<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE 14A
(RULE 14A-101)
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> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY
(AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 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
MAY 4, 2000
------------------
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 MAY 4, 2000
TO THE SHAREHOLDERS OF HEALTH CARE REIT, INC.:
The Annual Meeting of Shareholders of Health Care REIT, Inc. will be held
on May 4, 2000 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 ratification of the appointment of Ernst & Young LLP as independent
auditors for the fiscal year 2000; and
3. 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 9, 2000 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 28, 2000
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
MAY 4, 2000
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 Thursday, May 4, 2000 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, 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 or 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 voting securities 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 voting securities 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 31, 2000. A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR
ENDED DECEMBER 31, 1999, 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.
1
<PAGE> 5
VOTING SECURITIES OUTSTANDING
The Company had outstanding 28,577,227 shares of common stock, $1.00 par
value per share (the "shares of common stock") and 3,000,000 shares of Series C
cumulative convertible preferred stock, $1.00 par value per share (the "shares
of preferred stock") on March 28, 2000. These shares constitute the only classes
of outstanding voting securities of the Company. Shareholders of record at the
close of business on March 9, 2000 are entitled to notice of, and to vote at,
the Annual Meeting and any adjournments thereof. On all matters to come before
the Annual Meeting, each share of common stock is entitled to one vote and each
share of preferred stock is entitled to .97561 of one vote, the percentage of
common shares into which a preferred share is currently convertible.
PROPOSAL 1 -- ELECTION OF THREE DIRECTORS
The Company is currently authorized to have nine Directors. 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 proxy reserves 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 60. 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 also
serves as a Director of Balanced Care Corporation (developer and operator of
long-term health care facilities) and Genesis Health Ventures, Inc. (provider of
post-acute care and support services). 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 52. 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. 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 51. 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 of educational
products) 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, Investment and Planning
Committees.
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.
CLASS III
DIRECTORS WHOSE TERMS CONTINUE (1)
JEFFREY H. DONAHUE, AGE 53. Mr. Donahue is Executive Vice President and
Chief Financial Officer of The Rouse Company (real estate development and
operations), a position he has held since December 1998. From September 1993 to
December 1998, Mr. Donahue served as Senior Vice President and Chief Financial
Officer of
2
<PAGE> 6
The Rouse Company. 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 70. Mr. Thompson served as a consultant to the
Company in 1997 and 1998. From 1970 to October 1996, Mr. Thompson was the
Chairman and Chief Executive Officer of the Company. In addition, Mr. Thompson
serves as President and a Director of First Toledo Corporation (developer of
health care facilities), a position 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 a Director of the Company since 1971 and
is a member of the Board's Executive, Investment and Planning Committees.
RICHARD A. UNVERFERTH, AGE 76. 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, Compensation, Executive, Investment, Nominating and Planning
Committees.
- ---------------
(1) The terms of Messrs. Donahue, Thompson and Unverferth expire in 2001.
CLASS I
DIRECTORS WHOSE TERMS CONTINUE (2)
WILLIAM C. BALLARD, JR., AGE 59. 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 LG&E Energy Corp. (utility company),
Mid-America Bancorp (commercial bank), Healthcare Recoveries, Inc. (healthcare
subrogation and recovery services) 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 Investment, Nominating and Planning Committees.
PETER J. GRUA, AGE 46. Mr. Grua is a Principal and President of HLM
Management Company, Inc. (registered investment adviser). From 1986 until 1992,
Mr. Grua was a Managing Director and Senior Analyst of Alex. Brown & Sons,
Incorporated (brokerage services). Mr. Grua has served as a Director of the
Company since 1999 and is a member of the Board's Investment, Nominating and
Planning Committees.
R. SCOTT TRUMBULL, AGE 51. Mr. Trumbull is the Executive Vice President
International Operations & Corporate Development of Owens-Illinois, Inc.
(manufacturer of glass and plastic packaging products) and has held this
position since 1993. Mr. Trumbull is a member of the Board of Franklin Electric
Company (manufacturer of electric motors). Mr. Trumbull has served as a Director
of the Company since 1999 and is a member of the Board's Audit, Investment and
Planning Committees.
- ---------------
(2) The terms of Messrs. Ballard, Grua and Trumbull expire in 2002.
BOARD AND COMMITTEES
The Board met four times during the year ended December 31, 1999. The Board
has 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 1999, 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 twice during the year ended December 31, 1999. 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.
3
<PAGE> 7
The function of the Executive Committee is to exercise all the powers of
the Board (except any powers specifically reserved to the Board) between
meetings of the Board.
The Compensation Committee, which met three times during 1999, is generally
responsible for determining the nature and amount of compensation for Executive
Officers.
The Investment Committee and its subcommittee met three and two times
during the year ended December 31, 1999, respectively.
The function of the Nominating Committee, which did not meet during 1999,
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 2001 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 18, 2000.
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table sets forth, as of February 1, 2000, unless otherwise
specified, certain information with respect to the beneficial ownership of the
Company's shares of common stock by each person who is a Director of the
Company, 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
common shares of the Company. No member of the group below owns any shares of
the Class C cumulative convertible preferred stock. The Company's Management is
not aware of any person who, as of December 31, 1999, was the beneficial owner
of more than 5% of the outstanding common shares of the Company.
<TABLE>
<CAPTION>
COMMON STOCK
---------------------------------------------------------------
SHARES HELD OPTIONS EXERCISABLE TOTAL SHARES
NAME OF BENEFICIAL OWNER OF RECORD(1) WITHIN 60 DAYS BENEFICIALLY OWNED
------------------------ ------------ ------------------- ----------------------
<S> <C> <C> <C>
William C. Ballard, Jr................... 12,800 13,334 26,134
Pier C. Borra............................ 48,500 13,334 61,834
Raymond W. Braun......................... 58,696 162,500 221,196
George L. Chapman........................ 110,172 385,173 495,345(3)
Michael A. Crabtree...................... 16,926 14,500 31,426
Jeffrey H. Donahue....................... 3,250 13,334 16,584
Peter J. Grua............................ 4,500 11,667 16,167
Erin C. Ibele............................ 27,239 77,350 104,589
Edward F. Lange, Jr...................... 54,275 122,000 176,275
Sharon M. Oster.......................... 3,000 13,334 16,334
Bruce G. Thompson........................ 210,149 13,334 223,483
R. Scott Trumbull........................ 1,000 -0- 1,000
Richard A. Unverferth.................... 6,316(2) 13,334 19,650
All Directors and Executive Officers as a
group (13 persons)..................... 556,823 853,194 1,410,017(4)
</TABLE>
- ---------------
(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, 2000.
(2) Mr. Unverferth disclaims beneficial ownership of 3,816 shares held in his
sons' names.
(3) As of February 1, 2000, Mr. Chapman beneficially owned 1.74% of the
outstanding common shares of the Company.
(4) Total beneficial ownership represents 4.94% of the outstanding common shares
of the Company.
4
<PAGE> 8
EXECUTIVE OFFICERS OF THE COMPANY
The following information is furnished as to the Executive Officers of the
Company:
GEORGE L. CHAPMAN, AGE 52. 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 42. 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.
EDWARD F. LANGE, JR., AGE 40. 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.
ERIN C. IBELE, AGE 38. Ms. Ibele has served as Vice President and
Corporate Secretary of the Company since January 1993. Since 1986, Ms. Ibele has
served in various capacities with the Company.
MICHAEL A. CRABTREE, AGE 43. Mr. Crabtree has served as Controller of the
Company since July 1996. Prior to that date, Mr. Crabtree was Chief Financial
Officer of Westhaven Services Co., a provider of pharmaceutical services to
nursing homes, holding that position from July 1993 through July 1996.
REMUNERATION
COMPENSATION OF EXECUTIVE OFFICERS
The following table presents the total compensation awarded to, earned by,
or paid to, the Chief Executive Officer of the Company during 1997, 1998 and
1999, and the total compensation awarded, earned, or paid during 1997, 1998 and
1999 to the Company's most highly compensated Executive Officers who were
serving at the end of 1999, and whose total annual salary and bonus exceeded
$100,000.
5
<PAGE> 9
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
--------------------------
RESTRICTED
ANNUAL COMPENSATION STOCK SECURITIES ALL OTHER
NAME AND --------------------- AWARDS UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(1) OPTIONS(#) ($)(2)
------------------ ---- --------- -------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
George L. Chapman, 1999 $420,000 $393,222 $ 496,875 125,000 $20,000
Chairman, Chief Executive 1998 400,000 467,288 587,500 125,000 13,725
Officer and President 1997 350,000 335,000 1,439,953 140,000 19,839
Raymond W. Braun, 1999 210,000 172,035 248,438 62,500 20,000
Vice President, 1998 200,000 198,210 293,750 62,500 13,725
Chief Operating Officer 1997 175,000 135,000 696,218 70,000 19,839
Edward F. Lange, Jr., 1999 210,000 172,035 248,438 62,500 20,000
Vice President, Chief
Financial 1998 200,000 198,210 293,750 62,500 13,725
Officer and Treasurer 1997 170,000 125,000 680,731 67,500 19,839
Erin C. Ibele, 1999 101,750 47,631 99,375 25,000 18,553
Vice President, 1998 92,500 48,750 117,500 25,000 11,357
Corporate Secretary 1997 80,000 35,000 313,649 33,875 13,477
Michael A. Crabtree 1999 99,000 46,344 99,375 25,000 18,002
Controller 1998 90,000 47,500 105,750 22,500 11,576
1997 80,000 25,000 180,228 20,000 2,625
</TABLE>
- ---------------
(1) The restricted stock awards vest ratably over periods ranging from five to
ten years. The restricted stock awards set forth above are valued at the
time of grant. The table below shows the aggregate amounts of restricted
stock held at December 31, 1999, and the value of such restricted stock
(calculated by multiplying the amount of restricted stock by the closing
market price of $15.125 on the last trading day of 1999). Dividends are paid
on the restricted shares at the same rate as on all other shares of common
stock of the Company. Such dividends are not included in the Summary
Compensation Table.
<TABLE>
<CAPTION>
RESTRICTED
STOCK GRANTS
NUMBER OF SHARES OF WITH
RESTRICTED STOCK AT VALUE OF RESTRICTED STOCK RESPECT
DECEMBER 31, 1999 AT DECEMBER 31, 1999 TO 1999
------------------- ------------------------- -------------
<S> <C> <C> <C>
George L. Chapman................... 86,919 $1,314,650 25,000
Raymond W. Braun.................... 42,986 650,163 12,500
Edward F. Lange, Jr................. 42,335 640,317 12,500
Erin C. Ibele....................... 18,470 279,359 5,000
Michael A. Crabtree................. 13,822 209,058 5,000
</TABLE>
(2) Includes contributions that were or will be made in connection with the
Company's Retirement Plan and Trust and Money Purchase Pension Plan.
EMPLOYMENT AGREEMENTS
The Company and Mr. Chapman 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 per annum for
1997 and $400,000 per annum for subsequent years, as well as discretionary
annual bonuses and stated fringe benefits. Mr. Chapman's annual base salary was
increased to $441,000, effective January 1, 2000. If Mr. Chapman is terminated
without cause, he would receive severance pay for the remaining term of the
agreement or for twenty-four months, whichever is greater. If he resigns during
the twelve months following a "change in corporate control" (as defined in the
employment agreement), he would receive severance pay for thirty-six months.
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
6
<PAGE> 10
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. Pursuant to the Stock Incentive Plan,
in December 1999 and January 2000, the Company loaned $169,203 and $76,855,
respectively, to the Company's Executive Officers and one key employee to assist
such individuals with paying taxes related to the vesting of restricted stock
awards. The Compensation Committee has the discretion to select the particular
officers and key employees who will receive awards. At February 1, 2000, fifteen
officers and key employees of the Company were eligible to participate.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SHARES OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES OR BASE GRANT
GRANTED(#) IN FISCAL PRICE EXPIRATION DATE
NAME (1),(2) YEAR ($/SH) DATE VALUE($)(3)
- --------------------------------- ---------- ---------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C>
George L. Chapman................ 125,000 32% $19.875 9/29/09 $263,750
Raymond W. Braun................. 62,500 16% 19.875 9/29/09 131,875
Edward F. Lange, Jr.............. 62,500 16% 19.875 9/29/09 131,875
Erin C. Ibele.................... 25,000 6% 19.875 9/29/09 52,750
Michael A. Crabtree.............. 25,000 6% 19.875 9/29/09 52,750
</TABLE>
- ---------------
(1) All of the options granted vest between the years 2000 and 2004.
(2) The terms of the options granted permit cashless exercises and payment of
the option exercise price by delivery of previously owned shares.
(3) Calculated using the Black-Scholes option valuation methodology. In using
such methodology, the following variables were used: risk-free interest rate
of 6.01%, dividend yields of 8.0%, expected lives of seven years, and
expected volatility of .23%. The actual value, if any, that an Executive
Officer may realize will depend upon the excess of the closing market price
over the exercise price on the date the option is exercised so that there is
no assurance that the value realized by an Executive Officer will be at or
near the value estimated by the Black-Scholes model.
7
<PAGE> 11
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
ACQUIRED VALUE AT FISCAL YEAR END AT FISCAL YEAR END($)(2)
ON REALIZED --------------------------------- ---------------------------------
NAME EXERCISE(#) ($)(1) EXERCISABLE(#) UNEXERCISABLE(#) EXERCISABLE($) UNEXERCISABLE($)
- ------------------------ ----------- -------- -------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
George L. Chapman....... 0 N/A 340,135 235,633 $-0- $-0-
Raymond W. Braun........ 0 N/A 144,332 102,168 -0- -0-
Edward F. Lange, Jr..... 0 N/A 136,600 88,400 -0- -0-
Erin C. Ibele........... 0 N/A 70,350 43,325 -0- -0-
Michael A. Crabtree..... 0 N/A 14,500 28,000 -0- -0-
</TABLE>
- ---------------
(1) Value at exercise is the difference between the closing market price on the
date of exercise less the exercise price per share, multiplied by the number
of shares acquired on exercise.
(2) Calculated based on the closing market price on the last trading day of 1999
multiplied by the number of applicable shares covered by in-the-money
options, less the total exercise price for such shares.
COMPENSATION OF DIRECTORS
In 1999, each Director received a fee of $20,000 for his or her services as
such, which fee did not increase in 2000. In addition, each Director received a
fee of $1,500 for each Board meeting attended. For 1999 and 2000, 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 are not paid to Mr. Chapman. The fees paid to all other
Directors totaled $273,333 in 1999.
During 1997, the Company adopted the Stock Plan for Non-Employee Directors.
Pursuant to this Plan, in January 1999 each Director not employed by the Company
was granted 1,000 shares of restricted stock and stock options to purchase 5,000
shares. Additionally, in April 1999, a newly elected eligible Director was
granted stock options to purchase 10,000 shares. In future years, each eligible
Director will receive additional stock options to purchase 5,000 shares and
annual grants of 1,000 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. Option
awards generally 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. The
Committee consists of three non-employee directors, Pier C. Borra, Jeffrey H.
Donahue and Richard A. Unverferth. During the year ended December 31, 1999, the
Compensation Committee of the Board met three times. The Compensation Committee
utilizes the services of FPL Advisory Group, a nationally recognized executive
compensation consulting firm, to assist the Compensation Committee in reviewing
and developing the Company's executive compensation criteria. Based largely on
the information provided by this consulting firm, which included a detailed
survey of the compensation practices of other REITs in the health care industry,
the Compensation Committee believes that the Company's executive compensation
program is within the market range for the Company's peer group of companies,
and is well-designed to support the Company's incentive-based compensation
philosophy.
8
<PAGE> 12
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 group companies 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 1999, following discussions with the
Chief Executive Officer and the Company's compensation consultants, the
Compensation Committee approved salary increases for each Executive Officer, to
ensure their compensation remains consistent with the other peer-group 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
1999 bonuses for the Executive Officers were in part formula driven, based on
the 1999 program of performance goals approved by the Compensation Committee at
its January 1999 meeting. For 1999, these goals related in part to growth in the
Company's funds from operations as well as the Committee's subjective appraisal
of each officer's satisfaction of certain individual non-financial goals.
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 shares or other equity-based incentive awards to Executive
Officers and key employees and to determine the terms of these awards.
In September 1999, the Compensation Committee granted Executive Officers of
the Company stock options to purchase an aggregate of 300,000 shares, as well as
an aggregate of 60,000 shares of restricted stock. The Compensation Committee's
decision to grant these stock options and restricted stock awards was based on,
among other things, the Company's success during the fiscal years ended December
31, 1998 and December 31, 1999, the Compensation Committee's subjective
evaluation 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 ownership by Executive Officers.
At its September 1998 meeting, the Compensation Committee increased Mr.
Chapman's annual base salary for 1999 to $420,000, based upon the recommendation
of the Committee's compensation consultant, in light of the base salaries paid
to CEOs of similarly situated REITs, and in recognition of the Company's
performance in 1998 under his leadership. In addition to his base salary, Mr.
Chapman was eligible in 1999 to receive an annual bonus based on a percentage of
his annual base salary, with the percentage earned to depend on achievement of
certain financial and non-financial goals established by the Committee at its
January 1999 meeting. For 1999, these goals related in part to growth in the
Company's funds from operations as well as the Committee's subjective appraisal
of Mr. Chapman's satisfaction of certain individual non-financial goals. Based
upon Mr. Chapman's achievement of the targeted goals and his overall performance
in 1999, he was awarded an annual bonus of $393,222. The Compensation Committee
believes that the amount of Mr. Chapman's compensation is consistent with
general compensation levels within the health care REIT industry and appropriate
in view of the Company's continued success in a difficult investment environment
for health care REITs during 1999.
The Compensation Committee has considered the anticipated tax treatment to
the Company of the compensation and benefits paid to the Executive Officers of
the Company in light of Section 162(m) of the Internal Revenue Code of 1986, as
amended. The Compensation Committee will strive to provide Executive Officers
with attractive, well-designed compensation packages that will generally
preserve the deductibility of such payments for the Company. However, certain
types of compensation payments and their deductibility will depend upon the
timing of an executive officer's vesting or exercise of previously granted
rights. Moreover,
9
<PAGE> 13
interpretations of any changes in the tax laws and other factors beyond the
Compensation Committee's control may affect the deductibility of certain
compensation payments. The Compensation Committee will consider various
alternatives to preserve the deductibility of compensation payments to Executive
Officers to the extent reasonably practical and to the extent consistent with
its other compensation objectives, but reserves the right to make
incentive-based awards not exempt from these limits where such awards are
appropriate and will not have a material impact on shareholder value.
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 further changes
it considers necessary to achieve such objectives.
Compensation Committee of the Board of Directors
Health Care REIT, Inc.
Pier C. Borra
Jeffrey H. Donahue
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. Ten 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. 1994 equals $100 and dividends are
assumed to be reinvested.
Performance Graph
<TABLE>
<CAPTION>
S & P 500 COMPANY HYBRID
--------- ------- ------
<S> <C> <C> <C>
12/31/94 100.00 100.00 100.00
12/31/95 137.43 94.78 122.99
12/31/96 168.98 141.27 159.09
12/31/97 225.37 176.23 176.20
12/31/98 289.78 177.12 116.25
12/31/99 350.72 114.79 74.52
</TABLE>
10
<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, 1999.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PARTNERSHIP FINANCINGS
The Company has provided direct loans and credit enhancements to three
partnerships in connection with two assisted living and retirement facilities
and two nursing homes. First Toledo Corporation, of which Mr. Thompson owns 50%,
serves as a general partner in each partnership. The partnership structures
facilitated industrial development bond financing. 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
$8,925,000. For the years ended 1999, 1998 and 1997, the Company received
$177,000, $253,000, and $317,000, respectively, in connection with its
contingent obligations pursuant to the agreements to purchase. An affiliate of
Mr. Thompson, Kingston HealthCare Company ("Kingston") operates three of the
facilities.
OTHER RELATIONSHIPS
For the years ended 1999, 1998 and 1997, the Company recorded lease and
interest income from Kingston in the amounts of $148,000, $83,000, and $204,000,
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, 1999, 1998
and 1997, revenues from related parties totaled $1,156,000, $1,236,000, and
$980,000, or .90%, 1.26%, and 1.34%, respectively, of the revenues of the
Company.
PROPOSAL 2 -- 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, 1999 and has been selected by the Company to
serve as its independent auditors for the year ending December 31, 2000. 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 of voting securities 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 2001 because of
the difficulty and expense of making a substitution. Representatives of Ernst &
Young LLP are expected to be present at the
11
<PAGE> 15
Annual Meeting and will be available to respond to appropriate questions. Those
representatives will have the opportunity to make a statement if they desire to
do so.
Audit services of Ernst & Young LLP for the year ended December 31, 1999
included the audit of the financial statements of the Company included in the
Annual Report to Shareholders for 1999, 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 the shares of voting securities present in
person or by proxy at the Annual Meeting will be required for such ratification.
VOTING PROCEDURES
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. A "broker non-vote" occurs when a broker or
other nominee holding shares for a beneficial owner votes on one proposal, but
does not vote on another proposal because the broker does not have discretionary
voting power for the other proposal and has not received instructions from the
beneficial owner. Broker non-votes are counted as present or represented for
purposes of determining the presence or absence of a quorum for the Annual
Meeting, but are not counted for purposes of determining the number of shares
entitled to vote with respect to any proposal for which the broker lacks
discretionary authority.
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 person named in the proxy will vote in accordance with his judgment on such
matters.
SHAREHOLDER PROPOSALS FOR PRESENTATION AT THE 2001 ANNUAL MEETING
The Board of Directors requests that any shareholder proposals intended for
inclusion in the Company's proxy materials for the 2001 Annual Meeting be
submitted to Erin C. Ibele, Vice President and Corporate Secretary of the
Company, in writing no later than November 18, 2000. Unless the Company has been
given written notice by January 30, 2001 of a shareholder proposal to be
presented at the 2001 Annual Meeting other than by means of inclusion in the
Company's proxy materials for the Meeting, persons named in the proxies
solicited by the Board of Directors for the Meeting may use their discretionary
voting authority to vote against the proposal.
BY THE ORDER OF THE BOARD OF DIRECTORS
ERIN C. IBELE
Vice President and Corporate Secretary
12
<PAGE> 16
HEALTH CARE REIT, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints G. L. Chapman with full
P power of substitution, to vote all shares of voting
securities of Health Care REIT, Inc. (the "Company") that the
R undersigned is entitled to vote at the Annual Meeting of the
Shareholders of the Company to be held on Thursday, May 4,
O 2000 or any adjournments thereof.
X YOU MAY REVOKE THIS PROXY AT ANY TIME PRIOR TO THE
TAKING OF A VOTE ON THE MATTERS HEREIN.
Y
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.
(Over)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 17
[X] Please mark
your choice
like this
in blue or
black ink.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. THE MANAGEMENT AND THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY
RECOMMEND VOTES "FOR" ALL OF THE FOLLOWING:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FOR WITHHELD
ALL FOR ALL FOR AGAINST ABSTAIN
1. Election of three Directors for a [ ] [ ] 2. Ratification of the appointment of [ ] [ ] [ ]
term of three years: Ernst & Young LLP as independent
auditors for the fiscal year 2000.
Pier C. Borra
George L. Chapman
Sharon M. Oster
3. With discretionary authority on any
other business that may properly
come before the meeting or any
adjournment thereof.
</TABLE>
To withhold authority to vote for any individual nominee, please write the
person's name in the following space:
_____________________________________
Signature(s) __________________________________________________ Date __________
NOTE: Please sign exactly as your name appears herein. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such. Corporate or partnership proxies should be
signed by an authorized person with the person's title indicated.
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FOLD AND DETACH HERE
