<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<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)
XXXXXXXXXXXXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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 21, 1998
YOUR VOTE IS IMPORTANT!
YOU ARE URGED TO SIGN, DATE, AND RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE.
1
<PAGE> 3
HEALTH CARE REIT, INC.
One SeaGate
Suite 1500
Toledo, Ohio 43604
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 21, 1998
TO THE SHAREHOLDERS OF HEALTH CARE REIT, INC.:
The Annual Meeting of Shareholders of Health Care REIT, Inc. will be
held on April 21, 1998 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 Stock Plan for
Non-Employee Directors to increase the number of shares
available for issuance;
3. The ratification of the appointment of Ernst & Young LLP as
independent auditors for the fiscal year 1998; and
4. The transaction of such other business as may properly come
before the meeting or any adjournment thereof.
Shareholders of record at the close of business on March 2, 1998 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 10, 1998
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.
2
<PAGE> 4
HEALTH CARE REIT, INC.
ONE SEAGATE
SUITE 1500
TOLEDO, OHIO 43604
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
APRIL 21, 1998
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 21, 1998 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 Stock Plan for
Non-Employee Directors, 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 in writing, by telephone, fax 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 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 $5,000, 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. Approval of 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. Box 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 16, 1998. A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR
ENDED DECEMBER 31, 1997, 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.
3
<PAGE> 5
VOTING SECURITIES OUTSTANDING
The Company had outstanding ______________ shares of common stock,
$1.00 par value per share (the "shares of common stock"), on March 10, 1998. The
shares constitute the only class of outstanding voting securities of the
Company. Shareholders of record at the close of business on March 2, 1998 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.
PROPOSAL 1--ELECTION OF THREE DIRECTORS
The Company is currently authorized to have ten Directors. Effective
with Mr. Glowacki's retirement from the Board of Directors as of the Annual
Meeting and the anticipated election of the individuals below, there will be
nine directors, leaving one position vacant. The By-Laws divide the Board 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. 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 III
DIRECTORS TO BE ELECTED
JEFFREY H. DONAHUE, AGE 51. Mr. Donahue is Senior Vice President and
Chief Financial Officer of The Rouse Company (real estate development and
operations). He has served as a Director of the Company since 1997 and is a
member of the Board's Compensation, Investment and Planning Committees.
BRUCE G. THOMPSON, AGE 68. Mr. Thompson served as a consultant to the
Company in 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 Kingston HealthCare Company (manager of health care facilities). 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 74. 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.
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 (1)
WILLIAM C. BALLARD, JR., AGE 57. Mr. Ballard is Of Counsel to
Greenebaum, Doll & McDonald PLLC (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. (provider of integrated health
care services). Mr. Ballard also serves as a Director of American Safety Razor
Co. (manufacturer of health and beauty aids), Atria Communities, Inc. (health
care provider), LG&E Energy Corp. (utility
4
<PAGE> 6
company), Mid-America Bancorp (commercial bank), and United HealthCare Corp.
(managed care company). Mr. Ballard has served as a Director of the Company
since 1996 and is a member of the Board's Nominating and Planning Committees.
BRUCE DOUGLAS, AGE 65. 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 68. 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 Kingston
HealthCare Company (manager of health care facilities). Mr. Wolfe has served as
a Director of the Company since 1971 and is a member of the Board's Investment
and Planning Committees.
(1) The terms of Messrs. Ballard, Douglas and Wolfe expire in 1999.
CLASS II
DIRECTORS WHOSE TERMS CONTINUE (2)
PIER C. BORRA, AGE 58. Mr. Borra is the Chairman, President and Chief
Executive Officer of CORA Health Services, Inc. (outpatient rehabilitation
services), a position he has held since January 1998. From April 1985 to
December 1997, Mr. Borra served as 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.
GEORGE L. CHAPMAN, AGE 50. 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 Executive, Investment, Nominating and Planning
Committees.
SHARON M. OSTER, AGE 49. Ms. Oster is Professor of Management at the
Yale School of Management, Yale University. Ms. Oster also serves as a Director
of Aristotle Corporation (holding company for a manufacturer and designer of
women's apparel) and Transpro, Inc. (designer and manufacturer of precision
transportation products). Ms. Oster has served as a Director of the Company
since 1994 and is a member of the Board's Audit and Planning Committees.
(2) The terms of Messrs. Borra and Chapman and Ms. Oster expire in 2000.
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, 1997. The
Board has appointed standing Audit, Executive, Compensation, Investment,
Nominating and Planning Committees. In 1997, the Board appointed a subcommittee
of the Investment Committee to meet between Investment Committee meetings. In
1997, each incumbent Director attended at least 75% of the aggregate of the
meetings of the Board and the committees on which they served.
5
<PAGE> 7
The Audit Committee met twice during the year ended December 31, 1997.
The Audit Committee makes recommendations to the Board of Directors as to the
engagement or discharge of the independent auditors; reviews the plan and
results of the auditing engagement with the independent auditors; reviews the
adequacy of the Company's system of internal accounting controls; and directs
and supervises investigations into matters within the scope of its duties.
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 1997, is
generally responsible for determining the nature and amount of compensation for
Executive Officers.
The Investment Committee and its subcommittee met four and two times
during the year ended December 31, 1997, respectively.
The function of the Nominating Committee, which did not meet during the
year ended December 31, 1997, 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 1999 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 10, 1998.
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table sets forth as of February 1, 1998, 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 Executive Officer, and by the Directors and Executive Officers
of the Company as a group. Unless noted below, each person has sole voting and
investment power regarding the Company's shares. Also, unless noted below, the
beneficial ownership of each person represents less than 1% of the outstanding
shares of the Company. The Company's Management is not aware of any person who,
as of December 31, 1997, was the beneficial owner of more than 5% of the
outstanding shares of the Company.
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<PAGE> 8
<TABLE>
<CAPTION>
COMMON STOCK
-------------------------------------------------------------------------------------
OPTIONS EXERCISABLE
NAME OF BENEFICIAL OWNER SHARES HELD OF RECORD (1) WITHIN 60 DAYS TOTAL SHARES BENEFICIALLY OWNED
- ------------------------ ------------------------- ------------------- -------------------------------
<S> <C> <C> <C>
William C. Ballard, Jr. 6,800 10,000 16,800
Pier C. Borra 3,070(2) 10,000 13,070
Raymond W. Braun 28,696 94,832 123,528
George L. Chapman 65,809 205,635 271,444(3)
Jeffrey H. Donahue 1,250 -0- 1,250
Bruce Douglas 27,476 10,000 37,476
Richard C. Glowacki 16,702 10,000 26,702
Erin C. Ibele 17,239 49,000 66,239
Edward F. Lange, Jr. 29,275 47,500 76,775
Sharon M. Oster 600 10,000 10,600
Bruce G. Thompson 208,149 10,000 218,149
Richard A. Unverferth 4,316(2) 10,000 14,316
Frederic D. Wolfe 274,279 10,000 284,279(3)(4)
All Directors and Executive 683,661 476,967 1,160,628(5)
Officers as a group (13 persons)
<FN>
(1) Includes all restricted shares granted under the Company's 1995 Stock
Incentive Plan or Stock Plan for Non-Employee Directors beneficially
owned by such Directors and Executive Officers as of February 1, 1998.
(2) Mr. Borra disclaims beneficial ownership of 2,570 shares held by his
spouse as trustee for their son and Mr. Unverferth disclaims beneficial
ownership of 3,816 shares held in his sons' names.
(3) As of February 1, 1998, Messrs. Chapman and Wolfe beneficially owned
1.1% and 1.2% of the outstanding shares of the Company, respectively.
(4) Includes an aggregate of 108,210 shares owned by Mr. Wolfe's spouse and
a family foundation over which Mr. Wolfe has shared voting and
investment powers.
(5) Total beneficial ownership represents approximately 4.8% of the
outstanding shares of the Company.
</TABLE>
EXECUTIVE OFFICERS OF THE COMPANY
The following information is furnished as to the Executive Officers of
the Company:
GEORGE L. CHAPMAN, AGE 50. 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 40. 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
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<PAGE> 9
President, Vice President and Assistant General Counsel of the Company. Mr.
Braun was an attorney with the law firm of Shumaker, Loop & Kendrick, LLP from
1983 through 1993.
EDWARD F. LANGE, JR., AGE 38. 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 36. 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).
REMUNERATION
COMPENSATION OF EXECUTIVE OFFICERS
Prior to December 1995, 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, 1996 and
1997, and the total compensation awarded, earned, or paid during 1995, 1996 and
1997 to the Company's most highly compensated Executive Officers who were
serving at the end of 1997, and whose total annual salary and bonus exceeded
$100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
RESTRICTED
ANNUAL COMPENSATION STOCK SECURITIES ALL OTHER
NAME AND ------------------- AWARDS UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(1) OPTIONS(#) ($)(2)
------------------ ---- --------- -------- ----- ---------- ------
<S> <C> <C> <C> <C> <C> <C>
George L. Chapman, 1997 $350,000 $335,000 $1,439,953 140,000 $20,500
Chairman, Chief Executive Officer 1996 275,000 200,000 -0- 180,000 16,976
and President 1995 240,000 107,500 -0- 139,268 9,000
Raymond W. Braun, 1997 175,000 135,000 696,218 70,000 20,500
Vice President, 1996 146,538 85,000 -0- 75,000 16,976
Chief Operating Officer 1995 174,307 40,555 -0- 70,000 9,000
Edward F. Lange, Jr., 1997 170,000 125,000 680,731 67,500 20,500
Vice President, Chief Financial 1996(3) 121,154 75,000 -0- 100,000 -0-
Officer and Treasurer 1995(3) N/A N/A N/A N/A N/A
Erin C. Ibele, 1997 80,000 35,000 313,649 33,875 13,980
Vice President, 1996 67,000 26,800 -0- 35,000 9,277
Corporate Secretary 1995 54,000 21,500 -0- 37,000 4,530
<FN>
(1) The restricted stock awards vest ratably over periods ranging from five
to ten years. The restricted stock awards set forth above reflect the
1997 restricted stock awards valued at the time of grant. The table
below shows the aggregate amounts of restricted stock held at December
31, 1997, and the value of such restricted stock (calculated by
multiplying the amount of restricted stock by the closing market price
of $28.125 on the last trading day of 1997). Dividends are paid on the
restricted shares at the same rate as on all other shares of common
stock of the Company. Such dividends are not included in the Summary
Compensation Table.
</TABLE>
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<PAGE> 10
<TABLE>
<CAPTION> RESTRICTED
NUMBER OF SHARES OF STOCK GRANTS
RESTRICTED STOCK AT VALUE OF RESTRICTED STOCK WITH RESPECT
DECEMBER 31, 1997 AT DECEMBER 31, 1997 TO 1997
------------------- ------------------------- ------------
<S> <C> <C> <C>
George L. Chapman 58,215 $1,637,297 59,260
Raymond W. Braun 28,260 794,812 28,696
Edward F. Lange, Jr. 27,552 774,900 27,975
Erin C. Ibele 12,830 360,844 13,029
<FN>
(2) Includes contributions that were or will be made in connection with the
Company's Retirement Plan and Trust.
(3) Mr. Lange was not appointed as an Executive Officer of the Company
until March 1996.
</TABLE>
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 served as a consultant to the Company, performing such
services as was requested of him by the Board of Directors or Management,
through December 31, 1997.
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 discretionary annual bonuses and stated fringe benefits. Mr. Chapman's
annual base salary was increased to $400,000, effective January 1, 1998. 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. 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. In addition, if it is determined that any payment by the Company
to Mr. Chapman would be a golden parachute subject to excise tax, the amount of
the payments to him would be increased to cover such excise tax.
The Company has entered into similar employment agreements with the
Company's other Executive Officers, which 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, 1998, approximately eleven officers and key employees of
the Company were eligible to participate.
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<PAGE> 11
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
NUMBER OF % OF TOTAL
SHARES OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES OR BASE
GRANTED(#) IN FISCAL PRICE EXPIRATION GRANT DATE
NAME (1), (2) YEAR ($/SH) DATE VALUE ($) (3)
---- -------- ---- ------ ---- -------------
<S> <C> <C> <C> <C> <C>
George L. Chapman 80,000 21% $23.375 01/02/07 $150,000
60,000 15% 26.125 11/18/07 127,000
Raymond W. Braun 40,000 10% 23.375 01/02/07 75,000
30,000 8% 26.125 11/18/07 63,000
Edward F. Lange, Jr. 37,500 10% 23.375 01/02/07 71,000
30,000 8% 26.125 11/18/07 63,000
Erin C. Ibele 20,000 5% 23.375 01/02/07 38,000
13,875 4% 26.125 11/18/07 29,000
<FN>
(1) All of the options granted vest between the years 1998 and 2002.
(2) The terms of the options granted permit cashless exercises and payment
of the option exercise price by delivery of previously owned shares.
(3) Calculated using the Black-Scholes option valuation methodology. In
using such methodology, the following variables were used: risk-free
interest rate of 6.421%, dividend yields of 8%, expected lives of seven
years, and expected volatility of .18%. The actual value, if any, that
an Executive Officer may realize will depend upon the excess of the
closing market price over the exercise price on the date the option is
exercised so that there is no assurance that the value realized by an
Executive Officer will be at or near the value estimated by the
Black-Scholes model.
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION> NUMBER OF SHARES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES VALUE AT FISCAL YEAR END AT FISCAL YEAR END($)(2)
ACQUIRED ON REALIZED --------------------------------- --------------------------------
NAME EXERCISE(#) ($)(1) EXERCISABLE(#) UNEXERCISABLE(#) EXERCISABLE($) UNEXERCISABLE($)
---- ------------ ------ --------------- ---------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
George L. Chapman 10,000 $ 78,177 149,116 324,152 $1,341,196 $1,625,912
Raymond W. Braun 15,000 120,508 67,313 142,687 558,878 667,372
Edward F. Lange, Jr. -- -- 20,000 147,500 171,500 924,125
Erin C. Ibele 21,000 166,387 38,000 63,675 253,625 407,200
<FN>
(1) Value at exercise is the difference between the closing market price on
the date of exercise less the exercise price per share, multiplied by
the number of shares acquired on exercise.
(2) Calculated based on the closing market price on the last trading day of
1997 multiplied by the number of applicable shares covered by
in-the-money options, less the total exercise price for such shares.
</TABLE>
COMPENSATION OF DIRECTORS
In 1997, each Director received a fee of $12,000 for his or her
services as such, which fee increased to $18,000 in 1998. In addition, each
Director received a fee of $1,500 for each Board meeting attended. For 1997 and
1998, members of the Audit
10
<PAGE> 12
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 are not paid to Mr. Chapman. The fees paid to all other
Directors totaled $193,800 in 1997.
During 1997, the Company adopted the Stock Plan for Non-Employee
Directors. Pursuant to this Plan, in 1997 each Director not employed by the
Company was granted stock options to purchase 10,000 shares 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 restricted stock. All of the options have an option exercise price
equal to the fair value of the shares at the time the options were granted. The
options granted to a Director under this Plan may not be exercised more than ten
years after the date the options are granted. Each option award granted in
January 1997 became exercisable on July 20, 1997, and Mr. Donahue's initial
options will become exercisable six months after the date of grant. 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 other terms of these awards are set
forth in detail in the Stock Plan for Non-Employee Directors.
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, 1997, the Compensation Committee of the Board
consisted of Pier C. Borra and Richard A. Unverferth. Mr. Donahue was appointed
to serve on the Compensation Committee in January 1998. During 1997, 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, in order to retain and attract top management. The three key
components of the Company's Executive Officer compensation system are annual
salaries, annual incentive bonuses and long-term incentives. In determining
compensation for each of these three components, the Compensation Committee
reviewed and considered data compiled by the Company's compensation consultants
on salary, bonus and incentive compensation paid to executive officers by 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. For 1997, following
discussions with the Chief Executive Officer and the Company's compensation
consultants, the Compensation Committee approved salary increases for each
Executive Officer, making compensation consistent with other REITs for similar
executive officer positions.
Annual bonus compensation payments are based on attaining certain
financial and non-financial business objectives of the Company on an annual
basis. The 1997 bonuses for the Executive Officers were in part formula driven,
based on the 1997 program of performance goals approved by the Compensation
Committee and the 1997 performance achieved by the Company. The Compensation
Committee, however, decided to award additional restricted stock bonuses to
certain Executive Officers for superior performance beyond the 1997 program
objectives. By awarding the performance bonus in the form of shares of
restricted stock, the Committee intends to recognize the performance of the
individual Executive Officers as well as to promote ownership and retention of
common stock by these Executive Officers.
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. The Company's 1995 Stock Incentive Plan is the Company's
primary vehicle for providing long-term incentive compensation, and is intended
to enable the Company to continue to provide its Executive Officers and other
key employees with competitive equity-based compensation in order to create
appropriate long-term incentives. Under the terms of the Company's 1995 Stock
Incentive Plan, the Compensation Committee has authority to approve stock option
awards, restricted
11
<PAGE> 13
shares or other equity-based incentive awards to Executive Officers and key
employees and to determine the terms of these awards.
In January 1997, the Executive Officers received stock options to
purchase an aggregate of 177,500 shares as well as 10,509 shares of restricted
stock under awards approved by the Compensation Committee at its last 1996
meeting. In May 1997, the Executive Officers received additional restricted
stock aggregating 82,176 shares. In November 1997, the Compensation Committee
granted Executive Officers of the Company additional stock options to purchase
an aggregate of 133,875 shares, as well as an aggregate of 36,275 shares of
restricted stock. The Compensation Committee's decision to grant these stock
options and restricted stock awards (including the special bonus award referred
to above) was based on, among other things, the Company's success during the
fiscal years ended December 31, 1996 and December 31, 1997, the Compensation
Committee's perception of the individuals' past and expected future
contributions to the Company's achievement of its long-term performance goals,
and the Compensation Committee's goal of increased stock retention by Executive
Officers.
With respect to Chief Executive Officer compensation, Mr. Chapman's
base salary for 1997 was set at $350,000. In addition to his base salary, Mr.
Chapman was eligible in 1997 to receive an annual bonus of between 25 percent
and 100 percent of his annual base salary, with the percentage earned to depend
on achievement of certain financial and non-financial goals, including goals
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 targeted goals and his overall performance in 1997, he was awarded an annual
bonus of $335,000. In addition, as noted above, the Compensation Committee
decided that a special bonus should be paid to Mr. Chapman in the form of 5,000
shares of restricted stock for superior performance beyond the 1997 program
objectives. The Compensation Committee believes that the amount of Mr. Chapman's
compensation is consistent with general compensation levels within the REIT
industry and appropriate in view of the Company's substantial accomplishments in
1997.
Finally, the Compensation Committee is committed to maintaining a
compensation program that appropriately aligns the Company's executive
compensation with corporate performance and the interests of its shareholders.
The Compensation Committee periodically reviews its program in order to make any
changes it considers necessary to achieve such objectives.
Compensation Committee of the Board of Directors
Health Care REIT, Inc.
Pier C. Borra
Richard A. Unverferth
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. Nine 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,
P.O. Box 1475, Toledo, Ohio, 43603-1475, the Company will 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. 1992 equals $100 and
dividends are assumed to be reinvested.
<TABLE>
<CAPTION>
12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
S & P 500 100.00 109.99 111.43 153.13 188.29 251.13
Company 100.00 116.06 110.58 122.65 164.59 205.33
Hybrid 100.00 121.18 126.03 155.01 200.51 222.07
12
</TABLE>
<PAGE> 14
Except to the extent the Company specifically incorporates this
information by reference, the foregoing Report of the Compensation Committee and
Shareholder Return Performance Presentation shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933 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 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, 1997 except for Mr. Wolfe who failed to report a gift of
shares on an Annual Form 5.
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 $15,565,000. For the years ended
1997, 1996 and 1995 the Company received $317,000, $383,000 and $383,000,
respectively, in connection with its contingent obligations pursuant to the
agreements to purchase. An affiliate of Messrs. Thompson and Wolfe, Kingston
HealthCare Company ("Kingston"), operates four of the facilities.
OTHER RELATIONSHIPS
For the years ended 1997, 1996 and 1995, the Company recorded lease and
interest income from Kingston in the amounts of $204,000, $204,000 and $202,000,
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,
1997, 1996 and 1995, revenues from related parties totaled $980,000, $3,089,000
and $3,378,000 or 1.34%, 5.68% and 7.57%, respectively, of the revenues of the
Company.
PROPOSAL 2--AMENDMENT OF
STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
The Company's Stock Plan for Non-Employee Directors, as originally
approved, authorizes 100,000 shares of the Company's common stock, par value
$1.00 per share, to be issued to non-employee members of the Company's Board of
Directors as restricted stock awards or upon the exercise of stock options. The
terms of the Stock Plan for Non-Employee Directors provide that an additional
42,000 shares are to become available for new grants each January 1. During
1997, the size of the Board of Directors was increased, raising the number of
non-employee Directors to nine. As of February 1, 1998, stock options to
purchase a total of 135,000 shares had been granted to the nine eligible
non-employee Directors, as well as
13
<PAGE> 15
4,250 shares of restricted stock. Only 2,750 shares remain available for awards
to any additional Directors newly appointed to the Board during 1998 or
subsequent years.
Since the Company's By-Laws provide that the Board may have a total of
fifteen Directors, as long as such additions are authorized by the Board, the
Board of Directors believes it is necessary to amend the Stock Plan for
Non-Employee Directors to increase the number of shares that may be issued under
the Plan in order to continue to provide for annual stock awards to all eligible
non-employee Directors. The proposed amendment would immediately increase the
number of shares available under the Plan by 50,000 shares for the awards the
Company anticipates will be made to individuals newly appointed to the Board
over the next several years as some of the current Directors retire. The
amendment would also change the number of shares to be added at the start of
each subsequent year from 42,000 per year to that number of shares equal to
6,000 shares for each non-employee Director serving on the Board on the first
day of each year. This change is made so that the Company may continue the
present level of annual awards to all continuing non-employee Directors each
year and provide flexibility to grant stock option and restricted awards to
newly appointed non-employee Directors each year.
The stock options provided to an eligible Director under the Stock Plan
will permit the Director to purchase shares of the Company's common stock at an
option purchase price equal to the fair market value of a share of the Company's
common stock as of the time the option was granted. For this purpose, the fair
market value of the common stock will be determined by reference to the closing
price for shares of common stock quoted on the New York Stock Exchange for the
previous trading day. As of March 10, 1998, the market value of the Company's
common stock was $_______ per share. If the proposed amendment to the Stock Plan
is approved, the shares that would be provided to participants in each future
year would be allocated as follows:
<TABLE>
<CAPTION>
ANTICIPATED NUMBER OF SHARES
ANTICIPATED NUMBER OF SHARES OF ANNUAL RESTRICTED
NAME AND POSITION DOLLAR VALUE (1) UNDERLYING ANNUAL OPTIONS STOCK AWARDS
----------------- ---------------- ------------------------- ----------------------------
<S> <C> <C> <C>
Non-Executive Directors as a
Group (2) - 40,000 2,000
<FN>
(1) The dollar value of the annual restricted stock and stock option awards
to be made in future years is not determinable because the value and
the exercise price will depend on the market value of a share of the
Company's common stock on the date of grant.
(2) Assumes that the Board will include eight Non-Employee
Directors.
</TABLE>
FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN
The following summary of the federal income tax consequences of the
Plan is not intended to be exhaustive and does not describe state or local tax
consequences.
The options granted to non-employee Directors under the Plan are
nonstatutory options and will not qualify as "incentive stock options" under
Section 422 of the Internal Revenue Code. In general: (i) an eligible Director
will not recognize taxable income at the time he or she is granted an option
award; (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.
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.
14
<PAGE> 16
The Stock Plan for Non-Employee Directors 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 Stock 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 scheduled for such awards.
A complete copy of the amendment to the Stock Plan for Non-Employee
Directors is attached to this Proxy Statement 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
PLAN FOR NON-EMPLOYEE DIRECTORS. The affirmative vote of the holders of a
majority of the shares present in person or represented by proxy at the Annual
Meeting of Shareholders will be required for such approval.
PROPOSAL 3--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, 1997 and has been selected by the
Company to serve as its independent auditors for the year ending December 31,
1998. 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 1999 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,
1997 included the audit of the financial statements of the Company included in
the Annual Report to Shareholders for 1997, services related to filings with the
Securities and Exchange Commission, and consultation and assistance on
accounting and related matters.
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.
VOTING PROCEDURES
The Inspector of Elections will treat shares referred to as "broker
non-votes" (i.e., shares held by brokers or nominees as to which instructions
have not been received from the beneficial owner or persons entitled to vote for
whom the broker or nominee does not have the discretionary power to vote on a
particular matter) as shares that are present and entitled to vote for purposes
of establishing a quorum. For purposes of determining the outcome of any matter
as to which the broker has physically indicated on the proxy that it does not
have discretionary authority to vote, those shares will be treated as not
present and not entitled to vote with respect to that matter (even though those
shares are considered entitled to vote for quorum purposes and may be entitled
to vote on other matters).
15
<PAGE> 17
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 1999 Annual
Meeting of Shareholders must be received by the Company no later than November
10, 1998 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
16
<PAGE> 18
APPENDIX A
FIRST AMENDMENT TO THE
HEALTH CARE REIT, INC.
STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
---------------------------------------
Health Care REIT, Inc., a Delaware corporation (the
"Company"), hereby amends the Health Care REIT, Inc. Stock Plan for Non-Employee
Directors (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 purpose of this Amendment is
to increase the number of shares of the Company's common stock reserved for
issuance to eligible non-employee directors under the Plan, so as to provide for
annual grants to non-employee directors and to project the increased needs for
grants under the Plan as current directors retire or otherwise leave the Board.
2. AUTHORITY FOR THE AMENDMENT. Section 13 of the Plan
provides the Board of Directors of the Company with the authority to amend or
modify the Plan in such respects as it shall deem advisable.
3. AMENDMENT TO SECTION 3. The first two sentences of Section
3 of the Plan shall be amended, to read as follows:
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
192,000 shares. On January 1 of each year subsequent to the Effective
Date, the aggregate number of shares of common stock available for
issuance under the Plan shall be increased by an additional number of
shares calculated by multiplying the number of non-employee directors
serving on the Board each January 1, by 6,000 shares (not to exceed
90,000 shares).
The effectiveness of this Amendment to Section 3 set forth in this Paragraph 3
shall be conditioned upon its approval by the Company's shareholders at the next
Annual Meeting of Shareholders.
4. 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
--------------------------------
Title
----------------------------
17
<PAGE> 19
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
21, 1998 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: Jeffrey H.
Donahue, Bruce G. Thompson and Richard A. Unverferth.
[ ] 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 Stock Plan for
Non-Employee Directors to increase the number of shares available for issuance.
3. Ratification of the appointment of Ernst & Young LLP as independent
auditors for the fiscal year 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE> 20
4. With discretionary authority on any other business that may properly
come before the meeting or any adjournment thereof.
Dated:_______________,1998
-------------------------------
Signature
-------------------------------
Signature if Held Jointly
PLEASE MARK, SIGN Please sign exactly as your name appears
DATE AND RETURN THE herein. Joint owners should each sign. When
PROXY CARD PROMPTLY signing as attorney, executor, administrator,
USING THE ENCLOSED trustee or guardian, please give full title as
ENVELOPE. PLEASE such. Corporate or partnership proxies should
MARK YOUR CHOICE be signed by an authorized person with the
LIKE THIS __ IN BLUE OR person's title indicated.
BLACK INK.
