.74
Dec-96 173.91 165.19 157.87
Mar-97 178.57 166.35 152.02
Jun-97 210.59 174.66 184.10
14
<PAGE>
CERTAIN TRANSACTIONS
Since 1985, the Company has been insured through Alexander & Alexander,
Inc., now Aon Worldwide Resources, insurance brokers for general liability,
workmen's compensation, and other insurance. Paul V. Colony, a Director of the
Company since April 1988, is Vice Chairman of Aon Worldwide Resources and
Chairman, Advisory Board of Aon Risk Services Companies, Inc. The terms of
such insurance policies were established after evaluation of market rates, and
were no less favorable to the Company than might have been negotiated with an
unrelated party. The premiums paid to Alexander & Alexander, Inc. and/or Aon
Worldwide Resources for the fiscal year ending December 31, 1997 were
approximately $256,000.
Peter L. Rhein, a Director of the Company, Mr. Roath, a Director and officer
of the Company, and Mr. Maulbetsch, an officer of the Company, have remaining
balances on loans made in connection with the purchase of Shares of $115,000,
$473,566 and $78,355, respectively. These loans are due on July 20, 1998,
November 19, 1999 and March 28, 1999, respectively. In May of 1997 and January
of 1998, additional loans of $187,902 due on April 30, 2000 and $257,495 due
on January 27, 2001, respectively, were made to Mr. Roath for the purpose of
paying payroll taxes due upon vesting of stock grants and are secured by stock
of the Company.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "1934
Act"), requires the Company's directors and executive officers, and persons
who own more than 10% of a registered class of the Company's equity securities
("Insiders"), to file with the SEC initial reports of ownership and reports of
changes in ownership of equity securities of Common Stock of the Company.
Insiders are required by SEC regulations to furnish the Company with copies of
all Section 16(a) reports they file. To the Company's knowledge, based solely
on its review of the copies of such reports furnished to the Company and
written representations from certain Insiders that no other reports were
required during the year ended December 31, 1997, all Section 16(a) filing
requirements applicable to Insiders were complied with.
15
<PAGE>
RATIFICATION OF THE SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
(PROXY ITEM NO. 2)
Arthur Andersen LLP audited the Company's financial statements for the year
ended December 31, 1997 and have been the Company's auditors since the
Company's organization.
The Directors have selected the firm of Arthur Andersen LLP as independent
accountants for the Company for the fiscal year ending December 31, 1998, it
being intended that such selection would be submitted for ratification by
Stockholders. The proxy holders named in the accompanying form of proxy will
vote the Shares represented by the proxy for ratification of the selection of
Arthur Andersen LLP, unless a contrary choice has been specified on the proxy.
If Stockholders do not ratify the selection of Arthur Andersen LLP, the
selection of independent accountants will be considered by the Directors,
although the Directors would not be required to select different independent
accountants for the Company. The Directors retain the power to select another
firm as independent accountants for the Company to replace the firm whose
selection was ratified by Stockholders in the event the Directors determine
that the best interest of the Company warrants a change of its independent
accountants. A representative of Arthur Andersen LLP is expected to be present
at the May 12, 1998 Annual Meeting with an opportunity to make a statement if
he desires to do so, and such representative is expected to be available to
respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" RATIFICATION
OF THE SELECTION OF ARTHUR ANDERSEN LLP AS THE COMPANY'S INDEPENDENT
ACCOUNTANTS FOR THE SUCCEEDING YEAR.
VOTING PROCEDURES
Under the Amended Bylaws of the Company as in effect on the date hereof,
elections of Directors shall be by a plurality of the votes cast. Stockholders
together holding a majority of the stock issued and outstanding and entitled
to vote at the Annual Meeting of Stockholders, who shall be present in person
or represented by proxy at such meeting duly called, shall constitute a quorum
for the transaction of business. The Inspector of Elections will treat Shares
represented by properly signed and returned proxies that reflect abstentions
as Shares that are present and entitled to vote for purposes of determining
the presence of a quorum and for purposes of determining the outcome of any
matter submitted to the Stockholders for a vote. Except as otherwise noted
herein, abstentions do not constitute a vote "for" or "against" any matter and
thus will be disregarded in the calculation of "votes cast."
The Inspector of Elections will treat Shares referred to as "broker non-
votes" (i.e., Shares held by brokers or nominees as to which instructions have
not been received from the beneficial owner or persons entitled to vote that
the broker or nominee does not have the discretionary power to vote on a
particular matter) as Shares that are present and entitled to vote for
purposes of establishing a quorum. For purposes of determining the outcome of
any matter as to which the broker has physically indicated on the proxy that
it does not have discretionary authority to vote, those Shares will be treated
as not present and not entitled to vote with respect to that matter (even
though those Shares are considered entitled to vote for quorum purposes and
may be entitled to vote on other matters).
16
<PAGE>
DEADLINE FOR SUBMISSION OF STOCKHOLDER
PROPOSALS FOR NEXT YEAR'S ANNUAL MEETING
The proxy rules adopted by the SEC provide that certain Stockholder
proposals must be included in the proxy statement for the Company's Annual
Meeting. For a proposal to be considered for inclusion in next year's proxy
statement, it must be received by the Company no later than December 23, 1998.
OTHER MATTERS
The Board of Directors of the Company knows of no matters to be presented at
the Annual Meeting other than those described in this proxy statement. Other
business may properly come before the meeting, and in that event it is the
intention of the persons named in the accompanying proxy to vote in accordance
with their judgment on such matters.
The cost of the solicitation of proxies will be borne by the Company. In
addition to solicitation by mail, Directors and officers of the Company,
without receiving any additional compensation, may solicit proxies personally
or by telephone or telegraph. The Company will request brokerage houses,
banks, and other custodians or nominees holding stock in their names for
others to forward proxy materials to their customers or principals who are the
beneficial owners of Shares and will reimburse them for their expenses in
doing so. The Company has retained the services of Kissel-Blake Inc., for a
fee of $8,000 plus out-of-pocket expenses, to assist in the solicitation of
proxies from brokerage houses, banks, and other custodians or nominees holding
stock in their names for others.
The Company's Annual Report to Stockholders, including the Company's audited
financial statements for the year ended December 31, 1997, is being mailed
herewith to all Stockholders of record as of March 18, 1998. THE COMPANY WILL
PROVIDE WITHOUT CHARGE TO ANY PERSON SOLICITED HEREBY, UPON THE WRITTEN
REQUEST OF ANY SUCH PERSON, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 1996 FILED WITH THE SEC. SUCH REQUESTS SHOULD
BE DIRECTED TO JAMES G. REYNOLDS, EXECUTIVE VICE PRESIDENT OF THE COMPANY, AT
4675 MACARTHUR COURT, SUITE 900, NEWPORT BEACH, CALIFORNIA 92660.
ALL STOCKHOLDERS ARE URGED TO COMPLETE, SIGN AND RETURN THE ACCOMPANYING
PROXY CARD IN THE ENCLOSED ENVELOPE.
By Order of the Board of Directors
[LOGO of SIGNATURE]
Edward J. Henning
Corporate Secretary
Newport Beach, California
March 30, 1998
17
<PAGE>
HEALTH CARE PROPERTY INVESTORS, INC.
REVOCABLE PROXY
ANNUAL MEETING OF STOCKHOLDERS
MAY 12, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, as a holder of Common Stock of Health Care Property
Investors, Inc. (the "Company"), hereby appoints Kenneth B. Roath and Orville E.
Melby as Proxies, with the full power of substitution, to represent and to vote
as designated on this card all of the shares of Common Stock of the Company
which the undersigned is entitled to vote at the Annual Meeting of Stockholders
to be held on May 12, 1998 at 9:30 A.M., or any adjournment thereof.
Unless otherwise marked, this Proxy will be voted FOR the election of the
Board of Directors' nominees to the Board of Directors and FOR the ratification
of Arthur Andersen LLP as independent auditors. If any other business is
presented at the Annual Meeting of Stockholders, the Proxy will be voted in
accordance with the discretion of the Proxies named above.
The Board of Directors recommends a vote "FOR" the nominees listed below and
"FOR" Proposals 2 and 3.
1. ELECTION OF DIRECTORS: Paul V. Colony and Peter L. Rhein
[_] FOR all nominees listed above [_] WITHHOLD AUTHORITY to vote
(except as marked to the contrary hereon) for all nominees listed above
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, write
that nominee's name on the line provided below.)
________________________________________________________________________________
2. Ratification of Arthur Andersen LLP as independent auditors for the year
ending December 31, 1998.
[_] FOR [_] AGAINST [_] ABSTAIN
3. In their discretion, upon any other matter that may properly come before the
Annual Meeting of Stockholders or any adjournment thereof.
[_] FOR [_] AGAINST [_] ABSTAIN
IMPORTANT: PLEASE DATE AND SIGN THE PROXY ON REVERSE SIDE
______________ ________________
ACCOUNT NUMBER COMMON
________________
D.R.S.
<PAGE>
Please mark, date and sign as your
name appears above. If acting as
executor, administrator, trustee,
guardian, etc., you should so
indicate when signing. If the signer
is a corporation, please sign the
full corporate name, by a duly
authorized officer and indicate the
title of such officer. If shares are
held jointly, each stockholder named
should sign. If you receive more than
one proxy card, please date and sign
each card and return all proxy cards
in the enclosed envelope.
Dated: _______________, 1998
_____________________________________
Signature
_____________________________________
Signature
PLEASE DATE, SIGN AND MAIL THIS PROXY IN THE ENCLOSED ENVELOPE.
