<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
HEALTH CARE & RETIREMENT CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(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:
(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):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
================================================================================
<PAGE> 2
- --------------------------------------------------------------------------------
HCR LOGO
HEALTH CARE AND RETIREMENT CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
and
PROXY STATEMENT
MEETING DATE
MAY 6, 1997
YOUR VOTE IS IMPORTANT!
Please mark, date and sign the enclosed proxy card and
promptly return it to the Company in the enclosed envelope.
- --------------------------------------------------------------------------------
<PAGE> 3
HCR LOGO
HEALTH CARE AND RETIREMENT CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 6, 1997
The Annual Meeting of Stockholders of Health Care and Retirement
Corporation will be held on Tuesday, May 6, 1997 at 2:00 p.m. in the auditorium
of One SeaGate, Toledo, Ohio, for the following purposes:
1. To elect three directors for three-year terms, or until their successors
are elected and qualified;
2. To approve the Amended Restricted Stock Plan;
3. To ratify the selection of Ernst & Young LLP as independent public
accountants for the Company for the fiscal year ending December 31,
1997; and
4. To transact such other business as may properly come before the meeting.
The record date for voting at the meeting is March 13, 1997. Only holders
of Common Stock of record at the close of business on the record date will be
entitled to notice of and to vote at the Annual Meeting.
Please sign, date and return your proxy in the enclosed envelope so that
your shares may be voted at the meeting. If the shares are held in more than one
name, all holders of record should sign.
By Order of the Board of Directors,
Paul A. Ormond
Chairman of the Board
R. Jeffrey Bixler
Secretary
March 25, 1997
<PAGE> 4
HEALTH CARE AND RETIREMENT CORPORATION
PROXY STATEMENT
This statement is furnished in connection with the solicitation on behalf
of the Board of Directors of Health Care and Retirement Corporation, a Delaware
corporation ("HCR" or "Company"), of proxies for use at the Annual Meeting of
Stockholders of the Company ("Annual Meeting"), to be held at One SeaGate,
Toledo, Ohio, on Tuesday, May 6, 1997, at 2:00 p.m., and at any and all
adjournments thereof. It is anticipated that the mailing to stockholders of this
Proxy Statement and the enclosed proxy will commence on or about March 25, 1997.
The mailing address of the principal executive offices of the Company is One
SeaGate, Toledo, Ohio 43604-2616.
Only stockholders of record at the close of business on March 13, 1997 will
be entitled to vote at the meeting. At such date, there were outstanding
44,592,100 shares of the Company's Common Stock. Each share of Common Stock is
entitled to one vote. There is no provision in the Company's Certificate of
Incorporation for cumulative voting. The holders of a majority of the total
shares issued and outstanding, whether present in person or represented by
proxy, will constitute a quorum for the transaction of business at the meeting.
Votes cast in person or by proxy will be tabulated by the election inspectors
appointed for the meeting and will determine whether or not a quorum is present.
The election inspectors will treat abstentions as shares that are present and
entitled to vote for purposes of determining the presence of a quorum but as
unvoted for purposes of determining the matter to which the abstention applies.
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. The
Common Stock outstanding on the record date included 443,883 shares held by the
trustee under the Company's Stock Purchase and Retirement Savings Plan, a
defined contribution plan qualified under Section 401(k) of the Internal Revenue
Code, which shares the trustee must vote in accordance with written instructions
from participants in such plan or, as to those shares for which no instructions
are received, in a uniform manner as a single block in accordance with the
instructions received with respect to the majority of shares for which
instructions were received.
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation and By-Laws provide that the
Board of Directors is divided into three classes. Each year the stockholders are
asked to elect the members of a class for a term of three years. Currently, the
terms of office for members of Class III of the Board of Directors will expire
on the date of the Annual Meeting in 1997. The members of Class III are Robert
G. Siefers, M. Keith Weikel and Thomas L. Young. The Board of Directors has
fixed the number of directors to be elected at the 1997 Annual Meeting at three
and has nominated Messrs. Siefers, Weikel and Young for election to Class III.
Those persons who are elected directors at the 1997 Annual Meeting will hold
office until their terms expire on the date of the 2000 Annual Meeting or until
the election and qualification of their successors. The terms of office of the
members of Class I and Class II of the Board of Directors will expire,
respectively, on the dates of the Annual Meeting in 1998 and 1999.
So far as the Board has been advised, only the three persons named above as
nominees will be nominated for election as directors at the Annual Meeting. It
is intended that the shares represented by proxies in the accompanying form will
be voted for the election of these three nominees unless authority to so vote is
withheld. The nominees have consented to being named herein and to serve if
elected. If any of them should
1
<PAGE> 5
become unavailable prior to the Annual Meeting, the proxy will be voted for a
substitute nominee or nominees designated by the Board of Directors or the
number of directors may be reduced accordingly. Directors shall be elected by a
plurality of the votes of the shares present in person or represented by proxy
at the meeting and entitled to vote on the election of directors. A stockholder
entitled to vote for the election of directors may withhold authority to vote
for all or certain nominees.
The following information, which has been provided by the directors, sets
forth for each of the nominees for election to the Board of Directors and for
each director whose term continues, his name, age, principal occupation or
employment during at least the past five years, the name of the corporation or
other organization, if any, in which such occupation or employment is carried on
and the period during which such person has served as a director of the Company.
1997 NOMINEES
ROBERT G. SIEFERS, age 51, has been a director of the Company since
February, 1992. Since February, 1991 Mr. Siefers has been Executive Vice
President and Chief Financial Officer of National City Corporation, Cleveland,
Ohio. Mr. Siefers is a member of Class III of the Board of Directors and a
member of the Audit and Compensation Committees.
M. KEITH WEIKEL, age 59, has been Senior Executive Vice President and Chief
Operating Officer of the Company since August, 1991 and a director of the
Company since February, 1992. Since October, 1991 he has been employed by Health
Care and Retirement Corporation of America ("HCRA"), a subsidiary of the
Company, as Senior Executive Vice President and Chief Operating Officer. Mr.
Weikel is a member of Class III of the Board of Directors.
THOMAS L. YOUNG, age 53, has been a director of the Company since August,
1991. He is Executive Vice President-Administration and General Counsel of
Owens-Illinois, Inc., a position he has held since April, 1992. From December,
1990 to April, 1992, he was Vice President and General Counsel of
Owens-Illinois. He is a member of Class III of the Board of Directors and a
member of the Audit and Compensation Committees of the Board.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR EACH NOMINEE.
CONTINUING DIRECTORS
JOHN J. CLAIR, JR., age 50, has been a director of the Company since
February, 1992. Since 1980, he has been a partner in the law firm of Latham &
Watkins, with headquarters in Los Angeles, California. Mr. Clair concentrates
his practice in corporate tax matters. He is a member of the bar of the State of
California and a member of the American, California and Los Angeles County bar
associations. He is a member of Class I of the Board of Directors and a member
of the Audit Committee.
JOSEPH H. LEMIEUX, age 66, has been a director of the Company since August,
1991. Mr. Lemieux is Chief Executive Officer of Owens-Illinois, a position he
has held since September, 1990. Mr. Lemieux has been a member of the
Owens-Illinois Board of Directors since July, 1984 and Chairman of that Board
since September, 1991. He is a member of Class II of the Board of Directors of
the Company and a member of the Compensation Committee. Mr. Lemieux is also a
director of Libbey Inc. and National City Corporation.
GEOFFREY G. MEYERS, age 52, has been Executive Vice President, Chief
Financial Officer and Treasurer of the Company since August, 1991 and a director
of the Company since February, 1992. Since October, 1991 he has been employed by
HCRA, as Executive Vice President and Chief Financial Officer. Mr. Meyers is a
member of Class II of the Board of Directors of the Company.
2
<PAGE> 6
PAUL A. ORMOND, age 47, has been Chairman of the Board, President and Chief
Executive Officer of the Company since August, 1991. Since October, 1991 he has
been employed by HCRA as President and Chief Executive Officer. He is a member
of Class I of the Board of Directors of the Company. Mr. Ormond is also a
director of Trinova Corporation.
COMPENSATION OF DIRECTORS
During 1996, the annual fee for service on the Board by each non-management
director was $20,000. In addition, the fee paid to non-management directors for
attendance at Board meetings was $1,000 per meeting, and the fee for attendance
at meetings of a committee of the Board was $500 per meeting. Such fees were
paid in cash quarterly unless deferred under the Deferred Compensation Plan for
Outside Directors. Management directors do not receive additional compensation
for service on the Board of Directors.
The Company has adopted, with stockholder approval, a Stock Option Plan for
Outside Directors ("Outside Directors Plan"). Under the terms of the Outside
Directors Plan, each non-management director receives an option to purchase
9,000 shares of Common Stock upon election to the Board and, after completing
one year of service, an additional option to purchase 9,000 shares of Common
Stock on the business day immediately following each annual stockholders'
meeting for so long as such person continues to serve as a director. The per
share exercise price of each option is the fair market value of a share of
Common Stock on the date of grant. Options granted under this plan are
immediately exercisable. During 1996, Messrs. Clair, Lemieux, Siefers and Young
each received option grants under the terms of the Outside Directors Plan.
BOARD MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors met five times during 1996. All members of the Board
attended all meetings of the Board and all meetings of the committees on which
each served.
The Board of Directors currently has an Audit Committee and a Compensation
Committee. The Audit Committee makes recommendations to the Board of Directors
as to the engagement or discharge of the independent public accountants; reviews
the plan and results of the auditing engagement with the independent public
accountants; reviews the scope and results of the Company's internal auditing
procedures; reviews the adequacy of the Company's system of internal accounting
controls; and directs and supervises investigations into matters within the
scope of its duties. The Audit Committee met twice during 1996. The Committee is
comprised of Messrs. Clair, Siefers and Young.
The Compensation Committee of the Board of Directors is comprised of
directors who are not officers or employees of the Company and are not eligible
to participate in any of the Company's executive compensation programs. The
Committee has overall responsibility for administering the executive
compensation program of the Company. The Committee regularly evaluates the
executive compensation program to ensure its appropriateness in the context of
the Company's business and its competitiveness with the compensation practices
of other companies. From time to time, the Committee seeks the advice of
independent experts in evaluating plan design, compensation levels and
administration. Each year the Compensation Committee reviews and approves
salaries for the executive officers of the Company. The Committee is also
responsible for administering the Stock Option Plan for Key Employees, the
Restricted Stock Plan and certain other incentive compensation plans covering
executive officers. The Compensation Committee met twice during 1996. The
Committee is comprised of Messrs. Lemieux, Siefers and Young.
3
<PAGE> 7
OTHER DIRECTOR INFORMATION
During 1996, the law firm of Latham & Watkins, of which Mr. Clair is a
partner, received fees from the Company for legal services in connection with
various securities, tax, acquisition and litigation matters. The Company
anticipates continuing to utilize the services of Latham & Watkins on various
legal matters.
During 1996, National City Bank and National City Bank, Northwest,
subsidiaries of National City Corporation, provided commercial banking, private
banking and trust services to the Company and certain of its officers. National
City Bank, Northwest, is also trustee of the Company's Stock Purchase and
Retirement Savings Plan and administrator of its Senior Management Savings Plan.
Mr. Lemieux is a director of National City Corporation and Mr. Siefers is an
executive officer of National City Corporation.
SECURITY OWNERSHIP OF CERTAIN MANAGEMENT
AND BENEFICIAL OWNERS
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows, as of the record date, information concerning
beneficial ownership of shares of Common Stock by directors and nominees
individually, the individuals named in the Summary Compensation Table, and
directors and executive officers of the Company as a group. Except as indicated
by the notes to the table, the holders listed below have sole voting and
investment power over the shares beneficially owned by them.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME OF OF BENEFICIAL PERCENT
TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP(1)(2) OF CLASS
- ---------------------------- ------------------------ ----------------- --------
<S> <C> <C> <C>
Common Stock................ R. Jeffrey Bixler 101,296 (3)
Common Stock................ John J. Clair, Jr. 48,000 (3)
Common Stock................ Joseph H. Lemieux 60,000 (3)
Common Stock................ Geoffrey G. Meyers 444,861 (3)
Common Stock................ Paul A. Ormond 2,222,122(4) 4.6
Common Stock................ Paul G. Sieben 136,732 (3)
Common Stock................ Robert G. Siefers 48,000 (3)
Common Stock................ M. Keith Weikel 553,758 1.1
Common Stock................ Thomas L. Young 43,350 (3)
Common Stock................ Executive Officers & 3,833,633 7.9
Directors as a group
</TABLE>
- ---------------
(1) Includes the following number of shares which the person has a right to
acquire within 60 days of the record date upon the exercise of options:
Bixler -- 88,175; Clair -- 45,000; Lemieux -- 45,000; Meyers -- 340,992;
Ormond -- l,609,302; Sieben -- 57,001; Siefers -- 45,000;
Weikel -- 434,394; Young -- 38,300; and Executive Officers and Directors as
a Group -- 2,837,182.
(2) Includes shares held by Messrs. Bixler, Meyers, Ormond, Sieben and Weikel
and by all executive officers as a group, under the Stock Purchase and
Savings Plan as of the record date.
(3) Percentage of ownership does not exceed one percent of the class.
(4) Includes 81,472 shares held by family members of Mr. Ormond and 89,286
shares held in trust for certain family members of Mr. Ormond. Mr. Ormond
disclaims any beneficial interest in the shares held by family members or in
trust.
4
<PAGE> 8
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information, as of December 31, 1996, with
respect to any person who is known to the Company to be the beneficial owner of
more than five percent of its Common Stock. The information presented is based
upon Schedule 13Gs filed pursuant to the Securities Exchange Act of 1934 and
received by the Company.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF BENEFICIAL PERCENT OF
TITLE OF CLASS OF BENEFICIAL OWNER OWNERSHIP CLASS
- ----------------------- -------------------------------- ----------------- ----------
<S> <C> <C> <C>
Common Stock........... Putnam Investments, Inc.(1) 5,939,546 13.2%
One Post Office Square
Boston, MA 02109
Common Stock........... A I M Management Group, Inc.(2) 4,597,450 10.2%
11 Greenway Plaza, Suite 1919
Houston, TX 77046
Common Stock........... Brinson Partners, Inc.(3) 4,079,359 9.1%
209 South LaSalle Street
Chicago, IL 60604
Common Stock........... J.P. Morgan & Co.
Incorporated(4) 2,732,711 6.1%
60 Wall Street
New York, NY 10260
</TABLE>
- ---------------
(1) The Schedule 13G received by the Company from Putnam Investments, Inc.
("PI") indicated that the filing was made on behalf of PI, its parent
company, Marsh & McLennan Companies, Inc. ("MMC"), two subsidiaries of PI
which are registered investment advisers, Putnam Investment Management, Inc.
("PIM") and the Putnam Advisory Company, Inc. ("PAC"), and Putnam New
Opportunities Fund ("Fund"). The Schedule 13G filing further indicated that
PI had shared voting power over 212,600 shares and shared dispositive power
over 5,939,546 shares; that PIM had shared dispositive power over 5,492,646
shares; that PAC had shared voting power over 212,600 shares and shared
dispositive power over 446,900 shares; and that Fund had shared dispositive
power over 2,400,000 shares.
(2) The Schedule 13G received by the Company from A I M Management Group, Inc.
("AIM") indicated that the filing was made on behalf of AIM and its
wholly-owned subsidiaries, A I M Advisors, Inc. and A I M Capital
Management, Inc., and that AIM had shared voting and dispositive power over
all shares.
(3) The Schedule 13G received by the Company from Brinson Partners, Inc. ("BPI")
indicated that the filing was made on behalf of BPI, Brinson Trust Company
("BTC"), Brinson Holdings, Inc. ("BHI"), SBC Holding (USA), Inc. ("SBCUSA")
and Swiss Bank Corporation ("SBC"). BTC is a wholly-owned subsidiary of BPI.
BPI is a wholly-owned subsidiary of BHI. BHI is a wholly-owned subsidiary of
SBCUSA. SBCUSA is a wholly-owned subsidiary of SBC. The Schedule 13G further
indicated that BPI, BHI, SBCUSA and SBC had shared voting and shared
dispositive power over all shares and BTC had shared voting and shared
dispositive power over 814,250 shares.
(4) The Schedule 13G received by the Company from J.P. Morgan & Co. Incorporated
("J.P. Morgan") indicated that J.P. Morgan had sole voting power over
1,783,529 shares, shared voting power over 37,537 shares, sole dispositive
power over 2,671,399 shares and shared dispositive power over 59,712 shares.
5
<PAGE> 9
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION
The following table sets forth the annual and long-term compensation for
the last three completed fiscal years for the Company's Chief Executive Officer
and the four other most highly compensated executive officers at the end of the
last completed fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
------------------------
PAYOUTS
AWARDS --------
ANNUAL ----------- LONG-
COMPENSATION(1) SECURITIES TERM
NAME AND --------------------- UNDERLYING INCENTIVE ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS (#) PAYOUTS COMPENSATION(2)
- ---------------------------- ---- -------- -------- ----------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Paul A. Ormond.............. 1996 $481,731 $500,000 90,000 $396,900 $ 32,781
Chairman, President 1995 451,846 450,000 90,000 378,000 31,206
and Chief Executive 1994 421,961 400,000 90,000 360,000 69,082
Officer
M. Keith Weikel............. 1996 306,154 260,000 30,000 211,680 24,055
Senior Exec. Vice 1995 286,231 235,000 30,000 201,600 24,017
President and Chief 1994 269,859 215,000 30,000 192,000 32,886
Operating Officer
Geoffrey G. Meyers.......... 1996 220,808 128,000 18,000 108,241 13,300
Exec. Vice President 1995 208,738 115,000 18,000 103,088 13,267
and Chief Financial 1994 197,112 105,000 18,000 98,175 21,439
Officer
R. Jeffrey Bixler........... 1996 160,692 66,000 12,000 53,746 8,407
Vice President and 1995 145,923 60,000 10,500 51,188 8,000
General Counsel 1994 137,056 52,000 9,000 48,750 5,246
Paul G. Sieben.............. 1996 155,519 57,000 9,000 53,746 8,231
Vice President, Director 1995 145,615 54,000 9,000 51,188 8,112
of Development & 1994 137,056 49,000 9,000 48,750 6,328
Construction
</TABLE>
- ---------------
(1) The aggregate incremental cost of perquisites and other personal benefits
was less than the minimum required to be reported pursuant to the Securities
and Exchange Commission's rules.
(2) The amounts disclosed in this column for 1996 include (a) Company matching
contributions to its Senior Management Savings Plan ("SMSP"), a nonqualified
defined contribution plan, on behalf of Messrs. Ormond, Weikel, Meyers,
Bixler and Sieben in the amounts of $27,952, $16,235, $10,074, $6,321 and
$6,286, respectively; and (b) the dollar value of premiums paid for life
insurance for Messrs. Ormond, Weikel, Meyers, Bixler and Sieben in the
amounts of $4,829, $7,820, $3,226, $2,086 and $1,945, respectively.
6
<PAGE> 10
OPTION GRANTS
The following table sets forth information on stock option grants during
1996 pursuant to the Company's Amended Stock Option Plan for Key Employees for
the individuals named in the Summary Compensation Table. The Company does not
maintain a stock appreciation rights plan covering executive officers.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
---------------------------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION GRANT DATE
NAME GRANTED(#) 1996 PRICE DATE PRESENT VALUE(2)
- ----------------------------- ---------- ------------ ------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Paul A. Ormond............... 90,000 24.3% $ 27.75 12/4/06 $967,500
M. Keith Weikel.............. 30,000 8.1% 27.75 12/4/06 322,500
Geoffrey G. Meyers........... 18,000 4.9% 27.75 12/4/06 193,500
R. Jeffrey Bixler............ 12,000 3.2% 27.75 12/4/06 115,920
Paul G. Sieben............... 9,000 2.4% 27.75 12/4/06 86,940
</TABLE>
- ---------------
(1) Each grant during 1996 provides that the option shall not be exercisable to
any extent until three years following the date of grant at which time the
option becomes fully exercisable.
(2) Represents an estimate of option values at grant date (December 3, 1996) by
using the Black-Scholes option pricing model with the following weighted
average assumptions: dividend yield of 0%, expected volatility of 20%,
risk-free rate of return of 5.96% and expected life of 6.9 years.
AGGREGATED OPTION VALUES
The following table sets forth information concerning option exercises
during the last fiscal year by the individuals named in the Summary Compensation
Table and the aggregate dollar value of unexercised options held at the end of
the last fiscal year by such individuals. The value is based upon a share price
of $28.625.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF SECURITIES UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY
ACQUIRED ON OPTIONS AT DECEMBER 31, 1996 OPTIONS AT DECEMBER 31, 1996
EXERCISE VALUE ----------------------------- -----------------------------
NAME (#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Paul A. Ormond...... 1,609,302 270,000 $36,445,464 $ 1,676,250
M. Keith Weikel..... 434,394 90,000 9,773,167 558,750
Geoffrey G. Meyers.. 340,992 54,000 7,734,445 335,250
R. Jeffrey Bixler... 30,000 $611,475 98,175 31,500 2,183,710 180,938
Paul G. Sieben...... 89,785 27,000 1,988,417 167,625
</TABLE>
7
<PAGE> 11
LONG-TERM INCENTIVE PLANS
The individuals named in the Summary Compensation Table are covered by the
Company's Performance Award Plan ("PAP") under which eligible employees receive
a cash award payable at the end of the three-year period following the grant of
the award. The total amount of any award payable at the end of an award period
is determined by the Compensation Committee of the Board of Directors and is
based upon Company performance criteria established at the beginning of the
period. Award payouts for the 1996-1998 award period will be based on the
compound annual growth rate in earnings per share of Common Stock over the
period.
LONG-TERM INCENTIVE PLANS -- AWARDS IN 1996
<TABLE>
<CAPTION>
PERFORMANCE ESTIMATED FUTURE PAYOUTS
OR OTHER UNDER NON-STOCK
PERIOD UNTIL PRICE-BASED PLANS
MATURATION -----------------------------------
NAME OR PAYOUT THRESHOLD TARGET MAXIMUM
- -------------------------------------- ------------- --------- -------- --------
<S> <C> <C> <C> <C>
Paul A. Ormond........................ 1996-1998 $144,000 $288,000 $432,000
M. Keith Weikel....................... 1996-1998 76,250 152,500 228,750
Geoffrey G. Meyers.................... 1996-1998 38,500 77,000 115,500
R. Jeffrey Bixler..................... 1996-1998 20,000 40,000 60,000
Paul G. Sieben........................ 1996-1998 19,375 38,750 58,125
</TABLE>
RETIREMENT PLANS
The following table illustrates the estimated combined annual retirement
benefits which would be provided under the Company's Pension Plan, a qualified
defined benefit plan ("Pension Plan"), and the Senior Executive Retirement Plan,
a nonqualified defined benefit plan ("SERP"), in various average earnings
classifications upon normal retirement at age 65:
<TABLE>
<CAPTION>
HIGH
CONSECUTIVE
THREE-YEAR YEARS OF CREDITED SERVICE
AVERAGE -------------------------------------------------------------------------------------
EARNINGS 5 10 15 20 25 30 35
- -------------- ------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 300,000 20,400 40,800 61,200 81,600 102,000 122,400 142,800
600,000 41,800 83,700 125,500 167,300 209,100 251,000 292,800
900,000 63,300 126,500 189,800 253,000 316,300 379,500 442,800
1,200,000 84,700 169,400 254,100 338,700 423,400 508,100 592,800
1,500,000 106,100 212,200 318,300 424,500 530,600 636,700 742,800
1,700,000 120,400 240,800 361,200 481,600 602,000 722,400 842,800
</TABLE>
The benefits illustrated in the above table are calculated on a
straight-life annuity basis. In accordance with the provisions of the Pension
Plan and the SERP, the table reflects the greater of the regular benefit under
current provisions of the plans and the "grandfathered benefit" under the
formula in effect prior to January 1, 1989. The regular benefit does not contain
an offset for social security or other benefits, but the "grandfathered" benefit
does contain a partial offset for social security benefits.
At December 31, 1996, Messrs. Ormond, Weikel, Meyers, Bixler and Sieben
had, respectively, total Credited Service under the Pension Plan and the SERP of
23 years, 10 years, 29 years, 14 years and 17 years. Annual covered compensation
includes base salary and amounts earned under the Annual Incentive Award Plan
and PAP. The covered compensation for 1996 does not differ substantially from
that set forth in the Salary, Bonus and Long-Term Payout columns in the Summary
Compensation Table.
8
<PAGE> 12
EXECUTIVE EMPLOYMENT AGREEMENTS
HCRA has entered into employment agreements with each of the Company's
corporate officers, including the executive officers listed in the Summary
Compensation Table, that entitle them to receive their base salaries and to
participate in designated benefit plans of the Company. Each Employment
Agreement also provides that the officer's employment is not for any specified
term and may be terminated at any time. In addition, each Agreement provides
that, in the event of the officer's termination other than for "cause" (as
defined in the Agreement), payment of base salary will continue for two years in
Mr. Ormond's case and one year in the case of the other officers. The Employment
Agreement also provides that the officer's base salary may be adjusted
periodically and that benefit plans in which the officer is entitled to
participate may be adjusted or terminated by the Company at any time, but that
no vested or accrued benefit may be adversely affected.
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION IN COMPENSATION DECISIONS
The Compensation Committee is comprised of Messrs. Lemieux, Siefers and
Young, none of whom were officers or employees of the Company or any of its
subsidiaries during the fiscal year. Messrs. Lemieux and Young were, prior to
October 1991, officers of certain subsidiaries of the Company. As disclosed on
page 4, the Company has received banking and related services from subsidiaries
of National City Corporation of which Mr. Lemieux is a director and Mr. Siefers
is an executive officer.
COMPENSATION COMMITTEE REPORT
Compensation Policies Applicable to Executive Officers. During 1996, the
Compensation Committee continued to follow basic compensation policies
previously established. The main objective of the executive compensation program
remains the enhancement of stockholder value over the long term. The Committee
has noted that the health care industry continues to evolve in a highly
competitive and heavily regulated environment which presents senior management
with significant challenges and opportunities. The Committee believes that the
superior performance of the senior management team in this complex business
environment has directly resulted in significant and consistent increases in
recognized measures of stockholder value. In the judgment of the Committee, the
continued achievement of significant increases in stockholder value requires a
superior compensation package which attracts and retains executives of
exceptional talents and leadership ability and motivates superior performance in
achieving future growth in stockholder value. The compensation program therefore
is designed and administered (1) to be strongly competitive within the health
care industry generally and with the compensation policies of other
publicly-held companies of comparable size and complexity; (2) to provide major
incentives directly linked to increases in recognized measures of stockholder
value; and (3) to reward superior performance as measured by financial and
non-financial factors. The Committee believes that the current compensation
program is accomplishing these objectives but the Committee also recognizes its
responsibility to evaluate the program regularly and make appropriate changes to
ensure its continued success.
Annual base salaries of the executive officers were reviewed by the
Committee at its fall meeting and adjusted as determined to be appropriate,
effective December 1, 1996. Following previously stated policies, the Committee
adjusted salaries based upon competitive information, past individual
performance as measured by both qualitative and quantitative factors and the
potential for making significant contributions to future Company performance.
The Committee also took into consideration relatively low inflation in the
national economy. Although strong overall performance by the Company was a
factor in determining the salary adjustments, the individual factors stated
above were the primary considerations.
9
<PAGE> 13
The Committee approved payouts under the incentive components of the
executive compensation program based upon the Company's performance against
goals previously established by the Committee. With respect to the Annual
Incentive Plan ("Annual Plan"), the Company performance in 1996 significantly
exceeded Committee-approved goals for operating income and earnings per share
("EPS"). Other important measures of financial performance such as revenue, cash
flow from operations and revenue mix greatly improved versus prior year. In
addition, the Committee determined that the quality of care in the Company's
nursing centers remained at a high level and significant progress was made
during 1996 in implementing strategic plans. These performance achievements
justified payouts under the Annual Plan in excess of the target payout levels.
In determining the amount of the additional payout, the Committee considered a
number of factors but primarily rewarded performance which significantly
exceeded pre-established goals.
The Committee approved payouts under the Performance Award Plan ("PAP")
based upon the actual rate of growth in EPS during the 1994-1996 award period,
the criteria established by the Committee at the time awards were made. During
this period the growth in EPS exceeded the target goal by an amount which earned
maximum payouts under the specific formula established at the time the target
goals were set by the Committee. The Committee also set a target growth rate in
EPS for the 1996-1998 award period which includes a threshold growth rate for
any payment and a maximum payment for growth significantly in excess of the
target. The Committee believes that the PAP is achieving its objective of
focusing senior management on long-term increases in stockholder value.
The Committee continues to believe that a broad-based stock option plan is
an important element in a compensation program designed to maximize stockholder
value. The Company's Amended Stock Option Plan for Key Employees ("Option Plan")
covers executive officers and key corporate and field management. The Committee
believes that the program is valued by eligible employees at all levels of the
organization and that the program is providing an important incentive to
increasing stockholder value. The Committee approved additional stock option
grants during 1996, with exercise dates deferred for three years and exercise
prices set at the market value on the date of grant. The grants were based upon
competitive option practices and the individual's potential to make a
contribution to earnings growth as determined by the individual's job
classification, responsibilities and past performance.
Consistent with its obligation to evaluate periodically the appropriateness
of changes to the Company's compensation program, the Committee has determined
that authority to issue additional shares under the Restricted Stock Plan is
desirable. Share authority under the Plan was exhausted in October, 1991 and all
grants have fully vested. The Committee believes that grants of Restricted
Stock, conditioned upon achieving performance-based goals, will be an important
feature in the long-term retention of key executives and will provide further
motivation for performance which is directly linked to future increases in
stockholder value. Accordingly, in February, 1997 the Committee adopted
amendments to the Restricted Stock Plan, subject to stockholder approval, to
increase Restricted Stock authority by 500,000 shares and to make other changes
to bring the Plan, as amended, within the performance-based compensation
exception of Section 162(m) of the Code.
Compensation of Chief Executive Officer. The compensation policies
described above apply as well to the compensation of the Chief Executive Officer
("CEO"). The Committee is directly responsible for determining the CEO's salary
level and for all awards and grants to the CEO under the incentive components of
the compensation program. The overall compensation package of the CEO is
designed to recognize that the CEO bears primary responsibility for increasing
the value of stockholders' investments. Accordingly, a substantial portion of
the CEO's compensation is incentive-based, providing greater compensation as
direct and indirect financial measures of stockholder value increase. The
Committee also believes that the complex health care environment in which the
Company currently operates requires a high degree of leadership, innovation and
10
<PAGE> 14
prudent risk-taking in order to meet and sustain corporate objectives for
increasing stockholder value. The CEO's compensation is thus structured and
administered to motivate and reward the successful exercise of these
entrepreneurial skills.
The CEO's compensation for 1996 was again directly related to the overall
performance of the Company as measured by financial criteria and important
qualitative factors. Successful financial performance during the year was
demonstrated by the significant growth in revenue, revenue mix, operating income
and EPS. In addition, the CEO's compensation continued to reflect (1) the
excellent quality of care maintained in the Company's nursing centers and the
continued emphasis on quality among all employees; (2) progress in implementing
the growth objectives of the Company as reflected in earnings growth from
existing assets, the further development and addition of specialty care units,
and acquisition and new construction activities; (3) the continued strong
performance of the senior management team; and (4) related qualitative factors.
Policy Related to Deductibility of Compensation. Section 162(m) of the
Internal Revenue Code of 1986 denies a deduction to any publicly held
corporation for compensation paid to the CEO and the other four most highly
compensated officers, as of the end of a fiscal year, to the extent that the
compensation exceeds $1 million in any taxable year of the corporation beginning
after 1993, subject to an exception for "performance-based compensation." It is
the Committee's policy to take the necessary steps, including appropriate plan
amendments, to qualify compensation paid to executive officers for deductibility
to the extent that so qualifying the compensation is not inconsistent with the
Company's fundamental compensation policies. In furtherance of this policy, the
stockholders have approved amendments to the PAP and the Option Plan designed to
meet the performance-based compensation requirements of Section 162(m). The
Amended Restricted Stock Plan has also been designed to meet the
performance-based compensation requirements of Section 162(m) and is being
submitted for stockholder approval at the 1997 Annual Meeting. The Committee
will continue to monitor developments on this subject and take further action as
may be appropriate.
Joseph H. Lemieux
Robert G. Siefers
Thomas L. Young
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<PAGE> 15
PERFORMANCE GRAPH
The graph below compares the total stockholder return on HCR Common Stock
to the cumulative total return for a broad market index (the Standard & Poor's
500 Stock Index), and to the cumulative total return for an index comprised of a
peer group of companies.(1) The indices reflect the year-end market value of an
investment in the stock of each company in the index, including additional
shares assumed to have been acquired with cash dividends, if any.
The graph assumes a $100 investment in HCR stock on December 31, 1991 at a
price of $7.375 per share, as adjusted for 100% and 50% stock dividends on March
5, 1993 and June 5, 1996, respectively. The graph also assumes investments of
$100 in the S&P 500 and the peer group indices, respectively, on the same date.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
MEASUREMENT PERIOD PEER GROUP
(FISCAL YEAR COVERED) HCR S&P 500 INDEX
<S> <C> <C> <C>
1991 100.00 100.00 100.00
1992 148.02 107.73 114.80
1993 201.12 118.59 107.85
1994 272.31 120.22 108.15
1995 316.37 165.37 102.54
1996 388.12 204.15 121.77
</TABLE>
- ---------------
(1) The peer group index is based upon the total return for investments in the
common stock of the following companies: Beverly Enterprises, Inc.;
Integrated Health Services, Inc.; Living Centers of America, Inc.; Manor
Care, Inc.; and Novacare, Inc. The returns for each company are weighted in
proportion to the market values of the equity capitalization of such
companies.
12
<PAGE> 16
PROPOSAL TO APPROVE THE AMENDED RESTRICTED STOCK PLAN
In October, 1991, the Company adopted a Restricted Stock Plan pursuant to
which shares of Common Stock were issued to officers of the Company subject to
restrictions set forth in Restricted Stock Agreements executed by each officer
and the Company at the time the shares were issued. The Board of Directors
initially reserved 892,866 shares of Common Stock for issuance under the
Restricted Stock Plan, all of which were issued in October, 1991. The
Compensation Committee, which is responsible for the administration of the
Restricted Stock Plan, has adopted amendments to the Plan, subject to
stockholder approval, which: (1) increase the number of authorized shares of
Common Stock that may be issued as Restricted Stock by 500,000 shares to
1,392,866; (2) establish performance-based criteria for the issuance of
Restricted Stock; (3) limit the number of shares of additional Restricted Stock
that may be issued to any individual to 250,000 shares; (4) extend the
expiration date of the Restricted Stock Plan, as amended, to ten years from the
date of stockholder approval; and (5) make other changes to the Restricted Stock
Plan which conform the provisions thereof to the requirements of Section 162(m)
of the Code. The Restricted Stock Plan, as amended, has been renamed the Amended
Restricted Stock Plan. Upon approval by the stockholders of the Amended
Restricted Stock Plan, the Company believes that the value of Restricted Stock
will qualify as performance-based compensation within the meaning of Section
162(m) of the Code. The following description of the Amended Restricted Stock
Plan is qualified in its entirety by the terms of the Amended Restricted Stock
Plan which is set forth in its entirety in Appendix A.
The Amended Restricted Stock Plan ("Plan") is a stock-based compensation
plan pursuant to which the Compensation Committee periodically makes Restricted
Stock Awards which can, upon achievement of specified performance goals, result
in the issuance of Restricted Stock to the recipient of the award. The Plan
covers corporate officers and certain other key senior management personnel
selected by the CEO, and approved by the Committee, based upon their ability to
make significant contributions to the long-term performance of the Company.
Currently, there are 14 persons covered by the Plan. Restricted Stock Awards are
expressed in shares of Common Stock. At the time the Restricted Stock Award is
made, the Committee establishes a performance goal based upon the rate of growth
in earnings per share ("Target Performance Goal") and sets an Award Period
during which the Target Performance Goal must be achieved. The selection of the
Target Performance Goal is designed to reward performance which increases
stockholder value over the long term.
Following the end of each Award Period, the Committee determines the extent
to which the Restricted Stock Awards have been earned based upon the Company's
performance in achieving the Target Performance Goal. No shares of Restricted
Stock may be issued until the Compensation Committee certifies the extent to
which the Target Performance Goal has been achieved during the Award Period.
Shares of Restricted Stock are issued pursuant to written Restricted Stock
Agreements which will contain restrictions established by the Committee.
Typically, the restrictions will preclude the sale or encumbrance of the shares
until the expiration of a specified period of time.
The Plan may be amended in whole or in part or otherwise, modified,
suspended or terminated at any time by the Committee. However, certain
provisions of the Plan may not be amended without stockholder approval given
within twelve months before or after the action by the Committee. These
provisions include the maximum number of shares which may be issued as
Restricted Stock, the eligibility requirements of the Plan and the time limit
imposed for issuing shares of Restricted Stock. Shares of Restricted Stock may
not be issued after the expiration of ten years from the date the Plan is
approved by the stockholders.
The Plan provides that Restricted Stock may be reacquired by the Company
upon a termination of employment prior to the lapse of any restrictions. Any
shares of Restricted Stock reacquired by the Company may again be utilized under
the Plan subject to the limitations on the maximum number of shares which may
13
<PAGE> 17
be issued under the Plan. In the event that the outstanding shares of Common
Stock of the Company are changed into or exchanged for a different number or
kind of shares or other securities of the Company, or of another corporation, by
reason of reorganization, merger, consolidation, recapitalization,
reclassification, or the number of shares is increased or decreased by reason of
a stock split-up, stock dividend, combination of shares or any other increase or
decrease in the number of shares of Common Stock, the Committee will make
appropriate adjustments in the number of shares which may be issued as
Restricted Stock and in the outstanding shares of Restricted Stock.
As of the date hereof, the Compensation Committee has not allocated any
shares of Restricted Stock under the Plan to the CEO, to any of the other
individuals listed in the Summary Compensation Table or to any eligible
employees under the Plan. The amount of Restricted Stock which would have been
allocated to any individual under the Plan during the last completed fiscal year
is not determinable because such allocations are within the discretion of the
Compensation Committee.
Federal Income Tax Consequences of the Amended Restricted Stock Plan. The
following discussion is a general summary of the material federal income tax
consequences of the Plan to the Company and to participants in the Plan. Under
present federal regulations, there will be no federal income tax consequences to
either the Company or a participant in the Plan when a Restricted Stock Award is
made or Restricted Stock is issued pursuant to an Award. If Restricted Stock is
issued, the value of the Restricted Stock at the time the restrictions thereon
lapse will be taxable to a participant as ordinary income and deductible by the
Company as compensation unless the participant elects pursuant to Section 83(b)
of the Code to be taxed on the value of the Restricted Stock prior to the time
when all restrictions lapse. If the participant makes an election under Section
83(b) the value of the Restricted Stock will be taxable as ordinary income in
accordance with the election and will be deductible by the Company as
compensation. Upon disposition of the Restricted Stock, following lapse of the
restrictions thereon, the participant will realize short or long-term capital
gain depending on the participant's holding period and the Company receives no
further deduction.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ADOPTION OF THE
PROPOSAL.
PROPOSAL TO RATIFY SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
Upon the recommendation of the Audit Committee, the Board of Directors of
the Company has selected Ernst & Young LLP as independent public accountants for
the Company for the fiscal year ending December 31, 1997, subject to
ratification of such selection by the stockholders.
A partner of Ernst & Young LLP will attend the Annual Meeting. He will have
an opportunity to make a statement if he desires and will be available to
respond to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ADOPTION OF
THE PROPOSAL.
OTHER BUSINESS
As of the date of this Proxy Statement, management knows of no other
business that will be presented for consideration at the Annual Meeting.
However, if other proper matters are presented at the meeting, it is the
intention of the proxy holders named in the accompanying proxy to take such
action as shall be in accordance with their judgment on such matters. For
adoption, all proposals to be voted upon by stockholders require a majority vote
of Common Stock represented at the meeting in person or by proxy.
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<PAGE> 18
GENERAL INFORMATION
REVOCABILITY OF PROXIES
Any proxy solicited hereby may be revoked by the person or persons giving
it at any time before it has been exercised at the Annual Meeting by giving
notice of revocation to the Company in writing or at the Annual Meeting.
SOLICITATION COSTS
The Company will pay the cost of preparing and mailing this proxy statement
and other costs of the proxy solicitation made by the Company's Board of
Directors. Certain of the Company's officers and employees may solicit the
submission of proxies authorizing the voting of shares in accordance with the
Board of Directors' recommendations, but no additional remuneration will be paid
by the Company for the solicitation of those proxies. Such solicitations may be
made by personal interview, telephone and telegram. Arrangements have also been
made with brokerage firms and others for the forwarding of proxy solicitation
materials to the beneficial owners of Common Stock, and the Company will
reimburse them for reasonable out-of-pocket expenses incurred in connection
therewith.
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
A stockholder desiring to submit a proposal for inclusion in the Company's
Proxy Statement for the 1998 Annual Meeting must deliver the proposal so that it
is received by the Company no later than November 25, 1997. The Company requests
that all such proposals be addressed to R. Jeffrey Bixler, Vice President,
General Counsel and Secretary, Health Care and Retirement Corporation, One
SeaGate, Toledo, Ohio 43604-2616.
By Order of the Board of Directors,
R. JEFFREY BIXLER, SECRETARY
Toledo, Ohio
March 25, 1997
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APPENDIX A
HEALTH CARE AND RETIREMENT CORPORATION
AMENDED RESTRICTED STOCK PLAN
HEALTH CARE AND RETIREMENT CORPORATION, a corporation organized under the
laws of the State of Delaware (the "Company"), hereby adopts this Amended
Restricted Stock Plan. The purposes of this Amended Restricted Stock Plan are as
follows:
1. To further the growth, development and financial success of the
Company by providing additional incentives to certain of its Employees (as
defined hereunder) by assisting them to become owners of capital stock of
the Company and thus to benefit directly from its growth, development and
financial success.
2. To enable the Company to obtain and retain the services of the
type of officers considered essential to the long-range success of the
Company by providing and offering them an opportunity to become owners of
capital stock of the Company by means of issuances of Restricted Stock (as
defined hereunder).
ARTICLE I
DEFINITIONS
Whenever the following terms are used in this Plan, they shall have the
meaning specified below unless the context clearly indicates to the contrary.
The masculine pronoun shall include the feminine and neuter and the singular
shall include the plural, where the context so indicates.
Section 1.1 -- Award Period
"Award Period" shall mean the period of time set by the Committee during
which the Target Performance Goal set forth in a Restricted Stock Award must be
achieved.
Section 1.2 -- Board
"Board" shall mean the Board of Directors of the Company.
Section 1.3 -- Chief Executive Officer
"Chief Executive Officer" shall mean the Chief Executive Officer of the
Company elected by the Board in accordance with the by-laws of the Company.
Section 1.4 -- Code
"Code" shall mean the Internal Revenue Code of 1986, as amended.
Section 1.5 -- Committee
"Committee" shall mean the Compensation Committee of the Board, appointed
as provided in Section 5.1.
A-1
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Section 1.6 -- Common Stock
"Common Stock" shall mean the Company's common stock, $.01 par value.
Section 1.7 -- Company
"Company" shall mean Health Care and Retirement Corporation, a Delaware
corporation.
Section 1.8 -- Director
"Director" shall mean a member of the Board.
Section 1.9 -- Employee
"Employee" shall mean any employee of the Company, or of any corporation
which is then a Parent Corporation or Subsidiary, whether such employee is so
employed at the time this Plan is adopted or becomes so employed subsequent to
the adoption of this Plan.
Section 1.10 -- Exchange Act
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
Section 1.11 -- Fair Market Value
"Fair Market Value" of a share of the Company's stock as of a given date
shall be: (i) the closing price of a share of the Company's stock on the
principal exchange on which shares of the Company's stock are then trading, if
any, on the day previous to such date, or if shares were not traded on the day
previous to such dates, then on the next preceding trading day during which a
sale occurred; or (ii) if such stock is not traded on an exchange but is quoted
on NASDAQ or a successor quotation system, (1) the last sales price (if the
stock is then listed as a National Market Issue under the NASD National Market
System) or (2) the mean between the closing representative bid and asked prices
(in all other cases) for the stock on the day previous to such date as reported
by NASDAQ or such successor quotation system; or (iii) if such stock is not
publicly traded on an exchange and not quoted on NASDAQ or a successor quotation
system, the mean between the closing bid and asked prices of the stock, on the
day previous to such date, as determined in good faith by the Committee; or (iv)
if the Company's stock is not publicly traded, the fair market value established
by the Committee acting in good faith.
Section 1.12 -- Officer
"Officer" shall mean an officer of the Company, as defined in Rule 16a-1(f)
under the Exchange Act, as such Rule may be amended in the future.
Section 1.13 -- Parent Corporation
"Parent Corporation" shall mean any corporation in an unbroken chain of
corporations ending with the Company if each of the corporations other than the
Company then owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain.
Section 1.14 -- Plan
"Plan" shall mean this Health Care and Retirement Corporation Amended
Restricted Stock Plan.
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<PAGE> 21
Section 1.15 -- Restricted Stock
"Restricted Stock" shall mean Common Stock of the Company issued pursuant
to Article III of the Plan and subject to the terms and conditions imposed
pursuant to Article IV of the Plan.
Section 1.16 -- Restricted Stock Award
"Restricted Stock Award" shall mean an award of Restricted Stock which may
be issued only upon the attainment of performance goals established by the
Committee.
Section 1.17 -- Restricted Stockholder
"Restricted Stockholder" shall mean a person to whom Restricted Stock has
been issued under the Plan.
Section 1.18 -- Rule 16b-3
"Rule 16b-3" shall mean that certain Rule 16b-3 under the Exchange Act, as
such rule may be amended in the future.
Section 1.19 -- Secretary
"Secretary" shall mean the Secretary of the Company.
Section 1.20 -- Securities Act
"Securities Act" shall mean the Securities Act of 1933, as amended.
Section 1.21 -- Subsidiary
"Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last Corporation in the unbroken chain then owns stock possessing 50% or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain. "Subsidiary" shall also mean any partnership
in which the Company and/or any Subsidiary owns 50% or more of the capital or
profit interests.
Section 1.22 -- Target Performance Goal
"Target Performance Goal" shall mean the performance goal set forth in a
Restricted Stock Award and expressed in terms of a compound annual rate of
growth in earnings per share of Common Stock or in such other recognized measure
of stockholder value selected by the Committee.
Section 1.23 -- Termination of Employment
"Termination of Employment" shall mean the time when the employee-employer
relationship between the Restricted Stockholder and the Company, a Parent
Corporation or a Subsidiary is terminated for any reason, with or without cause,
including, but not by way of limitation, a termination by resignation,
discharge, death, total disability or retirement, but excluding: (i)
terminations where there is a simultaneous reemployment by the Company, a Parent
Corporation or a Subsidiary; or (ii) terminations where the Restricted
Stockholder continues a relationship (e.g., as a director or as a consultant)
with the Company, a Parent Corporation or a Subsidiary. The Committee, in its
absolute discretion, shall determine the effect of all other matters and
questions relating to Termination of Employment, including, but not by way of
limitation,
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the question of whether a Termination of Employment resulted from a discharge
for cause, and all questions of whether particular leaves of absence constitute
Terminations of Employment. Notwithstanding any other provision of this Plan,
the Company or any of its subsidiaries has an absolute and unrestricted right to
terminate the Restricted Stockholder's employment at any time for any reason
whatsoever, with or without cause.
ARTICLE II
SHARES SUBJECT TO PLAN
Section 2.1 -- Shares Subject to Plan
The shares of capital stock which may be issued as Restricted Stock shall
be shares of the Company's Common Stock, par value $.01 per share. The aggregate
number of such shares which may be issued as Restricted Stock shall not exceed
1,392,866. No employee shall be issued more than 250,000 shares of the
Restricted Stock authorized by the Stockholders at the 1997 Annual Stockholders
Meeting.
Section 2.2 -- Reacquired Restricted Stock
Any shares of Restricted Stock reacquired by the Company pursuant to the
restrictions thereon may again be utilized hereunder, subject to the limitations
of Section 2.1.
Section 2.3 -- Changes in Company's Shares
In the event that the outstanding shares of Common Stock of the Company are
hereafter changed into or exchanged for a different number or kind of shares or
other securities of the Company, or of another corporation, by reason of
reorganization, merger, consolidation, recapitalization, reclassification, or
the number of shares is increased or decreased by reason of a stock split-up,
stock dividend, combination of shares or any other increase or decrease in the
number of such shares of Common Stock effected without receipt of consideration
by the Company (provided however, that conversion of any convertible securities
of the Company shall not be deemed to have been "effected without receipt of
consideration"), the Committee shall make appropriate adjustments in the number
and kind of shares of Restricted Stock which may be issued including adjustments
of the limitations in Section 2.1 on the maximum number and kind of shares which
may be issued as Restricted Stock.
ARTICLE III
ISSUANCE OF RESTRICTED STOCK
Section 3.1 -- Eligibility
Any key Employee, as selected by the Chief Executive Officer and approved
by the Committee, shall be eligible to receive Restricted Stock Awards. Eligible
employees shall be selected based upon their ability to make significant
contributions to the long-term performance of the Company.
Section 3.2 -- Restricted Stock Awards
(a) The Committee is authorized, in its absolute discretion, from time to
time: (i) to make Restricted Stock Awards to any eligible Employee; (ii) to
determine the target number of shares of Restricted Stock to
A-4
<PAGE> 23
be issued to such selected Employees pursuant to the Restricted Stock Awards;
(iii) to determine the appropriate Award Period during which Restricted Stock
may be earned; and (iv) to determine the purchase price, if any, and other terms
and conditions applicable to such shares of Restricted Stock to be issued
pursuant to the Restricted Stock Awards, consistent with the Plan.
(b) Restricted Stock Awards shall be expressed in shares of Common Stock
which shall be issued to the Employee upon attainment of the applicable Target
Performance Goal set forth in the Award. Restricted Stock Awards shall be made
no later than the earlier of: (i) ninety (90) days after the commencement of the
Award Period; and (ii) the expiration of twenty-five percent (25%) of the Award
Period. The Award Period shall be determined by the Committee at the time the
Restricted Stock Award is made.
(c) The Target Performance Goal for issuance of Common Stock pursuant to
Restricted Stock Awards shall be based upon the compound annual growth rate in
earnings per share during the Award Period or such other recognized measure of
growth in stockholder value selected by the Committee at the time the Committee
makes the Restricted Stock Award, provided that in the event the Committee
determines that a change in the Target Performance Goal criteria under the Plan
would disqualify the Common Stock issued under the Plan for the "performance
based compensation" exception under Section 162(m) of the Internal Revenue Code,
the Target Performance Goal shall be the compound annual growth rate in earnings
per share. At the time the Restricted Stock Award is made, the Committee shall
set a Target Performance Goal for issuance of the Common Stock stated in the
Restricted Stock Award. In its discretion exercised at the time the Restricted
Stock Award is made, the Committee may also set a threshold performance level
for a minimum grant of Restricted Stock and a maximum grant of Restricted Stock
for performance in excess of the Target Performance Goal, and may authorize the
grant of Restricted Stock within the range established by such minimum and
maximum grants based upon the extent to which the Company achieves the Target
Performance Goal during the Award Period.
(d) Following preparation of financial statements and other necessary data
after the expiration of the Award Period, the Committee shall certify the extent
to which the Target Performance Goal has been achieved. As soon as practicable
thereafter, the Secretary shall issue the Restricted Stock in accordance with
the certification and the provisions of Article IV hereof.
(e) Shares of the Company's Common Stock issued as Restricted Stock may be
either previously authorized but unissued shares or issued shares which have
been reacquired by the Company. The Committee shall establish the purchase price
(if any) and form of payment for Restricted Stock. In all cases legal
consideration shall be required for each issuance of Restricted Stock.
ARTICLE IV
TERMS OF RESTRICTED STOCK
Section 4.1 -- Restricted Stock Agreement
The Restricted Stock issued under this Plan shall be issued pursuant to a
written Restricted Stock Agreement, which shall be executed by the Restricted
Stockholder and an authorized Officer of the Company and which shall contain
such terms and conditions as the Committee shall determine, consistent with the
Plan.
Section 4.2 -- Consideration to the Company
The consideration for the issuance of Restricted Stock shall be set by the
Committee.
A-5
<PAGE> 24
Section 4.3 -- Rights as Stockholders
Upon delivery of the shares of Restricted Stock to the escrow holder
pursuant to Section 4.8, the Restricted Stockholder shall have all the rights of
a stockholder with respect to said shares, subject to the restrictions in his
Restricted Stock Agreement, including the right to vote the shares and to
receive all dividends or other distributions paid or made with respect to the
shares.
Section 4.4 -- Restrictions
Unless otherwise approved in writing by the Committee, no shares of
Restricted Stock issued under this Plan to any Officer or Director may be sold,
assigned or otherwise transferred until at least six months have elapsed from
(but excluding) the date such Restricted Stock was issued. All shares of
Restricted Stock issued under this Plan (including any shares received by
holders thereof as a result of stock dividends, stock splits or any other forms
of recapitalization) shall be subject to such restrictions as the Committee
shall provide in the terms of each individual Restricted Stock Agreement;
provided, however, that by a resolution adopted after the Restricted Stock is
issued, the Committee may, on such terms and conditions as it may determine to
be appropriate and subject to Section 6.3, remove any or all of the restrictions
imposed by the terms of the Restricted Stock Agreement. Restricted Stock may not
be sold or encumbered until all restrictions are terminated or expire.
Section 4.5 -- Reacquisition of Restricted Stock
The Committee shall provide in the terms of each individual Restricted
Stock Agreement that Restricted Stock then subject to restrictions under the
Restricted Stock Agreement may be reacquired by the Company immediately upon a
Termination of Employment for any reason; provided, however, that provision may
be made that no such reacquisition shall occur in the event of a Termination of
Employment because of the Restricted Stockholder's normal retirement or total
disability (each as determined by the Committee in accordance with Company
policies), early retirement with the consent of the Committee or death, in which
event the restrictions imposed under the Restricted Stock Agreement upon some or
all shares of Restricted Stock shall immediately expire.
Section 4.6 -- Merger, Consolidation, Acquisition, Liquidation or Dissolution
Upon the merger or consolidation of the Company with or into another
corporation, the acquisition by another corporation or person (excluding any
employee benefit plan of the Company or any trustee or other fiduciary holding
securities under an employee benefit plan of the Company) of all or
substantially all of the Company's assets or 51% or more of the Company's then
outstanding voting stock, or the liquidation or dissolution of the Company, the
restrictions imposed under the Restricted Stock Agreement upon some or all
shares of Restricted Stock shall immediately expire and/or some or all of such
shares shall cease to be subject to reacquisition by the Company under Section
4.5.
Section 4.7 -- No Right to Continued Employment
Nothing in this Plan or in any Restricted Stock Agreement hereunder shall
confer upon any Restricted Stockholder any right to continue in the employ of
the Company, any Parent Corporation or any Subsidiary or shall interfere with or
restrict in any way the rights of the Company, its Parent Corporations and its
Subsidiaries, which are hereby expressly reserved, to terminate or discharge any
Restricted Stockholder at any time for any reason whatsoever, with or without
cause.
A-6
<PAGE> 25
Section 4.8 -- Escrow
The Secretary or such other escrow holder as the Committee may appoint
shall retain physical custody of the certificates representing Restricted Stock
until all of the restrictions imposed under the Restricted Stock Agreement
expire or shall have been removed; provided, however, that in no event shall any
Restricted Stockholder retain physical custody of any certificates representing
Restricted Stock issued to him.
Section 4.9 -- Legend
In order to enforce the restrictions imposed upon shares of Restricted
Stock hereunder, the Committee shall cause a legend or legends to be placed on
certificates representing all shares of Restricted Stock that are still subject
to restrictions under Restricted Stock Agreements, which legend or legends shall
make appropriate reference to the conditions imposed thereby.
Section 4.10 -- Tax Withholding
The Company's obligation: (i) to issue or deliver to the Restricted
Stockholder any certificate or certificates for unrestricted shares of stock; or
(ii) to pay to the Restricted Stockholder any dividends or make any
distributions with respect to the Restricted Stock, is expressly conditioned
upon receipt from the Restricted Stockholder, on or prior to the date the same
is required to be withheld of:
(a) Full payment (in cash or by check) of any amount that must be withheld
by the Company for federal, state and/or local tax purposes; or
(b) Subject to the Committee's consent and Section 4.10(c), full payment by
delivery to the Company of unrestricted shares of the Company' Common Stock
previously owned by the Restricted Stockholder duly endorsed for transfer to the
Company by the Restricted Stockholder with an aggregate Fair Market Value
(determined, as applicable, as of the date of the lapse of the restrictions or
vesting, or as of the date of the distribution) equal to the amount that must be
withheld by the Company for federal, state and/or local tax purposes; or
(c) With respect to the withholding obligation for shares of Restricted
Stock that become unrestricted shares of stock as of a certain date (the
"Vesting Date"), subject to the Committee's consent and to the timing
requirements set forth in this Section 4.10(c), full payment by retention by the
Company of a portion of such shares of Restricted Stock which become
unrestricted or vested with an aggregate Fair Market Value (determined as of the
Vesting Date) equal to the amount that must be withheld by the Company for
federal, state and/or local tax purposes. Such shares of Restricted Stock which
become unrestricted or vested as of the Vesting Date may be used to satisfy the
tax withholding consequences of such lapse of restrictions or vesting only: (i)
during the period beginning on the third business day following the date of
release of the quarterly or annual summary statement of sales and earnings of
the Company and ending on the twelfth business day following such date; or (ii)
pursuant to an irrevocable written election by the Restricted Stockholder to use
shares of Restricted Stock which become unrestricted or vested as of the Vesting
Date to pay all or part of the withholding taxes (subject to the approval of the
Committee) made at least six months prior to the payment of such withholding
taxes; or
(d) Subject to the Committee's consent, any combination of payments
provided for in the foregoing subsections (a), (b) or (c).
A-7
<PAGE> 26
ARTICLE V
ADMINISTRATION
Section 5.1 -- Compensation Committee
The Compensation Committee shall consist solely of two or more directors
appointed by and holding office at the pleasure of the Board, each of whom is
both a "non-employee director" as defined by Rule 16b-3 and an "outside
director" for purposes of Section 162(m) of the Code. Appointment of Committee
members shall be effective upon acceptance of appointment. Committee members may
resign at any time by delivering written notice to the Board. Vacancies in the
Committee shall be filled by the Board.
Section 5.2 -- Duties and Powers of Committee
It shall be the duty of the Committee to conduct the general administration
of the Plan in accordance with its provisions. The Committee shall have the
power to interpret the Plan and all other documents relating to Restricted Stock
and to adopt such rules for the administration, interpretation and application
of the Plan as are consistent therewith and to interpret, amend or revoke any
such rules. The Board shall have no right to exercise any of the rights or
duties of the Committee under the Plan.
Section 5.3 -- Majority Rule
The Committee shall act by a majority of its members in office. The
Committee may act either by vote at a meeting or by a memorandum or other
written instrument signed by a majority of the Committee.
Section 5.4 -- Compensation; Professional Assistance; Good Faith Actions
Members of the Committee shall receive such compensation for their services
as members as may be determined by the Board. All expenses and liabilities
incurred by members of the Committee in connection with the administration of
the Plan shall be borne by the Company. The Committee may, with the approval of
the Board, employ attorneys, consultants, accountants, appraisers, brokers or
other persons. The Committee, the Company and its Officers and Directors shall
be entitled to rely upon the advice, opinions or valuations of any such persons.
All actions taken and all interpretations and determinations made by the
Committee in good faith shall be final and binding upon all Restricted
Stockholders, the Company and all other interested persons. No member of the
Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or Restricted Stock,
and all members of the Committee shall be fully protected by the Company in
respect to any such action, determination or interpretation.
ARTICLE VI
OTHER PROVISIONS
Section 6.1 -- Restricted Stock Not Transferable
No Restricted Stock, or interest or right therein or part thereof, shall be
liable for the debts, contracts or engagements of the Restricted Stockholder or
successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any other means
whether such disposition be voluntary or involuntary or by operation of law by
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void
A-8
<PAGE> 27
and of no effect; provided, however, that nothing in this Section 6.1 shall
prevent transfers by will or by the applicable laws of descent and distribution.
Section 6.2 -- Amendment, Suspension or Termination of Plan
The Plan may be wholly or partially amended or otherwise modified,
suspended or terminated at any time or from time to time by the Committee.
However, without approval of the Company's stockholders given within twelve
months before or after the action by the Committee, no action of the Committee
may, except as provided in Section 2.3, increase any limit imposed in Section
2.1 on the maximum number of shares which may be issued as Restricted Stock,
materially modify the eligibility requirements of Section 3.1, extend the limit
imposed in this Section 6.2 on the period during the Restricted Stock may be
issued or amend or modify the Plan in a manner requiring stockholder approval
under Rule 16b-3. Neither the amendment, suspension nor termination of the Plan
shall, without the consent of the Restricted Stockholder, alter or impair any
rights or obligations under any Restricted Stock theretofore issued. No
Restricted Stock may be issued during any period of suspension nor after
termination of the Plan, and in no event may any Restricted Stock be issued
under this Plan after the expiration of ten years from the date the Plan is
approved by the Company's stockholders under Section 6.3.
Section 6.3 -- Approval of Plan by Stockholders
This Plan will be submitted for the approval of the Company's stockholders
within twelve months after the date of the Committee's adoption of this Plan.
Restricted Stock issued following the adoption of the Plan but prior to such
stockholder approval shall not vest prior to the time when the Plan is approved
by the stockholders; provided, that if such approval has not been obtained at
the end of said twelve-month period, all Restricted Stock issued during such
time period under the Plan shall thereupon be canceled and become null and void.
Section 6.4 -- Effect of Plan Upon Other Option and Compensation Plans
The adoption of this Plan shall not affect any other compensation or
incentive plans in effect for the Company, any Parent Corporation or any
Subsidiary. Nothing in this Plan shall be construed to limit the right of the
Company, any Parent Corporation or any Subsidiary; (a) to establish any other
forms of incentives or compensation for employees of the Company, any Parent
Corporation or any Subsidiary; or (b) to issue restricted or unrestricted stock
otherwise than under this Plan in connection with any proper corporate purpose,
including, but not by way of limitation, the issuance of restricted or
unrestricted stock in connection with the acquisition by purchase, lease,
merger, consolidation or otherwise, of the business, stock or assets of any
corporation, firm or association.
Section 6.5 -- Titles
Titles are provided herein for convenience only and are not to serve as a
basis for interpretation or construction of the Plan.
Section 6.6 -- Conformity to Securities Laws
The Plan is intended to conform to the extent necessary with all provisions
of the Securities Act and the Exchange Act and any and all regulations and rules
promulgated by the Securities and Exchange Commission thereunder, including
without limitation Rule 16b-3. Notwithstanding anything herein to the contrary,
the Plan shall be administered, and the Restricted Stock shall be issued, only
in such manner as to conform to such laws, rules and regulations. To the extent
permitted by applicable law, the Plan and the Restricted Stock issued hereunder
shall be deemed amended to the extent necessary to conform to such laws, rules
and regulations.
A-9
<PAGE> 28
[HRC LOGO]
<PAGE> 29
PROXY HEALTH CARE AND RETIREMENT CORPORATION PROXY
HCR STOCK PURCHASE AND RETIREMENT SAVINGS PLAN
The undersigned hereby authorizes and instructs National City Bank,
Northwest, Trustee under the HCR Stock Purchase and Retirement Savings Plan, to
vote in person or by proxy the full common shares of Health Care and Retirement
Corporation credited to my account under the Health Care and Retirement
Corporation Stock Fund as of March 13, 1997, if any, at the Annual Meeting of
Stockholders to be held on May 6, 1997, or at any adjournment thereof.
When properly executed, this proxy will be voted in the manner directed
on the reverse side of this card by the undersigned stockholder. If no direction
is made, this proxy will be voted by the Trustee in accordance with the
instructions received with respect to a majority of shares in the Health Care
and Retirement Corporation Stock Fund.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3.
ITEMS 1, 2 AND 3 HAVE BEEN PROPOSED BY THE REGISTRANT.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side.)
- -------------------------------------------------------------------------------
3351 - HEALTH CARE & RETIREMENT CORP. (SAVINGS PLAN) (YELLOW STOCK)
<PAGE> 30
HEALTH CARE AND RETIREMENT CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. /X/
[ ]
<TABLE>
<CAPTION>
For All
For Withheld Except Nominees(s)
All All Written Below
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS: CLASS III- / / / / / /
Nominees: Robert G. Siefers, M. Keith Weikel
and Thomas L. Young
________________________________________________________
<CAPTION>
For Against Abstain
<S> <C> <C> <C>
2. Approval of the Amended Restricted Stock Plan. / / / / / /
<CAPTION>
For Against Abstain
<S> <C> <C> <C>
3. Ratify selection of Ernst & Young LLP as auditors. / / / / / /
4. In its discretion, the Proxy is authorized to
vote upon such other business as may
properly come before the meeting.
</TABLE>
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON.
Dated: _________________________, 1997
_____________________________________
Signature
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
3351 - HEALTH CARE & RETIREMENT CORP. (SAVINGS PLAN)(YELLOW STOCK)
<PAGE> 31
PROXY HEALTH CARE AND RETIREMENT CORPORATION PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Paul A. Ormond, Geoffrey G. Meyers and
R. Jeffrey Bixler and each of them, as Proxies with full power of substitution,
and hereby authorize(s) them to represent and to vote, as designated herein, all
shares of common stock of Health Care and Retirement Corporation held of record
by the undersigned on March 13, 1997, at the Annual Meeting of Stockholders to
be held on May 6, 1997, or at any adjournment thereof.
This proxy, when properly executed will be voted in the manner directed
by the undersigned stockholder. If no direction is made, this proxy will be
voted FOR Items 1, 2 and 3. Items 1, 2 and 3 have been proposed by the
registrant.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side.)
- -------------------------------------------------------------------------------
3350 - HEALTH CARE & RETIREMENT CORP. (PROXY)
<PAGE> 32
HEALTH CARE AND RETIREMENT CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. /X/
[ ]
<TABLE>
<CAPTION>
For All
For Withheld Except Nominees(s)
All All Written Below
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS: CLASS III- / / / / / /
Nominees: Robert G. Siefers, M. Keith Weikel
and Thomas L. Young
________________________________________________________
<CAPTION>
For Against Abstain
<S> <C> <C> <C>
2. Approval of the Amended Restricted Stock Plan. / / / / / /
<CAPTION>
For Against Abstain
<S> <C> <C> <C>
3. Ratify selection of Ernst & Young LLP as auditors. / / / / / /
4. In their discretion, the Proxies are authorized to
vote upon such other business as may
properly come before the meeting.
</TABLE>
Please sign exactly as name appears hereon. 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.
Dated: _________________________, 1997
_____________________________________
Signature
_____________________________________
Signature, if held jointly
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
3350 - HEALTH CARE & RETIREMENT CORP. (PROXY)
