<PAGE> 1
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:
[ ] Preliminary Proxy [ ] Confidential, for Use of the
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> 2
HEALTH CARE PROPERTY INVESTORS, INC.
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 9, 2000
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
Tuesday, May 9, 2000, at 9:30 a.m., California time, for the purposes of:
(1) electing three directors,
(2) approving the 2000 Stock Incentive Plan,
(3) ratifying the selection of Arthur Andersen LLP as independent
accountants for the fiscal year ending December 31, 2000, and
(4) 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 7, 2000, 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 30, 2000
<PAGE> 3
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 May 9, 2000, 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 30, 2000.
On March 7, 2000, the record date for the determination of which
stockholders are entitled to notice of, and to vote at, our annual meeting, HCPI
had 51,253,192 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, 2000, 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>
Cohen & Steers Capital Management, Inc. ..... 757 Third Avenue 4,053,800(2) 7.86%
New York, NY 10017
Franklin Resources, Inc...................... 777 Mariners Island 2,750,502(3) 5.3%
Boulevard
San Mateo, CA 94404
Capital Research & Management Company........ 333 South Hope Street 2,606,500(4) 5.1%
Los Angeles, CA 90071
All directors and executive officers as a
group
(11 persons)................................. 1,559,415 2.8%(5)
</TABLE>
- ---------------
(1) Nature of beneficial ownership is voting and/or investment power.
(2) Based on information set forth in a Schedule 13G filed by Cohen & Steers
Capital Management, Inc. on February 10, 2000.
(3) According to a Schedule 13G filed by Franklin Resources, Inc. on January 19,
2000, represents shares owned by one or more investment companies or other
managed accounts which are advised by investment advisory subsidiaries of
Franklin Resources, Inc. The investment advisory subsidiaries of Franklin
Resources, Inc. exercise voting and dispositive power over the securities
owned by the advisory clients.
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<PAGE> 4
(4) According to a Schedule 13G filed on February 10, 2000, Capital Research &
Management Company, an investment adviser registered under the Investment
Advisers Act of 1940, is deemed to be the beneficial owner as a result of
acting as investment adviser to various investment companies. Capital
Research & Management Company disclaims beneficial ownership pursuant to
Rule 13d-4 of the Securities Exchange Act of 1934.
(5) Includes 1,039,660 shares purchasable within 60 days upon exercise of
outstanding stock options.
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, three 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 three positions of director to be voted
upon at our annual meeting are Robert R. Fanning, Jr., Michael D. McKee and
Harold M. Messmer, Jr. Unless you specifically withhold authority in the
attached proxy for the election of these three directors, the persons named in
the attached proxy intend to vote for the election of Messrs. Fanning, McKee and
Messmer 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 three nominees.
2
<PAGE> 5
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, 2000:
<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....................... 60 1988 2001 23,900 35,000 (4)
Robert R. Fanning, Jr................ 57 1985 2000 8,593 56,500 (4)
Devasis Ghose........................ 46... -- -- 24,725 64,080 (4)
Edward J. Henning.................... 46 -- -- 17,775 66,650 (4)
Stephen R. Maulbetsch................ 42 -- -- 27,680 52,790 (4)
Michael D. McKee..................... 54 1989 2000 20,650 13,000 (4)
Orville E. Melby..................... 78 1985 2002 14,500 45,000 (4)
Harold M. Messmer, Jr................ 54 1985 2000 64,400(5) 21,000 (4)
James G. Reynolds.................... 48 -- -- 71,240 143,200 (4)
Peter L. Rhein....................... 58 1985 2001 28,200 45,000 (4)
Kenneth B. Roath..................... 64 1986 2002 218,092 497,440 1.36%
</TABLE>
- ---------------
(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, now Northeast
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
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<PAGE> 6
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 Vice Chairman of The Irvine Company 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 also a Director of Realty Income
Corporation and Mandalay Resort Group, formerly Circus Circus Enterprises, Inc.,
both of which are NYSE listed companies.
Mr. Melby is a director and 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., a NYSE listed company, since
July 1986. Mr. Messmer is also a Director of Airborne Freight Corporation and
Spieker Properties, Inc., both of which are NYSE listed companies.
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.
Mr. Rhein is a director and has been a general partner of Sarlot and Rhein,
a real estate investment and development partnership, since 1967. From August
1970 until May 1984 he was employed in various capacities by Wells Fargo Realty
Advisors and its affiliates. From 1976 until May 1984 he was Vice President,
Treasurer and Chief Financial Officer of Wells Fargo Mortgage and Equity Trust,
a real estate investment trust. Mr. Rhein is a Certified Public Accountant.
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., both of which are NYSE
listed companies. 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 nine meetings during 1999. During that period,
no incumbent director attended fewer than 78% 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.
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<PAGE> 7
The audit committee is comprised of Messrs. McKee, Messmer and Rhein. The
audit committee held two meetings during 1999. 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
audit committee intends to adopt a new charter that will meet the recently
adopted requirements of the New York Stock Exchange.
The investment committee is comprised of Messrs. Fanning, Melby, Rhein and
Roath. The investment committee held three meetings during 1999. The investment
committee is authorized to approve all real estate acquisitions and other
investments and any financing activity related to a real estate acquisition.
The compensation committee, which held one meeting during 1999, is
comprised of outside directors of the Board who are not employees of the
Company. This committee is currently comprised of Messrs. Colony, Melby and
Messmer. The compensation committee is responsible for the administration of
HCPI's employee benefit plans and 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.
BOARD OF DIRECTORS COMPENSATION
HCPI currently pays each non-employee outside director:
(1) a fee of $24,000 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) $500 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 are granted an additional 3,000 options to
purchase common stock. HCPI's
5
<PAGE> 8
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 as part of 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.
In April 1999, HCPI granted 400 shares of restricted common stock and
options to acquire 7,000 shares of common stock at an exercise price of $30.75
to Messrs. Colony, Fanning, McKee, Melby, Messmer and Rhein. Subsequent to May
1999 HCPI determined that the outside directors were eligible for the 3,000
performance option grant for 1998 based upon the company's total return to
shareholders as compared to the total return of the health care equity segment
of the NAREIT index during 1998. In April 2000, outside directors Colony,
Fanning, McKee, Melby, Messmer and Rhein will each be granted 3,000 performance
options in respect of performance for 1998. In January 2000, HCPI adopted an
amendment to the Second Amended and Restated Directors Stock Incentive Plan that
provided that any directors serving on the Board as of January 4, 2000 would be
immediately granted an option to acquire 21,000 shares of common stock (the
"Special Option") in lieu of yearly grants of an option to acquire 7,000 shares
of common stock in April of 2000, 2001 and 2002. The Special Option is
exercisable in one-third cumulative installments over three years (i.e., 7,000
shares on the last Thursday in April 2001, 7,000 shares on the last Thursday in
April 2002 and 7,000 shares on the last Thursday in April 2003). The exercise
price for the Special Option is $23.875, the fair market value of the common
stock as of January 4, 2000. In order to exercise any of the one-third
installments of the Special Option, the directors must be serving on the Board
one-year prior to the specified exercise date. Messrs. Colony, Fanning, McKee,
Melby, Messmer and Rhein were each granted a Special Option, and will receive
grants of 400 shares of restricted stock in April 2000. Based upon HCPI's 1999
performance as compared to the health care equity segment of NAREIT, Messrs.
Colony, Fanning, McKee, Melby, Messmer and Rhein will also each receive 3,000
performance-based options. Although the existing outside directors will not
receive the 7,000 option grants in April 2000, 2001 or 2002, any newly appointed
directors to the Board will be eligible for the 7,000 option grant and beginning
in 2003, HCPI intends to resume yearly 7,000 option grants to any existing
directors who are then members of the Board of Directors.
Amended and Restated Director Deferred Compensation Plan. In January 1996,
HCPI adopted an Amended and Restated Director Deferred Compensation Plan that
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
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<PAGE> 9
- 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, a director may periodically transfer amounts between the
retirement benefit stock account and interest account or between the stock
credit account and interest rate account subject to certain restrictions,
including that the transfers not be made more often than every six months. As of
December 31, 1999, the participating directors had allocated in the aggregate
$940,000 to their retirement benefit stock accounts, $1,060,000 to their
deferred compensation stock accounts and $225,000 to their deferred compensation
interest accounts.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION ----------------------------------------
-------------------------------------------- RESTRICTED
OTHER ANNUAL STOCK STOCK ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION(2) AWARDS(3)(4) OPTIONS COMPENSATION(5)
--------------------------- ---- -------- -------- --------------- ------------ ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Kenneth B. Roath...................... 1999 $475,000 $486,400 $778,100 370,000 $30,000
Chairman, President 1998 440,000 461,000 799,200 250,000 30,000
and Chief Executive Officer 1997 422,800 428,000 635,000(6) 100,000 28,000
James G. Reynolds..................... 1999 290,000 270,500 337,200 250,000 20,000
Executive Vice President 1998 271,700 213,000 $197,000 194,300 85,000 20,000
and Chief Financial Officer 1997 261,200 200,000 135,200 38,000 18,000
Edward J. Henning..................... 1999 202,000 150,200 181,600 175,000 17,000
Senior Vice President, 1998 190,000 68,000 124,900 52,000 19,000
General Counsel and 1997 182,200 63,000 106,200 30,000 16,000
Corporate Secretary
Devasis Ghose......................... 1999 185,000 119,500 181,600 150,000 17,000
Senior Vice President -- 1998 159,500 55,000 105,000 111,000 46,000 19,000
Finance and Treasurer 1997 147,500 46,000 88,800 28,000 16,000
Stephen R. Maulbetsch................. 1999 171,000 131,300 168,600 140,000 15,000
Senior Vice President -- 1998 145,000 63,000 72,000 97,000 40,000 17,000
Acquisitions 1997 130,000 43,370 77,300 20,000 15,000
</TABLE>
- ---------------
(1) Bonuses are paid at the end of a fiscal year or the beginning of the
following fiscal year for the indicated year's performance.
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<PAGE> 10
(2) Includes amounts paid to Messrs. Reynolds, Ghose and Maulbetsch in 1998 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, 1999,
- the value of such restricted stock (calculated by multiplying the amount
of restricted stock by the closing market price of $23.875 on the last
trading day of 1999), 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.
<TABLE>
<CAPTION>
RESTRICTED STOCK
NUMBER OF SHARES VALUE OF GRANTS WITH RESPECT
OF RESTRICTED RESTRICTED TO INDICATED YEAR
STOCK AT STOCK AT ------------------------
DECEMBER 31, 1999 DECEMBER 31, 1999 1997 1998 1999
----------------- ----------------- ------ ------ ------
<S> <C> <C> <C> <C> <C>
Kenneth B. Roath............... 56,400 $1,346,600 15,000 28,800 30,000
James G. Reynolds.............. 15,300 365,300 3,500 7,000 13,000
Edward J. Henning.............. 10,775 257,300 2,750 4,500 7,000
Devasis Ghose.................. 9,965 214,000 2,300 4,000 7,000
Stephen R. Maulbetsch.......... 8,000 191,000 2,000 3,500 6,500
</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 1999
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
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<PAGE> 11
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 may elect to
reduce their current compensation up to a maximum of $10,000 for 1999 and
$10,500 for 2000 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 1999 and $6,800 for 2000 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, 1999, HCPI made contributions to the profit sharing
plan, including section 401(a) contributions discussed below, as follows:
$89,000 on behalf of its five most highly compensated executive officers each of
whose total remuneration exceeded $60,000 during such fiscal year; and $215,000
on behalf of all employees as a group. At December 31, 1999, 22 of the 35
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 1999.
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.
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<PAGE> 12
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.
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 age 64 or age 65:
ANTICIPATED ANNUAL BENEFITS AT AGES LISTED BELOW
<TABLE>
<CAPTION>
FINAL AVERAGE EARNINGS 64 65
---------------------- -------- --------
<S> <C> <C>
$885,000............................................... $387,000 $443,000
935,000............................................... 409,000 468,000
985,000............................................... 430,000 493,000
</TABLE>
A life insurance policy has been purchased on the life of Mr. Roath naming
HCPI as sole beneficiary to provide for a portion of the obligations under the
Executive Retirement Plan. The policy is designed so that HCPI will recover a
portion of its executive retirement plan payments plus a factor for the use of
its money.
HCPI believes that the Executive Retirement Plan aids in the ability to
attract, retain, motivate and provide financial security to management employees
who render valuable services to HCPI.
OPTION GRANTS IN JANUARY 2000 WITH RESPECT TO 1999 PERFORMANCE
<TABLE>
<CAPTION>
PERCENTAGE EXERCISE
OPTIONS OF TOTAL PRICE(2) EXPIRATION
NAME GRANTED(1) OPTIONS GRANTED ($/SH) DATE VALUATION(3)
---- ---------- --------------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Kenneth B. Roath...................... 370,000 30.38% $23.875 01/4/2010 $177,600
James G. Reynolds..................... 250,000 20.53% 23.875 01/4/2010 115,000
Edward J. Henning..................... 175,000 14.37% 23.875 01/4/2010 80,500
Devasis Ghose......................... 150,000 12.32% 23.875 01/4/2010 69,000
Stephen R. Maulbetsch................. 140,000 11.49% 23.875 01/4/2010 64,400
</TABLE>
- ---------------
(1) The option granted to Mr. Roath vests over five years in equal installments
of 20% of the shares subject to the option per year. The options granted to
Messrs. Reynolds, Henning, Ghose and Maulbetsch vest over six years in the
following cumulative installments: (i) the options are exercisable with
respect to 10% of the shares on each of the first, second and third
anniversaries of the date of grant, (ii) options with respect to an
additional 20% of the shares are exercisable on the fourth anniversary of
the date of grant,
10
<PAGE> 13
(iii) options with respect to an additional 25% of the shares are
exercisable on the fifth anniversary of the date of grant, and (iv) options
with respect to the final 25% of the shares are exercisable on the sixth
anniversary of the date of grant.
(2) The exercise price is equal to the market value of HCPI's common stock on
the date of grant.
(3) Calculated using the Black Scholes option valuation methodology, using the
following variables:
- risk-free rate of return of 6.54%;
- .1819 five year volatility factor;
- 11.64% dividend yield;
- 3% termination discount factor; and
- ten-year option term;
which yields a discount Black Scholes value for Mr. Roath's options of $0.48 and
for Messrs. Reynolds, Henning, Ghose and Maulbetsch's options of $0.46. 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 1999 AND OPTION VALUES AT DECEMBER 31, 1999
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1999 DECEMBER 31, 1999(3)
SHARES ACQUIRED VALUE AT --------------------------------- ---------------------------
NAME ON EXERCISE EXERCISE(1) EXERCISABLE(2) UNEXERCISABLE(2) EXERCISABLE UNEXERCISABLE
---- --------------- ----------- -------------- ---------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth B. Roath..... 3,000 $21,525 386,440 421,000 $203,000 $0
James G. Reynolds.... 1,000 (1,375) 106,400 143,600 0 0
Edward J. Henning.... 0 40,200 99,550 0 0
Devasis Ghose........ 0 41,740 85,940 2,200 0
Stephen R.
Maulbetsch......... 540 168 34,000 71,290 0 0
</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 1999 Messrs. Reynolds and Maulbetsch exercised all options
with dividend share rights that were then exercisable. At December 31, 1999,
Mr. Roath held 24,000 dividend share right options that are currently
exercisable, Mr. Henning held 2,400 of such options that are currently
exercisable, and Mr. Ghose held 540 of such options that are currently
exercisable. At December 31, 1999, Messrs. Roath, Reynolds, Henning, Ghose
and Maulbetsch held 6,000, 1,000, 600, 540 and 540, of such options that 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. As
described in footnote 1 to the Option Grant table set forth above, in
January 2000 the Compensation Committee granted options to Messrs. Roath,
Reynolds, Henning, Ghose and Maulbetsch, which are not currently
exercisable.
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<PAGE> 14
(3) Calculated based on the closing market price on the last trading day of 1999
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 members of the Board who are not employees of HCPI. 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 equity REITs, particularly those that specialize in
health care, and other real estate and finance 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.
The compensation committee has committed to a program that emphasizes both
short- and long-term performance, with a significant component of compensation
consisting of long-term incentive awards. 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 those 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 and
performance 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 2000, Shuman
reviewed the compensation practices of real estate organizations and financial
services firms, including self-administered equity REITs, real estate
development firms and general industry companies for positions where the labor
market is not restricted to the REIT industry. Companies reviewed had assets
approximating $2.5 billion and market capitalization approximating $1.5 billion.
In addition, Shuman provided to the compensation committee an
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<PAGE> 15
analysis of base salary, total cash and total direct compensation for 16
self-administered REITs, which included triple-net lease REITs, three health
care REITs, and other well-established equity REITs, ranging from $1 billion to
$5 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 16 selected REITs in determining what
constitutes "competitive practices" in setting compensation for HCPI's executive
officers. Some, but not all, of the companies included in the stock price
performance graph are included in the compensation surveys.
Shuman also provided to the compensation committee an analysis of HCPI's
performance compared to 12 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. Shuman reported to the committee that
the industry has experienced concerns about the ability to retain top talent
within the REIT industry due to poor industry stock performance despite strong
fundamentals and that there have been significant increases in REIT long-term
incentive awards as well as a move toward greater cash components as the
industry's upREITs mature.
The compensation committee noted that HCPI approximated the 50th to 75th
percentile relative to its peer group, with total return to shareholders for
1999 at about the 75th percentile both last year and for the past three to five
year period. HCPI's total return to shareholders for 1999 significantly
outperformed the NAREIT equity health care segment. However, performance for all
REIT segments was negative and significantly lagged the S&P 500 for 1999. HCPI's
growth in FFO, while its 14th straight year of increased FFO, was below the 50th
percentile. In addition, the compensation committee took into account that
HCPI's investment activity for 1999 was more than twice that of any previous
year, primarily as a result of its successful acquisition of American Health
Properties in November of 1999. The acquisition, which resulted in HCPI becoming
the largest and most diversified health care REIT in the country, involved a
significant effort on the part of senior management and its completion and the
subsequent successful integration of the portfolio is directly attributable to
the efforts and performance of the executive officers. HCPI also continued to
complete critical rollover activity that will extend the average duration of the
investment portfolio, recorded its 14th straight year of increased FFO and has
achieved 57 consecutive quarterly dividend increases.
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 1999, base
salary levels approximated the 50th 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
13
<PAGE> 16
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. In 1999, the compensation committee also took into consideration
the significant contribution senior management made in the successful
acquisition of American Health Properties and of the substantial efforts
expended in order to complete the acquisition within the targeted timetable.
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 1999. Both the business
development and FFO targets were exceeded in 1999 and target bonuses were
approved by and awarded by the compensation committee for 1999 performance. In
addition, the compensation committee established target bonuses for 2000.
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
14
<PAGE> 17
available for issuance. For 1999, 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. In part to reward the
senior executives for their contributions to the acquisition of American Health
Properties, the compensation committee made larger than normal option grants
this year. 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 2000 for 1999 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 2000 for 1999 performance) was slightly above the
50th percentile of these companies. The executive officers' compensation mix for
1999 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
1999, investment and acquisition activity was more than double that of the prior
year and was above plan targets. HCPI also successfully completed several
significant acquisitions, including a portfolio of 14 medical office buildings
in Utah pursuant to a downREIT transaction and the acquisition of 72 healthcare
properties in 22 states through the acquisition in November 1999 of American
Health Properties. Upon the completion of the American Health Properties
acquisition, HCPI became the largest and most diversified health care REIT in
the country, with a market capitalization of $2.7 billion and a portfolio of
more than 425 properties. HCPI's existing management, including the chief
executive officer, Mr. Roath, continues to manage the combined company. In
addition, the Company achieved its 14th consecutive year of increased FFO and
its 57th consecutive quarterly dividend increase. Finally, since 1986, the
Company has maintained an investment grade rating on its senior debt, and has
the highest bond rating among health care REITs. Under the direction of Mr.
Roath, the company has achieved consistent FFO growth and dividend increases,
has increased market capitalization, and has established unparalleled
diversification in its investment portfolio, creating an opportunity for greater
internal growth.
Mr. Roath's compensation in 1999 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 60th 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 $475,000 in 1999 which represents
an 8% increase from his base salary in 1998, as recommended by the compensation
committee last year 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 $486,400, restricted stock grants of 30,000 shares of common stock and
370,000 stock option grants at an exercise price of $23.875. These awards are
consistent
15
<PAGE> 18
with HCPI's pay-for-performance philosophy, reflecting Mr. Roath's significant
contribution to the successful acquisition of American Health Properties, HCPI's
consistent growth in FFO and dividend increases, the continued successful
execution of the Company's long-term business plan, and the expansion and
diversification 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 1999 of the five most highly compensated
executive officers of HCPI.
POLICY WITH RESPECT TO SECTION 162(m)
Section 162(m) of the Internal Revenue 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
Orville E. Melby, Chairman Paul V. Colony Harold M. Messmer,
Jr.
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<PAGE> 19
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, 1995 to December 31, 1999. Total return assumes
quarterly reinvestment of dividends before consideration of income taxes.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG S&P 500 EQUITY REITS AND HCPI
HEALTH CARE PROPERTY INVESTORS, INC.
RATE OF RETURN TREND COMPARISON
JANUARY 1995 -- DECEMBER 31, 1999
(DECEMBER 31, 1994 = 100)
STOCK PRICE PERFORMANCE GRAPH
TOTAL RETURN INDEX
[STOCK PRICE PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
S&P 500 EQUITY REITS HCPI
------- ------------ ----
<S> <C> <C> <C>
Dec-94 100.00 100.00 100.00
Apr-95 109.73 99.83 100.08
Jul-95 120.21 105.70 109.94
Sep-95 129.77 110.68 118.33
Dec-95 137.57 115.27 124.76
Mar-96 144.96 117.88 113.76
Jun-96 147.06 127.11 124.00
Sep-96 156.89 131.63 121.94
Dec-96 171.73 160.12 133.00
Mar-97 176.33 161.24 126.07
Jun-97 207.95 169.30 136.73
Sep-97 226.78 190.46 155.09
Dec-97 236.16 194.39 153.76
Mar-98 267.96 193.47 152.64
Jun-98 276.67 184.65 151.78
Sep-98 245.71 166.20 141.60
Dec-98 301.17 162.08 134.94
Mar-99 316.17 154.27 129.33
Jun-99 338.46 169.62 132.79
Sep-99 317.33 156.17 124.04
Dec-99 364.54 154.59 115.94
</TABLE>
- ---------------
Assumes $100 Invested January 1, 1995 in HCPI, S&P 500 Index and NAREIT
Equity Reit Index
17
<PAGE> 20
CERTAIN TRANSACTIONS
Mr. Roath, a director and officer of HCPI, has remaining balances on loans
of $473,576 with an interest rate of 6.45% due on November 17, 2002, $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, $141,873 with an interest rate of 6.31% due on September
20, 2001, and $91,692 with an interest rate of 5.81% due on May 3, 2002. 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 $158,438 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.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Board of Directors compensation committee for fiscal
1999 were Messrs. Colony, Melby and Messmer, none of whom are employed by the
Company. Mr. Colony is Vice Chairman of Aon Worldwide Resources and Chairman of
the Advisory Board of Aon Risk Services Companies, Inc. Since 1985, HCPI has
been insured through Aon Worldwide Resources, insurance brokers for general
liability, workmen's compensation, and other insurance. In 1999, in addition to
receiving commissions for HCPI's normal corporate insurance, Aon Risk Services
received a one-time commission of $356,750 for an insurance policy obtained in
connection with the acquisition of American Health Properties and Mr. Colony
received a one-time bonus from Aon of $71,350. Mr. Colony receives no other
income from Aon for insurance brokerage services. 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. For
the fiscal year ending December 31, 1999, the commissions paid to Aon Worldwide
Resources for the procurement of the insurance policies were approximately
$431,463.
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, 1999, all
section 16(a) filing requirements applicable to such insiders were complied
with.
ADOPTION OF THE 2000 STOCK INCENTIVE PLAN
(PROXY ITEM NO. 2)
On March 23, 2000, the Board of Directors unanimously adopted, subject to
stockholder approval, the Health Care Property Investors, Inc. 2000 Stock
Incentive Plan (the "2000 Stock Incentive Plan"), which provides for long-term
incentive awards for employees, consultants and outside directors of the
company. In addition to being a new incentive plan for employees and
consultants, the 2000 Stock Incentive Plan also
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<PAGE> 21
amends, restates, merges and continues the Health Care Property Investors, Inc.
Second Amended and Restated Directors Stock Incentive Plan (the "1997 Directors
Plan") which was previously approved by the stockholders on April 23, 1997. The
2000 Stock Incentive Plan provides for incentive awards of up to 2,500,000
shares of common stock plus the number of shares previously authorized and
remaining available under the 1997 Directors Plan (subject to adjustment for
changes in capital structure or reorganization of HCPI). Giving effect to the
grants of stock and options that have previously been made under the 1997
Directors Plan and those grants that will be made in April 2000, of the
1,000,000 shares previously reserved for issuance under the 1997 Directors Plan,
702,400 will remain available for future grant.
The incentive awards provided for in the 2000 Stock Incentive Plan are in
the form of (i) non-qualified non-statutory options to purchase shares of common
stock, (ii) incentive stock awards, (iii) dividend equivalents, and (iv) cash
based awards. Of the total authorized shares under the 2000 Stock Incentive
Plan, no more than 500,000 shares will be granted as incentive stock awards or
dividend equivalent rights. The Board of Directors has delegated administration
of the 2000 Stock Incentive Plan to the compensation committee. Under the 2000
Stock Incentive Plan, all employees, officers, consultants and outside directors
of HCPI are eligible to participate. Below is a brief description of the
proposed 2000 Stock Incentive Plan. The complete text of the 2000 Stock
Incentive Plan appears as Exhibit A to this Proxy Statement. While the 2000
Stock Incentive Plan is summarized herein, such summaries are in all respects
subject to the complete text of the 2000 Stock Incentive Plan contained in
Exhibit A.
We currently have in effect the 1997 Directors Plan and the Health Care
Property Investors, Inc. Second Amended and Restated Stock Incentive Plan (the
"1997 Employee Plan"). Under the 1997 Employee Plan, the compensation committee
was empowered to grant awards for up to an aggregate of 2,500,000 shares of
common stock. On March 23, 2000, there were outstanding options for an aggregate
of approximately 2,075,000 shares of common stock which were granted pursuant to
the 1997 Employee Plan and which have exercise prices ranging from $23.875 to
$38.625 per share. Upon stockholders' approval of the 2000 Stock Incentive Plan,
no further new awards will be made under the 1997 Employee Plan, although to the
extent prior awards are subsequently forfeited, expire unexercised or otherwise
become available, they may be reissued under the 1997 Employee Plan. All of the
outstanding awards granted under the 1997 Employee Plan will remain outstanding
and subject to the 1997 Employee Plan until they are either exercised or expire
in accordance with their respective terms. As of March 23, 2000 there were
outstanding options for an aggregate of 252,000 shares of common stock, which
were granted pursuant to the 1997 Directors Plan and which have exercise prices
ranging from $23.875 to $33.75 per share. In addition, we expect to grant to the
outside directors on April 27, 2000 18,000 performance options in respect of
1998 performance, with an exercise price of $32. 15/16 (the fair market value of
our common stock as of April 22, 1999) and 18,000 performance options in respect
of 1999 performance with an exercise price equal to the fair market value of our
common stock on April 27, 2000. All of the outstanding awards granted under the
1997 Directors Plan will become subject to the 2000 Stock Incentive Plan, upon
its approval by the stockholders.
Absent the approval of the 2000 Stock Incentive Plan, only approximately
260,000 shares remain available for issuance to key employees under the 1997
Employee Plan. We have recently added several key management personnel in
addition to the employees that were retained from American Health Properties
upon the closing of the acquisition. The Board of Directors believes that in
order to retain, motivate and attract key personnel essential to the continued
success of the company it is necessary to maintain our current practice of
providing meaningful incentive awards on an annual basis. The Board of Directors
believes that incentive awards have played a critical role in recent years in
motivating management to build a growing highly competitive business, while also
delivering a consistently strong financial performance record. The
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Board of Directors also believes that our previous stock incentive programs have
helped to stimulate a deeper commitment to HCPI and have minimized management
turnover. The 2000 Stock Incentive Plan as it is proposed will further the
interests of HCPI and its stockholders by strengthening our ability to attract,
motivate and retain employees, officers, consultants and directors of training,
experience and ability, and to provide a means to encourage stock ownership and
proprietary interest HCPI to valued employees, officers, consultants and
directors upon whose judgment, initiative, and efforts we largely depend for the
continued financial success and growth of the business.
SUMMARY OF THE 2000 STOCK INCENTIVE PLAN
Securities Subject to 2000 Stock Incentive Plan. The 2000 Stock Incentive
Plan authorizes the issuance of up to 2,500,000 shares of common stock. In
addition, shares previously authorized and remaining available under the 1997
Directors Plan will be available for issuance under the 2000 Stock Incentive
Plan. The 2000 Stock Incentive Plan provides for appropriate adjustments in the
number and kind of shares for certain changes in HCPI's capital structure,
reorganizations, consolidations or certain other types of recapitalization. If
shares subject to an incentive award expire or are cancelled without having been
fully exercised, or if shares subject to an incentive award are forfeited or
repurchased by HCPI, such shares will again be available for future grant under
the 2000 Stock Incentive Plan. The 2000 Stock Incentive Plan provides that the
number of shares of our common stock that may be issued will be increased by the
number of shares of our common stock that are delivered to us in connection with
the exercise of an option and shares delivered or relinquished in payment of
federal, state and local tax withholding liabilities upon exercise of an option.
Eligibility. Under the 2000 Stock Incentive Plan, the compensation
committee has the authority to grant incentive awards to any employee, officer,
outside director or consultant of HCPI.
Administration. The compensation committee of the board will administer the
2000 Stock Incentive Plan. The compensation committee determines the person to
whom incentive awards shall be granted, the number of incentive awards (subject
to an award limit of 750,000 shares that may be granted in a given year to a
single 2000 Stock Incentive Plan participant) and the other terms and conditions
of such incentive awards. The compensation committee is to consist solely of two
members who are "outside directors" for purposes of Section 162(m) of the
Internal Revenue Code and a "non-employee director" as defined by Rule 16b-3 of
the Exchange Act. If a member of the compensation committee is not a
"non-employee director" at the time of any incentive award grant, the grant of
the incentive award shall satisfy another exemption under Rule 16b-3.
Terms of Incentive Awards. The compensation committee has the authority to
grant the following types of incentive awards under the 2000 Stock Incentive
Plan: (i) non-qualified non-statutory options to purchase shares of common
stock, (ii) incentive stock awards, (iii) dividend shares, and (iv) cash based
awards. Subject to the limitations contained in the 2000 Stock Incentive Plan,
options become exercisable and incentive stock awards vest at such times and in
such installments as the compensation committee may provide in the terms of each
individual written agreement. However, in the event of the participant's death,
permanent disability or retirement, any outstanding incentive awards will become
vested and exercisable immediately or payable immediately, as applicable.
The compensation committee has the discretion to grant options at a price
that is at least 100% of the fair market value of the common stock on the date
of the grant. In no event may options be exercised after ten years from the date
of the grant. Written instruments verify the grant of incentive awards under the
2000 Stock Incentive Plan and may include other terms and conditions consistent
with the 2000 Stock Incentive Plan, as the compensation committee may determine.
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The compensation committee has the discretion to grant participants
dividend equivalents, subject to certain conditions. The compensation committee
also has the discretion to grant dividend equivalents, incentive stock awards
and cash based awards as performance based compensation upon attainment of
certain stockholder approved performance targets. The 2000 Stock Incentive Plan
limits the number of authorized shares to be granted as incentive stock awards
and dividend equivalents to 500,000 shares. The 2000 Stock Incentive Plan places
a $1 million limit on the amount of cash based awards that can be paid to any
one participant in any calendar year.
Terms of Incentive Awards to Directors. The 2000 Stock Incentive Plan
provides that on the last Thursday of April of each year, HCPI will grant to
each outside director an incentive stock award for 400 shares of 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 stockholders 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 as (A) the sum of (1) the fair market of our
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 our 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 options is
equal to the fair market value of our common stock on the date of grant. The
incentive stock awards granted to outside directors vests ratably over four
years and is subject to forfeiture if the outside director's membership on the
Board of Directors is terminated under certain circumstances.
Furthermore, the 2000 Stock Incentive Plan provides that any outside
directors serving on the Board of Directors as of January 4, 2000 would be
immediately granted an option to acquire 21,000 shares of common stock (the
"Special Option") in lieu of yearly grants of an option to acquire 7,000 shares
of common stock in April of 2000, 2001 and 2002. The Special Option is
exercisable over a three year period and in order to exercise any of the
one-third installments of the Special Option, the outside directors must be
serving on the Board of Directors one-year prior to the specified exercise date.
Outside directors will continue to receive grants of 400 shares of restricted
stock in April and be eligible for grants of performance based options.
Effective 2003, HCPI intends to resume yearly grants to the outside directors of
an option to acquire 7,000 shares of common stock.
Payment for Shares. An option may be exercised by payment in full of the
option exercise price at the time of exercise. The exercise price may be paid in
cash or, in the discretion of the compensation committee, by deliverance of
shares of common stock owned by the optionee (or issuable upon exercise of the
option), by promissory note secured by shares of common stock bearing interest
at a rate determined by the compensation committee, or by any combination of the
above. The compensation committee has the discretion, upon request of the
optionee, to issue shares of common stock upon the exercise of an option
directly to a brokerage firm or firms to be selected by the compensation
committee. Such issuance will be made without payment of the exercise price by
the optionee, subject to delivery of a new revocable guarantee of the payment of
the exercise price by the selected brokerage firm or firms. Proceeds received by
HCPI from the sale of common stock pursuant to the exercise of options under the
2000 Stock Incentive Plan will be used for general corporate purposes.
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2000 Stock Incentive Plan Amendments and Termination. The compensation
committee has the discretion to amend, suspend or terminate the 2000 Stock
Incentive Plan at any time. However, the compensation committee is not permitted
to reprice any outstanding incentive awards and our stockholders must approve of
any amendment which increases the number of shares of common stock subject to
the 2000 Stock Incentive Plan or makes any other change to the 2000 Stock
Incentive Plan that would require stockholder approval as a matter of law, stock
exchange regulation or exemptive condition. The 2000 Stock Incentive Plan
terminates on April 28, 2008, the date on which the 1997 Directors Plan would
have terminated absent its termination upon the stockholders' approval of the
2000 Stock Incentive Plan.
NEW PLAN BENEFITS
2000 PERFORMANCE AWARD PLAN
The compensation committee makes incentive award determinations for
executive officers and other employees in January or February of each new fiscal
year, based on the employee's and the company's performance during the prior
year. Therefore, most of the awards that are likely to made under the 2000 Stock
Incentive Plan are not currently determinable. Other than the special
performance awards for the outside directors, which are awarded only after
established performance criteria are met, the awards for outside directors are
set forth in the 2000 Stock Incentive Plan. The following table includes
information about anticipated awards to the extent that they are determinable
under the 2000 Stock Incentive Plan:
<TABLE>
<CAPTION>
DOLLAR VALUE NUMBER OF
NAME AND PRINCIPAL POSITION ($) UNITS
--------------------------- ------------ ---------
<S> <C> <C>
Kenneth B. Roath............................................ * *
Chairman, President and Chief Executive Officer
James G. Reynolds........................................... * *
Executive Vice President and Chief Financial Officer
Edward J. Henning........................................... * *
Senior Vice President, General Counsel and Corporate
Secretary
Devasis Ghose............................................... * *
Senior Vice President -- Finance and Treasurer
Stephen R. Maulbetsch....................................... * *
Senior Vice President -- Acquisitions
Executive Group............................................. * *
Non-Executive Director Group................................ * 271,200(1)
Non-Executive Officer Employee Group........................ * *
</TABLE>
- ---------------
* Not determinable.
(1) This total assumes HCPI continues to have 6 outside directors through the
expiration of the 2000 Stock Incentive Plan in April 2008 and that no new
outside directors become participants in the 2000 Stock Incentive Plan prior
to April 2008. Although the existing outside directors will not receive
7,000 option grants in April 2001 or 2002, any newly appointed directors to
the Board of Directors will be eligible for a grant of 7,000 options in 2001
and 2002 as well as for a grant of 400 restricted shares. Also, in any year
in which the HCPI's total return to shareholders exceeds by 3% the total
return of the NAREIT health care equity segment, each outside director will
be granted an additional 3,000 options to purchase common stock.
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FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a general summary of the material U.S. federal
income tax consequences to the U.S. participants in the 2000 Stock Incentive
Plan. The discussion is based on the Internal Revenue Code, regulations
thereunder, rulings and decisions now in effect, all of which are subject to
change. The summary does not discuss all aspects of federal income taxation that
may be relevant to a particular participant in light of such participant's
personal investment circumstances nor does it discuss tax consequences under
state or local laws.
The grant of an option generally will not result in taxable income to the
optionee at the time of the grant, and ordinary income will be realized by an
optionee at the time of exercise of an option in the amount by which the fair
market value of the common stock on the date of exercise exceeds the exercise
price. Subject to Section 162(m) of the Internal Revenue Code, discussed below,
HCPI will be entitled to a deduction from income for federal income tax purposes
in an amount equal to the ordinary income recognized by the optionee in such
case. Any subsequent disposition of the shares acquired pursuant to an option
will result in gain or loss to the optionee in an amount equal to the difference
between the sale price and the market price at date of exercise. An optionee's
basis for the common stock for purposes of determining gain or loss on his
subsequent disposition of the shares generally will be the fair market value of
the common stock on the date of exercise of the option.
The crediting of dividend equivalents to a participant generally will not
result in taxable income to the participant at the time of crediting, and
ordinary income will be realized by a participant at the time when a dividend
equivalent is paid to the participant. Subject to Section 162(m) of the Internal
Revenue Code, HCPI will be entitled to a deduction from income for federal
income tax purposes in an amount equal to the ordinary income recognized by the
participant in such case.
The grant of cash based awards to a participant generally will not result
in taxable income to the participant at the time of grant, and ordinary income
will be realized by a participant at the time when the cash based award is paid
to the participant. Subject to Section 162(m) of the Internal Revenue Code, HCPI
will be entitled to a deduction from income for federal income tax purposes in
an amount equal to the ordinary income recognized by the participant in such
case.
The grant of common stock pursuant to an incentive stock award generally
will not result in taxable income to the participant at the time of grant if the
common stock is restricted and subject to forfeiture. When the restriction on
the common stock lapses, ordinary income will be realized by the participant at
the time of lapse in the amount by which the fair market value of the common
stock on the date of lapse exceeds the purchase price, if any. Subject to
Section 162(m) of the Internal Revenue Code, HCPI will be entitled to deduction
from income for federal income tax purposes in an amount equal to the ordinary
income recognized by the participant in each case. However, if the participant
makes an election under Section 83(b) of the Internal Revenue Code subject to
HCPI's prior consent, ordinary income will be realized by the participant at the
time of the grant of the common stock in the amount by which the fair market
value of the common stock on the date of grant exceeds the purchase price, if
any, and subject to Section 162(m) of the Internal Revenue Code, HCPI will be
entitled to a deduction in the same amount. Any subsequent disposition of the
shares acquired will result in gain or loss to the participant in an amount
equal to the difference between the sale price and the market price at the date
on which the participant realized ordinary income. A participant's basis for
common stock for purposes of determining gain or loss on his subsequent
disposition of the shares generally will be the fair market value of the common
stock on the date at which the participant realized ordinary income.
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In general, under Section 162(m) of the Internal Revenue Code, income tax
deductions of publicly-held corporations may be limited to the extent total
compensation (including base salary, annual bonus, stock option exercises and
non-qualified benefits paid) for certain executive officers exceeds $1 million
(less the amount of any "excess parachute payments" as defined in Section 280G
of the Internal Revenue Code) in any one year. However, under Section 162(m) of
the Internal Revenue Code, the deduction limit does not apply to certain
"performance-based compensation" established by an independent compensation
committee which is adequately disclosed to, and approved by, stockholders. In
particular, stock options granted under the 2000 Stock Incentive Plan will
satisfy the "performance-based compensation" exception if (i) the stock options
are made by a qualifying compensation committee, (ii) the plan sets the maximum
number of shares that can be granted to any person within a specified period and
(iii) the compensation is based solely on an increase in the stock price after
the grant date (i.e., the stock option exercise price is equal to or greater
than the fair market value of the stock subject to the award on the grant date).
Rights or awards, other than stock options, granted under the 2000 Stock
Incentive Plan may qualify as "qualified performance-based compensation" for
purposes of Section 162(m) of the Internal Revenue Code if such rights or awards
are granted or vest upon preestablished objective performance goals, the
material terms of which are disclosed to and approved by the stockholders,
pursuant to their approval of the 2000 Plan.
RATIFICATION OF THE SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
(PROXY ITEM NO. 3)
Arthur Andersen LLP audited our financial statements for the year ended
December 31, 1999 and has 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, 2000, 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 if the directors determine that the
best interests of HCPI warrant a change of its independent accountants. A
representative of Arthur Andersen LLP is expected to be present at the May 9,
2000 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
The affirmative vote of a plurality of all of the votes cast at a meeting
at which a quorum is present is necessary for the election of a director. The
affirmative vote of a majority of all of the votes cast at a meeting at which a
quorum is present is required for the approval of the 2000 Stock Incentive Plan,
provided that the total vote cast on that proposal represents over 50% of the
total shares of outstanding HCPI common stock. The affirmative vote of a
majority of all of the votes cast at a meeting at which a quorum is present is
required
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for the ratification of the selection of Arthur Andersen LLP as independent
accountants for the fiscal year ending December 31, 2000.
The representation, in person or by properly executed proxy, of the holders
of a majority of the shares of HCPI common stock entitled to vote at the annual
meeting is necessary to constitute a quorum at the meeting. Shares of HCPI
common stock represented in person or by proxy will be counted for the purposes
of determining whether a quorum is present at the annual meeting. Shares that
abstain from voting on any proposal will be treated as shares that are present
and entitled to vote at the annual meeting for purposes of determining whether a
quorum exists, but will not be treated as votes cast and therefore will have no
effect of the result of the vote for any proposal.
Under NYSE regulations, a broker or nominee holding shares of HCPI common
stock in "street name" for a beneficial owner will not be able to vote those
shares with respect to the approval of the 2000 Stock Incentive Plan without
instructions. If you do not provide your broker with instruction on how to vote
your shares that are held in "street name", your broker will not be permitted to
vote your shares on the 2000 Stock Incentive Plan proposal. Shareholders should
contact their brokers to instruct them how to vote your shares on the proposal
for the 2000 Stock Incentive Plan. If a broker or nominee holding shares of
record for a customer indicates that it does not have discretionary authority to
vote on the proposal for the 2000 Stock Incentive Plan, those shares, which are
referred to as broker non-votes, will be treated as present and entitled to vote
at the annual meeting for purposes of determining a quorum but will have the
effect of a vote against the proposal unless holders of more than 50% of the
total shares of outstanding HCPI common stock cast votes. If holders of more
than 50% of the total shares of outstanding HCPI common stock cast votes, the
broker non-vote will not have any effect on the result of the vote.
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, 2000.
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 Georgeson Shareholder Communications Inc., for a fee of
$9,000 plus a flat fee per telephone call made by Georgeson plus out-of-pocket
expenses, to assist in the solicitation of proxies.
HCPI's annual report to stockholders, including HCPI's audited financial
statements for the year ended December 31, 1999, is being mailed herewith to all
stockholders of record as of March 7, 2000. HCPI WILL
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<PAGE> 28
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, 1999 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 30, 2000
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APPENDIX A
HEALTH CARE PROPERTY INVESTORS, INC.
2000 STOCK INCENTIVE PLAN
1. PURPOSE OF THE PLAN.
The purpose of the 2000 Stock Incentive Plan (the "Plan") of Health Care
Property Investors, Inc. (the "Company") is to promote the interests of the
Company and its stockholders by strengthening the Company's ability to attract,
motivate and retain employees, consultants and directors of training, experience
and ability, and to provide a means to encourage stock ownership and proprietary
interest in the Company to valued employees, consultants and directors of the
Company upon whose judgment, initiative, and efforts the continued financial
success and growth of the business of the Company largely depend. The Plan is a
new plan of the Company which also amends, restates, merges and continues the
Second Amended and Restated Directors Stock Incentive Plan of Health Care
Property Investors, Inc. (the "Directors Plan"). Upon the approval of the
Company's stockholders of this Plan, the Directors Plan will terminate and be of
no further force or effect. Any outstanding awards under the Directors Plan as
of the date of the stockholders' approval of the Plan shall be administered as
herein stated and such awards may be reissued under the Plan if they are
subsequently forfeited or expire before being exercised.
2. DEFINITIONS.
(a) "Board" means the Board of Directors of the Company.
(b) "Cash Based Award" means an award, as described in Section 7(g), that,
if paid, must be paid in cash and that are neither denominated in nor have a
value derived from the value of, nor an exercise or conversion privilege at a
price related to, shares of Common Stock.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means the Compensation Committee of the Board (or another
committee of the Board assuming the functions of the Committee under this Plan).
(e) "Common Stock" means the $1.00 par value Common Stock of the Company.
(f) "Company" means Health Care Property Investors, Inc.
(g) "Consultant" means any consultant or adviser if (i) the consultant or
adviser renders bona fide services to the Company; (ii) the services rendered by
the consultant or adviser are not in connection with the offer or sale of
securities in a capital-raising transaction and do not directly or indirectly
promote or maintain a market for the Company's securities; and (iii) the
consultant or adviser is a natural person who has contracted directly with the
Company to render such services.
(h) "Date of Grant" means with respect to the Special Option, January 4,
2000 and with respect to any other Incentive Award granted to Directors, the
last Thursday of April of each year (beginning April 28, 1997).
(i) "Director" means a member of the Board who is not an Employee.
(j) "Directors Plan" means the Second Amended and Restated Directors Stock
Incentive Plan.
A-1
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(k) "Disability" means the total and permanent incapacity of an Employee or
Director, due to physical impairment or legally established mental incompetence,
to perform the usual duties of an Employee or a member of the Board, as
applicable, which disability shall be determined on the basis of (i) medical
evidence by a licensed physician designated by the Company or (ii) evidence that
the Employee or Director has become entitled to receive primary benefits as a
disabled employee under the Social Security Act in effect on the date of such
disability.
(l) "Dividend Equivalents" means the right, under such terms as are
determined in the discretion of the Committee, to receive the equivalent value
(in cash or Common Stock) of dividends paid on Common Stock, awarded pursuant to
Section 7(e).
(m) "Effective Date" means March 23, 2000.
(n) "Eligible Person" means any Employee, Consultant or Director.
(o) "Employee" means any officer or other employee (as defined in
accordance with Section 3401(c) of the Code) of the Company, or of any of its
present or future parent or subsidiary corporations.
(p) "Fair Market Value" means for a share of Common Stock as of a given
date shall be the closing price of a share of Common Stock on the principal
exchange on which shares of Common Stock are then trading, if any (or as
reported on any composite index which includes such principal exchange), on such
date, or if shares were not traded on such date, then on the next preceding date
on which a trade occurred.
(q) "Incentive Award" means an Option, Dividend Equivalent, Incentive Stock
Award, or Cash Based Award granted under the Plan.
(r) "Incentive Stock Award" means a right to the grant or purchase, at a
price determined by the Committee, of Common Stock of the Company which is
nontransferable and subject to substantial risk of forfeiture until specific
conditions are met. Conditions may be based on continuing employment or
attainment of performance goals which are related to one or more of the
Performance Criteria or a combination thereof.
(s) "NAREIT" means The National Association of Real Estate Investment
Trusts (or successor thereto).
(t) "NAREIT Total Return" means the average Total Return for the healthcare
equity segment as published in the NAREIT Performance Indices by NAREIT.
(u) "Option" means a nonqualified or nonstatutory stock option and with
respect to grants made to Directors, also includes a Special Option, as defined
in Section 9(a)(i).
(v) "Participant" means any Eligible Person selected to participate in an
Incentive Award pursuant to Section 5(a).
(w) "Performance Criteria" means the following business criteria with
respect to the Company, any subsidiary or any division or operating unit: (i)
net income, (ii) pre-tax income, (iii) operating income, (iv) cash flow, (v)
earnings per share, (vi) return on equity, (vii) return on invested capital or
assets, (viii) cost reductions or savings, (ix) funds from operations, (x)
appreciation in the fair market value of Common Stock and (xi) earnings before
any one or more of the following items: interest, taxes, depreciation or
amortization.
(x) "Permissible Termination" means a Director's (i) death, (ii)
Disability, (iii) removal from the Board without cause (not including a failure
to be re-elected) or (iv) Retirement from the Board.
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(y) "Plan" means the 2000 Stock Incentive Plan as set forth herein, which
may be further amended from time to time.
(z) "Retirement" means the Participant (i) reached age sixty five and
completed five years of service as an Employee or a Board member or (ii) reached
the age of sixty and completed fifteen years of service as an Employee or a
Board member.
(aa) "Section 162(m) Participant" means any key Employee designated by the
Committee as a key Employee whose compensation for the fiscal year in which the
key Employee is so designated or a future fiscal year may be subject to the
limit on deductible compensation imposed by Section 162(m) of the Code.
(bb) "Total Return" means for any person for any calendar year the sum of
(X) the per share Fair Market Value as of December 31 of such year minus the per
share Fair Market Value of the Common Stock as of January 1 of such year and (Y)
the aggregate dividends paid to stockholders during such calendar year, divided
by (Z) the per share Fair Market Value as of January 1 of such year, as such
definition may be amended by NAREIT.
3. SHARES OF COMMON STOCK SUBJECT TO THE PLAN.
(a) Subject to the provisions of Section 3(e) and Section 10 of the Plan,
the number of shares of Common Stock that may be issued or transferred or
exercised pursuant to Incentive Awards under the Plan after the Effective Date
shall not exceed 2,500,000 shares, plus the number of shares authorized and
available for issuance under the Directors Plan as of the date of the
stockholders' approval of the Plan; provided, however, that of the authorized
number of shares under the Plan, the number of shares that may be issued or
transferred or exercised pursuant to Incentive Stock Awards or Dividend
Equivalents under the Plan after the Effective Date shall not exceed 500,000
shares.
(b) Subject to the provisions of Section 10, the maximum number of shares
of Common Stock with respect to which options or rights may be granted to any
Participant during any one calendar year is 750,000 shares (the "Award Limit").
To the extent required by Section 162(m) of the Code, shares subject to Options
which are canceled continue to be counted against the Award Limit.
(c) The shares of Common Stock to be delivered under the Plan shall be made
available, at the discretion of the Board or the Committee, either from
authorized but unissued shares of Common Stock or from previously issued shares
of Common Stock reacquired by the Company, including shares purchased on the
open market.
(d) If any Incentive Award expires or is canceled without having been fully
exercised, or is exercised in whole or in part for cash as permitted by this
Plan, the number of shares subject to such Incentive Award or other right but as
to which such Incentive Award was not exercised prior to its expiration,
cancellation or exercise may again be optioned, granted or awarded hereunder,
subject to the limitations of Sections 3(a) and 3(b). Furthermore, any shares
subject to Incentive Awards which are adjusted pursuant to Section 10 and become
exercisable with respect to shares of stock of another corporation shall be
considered cancelled and may again be optioned, granted or awarded hereunder,
subject to the limitations of Sections 3(a) and 3(b). Shares of Common Stock
which are delivered by the Participant or withheld by the Company upon the
exercise of an Incentive Award, in payment of the exercise price thereof, may
again be optioned, granted or awarded hereunder, subject to the limitations of
Sections 3(a) and 3(b). If any Incentive Award is forfeited or repurchased by
the Company, such share may again be optioned, granted or awarded hereunder,
subject to the limitations of Section 3(a) and 3(b).
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4. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by the Committee. The Committee shall
consist solely of two members appointed by and holding office at the pleasure of
the Board, each of whom is both an "outside director" for purposes of Section
162(m) of the Code and a "non-employee director" as defined by Rule 16b-3 under
the Securities Exchange Act of 1934 ("Rule 16b-3"). The Committee may include
more than two members appointed by the Board so long as such additional members
are "outside directors" for purposes of Section 162(m) of the Code and are a
"non-employee director" as defined by Rule 16b-3 or, if not a "non-employee
director" at the time of any Incentive Award grant, the grant of an Incentive
Award must otherwise satisfy an exemption under Rule 16b-3. Committee members
may resign at any time by delivering written notice to the Board. Vacancies in
the Committee may be filled by the Board.
(b) The Committee has and may exercise such powers and authority of the
Board as may be necessary or appropriate for the Committee to carry out its
functions as described in the Plan. The Committee has authority in its
discretion to determine the Eligible Persons to whom, and the time or times at
which, Incentive Awards may be granted and the number of shares subject to each
Incentive Award. The Committee also has authority to interpret the Plan, and to
determine the terms and provisions of the respective Incentive Awards agreements
and to make all other determinations necessary or advisable for Plan
administration. The Committee has authority to prescribe, amend, and rescind
rules and regulations relating to the Plan. All interpretations, determinations,
and actions by the Committee shall be final, conclusive, and binding upon all
parties.
(c) No member of the Board or the Committee shall be liable for any action
or determination made in good faith by the Board or the Committee with respect
to the Plan or any Incentive Award under it.
(d) If NAREIT amends its definition of Total Return or the NAREIT Total
Return is no longer available, the Committee may redefine Total Return and
NAREIT Total Return to correspond to such amended definition or to replace such
definition.
5. ELIGIBILITY.
(a) Any Employee or Consultant, who has been determined by the Committee to
be a key Employee or Consultant, and any Director is eligible to receive
Incentive Awards under the Plan. The Committee has authority, in its sole
discretion, to determine and designate from time to time those Eligible Persons
who are to be granted Incentive Awards, and the type and amount of Incentive
Award to be granted.
(b) Each Incentive Award shall be evidenced by a written instrument and may
include any other terms and conditions consistent with the Plan, as the
Committee may determine. If grants of Incentive Awards, at the discretion of the
Committee, are intended to qualify as performance-based compensation as
described in Section 162(m)(4)(C) of the Code, the award agreements shall
contain such terms and conditions as may be necessary to meet the applicable
provisions of Section 162(m) of the Code.
6. PROVISIONS APPLICABLE TO SECTION 162(m) PARTICIPANTS.
(a) The Committee, in its discretion, may determine whether an Incentive
Award is to qualify as performance-based compensation as described in Section
162(m)(4)(C) of the Code.
(b) Notwithstanding anything in the Plan to the contrary, the Committee may
grant an Incentive Award to a Section 162(m) Participant, including Incentive
Stock Awards, Dividend Equivalents, and Cash Based
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Awards, which vests or becomes exercisable or payable upon the attainment of
performance goals which are related to one or more of the Performance Criteria.
(c) To the extent necessary to comply with the performance-based
compensation requirements of Section 162(m)(4)(C) of the Code, with respect to
any Incentive Award granted under Section 7 or Section 8 which may be granted to
one or more Section 162(m) Participants, no later than ninety (90) days
following the commencement of any fiscal year in question or any other
designated fiscal period or period of service (or such other time as may be
required or permitted by Section 162(m) of the Code), the Committee shall, in
writing, (i) designate one or more Section 162(m) Participants, (ii) select the
Performance Criteria applicable to the fiscal year or other designated fiscal
period or period of service, (iii) establish the various performance targets, in
terms of an objective formula or standard, and amounts of such Incentive Awards,
as applicable, which may be earned for such fiscal year or other designated
fiscal period or period of service and (iv) specify the relationship between
Performance Criteria and the performance targets and the amounts of such
Incentive Awards, as applicable, to be earned by each Section 162(m) Participant
for such fiscal year or other designated fiscal period or period of service.
Following the completion of each fiscal year or other designated fiscal period
or period of service, the Committee shall certify in writing whether the
applicable performance targets have been achieved for such fiscal year or other
designated fiscal period or period of service. In determining the amount earned
by a Section 162(m) Participant, the Committee shall have the right to reduce
(but not to increase) the amount payable at a given level of performance to take
into account additional factors that the Committee may deem relevant to the
assessment of individual or corporate performance for the fiscal year or other
designated fiscal period or period of service.
(d) Furthermore, notwithstanding any other provision of the Plan, any
Incentive Award which is granted to a Section 162(m) Participant and is intended
to qualify as performance-based compensation as described in Section
162(m)(4)(C) of the Code shall be subject to any additional limitations set
forth in Section 162(m) of the Code (including any amendment to Section 162(m)
of the Code) or any regulations or rulings issued thereunder that are
requirements for qualification as performance-based compensation as described in
Section 162(m)(4)(C) of the Code, and the Plan shall be deemed amended to the
extent necessary to conform to such requirements.
7. TERMS AND CONDITIONS OF STOCK OPTIONS, DIVIDEND EQUIVALENTS AND CASH BASED
AWARDS.
(a) The purchase price of Common Stock under each Option shall be
determined by the Committee, and may not be less than 100% of the Fair Market
Value of the Common Stock on the date of the grant.
(b) Options may be exercised as determined by the Committee but in no event
after ten years from the date of grant; provided, however, that in the event of
the Participant's Retirement (or if the Participant retires with the consent of
the Company or any subsidiary thereof at an earlier age), death or Disability
while employed by the Company, all Options, right to credit or credits for
Dividend Equivalents and Cash Based Awards then outstanding under the Plan shall
be fully vested and immediately exercisable or immediately payable.
(c) Except as set forth below, upon the exercise of an Option, the purchase
price shall be payable in full in cash, or, in the discretion of the Committee,
by the assignment and delivery to the Company of shares of Common Stock owned by
the optionee (or issuable to the Participant upon exercise of the Option); or in
the discretion of the Committee, by a promissory note secured by shares of
Common Stock bearing interest at a rate determined by the Committee but not less
than the minimum rate permitted by the Internal Revenue Service; or by a
combination of any of the above. Any shares so assigned and delivered to the
Company in
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payment or partial payment of the purchase price shall be valued at their Fair
Market Value on the exercise date. The Committee may, in its discretion and upon
the request of the optionee, issue shares of Common Stock upon the exercise of
an Option directly to a brokerage firm or firms to be selected by the Committee,
without payment of the purchase price by the optionee but upon delivery of an
irrevocable guarantee by such brokerage firm or firms of the payment of such
purchase price. No payment by an assignment of shares, by a promissory note or
by any combination thereof, or by the guarantee of a brokerage firm or firms as
described above, shall be allowed unless such payments are allowed under
applicable requirements of Federal and state tax, securities and other laws,
rules and regulations and by any regulatory authority having jurisdiction.
(d) The Committee may, in its sole discretion, authorize all or a portion
of the Options to be granted to an optionee to be on terms which permit transfer
by such optionee to (i) any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, sister-in-law,
including adoptive relationships, any person sharing the household (other than a
tenant or employee) of the optionee ("Family Members"), (ii) a trust in which
such Family Members have more than fifty percent of the beneficial interest,
(iii) a foundation in which such Family Members or the optionee control the
management of assets, or (iv) any other entity in which such Family Members or
the optionee own more than fifty percent of the voting interests, provided that
(w) there may be no consideration for any such transfer, (x) the stock option
agreement pursuant to which such options are granted must expressly provide for
transferability in a manner consisted with this Section, (y) the Committee, in
its sole discretion, shall approve any transfer in advance, and (z) subsequent
transfers of transferred options shall be prohibited except by will or the laws
of descent and distribution. Following transfer, any such options shall continue
to be subject to the same terms and conditions as were applicable immediately
prior to transfer. The events of termination of employment of Section 14(d)
shall continue to be applied with respect to the original optionee, following
which the options shall be exercisable by the transferee only to the extent, and
for the periods specified in Section 14.
(e) The right to be credited with Dividend Equivalents may be granted to a
Participant in the discretion of the Committee. The Committee shall determine
(i) the number of shares of Common Stock subject to the Dividend Equivalents,
(ii) the period during which Dividend Equivalents shall be credited to the
Participant's account, (iii) the timing of payment to the Participant of
Dividend Equivalents credited to the Participant's account and (iv) any other
limitations and conditions as it deems appropriate with respect to the crediting
and payment of Dividend Equivalents. In addition, the Committee, in its
discretion, may determine whether a right to be credited with Dividend
Equivalents is to qualify as performance-based compensation as described in
Section 162(m)(4)(C) of the Code.
(f) No fractional shares shall be issued pursuant to the exercise of an
Option or the determination of Dividend Equivalents nor shall any cash payment
be made in lieu of fractional shares.
(g) Cash Based Awards may be granted to Participants at the discretion of
the Committee, which provide Participants with the opportunity to earn a cash
payment based upon the level of performance of the Company relative to one or
more Performance Criteria established by the Committee for an award cycle as
determined by the Committee, consisting of any period of time up to five years.
For each award cycle, the Committee shall determine the amount of the Cash Based
Award, the Performance Criteria, the performance target levels as to each of the
Performance Criteria and the weighting of the Performance Criteria, if more than
one Performance Criteria is applicable. Cash Based Awards to Section 162(m)
Participants that are either granted or become vested, exercisable or payable
based on attainment of one or more Performance Criteria shall only be granted as
performance-based compensation under Section 162(m)(4)(C) of the Code. Cash
Based Awards may be subject to any condition imposed by the Committee, including
a reservation of the
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right to revoke a Cash Based Award at any time before it is paid. The maximum
amount of Cash Based Awards that may be granted to any Participant during any
one calendar year is $1,000,000.
(h) An Option held by, those rights to credits of Dividend Equivalents
granted to, and Dividend Equivalents credited to a person who was an Eligible
Person at the time such Option and right to credits or credits of Dividend
Equivalents were granted shall expire immediately if and when the Participant
ceases to be an Eligible Person, except as follows:
(i) If the employment or service of a Participant is terminated by the
Company or any subsidiary thereof other than for cause, for which the
Company shall be the sole judge, then the Options and/or the right to
credits or credits of Dividend Equivalents shall expire eight months
thereafter unless by their terms they expire sooner. During said period,
the Options may be exercised and credits of Dividend Equivalents made in
accordance with their terms, but only to the extent allowable on the date
of termination of employment.
(ii) In the event of the Participant's Retirement or if the
Participant retires with the consent of the Company or any subsidiary
thereof at an earlier age, the Options and/or right to credits or credits
of Dividend Equivalents of the Participant shall expire three years
thereafter unless by their terms they expire sooner. During said period,
the Options may be exercised and credits of Dividend Equivalents made in
accordance with their terms, but only to the extent allowable on the date
of Retirement, subject to the accelerated vesting of such Options and/or
rights to credits or credits of Dividend Equivalents on the date of
Retirement.
(iii) In the event of the Participant's death or Disability while
employed by the Company, the Options and/or right to credits or credits of
Dividend Equivalents of the Participant shall expire three years after the
date of death or Disability of the Participant unless by their terms they
expire sooner. In the event of the Participant's death or Disability within
the eight months referred to in subparagraph (i) above, the Options and/or
right to credits or credits of Dividend Equivalents shall expire one year
after the date of death or Disability of the Participant unless by their
terms they expire sooner. In the event of the Participant's death or
Disability within the three-year period referred to in subparagraph (ii)
above, the Options and/or right to credits or credits of Dividend
Equivalents shall expire upon the later of three years after Retirement or
one year after the date of death or Disability of the Participant unless by
their terms they expire sooner.
(i) The Committee may in its sole discretion determine, with respect to an
Incentive Award, that any Participant who is on leave of absence for any reason
shall be considered as still in the employ of the Company, provided that rights
to such Incentive Award during a leave of absence shall be limited to the extent
to which such right was earned or vested at the commencement of such leave of
absence.
8. TERMS AND CONDITIONS OF INCENTIVE STOCK AWARDS.
(a) All shares of Incentive Stock Awards granted or sold pursuant to the
Plan shall be subject to the following conditions:
(i) The shares may not be sold, transferred or otherwise alienated or
hypothecated until the restrictions are removed or expire.
(ii) The Committee may require the Participant to enter into an
agreement providing that the certificates representing Incentive Stock
Awards granted or sold pursuant to the Plan shall remain in the physical
custody of the Company until all restrictions are removed or expire.
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(iii) Each certificate representing Incentive Stock Awards granted
pursuant to the Plan shall bear a legend making appropriate reference to
the restrictions imposed.
(iv) The Committee may impose other conditions on any shares granted
or sold pursuant to the Plan as it may deem advisable, including, without
limitation, restrictions under the Securities Act of 1933, as amended,
under the requirements of any stock exchange upon which such shares or
shares of the same class are then listed and under any blue sky or other
securities laws applicable to such shares.
(b) The restrictions imposed under subparagraph (a) above upon Incentive
Stock Awards shall lapse in accordance with a schedule or other conditions as
determined by the Committee; provided, however, in the event of the
Participant's Retirement (or if the Participant retires with the consent of the
Company or any subsidiary thereof at an earlier age), death or Disability while
employed by the Company, all Incentive Stock Awards then outstanding under the
Plan shall be fully vested and immediately exercisable and all restrictions
shall immediately cease.
(c) The Committee, in its discretion, may determine whether an Incentive
Stock Award is to qualify as performance-based compensation as described in
Section 162(m)(4)(C) of the Code.
(d) Subject to the provisions of subparagraph (a) above, the holder thereof
shall have all rights of a stockholder with respect to the Incentive Stock
Awards granted or sold, including the right to vote the shares and receive all
dividends and other distributions paid or made with respect thereto.
(e) Except as set forth below, the purchase price (if any) for shares of
Incentive Stock Awards shall be payable in full in cash; or by the assignment
and delivery to the Company of shares of Common Stock owned by the holder of the
Incentive Stock Awards; or by a promissory note secured by shares of Common
Stock bearing interest at a rate equal to the minimum rate permitted by the
Internal Revenue Service; or by a combination of any of the above. Any shares so
assigned and delivered to the Company in payment or partial payment of the
purchase price shall be valued at their Fair Market Value on the purchase date.
The Committee may, in its discretion and upon the request of the holder, issue
shares of the Incentive Stock Award directly to a brokerage firm or firms to be
selected by the Committee, without payment of the purchase price by the holder
but upon delivery of an irrevocable guarantee by such brokerage firm or firms of
the payment of such purchase price. No payment by an assignment of shares, by a
promissory note or by any combination thereof, or by the guarantee of a
brokerage firm or firms as described above, shall be allowed unless such
payments are allowed under applicable requirements of Federal and state tax,
securities and other laws, rules and regulations and by any regulatory authority
having jurisdiction.
9. TERMS AND CONDITIONS OF INCENTIVE AWARDS TO DIRECTORS.
(a) With respect to grants of Options to Directors:
(i) Each Director who was serving in such capacity as of January 4,
2000 (a "Year 2000 Director") was granted on January 4, 2000 an Option to
acquire 21,000 shares of Common Stock (the "Special Option").
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(ii) Prior to the termination of the Plan, for each of year 2000, 2001
and 2002, each Year 2000 Director who is serving in such capacity on the
applicable Date of Grant shall be granted on such Date of Grant:
(A) 400 shares of Incentive Stock Awards; and
(B) If in the preceding calendar year the Total Return for the
Company exceeds by three percentage points the NAREIT Total Return, an
Option to acquire an additional 3,000 shares of Common Stock.
(iii) Prior to the termination of the Plan, on each Date of Grant
beginning in 2003 and thereafter, each Year 2000 Director who is serving in
such capacity on each Date of Grant shall be granted on each Date of Grant
beginning in 2003:
(A) An Option to acquire 7,000 shares of Common Stock;
(B) 400 shares of Incentive Stock Awards; and
(C) If in the preceding calendar year the Total Return for the
Company exceeds by three percentage points the NAREIT Total Return, an
Option to acquire an additional 3,000 shares of Common Stock.
(iv) Each Option will be evidenced by a written instrument including
terms and conditions consistent with the Plan, as the Committee may
determine. The purchase price of Common Stock under each Option will be the
Fair Market Value of the Common Stock on the Date of Grant. Notwithstanding
any other provision to the contrary contained in the Plan, each Option will
expire not later than ten years from the Date of Grant.
(v) The Special Option granted under the Plan shall be exercisable in
the following cumulative installments: (A) the Special Option with respect
to 7,000 shares of Common Stock shall be exercisable by any Year 2000
Director on the last Thursday of April, 2001 so long as such Year 2000
Director is a member of the Board on the last Thursday of April, 2000, (B)
the Special Option with respect to 7,000 shares of Common Stock shall be
exercisable by any Year 2000 Director on the last Thursday of April, 2002
so long as such Year 2000 Director is a member of the Board on the last
Thursday of April, 2001, and (C) the Special Option with respect to 7,000
shares of Common Stock shall be exercisable by any Year 2000 Director on
the last Thursday of April, 2003 so long as such Year 2000 Director is a
member of the Board on the last Thursday of April, 2002. Each Option
granted under the Plan, other than a Special Option, may not be exercised
for a period of one year after the Date of Grant. After an Option, other
than a Special Option, becomes exercisable, such Option may be exercised
with respect to all shares of Common Stock covered thereby during its term
as provided hereunder. Notwithstanding the foregoing, upon a Director's
Permissible Termination, all Options then outstanding under the Plan shall
be fully vested and immediately exercisable.
(vi) Upon the exercise of an Option, the purchase price will be
payable in full in cash; or by the assignment and delivery to the Company
of shares of Common Stock owned by the holder of the Option (or issuable to
the Director upon exercise of the Option); or by a promissory note secured
by shares of Common Stock bearing interest at a rate equal to the minimum
rate permitted by the Internal Revenue Service; or by a combination of any
of the above. Any shares so assigned and delivered to the Company in
payment or partial payment of the purchase price will be valued at their
Fair Market Value on the exercise date. No payment by an assignment of
shares or by a promissory note or by any combination
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thereof will be allowed unless such payments are allowed under applicable
requirements of Federal and state tax, securities and other laws, rules and
regulations and by any regulatory authority having jurisdiction.
(vii) Subject to subparagraph (iv), each Option granted to a Director
will expire at the time the Director ceases to be a Director, except as
follows:
(A) If the service of the Director is terminated by the Company
other than for cause, for which the Company will be the sole judge, then
the Option will expire eight months after the date of termination unless
by the Option's terms it expires sooner.
(B) In the event of the Director's Retirement or the Director
retires with the consent of the Company at an earlier age, the Option
will expire three years after the date of termination unless by the
Option's terms it expires sooner.
(C) In the event of the Director's death or Disability while
serving in such capacity, the Option will expire three years after the
date of death or Disability of the Director unless by the Option's terms
it expires sooner. In the event of the Director's death or Disability
within the eight months referred to in subparagraph (A) above, the
Option will expire one year after the death or Disability of the
Participant unless by the Option's terms it expires sooner. In the event
of the Director's death or Disability within the three-year period
referred to in subparagraph (B) above, the Option will expire upon the
later of three years after Retirement or one year after the date of
death or Disability of the Director unless by the Option's terms it
expires sooner.
(b) All shares of Incentive Stock Awards granted pursuant to the Plan to
Directors will be subject to the following conditions:
(i) Each grant of 400 shares of an Incentive Stock Award shall vest at
a rate of 100 shares per year with the first 100 shares beginning one year
after the Date of the Grant.
(ii) The unvested portion of any Incentive Stock Award grant shall be
forfeited to the Company upon termination of a director's membership on the
Board unless such Director's termination is a Permissible Termination.
(iii) All Incentive Stock Awards shall become vested immediately upon
a Director's Permissible Termination.
(iv) Incentive Stock Awards may not be sold, transferred or otherwise
alienated or hypothecated until the restrictions are removed or expire.
(v) Each certificate representing an Incentive Stock Award granted
pursuant to the Plan will bear a legend making appropriate reference to the
restrictions imposed.
(vii) The Committee may impose other conditions on any shares granted
or sold pursuant to the Plan as it may deem advisable, including, without
limitation, restrictions under the Securities Act of 1933, as amended,
under the requirements of any stock exchange upon which such shares or
shares of the same class are then listed and under any blue sky or other
securities laws applicable to such shares.
(viii) Unless and until any shares of an Incentive Stock Award are
forfeited to the Company as provided in subsection (b) above, the holder
thereof will have all rights of a stockholder with respect to the Incentive
Stock Award granted or sold, including the right to vote the shares and
receive all dividends and other distributions paid or made with respect
thereto.
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10. ADJUSTMENT PROVISIONS.
(a) Subject to Sections 10(b), if the outstanding shares of Common Stock of
the Company are increased, decreased, or exchanged for a different number or
kind of shares or other securities, or if additional shares or new or different
shares or other securities are distributed with respect to such shares of Common
Stock or other securities, through merger, consolidation, sale of all or
substantially all the property of the Company, reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split or other
distribution with respect to such shares of Common Stock or other securities, an
appropriate and proportionate adjustment may be made in (i) the maximum number
and kind of shares provided in Section 3, (ii) the number and kind of shares or
other securities subject to the then outstanding Incentive Awards, and (iii) the
price for each share or other unit of any other securities subject to then
outstanding Incentive Awards without change in the aggregate purchase price or
value as to which such Incentive Awards remain exercisable or subject to
restrictions.
(b) Despite the provisions of Section 10(a), upon a Change in Control (as
defined below) all Incentive Awards then outstanding under the Plan will be
fully vested and exercisable and all restrictions will immediately cease, unless
provisions are made in connection with such transaction for the continuance of
the Plan and the assumption or the substitution for such Incentive Awards of new
incentive awards covering the stock of a successor employer corporation, or a
parent or subsidiary thereof, with appropriate adjustments as to the number and
kind of shares and prices. In addition, subject to the preceding sentence with
respect to grants of Options which are outstanding on the date of a Change in
Control, such Options, to the extent then exercisable (including Options which
become exercisable by a Change in Control), shall not expire until the later of
the date specified in the Participant's stock option agreement or the third
anniversary after the date of the Participant's termination of employment or
service with the Company; provided, however, that in no event shall such Options
be exercisable more than ten (10) years from the date of grant.
A Change in Control shall be deemed to occur if:
(i) any Person (as defined in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) is or
becomes the Beneficial Owner (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing 25%
or more of the combined voting power of the Company's then outstanding
securities ("Outstanding Company Voting Securities"); provided, however,
that for purposes of this subsection (i), the following shall not
constitute a Change of Control: (a) any acquisition directly from the
Company, (b) any acquisition by the Company or any corporation controlled
by the Company, (c) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any corporation
controlled by the Company, (d) any acquisition by a Person of 25% of the
Outstanding Company Voting Securities as a result of an acquisition of
common stock of the Company by the Company which, by reducing the number of
shares of common stock of the Company outstanding, increases the
proportionate number of shares beneficially owned by such Person to 25% or
more of the Outstanding Company Voting Securities; provided, however, that
if a Person shall become the beneficial owner of 25% or more of the
Outstanding Company Voting Securities by reason of a share acquisition by
the Company as described above and shall, after such share acquisition by
the Company, become the beneficial owner of any additional shares of common
stock of the Company, then such acquisition shall constitute a Change of
Control or (e) any acquisition pursuant to a transaction which complies
with subsection (iii) of this Section 9(b);
(ii) during any period of two consecutive years (not including any
period prior to the execution of this Plan), individuals who at the
beginning of such period constitute the Board, and any new director
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(other than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in Sections
9(b)(i), (ii) or (iv)) whose election by the Board or nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds (#) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination
for election was previously so approved (hereinafter referred to as
"Continuing Directors"), cease for any reason to constitute at least a
majority thereof;
(iii) the consummation by the company of a merger or consolidation of
the Company with any other corporation (or other entity), other than a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 66 2/3% of the combined
voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation;
provided, however, that a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no Person
acquires more than 25% of the combined voting power of the Company's then
outstanding securities shall not constitute a Change in Control; or
(iv) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by
the Company of all or substantially all of the Company's assets.
(c) Adjustments under Section 10(a) and 10(b) shall be made by the
Committee, whose determination as to what adjustments shall be made and the
extent thereof shall be final, binding, and conclusive. No fractional interest
shall be issued under the Plan on account of any such adjustments.
(d) In the event of a pending or threatened takeover bid or tender offer
and pursuant to which 10% or more of the outstanding securities of the company
is acquired, whether or not deemed a tender offer under applicable state or
Federal laws, or in the event that any person makes any filing under sections
13(d) or 14(d) of the Securities Exchange Act of 1934 with respect to the
Company, the Committee may in its sole discretion, without obtaining stockholder
approval, at the time of any one or more of the following actions to the extent
permitted in Section 14 with respect to all Eligible Persons and Participants:
(i) Accelerate the exercise dates of any outstanding Option, make all
outstanding Options or Cash Based Awards fully vested and exercisable,
accelerate the crediting of Dividend Equivalents or make all credits in a
Participant's account immediately payable;
(ii) Determine that all or any portion of conditions associated with
an Incentive Stock Award have been met;
(iii) Pay cash to any or all Option or Dividend Equivalent holders in
exchange for the cancellation of their outstanding nonstatutory Options or
Dividend Equivalents; or
(iv) Make any other adjustments or amendments to the Plan and
outstanding Incentive Awards and substitute new Incentive Awards.
11. TAX WITHHOLDING.
The Company shall be entitled to require payment in cash or deduction from
other compensation payable to each Participant of any sums required by Federal,
state or local tax law to be withheld with respect to the issuance, vesting,
exercise or payment of any Incentive Award. The Committee may in its discretion
and in satisfaction of the foregoing requirement allow such Participant to elect
to have the Company withhold shares
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<PAGE> 41
of Common Stock otherwise issuable under such Award (or allow the return of
shares of Common Stock) having a Fair Market Value equal to the sums required to
be withheld. Notwithstanding any other provision of the Plan, the number of
shares of Common Stock which may be withheld with respect to the issuance,
vesting, exercise or payment of any Incentive Award (or which may be repurchased
from the Participant of such Incentive Award within six months after such shares
of Common Stock were acquired by the Participant from the Company) in order to
satisfy the Participant's Federal and state income and payroll tax liabilities
with respect to the issuance, vesting, exercise or payment of the Incentive
Award shall be limited to the number of shares which have a Fair Market Value on
the date of withholding or repurchase equal to the aggregate amount of such
liabilities based on the minimum statutory withholding rates for Federal and
state tax income and payroll tax purposes that are applicable to such
supplemental taxable income.
12. GENERAL PROVISIONS.
(a) Nothing in the Plan or in any instrument executed pursuant to the Plan
shall confer upon any Participant any right to continue in the employ of the
Company or any of its subsidiaries or affect the right of the Company to
terminate the employment of any Participant at any time with or without cause.
(b) No shares of Common Stock shall be issued or transferred pursuant to an
Incentive Award unless and until all then applicable requirements imposed by
Federal and state securities and their laws, rules and regulations and by any
regulatory agencies having jurisdiction, and by any stock exchanges upon which
the Common Stock may be listed, having been fully met. As a condition precedent
to the issuance of shares pursuant to the grant or exercise of an Incentive
Award, the Company may require the Participant to take any reasonable action to
meet such requirements.
(c) No Participant and no beneficiary or other person claiming under or
through such Participant shall have any right, title or interest in or to any
shares of Common Stock allocated or reserved under the Plan or subject to any
Incentive Award except as to such shares of Common Stock, if any, that have been
issued or transferred to such Participant.
(d) The Company may make such provisions as they deem appropriate to
withhold any taxes the Company determines it is required to withhold in
connection with any Incentive Award.
(e) The Company may make a loan to a Participant in connection with (i) the
exercise of an Option in an amount not to exceed the aggregate exercise price of
the Option being exercised and the grossed up amount of any Federal and state
taxes payable in connection with such exercise for the purpose of assisting such
optionee to exercise such Option and (ii) the vesting of an Incentive Stock
Award in an amount equal to the grossed up amount of any Federal and state taxes
payable as a result of such vesting. Any such loan may be secured by shares of
Common Stock or other collateral deemed adequate by the Committee and shall
comply in all respects with all applicable laws and regulations. The Committee
may adopt policies regarding eligibility for such loans, the maximum amounts
thereof and any terms and conditions not specified in the Plan upon which such
loans shall be made. In no event shall the interest rate be less than the
minimum rate established by the Internal Revenue Service for the purpose of the
purchase and sale of property.
(f) The forms of Options and/or the right to credits or credits for
Dividend Equivalents granted under the Plan may contain such other provisions as
the Committee may deem advisable. Without limiting the foregoing and if so
authorized by the Committee, the Company may, with the consent of the
Participant, and at any time or from time to time, cancel the right to credits
or credits for Dividend Equivalents or all or a portion of any Option granted
under the Plan then subject to exercise and discharge its obligation in respect
of the Option and/or the right to credits or credits for Dividend Equivalents
either by payment to the Participant
A-13
<PAGE> 42
of an amount of cash equal to the excess, if any, of the Fair Market Value, at
such time, of the shares subject to the portion of the Option and/or the right
to credits or credits for Dividend Equivalents so cancelled over the aggregate
purchase price specified in the Option and/or the right to credits or credits
for Dividend Equivalents covering such shares, or by issuance or transfer to the
Participant of shares of Common Stock with a Fair Market Value, at such time,
equal to any such excess, or by a combination of cash and shares. Upon any such
payment of cash or issuance of shares, (i) there shall be charged against the
aggregate limitations set forth in Section 3(a) a number of shares equal to the
number of shares so issued plus the number of shares purchasable with the amount
of any cash paid to the Participant on the basis of the Fair Market Value as of
the date of payment, and (ii) the number of shares subject to the portion of the
Option so cancelled, less the number of shares so charged against such
limitations, shall thereafter be available for other grants.
(h) No Incentive Award shall be granted which would violate the Company's
articles of incorporation or which would cause the Company to not qualify as a
real estate investment trust.
(i) No Participant may make an election under Section 83(b) of the Code
regarding any Incentive Award without the prior consent of the Committee in its
sole discretion.
(j) No Incentive Award and no right under the Plan, contingent or
otherwise, shall be assignable or transferable or subject to any encumbrance,
pledge or charge of any nature, subject to the provisions of Section 7(d),
except that, under such rules and regulations as the Company may establish
pursuant to the terms of the Plan, a beneficiary may be designated with respect
to an Incentive Award in the event of death of a Participant. If such
beneficiary is the executor or administrator of the estate of the Participant,
any rights with respect to such Incentive Award may be transferred to the person
or persons or entity (including a trust) entitled thereto under the will of the
holder of such Incentive Award.
(k) Notwithstanding any other provision of the Plan, the Plan, and any
Incentive Award granted or awarded to any individual who is then subject to
Section 16 of the Exchange Act, shall be subject to any additional limitations
set forth in any applicable exemptive rule under Section 16 of the Exchange Act
(including any amendment to Rule 16b-3 of the Exchange Act) that are
requirements for the application of such exemptive rule. To the extent permitted
by applicable law, the Plan and Incentive Awards granted or awarded hereunder
shall be deemed amended to the extent necessary to conform to such applicable
exemptive rule.
13. APPROVAL OF PLAN BY STOCKHOLDERS.
The Plan shall be submitted for the approval of the Company's stockholders
within twelve months after the date of the Board's initial adoption of the Plan.
Incentive Awards may be granted or awarded prior to such stockholder approval,
provided that such Incentive Awards shall not be exercisable nor shall such
Incentive Awards vest prior to the time when the Plan is approved by the
stockholders, and provided further that if such approval has not been obtained
at the end of said twelve-month period, all Awards previously granted or awarded
under the Plan shall thereupon be canceled and become null and void. In
addition, if the Board determines that Incentive Awards other than Options which
may be granted to Section 162(m) Participants should continue to be eligible to
qualify as performance-based compensation under Section 162(m)(4)(C) of the
Code, the Performance Criteria must be disclosed to and approved by the
Company's stockholders no later than the first stockholder meeting that occurs
in the fifth year following the year in which the Company's stockholders
previously approved the Performance Criteria.
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<PAGE> 43
14. EFFECT OF PLAN UPON OPTIONS AND COMPENSATION PLANS.
The adoption of the Plan shall not affect any other compensation or
incentive plans in effect for the Company or any subsidiary. Nothing in the Plan
shall be construed to limit the right of the Company (a) to establish any other
forms of incentives or compensation for Employees, Directors or Consultants of
the Company or any subsidiary or (b) to grant or assume options or other rights
or awards otherwise than under the Plan in connection with any proper corporate
purpose including but not by way of limitation, the grant or assumption of
options in connection with the acquisition by purchase, lease, merger,
consolidation or otherwise, of the business, stock or assets of any corporation,
partnership, limited liability company, firm or association.
15. AMENDMENT AND TERMINATION.
(a) The Committee shall have the power, in its discretion, to amend,
suspend or terminate the Plan at any time. No such amendment shall, without
approval of the stockholders of the Company, except as provided in Section 10 of
the Plan, increase the number of shares of Common Stock subject to the Plan or
make any other change to the Plan that would require stockholder approval as a
matter of applicable law, stock exchange regulation or exemptive condition. In
addition, subject to Section 10(a), no amendment to the Plan shall permit
repricing of any outstanding Incentive Awards.
(b) The Committee may, with the consent of a Participant, make such
modifications in the terms and conditions of an Incentive Award agreement as it
deems advisable including accelerating the vesting and exercise dates of any
outstanding Options and making grants of Common Stock equal to all outstanding
credits of Dividend Equivalents; provided, however, no modifications of an
Incentive Award agreement shall permit repricing of any outstanding Incentive
Awards.
(c) No amendment, suspension or termination of the Plan shall, without the
consent of the Participant, alter, terminate, impair or adversely affect any
right or obligation under any Incentive Award previously granted under the Plan.
16. EFFECTIVE DATE OF PLAN AND DURATION OF PLAN.
This 2000 Stock Incentive Plan shall become effective upon adoption by the
Board and the holders of a majority of the outstanding shares at a meeting of
the stockholders of the Company. Unless previously terminated, the Plan shall
terminate on April 28, 2008. If not approved, this 2000 Incentive Plan shall not
take effect and the Second Amended and Restated Directors Stock Incentive Plan
shall remain in full force and effect.
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<PAGE> 44
HEALTH CARE PROPERTY INVESTORS, INC.
PROXY
ANNUAL MEETING OF STOCKHOLDERS -- MAY 9, 2000
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 May 9, 2000 at 9:30 A.M., or any adjournment or postponement
thereof.
Unless otherwise marked, this Proxy will be voted FOR the election of the
Board of Directors' nominees to the Board of Directors, FOR the approval of the
2000 Stock Incentive Plan 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, 3 and 4.
(IMPORTANT: PLEASE DATE AND SIGN THE PROXY ON REVERSE SIDE)
1. ELECTION OF DIRECTORS: Robert R. Fanning, Jr., Michael D. McKee and Harold M.
Messmer, Jr.
<TABLE>
<S> <C> <C>
[ ] FOR all nominees listed above [ ] WITHHOLD AUTHORITY to [ ] *EXCEPTIONS
(except as marked to the contrary vote for all nominees listed
hereon) above
</TABLE>
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and write that nominee's name on the line provided below.)
Exceptions: ________________________________________
2. Approval of the Company's 2000 Stock Incentive Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Ratification of Arthur Andersen LLP as independent auditors for the year
ending December 31, 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, upon any other matter that may properly come before the
Annual Meeting of Stockholders or any adjournment thereof.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
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: , 2000
------------------------
Signature
------------------------
Signature
PLEASE DATE, SIGN AND MAIL THIS PROXY IN THE ENCLOSED ENVELOPE.
