PRE 14A: Preliminary proxy statement not related to a contested matter or merger/acquisition
Published on March 31, 2009
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington
D.C. 20549
SCHEDULE
14A
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE
14A INFORMATION
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Omega Healthcare Investors,
Inc.
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OMEGA
HEALTHCARE INVESTORS, INC.
200
International Circle, Suite 3500
Hunt
Valley, Maryland 21030
(410)
427-1700
_______________
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
May
21, 2009
________________
To our
Stockholders:
The Annual Meeting of Stockholders of
Omega Healthcare Investors, Inc. (“Omega” or the “Company”) will be held at the
Embassy Suites, 213 International Circle, Hunt Valley, Maryland on Thursday, May
21, 2009, at 10:00 A.M. EDT, for the following purposes:
1. To
elect two members to Omega’s Board of Directors;
2. To
approve an amendment to our Articles of Incorporation to increase the number of
authorized shares of common stock from 100,000,000 to 200,000,000
shares;
3. To
ratify the selection of Ernst & Young LLP as our independent auditor for
fiscal year 2009; and
4. To
transact such other business as may properly come before the meeting or any
adjournment or postponement thereof.
The nominees for election as directors
are Thomas F. Franke and Bernard J. Korman, each of whom presently serves as a
director of Omega.
Our Board of Directors has fixed the
close of business on April 19, 2009 as the record date for the determination of
stockholders who are entitled to notice of and to vote at our Annual Meeting or
any adjournments or postponements thereof.
We encourage you to attend our Annual
Meeting. Whether you are able to attend or not, we urge you to
indicate your vote on the enclosed proxy card FOR (i) the election of
directors, (ii) the approval of the amendment of our Articles of Incorporation,
and (iii) the ratification of the selection of Ernst & Young LLP as our
independent auditor. Please complete, sign, date and return the proxy
card promptly in the enclosed envelope. If you attend the meeting,
you may vote in person even if you have previously mailed a proxy
card.
By order of Omega’s Board of
Directors,
C. Taylor Pickett
Chief Executive Officer
April
[20],
2009
Hunt
Valley, Maryland
YOUR
VOTE IS IMPORTANT. Please complete, sign, date and mail the proxy card promptly
in the enclosed envelope whether or not you plan to attend the meeting. It is
important that you return the proxy card promptly whether or not you plan to
attend the meeting, so that your shares are properly voted.
If you
hold shares through a broker, bank or other nominee (in “street name”), you may
receive a separate voting instruction form with this Proxy Statement, or you may
need to contact your broker, bank or other nominee to determine whether you will
be able to vote electronically using the Internet or
telephone.
-1-
OMEGA
HEALTHCARE INVESTORS, INC.
200
International Circle, Suite 3500
Hunt
Valley, Maryland 21030
(410)
427-1700
PROXY
STATEMENT
FOR
ANNUAL
MEETING OF STOCKHOLDERS
May
21, 2009
The accompanying proxy is solicited by
the Board of Directors to be voted at the Annual Meeting of Stockholders of
Omega Healthcare Investors, Inc. to be held at the Embassy Suites, 213
International Circle, Hunt Valley, Maryland at 10:00 A.M. EDT on Thursday, May
21, 2009, and any adjournments or postponements of the meeting. It is
anticipated that these proxy materials will be mailed on or about April [20], 2009, to our
common stockholders of record on April 19, 2009.
A copy of our Annual Report for the
year ended December 31, 2008, including financial statements, is
enclosed.
Important notice regarding the
availability of proxy
materials for our Annual Meeting of Stockholders to be held on May 21,
2009. This Proxy Statement, and our Annual Report to
Stockholders for fiscal year 2008, which includes our Annual Report on Form 10-K
filed with the Securities and Exchange Commission (“SEC”) on March 2, 2009, are
available electronically at http://www.omegahealthcare.com/annuals.cfm.
Additional copies of our Annual Report
for fiscal year 2008 will be provided, without charge, upon written request
addressed to Robert O. Stephenson at our principal executive offices at 200
International Circle, Suite 3500, Hunt Valley, Maryland 21030.
RECORD
DATE
Our Board
of Directors has fixed April 19, 2009, as the record date for the determination
of stockholders entitled to notice of, and to vote at, the Annual Meeting and
any adjournment or postponement thereof. As of the close of business
on the record date, there were[82,408,075]
shares of our common stock, par value $0.10 per share, outstanding and entitled
to vote.
As of the record date, our directors
and executive officers beneficially owned [1,744,824]
shares of our common stock (representing
[2.1]% of
the votes entitled to be cast at the meeting).
QUORUM
and VOTING
Quorum. Holders of
a majority of the outstanding shares of our common stock entitled to vote on the
record date must be present in person or represented by proxy to constitute a
quorum for the conduct of business at the Annual Meeting. Proxies
marked as abstaining and “broker non-votes” will be treated as shares present
for purposes of determining the presence of a quorum.
Broker Non-Votes. A
broker non-vote occurs when a broker submits a proxy card with respect to shares
of common stock held in a fiduciary capacity (typically referred to as being
held in “street name”), but declines to vote on a particular matter because the
broker has not received voting instructions from the beneficial owner. Under the
rules that govern brokers who are voting with respect to shares held in street
name, brokers have the discretion to vote such shares on routine matters, but
not on non-routine matters. Routine matters include the election of directors,
increases in authorized common stock for general corporate purposes and
ratification of auditors.
Voting. Each holder
of record of common stock on the record date will be entitled to one vote for
each share held on all matters to be voted upon at the Annual
Meeting. There are no rights of appraisal or similar dissenter’s
rights with respect to any matter to be acted upon pursuant to this Proxy
Statement. We urge stockholders to vote promptly either by
completing, signing, dating and returning the enclosed proxy card in the
enclosed envelope, or for stockholders who own their shares in “street name”
through a broker, in accordance with the telephone or internet voting
instructions your broker may include with this mailing.
-2-
If you vote by proxy, the individuals
named on the enclosed proxy card will vote your shares in the manner you
indicate. If you do not specify voting instructions, then the proxy will be
voted in accordance with recommendations of the Board of Directors, as described
in this Proxy Statement. If any other matter properly comes before the Annual
Meeting, the designated proxies will vote on that matter in their
discretion.
Ability to Revoke
Proxies. A stockholder giving a proxy has the power to revoke
it at any time before it is exercised. A proxy may be revoked by
filing with our Secretary (i) a signed instrument revoking the proxy or (ii) a
duly executed proxy bearing a later date. A proxy also may be revoked
if the person executing the proxy is present at the meeting and elects to vote
in person. If the proxy is not revoked, it will be voted by those
named in the proxy.
VOTES
REQUIRED
Election of
Directors. You may vote either “FOR” or “WITHHELD” with
respect to each nominee for the Board of Directors. Directors are elected by
plurality voting, which means that the two director nominees who receive the
highest number of votes will be elected to the Board. Votes of “WITHHELD” and
broker non-votes, if any, will have no effect on the outcome of the election of
directors.
Amendment of Articles of
Incorporation. The approval of the amendment of our Articles
of Incorporation requires the affirmative vote of a majority of the outstanding
shares of our common stock entitled to vote at our Annual Meeting as of the
record date. For purposes of the vote on this proposal, abstentions and broker
non-votes will have the same effect as votes against the proposal. The amendment
of our Articles of Incorporation is considered a “routine” matter under the
rules of the New York Stock Exchange (“NYSE”), and accordingly, intermediaries
such as banks and brokers will be afforded discretionary authority to vote on
this proposal to the extent beneficial owners do not provide specific voting
instructions.
Ratification of Selection of Ernst
& Young LLP as Our Independent Auditor. The ratification
of the selection of Ernst & Young LLP as our independent
auditor for fiscal year 2009 will require the affirmative vote of a majority of
the votes cast by all stockholders entitled to vote. Abstentions and broker
non-votes, if any, will have no effect on the outcome of the vote on this
proposal.
Director
Nominees and Voting Requirements
Our Board of Directors currently
consists of six members. Pursuant to our Articles of Incorporation,
the directors have been divided into three groups. At this year’s
Annual Meeting, two directors will be elected by the holders of our common stock
to hold office for a term of three years or, in each case, until their
respective successors have been duly elected and qualified.
Our Nominating and Corporate Governance
Committee of the Board of Directors has nominated Thomas F. Franke and Bernard
J. Korman for election as directors.
Unless authority to vote for the
election of directors has been specifically withheld, the persons named in the
accompanying proxy card intend to vote FOR the election of the
nominees named above to hold office for the term indicated above or until their
respective successors have been duly elected and qualified.
If any nominee becomes unavailable for
any reason (which event is not anticipated), the shares represented by the
enclosed proxy may (unless the proxy contains instructions to the contrary) be
voted for such other person or persons as may be determined by the holders of
the proxies. In no event would the proxy be voted for more than two
nominees.
-3-
Information
Regarding Directors
Information about each director
nominee, and the other individuals who currently serve on our Board of
Directors, is set forth below. Individuals not standing for election
at the Annual Meeting are presented under the heading “Continuing
Directors.”
Director
Nominees
|
Director (age as of April
19)
|
Year
First
Became
a
Director
|
Business Experience During Past 5
Years
|
Term
to Expire in
|
|
Thomas
F. Franke
(79)
|
1992
|
Mr.
Franke is Chairman and a principal owner of Cambridge Partners, Inc., an
owner, developer and manager of multifamily housing in Grand Rapids,
Michigan. He is also a principal owner of Laurel Healthcare (a private
healthcare firm operating in the United States) and is a principal owner
of Abacus Hotels LTD. (a private hotel firm in the United Kingdom). Mr.
Franke was a founder and previously a director of Principal Healthcare
Finance Limited and Omega Worldwide, Inc.
|
2012
|
|
Bernard
J. Korman (77)
|
1993
|
Mr.
Korman has served as Chairman of the Board since March 8, 2004. Mr. Korman
has been Chairman of the Board of Trustees of Philadelphia Health Care
Trust, a private healthcare foundation, since December 1995. Mr. Korman is
also a director of The New America High Income Fund, Inc. (NYSE:HYB)
(financial services), Medical Nutrition USA, Inc. (OTC:MDNU.OB) (develops
and distributes nutritional products) and NutraMax Products, Inc.
(OTC:NUTP) (consumer health care products). He was formerly President,
Chief Executive Officer and Director of MEDIQ Incorporated (OTC:MDDQP)
(health care services) from 1977 to 1995. Mr. Korman served as a trustee
of Kramont Realty Trust (NYSE:KRT) (real estate investment trust) from
June 2000 until its merger in April 2005. Mr. Korman also served as a
director of The Pep Boys, Inc. (NYSE:PBY) and as The Pep Boys, Inc.’s
Chairman of the Board from May 28, 2003 until his retirement from such
board in September 2004. Mr. Korman was previously a director of Omega
Worldwide, Inc.
|
2012
|
-4-
Continuing
Directors
|
Director (age as of April
19)
|
Year
First
Became
a
Director
|
Business Experience During Past 5
Years
|
Term
to Expire in
|
|
Edward
Lowenthal (64)
|
1995
|
Mr.
Lowenthal also serves as a director of REIS, Inc. (a provider of real
estate market information and valuation technology) (NASDAQ:REIS),
American Campus Communities (NYSE:ACC) (a public developer, owner and
operator of student housing at the university level), Desarrolladora Homex
(NYSE: HXM) (a Mexican homebuilder) and serves as a trustee of the
Manhattan School of Music. From January 1997 to March 2002, Mr. Lowenthal
served as President and Chief Executive Officer of Wellsford Real
Properties, Inc. (AMEX:WRP) (a real estate merchant bank) and was
President of the predecessor of Wellsford Real Properties, Inc. since
1986.
|
2010
|
|
Stephen
D. Plavin
(49)
|
2000
|
Mr.
Plavin has been Chief Operating Officer of Capital Trust, Inc., (NYSE:CT)
a New York City-based mortgage real estate investment trust (“REIT”) and
investment management company and has served in this capacity since
1998. In this role, Mr. Plavin is responsible for all of the
lending, investing and portfolio management activities of Capital Trust,
Inc.
|
2010
|
|
Harold
J. Kloosterman (67)
|
1992
|
Mr.
Kloosterman has served as President since 1985 of Cambridge Partners,
Inc., a company he formed in 1985. He has been involved in the
development and management of commercial, apartment and condominium
projects in Grand Rapids and Ann Arbor, Michigan and in the Chicago
area. Mr. Kloosterman was formerly a Managing Director of Omega
Capital from 1986 to 1992. Mr. Kloosterman has been involved in
the acquisition, development and management of commercial and multifamily
properties since 1978. He has also been a senior officer of LaSalle
Partners, Inc. (now Jones Lang LaSalle).
|
2011
|
-5-
|
C.
Taylor Pickett
(47)
|
2002
|
Mr.
Pickett is the Chief Executive Officer of our Company and has served in
this capacity since June, 2001. Prior to joining our Company,
Mr. Pickett served as the Executive Vice President and Chief Financial
Officer from January 1998 to June 2001 of Integrated Health Services,
Inc., a public company specializing in post-acute healthcare
services. He also served as Executive Vice President of Mergers
and Acquisitions from May 1997 to December 1997 of Integrated Health
Services. Prior to his roles as Chief Financial Officer and
Executive Vice President of Mergers and Acquisitions, Mr. Pickett served
as the President of Symphony Health Services, Inc. from January 1996 to
May 1997.
|
2011
|
Recommendation
The Board
of Directors unanimously recommends a vote FOR the election of Messrs.
Franke and Korman.
The following table sets forth
information regarding the beneficial ownership of our capital stock as of March
[31], 2009 for:
|
·
|
each
of our directors and the named executive officers appearing in the table
under “Executive Compensation —Summary Compensation Table” included
elsewhere in this Proxy Statement;
and
|
|
·
|
all
persons known to us to be the beneficial owner of more than 5% of our
outstanding common stock.
|
Beneficial ownership of our common
stock, for purposes of this Proxy Statement, includes shares of our common stock
as to which a person has voting and/or investment power. The number
of shares shown in the table below include shares of restricted stock as
reported in the footnotes below because the holders have the right to vote
restricted stock. Except for shares of restricted stock as to which
the holder does not have investment power until vesting and as indicated in the
footnotes, the persons named in the table have sole voting and investment power
with respect to all shares of our common stock shown as beneficially owned by
them, subject to community property laws where applicable. The
business address of the directors and executive officers is 200 International
Circle, Suite 3500, Hunt Valley, Maryland 21030. As of March [31], 2009, there were
[82,408,075]
shares of our common stock outstanding, and 4,339,500 shares of our
Series D Preferred Stock outstanding.
-6-
|
Common
Stock
|
Series
D Preferred
|
|||||||||||||||||||
|
Beneficial
Owner
|
Number
of
Shares
|
Percent
of
Class
|
Number
of
Shares
|
Percent
of
Class
|
||||||||||||||||
|
C.
Taylor Pickett
|
481,199 | 0.6 | % | — | — | |||||||||||||||
|
Daniel
J. Booth
|
154,015 | 0.2 | % | — | — | |||||||||||||||
|
Michael
D. Ritz
|
14,069 | * | 1,581 | * | ||||||||||||||||
|
R.
Lee Crabill, Jr.
|
84,126 | 0.1 | % | — | — | |||||||||||||||
|
Robert
O. Stephenson
|
152,449 | 0.2 | % | — | — | |||||||||||||||
|
Thomas
F. Franke
|
86,714 | (1 | ) | 0.1 | % | — | — | |||||||||||||
|
Harold
J. Kloosterman
|
74,867 | (2 | ) | 0.1 | % | — | — | |||||||||||||
|
Bernard
J. Korman
|
620,660 | (3 | ) | 0.8 | % | — | — | |||||||||||||
|
Edward
Lowenthal
|
36,692 | (4 | ) | * | — | — | ||||||||||||||
|
Stephen
D. Plavin
|
40,033 | (5 | ) | * | — | — | ||||||||||||||
|
Directors
and executive officers as a group (10 persons)
|
1,744,824 | (6 | ) | 2.1 | % | 1,581 | * | |||||||||||||
|
5%
Beneficial Owners:
|
||||||||||||||||||||
|
ING
Groep N.V
|
8,415,730 | (7 | ) | 10.2 | % | |||||||||||||||
|
Barclays
Global Investors, NA
|
6,456,112 | (8 | ) | 7.8 | % | |||||||||||||||
|
The
Vanguard Group, Inc.
|
6,444,755 | (9 | ) | 7.8 | % | |||||||||||||||
|
Cohen
and Steers, Inc.
|
5,246,437 | (10 | ) | 6.4 | % | |||||||||||||||
|
*
Less than 0.1%
|
||||||||||||||||||||
|
(1)
|
Includes
(a) 47,141 shares owned by a family limited liability company (Franke
Family LLC) of which Mr. Franke is a member, (b) stock options that are
exercisable within 60 days to acquire 1,668 shares, and (c) 3,600 shares
of restricted stock.
|
|
(2)
|
Includes
(a) shares owned jointly by Mr. Kloosterman and his wife, and 10,827
shares held solely in Mr. Kloosterman’s wife’s name, (b) stock options
that are exercisable within 60 days to acquire 1,000 shares, and (c) 3,600
shares of restricted stock. Does not include 2,568 deferred common stock
units, which represent the deferral of director stock grants under the
Company’s Deferred Stock Plan. The deferred common stock units will not be
converted into shares of common stock until certain events or dates as
specified in the Deferred Stock
Agreement.
|
|
(3)
|
Includes
(a) stock options that are exercisable within 60 days to acquire 5,001
shares, and (b) 6,001 shares of restricted
stock.
|
|
(4)
|
Includes
(a) 1,400 shares owned by his wife through an individual retirement
account, (b) stock options that are exercisable within 60 days to acquire
2,000 shares, and (c) 3,600 shares of restricted
stock.
|
|
(5)
|
Includes
(a) stock options that are exercisable within 60 days to acquire 14,000
shares, and (b) 3,600 shares of restricted
stock.
|
|
(6)
|
Includes
(a) stock options that are exercisable within 60 days to acquire 23,669
shares, and (b) 184,348 shares of restricted
stock.
|
|
(7)
|
Based
on a Schedule 13G/A filed by ING Groep N.V. on March 13,
2009. ING Groep N.V. is located at 201 King of Prussia Road,
Suite 600, Radnor, PA 19087. Includes 3,563,570 shares of
common stock over which ING Groep N.V. has sole voting power or power to
direct the vote.
|
|
(8)
|
Based
on a Schedule 13G filed by Barclays Global Investors, NA on February 5,
2009. Barclays Global Investors, NA. is located at 400 Howard
Street, San Francisco, CA 94105. Includes 5,671,280 shares of
common stock over which Barclays Global Investors, NA. has sole voting
power or power to direct the vote.
|
|
(9)
|
Based
on a Schedule 13G/A filed by The Vanguard Group, Inc. on February 13,
2009. The Vanguard Group, Inc. is located at 100 Vanguard Blvd.
Malvern, PA 19355. Includes 108,590 shares of common stock over
which The Vanguard Group, Inc. has sole voting power or power to direct
the vote.
|
|
(10)
|
Based
on a Schedule 13G/A filed by Cohen and Steers, Inc. on February 14, 2009.
Cohen and Steers, Inc. is located at 280 Park Avenue 10th
Floor, New York, New York, 10017. Includes 4,714,655 shares of
common stock over which Cohen and Steers, Inc. has sole voting power or
power to direct the vote.
|
-7-
DIRECTORS
AND OFFICERS OF OUR COMPANY
Board
of Directors and Committees of the Board
The members of the Board of Directors
on the date of this Proxy Statement and the committees of the Board on which
they serve are identified below.
|
Director
|
Audit
Committee
|
Compensation
Committee
|
Investment
Committee
|
Nominating
and Corporate
Governance
Committee
|
|
Thomas
F. Franke
|
XX
|
X
|
||
|
Harold
J. Kloosterman
|
X
|
X
|
XX
|
XX
|
|
Bernard
J. Korman *
|
X
|
X
|
X
|
|
|
Edward
Lowenthal
|
X
|
X
|
X
|
|
|
C.
Taylor Pickett
|
X
|
|||
|
Stephen
D. Plavin
|
XX
|
X
|
X
|
|
*
|
Chairman
of the Board
|
|
|
XX
|
Chairman
of the Committee
|
|
|
X
|
Member
|
The Board of Directors held 13 meetings
during 2008. All members of the Board of Directors attended more than
75% of the Board of Directors or Committee meetings held during
2008. Mr. Korman, as Chairman of the Board, presides over any
meeting, including regularly scheduled executive sessions of the non-management
directors. If Mr. Korman is not present at such a session, the presiding
director is chosen by a vote of those present at the session. Except for Mr.
Pickett, all of the members of the Board of Directors meet the NYSE listing
standards for independence. While the Board of Directors has not
adopted any categorical standards of independence, in making these independence
determinations, the Board of Directors noted that no director other than Mr.
Pickett (a) received direct compensation from our Company other than director
annual retainers and meeting fees, (b) had any relationship with our Company or
a third party that would preclude independence, or (c) had any business
relationship with our Company and its management, other than as a director of
our Company. Each of the members of the Audit Committee, Compensation
Committee and Nominating and Corporate Governance Committee meets the NYSE
listing standards for independence. While we invite our directors to
attend our Annual Meeting of Stockholders, we currently do not have a formal
policy regarding director attendance. Mr. Pickett was the only
director who attended the Annual Meeting last year.
Audit
Committee
The Audit Committee met six times in
2008. Its primary function is to assist the Board of Directors in fulfilling its
oversight responsibilities with respect to: (i) the financial information to be
provided to stockholders and the SEC; (ii) the system of internal controls that
management has established; and (iii) the external independent audit
process. In addition, the Audit Committee selects our Company’s
independent auditors and provides an avenue for communication between the
independent auditors, financial management and the Board of
Directors.
Each of the members of the Audit
Committee is financially literate, as required of audit committee members by the
NYSE. The Board of Directors has determined that Mr. Plavin is
qualified to serve as an “audit committee financial expert” as such term is
defined in Item 401 (h) of Regulation S-K promulgated by the SEC. The
Board of Directors made a qualitative assessment of Mr. Plavin’s level of
knowledge and experience based on a number of factors, including his formal
education and his experience as Chief Operating Officer of Capital Trust, Inc.,
a New York City-based mortgage REIT and investment management company, where he
is responsible for all lending and portfolio management
activities. Mr. Plavin holds an M.B.A. from J.L. Kellogg Graduate
School of Management at Northwestern University.
Compensation
Committee
The Compensation Committee met three
times during 2008 and has responsibility for the compensation of our key
management personnel and administration of our equity incentive plans. The
responsibilities of the Compensation Committee are more fully described in its
Charter, which is available on our website at www.omegahealthcare.com.
-8-
Investment
Committee
The Investment Committee met four times
during 2008 and has responsibility for developing strategies in growing our
portfolio.
Nominating
and Corporate Governance Committee
The Nominating and Corporate Governance
Committee met one time during 2008 and has responsibility for identifying
potential nominees to the Board of Directors and reviewing their qualifications
and experience. The process for identifying and evaluating nominees
to the Board is initiated by identifying candidates who meet the criteria for
selection as a nominee and have the specific qualities or skills being sought
based on input from members of the Board of Directors and, if the Nominating and
Corporate Governance Committee deems appropriate, a third-party search
firm. Nominees for director are selected based on their depth and
breadth of experience, industry experience, financial background, integrity,
ability to make independent analytical inquiries and willingness to devote
adequate time to director duties, among other criteria. The
Nominating and Corporate Governance Committee also develops and implements
policies and practices relating to corporate governance.
The Nominating and Corporate Governance
Committee will consider written proposals from stockholders for nominees as
director. Any such nomination should be submitted to the Nominating
and Corporate Governance Committee through our Secretary in accordance with the
procedures and time frame described in our Bylaws and as set forth under
“Stockholder Proposals” below.
Communicating
with the Board of Directors and the Audit Committee
The Board of Directors and our Audit
Committee have established procedures to enable anyone who has a concern about
our conduct, or any employee who has a concern about our accounting, internal
controls or auditing matters, to communicate that concern directly to the
non-management members of the Board of Directors or the Audit Committee, as
applicable. These communications may be confidential or anonymous,
and may be submitted in writing or through the Internet. The
employees have been provided with direct and anonymous access to each of the
members of the Audit Committee. Our Company’s Code of Business
Conduct and Ethics prohibits any employee of our Company from retaliating or
taking adverse action against anyone raising or helping resolve a concern about
our Company.
Interested parties may contact our
non-management directors by writing to them at our
headquarters: Omega Healthcare Investors, Inc., 200 International
Circle, Suite 3500, Hunt Valley, Maryland 21030, or by contacting them through
our website at www.omegahealthcare.com. Communications
addressed to the non-management members of the Board of Directors will be
reviewed by our corporate communications liaison, which is our outside legal
counsel, and will be directed to the appropriate director or directors for their
consideration. The corporate communications liaison may not “filter
out” any direct communications from being presented to the non-management
members of the Board of Directors and Audit Committee members without
instruction from the directors or committee members. The corporate
communications liaison is required to maintain a record of all communications
received that were addressed to one or more directors, including those
determined to be inappropriate communications. Such record will
include the name of the addressee, the disposition by the corporate
communications liaison and, in the case of communications determined to be
inappropriate, a brief description of the nature of the communication. The
corporate communications liaison is required to provide a copy of any additions
to the record upon request of any member of the Board of
Directors.
Conflicts
of Interest Policies and Code of Business Conduct
We have a written policy regarding
related party transactions under which we have determined that we will not
engage in any purchase, sale or lease of property or other business transaction
in which our officers or directors have a direct or indirect material interest
without the approval by resolution of a majority of those directors who do not
have an interest in such transaction. It is generally our policy to enter into
or ratify related party transactions only when our Board of Directors, acting
through our Audit Committee, determines that the related person transaction in
question is in, or is not inconsistent with, our best interests and the
interests of our stockholders. We are currently unaware of any transactions with
our Company in which our directors or officers have a material
interest.
-9-
We have
adopted a written Code of Business Conduct and Ethics (“Code of Ethics”) that
applies to all of our directors and employees, including our Chief Executive
Officer, Chief Financial Officer and Chief Accounting Officer. A copy
of our Code of Ethics is available on our website at www.omegahealthcare.com and
print copies are available upon request without charge. You can
request print copies by contacting our Chief Financial Officer in writing at
Omega Healthcare Investors, Inc., 200 International Circle, Suite 3500, Hunt
Valley, Maryland 21030 or by telephone at 410-427-1700. Any amendment
to our Code of Ethics or any waiver of our Code of Ethics will be disclosed on
our website at www.omegahealthcare.com
promptly following the date of such amendment or waiver.
Corporate
Governance Materials
The Corporate Governance Guidelines,
Code of Ethics and the charters of the Audit Committee, Compensation Committee
and Nominating and Corporate Governance Committee are available free of charge
through our website at www.omegahealthcare.com and
are available in print to any stockholder who requests them.
Compensation
Discussion and Analysis
Our
Compensation Discussion and Analysis (“CD&A”) addresses the following
topics:
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the
members and role of our Compensation Committee (the
“Committee”);
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our
compensation-setting process;
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our
compensation philosophy and policies regarding executive
compensation;
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the
components of our executive compensation program;
and
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our
compensation decisions for fiscal year 2008 and
2009.
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Thomas F.
Franke, Harold J. Kloosterman, Bernard J. Korman, Edward Lowenthal, and Stephen
D. Plavin are the members of the Committee. Mr. Franke, is the Chairman of the
Committee. Each member of the Committee qualifies as an independent director
under the NYSE listing standards and under our Board of Directors’ standards of
independence.
The
Committee’s responsibilities and function are governed by its charter, which the
Board of Directors has adopted and a copy of which is available at our website
at www.omegahealthcare.com. The
Committee administers our 2004 Stock Incentive Plan, our 2000 Stock Incentive
Plan and our 1993 Deferred Compensation Plan and has responsibility for other
incentive and benefit plans. The Committee determines the compensation of our
executive officers and reviews with the Board of Directors all aspects of
compensation for our executive officers.
The
Committee is responsible for the following activities:
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the
Committee determines and approves the compensation for the Chief Executive
Officer and our other executive officers. In doing so, the
Committee evaluates their performance in light of goals and objectives
reviewed by the Committee and such other factors as the Committee deems
appropriate in our best interests and in satisfaction of any applicable
requirements of the NYSE and any other legal or regulatory
requirements.
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the
Committee reviews and recommends for the Board of Directors’ approval (or
approves, where applicable) the adoption and amendment of our director and
executive officer incentive compensation and equity-based
plans. The Committee has the responsibility for recommending to
the Board the level and form of compensation and benefits for
directors.
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the
Committee may administer our incentive compensation and equity-based plans
and may approve such awards thereunder as the Committee deems
appropriate.
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the
Committee reviews and monitors succession plans for the Chief Executive
Officer and our other senior
executives.
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the
Committee meets to review and discuss with management the CD&A
required by the SEC rules and regulations. The Committee
recommends to the Board of Directors whether the CD&A should be
included in our proxy statement or other applicable SEC
filings. The Committee prepares a Compensation Committee Report
for inclusion in our applicable filings with the SEC. Such
reports state whether the Committee reviewed and discussed with management
the CD&A, and whether, based on such review and discussion, the
Committee recommended to the Board of Directors that the CD&A be
included in our proxy statement or other applicable SEC
filings.
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-10-
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the
Committee should be consulted with respect to any employment agreements,
severance agreements or change of control agreements that are entered into
between us and any executive
officer.
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to
the extent not otherwise inconsistent with its obligations and
responsibilities, the Committee may form subcommittees (which shall
consist of one or more members of the Committee) and delegate authority to
such subcommittees hereunder as it deems
appropriate.
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the
Committee reports to the Board of Directors as it deems appropriate and as
the Board of Directors may request.
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the
Committee performs such other activities consistent with its charter, our
Bylaws, governing law, the rules and regulations of the NYSE and such
other requirements applicable to us as the Committee or the Board of
Directors deems necessary or
appropriate.
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Committee
Meetings
The
Committee meets as often as necessary to perform its duties and
responsibilities. The Committee met three times during the year ended December
31, 2008. The Chairman of the Committee works, from time to time, with the Chief
Executive Officer and other members of the Committee to establish the agenda.
The Committee meets in one or more executive sessions each year to evaluate the
performance of our named executive officers, to determine their bonuses for the
prior year, to establish bonus metrics for the current year, to set their
salaries for the current year, and to approve any grants to them of equity
incentive compensation, as the case may be. Additionally, the
Committee meets with Omega’s legal counsel and from time to time with other
outside advisors as the Committee determines appropriate.
The
Committee receives and reviews materials in advance of its meetings. These
materials include information that management believes will be helpful to the
Committee as well as materials the Committee has requested. Depending upon the
agenda for the particular meeting, these materials may include, among other
things:
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reports
from compensation consultants or legal
counsel;
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a
comparison of the compensation of our executives and directors compared to
our competitors prepared by members of the Committee, by management at the
Committee’s request or by a compensation consultant engaged by the
Committee;
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financial
reports on year-to-date performance versus budget and compared to prior
year performance, as well as other financial data regarding us and our
performance;
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reports
on our strategic plan and budgets for future
periods;
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information
on the executive officers’ stock ownership and option holdings;
and
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reports
on the levels of achievement of individual and corporate
objectives.
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Committee
Advisors
The
Compensation Committee charter grants the Committee the sole and direct
authority to engage and terminate advisors and compensation consultants and to
approve their fees and retention terms. These advisors and consultants report
directly to the Committee, and we are responsible for paying their
fees.
The
Committee engaged a consulting group in 2004, The Schonbraun McCann Group LLP
(“Schonbraun”), in connection with determining the compensation of our executive
officers for 2005, and the Committee also retained Schonbraun in late 2006 in
connection with evaluating the compensation and incentive arrangements for our
executive officers for fiscal year 2007. Schonbraun has not performed and has
agreed not to perform in the future any work for us other than work for which it
is engaged by the Committee. During late 2006 and early 2007, Schonbraun
presented to the Committee analysis that included, but was not limited to, the
status of our current compensation scheme as compared to our peer companies, the
methodologies behind the research and analysis it used to prepare the
comparisons, the techniques it used to standardize the compensation schemes of
peer companies in order to permit more accurate comparisons against our
policies, and a proposed incentive compensation plan for executive officers. The
Committee also requested that Schonbraun evaluate our current director
compensation and prepare a proposal with respect to compensation for our
directors in 2007.
-11-
Peer
companies included in Schonbraun’s 2006/2007 analysis were Alexandria Real
Estate Equities, Inc., BioMed Realty Trust, Corporate Office Properties Trust
Inc., Digital Realty Trust, Inc., First Potomac Realty Trust, Glenborough Realty
Trust Incorporated, Health Care REIT, Inc., Healthcare Realty Trust, LTC
Properties, Inc., Medical Properties Trust Inc., Nationwide Health Properties,
Inc., Parkway Properties, Inc., Republic Property Trust, Ventas, Inc.,
Washington Real Estate Investment Trust and Windrose Medical Properties Trust.
Analyses performed included a comparison of the total return to the stockholders
of the respective companies, a comparison of salaries of comparable officers for
each company and a comparison of the terms of officer employment
agreements.
Our Chief
Executive Officer meets with the Committee at least annually and upon the
Committee’s request to provide information to the Committee regarding
management’s views regarding its performance as well as other factors the Chief
Executive Officer believes should impact the compensation of our executive
officers. In addition, the Chief Executive Officer provides his
recommendation to the Committee regarding the compensation of the executive
officers and the business and performance targets for incentive awards and
bonuses.
The
Committee also performs an annual evaluation of its performance and the adequacy
of its charter and reports to our Board of Directors regarding this
evaluation.
Compensation
Policy
Historically,
the policy and the guidelines followed by the Committee have been directed
toward providing compensation and incentives to our executive officers in order
to achieve the following objectives:
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assist
in attracting and retaining talented and well-qualified
executives;
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reward
performance and initiative;
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be
competitive with other healthcare real estate investment
trusts;
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be
significantly related to accomplishments and our short-term and long-term
successes, particularly measured in terms of growth in adjusted funds from
operations on a per share basis;
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align
the interests of our executive officers with the interests of our
stockholders; and
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encourage
executives to achieve meaningful levels of ownership of our
stock.
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Elements
of Compensation
The
following is a discussion of each element of our executive
compensation:
Annual
Base Salary
Our
approach to base compensation levels has been to offer competitive salaries in
comparison with prevailing market practices. The Committee examined
market compensation levels and trends in connection with the issuance of the
executive employment agreements during 2004. In connection with these
agreements, the Committee hired Schonbraun in 2004 to conduct a review and
analysis of our peer group companies and to provide the Committee with executive
base salaries of individuals then employed in similar positions in such
companies. The employment agreements for each of the executive officers
established a base annual salary in 2004 and provided that the base salary
should be reviewed on an annual basis to determine if increases are
warranted.
In
subsequent years, the Committee has evaluated and established the annual
executive officer salaries in connection with its annual review of management’s
performance and based on input from our Chairman of the Board and our Chief
Executive Officer. In undertaking the annual review, the Committee considers the
decision-making responsibilities of each position and the experience, work
performance and team-building skills of each incumbent officer, as well as our
overall performance and the achievement of our strategic objectives and
budgets. The Committee generally views work performance as the single
most important measurement factor, followed by team-building skills and
decision-making responsibilities.
The
Committee approved a 3.6% increase in executive officer base salaries for 2008
based on increases in the Consumer Price Index. In December 2008, the
Committee approved a 1.5% increase in executive officer base salaries for 2009,
noting that a 3.7% increase was reported in the Consumer Price Index over the 12
months ended October 2008 and 1.1% increase was reported over the 12 months
ended November 2008.
-12-
We accrue
salaries as they are earned by our officers, and thus all salaries earned during
the year are expensed in the year earned. Each officer must include his salary
in his taxable income in the year during which he receives it. We withhold
appropriate tax withholdings from the salaries of the respective
officers.
Annual
Cash Bonus
Our
historical compensation practices have embodied the principle that annual cash
bonuses that are based primarily on achieving objectives that enhance long-term
stockholder value are desirable in aligning stockholder and management
interests.
The
Committee considers our overall financial performance for the fiscal year and
the performance of the specific areas of our Company under each incumbent
officer’s direct control. It was the Committee’s view that this
balance supports the accomplishment of overall objectives and rewarded
individual contributions by executive officers. The Committee strives
to award individual annual bonuses for each named executive consistent with
market practices for positions with comparable decision-making responsibilities
and in accordance with the terms of each executive officer’s employment
agreement as discussed below.
Under
their respective employment agreements, the Company’s executive officers are
eligible to earn cash bonuses as set forth below:
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Bonus
Opportunity
As
Percentage of Base Salary
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C.
Taylor Pickett
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100 | % | ||
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Daniel
J. Booth
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50 | % | ||
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Robert
O. Stephenson
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50 | % | ||
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R.
Lee Crabill
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50 | % | ||
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Michael
D. Ritz
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35 | % | ||
For
2008, fifty percent of the bonus opportunity was based on the Company’s adjusted
funds from operations (“FFO”), with the remaining fifty percent based on the
subjective assessment of individual performance.
The Chief Executive Officer provided
the Committee with an assessment of each executive officer’s performance in
2008. The Committee after consultation with the Chief Executive
Officer determined the subjective portion of each executive officers
bonus. The principal factors noted in the assessment of the executive
officers’ performance included:
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completion of
a 5.9 million share common stock offering in May
2008;
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completion of
a 6.0 million share common stock offering in the challenging market
conditions of September
2008;
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integration
of the former Haven properties into owned and operated and prompt
transition to a new third-party
operator;
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prudent
investment underwriting and deployment of
capital;
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favorable
lease extensions and re-leases;
and
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success in
portfolio restructurings and
workouts
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The
Company’s actual adjusted FFO for 2008 exceeded budget by over $7.9 million,
although adjusted FFO per share available to common stockholders was $0.0031
less than the originally budgeted per share target due to the dilutive impact of
an additional common stock offering that was not anticipated in the original
budget. On September 19, 2008, the Company completed an underwritten
public offering of 6.0 million shares of its common stock at a price of $16.37
per share. The net proceeds, after deducting underwriting discounts
and offering expenses, were approximately $97 million. The Company’s
Board of Directors determined that it was in the best interests of the Company
to complete an equity offering at that time in view of prevailing conditions in
the capital markets and general economic conditions.
-13-
The
Committee determined to payout the adjusted FFO component of executive officer
bonuses for 2008, noting that it would be inappropriate to penalize executive
officers for the dilutive impact of a successfully completed equity financing on
favorable pricing terms, especially in view of then prevailing general economic
and capital markets conditions. The Committee also noted their
subjective evaluation of the Company’s overall performance in
2008. Accordingly, the Committee approved the following cash bonuses
relating to 2008:
Considering
these factors, the Committee set annual cash bonuses related to fiscal year 2008
as follows:
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Adjusted
FFO Portion of Bonus
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Subjective
Portion of Bonus
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Additional
Cash Discretionary Bonus
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Total
Cash Bonus
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C.
Taylor Pickett
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$ | 274,750 | $ | 274,500 | $ | -- | $ | 549,500 | ||||||||
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Daniel
J. Booth
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$ | 84,625 | $ | 84,625 | $ | -- | $ | 169,250 | ||||||||
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Robert
O. Stephenson
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$ | 68,000 | $ | 68,000 | $ | 20,000 | $ | 156,000 | ||||||||
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R.
Lee Crabill
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$ | 65,625 | $ | 65,625 | $ | -- | $ | 131,250 | ||||||||
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Michael
D. Ritz
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$ | 31,763 | $ | 31,763 | $ | 10,000 | $ | 73,526 | ||||||||
We accrue
estimated bonuses for our executive officers throughout the year service is
performed relating to such bonuses, and thus bonuses are expensed in the year
they are earned, assuming they are approved by our Board of Directors. Each
officer must include his bonus in his taxable income in the year during which he
receives it, which is generally in the year following the year it is
earned. We withhold appropriate tax withholdings from the bonus
amounts awarded.
In view
of current economic and market conditions, the Committee has determined that
executive officer bonuses for 2009 will be entirely based on the subjective
evaluation of performance, with 50% based on a review of overall corporate
performance and 50% based on the review of individual corporate
performance.
FFO and
adjusted FFO are non-GAAP financial measures. The Company
calculates and reports FFO in accordance with the definition and interpretive
guidelines issued by the National Association of Real Estate Investment Trusts
("NAREIT"), and consequently, FFO is defined as net income available to common
stockholders, adjusted for the effects of asset dispositions and certain
non-cash items, primarily depreciation and amortization. Investors
and potential investors in the Company’s securities should not rely on non-GAAP
financial measures as a substitute for any GAAP measure, including net
income.
Adjusted
FFO is calculated as FFO available to common stockholders less non-cash
stock-based compensation, litigation settlements, nursing home revenues and
expenses, FIN 46 adjustments, and other non-recurring revenue and expense items
as more fully set forth in the reconciliation in the Company’s earnings release
included as Exhibit 99.1 to the Form 8-K furnished on February 6,
2009. The Company believes that adjusted FFO provides an enhanced
measure of the operating performance of the Company’s core portfolio as a
REIT. The Company's computation of adjusted FFO is not comparable to
the NAREIT definition of FFO or to similar measures reported by other
REITs.
Stock
Incentives
2004
Awards.
In 2004,
we entered into restricted stock agreements with four executive officers under
the Omega Healthcare Investors, Inc. 2004 Stock Incentive Plan. A
total of 317,500 shares of restricted stock were granted, which equated to
approximately $3.3 million of deferred compensation. The shares were
to vest thirty-three and one-third percent (33 ⅓%) on each of January 1, 2005,
January 1, 2006 and January 1, 2007 so long as the executive officer remains
employed on the vesting date, with vesting accelerating upon a qualifying
termination of employment, upon the occurrence of a change of control (as
defined in the restricted stock agreements), death or disability. As
of January 1, 2007, all such shares were vested. In addition, we also
entered into performance restricted stock unit agreements with four executive
officers. A total of 317,500 performance restricted stock units
(PRSUs) were granted under the Omega Healthcare Investors, Inc. 2004 Stock
Incentive Plan. The PRSUs were fully vested as December 31, 2006
following our attaining $0.30 per share of common stock per fiscal quarter in
“Adjusted Funds from Operations” (as defined in the performance restricted stock
unit agreement) for two (2) consecutive quarters. Dividend
equivalents (plus an interest factor based on our Company’s cost of borrowing)
accrued on unvested shares and were paid, according to the terms of the stock
grant, because the PRSUs vested. Dividend equivalents on vested PRSUs
are paid currently. Pursuant to the terms of the performance
restricted stock unit agreements, each of the executive officers did not receive
the vested shares attributable to the PRSUs until January 1, 2008.
-14-
2007
Awards.
Following
its spring 2007 review of executive compensation and the analyses provided by
Schronbaum, the Committee determined to utilize three types of long-term
executive incentives: (1) restricted stock awards for retention
purposes and to encourage meaningful stock ownership, (2) PRSUs based on
annualized performance to motivate and reward short-term performance, and (3)
PRSUs based on cumulative performance through December 31, 2010 to motivate and
reward long-term performance. These awards are shown in the Outstanding Equity
Awards at fiscal year end for 2008 table below. As more thoroughly
described below, the PRSUs are designed to align executive compensation with the
interests of stockholders by tying vesting to achievement to an 11% Total
Shareholder Return hurdle rate.
2007 Restricted Stock
Awards.
On May 7,
2007 we granted restricted stock awards to each of our five executive
officers. Each restricted stock award vests one-seventh on December
31, 2007 and two-sevenths on each of December 31, 2008, December 31, 2009, and
December 31, 2010, subject to continued employment on the vesting
date. In addition, all restricted stock vests upon the officer’s
death, disability, termination of employment by us without cause (as defined in
the employment agreement), or if the officer voluntary quits for good reason (as
defined in the employment agreement). Dividends are paid currently on
unvested and vested shares. If unvested shares are forfeited,
dividends that are paid after the date of the forfeiture are not paid on these
shares.
2007 Performance Restricted Stock
Unit Awards.
On May 7,
2007, we also awarded two types of PRSUs to our executive
officers. The two types of PRSU awards differ in the manner in which
each award vests, as described below in greater detail.
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Vesting
for both types of Awards Based on Total Shareholder
Return. One-half of the total number of PRSUs granted to each
executive officer are subject to ratable annual vesting one-third on
December 31 of each of 2008, 2009 and 2010 per year based on achievement
of “Total Shareholder Return” (as described below) of 11% annualized
through the applicable vesting date. The other half vests 100%
on December 31, 2010 based on achievement of Total Shareholder Returns of
11% annualized through the end of the three-year period. Total
Shareholder Return is determined by reference to the total aggregate
increase in the stock price per share over the applicable performance
period plus dividends per share paid during the performance
period. In calculating Total Shareholder Return, the beginning
of the performance period stock value will be based on the twenty day
trailing average closing price prior to May 7, 2007, and the end of the
performance period stock value will normally be based on the twenty day
trailing average closing price as of the last day of the performance
period.
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Mechanics
of Annual PRSU Vesting. The PRSUs with annual vesting vest at
the rate of one-third on each of December 31, 2008, December 31, 2009, and
December 31, 2010, but only if the Company has achieved a Total
Shareholder Return on an annualized basis of at least 11%, compounded as
of each December 31, for the period commencing on May 7, 2007 and ending
on the applicable vesting date. The officer may catch-up on
vesting that does not occur in a given year because of a missed hurdle if
an 11% annualized cumulative Total Shareholder Return is achieved from May
7, 2007 through December 31, 2010.
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Mechanics
of Three Year PRSU Vesting. The Company must achieve Total
Shareholder Return of 11% per year compounded in the same manner as
described above for the PRSUs with annual vesting over the period from May
7, 2007 through December 31, 2010 for the PRSUs to
vest.
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Termination
of Employment. In the event of the officer’s death, disability,
termination of employment by the Company without cause, or voluntary
resignation for good reason, the performance period for measuring Total
Shareholder Return will end. If the Company has achieved a
Total Shareholder Return of 11% per year compounded annually from May 7,
2007 through the date the performance period is so ended, all the
unforfeited PRSUs will then vest. If the Total Shareholder
Return goal has not been satisfied as of such date the PRSUs will be
forfeited.
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·
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Change
of Control. If a change of control occurs before December 31,
2010, then the performance period for determining whether the Total
Shareholder Return hurdle of 11%, annualized, has been achieved will end
on the change in control date. The officer must be employed on
the applicable vesting date for each type of PRSU award set forth above to
vest. If the Company’s stock is bought for cash in the change in control,
the PRSUs will be converted to a cash obligation, which will grow by the
annual dividend yield of the Company for the last four quarters as of the
date of the change in control until the date the shares attributable to
vested PRSUs are distributable.
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-15-
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Dividend
Equivalents. Dividend equivalents based on dividends paid to
stockholders during the applicable performance period accrue on unvested
and vested PRSUs. Unpaid dividend equivalents accrue interest
at a quarterly rate of interest equal to the Company’s average borrowing
rate for the preceding quarter. Accrued dividend equivalents
plus interest are paid to the officer at the date the shares attributable
to vested PRSUs are distributable.
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Distribution
of Shares. Shares attributable to vested PRSU’s are
distributable upon the earliest of January 2, 2011, the officer’s death or
disability, or termination of the officer’s employment by that Company
without cause or resignation by the officer for good
reason. However, the distribution of shares attributable to
PRSUs with annual vesting will be delayed for six months after any
termination of the officer’s employment by the Company without cause or
his resignation for good reason to the extent required to comply with 409A
of the Internal Revenue Code.
|
Annualized
total shareholder return for the period from May 7, 2007 through December 31,
2008 did not meet the 11% hurdle rate, and therefore none of the PRSUs vested in
2008. As noted above, officers may “catch up” on vesting the 11%
annualized cumulative total shareholder return is achieved from May 7, 2007
through December 31, 2010.
General.
We
account for all stock and option awards in accordance with Statement of
Financial Accounting Standards No. 123R (“FAS 123R”). Executive
officers recognize taxable income from stock option awards when a vested option
is exercised. We generally receive a corresponding tax deduction for
compensation expense in the year of exercise. The amount included in the
executive officer’s wages and the amount we may deduct is equal to the most
recent closing common stock price on the date the stock options are exercised
less the exercise price multiplied by the number of stock options exercised. We
do not pay or reimburse any executive officer for any taxes due upon exercise of
a stock option or upon vesting of an award.
Other
Benefits
All
employees may participate in our 401(k) Retirement Savings Plan (the “401(k)
Plan”). We provide this plan to help our employees save some amount of their
cash compensation for retirement in a tax efficient manner. Under the 401(k)
Plan, employees are eligible to make contributions, and we, at our discretion,
may match contributions and make a profit sharing contribution. We do not
provide an option for our employees to invest in our stock in the 401(k)
plan.
We
provide a competitive benefits package to all full-time employees which includes
health and welfare benefits, such as medical, dental, disability insurance, and
life insurance benefits. The plans under which these benefits are offered do not
discriminate in scope, terms or operation in favor of officers and directors and
are available to all salaried employees. We have no structured executive
perquisite benefits (e.g., club memberships or company vehicles) for any
executive officer, including the named executive officers, and we currently do
not provide supplemental pensions to our employees, including the named
executive officers.
Tax
Deductibility of Executive Compensation
The SEC
requires that this report comment upon our policy with respect to Section 162(m)
of the Internal Revenue Code. Section 162(m) disallows a federal
income tax deduction for compensation over $1.0 million to any of the named
executive officers unless the compensation is paid pursuant to a plan that is
performance-related, non-discretionary and has been approved by our
stockholders. We did not pay any compensation during 2008 that would be subject
to Section 162(m). We believe that, because we qualify as a REIT under the
Internal Revenue Code and therefore are not subject to federal income taxes on
our income to the extent distributed, the payment of compensation that does not
satisfy the requirements of Section 162(m) will not generally affect our net
income, although to the extent that compensation does not qualify for deduction
under Section 162(m), a larger portion of stockholder distributions may be
subject to federal income taxation as dividend income rather than return of
capital. We do not believe that Section 162(m) will materially affect the
taxability of stockholder distributions, although no assurance can be given in
this regard due to the variety of factors that affect the tax position of each
stockholder. For these reasons, Section 162(m) does not directly govern the
Compensation Committee’s compensation policy and practices.
-16-
Compensation
Committee Report
The
Committee reviewed and discussed the CD&A with management, and based on this
review and discussion, the Committee recommended to the Board of Directors that
the CD&A be included in this Proxy Statement and incorporated by reference
in our Annual Report on Form 10-K for the year ended December 31,
2008.
Compensation
Committee of the Board of Directors
Thomas F.
Franke
Harold J.
Kloosterman
Bernard
J. Korman
Edward
Lowenthal
Stephen D. Plavin
-17-
The following table summarizes the
compensation of our “named executive officers” for the years ended December 31,
2008 and 2007. Our named executive officers are our Chief Executive
Officer, our Chief Financial Officer, and the three other most highly
compensated executive officers. With respect to stock awards,
compensation in the table below includes not only compensation earned for
services in the years indicated, but also compensation earned for services in
prior years but recognized as an expense for financial reporting purposes in the
years indicated.
|
Name
and Principal Position
(A)
|
Year
(B)
|
Salary
($)
(C)
|
Bonus
($)
(1)
(D)
|
Stock
Awards
($)
(2)
(E)
|
Option
Awards
($)
(F)
|
Non-Equity
Incentive Plan Compensation ($)
(G)
|
Change
in Pension Value and Non-qualified Deferred Compensation
Earnings
(H)
|
All
Other Compen-
sation
($)
(3)
(I)
|
Total
($)
(J)
|
|||||||||||||||||||||||||||
|
C.
Taylor Pickett
Chief
Executive Officer
|
2008
2007
2006
|
$549,500 $530,500 $515,000 | $549,500 $663,125 $463,500 | $787,668 $525,112 $1,756,675 |
$
--
$ --
$ --
|
$
--
$ --
$ --
|
$
--
$ --
$ --
|
$13,800 $6,750 $30,711 | $1,900,468 $1,725,487 $2,765,886 | |||||||||||||||||||||||||||
|
Robert
O. Stephenson
Chief
Financial Officer
|
2008
2007
2006
|
$272,000 $262,700 $255,000 | $156,000 $157,620 $114,750 | $325,633 $217,088 $843,204 |
$
--
$ --
$ --
|
$
--
$ --
$ --
|
$
--
$ --
$ --
|
$13,800 $6,750 $18,172 | $767,433 $644,158 $1,231,126 | |||||||||||||||||||||||||||
|
Daniel
J. Booth
Chief
Operating Officer
|
2008
2007
2006
|
$338,500 $326,500 $317,000 | $169,250 $244,875 $158,500 | $471,801 $314,534 $1,054,005 |
$
--
$ --
$ --
|
$
--
$ --
$ --
|
$
--
$ --
$ --
|
$13,800 $6,750 $21,066 | $993,351 $892,659 $1,550,571 | |||||||||||||||||||||||||||
|
R.
Lee Crabill
Senior
Vice-President of Operations
|
2008
2007
2006
|
$262,500 $253,400 $246,000 | $131,250 $136,840 $123,000 | $290,746 $193,831 $808,071 |
$
--
$ --
$ --
|
$
--
$ --
$ --
|
$
--
$ --
$ --
|
$13,800 $6,750 $17,691 | $698,296 $590,821 $1,194,762 | |||||||||||||||||||||||||||
|
Michael
D. Ritz (4)
Chief
Accounting Officer
|
2008
2007
2006
|
$181,500
$145,833
$ --
|
$73,526
$111,250
$ --
|
$105,073
$70,048
$ --
|
$
--
$ --
$ --
|
$ --
$ --
$ --
|
$
--
$ --
$ --
|
$13,800
$5,346
$ --
|
$373,899
$332,477
$ --
|
|||||||||||||||||||||||||||
|
(1)
|
Bonuses
are reported in the year earned, whether or not paid before year end.
|
|
(2)
|
Represents
the dollar amount expensed for the years indicated with respect to
restricted stock and PRSU awards for financial reporting purposes in
accordance with FAS 123R. These amounts reflect the Company’s
accounting expense for these awards in the year indicated, and do not
correspond to actual value recognized by the
officers.
|
Amounts
shown for 2008 reflect dollar amount expense in 2008 with respect to restricted
stock awards and PRSUs granted in May 2007. Amounts shown for 2007
reflect dollar amount expense in 2007 with respect to restricted stock awards
and PRSUs granted in May 2007. Amounts shown for 2006 reflect dollar
amount expensed in 2006 with respect to (i) restricted stock awards and (ii)
PRSUs awarded in 2004 and earned in 2006 because we attained $0.30 per share of
common stock in “Adjusted Funds from Operations” for two consecutive quarters,
which target was set by the Committee in 2004.
-18-
|
(3)
|
All
other compensation includes the following amounts over
$10,000:
|
|
Name
|
Year
|
Interest
on Dividends on Stock Awards
|
401(k)
Matching Contribution
|
|||||||||
|
C.
Taylor Pickett
|
2008
2007
2006
|
$
$
$
|
--
--
24,111
|
$
$
$
|
13,800
6,750
6,600
|
|||||||
|
Robert
O. Stephenson
|
2008
2007
2006
|
$
$
$
|
--
--
11,572
|
$
$
$
|
13,800
6,750
6,600
|
|||||||
|
Daniel
J. Booth
|
2008
2007
2006
|
$
$
$
|
--
--
14,466
|
$
$
$
|
13,800
6,750
6,600
|
|||||||
|
R.
Lee Crabill
|
2008
2007
2006
|
$
$
$
|
--
--
11,091
|
$
$
$
|
13,800
6,750
6,600
|
|||||||
|
Michael
D. Ritz
|
2008
2007
2006
|
$
$
$
|
--
--
--
|
$
$
$
|
13,800
5,346
--
|
|||||||
|
(4)
|
Mr.
Ritz began employment with the Company on February 28,
2007.
|
The Company did not grant any
plan-based awards to executive officers in 2008, and accordingly the Grants of
Plan-Based Awards table is intentionally omitted.
|
|
Outstanding
Equity Awards at Fiscal Year End for
2008
|
|
Option
Awards
|
Stock
Awards
|
||||||||
|
Name
(A)
|
Number
of Securities Underlying Unexercised Options (#)
Exercisable
(B)
|
Number
of Securities Underlying Unexercised Options
(#)
Unexercisable
(C)
|
Equity
Incentive Plan Awards: Number of Securities Underlying
Unexercised Unearned Options
(#)
(D)
|
Option
Exercise Price
($)
(E)
|
Option
Expiration
Date
(F)
|
Number
of Shares or Units of Stock That Have Not Vested
(#)
(G)
|
Market
Value of Shares or Units of Stock
That
Have Not Vested
($)
(H)(1)
|
Equity
Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights
That Have Not Vested
(#)
(I)
|
Equity
Incentive Plan Awards: Market or Payout Value of Unearned
Shares, Units or Other Rights That Have Not Vested
($)
(1)
(J)
|
|
C.
Taylor Pickett
|
65,368 (2)
49,026 (3)
49,026 (4)
|
$1,043,927
$782,945
$782,945
|
|||||||
|
Robert
O. Stephenson
|
27,024 (2)
20,268 (3)
20,268 (4)
|
$431,573
$323,680
$323,680
|
|||||||
|
Daniel
J. Booth
|
39,154 (2)
29,366 (3)
29,366 (4)
|
$625,289
$468,975
$468,975
|
|||||||
|
R.
Lee Crabill
|
24,129 (2)
18,097 (3)
18,097 (4)
|
$385,340
$289,009
$289,009
|
|||||||
|
Michael
D. Ritz
|
8,272 (2)
7,239 (3)
7,239 (4)
|
$132,104
$115,607
$115,607
|
|||||||
(1) The
market value is based on the closing price of our common stock on December 31,
2008 of $15.97.
-19-
|
(2)
|
Restricted
stock awards vesting one-seventh on December 31, 2007 and two-sevenths on
each of December 31, 2008, December 31, 2009, and December 31, 2010,
subject to continued employment on the vesting date. In addition, all
restricted stock vests upon the officer’s death, disability, termination
of employment by us without cause (as defined in the employment
agreement), or if the officer voluntary quits for good reason (as defined
in the employment agreement). Dividends are paid currently on
unvested and vested shares. If unvested shares are forfeited, dividends
that are paid after the date of the forfeiture are not paid on these
shares.
|
|
(3)
|
PRSUs
vesting one-third on each of December 31, 2008, 2009 and 2010 subject to
achieving Total Shareholder Return of at least 11% annualized from the
date of grant through the vesting date. See “2007 Performance Restricted
stock Unit Awards” under “CD&A” above for further
information.
|
|
|
(4)
|
PRSUs
vesting December 31, 2010 subject to achieving cumulative Total
Shareholder Return of at least 11% annualized from the date of grant
through the vesting date. See “2007 Performance Restricted Stock Unit
Awards” under “CD&A” above for further
information.
|
Option
Exercises and Stock Vested for 2008
|
Option
Awards
|
Stock
Awards
|
|||||||||||||||
|
Name
(A)
|
Number
of Shares Acquired on Exercise
(#)
(B)
|
Value
Realized on Exercise
($)
(1)
(C)
|
Number
of Shares Acquired on Vesting
(#)
(D)
|
Value
Realized on Vesting
($)
(2)
(E)
|
||||||||||||
|
C.
Taylor Pickett
|
-- | $ | -- | 32,684 | $ | 521,963 | ||||||||||
|
Robert
O. Stephenson
|
-- | $ | -- | 13,512 | $ | 215,787 | ||||||||||
|
Daniel
J. Booth
|
-- | $ | -- | 19,577 | $ | 312,645 | ||||||||||
|
R.
Lee Crabill
|
-- | $ | -- | 12,064 | $ | 192,662 | ||||||||||
|
Michael
D. Ritz
|
-- | $ | -- | 4,136 | $ | 66,052 | ||||||||||
|
(1)
|
This
amount represents the gain to the employee based on the market price of
underlying shares at the date of exercise less the exercise
price.
|
|
(2)
|
The
market value is based on the closing price of our common stocks on
December 31, 2008 of $15.97.
|
Compensation
and Severance Agreements
C.
Taylor Pickett Employment Agreement
We
entered into an employment agreement with C. Taylor Pickett, dated as of
September 1, 2004, to be our Chief Executive Officer. We amended the agreement with the consent of Mr. Pickett, effective May 7,
2007. The amendment extended the
term of the agreement set to expire on December 31, 2007 for an additional
three-year-period until December 2010.
Mr.
Pickett’s current base salary is $558,000 per year, subject to increase by us
and his employment provides that he will be eligible for an annual bonus of up
to 100% of his base salary based on criteria determined by the Compensation
Committee of our Board of Directors.
If we
terminate Mr. Pickett’s employment without “cause” or if he resigns for “good
reason,” we will pay him severance equal to three times the sum of his then
current annual base salary plus his average annual bonus over the last three
completed calendar years, which amount will be paid in installments over the
36-month-period following his termination. “Cause” is defined in the
employment agreement to include events such as willful refusal to perform
duties, willful misconduct in performance of duties, unauthorized disclosure of
confidential company information, or fraud or dishonesty against us. “Good
reason” is defined in the employment agreement to include events such as our
material breach of the employment agreement or our relocation of Mr. Pickett’s
employment to more than 50 miles away without his consent.
-20-
Mr.
Pickett is required to execute a release of claims against us as a condition to
the payment of severance benefits. Severance is not paid if the term of the
employment agreement expires. If Mr. Pickett dies during the term of
the employment agreement, his estate is entitled to a prorated bonus for the
year of his death.
Mr.
Pickett is restricted from using any of our confidential information during his
employment and for two years thereafter or from using any trade secrets during
his employment and for as long thereafter as permitted by applicable law. During
the period of employment and for one year thereafter, Mr. Pickett is obligated
not to provide within the states where Omega owns property as of May 7, 2007,
managerial services or management consulting services to a “competing business.”
Competing business is defined to include a list of named competitors and any
other business with the primary purpose of leasing assets to healthcare
operators or financing ownership or operation of senior, retirement or
healthcare - related real estate. In addition, during the period of employment
and for one year thereafter, Mr. Pickett agrees not to solicit clients or
customers with whom he had material contact or to solicit our management level
employees. If the term of the employment agreement expires at December 31, 2010
and as a result no severance is paid, then these provisions also expire at
December 31, 2010.
Daniel
J. Booth Employment Agreement
We
entered into an employment agreement with Daniel J. Booth, dated as of September
1, 2004, to be our Chief Operating Officer. We amended the agreement
with the consent of Mr. Booth, effective May 7, 2007. The amendment
extended the term of the agreement set to expire on December 31, 2007 for an
additional three-year-period until December 31, 2010.
Mr. Booth’s current base salary is
$344,000 per year, subject to increase by us and his employment agreement
provides that he will be eligible for an annual bonus of up to 50% of his base
salary based on criteria determined by the Compensation Committee of our Board
of Directors. However, in a separate letter, we provided that, for
2007, his percentage bonus opportunity was up to 75% of his base
salary.
If we
terminate Mr. Booth’s employment without “cause” or if he resigns for “good
reason,” we will pay him severance equal to two times the sum of his then
current annual base salary plus his average annual bonus over the last three
completed calendar years, which amount will be paid in installments over the
24-month-period following his termination. “Cause” is defined in the
employment agreement to include events such as willful refusal to perform
duties, willful misconduct in performance of duties, unauthorized disclosure of
confidential company information, or fraud or dishonesty against us. “Good
reason” is defined in the employment agreement to include events such as our
material breach of the employment agreement or our relocation of Mr. Booth’s
employment to more than 50 miles away without his consent.
Mr. Booth
is required to execute a release of claims against us as a condition to the
payment of severance benefits. Severance is not paid if the term of the
employment agreement expires. If Mr. Booth dies during the term of
the employment agreement, his estate is entitled to a prorated bonus for the
year of his death.
Mr. Booth
is restricted from using any of our confidential information during his
employment and for two years thereafter or from using any trade secrets during
his employment and for as long thereafter as permitted by applicable law. During
the period of employment and for one year thereafter, Mr. Booth is obligated not
to provide within the states where Omega owns property as of May 7, 2007,
managerial services or management consulting services to a “competing
business.” Competing business is defined to include a list of named
competitors and any other business with the primary purpose of leasing assets to
healthcare operators or financing ownership or operation of senior, retirement
or healthcare - related real estate. In addition, during the period of
employment and for one year thereafter, Mr. Booth agrees not to solicit clients
or customers with whom he had material contact or to solicit our management
level employees. If the term of the employment agreement expires at December 31,
2010 and as a result no severance is paid, then these provisions also expire at
December 31, 2010.
Robert
O. Stephenson Employment Agreement
We
entered into an employment agreement with Robert O. Stephenson, dated as of
September 1, 2004, to be our Chief Financial Officer. We amended the agreement with the consent of Mr.
Stephenson, effective May 7, 2007. The amendment extended the
term of the agreement set to expire on December 31, 2007 for an additional
three-year-period until December 31, 2010.
Mr. Stephenson’s current base salary is
$276,500 per year, subject to increase by us and his employment agreement
provides that he will be eligible for an annual bonus of up to 50% of his base
salary based on criteria determined by the Compensation Committee of our Board
of Directors. However, in a separate letter, we provided that, for
2007, his percentage bonus opportunity was up to 60% of his base
salary.
-21-
If we
terminate Mr. Stephenson’s employment without “cause” or if he resigns for “good
reason,” we will pay him severance equal to one and one-half times the sum of
his then current annual base salary plus his average annual bonus over the last
three completed calendar years, which amount will be paid in installments over
the 18-month-period following his termination. “Cause” is defined in
the employment agreement to include events such as willful refusal to perform
duties, willful misconduct in performance of duties, unauthorized disclosure of
confidential company information, or fraud or dishonesty against us. “Good
reason” is defined in the employment agreement to include events such as our
material breach of the employment agreement or our relocation of Mr.
Stephenson’s employment to more than 50 miles away without his
consent.
Mr.
Stephenson is required to execute a release of claims against us as a condition
to the payment of severance benefits. Severance is not paid if the term of the
employment agreement expires. If Mr. Stephenson dies during the term
of the employment agreement, his estate is entitled to a prorated bonus for the
year of his death.
Mr.
Stephenson is restricted from using any of our confidential information during
his employment and for two years thereafter or from using any trade secrets
during his employment and for as long thereafter as permitted by applicable law.
During the period of employment and for one year thereafter, Mr. Stephenson is
obligated not to provide within the states where Omega owns property as of May
7, 2007, managerial services or management consulting services to a “competing
business.” Competing business is defined to include a list of named
competitors and any other business with the primary purpose of leasing assets to
healthcare operators or financing ownership or operation of senior, retirement
or healthcare - related real estate. In addition, during the period of
employment and for one year thereafter, Mr. Stephenson agrees not to solicit
clients or customers with whom he had material contact or to solicit our
management level employees. If the term of the employment agreement expires at
December 31, 2010 and as a result no severance is paid, then these provisions
also expire at December 31, 2010.
R.
Lee Crabill, Jr. Employment Agreement
We
entered into an employment agreement with R. Lee Crabill, dated as of September
1, 2004, to be our Senior Vice President of Operations. We amended
the agreement with the consent of Mr. Crabill, effective May 7,
2007. Then amendment extended the term of the agreement set to expire
on December 31, 2007, for an additional three-year-period until December 31,
2010.
Mr. Crabill’s current base salary is
$266,500 per year, subject to increase by us and his employment agreement
provides that he will be eligible for an annual bonus of up to 50% of his base
salary based on criteria determined by the Compensation Committee of our Board
of Directors. However, in a separate
letter, we provided that, for 2007, his percentage bonus opportunity was up to
60% of his base salary.
If we
terminate Mr. Crabill’s employment without “cause” or if he resigns for “good
reason,” we will pay him severance equal to one and one-half times the sum of
his then current annual base salary plus his average annual bonus over the last
three completed calendar years, which amount will be paid in installments over
the 18-month-period following his termination. “Cause” is defined in
the employment agreement to include events such as willful refusal to perform
duties, willful misconduct in performance of duties, unauthorized disclosure of
confidential company information, or fraud or dishonesty against us. “Good
reason” is defined in the employment agreement to include events such as our
material breach of the employment agreement or our relocation of Mr. Crabill’s
employment to more than 50 miles away without his consent.
Mr.
Crabill is required to execute a release of claims against us as a condition to
the payment of severance benefits. Severance is not paid if the term of the
employment agreement expires. If Mr. Crabill dies during the term of
the employment agreement, his estate is entitled to a prorated bonus for the
year of his death.
Mr.
Crabill is restricted from using any of our confidential information during his
employment and for two years thereafter or from using any trade secrets during
his employment and for as long thereafter as permitted by applicable law. During
the period of employment and for one year thereafter, Mr. Crabill is obligated
not to provide within the states where Omega owns property as of May 7, 2007,
managerial services or management consulting services to a “competing
business.” Competing business is defined to include a list of named
competitors and any other business with the primary purpose of leasing assets to
healthcare operators or financing ownership or operation of senior, retirement
or healthcare - related real estate. In addition, during the period of
employment and for one year thereafter, Mr. Crabill agrees not to solicit
clients or customers with whom he had material contact or to solicit our
management level employees. If the term of the employment agreement expires at
December 31, 2010 and as a result no severance is paid, then these provisions
also expire at December 31, 2010.
Michael
D. Ritz Employment Agreement
We
entered into an employment agreement with Michael D. Ritz, dated as of May 7,
2007, to be our Chief Accounting Officer. The term of the agreement expires on
December 31, 2010.
-22-
Mr.
Ritz’ current base salary is $184,500 per year, subject to increase by us, and
his employment agreement provides that he will be eligible for an annual bonus
of up to 35% of his base salary based on criteria determined by the Compensation
Committee of our Board of Directors plus, for 2007 only, a guaranteed bonus of
$40,000, subject to his continued employment on the date the bonus is
paid.
If
we terminate Mr. Ritz’ employment without “cause” or if he resigns for “good
reason,” we will pay him severance equal to one times the sum of his then
current annual base salary plus his average annual bonus over the last three
completed calendar years, which amount will be paid in installments over the
12-month-period following his termination. “Cause” is defined in the employment
agreement to include events such as willful refusal to perform duties, willful
misconduct in performance of duties, unauthorized disclosure of confidential
company information, or fraud or dishonesty against us. “Good reason” is defined
in the employment agreement to include events such as our material breach of the
employment agreement or our relocation of Mr. Ritz’ employment to more than 50
miles away without his consent.
Mr.
Ritz is required to execute a release of claims against us as a condition to the
payment of severance benefits. Severance is not paid if the term of the
employment agreement expires. If Mr. Ritz dies during the term of the employment
agreement, his estate is entitled to a prorated bonus for the year of his
death.
Mr.
Ritz is restricted from using any of our confidential information during his
employment and for two years thereafter or from using any trade secrets during
his employment and for as long thereafter as permitted by applicable law. During
the period of employment and for one year thereafter, Mr. Ritz is obligated not
to provide, within the states where Omega owns property as of May 7, 2007,
managerial services or management consulting services to a “competing business.”
Competing business is defined to include a list of named competitors and any
other business with the primary purpose of leasing assets to healthcare
operators or financing ownership or operation of senior, retirement or
healthcare-related real estate. In addition, during the period of employment and
for one year thereafter, Mr. Ritz agrees not to solicit clients or customers
with whom he had material contact or to solicit our management level employees.
If the term of the employment agreement expires at December 31, 2010 and as a
result no severance is paid, then these provisions also expire at December 31,
2010.
Each of the employment agreements
listed above were amended in December 2008 to comply with Section 409(a) of the
Internal Revenue Code. However, the amendments did not result in any
material changes to the employment agreements.
Potential
Payments Upon Termination or Change of Control
The table
below illustrates the incremental compensation that would have been payable in
the event of termination events identified below, as if they had occurred as of
December 31, 2008.
In
general, the occurrence of a change of control does not increase benefits that
would otherwise be payable upon termination without cause or resignation for
good reason. If a change of control occurs before the end of a
performance period under the outstanding PRSUs, then the performance period for
the applicable PRSU will end on the change in control date. However,
the PRSUs only vest if the officer is employed at the original vesting date, or
the officer is terminated for cause or resigns for good reason. For a
description of the vesting of restricted stock and PRSUs, see “Stock Incentives”
on page 14 above. For a description of circumstances constituting
“cause” and “good reason”, and further detail regarding the estimated payments
and benefits upon the occurrence of certain triggering events, see the
discussion of each officer’s employment agreement above.
-23-
|
Involuntary
Without Cause or
Voluntary
for Good Reason
|
Death
or
Disability
|
|||||||
|
C.
Taylor Pickett:
|
||||||||
|
Severance
|
$ | 3,324,625 | $ | -- | ||||
|
Accelerated
Vesting of Restricted Stock(1)
|
$ | 1,043,927 | $ | 1,043,927 | ||||
|
Total
Value of Payments:
|
$ | 4,368,552 | $ | 1,043,927 | ||||
|
Robert
O. Stephenson:
|
||||||||
|
Severance
|
$ | 622,185 | $ | -- | ||||
|
Accelerated
Vesting of Restricted Stock(1)
|
$ | 431,573 | $ | 431,573 | ||||
|
Total
Value of Payments:
|
$ | 1,053,758 | $ | 431,573 | ||||
|
Daniel
J. Booth:
|
||||||||
|
Severance
|
$ | 1,058,750 | $ | -- | ||||
|
Accelerated
Vesting of Restricted Stock(1)
|
$ | 625,289 | $ | 625,289 | ||||
|
Total
Value of Payments:
|
$ | 1,684,039 | $ | 625,289 | ||||
|
R.
Lee Crabill:
|
||||||||
|
Severance
|
$ | 589,295 | $ | -- | ||||
|
Accelerated
Vesting of Restricted Stock(1)
|
$ | 385,340 | $ | 385,340 | ||||
|
Total
Value of Payments:
|
$ | 974,635 | $ | 385,340 | ||||
|
Michael
D. Ritz:
|
||||||||
|
Severance
|
$ | 268,888 | $ | -- | ||||
|
Accelerated
Vesting of Restricted Stock(1)
|
$ | 132,104 | $ | 132,104 | ||||
|
Total
Value of Payments:
|
$ | 400,992 | $ | 132,104 | ||||
(1) Based on
closing stock price as of December 31, 2008.
|
Name
(A)
|
Fees
earned or paid in cash
($)
(B)
|
Stock
Awards
($)
(1)(2)
(C)
|
Option
Awards
($)
(D)
|
Non-Equity
Incentive Plan Compensation
($)
(E)
|
Change
in Pension Value and Non-Qualified Deferred Compensation
Earnings
(F)
|
All
Other Compensation
($)
(G)
|
Total
($)
(H)
|
|||||||||||||||||||||
|
Thomas
F. Franke
|
$ | 57,500 | $ | 45,463 | $ | -- | $ | -- | $ | -- | $ | -- | $ | 102,963 | ||||||||||||||
|
Harold
J. Kloosterman
|
$ | 78,000 | $ | 45,463 | $ | -- | $ | -- | $ | -- | $ | -- | $ | 123,463 | ||||||||||||||
|
Bernard
J. Korman
|
$ | 84,500 | $ | 64,713 | $ | -- | $ | -- | $ | -- | $ | -- | $ | 149,213 | ||||||||||||||
|
Edward
Lowenthal
|
$ | 58,000 | $ | 45,463 | $ | -- | $ | -- | $ | -- | $ | -- | $ | 103,463 | ||||||||||||||
|
Stephen
D. Plavin
|
$ | 76,000 | $ | 45,463 | $ | -- | $ | -- | $ | -- | $ | -- | $ | 121,463 | ||||||||||||||
|
|
(1)
|
Dollar
amount expensed during fiscal year.
|
-24-
|
|
(2)
|
Grants
of plan-based awards table for
2008:
|
|
Name
|
Grant
Date
|
Shares
Awarded
|
Grant
Date
Fair
Value
|
||||||
|
Franke
|
1/7/2008
2/15/2008
5/15/2008
8/15/2008
11/17/2008
|
1,500
384
345
342
488
|
|
$22,560
$ 6,244
$ 6,241
$ 6,245
$ 6,251
|
|||||
|
Kloosterman
|
1/7/2008
2/15/2008
5/15/2008
8/15/2008
11/17/2008
|
1,500
384
345
342
488
|
$22,560
$ 6,244
$ 6,241
$ 6,245
$ 6,251
|
||||||
|
Korman
|
1/7/2008
2/15/2008
5/15/2008
8/15/2008
11/17/2008
|
2,500
384
345
342
488
|
$37,600
$ 6,244
$ 6,241
$ 6,245
$ 6,251
|
||||||
|
Lowenthal
|
1/7/2008
2/15/2008
5/15/2008
8/15/2008
11/17/2008
|
1,500
384
345
342
488
|
$22,560
$ 6,244
$ 6,241
$ 6,245
$ 6,251
|
||||||
|
Plavin
|
1/7/2008
2/15/2008
5/15/2008
8/15/2008
11/17/2008
|
1,500
384
345
342
488
|
$22,560
$ 6,244
$ 6,241
$ 6,245
$ 6,251
|
||||||
Our
standard compensation arrangement for directors for 2008 provided that each
non-employee director is entitled to receive (i) a cash payment of $25,000
payable in quarterly installments of $6,250, (ii) a quarterly grant of shares of
common stock equal to the number of shares determined by dividing the sum of
$6,250 by the fair market value of the common stock on the date of each
quarterly grant, currently set at February 15, May 15, August 15 and November
15, and (iii) an annual grant of 1,500 shares of restricted stock with an
additional 1,000 restricted shares granted to the Chairman of the Board
annually. In addition, the Chairman of the Board receives an
additional annual payment of $25,000, the Chairman of the Audit Committee
receives an additional $15,000, the Chairman of the Compensation Committee
receives an additional $10,000 and all other committee chairmen receive
$7,000.
We also
pay each non-employee director fees equal to $1,500 per meeting for attendance
at each regularly scheduled meeting of the Board of Directors. For each
teleconference or called special meeting of the Board of Directors, each
non-employee director receives $1,500 per meeting. In addition, each
new non-employee director of our Company will be awarded options with respect to
10,000 shares upon his or her initial election as a director.
The
number of shares of restricted stock granted to non-employee directors each year
has been modified commencing in 2009. The Chairman of the Board is
now entitled to receive a grant of 3,500 shares of restricted stock each year,
and each of the other non-employee directors is entitled to receive a grant of
2,100 shares of restricted stock each year. These restricted stock
grants were made as of February 3, 2009 and will be made as of January 15 in
future years (or if January 15 is not a business day, the next business
day).
Non-employee
director restricted stock vests ratably over a three-year period beginning
January 1 following the date of the grant. In addition, we reimburse
the directors for travel expenses incurred in connection with their duties as
directors. Employee directors receive no compensation for service as
directors.
-25-
Deferred
Stock Plan
The Board
of Directors of the Company has adopted a Deferred Stock Plan that allows
directors and executive officers to defer receive of stock grants, subject to
the terms of the plan and agreements approved by the Compensation Committee of
the Board of Directors for such purpose. The terms and conditions
will be reflected in a deferral agreement approved by the Compensation
Committee. If a participant makes a deferral election, the deferred
shares will be issued at a date or event specified in the deferral
agreement.
Unless
otherwise determined by the Compensation Committee, each stock grant that is
deferred will accrue dividend equivalents. The Compensation Committee
may provide in the applicable agreement that dividend equivalents will be
deferred along with the stock grants or may give the participant the right to
elect to receive the dividend equivalents currently or defer them. If
a participant makes a deferral election, the dividend equivalents will be
deferred until the date or event specified in the participant’s
agreement. The Compensation Committee may allow a participant to
elect, or may require, that deferred dividend equivalents will be converted into
common stock under a conversion formula or instead that the dividend equivalents
will not be converted but the amount will be increased by an interest rate set
by the Compensation Committee.
Compensation
Committee Interlocks and Insider Participation
Thomas F. Franke, Harold J.
Kloosterman, Bernard J. Korman, Edward Lowenthal and Stephen D. Plavin were
members of the Compensation Committee for the year ended December 31, 2008 and
during such period, there were no Compensation Committee interlocks or insider
participation in compensation decisions.
The
Audit Committee’s purpose is to oversee the accounting and financial reporting
processes of our Company, the audits of our financial statements, the
qualifications of the public accounting firm engaged as our independent auditor
to prepare and issue an audit report on our financial statements and the related
internal control over financial reporting, and the performance of our
independent auditors. The Audit Committee has the sole authority and
responsibility to select, determine the compensation of, evaluate and, when
appropriate, replace our Company’s independent auditors. The Audit Committee’s
function is more fully described in its revised charter, which the Board of
Directors adopted on January 16, 2007, and is available on our website at www.omegahealthcare.com. The
Board of Directors reviews the Audit Committee Charter annually.
The Audit Committee has three
independent directors, and the Board of Directors has determined that each Audit
Committee member is independent under the standards of director independence
established under our corporate governance policies and the NYSE listing
requirements and is also “independent” for purposes of Section 10A(m)(3) of the
Securities Exchange Act of 1934. In addition, the Board of Directors
has determined that Stephen Plavin is an “audit committee financial expert,” as
defined by SEC rules.
Management is responsible for the
preparation, presentation, and integrity of our financial statements, accounting
and financial reporting principles, internal control over financial reporting,
and procedures designed to ensure compliance with accounting standards,
applicable laws, and regulations. Our Company’s independent auditor,
Ernst & Young LLP, is responsible for auditing and expressing opinions on
the conformity of our Company’s consolidated financial statements with
accounting principles generally accepted in the United States, and the
effectiveness of our Company’s internal control over financial reporting based
on criteria established in Internal Control – Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (the COSO
criteria).
Audit
Committee Report
The Audit Committee, with respect to
the audit of Omega’s 2008 audited consolidated financial statements, reports as
follows:
|
1)
|
The
Audit Committee has reviewed and discussed our 2008 audited consolidated
financial statements with Omega’s
management;
|
|
2)
|
The
Audit Committee has discussed with Ernst & Young LLP the matters
required to be discussed by Statement on Auditing Standards No. 61, as
amended, “Communication with Audit Committees” and SEC Regulation S-X,
Rule 2-07, which include, among other items, matters related to the
conduct of the audit of Omega’s consolidated financial statements, and the
Public Company Accounting Oversight Board (“PCAOB”) Auditing Standard No.
5, (“An Audit of Internal Control Over Financial Reporting that is
integrated with an Audit of Financial
Statements”);
|
-26-
|
3)
|
The
Audit Committee has received written disclosures and the letter from Ernst
& Young LLP required by PCAOB Rule 3526 “Communications with Audit
Committees Concerning Independence,” (which relates to the auditor’s
independence from Omega and its related entities) and has discussed with
Ernst & Young LLP its independence from
Omega;
|
|
4)
|
Based
on reviews and discussions of Omega’s 2008 audited consolidated financial
statements with management and discussions with Ernst & Young LLP, the
Audit Committee recommended to the Board of Directors that Omega’s 2008
audited consolidated financial statements be included in our Company’s
Annual Report on Form 10-K;
|
|
5)
|
The
Audit Committee has policies and procedures that require the pre-approval
by the Audit Committee of all fees paid to, and all service performed by,
our Company’s independent auditor. At the beginning of each year, the
Audit Committee approves the proposed services, including the nature, type
and scope of service contemplated and the related fees, to be rendered by
the firm during the year. In addition, Audit Committee pre-approval is
also required for those engagements that may arise during the course of
the year that are outside the scope of the initial services and fees
approved by the Audit Committee. For each category of proposed service,
the independent accounting firm is required to confirm that the provision
of such services does not impair its independence. Pursuant to the
Sarbanes-Oxley Act of 2002, the fees and services provided as noted in the
table below were authorized and approved by the Audit Committee in
compliance with the pre-approval policies and procedures described herein;
and
|
|
6)
|
The
Committee has also reviewed the services provided by Ernst & Young LLP
discussed below and has considered whether provision of such services is
compatible with maintaining auditor
independence.
|
Audit
Committee of the Board of Directors
Stephen
D. Plavin
Harold J.
Kloosterman
Edward
Lowenthal
-27-
Independent
Auditors
Ernst & Young LLP audited our
financial statements for each of the years ended December 31, 2008, 2007 and
2006. Representatives of Ernst & Young LLP are expected to be
present at the Annual Meeting and will be given the opportunity to make a
statement if they desire to do so. It is also expected that they will
be available to respond to appropriate questions from stockholders at the Annual
Meeting. Approval of our independent auditors is not a matter
required to be submitted to stockholders; however, the Board considers the
selection of the independent auditor to be an important matter of stockholder
concern and is submitting the selection of Ernst & Young LLP for
ratification by stockholders as a matter of good corporate
practice.
Fees
The following table presents fees for
professional audit services rendered by Ernst & Young LLP for the audit of
our Company’s annual financial statements for the fiscal years 2008 and 2007 and
fees billed for other services rendered by Ernst & Young LLP during those
periods, all of which were pre-approved by the Audit Committee.
|
Year
Ended December 31,
|
||||||||
|
2008
|
2007
|
|||||||
|
Audit
Fees
|
$ | 874,000 | $ | 793,000 | ||||
|
Audit-Related
Fees
|
— | — | ||||||
|
Tax
Fees
|
— | — | ||||||
|
All
Other
Fees
|
6,000 | 6,000 | ||||||
|
Total
|
$ | 880,000 | $ | 799,000 | ||||
Audit Fees
The aggregate fees billed by Ernst
& Young LLP for professional services rendered to our Company for the audit
of our Company’s annual financial statements for fiscal years 2008 and 2007, the
audit of the effectiveness of our Company’s internal control over financial
reporting related to Section 404 of the Sarbanes-Oxley Act of 2002 for fiscal
years 2008 and 2007, the reviews of the financial statements included in our
Company’s Forms 10-Q for fiscal years 2008 and 2007, and services relating to
securities and other filings with the SEC, including comfort letters and
consents, were approximately $874,000 and $793,000, respectively.
Audit
Related Fees
Ernst & Young LLP was not engaged
to perform services for our Company relating to due diligence related to mergers
and acquisitions, accounting consultations and audits in connection with
acquisitions, internal control reviews, attest services that are not required by
statute or regulation, or consultation concerning financial accounting and
reporting standards for fiscal years 2008 and 2007.
Tax
Fees
Ernst & Young LLP was not engaged
to perform services to our Company relating to tax compliance, tax planning and
tax advice for fiscal years 2008 and 2007, respectively.
All
Other Fees
Ernst & Young LLP also billed us
approximately $6,000 annually for access to an online accounting research tool
in 2008 and 2007.
-28-
Determination
of Auditor Independence
The Audit Committee considered the
provision of non-audit services by our independent auditor and has determined
that the provision of such services was consistent with maintaining the
independence of Ernst & Young LLP.
Audit
Committee’s Pre-Approval Policies
The Audit Committee’s current practice
is to pre-approve all audit services and all permitted non-audit services to be
provided to our Company by our independent auditor; provided, however
pre-approval requirements for non-audit services are not required if all such
services: (1) do not aggregate to more than five percent of total
revenues paid by us to our accountant in the fiscal year when services are
provided; (2) were not recognized as non-audit services at the time of the
engagement; and (3) are promptly brought to the attention of the Audit Committee
and approved prior to the completion of the audit by the Audit
Committee.
PROPOSAL
2 – AMENDMENT TO OMEGA’S ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK
On
February 18, 2009 our Board of Directors approved a proposal to amend our
Articles of Incorporation, subject to stockholder approval, to increase the
number of shares of the Company’s common stock authorized for
issuance. Our Articles of Incorporation presently authorize us to
issue 120 million shares of stock, consisting of 100 million
shares of common stock and 20 million shares of preferred stock. We are
proposing to amend our Articles of Incorporation to increase the number of
authorized shares of our common stock from 100 million to 200 million. The
number of authorized shares of our preferred stock would remain the
same.
We
propose that Article IV, Section 1 of our Articles of Incorporation be amended
to read in its entirety as follows:
The total
number of shares of capital stock which the corporation shall have authority to
issue is Two Hundred Twenty Million (220,000,000), of which Two Hundred Million
(200,000,000) shall be shares of Common Stock having a par value of $.10 per
share and Twenty Million (20,000,000) shall be shares of Preferred Stock having
a par value of $1.00 per share. The aggregate par value of all said
shares shall be Forty Million Dollars ($40,000,000). Prior to the
increase, the aggregate par value of all said shares was Thirty Million Dollars
($30,000,000).
At [March 31], 2009,
there were [82,408,075]
shares of common stock issued and outstanding and [3,553,082] shares were
reserved for issuance pursuant to our Dividend Reinvestment and Common Stock
Purchase Plan and stock incentive plans. As a result, as of [March 31], 2009, we had
[14,038,843] shares of
authorized common stock available for future issuance. As a real
estate investment trust, we frequently use common stock offerings to fund future
investments. For example, we issued 7.13 million shares of common
stock in April 2007, 5.9 million shares in May 2008, and 6.0 million shares in
September 2008. In addition, we issued approximately 1.2 million
shares in 2007 and approximately 2.1 million shares in 2008 under our Dividend
Reinvestment and Stock Purchase Plan. Our Board of Directors believes
it is in the best interests of our stockholders to increase the number of
authorized shares of common stock as it would provide flexibility with respect
to future transactions, including raising additional capital, acquisitions,
stock splits and other general corporate purposes.
The
additional authorized common stock would be part of our current class of common
stock and, if and when issued, would have the same rights and privileges as our
presently issued and outstanding common stock. We may use authorized shares of
common and preferred stock from time to time as appropriate and opportune
situations arise.
Our stockholders will not have any
preemptive rights with respect to the additional shares being authorized. No
further approval by stockholders would be necessary prior to the issuance of any
additional shares of common stock or preferred stock, except as may be required
by law or applicable NYSE rules. In certain circumstances, generally relating to
the number of shares to be issued and the identity of the recipient, the rules
of the NYSE require stockholder authorization in connection with the issuance of
such additional shares. Subject to applicable law and the rules of the NYSE, our
Board of Directors has the sole discretion to issue additional shares of common
stock and the Board of Directors does not intend to issue any stock except for
reasons and on terms which our Board of Directors deems to be in the best
interests of our stockholders. The issuance of any additional shares of common
or preferred stock may have the effect of diluting the percentage of stock
ownership of our present stockholders. However, in any such event, stockholders
wishing to maintain their interests may be able to do so through normal market
purchases.
-29-
If our stockholders approve this
Proposal 2, an amendment to our Articles of Incorporation will be filed with the
State Department of Assessments and Taxation of Maryland and will be effective
as of the date of acceptance for record by the State Department of Assessments
and Taxation.
Voting
Required for Approval
The
affirmative vote of a majority of all the outstanding shares of our common stock
entitled to vote at our Annual Meeting is required for approval of the proposed
amendment to our Articles of Incorporation. Consequently, abstentions and broker
non-votes will have the same effect as votes against the proposal. The amendment
to our Articles of Incorporation is considered a “routine” matter under the
rules of the NYSE, and accordingly, intermediaries such as banks and brokers
will be afforded discretionary authority to vote on this Proposal
2.
Recommendation
of the Board
The Board of Directors unanimously
recommends that a vote FOR the amendment to our
Articles of Incorporation to increase the number of authorized shares of common
stock from 100 million to 200 million.
The Audit Committee has selected Ernst
& Young LLP as our Company’s independent auditor for the current fiscal
year, and the Board of Directors is asking stockholders to ratify that
selection. Although current law, rules, and regulations, as well as
the charter of the Audit Committee, require our Company’s independent auditor to
be engaged, retained, and supervised by the Audit Committee, the Board of
Directors considers the selection of the independent auditor to be an important
matter of stockholder concern and is submitting the selection of Ernst &
Young LLP for ratification by stockholders as a matter of good corporate
governance. However, if the stockholders do not
ratify the selection, the Board of
Directors and the
Audit Committee will reconsider whether or not
to retain Ernst & Young LLP. Even if the selection is ratified,
the Board of Directors and the Audit Committee in their discretion may change
the appointment at any time during the year if they determine that such a change
would be in the best interest of us and our stockholders. Information
concerning the services Ernst & Young provided to us can be found beginning
on page 28.
Voting
Required for Approval
The
affirmative vote of holders of a majority of all votes cast on the matter is
required to ratify the selection of Ernst & Young LLP as our Company’s
independent auditor for the current fiscal year.
Accordingly,
abstentions and broker non-votes, if any, will have no effect on the outcome of
the vote on any of these proposals.
The Board of
Directors and the members of the Audit
Committee unanimously recommend
a vote FOR the proposal
to ratify the selection of Ernst & Young LLP as
our independent auditor for the fiscal year 2009.
STOCKHOLDER
PROPOSALS
December [21], 2009 is the date by which
proposals of stockholders intended to be presented at the 2010 Annual Meeting of
Stockholders must be received by us for inclusion in our proxy statement and
form of proxy relating to that meeting.
In addition, our Bylaws provide that in
order for business to be brought before the Annual Meeting, a stockholder must
deliver or mail written notice to our Secretary at our principal executive
office not less than 60 days nor more than 90 days prior to the first
anniversary of the preceding year’s Annual Meeting provided, however, that if
the date of the Annual Meeting is advanced by more than 30 days or delayed by
more than 60 days from such anniversary date, notice must be delivered not more
than 90 days prior to such Annual Meeting nor less than 60 days prior to such
Annual Meeting or if later, not later than the close of business on the tenth
day following the day on which the date of such meeting is publicly
announced. The notice must state the stockholder’s name,
address, class and number of shares of our stock and briefly describe the
business to be brought before the meeting, the reasons for conducting such
business at the meeting and any material interest of the stockholder and of the
beneficial owner, if any, on whose behalf the proposal is made. If
the stockholder intends to nominate a candidate for election as a director, in
addition to the requirements set forth above, the notice should include the name
of the nominee for election as a director, the age of the nominee, the nominee’s
business address and experience during the past five years, the number of shares
of our stock beneficially held by the nominee, and such other information
concerning the nominee as would be required to be included in a proxy statement
soliciting proxies for the election of the nominee. The notice must
also include a description of all arrangements or understandings between such
stockholder and each proposed nominee and any other person pursuant to which the
nominations are to be made by such stockholder, a representation that such
stockholder intends to appear in person or by proxy at the meeting to nominate
the person named in the notice, and the consent of the nominee to serve as a
director.
-30-
EXPENSES
OF SOLICITATION
The total cost of this solicitation
will be borne by us. In addition to use of the mails, proxies may be
solicited by our directors, officers and regular employees of our Company
personally and by telephone or facsimile. We may reimburse persons
holding shares in their own names or in the names of the nominees for expenses
such persons incur in obtaining instructions from beneficial owners of such
shares. In addition, we have engaged InvestorCom to assist in the
solicitation of proxies for the Annual Meeting for a fee of $3,500, plus
out-of-pocket expenses.
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities
Exchange Act of 1934, as amended, requires our executive officers, directors and
persons who beneficially own more than 10% of our Company’s common stock to file
initial reports of ownership and reports of changes in ownership with the
SEC. SEC regulations require these individuals to give us copies of
all Section 16(a) forms they file.
Based solely on our review of forms
that were furnished to us and written representations from reporting persons, we
believe that the executive officers, directors and more than 10% stockholders
complied with all filing requirements related to Section 16(a). In making these
statements, we have relied on the representations of the persons involved and on
copies of their reports filed with the SEC.
HOUSEHOLDING
The SEC
has adopted rules that permit companies and intermediaries such as brokers to
satisfy delivery requirements for proxy statements with respect to two or more
shareholders sharing the same address by delivering a single proxy statement to
the shareholders at that address. This procedure, referred to as householding,
reduces the volume of duplicate information shareholders receive and reduces
mailing and printing costs. Some brokers household proxy materials, delivering a
single proxy statement to multiple shareholders sharing an address, unless
contrary instructions have been received from the affected
shareholders
Once you have received notice from your
broker or us that they or we will be householding materials to your address,
householding will continue until you are notified otherwise or until you revoke
your consent. If, at any time, you no longer wish to participate in householding
and would prefer to receive a separate proxy statement, or if you are receiving
multiple copies of the proxy statement and wish to receive only one copy, please
notify your broker if your shares are held in a brokerage account, or notify us
if you hold registered shares. You can notify us by sending a written request to
Omega Healthcare Investors, Inc., 200 International Circle, Suite 3500, Hunt
Valley, MD 21030 or by calling our Investor Relations Department at
866-99-OMEGA.
-31-
OTHER
MATTERS
The Board of Directors knows of no
other business that may be validly presented at the Annual Meeting, but if other
matters do properly come before the Annual Meeting, it is intended that the
persons named in the proxy will vote on said matters in accordance with their
best judgment.
/s/ C.
TAYLOR
PICKETT
Chief Executive Officer
April
[20],
2009
Hunt
Valley, Maryland
-32-
OMEGA
HEALTHCARE INVESTORS, INC.
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY
The
undersigned hereby appoints Robert O. Stephenson and Thomas H. Peterson and each
of them, as proxies, each with the power to appoint his substitute to represent
and to vote as designated below, all the shares of common stock of Omega
Healthcare Investors, Inc. (“Omega”) held of record by the undersigned on April
19, 2009 at the Annual Meeting of Stockholders to be held on May 21, 2009 or any
adjournment thereof.
This
Proxy, when properly executed, will be voted in the manner directed herein by
the undersigned. If no specification is made, this Proxy will be
voted FOR:
|
1.
|
The
Election of Directors
|
NOMINEES:
Thomas Franke and Bernard J.
Korman
|
2.
|
Approval
of the amendment to our Articles of Incorporation described in Proposal 2
in the accompanying Proxy Statement
|
|
3.
|
Ratification
of Independent Auditors
|
Ernst
& Young LLP
In their
discretion, the proxies are authorized to vote upon such other business as may
properly come before the meeting and at any adjournment thereof.
(Continued,
and to be marked, dated and signed, on the other side)
SEE
REVERSE SIDE
-- FOLD
AND DETACH HERE --
[X] (Please
mark your
votes as in this
example.)
The Directors recommend a vote “FOR” Proposal 1, Proposal 2
and Proposal 3.
VOTE FOR VOTE WITHELD
1. The
Election of
Directors [ ] [ ]
NOMINEES:
Thomas F. Franke and Bernard J.
Korman
(Instruction: To withhold
authority to vote for any individual nominee,
write that nominee’s name
here.)
FOR AGAINST ABSTAIN
|
2.
|
Approval
of the amendment to our Articles of Incorporation
described
|
in Proposal 2 in the accompanying Proxy
Statement [ ] [ ] [ ]
3. Ratification
of Independent
Auditors [ ] [ ] [ ]
Ernst
& Young LLP
-------------------------------------------------------------------------------------------------------------
NOTE: Please
sign exactly as your name appears on this Proxy. When shares are held
by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as
such. If a corporation, please sign in full corporate name by
President or other authorized officer. If a partnership, please sign
in partnership name by authorized person.
Please
check the box if you plan to attend the Annual Meeting in
person. [ ]
SIGNATURE(S) DATE
|
NOTE:
|
Please
sign exactly as your name appears hereon. Joint owners should
each sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. This proxy will not
be used if you attend the meeting in person and so
request.
|
--------------------------------------------------------------------------------
- FOLD
AND DETACH