<PAGE>
================================================================================
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:
[_] 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 Section 240.14a-11(c) or Section 240.14a-12
NATIONWIDE HEALTH PROPERTIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LOGO OF NATIONWIDE HEALTH PROPERTIES, INC.]
-------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 17, 1998
To the Stockholders:
The Annual Meeting of Stockholders of Nationwide Health Properties, Inc.
(the "Company") will be held at The Four Seasons Hotel, 690 Newport Center
Drive, Newport Beach, California on April 17, 1998 at 2:00 p.m., for the
following purposes:
1. To elect three directors;
2. To ratify the selection of Arthur Andersen LLP as independent
accountants for the year ending December 31, 1998; and
3. To transact such other business as may properly come before the
meeting and at any adjournments thereof.
The nominees for election as directors are John C. Argue, David R. Banks and
Milton J. Brock, Jr., all of whom are currently serving as directors of the
Company.
The Board of Directors has fixed the close of business on March 6, 1998 as
the record date for the determination of stockholders who are entitled to
notice of and to vote at the meeting and at any adjournments thereof.
We encourage you to attend the meeting. Whether you are able to attend or
not, we urge you to indicate your vote on the enclosed proxy card FOR the
election of the directors named in the attached Proxy Statement and FOR the
ratification of Arthur Andersen LLP as independent accountants for the year
ending December 31, 1998. Please sign and return the proxy card promptly in
the enclosed envelope. If you attend the meeting, you may vote in person even
if you have previously mailed a proxy card.
By Order of the Board of Directors
R. Bruce Andrews
President and Chief Executive
Officer
March 9, 1998
Newport Beach, California
<PAGE>
NATIONWIDE HEALTH PROPERTIES, INC.
610 NEWPORT CENTER DRIVE, SUITE 1150
NEWPORT BEACH, CALIFORNIA 92660
----------------
PROXY STATEMENT
----------------
ANNUAL MEETING OF STOCKHOLDERS
APRIL 17, 1998
The accompanying proxy is solicited by the Board of Directors of Nationwide
Health Properties, Inc. (the "Company") to be voted at the Annual Meeting of
Stockholders to be held on April 17, 1998, and at any adjournments of the
meeting. It is anticipated that this proxy material will be mailed on or about
March 9, 1998.
A stockholder giving a proxy has the power to revoke it at any time before
it is exercised. A proxy may be revoked by filing with the Secretary of the
Company (i) an instrument revoking the proxy or (ii) a duly executed proxy
bearing a later date. The powers of the proxy holders will be suspended if the
person executing the proxy is present at the meeting and elects to vote in
person. If the proxy is neither revoked nor suspended, it will be voted by
those persons therein named.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The outstanding voting securities of the Company as of March 6, 1998, the
record date for this solicitation, consisted of 43,350,449 shares of Common
Stock, par value $.10 per share ("Common Stock"). Stockholders of record as of
the close of business on March 6, 1998 are entitled to notice of and to vote
at the meeting and at any adjournments thereof. Each holder of shares of
Common Stock is entitled to one vote per share on all matters properly brought
before the meeting. Shares represented by proxy or in person at the Annual
Meeting will be tabulated by the inspector of elections appointed for the
meeting and who will also determine whether or not a quorum is present. The
inspector of elections will treat abstentions as shares that are present and
entitled to vote for purposes of determining the presence of a quorum and
(except as noted below) as shares present for other purposes but as unvoted
for purposes of determining the approval of any matter submitted to the
stockholders for a vote. If a broker indicates on the proxy that it does not
have discretionary authority as to certain shares to vote on a particular
matter, those shares will not be considered as present and entitled to vote
with respect to that matter. Stockholders are not permitted to cumulate votes
for the purpose of electing directors or otherwise.
The following table sets forth the names of those stockholders known to the
Company to be the beneficial owners of more than 5% of the Company's
outstanding Common Stock at December 31, 1997.
<TABLE>
<CAPTION>
COMMON STOCK PERCENT OF
BENEFICIALLY OUTSTANDING
BENEFICIAL OWNER OWNED SHARES
---------------- ------------ -----------
<S> <C> <C>
Scudder Kemper Investments, Inc. ............... 3,476,127(1) 8.1%
345 Park Avenue
New York, NY 10154
Morgan Stanley, Dean Witter, Discovery & Co. ... 2,750,420(2) 6.4%
1585 Broadway
New York, NY 10036
</TABLE>
- --------
(1) Scudder Kemper Investments, Inc. had sole dispositive power with respect
to 3,476,127 of such shares, sole voting power with respect to 1,212,102
of such shares and shared voting power with respect to 1,869,700 of such
shares. Share ownership numbers are based on information as of December
31, 1997 obtained from a Schedule 13G filed with the Securities and
Exchange Commission by Scudder Kemper Investments, Inc.
<PAGE>
(2) Morgan Stanley, Dean Witter, Discovery & Co. had shared voting power with
respect to 2,491,320 of such shares and sole voting and dispositive power
with respect to none of such shares. Share ownership numbers are based on
information as of December 31, 1997 obtained from a Schedule 13G filed
with the Securities and Exchange Commission by Morgan Stanley, Dean
Witter, Discovery & Co.
PROPOSAL I
ELECTION OF DIRECTORS
Pursuant to the Company's Articles of Incorporation, the directors have been
divided into three groups. At the meeting, three directors will be elected in
one group to hold office for a term of three years or, in each case, until
their respective successors shall have been duly elected and qualified. The
remaining directors shall continue in office until their respective terms
expire and until their successors have been duly elected and qualified.
The nominees for election to the three positions of director to be voted
upon at the meeting are John C. Argue, David R. Banks and Milton J. Brock, Jr.
Unless authority to vote for the election of directors has been specifically
withheld, the persons named in the accompanying proxy intend to vote for the
election of Messrs. Argue, Banks and Brock to hold office as directors for a
term of three years each or until their respective successors have been duly
elected and qualified. The affirmative vote of a majority of all votes cast at
the Annual Meeting is required for the election of directors.
If any nominee becomes unavailable for any reason (which event is not
anticipated), the shares represented by the enclosed proxy may (unless such
proxy contains instructions to the contrary) be voted for such other person or
persons as may be determined by the holders of such proxies. In no event would
the proxy be voted for more than three nominees.
The following information relates to the nominees for election as directors
of the Company, the other persons whose terms as directors continue after the
meeting, certain executive officers, and all directors and executive officers
of the Company as a group:
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY
EXPIRATION OWNED AT
OF TERM AS FEBRUARY 28,
NAME AGE POSITION DIRECTOR(1) 1998(2)
---- --- -------- ----------- ------------
<S> <C> <C> <C> <C>
Charles D. Miller (S)+x. 70 Chairman of the Board and Director 1999 47,000
R. Bruce Andrews *x..... 57 President, Chief Executive Officer and Director 1999 178,365
John C. Argue........... 66 Director 1998 19,472(3)
David R. Banks +*....... 61 Director 1998 26,200
Sam A. Brooks, Jr .*
(S).................... 59 Director 2000 46,000
Milton J. Brock, Jr. *
x...................... 82 Director 1998 45,400(4)
Jack Samuelson*......... 73 Director 2000 7,863
Mark L. Desmond......... 39 Senior Vice President and Chief Financial Officer 44,598
T. Andrew Stokes........ 50 Senior Vice President of Corporate Development 27,433
John J. Sheehan, Jr. ... 40 Vice President of Corporate Development 9,999
Gary E. Stark........... 42 Vice President and General Counsel 18,999
All directors and executive officers as a group (12 persons).............................. 471,329(2)
</TABLE>
- --------
* Member of Investment Committee
(S)Member of Audit Committee
+ Member of Compensation Committee
x Member of Nominating Committee
(1) All directors were first elected in 1985, except R. Bruce Andrews, who was
elected in October 1989, Jack D. Samuelson, who was elected in October
1994 and John C. Argue who was elected in February 1998.
2
<PAGE>
(2) Except as otherwise noted, all shares are owned beneficially with sole
voting and investment power. Includes stock options exercisable within 60
days of February 28, 1998 as follows: Mr. Andrews: 39,999; Mr. Stokes:
15,333; Mr. Desmond: 13,998; Mr. Stark: 9,999; and Mr. Sheehan: 9,999. In
each instance, shares owned represent less than 1% of the outstanding
Common Stock. In the aggregate for all Directors and Executive Officers as
a group, shares owned represent 1.09% of the outstanding Common Stock.
(3) Such amount includes 9,342 shares held by a pension plan of which Mr.
Argue votes and makes investment decisions and 2,175 shares held by trusts
of which Mr. Argue is trustee. Such amount does not include 3,791 shares
owned by Mr. Argue's wife, as to which Mr. Argue disclaims any beneficial
interest.
(4) Such amount includes 1,600 shares held in trusts for certain of Mr.
Brock's family members, of which Mr. Brock serves as trustee, and 35,400
shares held in a trust, of which Mr. Brock and his wife serve as trustees.
Such amount does not include 6,000 shares owned by Mr. Brock's wife, as to
which Mr. Brock disclaims any beneficial interest.
CHARLES D. MILLER--Chairman of the Board of the Company since February 1998
and a Director of the Company since its inception. Mr. Miller has served as
the Chairman and Chief Executive Officer of Avery Dennison Corporation, a
manufacturer of self-adhesive materials, labels and office products, since
1983. Mr. Miller joined Avery Dennison in 1964 and was elected President and
Chief Operating Officer in 1975, President and Chief Executive Officer in
1977, and to his present position in 1983. He has been a Director of Avery
Dennison since 1975. He is a member of the Board of Directors of the Amateur
Athletic Foundation of Los Angeles, Kids in Sports, L.A. Sports Council,
Edison International, Pacific Life Insurance Company and a Trustee of Johns
Hopkins University and Occidental College. Mr. Miller serves as Chairman of
the Board of United Way of Greater Los Angeles. He is a member of the Advisory
Board of Korn/Ferry International, the California Business Roundtable, and the
Los Angeles Business Advisors.
R. BRUCE ANDREWS--President and Chief Executive Officer of the Company since
September 1989 and a director of the Company since October 1989. Mr. Andrews
had previously served as a director of American Medical International, Inc., a
hospital management company, and served as its Chief Financial Officer from
1970 to 1985 and its Chief Operating Officer in 1985 and 1986. From 1986
through 1989, Mr. Andrews was engaged in various private investments. Mr.
Andrews is also a director of Alexander Haagen Properties, Inc. and ARV
Assisted Living, Inc.
JOHN C. ARGUE--Director. Mr. Argue is Of Counsel and was formerly Senior
Partner of the law firm of Argue, Pearson, Harbison & Myers. Mr. Argue is a
director of Avery Dennison Corporation, CalMat Co., Apex Mortgage Capital,
Inc., TCW Funds, Inc., a registered investment company, and TCW Convertible
Securities Fund, Inc. He is also a trustee of the TCW/DW Family of Funds and
TCW/DW Term Trusts 2000, 2002 and 2003. Mr. Argue also is an advisory director
of LAACO, Ltd.
DAVID R. BANKS--Director. Mr. Banks has served as Chairman and Chief
Executive Officer of Beverly Enterprises, Inc., an operator of nursing
facilities, rehabilitation clinics and specialty hospitals, since October
1995. Mr. Banks joined Beverly Enterprises, Inc. as President and Chief
Operating Officer in October 1979, was elected President and Chief Executive
Officer in May 1989 and was elected Chairman, President and Chief Executive
Officer in March 1990. He has been a director of Beverly Enterprises, Inc.
since September 1979. Mr. Banks is also a director of Ralston Purina Company,
PharMerica, Inc. and Wellpoint Health Networks Inc. Mr. Banks was Chairman of
the Board of the Company from its inception until June 1988.
MILTON J. BROCK, JR.--Director. Mr. Brock served as Chairman of the Board of
the Company from September 1989 to February 1998 and as a director of the
Company since its inception. Mr. Brock served as President and Chief Executive
Officer of the Company from June 1988 to September 1989. Mr. Brock began his
career in 1940 with M. J. Brock & Sons, Inc., a general contractor and real
estate developer. He was elected President in 1959, Chairman and Chief
Executive Officer in 1973 and Chairman Emeritus in 1985 upon his retirement.
Mr. Brock was a director of Bank of America REIT (now BRE Properties) from its
inception until his retirement in 1985, and served for 26 years as a director
of Hollywood Presbyterian Medical Center.
3
<PAGE>
SAM A. BROOKS, JR.--Director. Mr. Brooks has been President and Chief
Executive Officer and Director of Renal Care Group, Inc., an operator of
outpatient dialysis clinics since February 1996 and has been President of
MedCare Investment Corporation, a health care investment company, since May
1991. Mr. Brooks is a director of PhyCor, Inc. and Quorum Health Group, Inc.
Mr. Brooks was Chairman of the Board of the Company from June 1988 to
September 1989. Mr. Brooks served as President and Chief Executive Officer of
the Company from its inception until June 1988. Mr. Brooks was the Chief
Financial Officer of Hospital Corporation of America, a hospital management
company, from 1970 to 1985.
JACK D. SAMUELSON--Director. Mr. Samuelson co-founded Samuelson Brothers, a
real estate contractor and developer, in 1946 and has served as its President
and Chairman of the Board since 1957. Mr. Samuelson is also a director of
Western Staff Services.
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The Board of Directors held 10 meetings during 1997. During that period, no
director attended less than 75% of all meetings of the Board and of committees
on which he served.
The Audit Committee, which met twice in 1997, selects the Company's
independent accountants, fixes the compensation to be paid to such
accountants, reports to the Board with respect to the scope of audit
procedures and reviews compliance with certain policies and procedures of the
Company.
The Investment Committee, which held ten meetings during 1997, has the power
to approve the Company's investments and reviews the Company's investment
policies.
The Compensation Committee, which held 2 meetings in 1997, has been
delegated the functions of the Board with respect to the compensation of the
Company's key management personnel and administration of the Company's Stock
Option Plan and Deferred Compensation Plan.
The Nominating Committee, which met once in 1997, reviews candidates for
director suggested by management, directors, stockholders and others and makes
recommendations to the Board of Directors regarding the composition of the
Board of Directors and selection of individual candidates for election to the
Board of Directors. Suggestions by stockholders for candidates should be
submitted in writing, accompanied by biographical material for evaluation, and
sent to the office of the President, Nationwide Health Properties, Inc., 610
Newport Center Drive, Suite 1150, Newport Beach, California 92660.
Non-employee directors receive compensation for their Board service in the
amount of $24,000 per year. The Chairman receives an additional $12,000 per
year. Committee chairmen receive additional compensation for their Board
Committee service in the amount of $3,600 per year. Non-employee directors
also receive $1,000 for attendance at each meeting of the Board and $500 for
attendance at each committee meeting. The Company reimburses directors for
travel expenses incurred in connection with their performance of duties as
directors of the Company.
Directors who are not full-time officers of the Company receive formula
awards of restricted stock on an annual basis under the Company's Stock Option
Plan. The amount of such awards is 2,000 shares.
In addition, non-employee directors are eligible to participate in the
Retirement Plan for Directors (the "Directors' Retirement Plan"), whereby
individuals who terminate their service as a director with at least five years
of service are entitled to receive an annual retirement benefit from the
Company equal to the aggregate annual director retainer in effect at the time
of the eligible director's termination from the Board. The current retainer
amount is $24,000 per year. Any increases in the annual retainer which take
effect after an eligible director's termination from the Board will
automatically operate to increase the annual retirement benefit under the
Directors' Retirement Plan.
Benefits under the Directors' Retirement Plan will be paid for a period
equal to the number of years of service that the eligible director served on
the Board. Upon death of an eligible director, any benefits under the
Directors' Retirement Plan will be paid to his or her surviving spouse in
accordance with the same payment schedule set forth above until receipt of the
maximum benefit to which the eligible director would have been entitled had he
or she survived or until the death of the eligible spouse, whichever occurs
first.
4
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth for the years ended December 31, 1997, 1996
and 1995, the compensation for services in all capacities to the Company of
those persons who were at December 31, 1997 (i) the chief executive officer
and (ii) the other highly compensated executive officers of the Company whose
total 1997 salary and bonus exceeded $100,000 (the "Named Executive
Officers"). No other individuals served as executive officers during 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------
ANNUAL
COMPENSATION
------------------ RESTRICTED
NAME AND PRINCIPAL STOCK AWARDS STOCK ALL OTHER
POSITION YEAR SALARY($) BONUS($) ($)(1) OPTIONS(#) COMPENSATION($)(2)
- ------------------ ---- --------- -------- ------------ ---------- ------------------
<S> <C> <C> <C> <C> <C> <C>
R. Bruce Andrews, Presi-
dent................... 1997 $400,000 $400,000 -- 40,000 $16,000
& Chief Executive Offi-
cer 1996 380,000 228,000 -- 40,000 15,200
1995 366,000 220,000 $254,625 -- 14,660
T. Andrew Stokes, Senior
Vice................... 1997 166,000 115,000 -- 16,000 6,634
President of
Corporate Development 1996 155,000 62,000 -- 15,000 6,200
1995 126,000 50,400 72,750 -- --
Mark L. Desmond, Senior
Vice................... 1997 159,000 95,000 -- 14,000 6,355
President & Chief Finan-
cial Officer 1996 151,000 60,400 -- 14,000 6,040
1995 126,000 50,400 72,750 -- 5,040
Gary E. Stark, Vice..... 1997 151,000 68,000 -- 10,000 6,076
President & General
Counsel 1996 145,000 43,500 -- 10,000 5,800
1995 120,000 36,000 54,563 -- --
John J. Sheehan, Jr.,
Vice................... 1997 120,000 63,000 -- 10,000 4,153
President of Development 1996 110,000 33,000 -- 10,000 4,400
1995 -- -- -- -- --
</TABLE>
- --------
(1) Restricted stock awards vest five years after the date of issuance. Dollar
amounts shown equal the number of shares of restricted stock awarded
multiplied by the stock price on award date, without giving effect to the
diminution of value attributable to the restrictions on such stock. The
table below shows the number and value of the aggregate restricted stock
holdings as of December 31, 1997 of each Named Executive Officer:
<TABLE>
<CAPTION>
SHARES VALUE
------ ----------
<S> <C> <C>
R. Bruce Andrews........................................ 41,400 $1,055,700
Mark L. Desmond......................................... 10,000 255,000
T. Andrew Stokes........................................ 8,500 216,750
Gary E. Stark........................................... 9,000 229,500
</TABLE>
The value of the aggregate restricted stock holdings is based upon the
closing price of the Company's common stock on December 31, 1997 of $25.50,
without giving effect to the diminution of value attributable to the
restrictions on such stock. Dividends are paid on the restricted stock at
the same rate that the Company pays dividends on all of its shares of Common
Stock.
(2) Such amounts represent the Company's matching contribution to the Named
Executive Officer's deferred compensation plan account and the Company's
contribution to the Named Executive Officer's Simple IRA Plan account.
5
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERCENTAGE EXERCISE
OPTIONS OF TOTAL PRICE EXPIRATION
NAME GRANTED(1) OPTIONS GRANTED ($/SH.)(2) DATE VALUATION(3)
- ---- ---------- --------------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
R. Bruce Andrews........ 40,000 44.44% $23.00 1/17/07 $85,600
Mark L. Desmond......... 14,000 15.56% 23.00 1/17/07 29,960
T. Andrew Stokes........ 16,000 17.78% 23.00 1/17/07 34,240
Gary E. Stark........... 10,000 11.11% 23.00 1/17/07 21,400
John J. Sheehan, Jr..... 10,000 11.11% 23.00 1/17/07 21,400
</TABLE>
- --------
(1) Awards of dividend equivalents accompany the 1997 stock option grants on a
one-for-one basis. Such dividend equivalents are payable in cash until
such time as the corresponding stock option is exercised, based upon a
formula approved by the Compensation Committee. That formula depends on
the Company's performance measured for a minimum of a three-year period
and up to a five-year period by total return to stockholders (increase in
stock price and dividends paid) compared to peer companies and other
companies comprising a general index of real estate investment trusts, in
each case as selected by the Compensation Committee. Dividend equivalents
may be earned in all or in part depending upon the actual total return to
shareholders as compared to peer groups of other real estate investment
trusts.
(2) The market prices on the dates of the grants were the same as the exercise
prices.
(3) Calculated using the Black Scholes option valuation methodology, as
recommended by Strategic Compensation Associates, an executive consulting
firm. In using this methodology, the following variables were utilized:
risk free rate of return of 6.30%; .1645 three-year volatility factor;
6.78% dividend yield; ten-year option term; which yields a Black Scholes
value for such stock options of $2.14. The actual value, if any, that an
executive officer may realize will depend on the excess of the closing
market price over the exercise price on the date the option is exercised
so that there is no assurance that the value realized by an executive
officer will be at or near the value estimated by the Black Scholes model,
which is based on assumptions as to variables such as stock price
volatility, future dividend yield, interest rates and exercise term.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information with respect to the Named
Executive Officers concerning the exercise of stock options during 1997 and
unexercised stock options held as of December 31, 1997:
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
ACQUIRED ON YEAR-END(#) AT FISCAL YEAR-END($)(1)
EXERCISE VALUE ------------------------- -------------------------
NAME (#) REALIZED($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
R. Bruce Andrews........ -- $-- 13,333 66,667 $61,665 $223,335
Mark L. Desmond......... -- -- 4,666 23,334 21,580 78,170
T. Andrew Stokes........ -- -- 5,000 26,000 23,125 86,250
Gary E. Stark........... -- -- 3,333 16,667 15,415 55,835
John J. Sheehan, Jr..... -- -- 3,333 16,667 18,332 61,669
</TABLE>
- --------
(1) Market value of the underlying securities at year-end minus the exercise
price of "in-the-money" stock options.
EXECUTIVE EMPLOYMENT SECURITY POLICY
The Company has adopted an Executive Employment Security Policy which
provides generally that if, within three years following a change of control
of the Company, the employment of any plan participant is
6
<PAGE>
terminated, except under defined circumstances, the participant shall be
entitled to receive payments equal to the person's highest compensation for
twelve to thirty-six months depending upon the participant's length of
employment. These payments would be reduced by one-half of any compensation
received from any new employment. R. Bruce Andrews, Mark L. Desmond, T. Andrew
Stokes, Gary E. Stark and John J. Sheehan, Jr. have been designated as plan
participants.
INTERESTED TRANSACTIONS
TRANSACTIONS WITH MANAGEMENT AND OTHERS
Steven J. Insoft joined the Company as its Vice President of Development in
February 1998. Mr. Insoft, together with certain family members, own entities
which are developing three facilities pursuant to development agreements with
the Company. Upon completion these facilities will be leased by the Company to
these entities. In addition, Mr. Insoft's parents own other entities that
operate four facilities that are either subject to leases with the Company or
have been provided mortgage financing by the Company. During the 1997 calendar
year, the total amount of mortgage and lease payments made by these entities
to the Company was approximately $2,471,000. These transactions were entered
into prior to Mr. Insoft being employed by the Company. The Company believes
that all of the foregoing transactions are on terms and conditions which are
similar to those between the Company and unrelated third parties.
John C. Argue, a newly elected director of the Company, is of counsel to the
law firm of Argue, Pearson, Harbison & Myers. Mr. Argue's law firm performs
legal services from time to time on behalf of the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Banks serves as Chairman and Chief Executive Officer of Beverly
Enterprises, Inc. Mr. Banks is a member of the Company's Compensation
Committee and was Chairman of the Board of Directors of the Company from its
inception until June 1988. At December 31, 1997, Beverly Enterprises, Inc. or
its subsidiaries ("Beverly") leased and operated 40 of the Company's 234 owned
facilities and operated four of the 57 facilities securing the Company's
mortgage loans receivable. Beverly paid aggregate rent, including additional
rent, and interest payments of approximately $19,712,000 to the Company in
1997. The aggregate minimum rent payable in 1998 by Beverly to the Company for
the 40 facilities leased and operated as of December 31, 1997 will be
approximately $13,496,000. Additional rent, based upon increased net patient
revenues of such facilities, may also be payable by Beverly to the Company in
1998. The aggregate interest payable in 1998 by Beverly to the Company for the
mortgage loans will be approximately $684,000.
REPORT OF THE COMPENSATION COMMITTEE
WITH RESPECT TO EXECUTIVE COMPENSATION
Members of the Compensation Committee administer the Company's various
incentive plans, including its stock incentive plan, its annual bonus plan and
its deferred compensation plan. In addition, the Committee reviews
compensation levels of members of management, evaluates the performance of
management and considers management succession. The Committee reviews with the
Board in detail all aspects of compensation for the Company's executive
officers.
The compensation policy of the Company, which is endorsed by the Committee,
is that a substantial portion of the annual compensation of each officer
relates to and is contingent upon the performance of the Company, as well as
the individual contribution of each officer. As a result, much of an executive
officer's compensation is "at risk" with annual bonus and long-term incentive
compensation amounting to a significant portion of each executive officer's
total compensation.
In the fall of 1995, the Compensation Committee retained the services of
Strategic Compensation Associates ("SCA"), an executive compensation
consulting firm, to assist the Committee in its assessment of the
7
<PAGE>
Company's compensation programs for its executive officers. SCA's study
developed two peer groups of companies: (1) publicly-traded healthcare real
estate investment trusts (REITS); and (2) publicly-traded general REITs. From
its analysis of the peer groups of companies, SCA calculated total shareholder
return on a three-year basis for healthcare REITs and general REITs, and on a
five-year basis for general REITs. SCA then determined competitive
compensation levels for the Company's senior executives and developed
recommendations for long-term incentives.
1997 EXECUTIVE COMPENSATION COMPONENTS
The Company's executive compensation for 1997 was based on three key
components.
BASE SALARY. Salaries for executives were reviewed by the Compensation
Committee in January of 1997 and were increased based upon the recommendations
of SCA and upon a subjective assessment of the individual executive's
contribution to the Company as well as competitive pay levels. Base salary was
intended to be set at a level competitive to amounts paid to executive
officers of companies with similar business structure, size and marketplace
orientation. The consideration of competitive salaries for 1997 was based upon
the recommendations of SCA.
ANNUAL BONUS. Annual bonuses for 1997 were awarded in January of 1998 in
cash based upon the recommendations of SCA, including an evaluation by SCA of
the performance of the Company as a whole, together with a subjective
evaluation by the Compensation Committee of the performance of each executive
officer.
LONG-TERM INCENTIVES. All of the executive officers participate in the
Company's Stock Option and Restricted Stock Plan. That plan's primary purpose
is to offer an incentive for long-term performance of the Company. The plan
provides for awards of restricted stock, grants of stock options and stock
appreciation rights and awards of dividend equivalents.
From 1992 through 1995, awards of restricted stock were made annually to the
executive officers of the Company. Such restricted stock vests five years
after the date of award and is intended to build each executive officer's
equity interest in the Company as well as provide incentives for the long-term
performance of the Company. Awards to executive officers other than the Chief
Executive Officer had ranged between 3,000 to 4,000 shares per year, and
awards to the Chief Executive Officer have ranged between 13,400 and 14,000
per year. The levels of such awards were determined in part by an assessment
of the performance of the Company based on subjective and objective factors,
including total return to stockholders, growth in per share funds from
operations, asset growth, credit quality and the perception of the Company by
industry analysts; however, no specific targets are assigned or established by
the Compensation Committee for these criteria. The levels of awards made and
the proportion of total compensation payable through restricted stock awards
is not subject to any fixed formula.
In 1996, awards of restricted stock were replaced with grants of stock
options and awards of dividend equivalents related to stock options at the
recommendation of SCA. The stock options vest ratably over a three-year period
and are exercisable at the market price of the Company's common stock on the
date of grant. Dividend equivalents are payable in cash based upon a formula
recommended by SCA. That formula award depends upon the Company's performance
measured for a minimum of a three-year period and up to a five-year period by
total return to stockholders (increase in stock price and dividends paid)
compared to peer companies and other companies comprising a general index of
real estate investment trusts, in each case as selected by the Compensation
Committee. Dividend equivalents may be earned in all or in part depending upon
the actual total return to shareholders as compared to peer groups of other
real estate investment trusts. For executive officers, other than the Chief
Executive Officer, grants ranged from 10,000 to 16,000 stock options, and
awards ranged from 10,000 to 16,000 dividend equivalents. The Chief Executive
Officer was granted 40,000 stock options and awarded 40,000 dividend
equivalents. The levels of such awards were based upon the recommendation of
SCA. The awards are intended to provide incentives for the long-term
performance of the Company.
8
<PAGE>
1997 CEO COMPENSATION
Mr. Andrews' salary for 1997 was set by the Compensation Committee at its
January 1997 meeting. Mr. Andrews' base salary was increased $20,000 to
$400,000 based upon the recommendation of SCA and in light of salaries being
paid to other similarly situated CEOs as determined based on the business
experience of the members of the Compensation Committee and in recognition of
the Company's performance in 1996 under his leadership.
Mr. Andrews' bonus with respect to 1997 was $400,000, or 100% of his base
salary for 1997, and was awarded based on the recommendation of SCA as well as
a subjective evaluation by the Committee of Mr. Andrews' performance and of
the performance of the Company as a whole.
Mr. Andrews was granted 40,000 stock options and awarded 40,000 dividend
equivalents in January 1997. The purpose of this award was to provide a long-
term incentive to Mr. Andrews as options vest ratably over three years and the
dividend equivalents can be earned depending upon the Company's performance
measured for a minimum of a three-year period up to a five-year period by the
total return to stockholders compared to peer companies and other companies
comprising a general index of real estate investment trusts. The award was
based upon the recommendation of SCA and the subjective evaluation of Mr.
Andrews' performance and that of the Company as a whole.
The Compensation Committee has considered the anticipated tax treatment to
the Company regarding the compensation and benefits paid to the executive
officers of the Company in light of the enactment of Section 162(m) of the
Internal Revenue Code of 1986, as amended. The basic philosophy of the
Compensation Committee is to strive to provide such executive officers with a
compensation package which will preserve the deductibility of such payments
for the Company. However, certain types of compensation payments and their
deductibility depend upon the timing of an executive officer's vesting or
exercise of previously granted rights. Moreover, interpretations of and
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 and benefits to the extent reasonably
practicable and to the extent consistent with its other compensation
objectives.
March 9, 1998 Compensation Committee
Charles D. Miller (Chairman)
David R. Banks
9
<PAGE>
PERFORMANCE GRAPH
The following graph demonstrates the performance of the cumulative total
return to the stockholders of the Company's Common Stock during the previous
five years in comparison to the cumulative total return on the National
Association of Real Estate Investment Trusts' (NAREIT) Equity Index and the
Standard & Poor's 500 Stock Index. The NAREIT Equity Index is comprised of all
tax-qualified, equity oriented, real estate investment trusts listed on the
New York Stock Exchange, the American Stock Exchange or the Nasdaq National
Market.
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
NATIONWIDE
Measurement Period HEALTH S&P NAREIT
(Fiscal Year Covered) PROPERTIES 500 INDEX EQUITY INDEX
- --------------------- ---------- --------- ------------
<S> <C> <C> <C>
Measurement Pt-12/92 $100 $100 $100
FYE 12/93 $116.69 $110.08 $119.65
FYE 12/94 $126.08 $111.53 $123.45
FYE 12/95 $159.45 $153.45 $142.3
FYE 12/96 $196.94 $188.68 $192.48
FYE 12/97 $221.89 $251.63 $231.47
</TABLE>
IT SHOULD BE NOTED THAT THIS GRAPH REPRESENTS HISTORICAL STOCK PRICE
PERFORMANCE AND IS NOT NECESSARILY INDICATIVE OF ANY FUTURE STOCK PRICE
PERFORMANCE.
THE FOREGOING REPORT OF THE COMPENSATION COMMITTEE AND THE PERFORMANCE GRAPH
THAT APPEARS IMMEDIATELY AFTER SUCH REPORT SHALL NOT BE DEEMED TO BE
SOLICITING MATERIAL OR TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934 OR
INCORPORATED BY REFERENCE IN ANY DOCUMENT SO FILED.
10
<PAGE>
PROPOSAL II
RATIFICATION OF APPOINTMENT OF AND
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Company has selected Arthur Andersen LLP as its auditors for the year
ending December 31, 1998, subject to ratification by stockholders. Arthur
Andersen LLP audited the Company's financial statements for the year ended
December 31, 1997 and has been the Company's auditors since the Company's
inception in 1985.
If the stockholders do not ratify the selection of Arthur Andersen LLP, the
selection of independent accountants will be considered by the Board of
Directors, although the Board of Directors would not be required to select
different independent accountants for the Company. The Board of Directors
retains the power to select another firm as independent accountants for the
Company to replace the firm whose selection was ratified by the Company's
stockholders in the event the Board of Directors determines that the best
interest of the Company warrants a change of its independent accountants.
Representatives of Arthur Andersen LLP are expected to be present at the
meeting and will be given the opportunity to make a statement if they desire
to do so. It is expected that they will be available to respond to appropriate
questions from stockholders at the meeting.
STOCKHOLDER PROPOSALS
November 9, 1998 is the date by which proposals of stockholders intended to
be presented at the 1999 Annual Meeting of Stockholders must be received by
the Company for inclusion in the Company's proxy statement and form of proxy
relating to that meeting.
EXPENSES OF SOLICITATION
The total cost of this solicitation will be borne by the Company. In
addition to use of the mails, proxies may be solicited by directors and
officers of the Company personally and by telephone or facsimile. The Company
may reimburse persons holding shares in their own names or in the names of the
nominees for expenses they incur in obtaining instructions from beneficial
owners of such shares. The Company has also engaged D.F. King, Inc. to deliver
proxies for a fee of approximately $750 plus out-of-pocket expenses.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of
a registered class of the Company's equity securities, to file with the
Securities and Exchange Commission ("SEC") and the New York Stock Exchange
initial reports of ownership and reports of changes in ownership of Common
Stock and other equity securities of the Company. Executive officers,
directors and greater than ten-percent stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company, all Section 16(a) filing requirements
applicable to its executive officers, directors and ten-percent stockholders
were complied with.
11
<PAGE>
OTHER MATTERS
A copy of the annual report of the Company for the year ended December 31,
1997, including financial statements, is enclosed herewith. THE COMPANY WILL
PROVIDE WITHOUT CHARGE TO ANY PERSON SOLICITED HEREBY, UPON THE WRITTEN
REQUEST OF SUCH PERSON, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K
(WITHOUT EXHIBITS) FOR THE YEAR ENDED DECEMBER 31, 1997 FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. SUCH REQUESTS SHOULD BE DIRECTED TO MARK
L. DESMOND, CHIEF FINANCIAL OFFICER OF THE COMPANY, AT 610 NEWPORT CENTER
DRIVE, SUITE 1150, NEWPORT BEACH, CALIFORNIA 92660.
The Board of Directors knows of no other business to be presented at the
meeting, but if other matters do properly come before the meeting, it is
intended that the persons named in the proxy will vote on such matters in
accordance with their best judgment.
R. Bruce Andrews
President and Chief Executive
Officer
March 9, 1998
Newport Beach, California
12
<PAGE>
NATIONWIDE HEALTH PROPERTIES, INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Mark L. Desmond, Don M. Pearson and Gary E.
Stark, and each of them, as proxies, each with the power to appoint his
substitute, to represent and to vote as designated on the reverse side hereof,
all the shares of Common Stock of Nationwide Health Properties, Inc. held of
record by the undersigned on March 6, 1998, at the Annual Meeting of
Stockholders to be held on April 17, 1998 and at any adjournment thereof.
This Proxy when properly executed will be voted in the manner directed
herein by the undersigned. If no specification is made, the Proxy will be
voted FOR proposals 1, 2 and 3.
NATIONWIDE HEALTH PROPERTIES, INC.
P.O. BOX 11378
NEW YORK, N.Y. 10203-0378
(CONTINUED, AND TO BE SIGNED AND DATED ON THE REVERSE SIDE)
<PAGE>
[X] VOTES MUST BE INDICATED (X) IN
BLACK OR BLUE INK.
<TABLE>
<CAPTION>
FOR all nominees WITHHOLD AUTHORITY NOMINEES: JOHN C. ARGUE
listed below to vote for all DAVID R. BANKS
nominees listed below *EXCEPTIONS MILTON J. BROCK, JR.
<S> <C> <C> <C> <C>
1. Election of Directors [_] [_] [_]
</TABLE>
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE
FOR ANY INDIVIDUAL NOMINEE, MARK THE "EXCEPTIONS"
BOX AND WRITE THAT NOMINEE'S NAME IN THE SPACE
PROVIDED BELOW.)
*Exceptions
-----------------------------------------------------
-----------------------------------------------------
If any nominee named above declines or is unable
to serve as a director, the persons named as
proxies, and each of them, shall have full discretion
to vote for any other person who may be nominated.
FOR AGAINST ABSTAIN
2. Proposal to ratify the selection of Arthur [_] [_] [_]
Andersen LLP as independent accountants for the
year ending December 31, 1998.
3. In their discretion, the proxies are authorized
to vote upon such other business as may properly
come before the meeting and at any adjournment
thereof.
Change of Address and or Comments Mark Here [X]
Please sign, date and return the Proxy Card promptly using the enclosed
envelope. This Proxy will not be used if you attend the meeting in person and so
request.
Dated: ,1998
--------------------------------------- -------
SIGNATURE OF STOCKHOLDER(S)
---------------------------------------
SIGNATURE OF STOCKHOLDER(S)
NOTE: Please sign exactly as name appears on this Proxy. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president or other authorized
officer. If a partnership, please sign in partnership name by authorized
person.
