SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
(xx) Filed by the Registrant
( ) Filed by a Party other than the Registrant
Check the appropriate box:
( ) Preliminary Proxy Statement
(xx) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to (section mark)240.14a-11(c) or
(section mark)240.14a-12
Health Equity Properties Incorporated
(Name of Registrant as Specified In Its Charter)
Susan Christiansen
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (Check the appropriate box):
( ) $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(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.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11: *
* Set forth the amount on which the filing fee is calculated and state how
it was determined.
( ) 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:
(xx) Filing Fee of $125.00 was previously paid on February 10, 1994,
the date the Preliminary Proxy Statement was filed.
HEALTH EQUITY PROPERTIES INCORPORATED
915 West Fourth Street
Winston-Salem, North Carolina 27101
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be Held April 28, 1994
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Shareholders of Health Equity Properties Incorporated (the
"Company") will be held in Forsyth Ballroom C-D on the second
floor of the Adams Mark Winston Plaza Hotel, 435 North Cherry
Street, Winston-Salem, North Carolina on Thursday, April 28, 1994
at 10:00 o'clock a.m. for the following purposes:
1. To elect Directors;
2. To approve certain amendments to the Company's Stock
Option Plan;
3. To authorize the Board of Directors to purchase, or
cause to be purchased on behalf of the Company, shares
of the Company's common stock with an aggregate maximum
purchase price of $7,000,000; and
4. To transact such other business as may properly come
before the meeting or any adjournment thereof.
The transfer books of the Company will not be closed. The
date fixed by management as the record date for the determination
of shareholders entitled to notice of and to vote at the Annual
Meeting or any adjournment thereof is the close of business on
March 15, 1994.
Winston-Salem, North Carolina
March 18, 1994
By Order of the Board of Directors
SUSAN L. CHRISTIANSEN, Secretary
IF YOU ARE UNABLE TO ATTEND THE MEETING IN PERSON,
MANAGEMENT REQUESTS THAT YOU SIGN AND DATE THE ENCLOSED PROXY AND
MAIL IT AT ONCE IN THE ENCLOSED ENVELOPE WHICH REQUIRES NO
POSTAGE IF MAILED WITHIN THE UNITED STATES.
HEALTH EQUITY PROPERTIES INCORPORATED
915 West Fourth Street
Winston-Salem, North Carolina 27101
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
To be Held April 28, 1994
The enclosed proxy is solicited by the Board of Directors of
Health Equity Properties Incorporated (the "Company") to be voted
at the annual meeting of shareholders to be held on April 28,
1994, or at any adjournment thereof. The proxy may be revoked at
any time before it is voted by: (a) giving written notice to the
Secretary of the Company before the annual meeting; (b) attending
the annual meeting and voting in person; or (c) delivering a
proxy bearing a later date to the Company before the annual
meeting or to a person attending the meeting. The cost of the
preparation of the Proxy Statement and solicitation of proxies,
which is anticipated to be the amount normally expended for such
a solicitation, will be borne by the Company. The solicitation
will be by mail. Certain officers and regular employees of the
Company may solicit proxies by letter, telephone and personal
interview. No additional compensation shall be paid to any such
persons participating in such further solicitation. Further, the
Company has retained Doring & Co. to aid in the solicitation of
proxies for a fee not to exceed $3,000, plus out-of-pocket
expenses. Arrangements have also been made for brokerage houses,
nominees and other custodians to send this Proxy Statement, Form
of Proxy and Annual Report to their principals and the Company
will reimburse them for doing so.
The Company intends to mail Proxy Statements, Forms of Proxy
and Annual Reports to shareholders on or about March 18, 1994.
Shareholders of record at the close of business on March 15, 1994
and no other persons shall be entitled to notice of, and to vote
at, the meeting. The shares represented by all properly executed
proxies which are received prior to the final call for delivery
of proxies at the meeting will be voted in accordance with the
directions given thereon. If no directions are given on a proxy,
the shares represented by such proxy will be counted for purposes
of determining the presence of a quorum and will be voted for the
nominees for directors named herein, for the amendments to the
Stock Option Plan and for the authorization of the Board of
Directors to repurchase shares of the Company's common stock. A
shareholder marking the proxy "Abstain" will be counted as
present for determining a quorum, but will not be counted as
voting in favor or against the particular proposal from which the
shareholder has elected to abstain.
As of March 4, 1994, there were outstanding 14,581,237
shares of common stock, $0.01 par value per share, of the
Company. Each shareholder is entitled to one vote for each of
said shares. At the election of directors, each shareholder is
entitled to vote the number of shares held by him or her for as
many persons as there are directors to be elected. The
shareholders will not be entitled to cumulative voting.
A majority of the shares of the Company entitled to vote
represented in person or by proxy shall constitute a quorum at
the annual meeting. For purposes of determining the presence of
a quorum, all signed proxies shall be included as shares
represented by proxy regardless of whether or how the proxy has
been voted.
1. ELECTION OF DIRECTORS -- The number of directors of the
Company constituting the entire Board of Directors shall be not
less than nine nor more than 12 directors, with the actual number
constituting the entire Board of Directors to be established by
resolution adopted from time to time by the Board of Directors.
The Board of Directors has established the number of directors at
nine. The Board of Directors is staggered by division into three
classes. Class Three directors have terms expiring at the Annual
Meeting of Shareholders to be held April 28, 1994. The Class
Three directors whose terms will expire at the Annual Shareholder
Meeting and who are being nominated for re-election shall be
elected to hold office until the third succeeding Annual Meeting
of Shareholders.
The Class Three directors who have been nominated for
election to a three year term are as follows: William G. Benton,
Susan L. Christiansen and David Weil.
Management knows of no reason why the nominees for election
as directors will not be available for election or, if elected,
will not be able to serve. If any individual nominee shall not
be available for election as contemplated, it is the intention of
those persons named in the proxy to vote for such other persons
as the directors of the Company may recommend. The Form of Proxy
does not authorize a vote for more than three directors.
Unless otherwise directed, the enclosed proxy will be voted in
favor of William G. Benton, Susan L. Christiansen and David Weil
in the election of directors, all of whom are currently members
of the Board of Directors.
NOMINEES FOR DIRECTORS; DIRECTORS; AND CERTAIN STOCK OWNERSHIP
Set forth below are the names of the nominees for election
to the Board of Directors, all of whom are currently directors of
the Company; the names of the directors whose terms are not
subject to re-election at this meeting; the principal occupation
or employment of both nominees and other directors during the
past five years; all their positions with the Company; and
certain other information with respect to such persons:
William G. Benton - Director since 1987 (1)(4) Chairman
of the Board and Chief Executive Officer since June 1989;
President of the Company from October 1987 to June 1989 and
since April 1991; Director and Chief Executive Officer of
ACREMS, Inc. through November 1991 (the company which served
as the Company's advisor from January 1988 through July
1990); principal shareholder, director and Chief Executive
Officer of Taylor House Enterprises Limited since October,
1992, a holding company with several real estate related
operating subsidiaries (ACREMS, Inc. merged with Taylor
House Enterprises Limited in November 1991); sole Director
of Benton Investment Company from its incorporation in 1984,
President of Benton Investment Company from 1984 to August
1989, and Chief Executive Officer from August 1989 to
present; Director of MBG Management Company, a company which
manages residential real estate, and affiliated companies,
from January 1992; Chairman since July 1992; President from
January 1992 to June 1993; Director of Tanger Factory Outlet
Centers, Inc., a publicly traded REIT, since May 1993;
active in real estate development since 1972. Age 48.
G. L. "Bud" Clark, Jr. - Director since 1988 Vice
President of the Company since March 1989; Treasurer of the
Company from March 1989 to April 1991; Chief Financial
Officer since April 1991; Vice President, Chief Financial
Officer and Director of ACREMS, Inc. through November 1991,
(the company which served as the Company's Advisor from
January 1988 through July 1990); Vice President and Chief
Financial Officer of Taylor House Enterprises Limited since
October 1991; Vice President of Benton Investment Company
from 1986 to August 1989 and President of Benton Investment
Company since August 1989; Vice President of MBG Management
Company, a company which manages residential real estate,
and affiliated companies, from January 1992 to present and
Director of MBG Management Company, and affiliated
companies, from July 1993 to present. Age 48.
Susan L. Christiansen - Director since 1990(4) Vice
President and General Counsel of the Company since September
1990, Secretary of the Company since December 1989; Vice
President and General Counsel of Taylor House Enterprises
Limited since October 1991; attorney with the law firm of
House & Blanco, P.A., Winston-Salem, North Carolina from
August 1977 through September 1990 and a director and
executive officer of House & Blanco, P.A. from March 1983
through September 1990. Age 41.
Lisbeth C. Evans - Director since 1987(1) President,
Director and sole shareholder of Clark, Evans & Tate, Inc.
since its organization in 1991, a company which invests in
long-term healthcare properties; Chief Executive Officer and
Director of Salem Villages, Inc. since June 1991, a
nonprofit corporation which invests in long-term healthcare
properties; President and Chief Operating Officer of the
Company from June 1989 to April 1991; Vice President and
Secretary of the Company from October 1987 to June 1989;
Director of ACREMS, Inc. through December 1991, (the company
which served as the Company's advisor from January 1988
through July 1990); Vice President and Chief Financial
Officer of ACREMS, Inc. from December 1986 to March 1990;
President of ACREMS, Inc. through November 1991. Age 41.
Perry C. Craven - Director since 1987(1)(2)(3)(5) Sole
shareholder and Director of Perry C. Craven Associates, Inc.
since 1977, a company which specializes in elderly housing
development, nonprofit development, housing training, rural
housing development and communications. Age 53.
Dr. Walter H. Ettinger, Jr. - Director since
1987(1)(2)(3)(5) Associate Professor of Medicine, Head of
Section on Internal Medicine and Gerontology, Department of
Medicine, Bowman Gray School of Medicine, Winston-Salem,
North Carolina and Deputy Director of the J. Paul Sticht
Center on Aging, Bowman Gray/Baptist Hospital Medical Center
since 1987; from 1985 to 1987 Assistant Professor of
Medicine, Division of Geriatrics and Gerontology, The Johns
Hopkins University School of Medicine, Baltimore, Maryland;
from 1982 to 1987, staff of Francis Scott Key Medical
Center, Baltimore, Maryland. Age 42.
Dr. Thomas K. Hearn, Jr. - Director since 1987(2)(3)(5)
President of Wake Forest University, Winston-Salem, North
Carolina since October 1983. Mr. Hearn also serves as a
Director of Wachovia Corporation. Age 57
Floyd A. Schlossberg - Director since 1990(2)(5) Sole
shareholder and President of Alden Management Services, Inc.
since formation in 1977, a company which owns and manages
long-term care nursing homes and, through subsidiaries,
leases five properties of the Company; sole shareholder and
President of Alden Realty Services, established in 1980 to
purchase and manage property; sole shareholder and President
of Alden Bennett Construction Co., Inc., a general
contracting firm established in 1961. Age 56.
David Weil - Director since 1987(1)(2)(4)(5)(6) Involved
in several diversified businesses in the past five years,
including serving as Chairman of the Board and a shareholder
of Southco Distributing Company, a wholesaler of cigarettes,
groceries and candies, since 1981; a director and
shareholder of Mount Olive Pickle Company, a pickle
manufacturing company, since 1988; an officer, director and
shareholder of Stackhouse Incorporated, a company which
installs utility lines, since 1987 ; Director and Chief
Executive Officer of MBG Management Company, a company which
manages residential real estate, and affiliated companies,
from January 1992 to June 1993. Age 58.
NOTES:
(1) Member of Property Committee.
(2) Member of Audit Committee.
(3) Member of Compensation Committee.
(4) The indicated directors are nominees for re-election at
the meeting of shareholders.
(5) The indicated directors are Independent Directors.
(6) In April 1993 Mr. Weil and his spouse filed a petition
for reorganization under Federal Bankruptcy Law.
Although Mr. Weil's assets exceed his liabilities by an
estimated $10 million, the filing was precipitated by
an aggressive stance taken by a creditor bank. Prior to
the filing, Mr. Weil informed the Board of his decision
to file and offered to tender his resignation from the
Board. The remaining Board members voted unanimously to
reject Mr. Weil's offer and to confirm his continuation
as a Board member. The Board does not believe that the
filing negatively impacts Mr. Weil's ability to
continue to serve as a valued Board member.
____________
Information Concerning Security Ownership
Under regulations of the Securities and Exchange Commission,
persons who have power to vote or dispose of shares of the
Company either alone or jointly with others, are deemed to be
beneficial owners of such shares. Because the voting or
dispositive power of certain shares listed in the following table
is shared, the same securities in such cases are listed opposite
more than one name in the table. The total number of shares of
Common Stock of the Company listed below for directors and
executive officers as a group eliminates such duplication.
Members of management intend to vote their shares in favor of all
the proposals.
Set forth in the following table are the beneficial holdings
as of the close of business on March 4, 1994 of individual
directors and nominees, and directors and executive officers as a
group. As of March 4, 1994, to the knowledge of the directors
and executive officers, there were no persons who beneficially
owned more than 5% of the outstanding stock of the Company.
Name Sole Voting Shared Voting Options
and/or and/or Exercisable
Dispositive Dispositive Within 60 % of
Power Power Days Class
William G. Benton 287,245 (1) 16,950 (5) 81,228(6) 3%
G. L. "Bud" Clark, Jr. 5,032 (2) 16,950 (5) 74,703 (6) *
Susan L. Christiansen 1,161 16,950 (5) 73,616 (6) *
Lisbeth C. Evans 4,200 -- -- *
Perry C. Craven 625 -- -- *
Dr. Walter H. Ettinger, Jr. 500 (3) -- -- *
Dr. Thomas K. Hearn, Jr. 750 -- -- *
Floyd A. Schlossberg 20,000 -- -- *
David Weil 23,825 (4) -- -- *
Directors and Executive
Officers as a Group
(10 persons) 344,163 16,950 127,237 3%
* Less than 1%
NOTES:
(1) The amount indicated includes 9,600 shares which Mr.
Benton owns in his own name, 254,211 shares owned by
Taylor House Enterprises, Limited and 23,759 shares
owned by Mr. Benton's spouse. Mr. Benton is the
controlling shareholder of Taylor House Enterprises,
Limited. Mr. Benton disclaims beneficial ownership of
the shares owned by his spouse.
(2) Mr. Clark has sole voting and investment power over
1,732 shares owned directly by him and 3,300 shares
owned by a family partnership.
(3) Dr. Ettinger co-owns the shares indicated with his
spouse.
(4) Includes 1,525 shares owned by Mr. Weil's spouse, as to
which shares Mr. Weil disclaims beneficial ownership.
(5) The indicated shares are owned by a limited partnership
for which Messrs. Benton and Clark and Ms. Christiansen
serve as general partners. The percentage interest of
each is as follows: Mr. Benton - 12.6%; Mr. Clark -
16.1%; Ms. Christiansen - 7.6%.
(6) 56,422 of the indicated option shares are owned by the
limited partnership referred to in Note 5 above. Option
shares are owned directly as follows: Mr. Benton -
24,806; Mr. Clark - 18,281; Ms. Christiansen - 17,194.
_____________
Meetings and Committees of the Board
The Board of Directors of the Company has standing Audit,
Compensation and Property Committees. The members of the
committees are indicated in the preceding table. The Audit
Committee held two meetings during the fiscal year for the
purpose of reviewing the financial statements for the year ended
December 31, 1992 and for the purpose of determining the scope of
the engagement of the Company's auditors for the audit of
financial statements for fiscal year ended December 31, 1993.
The Property Committee and the Compensation Committee each met
once during 1993. As discussed in more detail below, the
Compensation Committee reviews compensation matters and
administers the Company's Stock Option and Employee Stock
Purchase Plans. See "Plans" and "Report of Compensation
Committee" below. The Property Committee reviews proposed
acquisitions and dispositions of properties and makes
recommendations to the Board of Directors. The Board of
Directors held five meetings during the past fiscal year ended
December 31, 1993.
Compliance with Section 16(a) of the Securities and
Exchange Act
Section 16(a) of the Securities and Exchange Act of 1934, as
amended, requires officers, directors, and persons owning more
than 10% of the Company's common stock to file initial statements
of beneficial ownership on Form 3 and statements of changes in
beneficial ownership on Forms 4 or 5 with the Securities and
Exchange Commission and the New York Stock Exchange. The persons
subject to these filing requirements are also required to provide
the Company with copies of all such forms filed. To the Company's
knowledge, based solely on review of the copies of such forms
received by it and written representations received from persons
subject to the reporting requirements that no additional forms
were required to be filed, the Company believes that all filing
requirements applicable to the reporting persons during year
ended December 31, 1993 were complied with except as follows:
Lisbeth C. Evans, one of the Company's directors, sold 300
shares of the Company's common stock in December of 1993. The
Form 4 reflecting the sale was filed on January 21, 1994, 11 days
after its due date. In addition, Floyd A. Schlossberg, one of the
Company's directors, purchased 2,660 shares of the Company's
common stock in December of 1993. The Form 5 reflecting the
purchase was filed on March 1, 1994, 15 days after its due date.
Compensation of Directors and Executive Officers
(a) Compensation to Directors
The Company pays each independent director a fee of
$10,000 per year for services as a director, plus $500 for each
meeting of the Board of Directors attended. The Company
reimburses all directors for travel expenses incurred in
connection with their duties as directors of the Company.
(b) Compensation to Executive Officers
The following tables provide compensation information
regarding executive officers of the Company:
TABLE 1. SUMMARY COMPENSATION TABLE
Annual Long-Term
Compensation Compensation
Name and Principal Stock Option
Position Year Salary(1) Bonus (2) Shares
$ $ #
William G. Benton 1993 183,750 0 40,929
Chairman of the Board, 1992 175,000 21,000 43,558
Chief Executive Officer 1991 175,000 88,649 18,842
and President
G. L. Clark, Jr. 1993 90,000 7,500 22,947
Vice President and 1992 80,000 24,500 23,852
Chief Financial Officer 1991 80,000 41,333 20,215
Susan L. Christiansen 1993 99,750 7,500 22,451
Vice President, General 1992 95,000 35,000 15,304
Counsel and Secretary 1991 95,000 44,333 16,907
NOTES:
(1) The following table indicates the amount reimbursed the
Company in 1993 and 1992 by Taylor House Enterprises,
Limited and in 1991 by Benton Investment Company for
services rendered by the named individuals to that
company during those years:
Amount Net Salary Paid
Name of Individual Year Reimbursed by the Company
William G. Benton 1993 $27,563 $156,187
1992 $26,250 $148,750
1991 $17,500 $157,500
G. L. Clark, Jr. 1993 $18,000 $72,000
1992 $16,000 $64,000
1991 $12,000 $68,000
Susan L. Christiansen 1993 $9,975 $89,775
1992 $14,250 $80,750
1991 $9,500 $85,500
(2) A portion of the 1991 cash bonus was contributed on
behalf of each named executive to a limited partnership
as follows: Benton - $18,649; Clark - $9,333 and
Christiansen - $11,083.
_____________
TABLE 2. OPTION GRANTS IN YEAR ENDED 12/31/93
<TABLE>
Individual Grants Potential Realizable
Value at Assumed
Percent of Annual Rates of Stock
Total Options Price Appreciation
Granted to for Option Term
Options Employees in Exercise
Granted (1) Year Ended Price Expiration
Name (#) 12/31/93 ($/Sh) Date 0% 5% 10%
<S> <C> <C> <C> <C> <C> <C> <C>
William G. Benton 40,929 28% $9.19 2003 $0 $236,487 $599,303
G. L. Clark, Jr. 22,947 16% $9.19 2003 $0 $132,587 $336,002
Susan L. Christiansen 22,451 15% $9.19 2003 $0 $129,721 $328,739
</TABLE>
NOTES:
(1) The options granted have a vesting schedule as follows:
30% 12/31/94; 30% 12/31/95; 30% 12/31/96; and 10%
12/31/97
______________
TABLE 3. AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
Value of
Number of Unexercised
Unexercised in-the-Money
Options Options
Shares at Fiscal at Fiscal
Acquired Year End (#) Year End ($)
on Value
Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
William G. Benton 0 0 31,910/71,419 $33,810/$34,353
G. L. Clark, Jr. 0 0 27,371/39,643 $30,267/$18,912
Susan L. Christiansen 0 0 21,499/33,163 $24,095/$13,582
(c) Plans
1. Agreements with Executive Officers. Mr. Benton, Mr.
Clark and Ms. Christiansen have employment agreements with the
Company. The Employment Agreements provide for a base salary
with increases as authorized by the Board of Directors. The
Agreements are for terms of five years, with each day worked
being deemed to extend the term by an additional day. The
Agreements allow for the performance of services for other
entities with the Company being entitled to reimbursement from
any such entity for the time required to perform such services.
The Agreements provide for the payment to each executive
officer of a lump-sum payment if the Company terminates such
executive employment during the term of the Agreements other than
for cause, or if the employment is terminated for certain
reasons, including a change of control of the Company. The lump-
sum payment is equal to three times the amount of such
executive's average base salary for the previous five years. In
addition, Mr. Benton's Agreement provides an alternative
termination payment equal to five times the highest gross
compensation received by Mr. Benton during the immediately
preceding five fiscal years, which shall include all cash and
noncash compensation received by Mr. Benton, at Mr. Benton's
election. Mr. Benton's Agreement also provides that the Company
will reimburse Mr. Benton for the amount of excise tax, if any,
on his termination payments, as well as any incremental income
taxes payable on the reimbursed amount.
In all other respects the Agreements provide that the terms
of employment will be subject to policies affecting all
employees.
2. Stock Option Plan. The Company's Stock Option Plan
provides that an aggregate of 564,927 shares of the Company's
$0.01 par value common stock may be optioned by the Board of
Directors as nonqualified options to officers and directors of
the Company selected by the Compensation Committee of the Board
of Directors (the "Committee"). For a period one year prior to
serving on the Committee, and while serving on the Committee, no
member may be granted an option to purchase stock of the Company
under the plan or any other stock option plan of the Company.
The exercise price of options granted under the plan will be the
fair market value of the shares on the date of grant. All options
granted under the plan will expire not later than ten years after
the date of the grant and will be subject to such other terms and
conditions as may be determined by the Committee at the date of
the grant. All options granted under the plan expire no later
than 60 days after termination of the relationship under which
the optionee provides services to the Company, except when the
termination is by reason of retirement, by reason of age or
disability, or by reason of the optionee's death. In the case of
retirement by reason of age or disability, options expire three
months after termination of the optionee's relationship with the
Company. In the case of death, options may be exercised by the
personal representative of the deceased within one year after the
date of death. Options are not transferable by the holder other
than by will or by applicable laws of descent and distribution.
The Board of Directors is proposing that the Stock Option Plan
be amended to increase the number of shares reserved to 1,500,000
and to include the grant of restricted shares of stock as a form
of incentive compensation. See Proposal 2 - Proposal to Amend
Stock Option Plan and Report of Compensation Committee below.
3. Employee Stock Purchase Plan. The Company's Employee
Stock Purchase Plan, which is intended to qualify under Section
423 of the Internal Revenue Code, authorizes the issuance of up
to an aggregate of 100,000 shares of common stock to
participating employees. Employees of the Company are eligible
to participate in the plan if they are employed by the Company
for at least 20 hours per week and more than five months per
year. Employees who own 5% or more of the common stock of the
Company and directors who are not employees are not eligible to
participate. The plan is administered by the Compensation
Committee of the Board of Directors. The plan permits eligible
employees to purchase common stock through payroll deductions,
which may not exceed 10% of an employee's base compensation. The
price at which the stock is purchased under the plan is equal to
85% of the fair market value of the common stock on the first day
of each six month offering period. The plan became effective
during 1992 after approval by the shareholders at the annual
meeting held April 30, 1992 and the first offering period under
the plan was the six months beginning July 1, 1992. During 1992,
employees invested $21,255 in 2,819 shares of the Company's
common stock under the plan, and during 1993 employees invested
$46,733 in 6,238 shares of the Company's common stock under the
plan.
Report of Compensation Committee
THE FOLLOWING REPORT OF THE COMPENSATION COMMITTEE IS
PROVIDED FOR INFORMATION PURPOSES ONLY AND SHALL NOT BE DEEMED TO
BE SOLICITATION MATERIAL OR TO BE FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION.
1. The Committee and General Philosophy. The Company's
compensation policies are determined by the Compensation
Committee of the Board of Directors which makes its compensation
recommendations to the full board for approval. The Committee is
comprised of three directors of the Company, none of whom is
employed by the Company. In addition to making recommendations
with respect to compensation, the Committee also administers the
Company's Nonqualified Stock Option Plan and Employee Stock
Purchase Plan. These plans are described above.
The Company's approach to compensation places primary
emphasis on team performance and secondary emphasis on individual
performance. As such, compensation is awarded to all employees
as a whole with specific allocations based on deemed contribution
to the team effort.
The Company's compensation program currently is comprised of
two elements: base salary and annual bonus. Base salaries of
executive officers are generally in the 25th percentile or below
of base salaries in comparable companies, as determined by the
Committee's outside consultant. Bonus is based on the Company's
annual incentive plan and is comprised of a combination of cash
and fair market value stock options, with the amount of cash
bonus and the vesting schedule of stock options being tied to
specific performance goals.
2. Annual Incentive Bonus Plan. The Company's Annual
Incentive Bonus Plan provides for a cash bonus pool and a stock
option pool. The cash bonus pool is subject to adjustment from
zero to 125% based on Company performance. The vesting schedule
of the stock option pool is subject to a range of three years to
ten years based on Company performance. Stock options utilized
in the Annual Incentive Bonus Plan ar granted under the terms of
the Company's Stock Option Plan. Goals for Company performance
are established annually. Points are awarded based on the
achievement of the targeted goals. The aggregate number of
points "earned" determines the percentage of the bonus pool
available for award and the vesting schedule for stock options in
the stock option pool. All employees are eligible for
participation in the plan.
Goals for 1993 were: (1) increasing funds from operations;
(2) increasing total market capitalization; and (3) increasing
the Company's return on equity. In addition, the Company
established a special goal for 1993 of reducing the Company's
dependence on any one lessee to no more than 30% of base
revenues. The base pool for cash bonuses for 1993 was established
at $191,000, which was determined as a percentage of historical
cash flow from operations, as well as a percentage of the
projected increase in cash flow from operation for 1993. In the
event that management had been successful in achieving the
specific goal for 1993, the base pool for cash bonuses would have
doubled. The stock option pool is determined by taking 1% of the
Company's outstanding shares at year end.
Based on 1993 performance, management was successful in the
three general goals set for 1993 and "earned" sufficient points
to justify a cash bonus pool of 115% of the base amount, or
$219,650, and a vesting schedule for stock options of four years
as follows: 30% 1994, 30% 1995, 30% 1996 and 10% 1997. The
special goal for 1993 was not achieved, however, and management
recommended that the cash pool be reduced to $100,000.
Executive officers received 15% of the aggregate annual cash
bonus pool awarded for 1993 and 59% of the stock options granted.
As reflected in Table 2 above, of the total of 145,812 stock
options granted with respect to the 1993 Incentive Bonus Plan,
options for 86,327 shares were granted to executive officers.
To provided additional flexibility in the Annual Incentive
Bonus Plan, the Board of Directors is proposing that the number
of shares reserved under the Company's Stock Option Plan be
increased to 1,500,000 shares and the plan be amended to provide
for the grant of restricted shares. If approved by the
shareholders, it is anticipated that rather than awarding 100% of
the bonus pool in cash, that a percentage of the pool would be
awarded in restricted shares of stock. In general, the restricted
shares would be subject to continued employment during the five
year term. During the restricted period the employee receiving
the award would be entitled to receive dividends and to vote the
stock awarded but could not sell or transfer the stock.
3. Compensation to Chief Executive Officer. Mr. Benton's
base salary of $183,750 was set in 1993. Mr. Benton's prior
salary of $175,000 was reviewed by the Compensation Committee's
outside advisor during 1992 and was determined to be in the 25th
percentile for comparable companies. The Board has approved a
budgeted increase of up to 5% for Mr. Benton during 1994, but the
Committee has not yet implemented an increase. Mr. Benton's
participation in the annual incentive bonus is based on his
relative performance as compared to the performance of all team
members. Mr. Benton's allocation for 1993 was 0% of the total
cash bonus pool and 28% of the total stock option pool. Company
performance as measured by the annual incentive bonus plan can
account for up to 50% of Mr. Benton's total compensation.
Mr. Benton's bonus decreased substantially for 1993 and 1992
as compared to 1991. Although the Company's stock traded above
1992 levels during 1993, the Company's dividend continues to pay
the highest percentage yield among the health care REITs.
Management believes that as a result the Company's stock is
undervalued. Although the Company's stock price has improved as a
result of the Company's stronger balance sheet, Mr. Benton
believes that the Company must reduce its dependence on lessees
providing more than 30% of the Company's base revenues to
increase the market's confidence in the Company and thereby
effect an increase in the market price of the Company's common
stock. As a result, Mr. Benton recommended to the Committee that
bonuses to executive officers be reduced in 1993, his own bonus
being reduced to zero, until this overriding objective is
achieved.
Thomas K. Hearn, Jr. Perry C. Craven Walter H. Ettinger, Jr.
Performance Graph
THE FOLLOWING IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY
AND SHALL NOT BE DEEMED TO BE SOLICITATION MATERIAL OR TO BE
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
FIVE YEAR CUMULATIVE TOTAL RETURNS (1)
HEALTH EQUITY PROPERTIES, S&P 500, ALL REIT
REGISTRANT S&P ALL REIT (2) FOR THE
YR-ENDS YR-ENDS YR-ENDS YEARS
100.00 100.00 100.00 1988
101.12 131.49 98.19 1989
97.52 127.32 81.16 1990
153.43 166.21 110.11 1991
150.95 178.96 123.52 1992
168.74 196.84 146.43 1993
Assumes $100 invested December 31, 1988
NOTES:
(1) Assumes dividends reinvested and fiscal years ending
December 31 for each of the years 1989 through 1993
(2) Based on information published by the National
Association of Real Estate Investment Trusts
________________
Certain Transactions
1. Alden. The Company leases five properties to Alden
Management Services, Inc. ("Alden"), which is wholly owned by Mr.
Floyd A. Schlossberg, a director of the Company. For the year
ended December 31, 1993, the Company received $4,657,000 in
rental income from Alden representing 24% of the Company's total
rental income for the year. The leases with Alden were entered
into in 1986. Since the leases were entered into and negotiated
prior to Mr. Schlossberg's appointment to the Board of Directors
of the Company, the Company considers such leases to have been
negotiated at arm's length and to have terms comparable to those
obtainable from other unaffiliated third parties. The leases
provide for an initial term of ten years with three renewal
options of five years each. The lessee is required to pay a
minimum rental amount with provisions for additional rent based
on increases in revenue. The leases are triple net and pass the
obligation of taxes, insurance, operating expenses and
maintenance on to the lessee. The facilities must be operated as
nursing homes and cannot be subleased without the Company's
approval. The leases provide Alden with a right of first refusal
to purchase the nursing home facilities on the same terms and
conditions as offered by bonafide third party offeror in the
event the Company proposes to accept such bonafide offer.
In December 1987, the Company entered into a loan
agreement with Alden providing for a loan in the amount of
$500,000 for the purpose of making certain capital improvements
to the Company's properties leased by Alden. Pursuant to the
terms of the loan agreement, the Company has advanced $500,000 to
Alden. The $500,000 loan is represented by a promissory note
which bears interest at an annual rate of 12.18% and is payable
in equal monthly installments of principal and interest based on
a 25-year amortization of the principal balance. Upon the
termination of the leases with Alden, the Company may declare the
entire outstanding balance due and payable. The highest
outstanding balance of the note during 1993 was $484,575 and the
outstanding balance on December 31, 1993 was $479,316.
2. Equipment Lease. The Company paid Taylor House
Enterprises Limited, a company controlled by Mr. William G.
Benton, a director, Chairman of the Board and Chief Executive
Officer of the Company, $100,000 for the year ended December 31,
1992 pursuant to an equipment lease. The equipment lease was
entered into in September 1990 and was approved by the
independent members of the Board of Directors, who deemed the
terms to be at least as favorable to the Company as those that
would have been obtained from an unaffiliated party.
3. Shared Expenses. The Company shares office space
and certain overhead expenses with other companies affiliated
with Mr. William G. Benton, director, Chairman of the Board and
Chief Executive Officer of the Company. For the year ended
December 31, 1993, the Company's share of these expenses
(excluding payroll) was $135,521 compared to an aggregate of
$47,615 contributed by Mr. Benton's affiliates. With respect to
the allocation of expenses, items directly attributable to the
Company are allocated 100% to the Company. These items include
postage, audit expense, employee education and training,
insurance and similar items. Direct items account for
approximately 92% of the Company's administrative expenses.
Items shared by all entities are allocated based on relative
payroll expense. These items include rent, office supplies,
utilities and similar items. These items account for
approximately 8% of the Company's administration expenses.
2. AMENDMENT TO STOCK OPTION PLAN - The Board of Directors
has approved certain amendments to the Company's Stock Option
Plan to increase the number of shares reserved for the Plan from
564,927 to 1,500,000 shares and to provide for the grant of
restricted shares of stock under the Plan. The Stock Option Plan
plays an important role in the Company's overall compensation and
provides the key long-term incentive component of the Plan. The
increase in the number of shares reserved, as well as the
establishment of restricted share grants under the Plan, will
provide the Compensation Committee with increased flexible in
rewarding the Company's employees based on performance. A basic
description of the Stock Option Plan appears under Proposal 1 -
Election of Directors, under the heading "Compensation of
Directors and Officers - Plans." In addition, the contribution
of stock options to the Company's annual compensation is
discussed in the Report of Compensation Committee which appears
under that heading in Proposal 1 - Election of Directors.
In general, the Plan provides for the granting of stock
options to all employees. The Participants are selected by the
Compensation Committee, which is composed of three persons
appointed by the Board of Directors. No member of the
Compensation Committee is eligible during his appointment, nor
during the year preceding appointment, to participate in the
Plan. The Compensation Committee is currently comprised of three
of the Company's independent directors.
Stock Options - All other existing terms of the Plan which
relate to stock options will remain unchanged. The exercise
price of options granted under the Stock Option Plan is the fair
market value of the shares on the date of grant, or any such
other price as the Compensation Committee may establish, but in
no event shall such price be less than the fair market value of
the shares on the date of grant. All options granted under the
Plan expire no later than ten years after the date of the grant
and are subject to such other terms and conditions as may be
determined by the Compensation Committee at the date of the
grant. The last reported sale price of the Company's stock on
the New York Stock Exchange on March 4, 1994 was $9.625 per
share. An option granted under the plan is exercisable only
after one year of continuous service to the Company immediately
following the date the option is granted. All options granted
under the Plan expire no later than 60 days after the termination
of service to the Company, except when the termination is by
reason of retirement due to age or disability, or by reason of
the optionee's death. In the case of retirement due to age or
disability, options expire three months after termination of the
optionee's relationship with the Company. In the case of death,
options may be exercised by the personal representative of the
deceased within one year after the date of death. Options are
not transferable by the holder other than by way of applicable
laws of descent and distribution.
Restricted Shares - The amendments to the Plan provide for
the issuance of shares of Common Stock to participants without
the payment of consideration. The shares of stock are subject to
restriction that the participant continue employment with the
Company for a period of five years after grant. The restriction
applies to the participant's right to transfer or sell the
shares, but does not affect the ability of the participant to
participate in the dividend and voting rights relating to the
shares. In the event employment is terminated while the shares
are restricted, the shares are forfeited unless the termination
is due to certain fundamental changes relating to the Company,
retirement, disability or death. Under these circumstances the
restriction lapses and the shares are no longer restricted.
The increase in the number of shares reserved for the Plan as
well as the authorization of grants of restricted shares under
the proposed amendments would increase the dilutive potential to
shareholders upon the exercise of stock options and the issuance
of restricted shares. Because many of the persons eligible to
participate in the Plan are deemed to be affiliates of the
Company, such persons may only resell any shares acquired
pursuant to exercise of the options in compliance with the
provisions of Rule 144. Conditions of Rule 144 that apply to the
affiliates include restrictions on the manner of the offering,
restriction on the number of shares which may be sold during any
calendar quarter, requirement that current public information be
available on the Company and a requirement that a notice of the
proposed Rule 144 transaction be filed with the Securities and
Exchange Commission.
The timing of the federal income tax consequences of
nonqualified stock options and restricted shares is governed by
Section 83 of the Internal Revenue Code of 1986, as amended (the
"Code"). Generally, the grant of options and restricted shares
to participants in the Plan is not a taxable event to the
participant. With respect to nonqualified stock options, in the
year of exercise the participant will have compensation income in
the amount that the fair market value of the shares on the date
of exercise exceeds the exercise price. With respect to grants
of restricted stock, generally, the participant will have
compensation income in the amount of the fair market value of the
shares on the date the restriction lapses. The Company is
entitled to a deduction in the amount of the aggregate exercise
price with respect to stock options and the fair market value of
restricted shares in the year the participant incurs the
compensation income.
The Board of Directors recommends that shareholders vote
"FOR" the proposal amending the Stock Option Plan. The proposal
will be approved if a majority of the Company's shares
represented in person or by proxy at the Annual Meeting vote in
favor of the amendments, assuming the presence of a quorum.
3. AUTHORIZATION TO PURCHASE SHARES OF COMMON STOCK OF THE
COMPANY UP TO AN AGGREGATE PURCHASE PRICE OF $7,000,000 - The
Board of Directors is submitting to the Company's shareholders
for their approval a proposal that the Board of Directors, on
behalf of the Company, be authorized, subject to the limitations
of applicable laws or regulations to purchase or cause to be
purchased within one year after the date of the Annual Meeting,
shares of the common stock up to an aggregate purchase price of
$7,000,000. Notwithstanding the foregoing, at no time shall the
aggregate shares purchased pursuant to this authorization exceed
5% of the shares outstanding at the time of purchase less one (1)
share. Purchases would only be made if in the determination of
the Board of Directors such purchase would not have an adverse
effect on the liquidity or capital resources of the Company.
The purchases for which authorization is sought in this Proxy
Statement will be made for cash and at such prevailing purchase
prices as are available and as the Board of Directors, in its
discretion, shall deem advisable and in the best interest of the
Company. The Company could purchase shares only upon
authorization of the Board of Directors, but without further
notice to shareholders, from any public (open market) transaction
and in accordance with any applicable rules of the Securities and
Exchange Commission. Any purchases would be made with the use of
general corporate funds and revenues that may be generated from
the Company's rental activities. Management of the Company
presently is not aware of any affiliates of the Company who
contemplate offering or selling any securities to the Company.
As of March 4, 1994 there were 14,581,237 shares of the Company's
common stock outstanding.
Any shares acquired by the Company would be deemed part of
the Company's shares but would not be deemed outstanding. The
sole purpose for reaquiring shares would be in the event that the
effective annual dividend rate on the shares was sufficiently
high to make a repurchase of shares a better use of Company funds
than other investments or the repayment of debt with lower annual
interest rates. The Company would not effect any repurchase of
shares at any time in which the Company was otherwise making a
distribution of its securities.
One effect of a purchase by the Company of its shares would
be to decrease the number of outstanding shares, thus increasing
the percentage ownership of, and commensurate ability to control
the Company by, those shareholders who do not sell their shares,
including present management and affiliates of the Company. The
bylaws of the Company provide that no shareholder may acquire
more than 9.8% of the Company's stock. Based on the closing
price of $9.625 per share on March 4, 1994, if the Company were
to purchase all shares authorized by this proposal, the Company
would purchase 727,273 shares, constituting approximately 4.99%
of the total shares of the Company which were outstanding as of
March 4, 1994. Purchase of the Company's shares over the next
year may have a dilutive effect on shareholder's equity with the
amount thereof dependent upon the purchase price for the shares,
the number of shares purchased, the book value of the shares and
other factors.
The Board of Directors recommends that shareholders vote
"FOR" the proposal authorizing such purchases. The proposal will
be adopted if approved by a majority of the Company's shares
represented in person or proxy at the Annual Meeting, assuming
the presence of a quorum. If the proposal is adopted, the
purchase of shares will depend upon the availability of funds of
the Company, market conditions and other considerations. The
Board of Directors, in its discretion, may purchase some, all or
none of the shares authorized for purchase and may terminate the
purchase program at any time.
4. SELECTION OF AUDITORS - Coopers & Lybrand, independent
certified public accountants, has been selected by the Board of
Directors as auditors of the Company for fiscal year ending
December 31, 1994. Representatives of Coopers & Lybrand are
expected to be present at the shareholders' meeting with the
opportunity to make a statement, if they desire to do so, and
will be available to respond to appropriate questions.
5. OTHER MATTERS - Management knows of no other matters
that may properly be, or which are likely to be, brought before
the meeting. However, if any other matters are properly brought
before the meeting, the persons named in the enclosed proxy or
their substitutes will vote in accordance with their best
judgment on such matters.
6. ANNUAL REPORT ON FORM 10-K TO THE SECURITIES AND
EXCHANGE COMMISSION - The Form 10-K was filed on February 1,
1994.
7. DATE FOR THE RECEIPT OF PROPOSALS - In order for
shareholder proposals to be included in the proxy materials for
the 1995 Annual Meeting, any such proposal must be received by
the Company at its executive offices not later than November 15,
1994, and meet all other applicable requirements for inclusion
therein.
By Order of the Board of Directors
WILLIAM G. BENTON, Chairman
March 18, 1994
HEALTH EQUITY PROPERTIES INCORPORATED
SHAREHOLDER'S PROXY
The undersigned, revoking previous proxies of such shares of common stock,
hereby appoints G. L. CLARK, JR. and DEBORAH O. ROBINSON, or either of them,
proxies for the undersigned with several power of substitution or
resubstitution, to vote all of the shares of common stock of Health Equity
Properties Incorporated held of record by the undersigned on March 15, 1994 at
the Annual Meeting of Shareholders to be held on April 28, 1994, or any
adjournment thereof, as follows:
1. The election as Directors of all nominees listed (except as marked to the
contrary below).
( ) FOR ( ) VOTE WITHHELD
William G. Benton, Susan L. Christiansen and David Weil
INSTRUCTION: To withhold your vote for any individual nominee, write that
nominee's name on the space provided.
2. To approve certain amendments to the Company's Stock Option Plan.
( ) FOR ( ) AGAINST ( ) ABSTAIN
3. To authorize the Board of Directors to purchase, or cause to be purchased on
behalf of the Company, shares of the Company's common stock with an aggregate
maximum purchase price of $7,000,000.
( ) FOR ( ) AGAINST ( ) ABSTAIN
In their discretion, the Proxies are authorized to vote upon such matters as
may properly come before the meeting. The Board of Directors recommends a
vote FOR each of the listed proposals.
THIS PROXY IS REVOCABLE AND WILL BE VOTED AS DIRECTED. IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS. IF ANY OTHER
BUSINESS IS PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED
IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME THE BOARD OF DIRECTORS
KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned acknowledges receipt from Health Equity Properties
Incorporated prior to the execution of this proxy of a Notice of Meeting and of
a proxy statement dated March 18, 1994.
<TABLE>
<S> <C>
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN Dated: , 1994
THE ENCLOSED POSTAGE-PREPAID ENVEL-
OPE. RETURNING YOUR PROXY DOES NOT DEPRIVE YOU OF YOUR RIGHT PRINT NAME OF SHAREHOLDER
TO ATTEND AND VOTE AT THE MEETING AND IT WILL HELP TO AVOID
THE EXPENSE OF ADDITIONAL SOLICI- SIGNATURE OF SHAREHOLDER
TATION IF REQUIRED TO ENSURE A QUORUM. PRINT NAME OF SHAREHOLDER
SIGNATURE OF SHAREHOLDER
Please sign exactly as your name appears on this card.
When signing as attorney, executor, administrator,
trustee or guardian, please give your full title. If
shares are held jointly, each holder should sign.
</TABLE>
