<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
- --------------------------------------------------------------------------------
Check the appropriate box:
[ ] Preliminary Proxy 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 sec.240.14a-11(c) or sec.240.14a-12
MEDITRUST
(Name of Registrant as Specified In Its Charter)
MEDITRUST
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act
Rule 0-11:
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
Set forth the amount on which the filing fee is calculated and state how it
was determined.
[ ] 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
MEDITRUST
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 7, 1997
The annual meeting of shareholders of Meditrust will be held at Fleet Bank,
N.A., 75 State Street, 8th Floor, Boston, Massachusetts, on Wednesday, May 7,
1997 at 4:00 o'clock in the afternoon for the following purposes:
1. To fix the number of trustees and elect a Board of Trustees for the
ensuing year.
2. To consider and act upon such other business, matters or proposals as
may properly come before the Meeting.
The Board of Trustees has fixed the close of business on March 31, 1997 as
the record date for determining the shareholders having the right to receive
notice of and to vote at the Meeting.
By Order of the Board of Trustees
/s/ Michael S. Benjamin
MICHAEL S. BENJAMIN
Senior Vice President and Secretary
Needham Heights, Massachusetts
April 10, 1997
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO SIGN, DATE
AND MAIL PROMPTLY THE ENCLOSED PROXY WHICH IS BEING SOLICITED ON BEHALF OF THE
BOARD OF TRUSTEES. A RETURN ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES IS ENCLOSED FOR THAT PURPOSE. RETURNING THE ENCLOSED PROXY WILL
NOT AFFECT YOUR RIGHT TO ATTEND THE MEETING AND VOTE YOUR SHARES IN PERSON.
<PAGE> 3
MEDITRUST
197 FIRST AVENUE
NEEDHAM HEIGHTS, MASSACHUSETTS 02194
------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MAY 7, 1997
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation by
and on behalf of the Board of Trustees of Meditrust, a Massachusetts business
trust (the "Company"), of proxies for use at the annual meeting of shareholders
of the Company and at any adjournment or adjournments thereof (the "Meeting") to
be held, pursuant to the accompanying Notice of Annual Meeting, at 4:00 p.m. on
May 7, 1997 at Fleet Bank, N.A., 75 State Street, 8th Floor, Boston,
Massachusetts. The Company expects to mail this Proxy Statement and the
accompanying form of proxy to shareholders on or about April 10, 1997.
VOTING AND REVOCATION OF PROXIES
Valid proxies will be voted as specified thereon at the Meeting. Any
shareholder giving a proxy in the accompanying form retains the power to revoke
it at any time prior to the exercise of the powers conferred thereby by (a)
delivering written notice of such revocation to Michael S. Benjamin, Esquire,
Senior Vice President and Secretary, Meditrust, 197 First Avenue, Needham
Heights, Massachusetts 02194; (b) delivering a duly executed proxy bearing a
later date to the Secretary of the Company; or (c) appearing at the Meeting and
requesting the return of his proxy. Any shareholder who attends the Meeting in
person will not be deemed thereby to revoke the proxy unless such shareholder
affirmatively indicates thereat his intention to vote the shares in person.
ANNUAL REPORT
The Annual Report of the Company for the fiscal year ended December 31,
1996, including financial statements, audited and reported upon by Coopers &
Lybrand L.L.P., independent accountants, is being mailed herewith to each of the
Company's shareholders of record at the close of business on March 31, 1997.
VOTING SECURITIES, PRINCIPAL HOLDERS THEREOF AND HOLDINGS BY CERTAIN EXECUTIVE
OFFICERS
The holders of record of shares of beneficial interest of the Company
("Shares") at the close of business on March 31, 1997 are entitled to vote at
the Meeting. On that date there were outstanding and entitled to vote 61,495,104
Shares. Each shareholder has one vote for each Share held by such shareholder of
record on the matters listed in the Notice of Annual Meeting.
<PAGE> 4
<TABLE>
No one was known by the Company to own beneficially more than 5% of the
Company's outstanding Shares on March 31, 1997, except as shown in the following
table:
<CAPTION>
SHARES
BENEFICIALLY PERCENTAGE OF
NAME AND ADDRESS OWNED(1) SHARES
- ---------------- ------------ -------------
<S> <C> <C>
Franklin Resources, Inc....................... 3,202,838(2) 5.3%
77 Mariners Island Blvd.
San Mateo, CA 94404
</TABLE>
- ---------------
(1) None of such Shares are known to be Shares with respect to which the holder
has the right to acquire beneficial ownership.
(2) Based on information concerning beneficial ownership of Shares as of
December 31, 1996 as set forth in the Schedule 13G of Franklin Resources,
Inc. dated February 13, 1997.
- ----------------------
<TABLE>
The following table sets forth information concerning ownership of Shares
by certain executive officers of the Company:
<CAPTION>
SHARES SUBJECT
SHARES TO OPTIONS
BENEFICIALLY EXERCISABLE WITHIN PERCENTAGE OF
OWNED AS OF 60 DAYS OF SHARES
3/31/97(1) 3/31/97 OUTSTANDING
------------ ------------------ -------------
<S> <C> <C> <C>
Abraham D. Gosman....................... 978,564(2) 211,353 1.6%
David F. Benson......................... 66,137 55,706 (3)
Michael S. Benjamin..................... 21,719 13,333 (3)
Michael F. Bushee....................... 23,092 13,333 (3)
Stephen H. Press........................ 24,024 23,332 (3)
</TABLE>
- ---------------
(1) Unless otherwise indicated, the number of Shares stated as being owned
beneficially includes (i) Shares beneficially owned by spouses, minor
children and/or other relatives in which the executive officer may share
voting or investment power and (ii) any Shares listed as being subject to
options exercisable within 60 days of March 31, 1997.
(2) Includes 162,000 Shares owned by A.M.A. Financial Corporation, of which Mr.
Gosman is President and a 98% shareholder.
(3) Less than 1%.
EXECUTIVE COMPENSATION
REPORT OF THE PERSONNEL AND COMPENSATION COMMITTEE
In determining the compensation to be paid to the Company's executive
officers, the Personnel and Compensation Committee (the "Compensation
Committee") strives to (i) reward executives for achievement of the Company's
strategic goals and the enhancement of shareholder value, (ii) recognize
superior Company performance as compared to that of competing businesses and
(iii) attract, motivate and retain highly-trained and talented executives who
are vital to the Company's long-term success. Individual compensation packages
are generally set at levels believed by the Compensation Committee to correspond
to
2
<PAGE> 5
the median range of compensation paid to individuals serving in comparable
positions at other real estate investment trusts with publicly-traded securities
(including those comprising the National Association of Real Estate Investment
Trusts Index referred to in the performance graph set forth hereinafter). At
present, the Company's compensation package is comprised of a base salary, an
annual cash bonus, long-term incentives in the form of stock options and stock
grants (which are awarded by the Stock Option Committee) and other benefits
typically offered to executives by major corporations.
SALARIES
During 1996, the Board of Trustees, on the recommendation of the
Compensation Committee, increased the salaries paid to each of the four most
highly compensated executive officers of the Company other than Mr. Gosman
(collectively, the "Senior Executives"). These salary increases, as well as
those of other Company executives, were based on cost-of-living adjustments,
position tenure, subjective assessments of individual performance, comparability
considerations (including the Company's financial performance relative to its
competitors) and competitive data, including asset growth, revenue growth, cash
flow growth and total return to shareholders. In setting compensation levels for
1996, the Compensation Committee gave considerable weight to the Company's
favorable 1995 financial results (including the 18.6% increase in the Company's
assets, 21% increase in the Company's revenues and 40.8% increase in cash flow).
The 1995 financial results generally exceeded management's expectations, which
further influenced the Compensation Committee's decision to increase salaries.
Performance assessments were also given greater weight in the Compensation
Committee's determinations relative to the other factors.
Mr. Gosman's 1996 base salary was paid pursuant to the provisions of his
employment agreement (the "Employment Agreement") with the Company which was
entered into on January 1, 1993 with an original term of four years. The terms
of the Employment Agreement, including salary terms, were determined through
negotiations between Mr. Gosman and the Compensation Committee. Factors
considered by the Compensation Committee in the course of those negotiations
included Mr. Gosman's unique insight and experience in the health care industry,
his leadership abilities, his past contributions to the success of the Company,
his perceived importance to the continued success of the Company, his four-year
commitment to lead the Company and the Company's financial performance, as
measured by asset growth, revenue growth, cash flow growth and total return to
shareholders, under Mr. Gosman's leadership.
Under certain circumstances, Section 162(m) of the Internal Revenue Code
denies a deduction for compensation in excess of $1 million paid to an
individual who is the chief executive officer or one of the four next most
highly paid officers of a corporation. In general, compensation from all sources
is taken into account, including salary, bonus and income realized from the
exercise of non-qualified stock options. Because it is a real estate investment
trust, and based on the advice of counsel, the Company believes that the denial
of deductions by Section 162(m) would have no adverse impact on the Company. A
real estate investment trust is subject to tax on its "real estate investment
trust taxable income," which is taxable income subject to adjustments and
reduced by a deduction for dividends paid. The Company expects to pay sufficient
dividends such that it will have no real estate investment trust taxable income
even if Section 162(m) were to be applicable to compensation paid to one or more
of its officers.
BONUS AWARDS
Executive officers of the Company were awarded cash bonuses in 1996 based
on the Compensation Committee's assessment of the Company's performance in 1996.
The performance measures reviewed by the Compensation Committee included the
Company's revenue growth, cash flow growth and total return to shareholders
compared to that of its competitors. These measures were assigned approximately
equal weight in the Compensation Committee's determinations. The Company's
performance in each of these measures
3
<PAGE> 6
generally compared favorably to its competitors' corresponding results. The
increases in the bonuses paid to executive officers in 1996 over those paid in
1995 were based in large part on these results.
Pursuant to the Employment Agreement, Mr. Gosman received bonus
compensation in 1996 which consisted solely of Shares. In its 1992 negotiations
regarding the amount of bonus compensation to be paid to Mr. Gosman each year
during the four-year term of the Employment Agreement, the Board of Trustees
considered the performance measures listed above, Mr. Gosman's unique abilities
and experience and his perceived contributions to the Company's financial
performance in 1991 and 1992, including the approximately 57% and 10% total
returns (comprised of stock price appreciation and dividend yield) on Shares in
1991 and 1992, respectively. Mr. Gosman's annual bonus under the Employment
Agreement is paid in Shares in order to further align his interests with those
of the Company's shareholders.
OTHER COMPENSATION PLANS
The Company maintains certain broad-based employee benefit plans in which
Mr. Gosman and the Senior Executives participated. These plans include a 401(k)
savings plan, life, disability and health insurance plans and allowances for
automobile use. These plans are not directly or indirectly tied to Company
performance.
Submitted by,
Thomas J. Magovern, Chairman
Philip L. Lowe
Frederick W. Zuckerman
REPORT OF THE STOCK OPTION COMMITTEE
The Board's Stock Option Committee administers the Company's 1988 Stock
Option Plan and the Amended and Restated 1992 Equity Incentive Plan. Stock
options and stock grants are awarded under these plans in order to provide
incentives to trustees, officers and key employees of the Company to maximize
their efforts on behalf of the Company, to attract and retain those highly
competent individuals upon whose judgment, initiative and leadership the
Company's continuing success largely depends and to align the interests of the
trustees, officers and key employees of the Company with those of the Company's
shareholders. The size of individual option and stock grants is determined by
the Stock Option Committee based on its comparison of option and stock grants to
executives with similar responsibilities in other companies and the executive's
level of responsibility and relative importance to the operations of the
Company. In recognition of the Company's favorable 1995 financial results, the
Stock Option Committee granted stock awards in 1996 to the Senior Executives, as
reflected in certain of the tables appearing hereinafter.
It is the present policy of the Stock Option Committee to review
periodically the Company's stock option and stock grant award levels and the
over-all effectiveness of the Company's equity incentive plans in achieving the
objectives of the Company.
Submitted by,
Gerald Tsai, Jr., Chairman
Edward W. Brooke
4
<PAGE> 7
<TABLE>
The following table sets forth the compensation paid to the Company's Chief
Executive Officer (the "CEO") and the four most highly compensated executive
officers other than the CEO in 1996 for services rendered in all capacities to
the Company and its subsidiaries during the fiscal years ended December 31,
1996, 1995 and 1994.
SUMMARY COMPENSATION TABLE
<CAPTION>
ALL OTHER
ANNUAL COMPENSATION COMPENSATION
NAME AND ---------------------------- ------------
PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(1)
- ------------------------------------------------- ---- --------- -------- ------
<S> <C> <C> <C> <C>
Abraham D. Gosman................................ 1996 900,000 885,938(2) 179,249(3)
Chairman and CEO 1995 767,559 834,375(2) 375,754(3)
1994 900,000 806,250(2) 5,344
David F. Benson.................................. 1996 290,000 335,997(4) 6,370
President and Treasurer 1995 275,000 123,060(4) 6,240
1994 250,000 65,253(4) 5,367
Michael S. Benjamin.............................. 1996 175,000 240,318(5) 6,305
Senior Vice President and Secretary 1995 165,000 84,459(5) 6,175
1994 150,000 40,191(5) 5,138
Michael F. Bushee................................ 1996 175,000 240,318(5) 6,305
Chief Operating Officer 1995 165,000 84,459(5) 6,175
1994 150,000 40,191(5) 5,096
Stephen H. Press................................. 1996 150,000 79,523(6) 5,677
Vice President of Acquisitions 1995 143,000 63,143(6) 5,537
1994 130,000 30,000 5,105
</TABLE>
- ---------------
(1) Includes 401(k) plan contribution of $4,750, $4,750, $4,750, $4,750 and
$4,750 in 1996, $4,620, $4,620, $4,620, $4,620 and $4,610 in 1995, and
$4,583, $4,589, $4,609, $4,610 and $4,619 in 1994, and term life insurance
premium payments of $785, $1,620, $1,555, $1,555 and $927 in 1996, $0,
$1,620, $1,555, $1,555, and $927 in 1995, and $761, $778, $529, $486 and
$486 in 1994, on behalf of Messrs. Gosman, Benson, Benjamin, Bushee and
Press, respectively.
(2) For the years 1996, 1995 and 1994, relates to the Company's issuance to Mr.
Gosman of (i) 25,000 shares in four equal quarterly installments valued at
$33.50, $33.75, $35.125 and $39.375 per Share on April 12, 1996, July 8,
1996, October 3, 1996 and January 3, 1997; (ii) 25,000 shares in four equal
quarterly installments valued at $29.50, $34.25, $34.625 and $35.125 per
Share on April 4, 1995, July 3, 1995, October 2, 1995 and January 2, 1996;
and (iii) 25,000 shares in four equal quarterly installments valued at
$33.125, $33.875, $31.625 and $30.375 per Share on April 11, 1994, July 6,
1994, October 4, 1994 and January 3, 1995. All issuance prices were the
closing prices for Shares on the New York Stock Exchange on the respective
dates of issuance.
(3) $173,714 and $371,134 of which reflects the current dollar value of the
benefit to Mr. Gosman of the portion of the premium paid by the Company in
1996 and 1995, respectively, with respect to a split-dollar life insurance
agreement (see "Further Information Regarding the Board of Trustees and
Executive Officers" below for a description of such agreement). The benefit
for each of 1996 and 1995 was determined by calculating the time value of
money (using the applicable short-term federal funds rate of 5.76% and
6.62%) of the premium paid by the Company in 1996 ($2,951,045) for the
period from May 19, 1996 (the date on which the premium was paid) until June
18, 1997 (which is the earliest date on which the Company could terminate
the agreement and obtain a refund of the premium paid); and in 1995
($2,969,260) for the period from May 19, 1995 to June 18, 1997.
(4) For the years 1996, 1995 and 1994, $121,832, $48,060 and $20,253 of which
relates to the Company's issuance to Mr. Benson of (i) 428 Shares and 3,185
Shares valued at $33.50 and $33.75 per Share on
5
<PAGE> 8
April 12, 1996 and July 8, 1996; (ii) 1,440 Shares in four equal quarterly
installments valued at $29.50, $34.25, $34.625 and $35.125 per Share on
April 4, 1995, July 3, 1995, October 2, 1995 and January 2, 1996; and (iii)
628 Shares in four equal quarterly installments valued at $33.125, $33.875,
$31.625 and $30.375 per Share on April 11, 1994, July 6, 1994, October 4,
1994 and January 3, 1995. All issuance prices were the closing prices for
Shares on the New York Stock Exchange on the respective dates of issuance.
(5) For the years 1996, 1995 and 1994, $130,318, $29,459 and $10,191 of which
relates to the Company's issuance to each of Messrs. Benjamin and Bushee of
(i) 257, 2,324, 945 and 256 Shares valued at $33.50, $33.75, $35.125 and
$39.375 per Share on April 12, 1996, July 8, 1996, October 3, 1996 and
January 3, 1997; (ii) 847 Shares in four equal quarterly installments valued
at $29.50, $34.25, $34.625 and $35.125 per Share on April 4, 1995, July 3,
1995, October 2, 1995 and January 2, 1996; and (iii) 316 Shares in four
equal quarterly installments valued at $33.125, $33.875, $31.625 and $30.375
per Share on April 11, 1994, July 6, 1994, October 4, 1994 and January 3,
1995. All issuance prices were the closing prices for Shares on the New York
Stock Exchange on the respective dates of issuance.
(6) For the years 1996 and 1995, $24,523 and $8,144 of which relates to the
Company's issuance to Mr. Press of (i) 692 Shares in four equal quarterly
installments valued at $33.50, $33.75, $35.125 and $39.375 per Share on
April 12, 1996, July 8, 1996, October 3, 1996 and January 3, 1997 and (ii)
244 Shares in four equal quarterly installments valued at $29.50, $34.25,
$34.625 and $35.125 per Share on April 4, 1995, July 3, 1995, October 4,
1995 and January 2, 1996. All issuance prices were the closing prices for
Shares on the New York Stock Exchange on the respective dates of issuance.
The following table sets forth information concerning exercises of stock
options by the following persons during the fiscal year ended December 31, 1996
and the number and value of their stock options at December 31, 1996.
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT OPTIONS AT
ACQUIRED ON VALUE 12/31/96(#) 12/31/96($)
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($)(1) UNEXERCISABLE UNEXERCISABLE(2)
---- ----------- -------- ------------- ----------------
<S> <C> <C> <C> <C>
Abraham D. Gosman................. 0 0 191,353/40,000 2,713,728/395,000
David F. Benson................... 0 0 35,706/40,000 413,457/395,000
Michael S. Benjamin............... 13,333 64,998 0/26,667 0/263,337
Michael F. Bushee................. 13,333 63,332 0/26,667 0/263,337
Stephen H. Press.................. 20,000 140,000 23,332/11,668 230,403/115,221
</TABLE>
- ---------------
(1) Market value of underlying securities at exercise, less the exercise price.
(2) Market value of $40.00 as of December 31, 1996, less the exercise price.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Company during its most recent fiscal year, Forms 5 and
amendments thereto furnished to the Company with respect to its most recent
fiscal year and written representations furnished to the Company, no officer,
director or 10% beneficial owner failed to timely file a required Form except
that John G. Demeritt, the Company's Controller filed a Form 4 for a transaction
which occurred on June 18, 1996 approximately ten (10) days after the filing
deadline.
6
<PAGE> 9
PERFORMANCE GRAPH(1)
<TABLE>
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total shareholder return on the Company's Shares against the
cumulative market-weighted return of the Standard & Poor's Composite 500 Stock
Index and the National Association of Real Estate Investment Trusts ("NAREIT")
All REIT Total Return Index (which is comprised of all tax-qualified real estate
investment trusts, without regard to investment focus, listed on the New York
Stock Exchange, American Stock Exchange and NASDAQ National Market System) for
the period of five fiscal years commencing January 1, 1992 and ending December
31, 1996.
[GRAPH]
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) MEDITURST S&P 500 NAREIT
<S> <C> <C> <C>
12/31/91 100.00 100.00 100.00
1992 110.36 107.67 112.18
1993 124.91 118.43 132.98
1994 126.75 119.97 134.05
1995 156.68 164.88 158.60
1996 192.25 202.74 215.30
</TABLE>
- ---------------
(1) Assumes that the value of an investment in Meditrust Shares and each index
was $100 on December 31, 1991 and that all dividends were reinvested on a
monthly basis.
ITEM I
ELECTION OF TRUSTEES
It is the intention of the persons named as proxies in the accompanying
form of proxy (unless otherwise indicated) to vote such proxies to elect the
nominees for trustee named in the following table, all of whom are currently
members of the Board of Trustees. If elected, the nominees will serve as
trustees until the next scheduled annual meeting and until their successors are
chosen and qualified. In the event that any of the nominees becomes unavailable
(which is not now anticipated by the Company), the persons named as proxies have
discretionary authority to vote for a substitute or to reduce the number of
trustees to be fixed and elected. The Board of Trustees, which currently
consists of seven persons, has no reason to believe that any of said persons
will be unwilling or unable to serve if elected. The trustees will be elected by
a plurality of the votes cast at the Meeting by the holders of Shares entitled
to vote at the Meeting. The affirmative vote of the holders of a majority of the
outstanding Shares of the Company present or represented at the Meeting and
7
<PAGE> 10
entitled to vote thereat is required to fix the number of trustees for the
ensuing year, provided that such majority is at least a majority of the
outstanding Shares entitled to vote at the Meeting. Abstentions and broker
non-votes with regard to any item being acted upon at the Meeting will not be
treated as votes cast.
<TABLE>
<CAPTION>
SHARES SUBJECT SHARES
SHARES TO OPTIONS BENEFICIALLY OWNED
BENEFICIALLY EXERCISABLE AS A PERCENTAGE OF
NAME AND PRINCIPAL OCCUPATION OR TRUSTEE OWNED AS OF WITHIN 60 DAYS SHARES OUTSTANDING
EMPLOYMENT AGE SINCE 3/31/97(1) OF 3/31/97 AS OF 3/31/97
-------------------------------- --- ------- ---------- -------------- ------------------
<S> <C> <C> <C> <C> <C>
Abraham D. Gosman..................... 68 1985 978,564(2) 211,353 1.6%
Chairman and Chief Executive Officer
of the Company
David F. Benson....................... 48 1991 66,137 55,706 (3)
President and Treasurer of the
Company
Edward W. Brooke...................... 77 1985 92,555(4) 40,000 (3)
Partner in the law firm of
O'Connor & Hannan
Philip L. Lowe........................ 79 1987 43,000(5) 40,000 (3)
Principal of Philip L. Lowe and
Associates, a consulting firm
Thomas J. Magovern.................... 54 1985 27,250 20,000 (3)
Regional Vice President,
Real Estate Asset Management, Summit
Bank, a New Jersey banking
institution
Gerald Tsai, Jr....................... 68 1992 28,000 20,000 (3)
Chairman, Chief Executive Officer
and President of Delta Life
Corporation, an annuity company
Frederick W. Zuckerman................ 62 1990 25,000 20,000 (3)
General Partner, Zuckerman,
Firstenberg and Associates LLC, an
investment banking and financial
advisory firm
All trustees and officers as a group
(14 in number)...................... -- -- 1,353,747(6) 480,389 2.2%
</TABLE>
- ---------------
(1) Unless otherwise indicated, the number of Shares stated as being owned
beneficially includes (i) Shares beneficially owned by spouses, minor
children and/or other relatives in which the trustee may share voting or
investment power and (ii) any Shares listed as being subject to options
exercisable within 60 days of March 31, 1997.
(2) Includes 162,000 Shares owned by A.M.A. Financial Corporation, of which Mr.
Gosman is President and a 98% shareholder.
(3) Less than 1%.
(4) Does not include 817 Shares owned by Mr. Brooke's wife, 2,271 Shares owned
of record by Mr. Brooke as custodian for his son and 2,100 Shares owned of
record by Mr. Brooke as trustee for his grandchildren, as to which Shares
Mr. Brooke disclaims any beneficial interest.
(5) Does not include 1,500 Shares owned by Mr. Lowe's wife, as to which Shares
Mr. Lowe disclaims any beneficial interest.
8
<PAGE> 11
(6) Does not include an aggregate of 7,038 Shares owned by or for parents,
spouses or children, as to which Shares the trustees or officers disclaim
any beneficial interest.
Abraham D. Gosman has been the Chairman of the Company since its
organization in 1985 and became Chief Executive Officer in February 1991. Mr.
Gosman is also the Chairman of the Board, Chief Executive Officer and President
of PhyMatrix Corp., a publicly traded physician practice management company
which renders managerial and administrative services to a variety of specialized
medical care and treatment providers. Additionally, Mr. Gosman is Chairman of
the Board of CareMatrix Corporation, a publicly traded company which provides a
full range of quality senior residential services in assisted living settings.
Mr. Gosman was the Chief Executive Officer and Chairman of the Board of The
Mediplex Group, Inc. ("Mediplex"), an operator and developer of health care
facilities, from August 1990 until June 1994, when Mediplex was acquired by Sun
Healthcare Group, Inc. Mr. Gosman has been in the health care and development
business for more than thirty years.
David F. Benson has been President of the Company since September 1991 and
Treasurer since October 1996. Mr. Benson also served as Treasurer of the Company
from January 1986 to May 1992. He was Treasurer of Mediplex from January 1986
through June 1987. He was previously associated with Coopers & Lybrand L.L.P.,
independent accountants, from 1979 to 1985. Mr. Benson is a trustee of
Mid-Atlantic Realty Trust and a member of the Board of Directors of Harborside
Healthcare Corporation and Nursing Home Properties, Plc.
Edward W. Brooke has been a partner of O'Connor & Hannan, a Washington,
D.C. law firm since 1979. From 1979 until October 1990 he was Of Counsel to
Csaplar & Bok, a Boston law firm. He was United States Senator from
Massachusetts from January 1967 to January 1979 and the Massachusetts Attorney
General from 1963 to 1967.
Philip L. Lowe has been a principal of Philip L. Lowe and Associates, a
consulting firm, and its predecessors for more than five years and until March
1997 had been a director of Analog Devices, Inc. for 17 years.
Thomas J. Magovern has been a Regional Vice President, Real Estate Asset
Management of Summit Bank (successor to United Jersey Bank), a New Jersey
banking institution, since November 1995. He was a principal of Nationwide
Financial Corp., a real estate consulting firm from September 1993 to October
1995. Mr. Magovern was Executive Vice President of Northeast Savings, F.A. from
January 1991 until February 1993. Prior to that time he had been Senior Vice
President of City Savings Bank, F.S.B. from April 1989 until January 1991 and a
Vice President of that bank for more than five years.
Gerald Tsai, Jr. has been the Chairman, Chief Executive Officer and
President of Delta Life Corporation, an annuity company, since February 1993.
Mr. Tsai retired in 1991 as Chairman of the Executive Committee of the Board of
Directors of Primerica Corporation (a diversified financial services company),
which position he held since December 1988. From January 1987 to December 1988,
Mr. Tsai was Chairman, and from April 1986 to December 1988, he was Chief
Executive Officer of Primerica Corporation. He is a director of Rite Aid
Corporation, Sequa Corporation, Triarc Companies, Inc., Proffitt's, Inc. and
Zenith National Insurance Corp. Mr. Tsai is also a Trustee of Boston University
and New York University Medical Center.
Frederick W. Zuckerman has been a general partner in the merchant banking
and financial advisory firm of Zuckerman, Firstenberg & Associates LLC, since
January 1995. He was Vice President and Treasurer of International Business
Machines Corporation, an information technology corporation, from September 1993
to January 1995. He was Senior Vice President and Treasurer of RJR Nabisco,
Inc., a consumer food and tobacco producer, from February 1991 to September
1993. Mr. Zuckerman was Vice President and Treasurer of Chrysler Corporation, a
motor vehicle manufacturer, from December 1981 until September 1990. Mr.
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Zuckerman is a director of The Singapore Fund, The Turner Corporation, The Japan
Equity Fund, NVR, Inc., Olympic Financial Ltd., Caere Corp. and Designer
Holdings, Inc.
The Board of Trustees of the Company met 14 times in 1996. Each trustee
attended at least 75% of the meetings of the Board of Trustees and all
committees on which he served in 1996.
The Executive Committee, consisting of Messrs. Brooke, Gosman and
Zuckerman, exercises all the powers of the Board of Trustees between meetings of
the Board of Trustees, except such powers as are reserved to the Board of
Trustees by law. The Executive Committee met 23 times in 1996.
The Audit Committee, consisting of Messrs. Lowe, Magovern and Tsai, confers
with Coopers & Lybrand L.L.P., independent accountants, regarding the plans,
scope and results of their audits and any recommendations they may have with
respect to internal accounting controls and other matters relating to accounting
procedures and the books and records of the Company. The Audit Committee met
four times in 1996.
The Nominating Committee, consisting of Messrs. Gosman and Brooke, makes
recommendations to the Board of Trustees concerning the Board's size and
composition and suggests prospective candidates for trustee. The Nominating
Committee met once during 1996. The Nominating Committee will consider
shareholder recommendations for nominees for trustee. Shareholders of the
Company wishing to make recommendations should write to the Nominating Committee
c/o Michael S. Benjamin, Esquire, Senior Vice President and Secretary,
Meditrust, 197 First Avenue, Needham Heights, Massachusetts 02194.
The Personnel and Compensation Committee, consisting of Messrs. Magovern,
Lowe and Zuckerman, reviews the compensation of and other employment matters
relating to the Company's officers and administrative employees. The Personnel
and Compensation Committee met two times in 1996.
The Stock Option Committee, consisting of Messrs. Tsai and Brooke,
administers the Company's 1988 Stock Option Plan and Amended and Restated 1992
Equity Incentive Plan. The Stock Option Committee did not hold any formal
meetings during 1996.
The Finance Committee, consisting of Messrs. Zuckerman, Benson and Tsai,
reviews and recommends to the Board debt and equity financing opportunities
available to the Company. The Finance Committee did not hold any formal meetings
during 1996.
The Company pays each trustee who is not otherwise an employee of the
Company a fee of $30,000 per year for services as a trustee plus $1,000 per day
for attendance at each meeting of the full Board of Trustees. In addition, the
Chairman and each member of a committee of the Board of Trustees are paid $1,250
and $1,000, respectively, for attendance at a committee meeting. The Company
reimburses the trustees for travel expenses incurred in connection with their
duties as trustees of the Company. In addition, the Company from time to time
pays trustees additional fees in connection with various special projects.
FURTHER INFORMATION REGARDING THE BOARD OF TRUSTEES AND EXECUTIVE OFFICERS
In March 1996, the Company issued to Mr. Robert Cataldo, a former Trustee
of the Company who resigned on January 31, 1997, 7,435 Shares valued at
approximately $250,000 and on January 31, 1997 paid $57,500 to Mr. Cataldo, all
for services to the Company relating to the negotiation of selected loans.
In December 1996, the Company issued to Mr. Brooke 3,039 Shares valued at
approximately $117,000 for services to the Company during 1996.
In July 1996 and January 1997, the Company issued to Mr. Hugh L. Carey, a
former Trustee of the Company who resigned on February 12, 1996, 7,380 Shares
valued at approximately $250,000, and 3,726 Shares valued at approximately
$150,000, respectively, for services rendered to the Company in 1996.
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The Company has adopted a Deferred Compensation Plan for trustees of the
Company pursuant to which the trustees may defer receipt of fees. Currently, no
trustee participates in such plan.
In January 1996, the Company adopted a Trustee Retirement Plan for trustees
of the Company who have served on the Board for at least five years and who are
not employed by the Company upon their retirement from the Board. Pursuant to
the plan, the Company will issue to each eligible retired trustee annual
installments of Shares having a fair market value equal to the amount of the
basic trustee fee paid to such trustee (currently $30,000) during the last full
year of such trustee's service on the Board plus the amount payable to such
trustee for attendance at six Board meetings (currently $6,000) during such
year. Annual benefits will be paid for the number of years equal to the number
of years that the retired trustee served on the Board.
During 1996, the Company granted secured loans aggregating up to $240,000
to David F. Benson, with a weighted average interest rate of approximately 6%
per annum. As of December 31, 1996, the balance outstanding on these loans was
$151,039, all of which is payable on or before August 1, 1997.
There are no family relationships among any of the trustees or executive
officers of the Company.
Effective January 1, 1993, Abraham D. Gosman entered into the Employment
Agreement pursuant to which he will serve as Chief Executive Officer of the
Company. The Employment Agreement had an initial term of four years and has been
extended through December 31, 1997. Mr. Gosman's base compensation is $900,000
per year. In addition, Mr. Gosman will receive annually 25,000 Shares during the
term of the Employment Agreement pursuant to the Company's Amended and Restated
1992 Equity Incentive Plan. In the event of a "Change of Control" (which is
defined as the acquisition by any person or group of 20% or more of the Shares,
but only if a majority of the "Continuing Trustees" (defined in the Employment
Agreement generally as the current trustees and any trustee nominated or elected
by the current trustees) disapprove of such acquisition), Mr. Gosman shall be
paid his base salary through the remaining term of the Employment Agreement,
less the amount of salary and benefits payable to Mr. Gosman by a new employer.
Mr. Gosman may upon 30 days' prior written notice to the Company demand the
present value of such amount in a lump sum. Mr. Gosman shall also be entitled to
participate in benefit plans of the Company until he is employed by a new
employer. In the event of a termination resulting from a cause other than death,
disability or a "Termination For Cause" (defined in the Employment Agreement as
a termination due to a material breach of the Employment Agreement or the
commission of certain other wrongful acts), Mr. Gosman shall be paid his base
salary for one year, less the amount of compensation payable to Mr. Gosman by a
new employer. In the event of a Termination For Cause or termination after such
annual review of the Board of Trustees, Mr. Gosman is not entitled to receive
any severance payments.
In May 1995, the Company entered into a Split-Dollar Agreement with a trust
established by Mr. Gosman (the "Insurance Trust"), pursuant to which the Company
and the Insurance Trust share in the premium costs of a life insurance policy
purchased by the Insurance Trust that will pay a benefit of approximately $50
million upon the death of Mr. Gosman. Pursuant to such agreement, the Company
has agreed to advance the portion of the policy premiums not related to the term
life insurance portion of the policy. The Company is entitled to reimbursement
of the amounts advanced, without interest, upon the first to occur of (a) Mr.
Gosman ceasing to be employed by the Company, (b) the death of Mr. Gosman or (c)
the surrender of the policy. The Company's right to reimbursement is secured by
an assignment of the life insurance policy and a promissory note of Mr. Gosman
in the amount of the excess, if any, of the premiums paid by the Company over
the cash surrender value of the insurance policy.
In connection with the Split-Dollar Agreement, Mr. Gosman agreed with the
Company that if the Split-Dollar Agreement is in effect at the time of his death
and the net death benefit payable to the Insurance Trust is at least $24
million, then no shares owned by Mr. Gosman at his death will be sold by any of
his heirs during
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the first year following his death and no more than 100,000 of such Shares will
be sold during any three-month period in the second, third and fourth years
following his death.
CERTAIN TRANSACTIONS
The Company currently leases its principal executive offices from Continuum
Care of Massachusetts, Inc. ("CCM"), which is wholly-owned by Mr. Gosman and his
two adult sons. The lease provides for an average annual rental fee of $181,776
over the initial five-year term of the lease, which expires on March 31, 1999.
The lease term may be extended for an additional term of one year and ten
months.
In April 1995, the Company provided $11,287,581 of financing to an
affiliate of Life Care Centers of America, Inc. ("Life Care") for the
construction of a health care facility in West Bridgewater, Massachusetts. Life
Care retained CCM to construct the facility pursuant to a turnkey development
agreement in such amount, of which approximately $800,000 has not yet been paid.
Final payment will occur upon the achievement of specified performance criteria
by the facility.
During 1995 and 1996, the Company agreed to provide mortgage and
sale/leaseback financing in the aggregate amount of $150,355,342 (of which
$119,753,456 had been funded through March 21, 1997) to entities controlled
directly or indirectly by Mr. Gosman for the construction and permanent
financing of six health care facilities located in Palm Beach, Florida (three
facilities), Princeton, New Jersey, Needham, Massachusetts and Dedham,
Massachusetts.
During 1995, 1996 and 1997, the Company also agreed to provide mortgage
financing in the aggregate of $229,050,342 (of which $175,075,157 had been
funded through March 21, 1997) to certain limited partnerships affiliated with
the DASCO Companies in which Mr. Gosman holds a minority equity interest. Mr.
Gosman owns from 7.125% to 47.5% of the aggregate interests in such limited
partnerships.
The Company paid $80,220 and $40,110 to Chancellor Aviation Corporation and
Magnum Aviation Services Corporation, respectively, each of which is owned by
Mr. Gosman, in connection with certain services rendered to the Company in 1996.
All of the terms and conditions of the above transactions and arrangements
were approved by the Company's Independent Trustees. The Board of Trustees
believes that the Company entered into the above transactions in the ordinary
course of its business, and the terms of these transactions and arrangements are
fair as to the Company and were made on terms not less favorable to the Company
than those prevailing at the time for comparable transactions and arrangements
with other persons.
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P. were the independent accountants of the Company
for fiscal 1996. The Board of Trustees intends to select the independent
accountants of the Company for fiscal 1997 at its annual meeting on May 7, 1997.
Representatives of Coopers & Lybrand L.L.P. will be present at the Meeting and
will be afforded an opportunity to make a statement if they desire to do so.
Such representatives of Coopers & Lybrand L.L.P. will also be available at that
time to respond to appropriate questions addressed to the officer presiding at
the Meeting.
PROPOSALS BY SHAREHOLDERS
If any shareholder intends to present a proposal at the Company's next
Annual Meeting of Shareholders and wishes to request that the same be included
in the proxy statement and form of proxy to be furnished on
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behalf of the Board of Trustees with respect to such meeting, a copy of such
proposal, meeting the eligibility standards promulgated by the Securities and
Exchange Commission, must be received by the Company at its principal executive
offices, 197 First Avenue, Needham Heights, Massachusetts 02194 Attention:
Michael S. Benjamin, Esquire, Senior Vice President and Secretary on or before
December 15, 1997.
OTHER MATTERS
The Board of Trustees knows of no business, matters or proposals which will
be presented for consideration at the Meeting other than as discussed above.
However, if any such business, matters or proposals should come before the
Meeting, it is the intention of the persons named in the enclosed form of proxy
to vote the proxies with respect to any such business, matters or proposals in
accordance with their best judgment.
The cost of preparing, assembling and mailing the proxy material will be
borne by the Company. The Company will request persons, firms and corporations
holding Shares in their names, or in the name of their nominees, which Shares
are beneficially owned by others, to send proxy material to and obtain proxies
from such beneficial owners. The Company will reimburse such holders for their
reasonable expenses in so doing. Employees of the Company may solicit proxies by
use of telegraphic and telephonic communications, in addition to the use of the
mails.
By Order of the Board of Trustees
/s/ Michael S. Benjamin
MICHAEL S. BENJAMIN
Senior Vice President and Secretary
April 10, 1997
THE DECLARATION OF TRUST ESTABLISHING MEDITRUST, DATED AUGUST 6, 1985, AS
AMENDED (THE "DECLARATION"), A COPY OF WHICH IS DULY FILED IN THE OFFICE OF THE
SECRETARY OF STATE OF THE COMMONWEALTH OF MASSACHUSETTS, PROVIDES THAT THE NAME
"MEDITRUST" REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS
TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY; AND THAT NO TRUSTEE, OFFICER,
SHAREHOLDER, EMPLOYEE OR AGENT OF THE COMPANY SHALL BE HELD TO ANY PERSONAL
LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, THE
COMPANY. ALL PERSONS DEALING WITH THE COMPANY, IN ANY WAY, SHALL LOOK ONLY TO
THE ASSETS OF THE COMPANY FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY
OBLIGATION.
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<TABLE>
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 7, 1997
MEDITRUST
The undersigned, having received the Notice of Annual Meeting and the Board of Trustees' Proxy Statement, hereby appoint(s)
Abraham D. Gosman, Edward W. Brooke and David F. Benson, and each of them, Proxies of the undersigned (with full power of
substitution) to attend the above Annual Meeting of Shareholders of Meditrust to be held May 7, 1997, and all adjournments thereof
(the "Meeting"), and there to vote all shares of beneficial interest of Meditrust that the undersigned would be entitled to vote,
if personally present, in regard to all matters which may come before the Meeting.
The undersigned hereby confer(s) upon the Proxies, and each of them, discretionary authority (i) to consider and act upon such
business, matters or proposals other than the proposals set forth below as may properly come before the Meeting and (ii) with
respect to the election of trustees in the event that any of the nominees is unable or unwilling to serve if elected. THIS PROXY
WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER SPECIFIED HEREIN. IF NO SPECIFICATION IS MADE, THE PROXIES INTEND TO VOTE (I)
TO FIX THE NUMBER OF TRUSTEES AT SEVEN, AND (II) FOR ALL NOMINEES.
<S> <C>
[X] Please mark votes as in this example
1. To fix the number of trustees at seven and to vote for the election of [ ] FOR all nominees [ ] WITHHELD from all nominees
all nominees listed below (except as otherwise indicated).
NOMINEES: Abraham D. Gosman David F. Benson Edward W. Brooke Thomas J. Magovern Philip L. Lowe
Gerald Tsai, Jr. and Frederick W. Zuckerman
- ------------------------------------------------------------------------------------------------------------------------------------
For, except vote withheld from nominee(s) listed above
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
CONTINUED AND TO BE SIGNED AND DATED ON REVERSE SIDE (SEE REVERSE SIDE)
IN SIGNING, PLEASE WRITE NAME(S) EXACTLY AS APPEARING IN THE IMPRINT ON MARK HERE FOR
THIS CARD. FOR SHARES HELD JOINTLY, EACH JOINT OWNER SHOULD SIGN. IF ADDRESS CHANGE
SIGNING AS EXECUTOR, OR IN ANY OTHER REPRESENTATIVE CAPACITY, OR AS AN AND NOTE BELOW [ ]
OFFICER OF A CORPORATION, PLEASE INDICATE YOUR FULL TITLE AS SUCH.
Date:
----------------------------------------------------- ----------------------------------------------------
Signature
Date:
----------------------------------------------------- ----------------------------------------------------
Signature
</TABLE>
