SCHEDULE 14A
SCHEDULE 14 INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ X ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Name of Registrant as Specified in Its Charter:
Universal Health Realty Income Trust
Name of Person(s) Filing Proxy Statement:
Culinary Workers Union, Local 226
Payment of Filing Fee (check the appropriate box)
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
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Proxy Statement
For release to shareholders 2/24/99
Culinary Workers Union Local 226
1630 S. Commerce Street
Las Vegas, Nevada 89102
(702) 387-7064 tel.
(702) 385-1197 fax.
NOTICE OF INTENDED PROXY CONTEST
AT
UNIVERSAL HEALTH REALTY INCOME TRUST
(NYSE:UHT)
IS THE TRUST BEING RUN BY "INDEPENDENT" TRUSTEES?
To Fellow UHT shareholders:
We own UHT stock and also represent employees of UHT's
Advisor, UHS.<F1> We intend to solicit proxies for the
next annual meeting for our shareholder proposal to prevent
conflicts-of-interest among "independent" trustees.
Currently the Trust's primary "Advisor", Universal Health
Services, Inc. ("UHS"), is also the Trust's primary tenant. We
believe the best way to ensure all transactions between the
Trust and UHS are fair to shareholders is to have a majority of
trustees be truly independent of UHS.
We question whether such independence is achieved by the
current Declaration of Trust, the document governing the Trust.
While a majority of trustees are currently deemed
"independent" under the Declaration, the Declaration defines this
term in an interesting way.
Thus for many years (until 12/98), Michael Walker was an
"independent" trustee -- but he was CEO of Genesis Health
Ventures, which had on its board of directors Alan Miller, the
CEO of UHS. Miller even served on the Genesis executive
compensation committee which set Walker's pay.
"Independent" trustee James Dalton, Jr. is the CEO of Quorum
Health Group, which is involved in a 3-hospital joint venture
with UHS in the Las Vegas area.
Quorum's relationship with UHS was not disclosed in the
Trust's last proxy statement to shareholders. We express no view
as to whether such disclosure was required by law.
We in no way suggest trustees made improper decisions --
that would require analyzing data to which we do not have access.
_______________
<F1> For more information, see section below entitled
"Proxy Solicitation."
<PAGE>
UHS saw its annual net income grow by over 175% from 1994
thru 1998; while the Trust's net income increased by only
two-tenths of one percent in the same period.<F2> Obviously many
factors affect the profitability of the two companies.
However, we feel shareholders should not have to
worry in the least that trustees are favoring UHS at the Trust's
expense because of trustees' outside business relationships with
UHS.
TEXT OF PROPOSAL AND CURRENT DECLARATION OF TRUST
Please support the following proposal to avoid
conflicts-of-interest among independent trustees overseeing the
Trust:
WHEREAS, under the current Declaration of Trust, a majority
of trustees must be "Independent Trustees", and a majority
of Independent Trustees must approve the Trust's agreement
with its Advisor (UHS), which is also the Trust's primary
tenant;
AND WHEREAS the term "Independent Trustee" is currently
defined by the Declaration to allow such trustees to be
major suppliers or customers of UHS, or executives of major
suppliers or customers or joint venturers of UHS, or
executives of companies which have UHS officers on their own
boards, including even these boards' executive compensation
committees;
WHEREFORE, shareholders recommend that trustees support
amending section 1.4(l) of the Declaration to read as
follows: "'Independent trustee' shall mean a trustee who (i)
is not an Affiliate of the Advisor and personally performs
no services for the Trust except as trustee; and (ii) in the
last 3 years has not personally engaged in (or served as an
officer, director, general partner, employee, or trustee of
any business entity which engaged in) any of the following:
(a) being in a partnership or joint venture with the Advisor
or Trust; or (b) having on its own governing board any
executive of the Advisor or Trust; or (c) buying from or
selling to the Advisor or Trust more than $10,000 in goods,
services or property in any year."
Compare this to the existing language of the Declaration of
Trust. Section 1.4(l) provides: "'Independent Trustee' shall
mean a Trustee who, in his individual capacity, (i) is not an
Affiliate of the Advisor and (ii) does not perform any services
for the Trust except as Trustee." This definition is further
________________________
<F2> Annual net income was as follows (in mil.):
1998 1997 1996 1995 1994
Trust 14.3 14.0 14.2 13.6 14.3
UHS 79.6 67.3 50.7 35.5 28.7
<PAGE>
narrowed by the Declaration (section 1.4(c)) defining "Affiliate"
to ignore suppliers, contractors, consultants, customers, joint
venturers, and other business relationships which might make the
trustee feel beholden to UHS:
"'Affiliate' shall mean, as to any Person, (i) any other Person
directly or indirectly controlling, controlled by or under common
control with such person, (ii) any other Person that owns
beneficially, directly or indirectly, five percent (5%) or more
of the outstanding capital stock, shares or equity interests of
such Person, or (iii) any officer, director, employee, general
partner or trustee of such Person or of any Person controlling,
controlled by or under common control with such Person (excluding
trustees who are not otherwise an Affiliate of such Person)."
SUMMARY OF RELATIONSHIP BETWEEN THE TRUST AND UHS
In 1998, UHS subsidiaries were the principal tenants of 7 of
the 9 hospitals owned by the Trust. These leases accounted for
79% of the Trust's total revenues for the 5 years ended 12/31/97.
The Trust's officers are all also UHS officers. The Advisory
Agreement between the Trust and UHS is renewable annually,
subject to approval by a majority of independent trustees. The
Trust paid UHS $1.1 million for advisory services in FY 1997.
As of the last proxy statement, 2 of the 7 trustees were UHS
executives and therefore not deemed "independent" under the
current declaration of trust. Management advises us that
"independent" trustee Walker resigned in December 1998.
More information about the trustees and the relationship
between UHS and the Trust is contained in the Trust's last proxy
statement at pp. 3-4 and pp. 13-15, incorporated herein by
reference.*
* You may obtain a copy of these materials from the SEC's EDGAR
database (www.sec.gov), or by contacting us at the address or
phone above.
VOTING PROCEDURE AND IMPLEMENTATION OF PROPOSAL
A proxy card is not included at this time; enclosed
is a voluntary survey. Management's proxy card may not
include the proposal. We intend to solicit for the proposal using
our own proxy card and a new proxy statement: look for
these after you receive your proxy card from the Trust. We
intend to send these to a majority of the voting power of the
outstanding stock. The Trust's annual shareholders meetings have
occurred in early June at the offices of UHS and the Trust, 367
South Gulph Road, King of Prussia PA 19406, (610) 265-0688 (tel).
Passage of the proposal will require a favorable vote by a
majority of stock represented at the meeting. The proposal is
non-binding. If all trustees or all but one approve, it would
be submitted for shareholder ratification; under the Declaration,
approval by a majority of shares eligible to vote is required.
The proposal leaves the timing of implementation to board
discretion: we expect the board would time this so as not
to force any existing trustees to resign, but no assurances can
be offered as to future board decisions in this regard. It is
possible that introduction of, voting upon or adoption of the
proposal might positively or negatively impact the relationship
between the Trust and UHS.
Responses to the enclosed survey will be used solely for
communications with shareholders and management about matters for
shareholder vote: if insufficient favorable responses are
received, they will not be used; if favorable responses are
received, we will use this to try to convince management to adopt
reforms without a proxy fight and will forward results to
shareholders.
PROXY SOLICITATION
We are not currently asking you to vote on the
proposal. This solicitation is conducted by Culinary Local 226,
which owns 56 shares in the Trust. Culinary has interests in UHS
activities beyond its UHT stock ownership: Culinary represents
over 40,000 employees in Las Vegas, including approximately 100
employees at UHS' Valley Hospital. Culinary is negotiating with
UHS for a new agreement. Culinary has petitioned to compel
arbitration over a grievance concerning UHS's failure to apply
the agreement to Desert Springs Hospital after a majority of
Desert's unit employees designated Culinary as their
representative. No work stoppage or picketing has occurred.
Culinary does not ask for your support in these matters, and does
not believe them relevant to how you should vote as a Trust
shareholder. Neither hospital is owned by the Trust (as of
the Trust's latest listings with the SEC). Regardless of the
outcome of labor matters, Culinary will vote each proxy card it
receives in accordance with the shareholder's instructions.
Culinary has not offered to trade its shareholder activities
for labor concessions. Such shareholder activities may have no
effect on labor relations, or propel settlement, or so anger
management as to prevent settlement. Culinary will bear all
solicitation costs (anticipated at $5000) and will not seek
reimbursement from the Company. It intends to solicit proxies by
mail, fax, phone, e-mail and meetings using regular staff.
RECORD DATE/EXECUTIVE COMPENSATION/STOCK OWNERSHIP OF MANAGEMENT,
TRUSTEES AND 5% OWNERS/ELECTION OF TRUSTEES
We do not have information on these matters more current the
Trust's last proxy statement (pp. 1-4 and 6-19, incorporated by
reference herein).*
FUTURE SHAREHOLDER PROPOSALS
You can contact us if you wish further information with
respect to shareholder rights in making proposals. The
deadline for shareholders to submit proposals for inclusion in
management's proxy materials will appear in management's upcoming
proxy statement.
PLEASE RETURN THE ENCLOSED SURVEY TODAY.
For more information, contact our Research Analyst, John Canham-
Clyne, at (702) 387-7064
<PAGE>
SURVEY OF SHAREHOLDERS OF
UNIVERSAL HEALTH REALTY INCOME TRUST
BY CULINARY LOCAL 226
This is a voluntary survey, not a proxy card, and cannot be
used to vote on the shareholder proposal: you will have a
chance to vote upon receiving our proxy card later. Your
identity will be kept confidential unless you specifically
authorize to the contrary.
YOUR VIEW OF THE SHAREHOLDER PROPOSAL REGARDING TRUSTEE
CONFLICTS-OF-INTEREST:
[ ] Strongly support
[ ] Likely to support
[ ] Likely to oppose because _____________________
[ ] Undecided
[ ] Please send me more information about the issues on which
Trust shareholders will be voting:
Mailing address: __________________________________
___________________________________
E-mail address: _________________________
Telephone: _________________ Fax: ___________
__________________________ _______________
PRINT SHAREHOLDER NAME # SHARES
Please return by March 29, 1999 in the enclosed envelope
or fax to (702) 385-1197.
