<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Confidential, for Use of the
[_] Preliminary Proxy Statement Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)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:
(2) Aggregate number of securities to which transaction applies:
(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):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] 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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
HEALTH CARE PROPERTY INVESTORS, INC.
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 28, 1999
Our annual meeting of stockholders will be held in the Cabrillo Room of the
Four Seasons Hotel, 690 Newport Center Drive, Newport Beach, California 92660
on Wednesday, April 28, 1999, 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, 1999, and
(3) transacting such other business as may properly come before the
meeting.
Only those stockholders whose names appear on our books as owning our common
stock at the close of business on March 1, 1999, are entitled to notice of,
and to vote at, our annual meeting or any adjournment or adjournments of our
annual meeting.
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
/s/ Edward J. Henning
Edward J. Henning
Corporate Secretary
Newport Beach, California
March 26, 1999
<PAGE>
HEALTH CARE PROPERTY INVESTORS, INC.
----------------
PROXY STATEMENT
This proxy statement is furnished to our stockholders in connection with our
Board of Directors' solicitation of proxies for use at the annual meeting of
stockholders to be held on April 28, 1999, and at any and all adjournments of
our annual meeting. Our principal executive offices 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 our stockholders is March 26, 1999.
On March 1, 1999, the record date for the determination of which
stockholders are entitled to notice of, and to vote at, our annual meeting,
HCPI had 31,040,276 shares of 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.
You may revoke the enclosed proxy at any time before it is exercised. If you
attend the meeting and vote in person your proxy will not be used.
PRINCIPAL STOCKHOLDERS
The following table sets forth information as of March 1, 1999, with respect
to each person who is known by HCPI to own beneficially more than 5% of our
common stock and with respect to the common stock owned beneficially by all
directors and executive officers of HCPI 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>
Scudder, Stevens &
Clark, Inc. ........... 345 Park Avenue 2,086,066(2) 6.7%
New York, NY 10154
All directors and
executive officers as a
group (11 persons)..... 1,237,600 3.9%(3)
</TABLE>
- - --------
(1) Nature of beneficial ownership is voting and/or investment power.
(2) Based on information as of December 31, 1998 obtained by HCPI from public
filings made by the beneficial owners listed.
(3) Includes 805,280 shares purchasable within 60 days upon exercise of
outstanding stock options.
1
<PAGE>
ELECTION OF DIRECTORS
(Proxy Item No. 1)
Pursuant to our 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 our annual meeting are Kenneth B. Roath and Orville E. Melby. Unless you
specifically withhold authority in the attached proxy for the election of
these two directors, HCPI will count your vote as for the election of Messrs.
Roath and Melby 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 that you vote by returning the enclosed proxy may be
voted for such other person or persons as may be determined by the holders of
such proxies unless your proxy contains instructions to the contrary. In no
event will your proxy be voted for more than two nominees.
BOARD OF DIRECTORS AND OFFICERS
The following table sets forth HCPI's executive officers, nominees for
election as directors and the other persons whose terms as directors continue
after our annual meeting. With respect to these individuals, HCPI has provided
information regarding their principal occupations for the past five years or
more, their ages, their positions and offices with HCPI, information as to
their terms in office as directors, and the number of shares of our common
stock owned beneficially by them on March 1, 1999:
<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.......... 59 1988 2001 15,500 28,000 (4)
Robert R. Fanning, Jr. . 56 1985 2000 8,193 49,500 (4)
Devasis Ghose........... 45 -- -- 17,665 41,740 (4)
Edward J. Henning....... 45 -- -- 14,450 38,700 (4)
Stephen R. Maulbetsch... 41 -- -- 20,180 34,000 (4)
Michael D. McKee........ 53 1989 2000 4,250 26,000 (4)
Orville E. Melby........ 77 1985 1999 14,300 38,000 (4)
Harold M. Messmer, Jr... 53 1985 2000 64,500(5) 14,000 (4)
James G. Reynolds....... 47 -- -- 58,240 106,400 (4)
Peter L. Rhein.......... 57 1985 2001 27,800 38,000 (4)
Kenneth B. Roath........ 63 1986 1999 187,242 389,440 1.81%
</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 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 HCPI since
January 1995 and has been in various positions with HCPI since 1986.
Mr. Henning became Senior Vice President, General Counsel and Corporate
Secretary of HCPI in January 1995 and joined HCPI 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 HCPI 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 HCPI in January 1995 and
also serves as its Chief Financial Officer. He has been employed with HCPI
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. Roath is Chairman of the Board of Directors and became President and
Chief Executive Officer of HCPI in May 1988, having previously served as
President and Chief Operating Officer since the inception of HCPI in 1985. Mr.
Roath is a past Chairman of the National Association of Real Estate Investment
Trusts, Inc. and also serves as a Special 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 five meetings during 1998. 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 1998. The audit committee is
authorized to:
. select the independent accountants to serve HCPI 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 HCPI'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 four meetings during 1998. 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
1998. The compensation committee is responsible for the administration of
HCPI'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 HCPI's executive officers and determines the
general compensation policy for HCPI.
4
<PAGE>
Board of Directors Compensation
HCPI currently pays each non-employee outside director:
(1) a fee of $18,000 per year for services as a director,
(2) $1,000 for attendance in person at each meeting of the Board of
Directors or any committee meeting, and
(3) $400 for participation in any telephonic Board of Directors meeting
or committee meeting, when such meeting lasts longer than one-half
hour.
In addition, HCPI reimburses the outside directors for travel expenses
incurred in connection with their duties as directors of HCPI. Inside
directors, who are employees of HCPI, do not receive any fees for serving on
the Board or for attending meetings.
Non-employee outside directors also participate in the Second Amended and
Restated Directors Stock Incentive Plan, which was adopted by HCPI and
approved by stockholders in April 1997. Under the Directors Stock Incentive
Plan, on the last Thursday of April of each year, HCPI grants to each outside
director 400 shares of restricted common stock and non-qualified options to
acquire 7,000 shares of common stock. In addition, for any year in which
HCPI's total return to shareholders exceeds by three percentage points the
total return of the health care equity segment of the National Association of
Real Estate Investment Trusts (NAREIT), outside directors will be granted an
additional 3,000 options to purchase common stock. HCPI's total return is
defined in the Directors Stock Incentive Plan as (A) the sum of (1) the fair
market value of HCPI's common stock as of December 31 of the year in question
minus the fair market value of the common stock as of January 1 of that year,
plus (2) the aggregate dividends paid to stockholders during that year,
divided by (B) the fair market value of HCPI's common stock as of January 1 of
that year. The total return of the NAREIT health care equity segment is
defined as the average total return of companies in the NAREIT health care
equity segment as published by NAREIT.
Options granted under the 7,000 annual grant and the 3,000 performance-based
grant, if any, are exercisable one year after the date of grant and expire not
later than 10 years from the date of grant. The exercise price of the options
is equal to the per share market value of HCPI's common stock on the date of
grant. The directors' restricted stock vests ratably 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 1998, outside
directors Colony, Fanning, McKee, Melby, Messmer and Rhein were each granted
400 shares of restricted stock and options for 7,000 shares of common stock at
an exercise price of $33.75. No performance based options were granted in
1998. In April 1999 HCPI will grant 400 shares of restricted common stock and
options to acquire 7,000 shares of common stock to Messrs. Colony, Fanning,
McKee, Melby, Messmer and Rhein. No performance options will be granted in
April 1999 in respect of performance for 1998.
5
<PAGE>
Amended and Restated Director Deferred Compensation Plan. In January 1996,
HCPI adopted an Amended and Restated Director Deferred Compensation Plan which
permits the outside directors to elect to defer fees and retainers.
Compensation deferred under the Director Deferred Compensation Plan is payable
to a participating director upon:
. his or her retirement,
. death,
. disability,
. 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 Director Deferred Compensation Plan elects
the amount of deferred compensation to be credited to:
(1) an interest rate 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
(2) a stock credit account wherein the deferred amount is treated as if
it were invested in HCPI common stock with the account increasing for
dividends paid, and increasing or decreasing with changes in the
price of the common stock.
In 1997 the Director deferred compensation plan was amended to provide for
the creation of retirement benefit stock accounts and interest accounts in
order to accommodate the transfer of the directors' accrued benefits under the
old retirement plan for outside directors into the Director Deferred
Compensation Plan. These new retirement benefit stock accounts and interest
accounts are substantially identical to the stock credit accounts and the
interest rate accounts described above, except that amounts available in the
retirement benefit stock accounts and interest accounts will be paid only
after the director's retirement from the Board of Directors. Under the
Director Deferred Compensation Plan, amounts may periodically be transferred
by a director between the retirement benefit stock account and interest
account or between the stock credit account and interest rate account.
6
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term Compensation
Annual Compensation -------------------------------------
-------------------------------------- Restricted
Name and Principal Other Annual Stock Stock All Other
Position Year Salary Bonus(1) Compensation(2) Awards(3)(4) Options Compensation(5)
------------------ ---- -------- -------- --------------- ------------ ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Kenneth B. Roath 1998 $440,000 $461,000 $799,200 250,000 $30,000
Chairman, President 1997 422,800 428,000 635,000(6) 100,000 28,000
and Chief Executive 1996 422,800 410,000 402,900 75,000 29,000
Officer
James G. Reynolds 1998 271,700 213,000 $197,000 194,300 85,000 20,000
Executive Vice 1997 261,200 200,000 135,200 38,000 18,000
President and Chief 1996 251,200 184,000 109,900 24,000 15,000
Financial Officer
Edward J. Henning 1998 190,000 68,000 124,900 52,000 19,000
Senior Vice President, 1997 182,200 63,000 106,200 30,000 16,000
General Counsel and 1996 175,200 61,000 96,100 20,250 12,000
Corporate Secretary
Devasis Ghose 1998 159,500 55,000 105,000 111,000 46,000 19,000
Senior Vice President-- 1997 147,500 46,000 88,800 28,000 16,000
Finance and Treasurer 1996 141,800 36,000 68,700 15,000 15,000
Stephen R. Maulbetsch 1998 145,000 63,000 72,000 97,000 40,000 17,000
Senior Vice President-- 1997 130,000 43,370 77,300 20,000 15,000
Acquisitions 1996 117,900 28,000 54,900 11,250 15,000
</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) Includes amounts paid to Messrs. Reynolds, Ghose and Maulbetsch to
reimburse these individuals for expenses incurred for moving their
personal residences when the Company moved its headquarters, in the
amounts of $188,000, $100,000 and $72,000, respectively.
(3) Other than Mr. Roath's May 1997 restricted stock grant discussed in
footnote 6 below and a May 1995 restricted stock grant to Mr. Roath of
30,000 shares which vested 40% after two years and 20% per year
thereafter, restricted stock awards vest ratably over five years. The
table below shows:
. the amounts of all restricted stock held at December 31, 1998,
. the value of such restricted stock (calculated by multiplying the
amount of restricted stock by the closing market price of $30.75 on
the last trading day of 1998), 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 HCPI. Such dividends are not included in
the summary compensation table.
7
<PAGE>
<TABLE>
<CAPTION>
Restricted Stock
Number of Shares Value of Grants with Respect
of Restricted Restricted to Indicated Year
Stock at Stock at --------------------
December 31, 1998 December 31, 1998 1996 1997 1998
----------------- ----------------- ------ ------ ------
<S> <C> <C> <C> <C> <C>
Kenneth B. Roath........ 52,800 $1,623,600 11,000 15,000 28,800
James G. Reynolds....... 13,080 402,210 3,000 3,500 7,000
Edward J. Henning....... 9,550 293,663 2,625 2,750 4,500
Devasis Ghose........... 7,470 229,703 1,875 2,300 4,000
Stephen R. Maulbetsch... 6,840 210,330 1,500 2,000 3,500
</TABLE>
(4) Long-term incentive stock award amounts have been calculated based upon
the closing market price as of the date of grant.
(5) These amounts represent HCPI's contributions to HCPI's 401(k) plan and,
for Mr. Roath only, also includes the value of $10,000 of premiums paid in
1998 by HCPI for Mr. Roath's term life insurance. HCPI is not the
beneficiary of this life insurance policy and the premiums that HCPI pays
are taxable as income to Mr. Roath.
(6) 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 vested on May 1, 1998. The remainder
of the amount reported reflects the January 1998 grants of restricted
stock for 1997 performance in connection with HCPI's annual year-end
review of compensation.
Employment Agreement. On April 28, 1988, HCPI entered into an employment
agreement with Kenneth B. Roath which was amended as of January 31, 1991. The
term of the employment agreement was for three years and is automatically
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 employment
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 employment agreement also provides for bonus
compensation. The employment agreement also provides that HCPI will pay the
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 in connection with a change in control or without
cause, he is entitled to receive in severance pay either:
. his then annual base salary through the remaining term of the employment
agreement, 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, minus the amount of compensation that he receives from a
new employer during what would have been the remainder of his term of
employment with HCPI, or
. 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, HCPI adopted a tax-qualified cash or deferred
profit-sharing plan. Under the profit-sharing plan, which covers all HCPI
employees after they have completed one year of service, employees
8
<PAGE>
may elect to reduce their current compensation up to a maximum of $10,000 for
1998 and 1999 and have the amount of the reduction contributed to the profit
sharing plan. HCPI also contributes to the profit-sharing plan an amount equal
to the lesser of $6,400 for 1998 and 1999 or 4% of such employee's
compensation if such employee's contribution to the profit-sharing plan is at
least the lesser of 3% of his compensation or the maximum contribution
allowable by law. The employee's right to retain HCPI's contributions vests at
the rate of 20% per year, beginning after the employee has been in the profit
sharing plan for one year. The profit sharing plan is intended to qualify
under section 401 of the internal revenue code so that contributions by
employees or by HCPI are not taxable to employees until withdrawn from the
profit sharing plan, and so that contributions by HCPI will be deductible by
HCPI when made. For the fiscal year ended December 31, 1998, HCPI made
contributions to the profit sharing plan, including section 401(a)
contributions discussed below, as follows: $95,000 on behalf of its five most
highly compensated executive officers each of whose total remuneration
exceeded $60,000 during such fiscal year; and $193,000 on behalf of all
employees as a group. At December 31, 1998, 19 of the 29 employees of HCPI
were participants in the profit-sharing plan.
In 1993, the compensation committee adopted an amendment to the profit-
sharing plan to provide for a section 401(a) profit sharing contribution as
provided for in the Internal Revenue Code. Contributions under the profit-
sharing plan are subject to various limitations under the Internal Revenue
Code. 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 1998.
Supplemental Executive Retirement Plan. On May 1, 1988, the Board of
Directors adopted a Supplemental Executive Retirement Plan, 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 Executive
Retirement Plan varies according to:
(1) the age of the participant at retirement, with the youngest
retirement age being 55, and
(2) the number of years the participant has served HCPI, 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 average annual earnings multiplied by
years of service after age 60 (not to exceed five years). Final average
earnings are defined under the Executive Retirement Plan to mean the average
of the three highest, not necessarily consecutive, years' earnings. Under the
Executive Retirement Plan, 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 HCPI under the
profit-sharing plan described above. If a participant retires before age 65,
his benefits may be subject to reduction for early retirement.
The Executive Retirement Plan benefit is reduced by 100% of any retirement
employee benefit received from any of HCPI's other retirement plans 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.
9
<PAGE>
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 63 and age 65:
Anticipated annual benefits
at ages listed below
<TABLE>
<CAPTION>
Final
Average
Earnings 63 64 65
-------- -------- -------- --------
<S> <C> <C> <C>
$885,000 $323,000 $365,000 $418,000
935,000 342,000 387,000 443,000
985,000 361,000 417,000 478,000
</TABLE>
A life insurance policy has been purchased on the life of Mr. Roath naming
HCPI as sole beneficiary to provide for a portion of the obligations under the
Executive Retirement Plan. The policy is designed so that HCPI will recover a
portion of its executive retirement plan payments plus a factor for the use of
its money.
HCPI believes that the Executive Retirement Plan aids in the ability to
attract, retain, motivate and provide financial security to management
employees who render valuable services to HCPI.
OPTION GRANTS IN FEBRUARY 1999 WITH RESPECT TO 1998 PERFORMANCE
<TABLE>
<CAPTION>
Percentage
Options of Total Exercise Price(1) Expiration
Name Granted Options Granted ($/Sh) Date Valuation(2)
---- ------- --------------- ----------------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Kenneth B. Roath........ 250,000 46.083% $27.750 2/3/09 $159,700
James G. Reynolds....... 85,000 15.668% 27.750 2/3/09 54,298
Edward J. Henning....... 52,000 9.585% 27.750 2/3/09 33,218
Devasis Ghose........... 46,000 8.479% 27.750 2/3/09 29,385
Stephen R. Maulbetsch... 40,000 7.373% 27.750 2/3/09 25,552
</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, using the
following variables:
. risk-free rate of return of 4.87%;
. .1669 five year volatility factor;
. 9.59% dividend yield;
. 3% termination discount factor; and
. ten-year option term;
which yields a discount Black Scholes value for such stock options of
$0.6388. 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.
10
<PAGE>
AGGREGATED OPTION EXERCISES IN 1998 AND OPTION VALUES AT DECEMBER 31, 1998
<TABLE>
<CAPTION>
Number of Value of Unexercised
Unexercised Options at December In-The-Money Options at
Value 31, 1998 December 31, 1998(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........ 6,200 $97,000 326,440 234,000 $1,715,600 $31,750
James G. Reynolds....... 8,000 48,000 85,900 80,100 342,580 7,520
Edward J. Henning....... 0 -- 22,650 65,100 7,800 3,740
Devasis Ghose........... 1,620 3,500 28,440 53,240 96,380 2,830
Stephen R. Maulbetsch... 1,620 8,300 23,330 42,500 64,340 3,250
</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 when
the options are exercised. During 1998 Messrs. Reynolds, Ghose and
Maulbetsch exercised all options with dividend share rights that were then
exercisable. At December 31, 1998, Mr. Roath held 18,000 dividend share
right options which are currently exercisable and Mr. Henning held 1,800
of such options which are currently exercisable. At December 31, 1998,
Messrs. Roath, Reynolds, Henning, Ghose and Maulbetsch held 12,000, 2,000,
1,200, 1,080 and 1,080, of such options which are not currently
exercisable. 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 on such
options accrue at the same rate as dividends on our common stock.
(3) Calculated based on the closing market price on the last trading day of
1998 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 HCPI's previous
filings under the Securities Act or the Exchange Act that refer to future
filings for additional information, including specifically to this proxy
statement, in whole or in part, the following report and the stock performance
graph shall not be considered to be a part of any such filing.
COMPENSATION COMMITTEE REPORT TO STOCKHOLDERS
The compensation committee of the Board of Directors is comprised of three
outside, non-employee members of the Board. The compensation committee is
responsible for establishing and governing the compensation and benefit
practices of HCPI. The compensation committee establishes the general
compensation policies of HCPI, reviews and approves compensation of the
executive officers of HCPI and administers all of HCPI's employee benefit
plans. The compensation committee conducts an annual review of the executive
compensation program of HCPI to ensure that:
(1) compensation levels are reasonable and consistent with practices of
comparably sized REITs and real estate development organizations,
(2) the program adequately rewards performance which is tied to creating
stockholder value, and
(3) the program is designed to achieve HCPI's goals of promoting
financial and operational success by attracting, motivating and
facilitating the retention of key employees with outstanding talent
and ability.
11
<PAGE>
The compensation committee has committed to a program that emphasizes both
short- and long-term incentive compensation, with a significant component of
compensation tied to performance. On a short-term basis, cash bonuses are
awarded based upon the achievement of annual business objectives. In addition,
by emphasizing stock and options as a substantial portion of compensation, the
compensation committee believes that management's interests are aligned with
that of HCPI's stockholders. The compensation program is also designed to
promote teamwork, initiative and resourcefulness on the part of key employees
whose performance and responsibilities directly affect the company's profits.
The compensation committee reviews with the Board of Directors all aspects of
compensation for executive officers.
The compensation committee bases its compensation decisions on an analysis
of HCPI's performance and an evaluation of comparative compensation
information. To assist it in this regard, the compensation committee retained
the services of Shuman Management Consulting, an executive compensation
consulting firm. In the course of its deliberations, the compensation
committee reviews survey and other data supplied by Shuman relating to the
compensation practices of competitors and other comparably sized companies.
Shuman also provides advice to the compensation committee with respect to the
reasonableness of the compensation paid to the executive officers.
For the compensation committee deliberations in January 1999, Shuman
reviewed the compensation practices of companies including predominantly real
estate organizations with assets and market capitalization approximating $1
billion, REITs specializing in health care, real estate development firms and
general industry companies for positions where the labor market is not
restricted to the REIT industry. In addition, Shuman provided to the
compensation committee an analysis of base salary, total cash and total direct
compensation for 15 self-administered REITs, which include health care, triple
net lease and well-established equity REITs, ranging from $600 million to $7
billion in assets and $500 million to $2 billion in market capitalization. The
compensation committee considers both the more general compensation analysis
as well as the information regarding the 15 selected REITs in determining what
constitutes "competitive practices" in setting compensation for HCPI's
executive officers. Shuman also provided to the compensation committee an
analysis of HCPI's performance compared to 17 health care, triple net lease
and well-established REITs with over $500 million in assets and market
capitalization, and compared to the NAREIT equity health care segment. Some,
but not all, of the companies included in the stock price performance graph
are included in the compensation surveys.
The compensation committee noted that HCPI exceeded its plan targets with
respect to new investment activity and funds from operations ("FFO") growth.
HCPI's total return to shareholders for 1998 approximated the 50th percentile
compared to the peer group of 17 selected REITs and significantly outperformed
the NAREIT equity health care and total equity REIT segments. However,
performance for all REIT segments was negative and significantly lagged the
S&P 500 for 1998. HCPI's total return to stockholders as compared to the 17
selected REITs was below the 50th percentile for the last three and four year
periods and between the 50th and 75th percentile for the last five to nine
year period. HCPI's FFO growth approximates the average of this peer group for
the past 3 years and the 75th percentile for the past five years. In addition,
the compensation committee took into account that HCPI's investment activity
for 1998 was nearly twice that of any previous year and that HCPI completed
critical rollover activity that will extend the average duration of the
investment portfolio, each of which is directly attributable to the efforts
and performance of the executive officers. HCPI also recorded its 13th
straight year of increased FFO and has achieved 53 consecutive quarterly
dividend increases.
12
<PAGE>
Compensation Mix for Executive Officers other than the Chief Executive Officer
HCPI's executive compensation is based on three components which are
designed to accomplish the Company's compensation philosophy:
(1) base salary,
(2) annual cash incentive bonuses, and
(3) long-term stock incentive awards.
The compensation committee has designed a highly leveraged program that is
intended to result in approximately 40% in base compensation and 60% in
incentive compensation 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 targets
base pay levels in the middle quartiles of competitive practices. For 1998,
base salary levels approximated the 40th percentile of competitive practices.
The compensation committee believes that the base compensation levels of the
executive officers generally is reasonable in view of competitive practices,
HCPI's performance and the contribution of those officers to that performance.
In the future, salaries may be increased based upon an assessment of
competitive pay levels or the individual's contribution to the asset and
financial growth of HCPI.
Annual Cash Incentive Awards. Annual cash incentive bonuses are awarded
based upon multiple performance criteria, including subjective evaluations of
personal job performance and performance measured against objective business
criteria. The performance targets established each year include a targeted
amount of new investment and acquisition activity and a FFO target. The
compensation committee believes that management generally has an ability to
drive the levels of new investment activity and FFO, and that growth in these
factors is reasonably expected to correlate with the value of HCPI's common
stock. In setting the performance targets, the compensation committee makes
judgments regarding what levels of FFO and new business acquisition levels it
believes are achievable, taking into account outside factors such as
competition for the acquisition and financing of health care facilities, the
interest rate environment and the cost of capital. Within these levels, the
compensation committee sets performance targets it believes will positively
affect the company's stock price. In addition to satisfying the performance
targets, bonus awards are also based on personal performance measured by the
extent to which each officer meets his personal goals. Personal performance
goals necessarily vary among executive officers based upon their specific
roles within HCPI and specific objectives established each year for each
executive officer by HCPI's chief executive officer. The annual cash bonus
incentive awards are heavily weighted toward satisfaction of the performance
targets, consistent with the compensation committee's focus on tying incentive
compensation to stockholder value creation.
A target bonus 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 bonus at the
beginning of each calendar year. The target bonus is expressed as a percentage
of base salary and ranged between 25% and 60% of base salaries in 1998. Both
the business development and FFO targets were significantly exceeded in 1998
and target bonuses were approved by and awarded by the compensation committee
for 1998 performance. In addition, the compensation committee established
target bonuses for 1999.
13
<PAGE>
Long-Term Incentive Stock Plans. The compensation committee administers
HCPI's benefits and stock plans, including the amended and restated stock
incentive plan. Pursuant to the stock incentive 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 usually are granted
at 100% of the current fair market value of the common stock. Generally, stock
option grants and restricted stock awards vest ratably over a five-year
period, and the executive must be employed by HCPI at the time of vesting in
order to receive restricted stock and to exercise the options. The
compensation committee may make grants based on a number of factors,
including:
(1) the executive officer's position with HCPI,
(2) performance of his responsibilities,
(3) equity participation levels of comparable executives at competitive
companies, and
(4) individual contribution to the success of HCPI'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 HCPI, accounting impact and the number of shares available for issuance.
For 1998, each of the executive officers received restricted stock and options
which were based on his responsibilities, relative position with HCPI,
competitive practices and the committee's philosophy of leveraging
compensation toward long term incentives. 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 1999 for 1998 performance) for the executive officers other than the
chief executive officer was at or below the 50th percentile of competitive
practices and total direct compensation (cash compensation plus restricted
stock and option grants in January 1999 for 1998 performance) was slightly
above the 50th percentile of these companies, in each case, somewhat lower
than in prior years. The executive officers' compensation mix for 1998 was
leveraged 60% toward incentive based compensation and 40% comprised of base
salary.
Chief Executive Compensation
The compensation committee believes that the biggest challenges facing HCPI
today are competition for acquisition and financing activity and lease and
mortgage maturities. As discussed above, the compensation committee
establishes individual performance targets for each executive officer other
than the chief executive officer, which include a targeted amount of new
investments and acquisitions and a FFO target. The chief executive officer is
evaluated on the basis of HCPI's achievement of the collective performance
targets, as well as progress in successful roll-over of maturing leases and
mortgages, the level of stockholder dividends, and the diversity and stability
of the portfolio. During 1998, investment and acquisition activity were nearly
double that of the prior year and were 15% above plan targets. HCPI also
successfully completed a significant number of lease roll-overs and added to
the portfolio diversification and stability by expanding into the medical
office building and not for profit health care sectors. In addition, the
Company achieved its 13th consecutive year of quarterly dividend increases.
Finally, since 1986, the Company has maintained an investment grade rating on
its senior debt, the highest bond rating among health care REITs.
Mr. Roath's compensation in 1998 was leveraged 75% toward compensation based
upon HCPI's performance and 25% comprised of a base salary component. Mr.
Roath's base salary is targeted at the 50th percentile of competitive
practices and his total direct compensation is targeted at the upper quartile
of these companies. Mr. Roath received a base salary of $440,000 in 1998 which
represents a 4% increase from his base
14
<PAGE>
salary in 1997. For 1999, the compensation committee recommended a 8%
increase, to $475,000 in Mr. Roath's base salary over 1998 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 HCPI 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 $461,000, restricted stock
grants of 22,800 shares of our common stock and 250,000 stock option grants at
an exercise price of $27.75. These awards are consistent with HCPI's pay-for-
performance philosophy, reflecting Mr. Roath's consistent contribution to
HCPI's growth in FFO, the continued successful execution of the Company's
long-term business plan, stabilization of lease roll-overs and increase in
investment activity in excess of the business plan, and his continued
contribution to the expansion of HCPI's investment portfolio.
HCPI provides Mr. Roath other benefits under his employment agreement and
HCPI has reported them in the summary compensation table.
Based upon the foregoing, the compensation committee has reviewed and
approved the total compensation for 1998 of the five most highly compensated
executive officers of HCPI.
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. HCPI will continue to
evaluate alternatives to ensure executive compensation is reasonable,
performance-based, and consistent with HCPI's overall compensation objectives.
The compensation committee reserves the right to design programs that
recognize a full range of performance criteria important to HCPI's success,
even where the compensation paid under such programs may not be deductible.
Compensation Committee
<TABLE>
<S> <C> <C>
Orville E. Melby Michael D. McKee Harold M. Messmer, Jr.
Chairman
</TABLE>
15
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The graph below compares cumulative total return of HCPI, the S&P 500 Index
and the Equity REIT Index of the National Association of Real Estate
Investment Trusts, Inc., from January 1, 1994 to December 31, 1998. Total
return assumes quarterly reinvestment of dividends before consideration of
income taxes.
Assumes $100 Invested January 1, 1994 in HCPI, S&P 500 Index and NAREIT Equity
Reit Index
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG S&P 500 EQUITY REITS AND HCPI
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) S&P 500 Euity REITs HCPI
- - ------------------- ------- ----------- ----
<S> <C> <C> <C>
Measurement Pt- Dec-93 $100.00 $100.00 $100.00
Apr-94 $ 96.23 $103.40 $114.26
Jul-94 $ 96.61 $105.31 $116.98
Sep-94 $101.32 $103.32 $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 $164.67
Sep-97 $229.60 $196.50 $184.10
Dec-97 $238.14 $200.54 $182.51
Mar-98 $271.36 $199.60 $181.19
Jun-98 $280.18 $190.50 $180.16
Sep-98 $248.83 $171.47 $168.32
Dec-98 $304.99 $167.22 $160.18
</TABLE>
16
<PAGE>
CERTAIN TRANSACTIONS
Since 1985, HCPI 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 HCPI since
April 1988, is Vice Chairman of Aon Worldwide Resources and Chairman of the
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 HCPI 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, 1998 were approximately
$472,000.
Mr. Roath, a director and officer of HCPI, has remaining balances on loans
of $473,576 with an interest rate of 6.83% due on November 18, 1999, $187,902
with an interest rate of 7.09% due on April 30, 2000, $257,495 with an
interest rate of 6.58% due on January 27, 2001, $134,827 with an interest rate
of 6.39% due on April 30, 2001, and $141,873 with an interest rate of 6.31%
due on September 20, 2001. HCPI made a loan to Mr. Reynolds, an officer of
HCPI, of $139,851 with an interest rate of 5.97% due on October 8, 2001. In
addition, HCPI made loans to Mr. Melby, a director of HCPI, of $128,734 with
an interest rate of 5.97%, due on October 21, 2001 and to Mr. Fanning, also a
director of HCPI, of $87,750 with an interest rate of 6.40% due on April 29,
2001 and $8,191 with an interest rate of 6.31% due on September 28, 2001. All
of the loans were made either for the purpose of purchasing shares or meeting
payroll taxes due upon vesting of stock grants, and such loans are secured by
the stock of HCPI.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act, requires HCPI's directors and executive
officers, and persons who own more than 10% of a registered class of HCPI's
equity securities, to file with the SEC initial reports of ownership and
reports of changes in ownership of equity securities of our common stock.
These people are required by SEC regulations to furnish HCPI with copies of
all these reports they file. To HCPI's knowledge, based solely on its review
of the copies of such reports furnished to us and written representations from
certain insiders that no other reports were required during the year ended
December 31, 1998, all section 16(a) filing requirements applicable to such
insiders were complied with other than a report on Form 4 reporting the
purchase of 2,500 shares of common stock by Mr. Colony was filed late for the
month ended September 1998.
17
<PAGE>
RATIFICATION OF THE SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
(Proxy Item No. 2)
Arthur Andersen LLP audited our financial statements for the year ended
December 31, 1998 and have been HCPI's auditors since HCPI's organization.
The directors have selected the firm of Arthur Andersen LLP as independent
accountants for HCPI for the fiscal year ending December 31, 1999, and are
submitting our selection for ratification by our stockholders. Unless you
specifically make another choice in the attached proxy, HCPI will count your
vote as for the ratification of the selection of Arthur Andersen LLP. 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 HCPI. The directors retain the power to replace the independent
accountants whose selection was ratified by stockholders in the event the
directors determine that the best interest of HCPI warrants a change of its
independent accountants. A representative of Arthur Andersen LLP is expected
to be present at the April 28, 1999 annual meeting and will have an
opportunity to make a statement if he desires to do so. Arthur Andersen's
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 HCPI'S INDEPENDENT ACCOUNTANTS FOR
THE SUCCEEDING YEAR.
VOTING PROCEDURES
Under HCPI's bylaws 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: (1)
determining the presence of a quorum and (2) 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" as shares that are present and entitled to vote for purposes of
establishing a quorum. Broker non-votes include, for example, shares held by
brokers when the beneficial owner or persons entitled to vote have not given
instructions on how to vote on a particular matter to such broker and the
broker or its nominee does not have the discretionary power to vote on such
matter. 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).
18
<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 HCPI's annual meeting.
For a proposal to be considered for inclusion in next year's proxy statement,
it must be received by HCPI no later than December 30, 1999.
OTHER MATTERS
The Board of Directors 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 HCPI. In addition
to solicitation by mail, directors and officers of HCPI, without receiving any
additional compensation, may solicit proxies personally or by telephone or
telegraph. HCPI 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 of our
common stock and will reimburse them for their expenses in doing so. HCPI 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.
HCPI's annual report to stockholders, including HCPI's audited financial
statements for the year ended December 31, 1998, is being mailed herewith to
all stockholders of record as of March 1, 1999. HCPI WILL PROVIDE WITHOUT
CHARGE TO ANY PERSON SOLICITED HEREBY, UPON THE WRITTEN REQUEST OF ANY SUCH
PERSON, A COPY OF HCPI'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1998 FILED WITH THE SEC. SUCH REQUESTS SHOULD BE DIRECTED TO
JAMES G. REYNOLDS, EXECUTIVE VICE PRESIDENT OF HEALTH CARE PROPERTY INVESTORS,
INC., 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
/s/ Edward J. Henning
Edward J. Henning
Corporate Secretary
Newport Beach, California
March 26, 1999
19
<PAGE>
HEALTH CARE PROPERTY INVESTORS, INC.
REVOCABLE PROXY
Annual Meeting of Stockholders
April 28, 1999
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 Paul V.
Colony 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 April 28, 1999 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: Kenneth B. Roath and Orville E. Melby
<TABLE>
<S> <C>
[_] FOR all nominees listed above [_] WITHHOLD AUTHORITY to vote
(except as marked to the contrary hereon) for all nominees listed above
</TABLE>
(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, 1999.
[_] 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, adminstrator, 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: _______________________, 1999
-----------------------------------
Signature
-----------------------------------
Signature
PLEASE DATE, SIGN AND MAIL THIS PROXY IN THE ENCLOSED ENVELOPE.
