<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:
<TABLE>
<S> <C>
/X/ Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
HEALTH CARE REIT, 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):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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:
------------------------------------------------------------------------
<PAGE> 2
HEALTH CARE REIT, INC.
NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS
AND
PROXY STATEMENT
MEETING DATE
APRIL 22, 1997
--------------
YOUR VOTE IS IMPORTANT!
YOU ARE URGED TO SIGN, DATE, AND RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE.
<PAGE> 3
HEALTH CARE REIT, INC.
One SeaGate
Suite 1500
Toledo, Ohio 43604
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 22, 1997
TO THE SHAREHOLDERS OF HEALTH CARE REIT, INC.:
The Annual Meeting of Shareholders of Health Care REIT, Inc. will be
held on April 22, 1997 at 10:00 a.m. in the Auditorium of One SeaGate, Toledo,
Ohio, for the purpose of considering and acting upon:
1. The election of three Directors for a term of three years;
2. The approval of an amendment to the Company's 1995 Stock
Incentive Plan to increase the number of shares available for
issuance, to modify the Plan's antidilution provisions and to
permit transferable stock options;
3. The approval of the Health Care REIT, Inc. Stock Plan for
Non-Employee Directors;
4. The approval of an amendment to the Company's By-Laws to
provide for the New York Stock Exchange's settlement language;
and
5. The ratification of the appointment of Ernst & Young LLP as
independent auditors for the fiscal year 1997.
Shareholders of record at the close of business on March 18, 1997 will
be entitled to notice of, and to vote at, such Annual Meeting or any adjournment
thereof. Information relating to the matters to be considered and voted on at
the Annual Meeting is set forth in the Proxy Statement accompanying this Notice.
BY ORDER OF THE BOARD OF DIRECTORS
Erin C. Ibele
Vice President and Corporate Secretary
Toledo, Ohio
March 20, 1997
- --------------------------------------------------------------------------------
PLEASE COMPLETE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE
ENVELOPE PROVIDED WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING. THE
PROXY MAY BE REVOKED BY YOU AT ANY TIME, AND GIVING YOUR PROXY WILL NOT
AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE ANNUAL MEETING.
- --------------------------------------------------------------------------------
<PAGE> 4
HEALTH CARE REIT, INC.
ONE SEAGATE
SUITE 1500
TOLEDO, OHIO 43604
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
APRIL 22, 1997
GENERAL
This Proxy Statement is furnished to the shareholders of Health Care
REIT, Inc. (the "Company") by its Management and the Board of Directors in
connection with the solicitation of proxies in the enclosed form to be used in
voting at the Annual Meeting of Shareholders (the "Annual Meeting"), which is
scheduled to be held on Tuesday, April 22, 1997 at 10:00 a.m. as set forth in
the foregoing notice. At the Annual Meeting, the shareholders will be asked to
elect three Directors, approve an amendment to the Company's 1995 Stock
Incentive Plan, approve the Health Care REIT, Inc. Stock Plan for Non-Employee
Directors, approve an amendment to the Company's By-Laws, ratify the appointment
of Ernst & Young LLP as independent auditors and transact such other business as
may properly come before the Annual Meeting or any adjournment thereof.
A share cannot be voted at the Annual Meeting unless the holder thereof
is present or represented by proxy. When proxies in the accompanying form are
returned properly executed and dated, the shares represented thereby will be
voted at the Annual Meeting. If a choice is specified in the proxy, the shares
represented thereby will be voted in accordance with such specification. If no
specification is made, the proxy will be voted FOR the action proposed. Any
shareholder giving a proxy has the right to revoke it any time before it is
voted by filing with the Vice President/Corporate Secretary of the Company a
written revocation, or by filing a duly executed proxy bearing a later date, or
by attending the Annual Meeting and voting in person. The revocation of a proxy
will not be effective until notice thereof has been received by the Vice
President/Corporate Secretary of the Company.
The cost of solicitation of proxies will be borne by the Company. In
addition to solicitation by mail, Directors and officers of the Company may
solicit proxies by telephone, telegraph or personal interview. The Company will
reimburse Directors and officers for their reasonable out-of-pocket expenses in
connection with such solicitation. The Company will request brokers and nominees
who hold shares in their names to furnish this proxy material to the persons for
whom they hold shares
-1-
<PAGE> 5
and will reimburse such brokers and nominees for their reasonable out-of-pocket
expenses in connection therewith. The Company has hired ChaseMellon Shareholder
Services, L.L.C. to solicit proxies for a fee not to exceed $7,000, plus
expenses and other customary charges.
The presence at the Annual Meeting, in person or by proxy, of the
holders of a majority of the total number of shares of common stock outstanding
on the record date shall constitute a quorum for the transaction of business by
such holders at the Annual Meeting. The three nominees for election as Directors
who receive the highest number of votes therefor at the Annual Meeting shall be
elected as Directors. Except for approval of the amendment to the By-Laws, which
requires the affirmative vote of 75% of the holders of outstanding shares of
common stock of the Company, all other matters shall require the affirmative
vote of a majority of the shares of common stock present in person or
represented by proxy.
The executive offices of the Company are located at One SeaGate, Suite
1500, Toledo, Ohio 43604, and its mailing address is One SeaGate, Suite 1500, P.
O. 1475, Toledo, Ohio 43603-1475. The telephone number is (419) 247-2800. The
approximate date on which this material was first sent to shareholders was March
20, 1997. A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1996, INCLUDING THE FINANCIAL STATEMENTS AND THE SCHEDULES AND
EXHIBITS THERETO, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, MAY BE
OBTAINED WITHOUT CHARGE BY WRITING TO THE VICE PRESIDENT/CORPORATE SECRETARY,
HEALTH CARE REIT, INC. AT THE ABOVE ADDRESS.
VOTING SECURITIES OUTSTANDING
AND PRINCIPAL HOLDERS THEREOF
The Company had outstanding 21,718,534 shares of common stock,
$1.00 par value per share (the "shares of common stock"), on March 20, 1997.
The shares constitute the only class of outstanding voting securities of the
Company. Shareholders of record at the close of business on March 18, 1997 are
entitled to notice of, and to vote at, the Annual Meeting and any adjournments
thereof. Each share of common stock is entitled to one vote on all matters to
come before the Annual Meeting.
-2-
<PAGE> 6
The Management and Board of the Company do not know of any person other
than Cohen & Steers Capital Management, Inc. that beneficially owns more than
five percent (5%) of the Company's outstanding shares of common stock. The
current holdings of shares of common stock by Cohen & Steers is set forth in the
table below. This information is based on information concerning beneficial
ownership of shares of common stock as of December 31, 1996 as set forth in a
Schedule 13G filed by Cohen & Steers with the Securities and Exchange Commission
on February 6, 1997. The percentage has been adjusted, however, to reflect the
Company's outstanding shares of common stock as of March 20, 1997. Cohen &
Steers has sole voting power with respect to 1,441,000 shares of common stock
and sole dispositive power with respect to 1,615,400 shares of common stock.
<TABLE>
<CAPTION>
Percentage of Outstanding
Name and Address Shares of Common Stock Shares of Common Stock as of
of Beneficial Owner Beneficially Owned March 20, 1997
- ------------------- ------------------ --------------
<S> <C> <C>
Cohen & Steers Capital 1,615,400 7.44%
Management, Inc.
757 Third Avenue
New York, New York 10017
</TABLE>
PROPOSAL 1 - ELECTION OF THREE DIRECTORS
The By-Laws provide for nine Directors and divide them into three
classes: Class I, Class II, and Class III. The Directors are elected for a
three-year term or until the election and qualification of their respective
successors. It is intended by Management that proxies received will be voted to
elect the three Directors named below to serve for a three-year term until their
respective successors are elected and have qualified or until their earlier
resignation or removal.
If any nominee declines or is unable to accept such nomination to serve
as a Director, events which Management does not now expect, the proxies reserve
the right to substitute another person as a Management nominee, or to reduce the
number of Management nominees, as they shall deem advisable. The Proxy solicited
hereby will not be voted to elect more than three Directors.
CLASS II
DIRECTORS TO BE ELECTED
PIER C. BORRA, AGE 57. Mr. Borra is the Chairman, President and Chief Executive
Officer of Arbor Health Care Company (operator of nursing homes). Mr. Borra
has served as a Director of the Company since 1991 and is a member of the
Board's Compensation, Investment and Planning Committees.
-3-
<PAGE> 7
GEORGE L. CHAPMAN, AGE 49. Mr. Chapman became Chairman, Chief Executive Officer
and President of the Company in October 1996. From 1992 to October 1996, Mr.
Chapman served in various capacities, including Executive Vice President,
General Counsel and President of the Company. In addition, from June 1994
through November 1995, Mr. Chapman also served as Vice President and General
Counsel of First Toledo Advisory Company (former manager of the Company) and
from January 1992 through November 1995 he was Executive Vice President and
General Counsel of First Toledo Corporation (developer of health care
facilities). Mr. Chapman has served as a Director of the Company since 1994 and
is a member of the Board's Investment and Planning Committees.
SHARON M. OSTER, AGE 48. Ms. Oster is Professor of Management at the Yale School
of Management, Yale University. Ms. Oster also serves as a Director of Aristotle
Corporation (publicly held company) and Transpro (manufacturer of precision
transportation products). Ms. Oster has served as a Director of the Company
since 1994 and is a member of the Board's Audit and Planning Committees.
CLASS III
DIRECTORS WHOSE TERMS CONTINUE(1)
RICHARD C. GLOWACKI, AGE 64. Mr. Glowacki is President of The Danberry
Management Company (real estate brokerage and investment activities). He has
served as a Director of the Company since 1981 and is a member of the Board's
Audit, Executive, Nominating and Planning Committees.
BRUCE G. THOMPSON, AGE 67. Mr. Thompson has served as a consultant to the
Company since January 1997. From 1970 to October 1996, Mr. Thompson was the
Chairman and Chief Executive Officer of the Company. Mr. Thompson served as
President and Director of First Toledo Advisory Company (former manager of the
Company) from June 1994 through November 1995. In addition, Mr. Thompson serves
as President and a Director of First Toledo Corporation (developer of health
care facilities), a position that he has held since June 1994. Mr. Thompson is
also a director of the following companies: WT Management Company (manager of
health care facilities); Kingston HealthCare Company (manager of health care
facilities); KeyBank National Association, Toledo (commercial bank); The Douglas
Company (general contractor); and Arbor Health Care Company (operator of
nursing homes). Mr. Thompson has served as Director of the Company since 1971
and is a member of the Board's Executive, Investment and Planning Committees.
RICHARD A. UNVERFERTH, AGE 73. Mr. Unverferth is Chairman of Unverferth
Manufacturing, Inc. (agricultural equipment manufacturer). In addition, Mr.
Unverferth is Chairman of H.C.F., Inc. (operator of a nursing home chain). Mr.
-4-
<PAGE> 8
Unverferth has served as a Director of the Company since 1971 and is a member of
the Board's Audit, Executive, Compensation, Investment, Nominating and Planning
Committees.
CLASS I
DIRECTORS WHOSE TERMS CONTINUE(2)
WILLIAM C. BALLARD, JR., AGE 56. Mr. Ballard is Of Counsel to Greenebaum, Doll &
McDonald (law firm) and has held this position since 1992. From 1972 to 1992,
Mr. Ballard was the Executive Vice President, Chief Financial Officer and
Director of Humana Inc., a provider of integrated health care services. Mr.
Ballard also serves as a director of the following companies: American Safety
Razor Co. (manufacturer of health and beauty aids); Atria Communities, Inc.
(health care provider); LG&E Energy Corp. (utility company), Mid-America Bancorp
(commercial bank); United HealthCare Corp. (managed care company); and Vencor,
Inc. (integrated health care delivery company). Mr. Ballard has served as a
Director of the Company since 1996 and is a member of the Board's Planning
Committee.
BRUCE DOUGLAS, AGE 64. Mr. Douglas is Chairman of the Board of The Douglas
Company (general contracting firm). He has served as a Director of the Company
since 1975 and is a member of the Board's Investment and Planning Committees.
FREDERIC D. WOLFE, AGE 67. Mr. Wolfe served as a consultant to the Company from
December 1995 through December 1996. Mr. Wolfe was the President of the Company
from 1970 through September 1995. From June 1994 through November 1995, Mr.
Wolfe was the Chairman of the Board and Director of First Toledo Advisory
Company (former manager of the Company). Mr. Wolfe is also the Chairman of the
Board and a Director of First Toledo Corporation (developer of health care
facilities). In addition, Mr. Wolfe serves as a director of the following
companies: WT Management Company (manager of health care facilities); Kingston
HealthCare Company (manager of health care facilities); and National City Bank,
Northwest (commercial bank). Mr. Wolfe has served as a director of the Company
since 1971 and is a member of the Board's Executive, Investment and Planning
Committees.
- --------------
(1) The terms of Messrs. Glowacki, Thompson and Unverferth expire in 1998.
(2) The terms of Messrs. Ballard, Douglas and Wolfe expire in 1999.
-5-
<PAGE> 9
THE MANAGEMENT AND THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY
RECOMMEND THAT YOU VOTE "FOR" THE ELECTION OF THE ABOVE NOMINEES. The nominees
who receive the highest number of votes at the Annual Meeting shall be elected
as Directors.
BOARD AND COMMITTEES
The Board met four times during the year ended December 31, 1996. The
Board has appointed standing Audit, Executive, Compensation, Investment,
Nominating and Planning Committees. In 1996, each incumbent Director attended at
least 75% of the aggregate of the meetings of the Board and the committees on
which they served.
The Audit Committee met once during the year ended December 31, 1996.
The purpose of the Audit Committee is to review the external audit function and
the operations of the principal accounting officer of the Company, and to make
recommendations to the Board with respect to the formulation and development of
the auditing policies of the Company. The Audit Committee may also make
recommendations to the Board with respect to the selection of the independent
auditing firm to audit the Company's records.
The function of the Executive Committee is to exercise all the powers
of the Board (except any powers specifically reserved to the Board) during
intervals between meetings of the Board.
The Compensation Committee, which met three times during 1996, is
generally responsible for determining the nature and amount of compensation for
Executive Officers.
The Investment Committee met eight times during the year ended December
31, 1996.
The function of the Nominating Committee, which did not meet during the
year ended December 31, 1996, is to select and recommend to the full Board
nominees for election as Directors. The Committee may, in its discretion,
consider nominees proposed by shareholders of the Company for the 1998 Annual
Meeting of Shareholders, provided such recommendations are in writing, contain a
description of the nominee's qualifications and his consent to serve, and are
received by the Company by November 17, 1997.
-6-
<PAGE> 10
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table sets forth as of February 1, 1997, unless otherwise
specified, certain information with respect to the beneficial ownership of the
Company's shares by each person who is a Director of the Company, a nominee for
the Board, each of the named Executive Officers, and by the Directors and
Executive Officers of the Company as a group.
<TABLE>
<CAPTION>
Amount and Nature of Beneficial
Ownership of Common Stock Percent
Name of Beneficial Owner as of February 1, 1997 of Class
- ------------------------ ---------------------- --------
<S> <C> <C>
William C. Ballard, Jr. Sole voting power 6,300 .03
Shared voting power 0 N/A
Sole investment power 6,300 .03
Shared investment power 0 N/A
TOTAL 6,300 .03
Pier C. Borra Sole voting power 0 N/A
Shared voting power 0 N/A
Sole investment power 0 N/A
Shared investment power 2,570 .01
TOTAL 2,570 .01
Raymond W. Braun Sole voting power 70,171(1)(2) .38
Shared voting power 0 N/A
Sole investment power 70,171(1)(2) .38
Shared investment power 0 N/A
TOTAL 70,171(1)(2) .38
George L. Chapman Sole voting power 149,117(1)(2) .80
Shared voting power 0 N/A
Sole investment power 149,117(1)(2) .80
Shared investment power 0 N/A
TOTAL 149,117(1)(2) .80
Bruce Douglas Sole voting power 36,976 .20
Shared voting power 0 N/A
Sole investment power 36,976 .20
Shared investment power 0 N/A
TOTAL 36,976 .20
Richard C. Glowacki Sole voting power 16,202 .09
Shared voting power 0 N/A
Sole investment power 16,202 .09
Shared investment power 0 N/A
TOTAL 16,202 .09
Edward F. Lange, Jr. Sole voting power 3,414(1)(2) .02
Shared voting power 0 N/A
Sole investment power 3,414(1)(2) .02
Shared investment power 0 N/A
TOTAL 3,414(1)(2) .02
</TABLE>
-7-
<PAGE> 11
<TABLE>
<CAPTION>
Amount and Nature of Beneficial
Ownership of Common Stock Percent
Name of Beneficial Owner as of February 1, 1997 of Class
- ------------------------ ---------------------- --------
<S> <C> <C>
Sharon M. Oster Sole voting power 100 .00
Shared voting power 0 N/A
Sole investment power 100 .00
Shared investment power 0 N/A
TOTAL 100 .00
Bruce G. Thompson Sole voting power 207,649(1) 1.11
Shared voting power 0 N/A
Sole investment power 207,649(1) 1.11
Shared investment power 0 N/A
TOTAL 207,649 1) 1.11
Richard A. Unverferth Sole voting power 0 N/A
Shared voting power 0 N/A
Sole investment power 0 N/A
Shared investment power 3,816 .02
TOTAL 3,816 .02
Frederic D. Wolfe Sole voting power 232,454 1.25
Shared voting power 41,325 .22
Sole investment power 232,454 1.25
Shared investment power 41,325 .22
TOTAL 273,779 1.47
All Directors and Officers Sole voting power 775,972(3)(4) 4.15
as a group (12 persons) Shared voting power 41,325 .24
Sole investment power 775,972(3)(4) 4.15
Shared investment power 47,711 .26
TOTAL 823,683 3)(4) 4.41
</TABLE>
- -----------
(1) Includes shares not actually owned by such individuals as of February
1, 1997, but of which beneficial ownership could be acquired currently
by such individuals upon the exercise of outstanding options.
(2) Includes restricted shares beneficially owned by such Director or
Executive Officers as of February 1, 1997.
(3) Includes an aggregate of 275,757 shares not actually owned by such
Directors and Executive Officers as of February 1, 1997, but of which
beneficial ownership could be acquired currently by such Directors and
Executive Officers upon the exercise of outstanding options.
(4) Includes an aggregate of 10,509 restricted shares beneficially owned by
such Director and Executive Officers as of February 1, 1997.
EXECUTIVE OFFICERS OF THE COMPANY
The following information is furnished as to the Executive Officers of
the Company:
-8-
<PAGE> 12
GEORGE L. CHAPMAN, AGE 49. Since October 1996, Mr. Chapman has served as
Chairman, Chief Executive Officer and President of the Company. As described
above, since 1992 Mr. Chapman has served in various executive capacities with
the Company.
RAYMOND W. BRAUN, AGE 39. Mr. Braun has served as Vice President and Chief
Operating Officer of the Company since January 1997 and from January 1993
through January 1997, Mr. Braun served in various roles, including Assistant
Vice President, Vice President and Assistant General Counsel of the Company.
Mr. Braun was Of Counsel to the law firm of Shumaker, Loop & Kendrick, LLP from
January 1993 through April 1996 and was an attorney with the same firm from 1983
through 1993.
EDWARD F. LANGE, JR., AGE 37. Mr. Lange has served as Vice President, Chief
Financial Officer and Treasurer of the Company since March 1996. Prior to that
date, Mr. Lange was Senior Vice President of Finance of The CarePlex Group,
Inc., a long-term care operating company, holding that position from January
1995 through March 1996. From 1994 through 1995, Mr. Lange was Vice President-
Finance of MediTrust, a real estate investment trust. He was Senior Vice
President-Finance of The MediPlex Group, Inc., also a long-term care operating
company, from 1993 through 1994.
ERIN C. IBELE, AGE 35. Ms. Ibele has served as Vice President and Corporate
Secretary of the Company since January 1993. Prior to that date, Ms. Ibele was
Corporate Secretary of the Company from 1987 through January 1993. From June
1994 through November 1995, Ms. Ibele served as Vice President, Corporate
Secretary and Director of First Toledo Advisory Company (former manager of the
Company) and in the same capacities for First Toledo Corporation (developer of
health care facilities).
REMUNERATION
COMPENSATION OF EXECUTIVE OFFICERS
Beginning in December 1995, each Executive Officer of the Company
became employed and compensated by the Company. Previously, each Executive
Officer of the Company was employed and compensated by the former management
company, First Toledo Advisory Company. The following table presents the total
compensation awarded to, earned by, or paid to, the Chief Executive Officer of
the Company during 1995 and 1996, and the total compensation awarded, earned, or
paid during 1995 and 1996 to the Company's most highly compensated Executive
Officers who were serving at the end of 1996, and whose total annual salary and
bonus, if any, exceeded $100,000. Additionally, the table sets forth the total
compensation paid to Mr.
-9-
<PAGE> 13
Thompson who would have been one of the Company's most highly compensated
Executive Officers but for the fact he was not serving as an Executive Officer
at the end of 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
----------------------- -------------
Name and All Other
Principal Position Year Salary($) Bonus($) Options (#) Compensation ($)(1)
- ------------------ ---- --------- -------- ----------- -------------------
<S> <C> <C> <C> <C> <C>
George L. Chapman, 1996 $275,000 $200,000 180,000 $16,976
Chairman, Chief 1995 $240,000 $107,500 139,268 $ 9,000
Executive Officer
and President
Raymond W. Braun, 1996 $146,538 $ 85,000 75,000 $16,976
Vice President, 1995 $174,307 $ 40,555 70,000 $ 9,000
Chief Operating
Officer
Edward F. Lange, Jr. 1996(2) $121,154 $ 75,000 100,000 -0-
Vice President, 1995(2) N/A N/A N/A N/A
Chief Financial Officer
and Treasurer
Bruce G. Thompson 1996 $135,000 -0- -0- $14,921
former Chairman 1995 $113,984 $ 6,839
and Chief Executive
Officer
</TABLE>
- ------------
(1) Includes contributions that were or will be made in connection with the
Company's Retirement Plan and Trust.
(2) Mr. Lange was not appointed as an Executive Officer of the Company until
March 1996.
EMPLOYMENT AGREEMENTS
Pursuant to an Employment and Consulting Agreement entered into in
1995, Mr. Thompson served as the Company's Chief Executive Officer until October
14, 1996, and thereafter served as an employee of the Company through December
31, 1996. Mr. Thompson now serves as a consultant to the Company, performing
such services as are requested of him by the Board of Directors or Management,
until December 31, 1997. During the term of this agreement, Mr. Thompson will
receive a consulting fee of $139,200 per annum, subject to adjustment for
changes in the Consumer Price Index-All Urban Consumers (CPI-UC).
The Company and Mr. Chapman have entered into a three-year employment
agreement effective January 1, 1997, subject to optional successive three-year
renewal terms. Mr. Chapman will serve as the Company's Chairman, Chief Executive
Officer and President and receive a minimum annual base salary of $350,000, as
well as
-10-
<PAGE> 14
discretionary annual bonuses and stated fringe benefits. If Mr. Chapman is
terminated without cause, or resigns during the twelve months following a
"change in corporate control" (as defined in the employment agreement), he would
receive severance pay for the remaining term of the agreement, or for
twenty-four months, whichever is greater. These severance benefits would be made
in a series of monthly payments, in an amount equal to one-twelfth of the sum of
his annual base salary and the greater of the average of his annual bonuses for
the two fiscal years immediately preceding the termination or change in
corporate control or a minimum bonus equal to fifty percent of his annual base
salary. At Mr. Chapman's election, the Company would instead make an immediate
lump sum payment equal to the present value of such monthly payments, calculated
using a discount rate equal to the interest rate on 90-day treasury bills
reported at the date the election is delivered. In addition, Mr. Chapman's
stock option and restricted stock awards under the 1995 Stock Incentive Plan
would become vested and immediately exercisable in the event of a change in
corporate control, or upon his death, disability or termination without cause.
The Company has entered into similar employment agreements with the
Company's other Executive Officers, which will provide for two-year terms,
minimum annual salaries, stated benefits, and severance payments in the event of
a termination without cause or a change in corporate control.
STOCK INCENTIVE PLAN
The Company's 1995 Stock Incentive Plan (the "Stock Incentive Plan")
authorizes the Compensation Committee of the Board to grant eligible officers
and key employees of the Company awards consisting of options to purchase shares
of common stock, stock appreciation rights, dividend equivalent rights, shares
of restricted stock or performance shares. The Compensation Committee has the
discretion to select the particular officers and key employees who will receive
awards. At February 1, 1997, approximately nine officers and key employees of
the Company were eligible to participate.
The particular terms of the stock options and other awards granted to
eligible employees will be established by the Compensation Committee within the
limitations set forth in the provisions of the Stock Incentive Plan. Eligible
employees generally are not required to provide the Company with consideration
for the awards (other than their services), but stock options will require the
employees to pay an option exercise price based on the fair market value of the
shares of common stock at the time the grant of the options was approved by the
Compensation Committee. Stock options granted under the Stock Incentive Plan
expire no later than the tenth anniversary of the date of grant and become
exercisable under such vesting schedules as may be established by the
Compensation Committee. Vesting of the awards granted under the Stock
-11-
<PAGE> 15
Incentive Plan may be accelerated in the event of a change in corporate control,
as defined in the terms of the Stock Incentive Plan. The Compensation Committee
has discretionary authority to accelerate the vesting of stock options and other
awards in any other circumstances it determines to be appropriate, and the
stock option agreements under the Stock Incentive Plan provide for accelerated
vesting upon death, disability, and, in some cases, termination of employment
without cause.
The Stock Incentive Plan can be amended by the Board from time to time
in any manner the Board deems to be advisable, except that the Board must obtain
shareholder approval for amendments that require shareholder approval under the
federal tax or securities laws or the Listing Rules of the New York Stock
Exchange, including amendments to increase the aggregate number of shares
available for issuance under the Stock Incentive Plan (except for adjustments
required by the anti-dilution provisions of the Stock Incentive Plan).
Upon approval of the amendment to the Stock Incentive Plan described in
Proposal 2, the stock available for issuance pursuant to awards under the Stock
Incentive Plan will consist of 1,097,387 shares of the Company's shares of
common stock. The market value of a share of common stock on March 7, 1997 was
$24 1/4. The number of shares available under the Stock Incentive Plan would be
further adjusted in the event of any stock dividend, recapitalization,
reorganization, merger, stock split-up or similar transaction, or in the event
the equity offerings the Company has completed during a twelve-month period
increase the number of outstanding shares by at least five percent.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Number of % of Total Annual Rates of Stock
Shares Options Price Appreciation
Underlying Granted to Exercise for Option
Options Employees or Base Term (3)
Granted (#) in Fiscal Price Expiration --------
Name (1), (2) Year ($/SH) Date 5%($) 10%($)
---- -------- ---- ------ ---- ----- ------
<S> <C> <C> <C> <C> <C> <C>
George L. Chapman 180,000 42% $18.875 1/15/06 $2,141,000 $5,018,000
Raymond W. Braun 75,000 18% $18.875 1/15/06 $ 892,000 $2,091,000
Edward F. Lange, Jr. 73,000 17% $18.875 3/11/06 $1,165,000 $2,533,000
27,000 6% $21.375 5/30/06 $ 375,000 $ 853,000
Bruce G. Thompson 0 N/A N/A N/A N/A N/A
</TABLE>
-12-
<PAGE> 16
- ----------
(1) Of the options granted, 51,000 shares were exercisable at December 31, 1996
and options for 304,000 shares vest between the years 1997 and 2001.
(2) The terms of the options granted permit cashless exercises and payment of
the option exercise price by delivery of previously owned shares.
(3) Gains are reported net of the exercise price, but before taxes associated
with the exercise. These amounts represent certain assumed rates of
appreciation only. Actual gains, if any, on stock option exercises are
dependent on the future performance of the shares, as well as the
optionee's continued employment through the vesting period. The amount
reflected in this Table may not necessarily be achieved.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Shares Number of Shares
Acquired Value Underlying Value of Unexercised
On Realized Unexercised Options In-The-Money Options at
Name Exercise ($) at Fiscal Year End Fiscal Year End ($)
---- -------- --- ------------------ -------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
George L. Chapman $ -- $ -- 98,703 244,565 $524,000 $1,301,000
Raymond W. Braun $ -- $ -- 42,794 112,206 $187,000 $ 631,000
Edward F. Lange, Jr. $ -- $ -- -0- 100,000 -0- $ 495,000
Bruce G. Thompson $ -- $ -- 18,760 -0- $62,000 -0-
</TABLE>
COMPENSATION OF DIRECTORS
In 1996, each Director received a fee of $12,000 for his service as
such. In addition, each Director received a fee of $1,500 for each Board meeting
attended. These fees will remain the same for 1997. For both 1996 and 1997,
members of the Audit and Compensation Committees received or will receive $1,000
for each meeting attended and for the same time period, members of the
Investment and Planning Committees will receive $1,200 and $1,500, respectively,
for each such committee meeting attended.
Director's fees were not paid to Mr. Chapman and, through October 14,
1996, were not paid to Mr. Thompson. The fees paid to all Directors totalled
$169,000 in 1996.
Subject to approval of the Stock Plan for Nonemployee Directors by the
Company's shareholders, during 1997 each Director not employed by the Company
will be granted stock options to purchase 10,000 shares of the common stock and
250 shares of Restricted Stock. In future years, each eligible Director will
receive additional stock options to purchase 5,000 shares and annual grants of
250 shares of
-13-
<PAGE> 17
restricted stock. The terms of these awards are described in Proposal 2 and are
set forth in detail in the Stock Plan for Nonemployee Directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ending December 31, 1996, the Compensation
Committee of the Board consisted of Pier C. Borra and Richard A. Unverferth. As
noted above, Mr. Borra is the Chairman, President and Chief Executive Officer of
Arbor Health Care Company and Mr. Bruce Thompson, who was an Executive Officer
of the Company until October 14, 1996, serves as a director of Arbor Health Care
Company.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board is generally responsible for
determining the nature and amount of compensation for Executive Officers. During
the year ended December 31, 1996, the Compensation Committee of the Board
consisted of Pier C. Borra and Richard A. Unverferth. The Company retained the
services of a nationally recognized executive compensation consulting firm to
assist the Chief Executive Officer and Compensation Committee in reviewing and
developing the Company's executive compensation criteria.
The Compensation Committee believes that compensation for the Chief
Executive Officer and other Executive Officers should be generally competitive
with other REITs without necessarily meeting the particular salary levels of
competitors, in order to retain and attract top people. The Committee determined
that the three key components of its executive officer compensation system are
annual salaries, annual incentive bonuses and long-term incentives. In
determining compensation based on these three standards, the Compensation
Committee reviewed and considered a number of peer groups with which the Company
was compared.
The Executive Officers' base salaries are established in their
employment agreements and the Compensation Committee may adjust those base
salaries from time to time, as it deems appropriate.
Annual bonus compensation and long-term incentives are based on
attaining certain financial and non-financial business objectives of the Company
on an annual basis. Long-term incentives are primarily based on more closely
aligning incentives with increasing shareholder value, individual performance
and an individual's potential contributions to the Company's profitability and
long-term growth.
In 1995, the Board and the shareholders of the Company adopted the
Company's Stock Incentive Plan, which is intended to enable the Company to
-14-
<PAGE> 18
continue to provide its officers and key employees with competitive equity-based
compensation and to create appropriate long-term incentives.
Under the terms of the Stock Incentive Plan, the Compensation Committee
has authority to approve stock option awards, restricted shares or other
equity-based incentive awards to officers and key employees and to determine the
terms of these awards.
In 1996, the Compensation Committee granted to officers and certain key
employees of the Company options to purchase an aggregate of 425,000 shares
pursuant to the 1995 Plan. The Compensation Committee's decision to grant these
options to acquire 425,000 shares was based on, among other things, the
optionees' roles and the Company's success during the year ended December 31,
1995, as well as the Compensation Committee's perception of the individuals'
past and expected future contributions to the Company's achievement of its
long-term performance goals.
With respect to Chief Executive Officer compensation, Mr. Chapman's
base salary for 1996 was $275,000. In addition to the base salary, Mr. Chapman
was eligible in 1996 to receive an annual bonus determined by achieving certain
financial and non-financial goals, including those relating to growth in funds
from operations and gross investments as well as certain individual
non-financial goals. Based upon Mr. Chapman's achievement of the goals and his
performance in 1996, he was given a total annual bonus of $200,000. As
mentioned above, Mr. Chapman entered into an employment agreement with the
Company. The Compensation Committee believes that the amount of Mr. Chapman's
compensation is consistent with general compensation levels within the industry
and are appropriate in view of the Company's accomplishments in 1996.
Finally, the Compensation Committee is committed to maintaining a
compensation program that appropriately aligns the Company's executive
compensation with corporate performance and the interest. The Compensation
Committee periodically reviews its program in order to make any changes it
considers necessary to achieve all its objectives.
Compensation Committee of the Board of Directors
Health Care REIT, Inc.
Pier C. Borra
Richard A. Unverferth
-15-
<PAGE> 19
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the yearly percentage change
and the cumulative total shareholder return on the Company's shares against the
cumulative total return of the S & P Composite-500 Stock Index and the NAREIT
Hybrid Index. Twelve companies comprise the NAREIT Hybrid Index. The Index
consists of REITs identified by NAREIT as hybrid (those REITs which have both
mortgage and equity investments). Upon written request to the Vice
President/Corporate Secretary, Health Care REIT, Inc., One SeaGate, Suite
1500, Toledo, Ohio, 43604, the Company shall provide shareholders with the
names of the component issuers. The data are based on the last closing prices
as of December 31 for each of the five years. 1991 equals $100 and dividends
are assumed to be reinvested.
[Graph to be inserted]
<TABLE>
<CAPTION>
==============================================================================
12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
S & P 500 100.00 107.67 118.43 119.97 164.88 202.74
- ------------------------------------------------------------------------------
Company 100.00 112.04 130.00 123.84 123.62 184.38
- ------------------------------------------------------------------------------
Hybrid 100.00 116.59 141.28 146.94 180.72 233.77
==============================================================================
</TABLE>
Except to the extent the Company specifically incorporates this
information by reference, the foregoing Report of the Compensation Committee and
Stock Price Performance Graph shall not be deemed incorporated by reference by
any general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934. This information shall not otherwise be deemed filed under such Acts.
SECTION 16(a) COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934 requires the
Company's Directors and Executive Officers, and persons who own beneficially
more than ten percent (10%) of the shares of common stock of the Company, to
file reports of ownership and changes of ownership with the Securities and
Exchange
-16-
<PAGE> 20
Commission and The New York Stock Exchange. Copies of all filed reports are
required to be furnished to the Company pursuant to Section 16(a). Based solely
on the reports received by the Company and on written representations from
reporting persons, the Company believes that the Directors and Executive
Officers complied with all applicable filing requirements during the fiscal year
ended December 31, 1996.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PARTNERSHIP FINANCINGS
The Company has provided direct loans and credit enhancements to five
partnerships in connection with four assisted living and retirement facilities
and two nursing homes. First Toledo Corporation, which is wholly owned by
Messrs. Thompson and Wolfe, serves or served as a general partner in each
partnership. The partnership structures facilitated industrial development bond
financing in five of the projects. Credit enhancements were provided in the form
of the Company's agreement to purchase the facilities or the bonds in the event
of default by the partnerships. The Company has contingent obligations under the
agreements to purchase which currently total $18,815,000. For the years ended
1996, 1995 and 1994, the Company received $383,000, $383,000 and $339,000,
respectively in connection with its contingent obligations pursuant to the
agreements to purchase. In November 1996, one of the partnerships sold its
interest in one of the assisted living facilities. In connection with the sale,
the loan amount of $9,160,000 was repaid. Messrs. Thompson and Wolfe are limited
partners in three of the partnerships. An affiliate of Mr. Douglas, a director
of the Company, served as a general partner of one of the partnerships, and an
affiliate of Messrs. Thompson and Wolfe, Kingston HealthCare Company
("Kingston"), operates four of the facilities.
OTHER RELATIONSHIPS
Bruce G. Thompson, a consultant to and Director of the Company and
former Chairman and Chief Executive Officer of the Company, is a Director of the
Toledo District Board of Directors of KeyBank National Association. KeyBank
National Association is a participant in the Company's revolving line of credit.
Frederic D. Wolfe, a former consultant to and a Director of the
Company, received a $100,000 consulting payment in 1996 from the Company. Mr.
Wolfe is also a Director of National City Bank, Northwest (NCB), which is a
participant in the Company's revolving line of credit. NCB is an affiliate of
National City Bank of Cleveland, which is agent for, and a participant in, the
Company's revolving line of credit.
-17-
<PAGE> 21
For the years ended 1996, 1995 and 1994, the Company recorded lease and
interest income from Kingston in the amounts of $204,000, $202,000 and $313,000,
respectively.
GENERAL
All of the related party matters were approved by a majority of
Directors unaffiliated with the transactions. For the years ended December 31,
1996, 1995 and 1994, revenues from related parties totalled $3,089,000,
$3,378,000 and $3,810,000 or 5.68%, 7.57% and 8.92%, respectively, of the
revenues of the Company.
PROPOSAL 2 - AMENDMENT OF
THE STOCK INCENTIVE PLAN
The Company's Stock Incentive Plan, as originally approved, authorized
600,000 shares to be issued. An adjustment made at the end of 1996, pursuant to
the antidilution provisions of the Stock Incentive Plan, approved an additional
316,015 shares to be issued. As of January 20, 1997, options to purchase
approximately 806,000 shares had been granted and in some cases exercised, and
12,628 shares of restricted stock had been granted. Only 97,387 shares were
available for future awards. In order to continue to provide incentives to
eligible employees, the Board of Directors believes it is necessary to amend the
Stock Incentive Plan to increase the number of shares that may be issued under
the Stock Incentive Plan by an additional 1,000,000 shares.
The same amendment will also revise the antidilution provisions of the
Stock Incentive Plan to change the time at which the number of shares available
for issuance under the Stock Incentive Plan would be adjusted in the future to
reflect increases in the number of outstanding shares of common stock resulting
from equity offerings. Currently, the Stock Incentive Plan provides that these
adjustments are not made until the last day of the fiscal year, which could
result in a significant period of time before an adjustment is made. It has been
determined that it is more practicable to make such adjustments promptly, at the
end of the calendar month in which the relevant equity offering is completed.
The amendment makes certain other revisions to the Stock Incentive
Plan permitted by recent changes in Securities and Exchange Commission Rule
16b-3. In particular, under the revised terms of the Stock Incentive Plan, the
Compensation Committee may permit officers and key employees to transfer stock
options or other awards granted under the Stock Incentive Plan to family
members, trusts or family limited partnerships. This will allow eligible
officers to use the awards they receive under the Stock Incentive Plan as part
of their overall estate
-18-
<PAGE> 22
plans. The amendment also removes certain restrictions on the composition of the
Compensation Committee which are no longer required to satisfy Rule 16b-3.
A COMPLETE COPY OF THE AMENDMENT IS ATTACHED TO THIS PROXY AS APPENDIX
A. THE DISCUSSION OF THE AMENDMENT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
APPENDIX A.
THE MANAGEMENT AND THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY
RECOMMEND THAT YOU VOTE "FOR" APPROVAL OF THE PROPOSED AMENDMENT TO THE STOCK
INCENTIVE PLAN. The affirmative vote of the holders of a majority of the shares
present in person or represented by proxy at the Annual Meeting will be required
for such approval.
PROPOSAL 3 - ADOPTION OF
STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
Effective January 20, 1997, the Board of Directors, subject to
shareholder approval, adopted the Health Care REIT, Inc. Stock Plan for
Non-Employee Directors (the "Plan"). It is proposed that the shareholders of the
Company approve the Plan. The affirmative vote of the holders of a majority of
the shares present in person or represented by proxy at the Annual Meeting is
required to adopt the Plan. If the Plan is not approved by the shareholders, it
will not become effective. The purpose of the Plan is to more closely align the
non-employee Directors' interest with shareholder interest by providing
non-employee Directors an opportunity to participate in the future growth and
profitability of the Company through annual awards of non-qualified stock
options and shares of restricted stock.
A COMPLETE COPY OF THE PLAN IS ATTACHED TO THIS PROXY STATEMENT AS
APPENDIX B. THE FOLLOWING DISCUSSION OF THE PLAN IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO APPENDIX B.
The Plan authorizes grants of options to purchase shares of the common
stock ("Options"), and grants of shares of the common stock subject to transfer
restrictions and potential forfeiture ("Restricted Stock") to those members of
the Board of Directors who are not employees of the Company. The terms
applicable to these Options and Restricted Stock awards are fixed by and set
forth in detail in the terms of the Plan.
ELIGIBILITY. Participation in the Plan will be limited to those members
of the Company's Board of Directors who are not employees of the Company. There
are
-19-
<PAGE> 23
currently eight non-employee Directors who would be eligible to participate in
the Plan.
STOCK OPTIONS. The Plan provides that each Director who is an eligible
non-employee director on January 20, 1997 will be granted an award of Options
that will entitle the Director to purchase 10,000 shares of common stock at an
option price and on terms and conditions specified in the terms of the Plan. New
non-employee Directors elected or appointed to the Board during the term of the
Plan will be granted similar Options on the date they are first elected or
appointed to the Board. In addition, at the time of the January meeting of the
Board of each calendar year subsequent to 1997, each continuing Director who is
an eligible non-employee Director will be granted additional Options to purchase
5,000 shares of common stock, or such modified awards as the Board may approve
for such year.
The option price for the Options granted to Directors under the Plan
will be equal to the fair market value of the Company's shares of common stock
at the time the Options are granted. The Plan provides that for this purpose the
market value of a share of common stock will be determined by reference to the
closing price for the shares of common stock reported on the New York Stock
Exchange for the previous trading day. The option price for the Options is
payable in cash, by delivery to the Company of whole shares of common stock
already owned by the Director or in any other form satisfactory to the Company,
including cashless exercises.
The Options granted to a Director under this Plan may not be exercised
more than ten years after the date the Options were granted. Each Option award
granted in 1997 will become exercisable on July 20, 1997. Future Option
awards generally will become exercisable in three equal installments on the
first three anniversaries of the date of grant, so that one-third of the shares
subject to the Options will first become available for purchase by the Director
on each of these anniversaries. The Plan also provides that the Options will
become fully vested and immediately exercisable in the event of a change in
corporate control of the Company, as defined in the Plan, or upon the Director's
death, disability or retirement after age 65. Each Director's Options generally
will expire six months after the termination of the Director's service on the
Board. However, if the termination results from the Director's disability or
death, this period is extended to twelve months. If a Director is removed by the
shareholders for cause, as defined in the Plan, all of that Director's
unexercised Options will be forfeited immediately.
RESTRICTED STOCK. The Plan also provides that each eligible Director
will be granted annual awards consisting of 250 shares of Restricted Stock. The
Restricted Stock to be issued to each Director will be subject to restrictions
on transfer and possible risk of forfeiture of the shares if the Director's
service on the Board ends before the shares become vested. Restricted Stock
awards will be made to those
-20-
<PAGE> 24
Directors eligible to participate in the Plan on January 20, 1997, subject to
approval of the Plan by the shareholders. In future years, grants of 250 shares
of Restricted Stock awards will be made to each eligible Director at the time of
each January meeting of the Board.
The Restricted Stock issued to an eligible Director will not be
transferrable by the Director during a period of at least the first six months
following their issuance, and during this period the stock certificates for
these shares will be held by a custodian or an escrow agent designated by the
Company. The Director will have voting rights and be entitled to receive any
dividends payable with respect to the Restricted Stock. If a participating
Director's service on the Board terminates before the end of the period because
of his or her death, disability or retirement at or after age 65, his or her
Restricted Stock will become fully vested. In the event of any other termination
of a Director's service on the Board, his or her unvested shares of Restricted
Stock will be forfeited, unless the Board waives the forfeiture. This forfeiture
would be waived in the event of a change in corporate control, as defined in the
Plan, and may be waived by the Company at other times, at the Board's
discretion.
TERMINATION AND AMENDMENT OF THE PLAN. The Plan will terminate on
January 20, 2007, unless the Board has acted to terminate it at an earlier date.
The Plan may be amended by the Board of Directors from time to time,
but further approval by the shareholders of the Company will be required for any
amendment that would increase the number of shares of common stock that may be
issued under the Plan. The Board of Directors has reserved the authority to
modify the terms of the annual Option and Restricted Stock awards to be made to
eligible Directors in any manner it deems to be desirable, including the size or
vesting schedules for such awards.
SHARES AVAILABLE UNDER THE PLAN. Subject to adjustment as provided in
the Plan, the number of shares of common stock initially available for issuance
to eligible Directors under the terms of the Plan will be 100,000 shares. On
January 1st of each subsequent year, the number of shares will be increased by
an additional 42,000 shares. The number of shares available under the Plan also
would be adjusted to prevent dilution in the event of a stock dividend,
recapitalization, reorganization, merger, split-up or similar transaction
affecting the outstanding shares of common stock. The shares to be issued as
Restricted Stock or upon the exercise of Options granted under the Plan are
shares of common stock, which may be authorized but unissued shares, treasury
shares, or a combination thereof. The market value of a share of common stock
was 24-1/4 on March 6, 1997.
-21-
<PAGE> 25
NEW PLAN BENEFITS. Subject to the approval of the Stock Plan for Non-
Employee Directors by the shareholders, each eligible Non-Employee Director has
been granted nonstatutory options to purchase 10,000 shares of common stock and
250 shares of Restricted Stock. Such nonstatutory options were granted at the
price of $24.125 per share.
FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN. The following is a summary
of certain of the federal income tax consequences of certain transactions under
the Plan based on the federal income tax laws in effect on January 1, 1997. This
summary is not intended to be exhaustive and does not describe state or local
tax consequences.
Nonstatutory Options. The Options granted under the Plan will not
qualify as "incentive stock options" under section 422 of the Code. In general:
(i) an eligible Director will not recognize taxable income at the time he or she
is granted an award of Options; (ii) at the time a Director exercises his or her
Options, ordinary income will be recognized by the Director in an amount equal
to the difference between the option price paid for the shares and the fair
market value of the shares; and (iii) at the time the Director sells any shares
acquired by exercise of the Options, any appreciation (or depreciation) in the
value of the shares after the date of exercise will be treated as either
short-term or long-term capital gain (or loss) depending on how long the shares
have been held.
Restricted Stock. A participating Director granted shares of Restricted
Stock generally will be subject to tax at ordinary income rates on the fair
market value of the Restricted Stock, reduced by any amount paid for the shares,
at such time as the shares are no longer subject to a risk of forfeiture or
restrictions on transfer. Any dividends paid to the Director with respect to
shares of Restricted Stock that are still subject to a risk of forfeiture or
transfer restrictions generally will be treated as compensation that is taxable
as ordinary income to the Director.
Tax Consequences to the Company. When a Director recognizes ordinary
income in the circumstances described above, the Company generally will be
entitled to a corresponding federal income tax deduction, provided that, among
other things, (i) the income meets the test of reasonableness and is an ordinary
and necessary business expense; and (ii) the benefits do not constitute an
"excess parachute payment" within the meaning of Section 280G of the Code
because they are paid only by reason of a change in corporate control.
THE MANAGEMENT AND BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY
RECOMMEND THAT YOU VOTE "FOR" THE PROPOSAL TO APPROVE THE ADOPTION OF THE STOCK
PLAN FOR NON-EMPLOYEE DIRECTORS.
-22-
<PAGE> 26
PROPOSAL 4 - NEW YORK STOCK EXCHANGE
SETTLEMENT LANGUAGE
As a real estate investment trust, Article VI, Section 5 of the
Company's ByLaws provides that the Company and its transfer agent may refuse to
transfer any shares that could disqualify the Company as a real estate
investment trust. In order to preclude interference with the New York Stock
Exchange facilities, the New York Stock Exchange has requested that its listed
companies amend such provisions in their by-laws to preclude interference with
settlement. The specific language amending the By-Laws is set forth as Exhibit C
hereto. Any transfer, however, which would affect the Company's qualification as
a real estate investment trust will not be affected by such settlement language
since such transferred shares would have the status of "Excess Shares" under the
Company By-Laws. Excess Shares are not treated as outstanding for purposes of
the real estate investment trust rules.
THE MANAGEMENT AND THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY
RECOMMEND THAT YOU VOTE "FOR" APPROVAL OF THE PROPOSED AMENDMENT TO THE BY-LAWS.
The affirmative vote of the holders of 75% of the outstanding shares of common
stock of the Company will be required for such approval.
PROPOSAL 5 - RATIFICATION OF THE APPOINTMENT
OF INDEPENDENT AUDITORS
The firm of Ernst & Young LLP served as independent auditors of the
Company for the year ended December 31, 1996 and has been selected by the
Company to serve as its independent auditors for the year ending December 31,
1997. Ernst & Young LLP has served as independent auditors of the Company since
the Company's inception in 1970. Although the submission of this matter for
approval by shareholders is not legally required, the Board believes that such
submission follows sound business practice and is in the best interests of the
shareholders. If this appointment is not ratified by the holders of a majority
of the shares present in person or by proxy at the Annual Meeting, the Directors
will consider the selection of another accounting firm. If such a selection were
made, it may not become effective until 1998 because of the difficulty and
expense of making a substitution. Management anticipates that a representative
of Ernst & Young LLP will attend the Annual Meeting.
Audit services of Ernst & Young LLP for the year ended December 31,
1996 included the audit of the financial statements of the Company included in
the Annual Report to Shareholders for 1996, services related to filings with the
Securities and Exchange Commission, and consultation and assistance on
accounting and related matters.
-23-
<PAGE> 27
The services furnished by Ernst & Young LLP have been at customary
rates and terms. There are no existing direct or indirect understandings or
agreements that place a limit on future years' audit fees.
THE MANAGEMENT AND BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY
RECOMMEND THAT YOU VOTE "FOR" THE RATIFICATION OF ERNST & YOUNG LLP. The
affirmative vote of the holders of a majority of shares of common stock present
in person or by proxy at the Annual Meeting will be required for such
ratification.
OTHER MATTERS
Management is not aware of any matters to be presented for action at
the Annual Meeting other than the matters set forth above. If any other matters
do properly come before the meeting or any adjournment thereof, it is intended
that the persons named in the proxy will vote in accordance with their judgment
on such matters.
SHAREHOLDERS' PROPOSALS FOR NEXT ANNUAL MEETING
Shareholders' proposals intended to be presented at the 1998 Annual
Meeting of Shareholders must be received by the Company no later than November
19, 1997 for inclusion in the Company's proxy statement and form of proxy
relating to that meeting.
BY THE ORDER OF THE BOARD OF
DIRECTORS
Erin C. Ibele
Vice President and Corporate Secretary
-24-
<PAGE> 28
APPENDIX A
FIRST AMENDMENT TO THE
HEALTH CARE REIT, INC.
1995 STOCK INCENTIVE PLAN
---------------------------------------
Health Care REIT, Inc., a Delaware corporation (the "Company") hereby
amends the Health Care REIT, Inc. 1995 Stock Incentive Plan (the "Plan") in the
manner set forth in the terms of this Amendment (the "Amendment"). Capitalized
terms used in this Amendment and not otherwise defined shall have the
definitions set forth in the Plan.
1. Purpose of the Amendment. The purposes of this Amendment are to
increase the number of shares of the Company's common stock reserved for
issuance under the Plan by 1,000,000 shares, to clarify the time at which
additional shares will become available under the Plan, and to permit the
Company to take advantage of certain recent changes in Securities and Exchange
Commission Rule 16b-3.
2. Authority for the Amendment. Paragraph 12.1 of the Plan provides
that, to the extent permitted by law, the Board of Directors of the Company may
at any time and from time to time amend the Plan in such respects as it shall
deem advisable.
3. Amendment to Section 10.1. Paragraph (a) of Section 10.1 of the Plan
shall be amended and restated in its entirety, to read as follows:
(a) Shares of Common Stock which may be issued pursuant to
Options, SARs, Restricted Stock awards or Performance Share awards granted
under the Plan may be either authorized and unissued shares of Common Stock
or of Common Stock held by the Corporation as treasury stock. The number of
shares of Common Stock reserved for issuance under this Plan on the date of
any grant on or after April 22, 1997 shall not exceed 1,916,015 shares of
Common Stock, subject to such future adjustments as may be made pursuant to
Section 10.2.
The effectiveness of this Amendment to Section 10.1 set forth in this Paragraph
3 shall be conditioned upon its approval by the Company's stockholders at the
next Annual Meeting of Stockholders.
4. Amendment to Section 10.2. Section 10.2 of the Plan shall be
amended, effective as of the date hereof, by restating the second sentence of
the first paragraph of such Section 10.2, to read as follows:
In addition, if the total number of outstanding shares of Common Stock has
increased by more than 5 percent during any period of twelve (12) calendar
months by reason of equity offerings (including either public offerings and
private placements) completed during such period, the Committee shall
adjust the total number of shares available for future issuance under the
Plan to equal 5.0 percent of the total number of shares outstanding at the
end of the final calendar month during such twelve month period; provided
that, the total number of shares which may be reserved for issuance
pursuant to ISOs granted under the Plan shall not exceed 1,600,000 shares.
5. Amendment to Section 11.2. Section 11.2 of the Plan shall be
amended, effective as of the date hereof, by adding the following new sentence
to the end of such Section 11.2:
Notwithstanding the foregoing, the Committee may, in its discretion, permit
a Participant to transfer all or a portion of his or her Options or other
awards to
<PAGE> 29
members of his or her immediate family, to trusts established for the
benefit of members of his immediate family, or to family limited
partnerships in which the Participant and immediate family members are the
only partners, provided that the Participant may receive no consideration
for such transfers, and that such Options shall still be subject to
termination in accordance with Section 4.2 or Section 7.3 in the hands of
the transferee.
6. Amendment to Section 3.1. Section 3.1 of the Plan shall be amended
by restating paragraph (a) of such Section 3.1 as follows:
(a) The Plan shall be administered by a Committee consisting of not less
than two members of the Board of Directors. Such members shall be appointed
by the Board of Directors from time to time and shall serve at the pleasure
of the Board of Directors.
7. Ratification of the Plan. In all other respects, the Plan, as
amended to date, is hereby ratified, approved and confirmed.
IN WITNESS WHEREOF, the undersigned, being a duly authorized officer of
the Company, hereby executes this Amendment to the Plan on behalf of the
Company, as directed and approved by the Board of Directors of Health Care REIT,
Inc.
HEALTH CARE REIT, INC.
By __________________________________
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<PAGE> 30
APPENDIX B
STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
1. PURPOSE OF THE PLAN. Health Care REIT, Inc., a Delaware corporation,
hereby adopts this Stock Plan for Non-Employee Directors providing for the
granting of stock options to directors of the Company who are not employees of
the Company. The general purpose of the Plan is to more closely align the
interests of the Directors of the Company with the interests of the Company's
stockholders by providing members of the Board of Directors of the Company who
are not employees of the Company an opportunity to participate in the future
growth and profitability of the Company through annual awards of non-qualified
stock options and shares of restricted stock.
The Stock Plan for Non-Employee Directors has been approved by
the Board of Directors effective as of January 20, 1997, subject to approval by
the Company's stockholders at the annual meeting of the stockholders.
2. CERTAIN DEFINITIONS. In addition to the words and terms elsewhere
defined in this Plan, certain capitalized words and terms used in this Plan
shall have the meanings given to them by the definitions and descriptions in
this Section 2. Unless the context or use indicates another or different meaning
or intent, then such definition shall be equally applicable to both the singular
and plural forms of any of the capitalized words and terms herein defined. The
following words and terms are defined terms under this Plan:
2.1 Award means the grant of an Option or Restricted Stock
under this Plan.
2.2 Board of Directors means the Board of Directors of the
Company.
2.3 Code means the Internal Revenue Code of 1986, as the same
shall be amended from time to time.
2.4 Common Stock means the Common Stock, par value $1.00 per
share, of the Company.
2.6 Company means Health Care REIT, Inc., a Delaware
corporation.
2.7 Effective Date means January 20, 1997, the date the
adoption of the Plan was approved by the Board of Directors.
2.8 Fair Market Value means the fair market value of a share
of Common Stock as determined by the Board of Directors by reference to
the closing price for shares of Common Stock for the most recent
available date, as reported on the New York Stock Exchange.
2.9 Holder means a Non-Employee Director who has received an
Award of Options or Restricted Stock under this Plan.
2.10 Non-Employee Director means a member of the Board of
Directors who is not an employee of the Company.
2.11 Nonstatutory Stock Option means a stock option that does
not qualify as an incentive stock option within the meaning of Section
422 of the Code.
2.12 Option means a right granted to a Non-Employee Director
pursuant to the Plan to purchase a specified number of shares of Common
Stock at a specified Option Price during a
<PAGE> 31
specified period and on such other terms and conditions as may be
specified pursuant to the Plan. All Options granted under this Plan
shall be Nonstatutory Stock Options.
2.13 Option Price means, with respect to any Option, the price
per share the Holder will be required to pay to the Company to exercise
the Option and acquire the shares of Common Stock subject to the
Option.
2.14 Plan means this Stock Plan for Non-Employee Directors.
2.15 Restricted Stock means shares of Common Stock issued to
an eligible Non-Employee Director, subject to such transfer
restrictions and other conditions as may be specified in accordance
with Section 7 of the Plan.
2.16 Stock Option Agreement means the agreement specified in
Section 11 hereof.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 12
hereof, the number of shares of Common Stock which may be issued upon exercise
of Options or as Awards of Restricted Stock under the Plan shall be 100,000
shares of the Common Stock. On January 1 of each year subsequent to the
Effective Date, the aggregate number of shares of Common Stock available for
issuance under this Plan shall be increased by an additional 42,000 shares. Such
shares may be, in whole or in part, authorized and unissued shares of Common
Stock or treasury shares which have been reacquired by the Company. If any
Option shall expire or terminate for any reason without having been exercised in
full, the unexercised shares subject thereto shall again be available for
purposes of the Plan. If any Shares of Restricted Stock are forfeited, the
forfeited shares again be available for purposes of the Plan.
4. ADMINISTRATION.
4.1 Powers. The Plan shall be administered by the Board of
Directors, which shall have all of the powers vested in it by the terms of the
Plan, such powers to include authority (within the limitations described herein)
to prescribe the form of the agreement embodying Awards made under the Plan.
Subject to the express provisions of the Plan, the Board of Directors shall have
plenary authority to interpret the Plan, to adopt, amend and rescind the rules
and regulations relating to the Plan and to make all other determinations and to
take all other actions deemed necessary or advisable for the administration of
the Plan. Any decision of the Board of Directors in the administration of the
Plan, as described herein, shall be final and conclusive.
4.2 Delegation to Committee Permitted. Notwithstanding
anything to the contrary contained herein, the Board of Directors may at any
time, or from time to time, appoint a Committee of at least two members, who
shall be members of the Compensation Committee of the Board of Directors (or
such other persons as the Board of Directors may designate), and delegate to the
Committee the authority of the Board of Directors to administer the Plan. Upon
such appointment and delegation, the Committee shall have all the powers,
privileges and duties of the Board of Directors, and shall be substituted for
the Board of Directors in the administration of the Plan, except the power to
appoint members of the Committee and to terminate, modify or amend the Plan. The
Board of Directors may from time to time appoint members of the Committee in
substitution for or in addition to members previously appointed, may fill
vacancies in the Committee and may discharge the Committee. The Committee shall
select one of its members as its chairman and shall hold its meetings at such
times and places as its shall deem advisable. A majority of its members shall
constitute a quorum and all determinations shall be made by a majority of such
quorum. Any determination reduced to writing and signed by a majority of the
members shall be fully as effective as if it had been made by a majority vote at
a meeting duly called and held.
5. ELIGIBILITY. Options and Restricted Stock Awards under this Plan
shall be granted only to Non-Employee Directors.
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<PAGE> 32
6. OPTIONS.
6.1 Grant of Options.
(a) As of the Effective Date, each Non-Employee
Director serving on the Board of Directors automatically shall
be granted an Option to purchase 10,000 shares of Common
Stock, effective as of January 20, 1997, subject to approval
of the Plan by the stockholders of the Company as required
under Section 14 hereof.
(b) Each new Non-Employee Director who is first
appointed or elected to the Board of Directors after the
Effective Date automatically shall be granted an Option to
purchase 10,000 shares of Common Stock on the day he or she is
first appointed or elected to the Board of Directors.
(c) Each Non-Employee Director who has been granted
Options under paragraph (a) or (b) automatically shall be
granted an additional Option to purchase 5,000 shares of
Common Stock at the time of each regular January meeting of
the Board of Directors.
6.2 Option Prices. The purchase price of the Common Stock
under each Option shall be equal to the Fair Market Value of the Common Stock on
the grant date (subject to adjustment as provided in Section 12 hereof).
6.3 Term of Options; Limitations on Exercise. The term of each
Option shall be for ten years from the date of grant, and, except as set forth
in Section 8 hereof or as modified by the Board pursuant to Section 6.6, shall
expire six months after the cessation of the Holder's status as a Non-Employee
Director or upon the earlier expiration at the end of its ten year term. Each
Option granted pursuant to Section 6.1(a) shall become exercisable on the
six-month anniversary of the date of grant of such Option. Unless the Board of
Directors approves another vesting schedule, one-third of the shares of Common
Stock subject to each Option granted pursuant to Section 6.1(b) or Section
6.1(c) shall become exercisable on a cumulative basis on each of the first
three anniversaries of the date of the grant of such Option.
6.4 Exercise of Options. Any part of an Option granted and
presently exercisable under the Plan shall be exercisable in whole, or in part,
at any time during the term of the Option. Payment shall be made in cash, in
whole shares of Common Stock already owned by the Holder of the Option, partly
in cash and partly in such Common Stock, or in any other manner acceptable to
the Company. Such notice shall state that the Holder of the Option elects to
exercise the Option, the number of shares in respect of which it is being
exercised and the manner of payment for such shares, and shall either (i) be
accompanied by payment of the full Option Price of such shares, or (ii) provide
for such arrangements for the payment of the full Option Price of such shares as
may be satisfactory to the Company.
The Non-Employee Director shall be deemed to have paid the
full Option Price due upon exercise of his Options, if his irrevocable notice of
exercise to the Corporation is accompanied by an irrevocable instruction to the
Corporation to deliver the shares of Common Stock issuable upon exercise of the
Options promptly to a broker-dealer designated by Non-Employee Director (which
may include the Corporation's transfer agent) for the Non-Employee Director's
account, together with an irrevocable instruction to such broker-dealer to sell
at least that portion of the shares necessary to pay the option price (and any
related expenses specified by the parties), and such portion of the sale
proceeds is delivered directly to the Corporation no later than the settlement
date This cashless exercise alternative shall not be available if, at the time
of such exercise, the Corporation determines that this procedure would subject
the Non-Employee Director to liability under Section 16(b) of the Securities
Exchange Act of 1934.
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<PAGE> 33
6.5 Nontransferability of Options. No Options shall be
transferable otherwise than by will or the laws of descent and distribution, and
an Option may be exercised during the lifetime of the Holder thereof only by
such Holder.
Notwithstanding the foregoing, the Board of Directors may, in
its discretion, permit a Holder to transfer all or a portion of his or her
Options to members of his or her immediate family, to trusts for the benefit of
members of his or her immediate family, or to family limited partnerships in
which immediate family members are the only partners, provided that the Holder
may receive no consideration for such transfers, and that such Options shall
still be subject to termination in accordance with Section 6.3 and Section 9 in
the hands of the transferee.
6.6 Modifications. The Board of Directors shall have the
authority to modify, in any manner it deems desirable or appropriate, the terms
of the Option Awards to be made to one or more classifications of Non-Employee
Directors under this Section 7, including the size or vesting schedules of such
Option Awards; provided that, any modification shall be applied uniformly to all
Non-Employee Directors in equivalent circumstances, and further provided, that
the modification shall not increase the number of shares available under the
Plan beyond the aggregate limit set forth in Section 3.
7. RESTRICTED STOCK.
7.1 Annual Grants of Restricted Stock. On January 20, 1997,
and at the January meeting of the Board of Directors each subsequent year, each
Non-Employee Director shall be granted an Award consisting of 250 shares of
Restricted Stock; provided that, such an Award shall not be effective unless the
Plan has been approved by the stockholders of the Company, as specified in
Section 14 below, and the Non-Employee has agreed and acknowledged in writing in
such form as may be requested by the Company that he or she holds such
Restricted Stock subject to the transfer restrictions and other conditions set
forth in this Section 7 of the Plan.
7.2 Issuance of Restricted Stock. When a Non-Employee Director
is granted shares of Restricted Stock, the Company shall issue the shares
immediately, and shall register the stock certificates or certificates
representing such shares in the name of the Non-Employee Director. Each such
stock certificate shall bear an appropriate legend referring to the transfer
restrictions and other conditions applicable to such shares of Restricted Stock
under the terms of the Plan. The Company shall deliver the stock certificates
for each Restricted Stock Award to a custodian or an escrow agent designated by
the Board, to be held in escrow until the latest of the following dates:
(a) the date the Plan has been approved by the
stockholders of the Company, as specified in Section 14 below;
(b) six months after the date the Restricted Stock
was granted to the Non-Employee Director; or
(c) if later, the date on which the transfer
restrictions imposed on the Restricted Stock Award by Section
7.3 have expired or been waived.
The Board may designate an executive officer of the Company to act as the
custodian or escrow agent for such stock certificates.
Non-Employee Directors will not be required to make any
payment or provide consideration to the Company for the issuance of Restricted
Stock Awards, other than providing services to the Company as members of the
Board of Directors.
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<PAGE> 34
7.3 Rights As A Stockholder. A Non-Employee Director granted a
Restricted Stock Award shall have all of the rights of a stockholder of the
Company with respect to the shares of Restricted Stock included in the Award,
including the right to vote the shares and receive all dividends and other
distributions declared with respect to such shares, but the shares of Restricted
Stock held by the Non-Employee Director shall be subject to the following terms
and conditions:
(a) During a period set by the Board of Directors of
not less than six (6) months, commencing with the date on
which the Restricted Stock Award was granted (the "Restriction
Period"), the Non-Employee Director will not be permitted to
sell, transfer, pledge or assign the shares of Restricted
Stock awarded to him or her.
(b) If, at any time during the Restriction Period set
by the Board for the Restricted Stock Award, the Non-Employee
Director's service on the Board of Directors terminates for
any reason other than death, disability or retirement at or
after age 65, the shares of Restricted Stock included in that
Award shall be forfeited, unless the Board of Directors
determines that a waiver of such forfeiture would be
appropriate, desirable and in the best interests of the
Company. A Non-Employee Director shall not forfeit any shares
of Restricted Stock if his or her service as a director
terminates as a result of death, disability or retirement.
(c) Notwithstanding the other provisions of this
Section 7.3, the Board of Directors may adopt rules which
would permit a gift by a Non-Employee Director of shares of
Restricted Stock to a spouse, child, stepchild, grandchild or
a family limited partnership or a transfer to a trust the
beneficiary or beneficiaries of which shall be either such a
relative or persons or the Non-Employee Director, provided
that the Restricted Stock so transferred shall remain subject
to the restrictions in paragraphs (a) and (b).
7.4 Modifications. The Board of Directors shall have the
authority to modify, in any manner it deems desirable or appropriate, the terms
of the Restricted Stock Awards to be made to one or more classifications of
Non-Employee Directors under this Section 7, including the size or Restriction
Periods of such Restricted Stock Awards; provided that, any modification shall
be applied uniformly to all Non-Employee Directors in equivalent circumstances,
and further provided that the modification shall not increase the number of
shares available under the Plan beyond the aggregate limit set forth in Section
3.
8. ACCELERATION ON CHANGE IN CORPORATE CONTROL. Notwithstanding any
contrary waiting period set forth herein, each outstanding Option granted under
the Plan shall become exercisable in full for the aggregate number of shares
covered thereby, and all transfer restrictions and forfeiture conditions imposed
on Awards of Restricted Stock shall be waived, in the event of a Change in
Corporate Control. The acceleration of the exercise of Options or the waiver of
restrictions on Restricted Stock as provided in this Section 8 may be limited as
the Board of Directors deems appropriate to ensure that the penalty provisions
of Section 4999 of the Code will not apply to any stock received by the Holder
from the Company.
For purposes of this Plan, a "Change in Corporate Control" shall include any of
the following events:
(1) The acquisition in one or more transactions of more than twenty
percent (20%) of the Company's outstanding Common Stock (or the
equivalent in voting power of any classes or classes of securities of
the
-5-
<PAGE> 35
Company entitled to vote in elections of directors) by any corporation,
or other person or group (within the meaning of Section 14(d)(3) of the
Securities Exchange Act of 1934, as amended);
(2) Any transfer or sale of substantially all of the assets of the
Company, or any merger or consolidation of the Company into or with
another corporation in which the Company is not the surviving entity;
(3) Any election of persons to the Board of Directors which causes a
majority of the Board of Directors to consist of persons other than
"Continuing Directors". For this purpose, those persons who were
members of the Board of Directors on January 20, 1997, shall be
"Continuing Directors". Any person who is nominated for election as a
member of the Board after January 20, 1997, shall also be considered a
"Continuing Director" for this purpose if, and only if, his or her
nomination for election to the Board of Directors is approved or
recommended by a majority of the members of the Board (or of the
relevant Nominating Committee) and at least five (5) members of the
Board are themselves Continuing Directors at the time of such
nomination; or
(4) Any person, or group of persons, announces a tender offer for at
least twenty percent (20%) of the Company's Common Stock.
9. CESSATION OF SERVICE AS A NON-EMPLOYEE DIRECTOR.
9.1 Death of Holder. If any Non-Employee Director shall die
prior to the end of his or her service as a member of the Board of Directors,
then:
(a) Each outstanding but unexercised Option granted
to him or her under the Plan shall become exercisable in full
for the aggregate number of shares covered thereby and each
Option may be exercised by the legatee(s) or personal
representative(s) of such Holder at any time within twelve
months after such Holder's death; provided, however, that no
Option may be exercised after the expiration date of such
Option.
(b) Any transfer restrictions and conditions of
forfeiture applicable to his or her shares of Restricted Stock
shall be waived by the Company.
9.2 Total Disability; Retirement. If a Non-Employee Director
ceases to serve as a member of the Board of Directors prior to the end of his or
her term as a result of Retirement at or after age 65 or Total Disability, then:
(a) Each outstanding but unexercised Option granted
under the Plan shall become exercisable in full for the
aggregate number of shares covered thereby from and after the
date of such cessation of service and such Option may be
exercised by such Holder (or his or her guardian(s) or
personal representative(s)) at any time within twelve months
after such cessation of service; provided, however, that no
Option may be exercised after the expiration date of such
Option; and
(b) Any transfer restrictions and conditions of
forfeiture applicable to his or her shares of Restricted Stock
shall be waived by the Company.
-6-
<PAGE> 36
9.3 Failure to be Nominated for Reelection; Failure to be
Reelected. If a Non-Employee Director shall cease to serve as a member of the
Board of Directors as a result of such Holder's resignation from the Board
(other than as a result of Retirement or Total Disability) or such Holder's
decision not to stand for reelection at the expiration of his or her term of
office, or such Holder is not nominated by the Board to stand for election at
the Annual Stockholders' Meeting at which his or her term of office expires, or,
if nominated, such person is not reelected, then all Options held by such Holder
may be exercised at any time within six months after the date of such cessation
of service; provided, however, (i) only Options exercisable by the Holder at the
time of the cessation of service as a Non-Employee Director may be exercised
after such cessation, and (ii) no Option may be exercised after the expiration
date of such Option. Further, any shares of Restricted Stock held by that Non-
Employee Director subject to forfeiture under Section 7.3 shall be forfeited.
9.4 Removal by the Stockholders for Cause. If a Holder is
removed from the Board by the stockholders of the Company for cause (for these
purposes, cause shall include, but not be limited to, dishonesty, incompetence,
moral turpitude, other misconduct of any kind and the refusal to perform his or
her duties and responsibilities for any reason other than illness or
incapacity), then (a) all unexercised Options held by such Holder shall
immediately be cancelled and terminate, and (b) any shares of Restricted Stock
subject to forfeiture under Section 7.3 shall be forfeited.
10. NONALIENATION OF BENEFITS. No right or benefit under the Plan shall
be subject to anticipation, alienation, sale, assignment, hypothecation, pledge,
exchange, transfer, encumbrance or charge, and any attempt to anticipate, sell,
assign, hypothecate, pledge, exchange, transfer, encumber or charge the same
shall be void. No right or benefit hereunder shall in any manner be liable for
or subject to the debts, contracts, liabilities or torts of the person entitled
to such benefit.
11. WRITTEN AGREEMENTS. Each grant of an Option hereunder shall be
evidenced by a Stock Option Agreement, and each Restricted Stock Award shall be
evidenced by a Restricted Stock Agreement, each in such form and containing such
terms and provisions not inconsistent with the provisions of the Plan as the
Board of Directors from time to time shall approve.
12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of any
change or changes in the outstanding Common Stock of the Company by reason of
any stock dividend, recapitalization, reorganization, merger, consolidation,
split-up, combination or any similar transaction, the Board of Directors shall
adjust the number of shares of Common Stock which may be issued under this Plan,
the number of shares of Common Stock subject to Options theretofore granted
under this Plan, the Option Price of such Options, the number of shares of
Restricted Stock and make any and all other adjustments deemed appropriate by
the Board of Directors in such manner as the Board of Directors deems
appropriate to prevent substantial dilution or enlargement of the rights granted
to a participating Non-Employee Director.
13. TERMINATION AND AMENDMENT. Unless the Plan shall theretofore have
been terminated as hereinafter provided, the Plan shall expire on January 20,
2007. The Board of Directors may terminate the Plan at any time, and the Board
of Directors at any time also may modify or amend the Plan in such respects as
it shall deem advisable. No termination, modification or amendment of the Plan
or any outstanding Stock Option Agreement may, without the consent of the Holder
to whom any Award shall theretofore have been granted, adversely affect the
rights of such Holder with respect to such Award. The Plan automatically shall
terminate in the event that it is not approved by the stockholders of the
Company as required under Section 14 hereof.
14. EFFECTIVENESS OF THE PLAN. The Plan shall become effective as of
January 20, 1997, provided, that the Plan is approved at the 1997 Annual
Stockholders' Meeting of the Company by the holders of a majority of the shares
of Common Stock represented at the meeting (in person or by proxy) and entitled
to vote thereon. If the Plan
-7-
<PAGE> 37
is not so approved it shall terminate automatically, and all Options shall
automatically be cancelled and be of no further force or effect.
15. RIGHTS OF A HOLDER AS A STOCKHOLDER. The Holder of an Option shall
have none of the rights of a stockholder with respect to the shares subject to
the Option until such shares shall be transferred to the Holder upon the
exercise of the Option.
16. GOVERNMENT AND OTHER REGULATIONS. The obligation of the Company with
respect to Awards shall be subject to (i) all applicable laws, rules and
regulations and such approvals by any governmental agencies as may be required,
including, without limitation, the effectiveness of a registration statement
under the Securities Act of 1933, as amended, and (ii) the rules and regulations
of any securities exchange or securities market on which the Common Stock may be
listed or traded. Any Option or Restricted Stock award granted under this Plan
shall be subject to the requirement that, if at any time the Board of Directors
shall determine that any registration of the shares of Common Stock, or any
consent or approval of any governmental body, or any other agreement or consent,
is necessary as a condition of the granting of an Option or other Award, or the
issuance of Common Stock in satisfaction thereof, such Common Stock will not be
issued or delivered until such requirement is satisfied in a manner acceptable
to the Board of Directors.
17. WITHHOLDING. The Company's obligation to deliver shares of Common
Stock upon the exercise of any Option granted under the Plan shall be subject to
applicable Federal, state and local tax withholding requirements. Federal, state
and local withholding tax due upon the exercise of any Option may be paid in
shares of Common Stock upon such terms and conditions as the Board shall
determine; provided, however, that the Board in its sole discretion may
disapprove such payment and require that such taxes be paid in cash.
18. SEVERABILITY. If any of the terms or provisions of this Plan conflict
with these requirements of Rule 16b-3 under the Securities Exchange Act of 1934
(as the same shall be amended from time to time), then such terms or provisions
shall be deemed inoperative to the extent they so conflict with the requirements
of said Rule 16b-3.
19. NON-EXCLUSIVITY OF THE PLAN. Neither the adoption of the Plan by the
Board nor the submission of the Plan to the stockholders of the Company for
approval shall be construed as creating any limitations on the power of the
Board to adopt such other incentive arrangements as it may deem desirable,
including, without limitation, the granting of stock options and the awarding of
stock and cash otherwise than under the Plan, and such arrangements may be
either generally applicable or applicable only in specific cases.
20. GOVERNING LAW. The Plan shall be governed by, and construed in
accordance with, the laws of the State of Delaware.
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<PAGE> 38
APPENDIX C
SECTION 8. New York Stock Exchange Transactions. Nothing in
this Article VI, including but not limited to Section 5, shall preclude the
settlement of any transactions entered into through the facilities of the New
York Stock Exchange or any other stock exchange. The fact that settlement of
any transaction takes place shall not, however, negate the effect of any other
provision of this Article VI, and any transferee, and the shares of capital
stock transferred to such transferee in such a transaction, shall be subject to
all of the provisions and limitations in this Article VI.
<PAGE> 39
PRELIMINARY PROXY: FOR THE INFORMATION OF THE
---------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
----------------------------------
PROXY
-----
HEALTH CARE REIT, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints G.L. Chapman with full power of
substitution, to vote all shares of Common Stock, $1.00 par value, of Health
Care REIT, Inc. (the "Company") that the undersigned is entitled to vote at the
Annual Meeting of the Shareholders of the Company to be held on Tuesday, April
22, 1997, or any adjournments thereof.
YOU MAY REVOKE THIS PROXY AT ANY TIME PRIOR TO THE
TAKING OF A VOTE ON THE MATTERS HEREIN.
Returned proxy cards will be voted: (1) as specified on the matters
listed below; (2) in accordance with the Directors' recommendations where a
choice is not specified; and (3) in accordance with the judgment of the proxies
on any other matters that may properly come before the meeting.
THE MANAGEMENT AND THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY
RECOMMEND VOTES "FOR" ALL OF THE FOLLOWING:
1. Election of three Directors for a term of three years: Pier C.
Borra, George L. Chapman and Sharon M. Oster.
____ FOR ALL NOMINEES LISTED (except as marked to the contrary)
____ WITHHOLD AUTHORITY to vote for all nominees
To withhold authority to vote for any individual nominee, please write the
person's name in the following space: _________________
2. The approval of an amendment to the Company's 1995 Stock Incentive
Plan to increase the number of shares available for issuance, to modify the
Plan's antidilution provisions and to permit transferable stock options;
3. The approval of the Health Care REIT, Inc. Stock Plan for
Non-Employee Directors;
4. The approval of an amendment to the company's By-Laws to provide for
the New York Stock Exchange's settlement language; and
5. Ratification of the appointment of Ernst & Young LLP as independent
auditors for the fiscal year 1997.
________ FOR ________ AGAINST ________ ABSTAIN
6. With discretionary authority on any other business that may properly
come before the meeting or any adjournment thereof.
Dated: _________, 1997
---------------------------
Signature
---------------------------
Signature if Held Jointly
PLEASE MARK, SIGN, Please sign exactly as your
DATE AND RETURN THE name appears hereon. Joint
PROXY CARD PROMPTLY owners should each sign. When
USING THE ENCLOSED signing as attorney, executor,
ENVELOPE. PLEASE administrator, trustee or
MARK YOUR CHOICE LIKE guardian, please give full
THIS __ IN BLUE OR title as such. Corporate or
BLACK INK. partnership proxies should be
signed by an authorized person
with the person's title
indicated.
