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:
[X] Preliminary Proxy Statement
[ ] 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.
<PAGE>
[Preliminary] Proxy Statement
For release to shareholders 4/24/99
Culinary Workers Union Local 226
1630 S. Commerce Street
Las Vegas, Nevada 89102
(702) 387-7064 tel.
(702) 385-1197 fax.
VOTE FOR OUR SHAREHOLDER PROPOSAL TO ENSURE INDEPENDENT
TRUSTEES AT UNIVERSAL HEALTH REALTY INCOME TRUST
Annual Meeting of Shareholders
Universal Health Realty Income Trust
June 1, 1999, 10:00 a.m.
367 S. Gulph Rd.
King of Prussia PA
Dear Trust shareholders:
Please vote for our shareholder proposal to prevent
conflicts-of-interest among the so-called "independent" trustees
of the Trust. The only way to vote for this proposal may be the
enclosed proxy card.
We own Trust stock and also represent employees of the
Trust's primary "Advisor", Universal Health Services ("UHS")<F1>
UHS is also the Trust's primary tenant. The Trust is
supervised by a board of trustees (like a board of
directors).
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.
A majority of trustees are currently deemed "independent" under
the Declaration, but 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 the CEO of UHS
(Alan Miller). Miller even served on the Genesis compensation
committee which set Walker's pay.
_______________
<F1> For more information, see section below entitled
"Proxy Solicitation."
<PAGE>
"Independent" trustee James Dalton, Jr. is the CEO of Quorum
Health Group: his company is involved in a 3-hospital joint
venture with UHS in the Las Vegas area. "Independent" trustee
Cain has from time to time performed investment banking services
for the Trust.
Relationships like these could obviously make it harder for
a trustee to say "no" to demands made on the Trust by UHS.
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. We in no
way suggest trustees made improper decisions -- that would
require analyzing data to which we do not have access.
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.
Over 80% of shareholders responding to our survey to date
strongly supported the proposal.
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."
________________________
<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>
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
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. The UHS leases accounted for
75% of the Trust's total revenues for the 5 years ended 12/31/98.
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 $1,099,000 for advisory services in FY 1997
and $1,161,000 in FY 1998.
Currently, 4 of the 6 trustees are deemed "independent"
under the declaration of trust. A seventh trustee, Mr. Walker,
resigned as trustee in December, 1998.
"Independent" trustee
Cain received payment in the past for investment banking services
to the Trust, but reportedly not in 1995-98. We do not have
information suggesting trustees other than Dalton and
Cain would be affected by our proposal.
More information about the trustees and the relationship
between UHS and the Trust is contained in the Trust's latest
proxy statement at pp. 3-4 and 10-12 incorporated herein
by reference.
<PAGE>
VOTING PROCEDURE AND IMPLEMENTATION OF PROPOSAL
IT IS LIKELY THAT MANAGEMENT'S PROXY CARD WILL NOT INCLUDE
OUR PROPOSAL. IF SO, THE ENCLOSED CARD IS THE ONLY WAY YOU CAN
VOTE BY PROXY FOR OR AGAINST THIS PROPOSAL.
We will keep all cards we receive confidential until the
meeting, unless ordered otherwise by a court.
IF YOU HAVE ALREADY VOTED, YOU CAN CHANGE YOUR VOTE. Only
the latest-dated proxy card is counted. Any proxy may be revoked
prior to being counted at the meeting by (1) signing and dating a
new proxy card; or (2) appearing at the meeting to vote; or (3)
sending a written revocation to the proxyholder: the Company's
address is 367 South Gulph Road, King of Prussia PA 19406, (tel)
(610) 265-0688.
Passage of the proposal will require a favorable vote by a
majority of stock represented at the meeting. We intend to mail
this statement to a majority of voting power of the stock. 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.
The enclosed proxy card grants no discretionary authority:
we will vote solely as you instruct us. If matters come before
the meeting which are not set forth in this proxy statement or
management's proxy statement (which we do not anticipate), then
we will not vote your shares on these matters. If you sign the
enclosed card but do not instruct us how to vote, we will vote
your shares FOR our proposal and not vote in the trustees'
election. We incorporate herein by reference the discussion in
management's proxy statement of voting requirements, record date
and outstanding securities at p. 1 .
PROXY SOLICITATION
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. The federal district
court in Nevada has found UHS in violation of its contractual
duty to arbitrate a Culinary grievance over UHS' 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. 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 $7500 and will not seek
reimbursement from the Company. It intends to solicit proxies by
mail, fax, phone, e-mail and meetings using regular staff.
EXECUTIVE COMPENSATION/STOCK OWNERSHIP OF MANAGEMENT,
TRUSTEES AND 5% OWNERS/ELECTION OF TRUSTEES
Information on these matters is contained in management's
proxy statement (pp. 1-3 , 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 statement in 2000 will be December 31.
1999.
PLEASE RETURN THE ENCLOSED PROXY TODAY
For more information, contact our Research Analyst, John Canham-
Clyne, at (702) 387-7064
<PAGE>
PROXY SOLICITED BY CULINARY LOCAL 226
FOR 1999 SHAREHOLDERS MEETING OF
UNIVERSAL HEALTH REALTY INCOME TRUST
The undersigned shareholder hereby appoints John Canham-
Clyne as proxy, with full power of substitution, to vote for the
undersigned at the 1999 annual meeting of the Trust's
shareholder, and any adjournments thereof. The undersigned
directs this proxy be voted in accordance with the instructions
herein and grants no discretionary voting authority. If not
marked otherwise, this proxy will be voted FOR the shareholder
proposal and not voted in the election of trustees.
I. SHAREHOLDER PROPOSAL TO ENSURE INDEPENDENCE OF TRUSTEES
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
II. ELECTION OF TRUSTEES
Nominees of management: Alan Miller, Myles Tanenbaum
[ ] FOR all nominees
[ ] WITHHOLD AUTHORITY for all nominees
Instruction: To withhold authority to vote for election of one or
more of the nominees above, mark FOR above and cross out the
name(s) of the nominees for which you wish to withhold authority.
PLEASE SIGN, DATE, and PROMPTLY RETURN. PERSONS SIGNING IN
REPRESENTATIVE CAPACITY SHOULD INDICATE AS SUCH. IF SHARES ARE
HELD JOINTLY, BOTH OWNERS SHOULD SIGN.
Signature __________________________ Date _________
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