Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section
14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
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Care Capital Properties, Inc.
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Charter)
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Statement, if Other Than the Registrant)
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Table of Contents
Notice of
2017
Annual Meeting of
Stockholders
and Proxy Statement
__________
May 18, 2017
191
North Wacker Drive
Conference Center (10th Floor)
Chicago,
Illinois 60606
Table of Contents
Letter to Our
Stockholders
Care Capital
Properties, Inc.
191 North Wacker
Drive
Suite 1200
Chicago, Illinois 60606
(855)
755-9988
April 7,
2017
Dear Fellow Stockholders:
On behalf of our Board of Directors, we
are pleased to invite you to attend the Care Capital Properties, Inc. 2017
Annual Meeting of Stockholders. This years meeting will be held on Thursday,
May 18, 2017, at 191 North Wacker Drive, Conference Center (10th
Floor), in Chicago, Illinois. The attached Notice of Annual Meeting of
Stockholders and Proxy Statement provide you with information regarding the
business to be conducted at the meeting and other important matters regarding
our company.
I am proud of the results we delivered in
2016, which marked our first full year operating as an independent public
company following our spin-off from Ventas, Inc. in August 2015. We made
significant strides in each of the four strategic priorities we laid out at the
beginning of last year migrating to a permanent capital structure, optimizing
our portfolio, building out our standalone infrastructure, and making
value-enhancing investments and are pleased to share with you the vision and
values that we, not only as fiduciaries, but as stockholders, use to guide our
decisions as we position the company for long-term growth and sustained
success.
At Care Capital Properties, our vision is
to be a different kind of REIT one that is skilled, focused, and
invested:
● |
Skilled in managing a large diversified
portfolio of post-acute assets in the dynamic and rapidly changing
healthcare environment |
● |
Focused on delivering stockholder value
by allocating capital intelligently and maintaining a strong financial
profile |
● |
Invested in helping our operators to
grow and win in our large, fragmented and consolidating
market |
Although we have accomplished many of our
goals over the last 19 months, our work is not done. We remain committed to
maximizing long-term value for our company and our stockholders through
integrity, accountability, transparency, effective oversight, and sound risk
management, and we value your confidence and trust as much as the capital you
have invested in us.
Your vote is important to us and our
business. Prior to the meeting, I encourage you to review the information in the
attached Proxy Statement and use telephone or Internet voting, or sign and
return your proxy card if you received one by mail, so that your shares will be
represented and voted at the meeting. Instructions on how to vote can be found
in the Notice of Annual Meeting of Stockholders.
Our Board of Directors greatly appreciates
your investment and support.
Sincerely,
Douglas Crocker II
Chairman of the Board of Directors
www.carecapitalproperties.com/investors
Table of Contents
Notice of Annual
Meeting of Stockholders
Date and Time |
Place |
Thursday, May 18, 2017 |
191 North Wacker Drive, |
8:30 a.m., |
Conference Center (10th
Floor), |
Local (Central) Time |
Chicago, Illinois
60606 |
The 2017 Annual Meeting of Stockholders of
Care Capital Properties, Inc. (CCP) will be held at 8:30 a.m. local (Central)
time on Thursday, May 18, 2017, at 191 North Wacker Drive, Conference Center
(10th Floor), Chicago, Illinois 60606. The purposes of the meeting
are:
1 |
To
elect the seven director-nominees named in the Proxy Statement to serve
until the 2018 Annual Meeting of Stockholders; |
2 |
To
ratify the selection of KPMG LLP as our independent registered public
accounting firm for fiscal year 2017; and |
3 |
To
transact such other business as may properly come before the meeting or
any adjournments or postponements of the
meeting. |
The Proxy Statement following this Notice
describes these matters in detail. We have not received notice of any other
proposals to be presented at the meeting.
Our Board of Directors has established
March 20, 2017 as the record date for the meeting. Accordingly, holders of
record of shares of our common stock as of the close of business on that date
are entitled to vote at the meeting and any adjournment or postponement thereof.
We will make available to our stockholders, for ten days prior to the meeting, a
list of stockholders entitled to vote. That list will be available for
inspection for any purpose reasonably related to the meeting during normal
business hours at our principal executive offices located at 191 North Wacker
Drive, Suite 1200, Chicago, Illinois 60606, and it will also be available at the
meeting.
Please vote your shares promptly by
telephone, over the Internet or, if you have received paper copies of our proxy
materials by mail, by signing, dating and returning the proxy card in the
envelope provided. Voting your shares prior to the meeting will not prevent you
from changing your vote in person if you choose to attend the
meeting.
By Order of the Board of
Directors,
Kristen M.
Benson
Executive Vice President,
General Counsel and Corporate Secretary
April 7, 2017
Chicago,
Illinois
You are entitled to vote at the 2017
Annual Meeting of Stockholders if you were a stockholder of record at the close
of business on March 20, 2017, the record date for the meeting. On the record date, there were 84,049,574 shares of common
stock issued and outstanding and entitled to vote at the meeting.
You may vote at the meeting through any
of the following methods:
Vote by
Telephone
Call (800) 690-6903, 24 hours
a day, seven days a week through May 17, 2017
Vote on the
Internet
Visit www.proxyvote.com, 24
hours a day, seven days a week through May 17, 2017
Vote by
Mail
Request, complete and return a
copy of the proxy card in the postage-paid envelope provided
Vote in
Person
Request, complete and deposit a
copy of the proxy card or complete a ballot at the meeting
Care Capital
Properties 2017 Proxy Statement
Table of Contents
Table of
Contents
www.carecapitalproperties.com/investors
Table of Contents
Proxy Statement Summary
This summary highlights information contained elsewhere in this
Proxy Statement regarding the matters to be considered at the 2017 Annual
Meeting of Stockholders (which we refer to as the Annual Meeting or the
meeting). As it is only a summary, please read this entire
Proxy Statement carefully before you vote. Additional information regarding our 2016
performance can be found in our Annual Report on Form 10-K for the year
ended December 31, 2016 (which we refer to as our 2016 Form 10-K). This
Proxy Statement and the materials accompanying it are first being sent to stockholders on or about April 7,
2017. |
2017 Annual Meeting of
Stockholders
Proposals Requiring
Your Vote |
Proposal No.
1 |
|
Election of
Directors |
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The following table provides summary information about
our seven director-nominees, each of whom currently serves on our Board of
Directors (the Board). Ages shown are as of the date of the Annual
Meeting. Directors are elected annually by a majority of votes cast in
uncontested elections. Our Board recommends that you vote FOR each of the
named director-nominees. |
Name |
|
Age |
|
Director since |
|
Primary Position |
|
Current Committees** |
|
Principal Skills |
Douglas Crocker II* |
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77 |
|
2015 |
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Managing Partner of DC |
|
Audit |
|
Real Estate Industry, Corporate
Finance, |
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Partners, LLC |
|
Executive |
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Mergers and Acquisitions,
Strategic |
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Investment |
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Planning, Executive
Compensation, |
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Corporate Governance |
John
S. Gates, Jr.* |
|
63 |
|
2015 |
|
Chairman and Chief |
|
Audit |
|
Real Estate Industry, Corporate
Finance, |
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Executive Officer of |
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Nominating |
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Strategic Planning, Operations,
Property |
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PortaeCo, LLC |
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Management and Project
Development, |
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Government Relations |
Ronald
G. Geary* |
|
69 |
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2015 |
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President of Ellis Park Race |
|
Audit |
|
Healthcare Industry, Corporate
Finance, |
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Course, Inc. |
|
Investment |
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Mergers and Acquisitions,
Strategic |
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Planning, Government Relations,
Corporate |
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Governance, Accounting, Law |
Raymond J. Lewis |
|
52 |
|
2015 |
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Chief Executive Officer |
|
Executive |
|
Real Estate Industry, Corporate |
|
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of CCP |
|
Investment |
|
Finance, Mergers and
Acquisitions, |
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Portfolio Management, Capital
Markets, |
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Strategic Planning |
Jeffrey A. Malehorn* |
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56 |
|
2015 |
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President and Chief |
|
Compensation |
|
Financial Services Industry,
Portfolio |
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Executive Officer of World |
|
Executive |
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and Operations Management, |
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Business Chicago |
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Investment |
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Enterprise Risk Management,
Business |
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Development, Government
Relations, |
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Process Improvement |
Dale
Anne Reiss* |
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69 |
|
2015 |
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Managing Director of |
|
Compensation |
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Real Estate Industry, Financial
Services |
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Artemis Advisors, LLC and |
|
Executive |
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Industry, International,
Strategic |
|
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Chairman of Brock Real |
|
Nominating |
|
Planning, Corporate Finance,
Corporate |
|
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Estate, LLC |
|
|
|
Governance, Accounting |
John
L. Workman* |
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65 |
|
2015 |
|
Former Chief Executive |
|
Compensation |
|
Healthcare Industry, Corporate
Finance, |
|
|
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Officer of Omnicare, Inc. |
|
Nominating |
|
International, Strategic
Planning, |
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Operations, Capital Markets,
Executive |
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Compensation, Restructuring,
Accounting |
* |
Independent Director |
|
Chairman of the Board |
** |
Bold colored print indicates committee
chair. |
www.carecapitalproperties.com/investors
Table of Contents
2 |
|
Proxy Statement Summary |
|
Proposal No.
2 |
|
Ratification of the Selection of
KPMG LLP as Our Independent Registered Public Accounting Firm for Fiscal
Year 2017 |
|
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|
KPMG LLP (KPMG) audited our financial statements for
the years ended December 31, 2016 and 2015 and has been our independent registered public accounting
firm since our spin-off from Ventas in August 2015. KPMG was also engaged
by Ventas to audit our financial statements for the years ended December
31, 2014 and 2013 in connection with our Registration Statement on Form 10
relating to the spin-off. Our Board
recommends that you vote FOR the ratification of the selection of KPMG as
our independent registered public accounting firm for fiscal year 2017. |
Electronic Document
Delivery to Stockholders
Instead of receiving future copies of our
Notice of Annual Meeting and Proxy Statement and annual report by mail,
stockholders of record and most beneficial owners may elect to receive an e-mail
that will provide electronic links to these documents. Electronic document
delivery saves us the cost of producing and mailing documents and will give you
an electronic link to the proxy voting site. It is also more environmentally
friendly.
We are making this Proxy Statement and the
materials accompanying it available to our stockholders via the Internet, as
permitted by Securities and Exchange Commission (SEC) rules. We will mail to
stockholders a Notice of Internet Availability containing instructions on how to
access our proxy materials and how to vote by proxy online. Starting on or about
April 7, 2017, we will also mail this Proxy Statement and the materials
accompanying it to stockholders who have requested paper copies. If you would
like to receive a printed copy of our proxy materials by mail, you should follow
the instructions for requesting those materials included in the Notice of
Internet Availability that we mail to you.
IMPORTANT NOTICE REGARDING INTERNET
AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING TO BE HELD ON MAY 18, 2017: This Proxy Statement,
our 2016 Form 10-K and our 2016 Annual Letter to Shareholders are
available at www.proxyvote.com. |
Questions and
Answers
More information about proxy voting, proxy
materials and attending the Annual Meeting can be found under Other
InformationQuestions and Answers in this Proxy Statement.
Care Capital
Properties 2017 Proxy Statement
Table of Contents
Corporate Governance
One of the purposes of the Annual
Meeting is the election of directors for the coming year. In order to make
your voting decision, it is important that you understand the
nominees backgrounds, experience and relevant skills and why we
believe each of our director-nominees should be elected to the Board. We
also provide information regarding the process we follow to select
nominees, the roles and responsibilities of our Board and its
committees, and the policies and practices that govern the Boards and its
committees exercise of their
responsibilities. |
Proposal No. 1:
Election of Directors
Our Board currently consists of seven
directors. Each of our director-nominees presently serves as a director and has
been recommended by our Nominating and Governance Committee (the Nominating
Committee), and approved and nominated by our Board, for re-election at the
Annual Meeting.
Under our Amended and Restated Bylaws
(Bylaws), in uncontested elections (which is the case for the Annual Meeting),
a majority of votes cast is required for the election of each director. The
number of votes cast for a director-nominee must exceed the number of votes
cast against that nominee. Abstentions and broker non-votes are not counted as
votes for or against a director-nominee and, therefore, will have no
effect.
We do not have a staggered Board. Each
director elected at the Annual Meeting will hold office until the next
succeeding annual meeting of stockholders and until his or her successor is duly
elected and qualified, or until his or her earlier death, resignation or
removal.
Criteria for Board
Membership |
Our Guidelines on Governance set forth the process by which
the Nominating Committee identifies and evaluates nominees for Board membership.
In accordance with this process, the Nominating Committee annually considers and
recommends to the Board a slate of directors for election at the next annual
meeting of stockholders. In selecting this slate, the Nominating Committee
considers incumbent directors who have indicated a willingness to continue to
serve on our Board and candidates, if any, identified by our stockholders, as
well as other potential candidates identified by the Nominating Committee.
Additionally, if at any time during the year a seat on the Board becomes vacant
or a new seat is created, the Nominating Committee considers and recommends to
the Board a candidate for appointment to fill the vacant or newly created
seat.
The Nominating Committee considers
different perspectives, skill sets, education, ages, genders, ethnic origins and
business experience in its annual nomination process, although it has not
established a formal policy regarding diversity in identifying potential
director candidates. In general, the Nominating Committee seeks to include on
our Board a complementary mix of individuals with diverse backgrounds, industry
knowledge and viewpoints reflecting the broad set of challenges that the Board
confronts without representing any particular interest group or constituency.
The Nominating Committee regularly reviews the size and composition of the Board
in light of our changing requirements and seeks nominees who, taken together as
a group, possess the skills and expertise appropriate for an effective
Board.
www.carecapitalproperties.com/investors
Table of Contents
In evaluating potential director
candidates, the Nominating Committee considers, among other factors, the
experience, qualifications and attributes listed below and any additional
characteristics that it believes one or more directors should possess, based on
an assessment of the perceived needs of our Board at that time. Our Guidelines
on Governance provide that, in general, nominees for membership on the Board
should:
|
|
✔ |
have demonstrated management or
technical ability at high levels in successful
organizations; |
✔ |
be currently employed in positions
of significant responsibility and decision making; |
✔ |
have experience relevant to our
operations, such as real estate, real estate investment trusts (REITs),
healthcare, finance or general management; |
✔ |
be well-respected in their business
and home communities; |
✔ |
have time to devote to Board duties;
and |
✔ |
be independent from us and not
related to our other directors or employees. |
|
|
In addition, the Nominating Committee
looks for certain characteristics common to all Board members, including
integrity, independence, leadership ability and a proven record of
accomplishment. Our directors are expected to be active participants in
governing our enterprise, and personal commitment of time and effort, expertise
in business, professional, academic, political or community affairs, candor, and
the ability and willingness to evaluate, challenge and stimulate and to engage
in constructive dialogue are also important considerations. To strengthen the
effectiveness of our Board and ensure that its members keep informed of best
practices, industry trends and other issues of interest, we also encourage our
directors to participate in continuing education programs and take advantage of
third-party resources, including through membership in the National Association
of Corporate Directors.
No single factor or group of factors is
necessarily dispositive of whether a candidate will be recommended by our
Nominating Committee. The Nominating Committee considers and applies these same
standards in evaluating individuals recommended for nomination to our Board by
our stockholders in accordance with the procedures described in this Proxy
Statement under Other InformationRequirements for Submission of Stockholder
Proposals, Director Nominations and Other Business. Our Boards satisfaction of
these criteria is implemented and assessed through ongoing consideration of
directors and nominees by the Nominating Committee and the Board, as well as the
Boards annual self-evaluation process. Based upon these activities, our
Nominating Committee and Board believe that the director-nominees named in this
Proxy Statement satisfy these criteria.
In the future, we may retain search firms
and other third parties to assist us in identifying potential candidates based
on specific criteria that we provide to them, including the qualifications
described above.
Director Resignation
Policy |
In accordance with our Guidelines on
Governance, our Board will nominate an incumbent director for re-election only
if the director agrees that, in the event the director fails to receive the
required majority vote for re-election, he or she will tender, promptly
following certification of the election results, an irrevocable resignation that
will be effective upon acceptance by the Board. If an incumbent director fails
to receive the required majority vote for re-election, our Nominating Committee
will act on an expedited basis to determine whether to recommend acceptance or
rejection of the directors resignation and submit its recommendation for prompt
consideration by the Board. In reaching its decision, the Nominating Committee
will evaluate all relevant factors concerning the director, including, but not
limited to: (i) the stated reason(s), if any, that votes were not cast in favor
of the nominees election and whether the issue has been or can be resolved;
(ii) the directors history of service, qualifications and contributions to the
Board; and (iii) the potential impact that the resignation could have on our
compliance with exchange listing standards for Board composition, including
financial expertise and independence requirements. Our Board will act on the
Nominating Committees recommendation and publicly disclose its decision
regarding the tendered resignation by filing a Current Report on Form 8-K with
the SEC no later than 90 days following certification of the election
results.
Any director who tenders his or her
resignation pursuant to our Guidelines on Governance may not participate in any
Nominating Committee or Board decision regarding that resignation. If less than
a majority of the Nominating Committee members receive the required vote in
favor of their re-election in the same election, then the independent directors
who received the required vote will be constituted by our Board as a committee
to consider the tendered resignation(s) and make a recommendation to the Board.
However, if three or fewer independent directors receive the required vote in
the same election, all directors not required by our Guidelines on Governance to
tender a resignation may participate in considering and recommending to the
Board whether to accept or reject the resignation(s). Our Guidelines on
Governance do not specify age or term limits for incumbent directors.
Care Capital
Properties 2017 Proxy Statement
Table of Contents
Below is certain biographical and other
information concerning the persons nominated for election as directors, which is
based upon statements made or confirmed to us by or on behalf of these nominees,
except to the extent certain information appears in our records. Ages shown for
all nominees are as of the date of the Annual Meeting. Following each nominees
biographical information, we have provided information concerning the particular
experience, qualifications, attributes and skills that led our Nominating
Committee and Board to determine that such nominee should serve as a director.
In addition, a substantial majority of the nominees serve or have served on
boards and board committees (including, in many cases, as board or committee
chairs) of other public companies, which we believe provides them with essential
leadership experience, exposure to corporate governance best practices and
substantial knowledge and skills that enhance the functioning of our
Board.
Each nominee listed below has consented to
be named in this Proxy Statement and has agreed to serve as a director if
elected, and we expect each nominee to be able to serve if elected. If any
nominee is unable or unwilling to accept his or her election or is unavailable
to serve for any reason, the persons named as proxies will have authority,
according to their judgment, to vote or refrain from voting for such alternate
nominee as may be designated by the Board.
|
Our Board
recommends that you vote FOR each of the named
director-nominees. |
|
www.carecapitalproperties.com/investors
Table of Contents
Douglas Crocker II
Age:
77 Director since 2015 Chairman
since 2015 Audit, Executive (Chair) and Investment
(Chair) Committees |
|
|
|
John S. Gates,
Jr.
Age:
63 Director since 2015 Audit and Nominating
(Chair) Committees |
|
|
|
|
|
Business
Experience: Mr. Crocker currently
serves as Managing Partner of DC Partners LLC, a firm that invests in and
develops apartment properties, where he previously served as principal
from 2003 to 2006. From 2006 to 2014, Mr. Crocker was the Chairman of
Pearlmark Multifamily Partners, L.L.C., a commercial real estate firm.
From 1993 to 2003, he was the President, Chief Executive Officer and a
trustee of Equity Residential (NYSE: EQR), a prominent multifamily REIT,
most recently serving as Vice Chairman of the Board. Mr. Crocker has more
than 40 years of real estate experience in various executive roles,
including serving as: Executive Vice President of Equity Financial and
Management Company, a subsidiary of Equity Group Investments, Inc.;
President, Chief Executive Officer and a director of First Capital
Corporation; Managing Director of Prudential Securities Inc.; Chief
Executive Officer of McKinley Finance Group; President of American
Invesco; and Vice President of Arlen Realty and Development Company. He
was formerly a member of the Board of Governors of the National
Association of Real Estate Investment Trusts (NAREIT) and currently
serves on the Advisory Board of the DePaul University Real Estate School.
He is also a member of the Board of Trustees of Milton Academy and the
National Multi Housing Counsel.
Current Public
Company Directorships: Acadia
Realty Trust (NYSE: AKR) (2003-present) Colony Northstar Inc. (NYSE: CLNS)
(2017-present)
Past Public
Company Directorships: Associated
Estates Realty Corporation (formerly NYSE, NASDAQ: AEC) (2014-2015) CYS
Investments, Inc. (NYSE: CYS) (2007-2015) Post Properties, Inc. (NYSE:
PPS) (2004-2012) Ventas, Inc. (NYSE: VTR) (1998-2016)
Skills and
Qualifications: Mr. Crocker is a
successful, well-respected and recognized leader in the real estate
industry, with extensive executive experience and strong skills in
corporate finance, mergers and acquisitions, strategic planning, public
company executive compensation, and corporate governance. |
|
|
Business
Experience: Mr. Gates has been
Chairman and Chief Executive Officer of PortaeCo, LLC, a private
investment company, since 2006. In 1984, Mr. Gates co-founded CenterPoint
Properties Trust (formerly NYSE: CNT) (CenterPoint), the first U.S.
publicly traded industrial REIT, and he served as its Co-Chairman and
Chief Executive Officer for the next 22 years. From 2010 to 2014, Mr.
Gates was Chairman of the Board of the Regional Transportation Authority
(RTA), which oversees all forms of public transportation in the Chicago
metropolitan region. Before that, he served as Chairman of the Board and
Finance Committee of the Metropolitan Pier and Exposition Authority, which
owns and operates Chicagos McCormick Place and Navy Pier. Mr. Gates began
his career as an Assistant to former Illinois Governor James R. Thompson.
In 1979, he joined CB/Richard Ellis, and in 1981, he co-founded the
Chicago office of Jones Lang Wootton (now Jones Lang LaSalle (NYSE: JLL),
a global commercial property investment firm. Mr. Gates was formerly a
member of the Executive Board of NAREIT and currently serves on the Boards
of Directors of Lurie Childrens Hospital, Metropolitan Planning Council
and the University of Chicago Harris School of Public Policy. He is also
an active member of the Commercial Club of Chicago, the World Presidents
Organization and the Urban Land Institute. Mr. Gates has received numerous
industry awards, including being named Outstanding REIT CEO by Realty
Stock Review in its annual survey of institutional investors for the six
consecutive years prior to the sale of CenterPoint in 2006.
Current Public
Company Directorships: Davis
Funds (NYSE: NYVTX) (2007-present) DCT Industrial Trust (NYSE: DCT)
(2006-present)
Past Public
Company Directorships: None
Skills and
Qualifications: Mr. Gates is a
highly regarded and recognized leader in the real estate industry, with
extensive experience in public REITs and strong skills in corporate
finance, operations, property management and project development,
government relations, strategic planning, and other public company
matters. |
Care Capital
Properties 2017 Proxy Statement
Table of Contents
Ronald G. Geary
Age:
69 Director since 2015 Audit (Chair) and
Investment Committees |
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Raymond J. Lewis
Age:
52 Director since 2015 Executive and
Investment Committees |
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Business
Experience: Mr. Geary has been
President of Ellis Park Race Course, Inc., a thoroughbred racetrack in
Henderson, Kentucky since 2006. He previously served as President of
Res-Care, Inc. (formerly NASDAQ: RSCR) (ResCare), a provider of
residential training and support services for persons with developmental
disabilities and certain vocational training services, from 1990 to 2006
and as Chief Executive Officer of ResCare from 1993 to 2006. Before that,
Mr. Geary was Chief Operating Officer of ResCare from 1990 to
1993.
Current Public
Company Directorships: None
Past Public
Company Directorships: Ventas,
Inc. (NYSE: VTR) (1998-2015)
Skills and
Qualifications: Mr. Geary is an
attorney and certified public accountant, with extensive executive
experience in the healthcare industry and strong skills in corporate
finance, mergers and acquisitions, strategic planning, government
relations, and corporate governance. |
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Business
Experience: Mr. Lewis has been
Chief Executive Officer of CCP since our spin-off from Ventas, Inc. (NYSE:
VTR) (Ventas) in August 2015. From 2002 to 2015, he held various
executive positions of increasing responsibility at Ventas, most recently
serving as President from 2010 to 2015. Before that, he was Managing
Director of Business Development for GE Capital Healthcare Financial
Services, a division of General Electric Capital Corporation (GECC),
where he led a team focused on mergers and portfolio acquisitions of
healthcare assets, and Executive Vice President of Healthcare Finance for
Heller Financial, Inc., which was acquired by GECC in 2001, where he had
primary responsibility for healthcare lending. He is Chairman Emeritus of
the National Investment Center for the Seniors Housing & Care Industry
and a member of the Advisory Board of Governors of NAREIT.
Current Public
Company Directorships: None
Past Public
Company Directorships: None
Skills and
Qualifications: Mr. Lewis has
substantial executive experience, leadership ability and a proven record
of accomplishment, with strong skills in real estate finance, mergers and
acquisitions, portfolio management, capital markets, and strategic
planning. |
www.carecapitalproperties.com/investors
Table of Contents
Jeffrey A. Malehorn
Age:
56 Director since 2015 Compensation, Executive
and Investment Committees |
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Dale Anne Reiss
Age:
69 Director since 2015 Compensation (Chair),
Executive and Nominating Committees |
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Business
Experience: Mr. Malehorn has been
President and Chief Executive Officer of World Business Chicago, a
public-private, non-profit, partnership between the City of Chicago and
the business community focused on economic development, since 2013. He
previously spent 28 years in various capacities at General Electric
Corporation, most recently serving as President and CEO of GE Capital,
Commercial Distribution Finance, from 2009 to 2012, President and CEO of
GE Capital Healthcare Financial Services from 2004 to 2008, and President
and CEO of GE Commercial Finances Global Financial Restructuring Business
from 2002 to 2004. Additionally, Mr. Malehorn was Corporate Citizenship
Leader for GE Chicago and the Co-Leader for GE Capital Americas
Commercial Council. He was named a GE Company Officer in 2001. From 1991
through 2001, Mr. Malehorn was a Leader at GE Capital Real Estate, where
he founded and led the Senior Living & Hospitality Financing business
unit from 1993 to 1995, led the debt and equity origination business
nationally from 1997 to 1998, and was the European Platform Leader from
1999 to early 2002. Mr. Malehorn is the former Chairman of the Board of
the Metropolitan Chicago American Heart Association, serves as a Board
member of Junior Achievement and the Greater Chicago Food Depository and
was a founding Midwest Board member for BuildOn.
Current Public
Company Directorships: None
Past Public
Company Directorships: None
Skills and
Qualifications: Mr. Malehorn is
an experienced global leader in the financial services industry and has
substantial executive experience and strong skills in portfolio and
operations management, enterprise risk management, business development,
government relations, and process improvement. |
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Business
Experience: Ms. Reiss has been
Managing Director of Artemis Advisors, LLC, a real estate restructuring
and consulting firm, since 2008 and Chairman of Brock Real Estate, LLC, a
boutique investment bank, since 2010. She was previously a Senior Partner
at Ernst & Young LLP from 1995 to 2008 and served as Global and
Americas Director of the real estate, hospitality and construction
practices there from 1999 to 2008. Subsequently, she served as Senior
Advisor to the Global Real Estate Center of Ernst & Young LLP from
2008 to 2011. Ms. Reiss currently serves on the Police Pension Board of
the City of Sanibel, Florida and the Boards of Directors of Educational
Housing Services, Inc., the Southwest Florida Community Foundation and the
Guttmacher Institute. She is also a former director of the Urban Land
Institute and the Pension Real Estate Association.
Current Public
Company Directorships: CYS
Investments, Inc. (NYSE: CYS) (2015-present) iStar Inc. (NYSE: STAR)
(2008-present) Tutor Perini Corporation (NYSE: TPC)
(2014-present)
Past Public
Company Directorships: Post
Properties, Inc. (NYSE: PPS) (2008-2013)
Skills and
Qualifications: Ms. Reiss is a
certified public accountant with extensive knowledge of global
strategic and financial management and investment and governance issues and
comprehensive experience involving public and private companies across
many industries, including real estate, construction, and financial
services. |
Care Capital
Properties 2017 Proxy Statement
Table of Contents
John L. Workman
Age: 65 Director since 2015 Compensation
and Nominating Committees |
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The CCP Board
Board Independence
Tenure
Skills and Experience
Our
director-nominees bring relevant skills
and experience in many areas, including:
●Accounting
●Business Development
●Capital Markets
●Corporate Governance
●Executive Compensation
●Healthcare Industry
●Real Estate Industry
●Strategic Planning |
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Business
Experience: Mr. Workman served as
Chief Executive Officer of Omnicare, Inc. (formerly NYSE: OCR)
(Omnicare), a provider of comprehensive pharmaceutical solutions, from
2012 to 2014. Before that, he was President and Chief Financial Officer of
Omnicare from 2011 to 2012 and Chief Financial Officer of Omnicare from
2009 to 2011. From 2004 to 2009, Mr. Workman served as Executive Vice
President and Chief Financial Officer of HealthSouth Corporation (NYSE:
HLS) (HealthSouth). Prior to joining HealthSouth, he served as Chief
Executive Officer, as Chief Operating Officer and as Chief Financial
Officer of U.S. Can Corporation, a manufacturer of steel and plastic
containers, during his six-year tenure there. Before that, he spent more
than 14 years with Montgomery Ward & Company, Inc., serving in various
capacities, including Chief Financial Officer and Chief Restructuring
Officer. Mr. Workman began his career with KPMG LLP, where he was a
partner.
Current Public
Company Directorships: ConMed
Corporation (NASDAQ: CNMD) (2015-present) Federal Signal Corporation
(NYSE: FSS) (2014-present)
Past Public
Company Directorships: APAC
Customer Service (NASDAQ: APAC) (2008-2011) Omnicare, Inc. (formerly NYSE:
OCR) (2012-2014)
Skills and
Qualifications: Mr. Workman is a
certified public accountant with substantial executive experience in the
healthcare industry, proven leadership ability and strong skills in
capital markets, strategic planning, operations, restructuring and other
public company matters, including executive compensation.
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www.carecapitalproperties.com/investors
Table of Contents
Our Guidelines on Governance require that
at least a majority of the members of our Board meet the criteria for
independence under the rules and regulations of the NYSE and all applicable
securities laws and regulations. For a director to be considered independent
under the NYSEs listing standards, the director must satisfy certain
bright-line tests, and the Board must affirmatively determine that the director
has no direct or indirect material relationship with us. Not less than annually,
our Nominating Committee and Board evaluate the independence of each
non-management director on a case-by-case basis by considering any matters that
could affect his or her ability to exercise independent judgment in carrying out
the responsibilities of a director, including all transactions and relationships
between that director, members of his or her family and organizations with which
that director or family members have an affiliation, on the one hand, and us,
our subsidiaries and our management, on the other hand. Any such matters are
evaluated from the standpoint of both the director and the persons or
organizations with which the director has an affiliation. Each director abstains
from participating in the determination of his or her independence.
Based on its most recent review, the Board
has affirmatively determined that each of the following directors has no direct
or indirect material relationship with us and qualifies as independent under the
NYSEs listing standards: Douglas Crocker II, John S. Gates, Jr., Ronald G.
Geary, Jeffrey A. Malehorn, Dale Anne Reiss, and John L. Workman. Raymond J.
Lewis is not considered independent under the NYSE listing standards due to his
employment as our Chief Executive Officer.
The
Boards Role and Responsibilities
Our Board provides guidance and oversight
with respect to our financial and operating performance, strategic plans, key
corporate policies and decisions, and enterprise risk management. Among other
matters, our Board considers and approves significant acquisitions, dispositions
and other transactions and advises and counsels senior management on key
financial and business objectives. Members of the Board monitor our progress
with respect to these matters on a regular basis, including through
presentations made at Board and committee meetings by our executive management
team.
Management has primary responsibility for
identifying and managing our exposure to risk, subject to active oversight by
our Board of the processes we establish to assess, monitor and mitigate that
exposure. The Board, directly and through its committees, routinely discusses
with management our significant enterprise risks and reviews the guidelines,
policies and procedures we have in place to address those risks, such as our
approval process for acquisitions, dispositions and other investments. At Board
and committee meetings, directors engage in comprehensive analyses and dialogue
regarding specific areas of risk following receipt of written materials and
in-depth presentations from management and third-party experts. This process
enables our Board to focus on the strategic, financial, operational, legal,
regulatory and other risks that are most significant to us and our business in
terms of likelihood and potential impact and ensures that our enterprise risks
are well understood, mitigated to the extent reasonable and consistent with the
Boards view of our risk profile and risk tolerance.
In addition to the overall risk oversight
function administered directly by our Board, each of our Audit and Compliance
(Audit), Compensation, Nominating and Investment Committees exercises its own
oversight related to the risks associated with the particular responsibilities
of that committee.
Care Capital
Properties 2017 Proxy Statement
Table of Contents
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Board and Committee
Oversight of Risk |
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Board of
Directors |
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Reviews and
considers overall risk |
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Audit
Committee |
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Compensation
Committee |
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Investment
Committee |
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Nominating
Committee |
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Reviews financial, accounting and
internal control risks and the mechanisms through which we assess and
manage risk, and has certain responsibilities with respect to our
compliance programs. |
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Evaluates whether our compensation
policies and practices, as they relate to both executive officers and
employees generally, encourage excessive risk-taking. |
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Responsible for overseeing certain
transaction-related risks, including the review of transactions in excess
of certain thresholds, with existing tenants or borrowers, or that involve
investments in non-core assets. |
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Focuses on risks related to
corporate governance, board effectiveness and succession
planning. |
The chairs of these committees report on
such matters to the full Board at each regularly scheduled Board meeting and
other times as appropriate. Our Board believes that this division of
responsibilities is the most effective approach for identifying and addressing
risk, and through Mr. Crockers role as our non-executive Chairman, our Board
leadership structure appropriately supports the Boards role in risk oversight,
as well as management accountability for mitigating the significant enterprise
risks identified in our day-to-day operations.
Compensation Risk
Assessment |
As part of its oversight role, our
Compensation Committee annually analyzes the risk profile of our compensation
policies and practices for all employees, including our executive officers, and
the incentives created by the compensation awards it administers. In conducting
its risk assessment in 2017, the Compensation Committee reviewed a report
prepared by management regarding our existing compensation structure, including
our employment, severance and change-in-control arrangements, in the context of
our business risk environment and noted several design features of our
compensation programs that mitigate the likelihood of excessive risk-taking,
including, but not limited to, the following:
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a balanced mix of cash and equity
compensation with a strong emphasis on performance-based incentive
awards; |
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multiple quantitative and
qualitative performance measures selected in the context of our business
strategy and often in tension with each other; |
✓ |
regular review of comparative
compensation data to maintain competitive compensation levels in light of
our industry, size and performance; |
✓ |
incentive award opportunities that do
not provide minimum guaranteed payouts, are based on a range of
performance outcomes and plotted along a continuum and have capped
payouts, subject in all cases to the Compensation Committees overall
assessment of performance; |
✓ |
restricted stock awards granted for
prior-year performance with multi-year vesting schedules to enhance
retention; |
✓ |
a portion of equity compensation
granted in the form of performance-based restricted stock units with a
three-year performance period that encourages the creation and
preservation of long-term stockholder value; |
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minimum stock ownership guidelines
that align executive officers with long-term stockholder interests;
and |
✓ |
prohibitions on engaging in
derivative and other hedging transactions in our securities and
restrictions on holding our securities in margin accounts or otherwise
pledging our securities to secure loans. |
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Based on this evaluation, the Compensation Committee determined, in its reasonable business judgment, that our compensation practices and policies for all employees promote behaviors that support long-term sustainability and creation of stockholder value and do not create risks that are reasonably likely to have a material adverse effect on our company.
www.carecapitalproperties.com/investors
Table of Contents
Our Guidelines on Governance reflect the
fundamental corporate governance principles by which our Board and its
committees operate. These guidelines set forth general practices the Board and
its committees follow with respect to structure, function, organization,
composition and conduct. These guidelines are reviewed at least annually by the
Nominating Committee and may be updated periodically in response to changing
regulatory requirements, evolving corporate governance practices, input from our
stockholders and otherwise as circumstances warrant.
Our Global Code of Ethics and Business
Conduct sets forth the legal and ethical standards for conducting our business
to which our directors, officers and employees, including our Chief Executive
Officer, Chief Financial Officer and Chief Accounting Officer, and the
directors, officers and employees of our subsidiaries must adhere. Our Global
Code of Ethics and Business Conduct covers all significant areas of professional
conduct, including employment practices, conflicts of interest, unfair or
unethical use of corporate opportunities, protection of confidential information
and other company assets, compliance with applicable laws and regulations,
political activities and other public policy matters, and proper and timely
reporting of financial results. See also Public Policy Matters.
Our Guidelines on Governance and our
Global Code of Ethics and Business Conduct are available in the Corporate
Governance section of our website at www.carecapitalproperties.com/investors/corporate-governance. We also provide copies of our Guidelines on Governance and
our Global Code of Ethics and Business Conduct, without charge, upon request to
our Corporate Secretary at Care Capital Properties, Inc., 191 North Wacker
Drive, Suite 1200, Chicago, Illinois 60606. Waivers from, and amendments to, our
Global Code of Ethics and Business Conduct that apply to our Chief Executive
Officer, Chief Financial Officer or persons performing similar functions will be
timely posted on our website at www.carecapitalproperties.com. The
information on our website is not a part of this Proxy Statement.
Transactions with Related
Persons |
We have adopted a written Policy on
Transactions with Related Persons that describes the consideration and approval
of transactions in which any of our directors, officers or employees (or their
immediate family members) has a direct or indirect material interest. Under the
policy, we may not enter into any such transaction unless it has been made known
to, and reviewed and approved or ratified by, the Audit Committee or the
disinterested members of our Board. Our Global Code of Ethics and Business
Conduct requires our directors, officers and employees to disclose in writing to
our General Counsel any existing or proposed transaction in which he or she has
a personal interest, or in which there is or might appear to be a conflict of
interest by reason of his or her connection to another business organization.
Our General Counsel reviews these matters with the Chairman of the Board to
determine whether the transaction raises a conflict of interest that warrants
review and approval by the Audit Committee or the disinterested members of the
Board. In determining whether to approve or ratify a transaction, the Audit
Committee or disinterested members of the Board consider all relevant facts and
circumstances available to them and other factors they deem
appropriate.
Since the beginning of 2016, we have not
engaged in any transactions with related persons.
We are committed to ethical business
conduct and expect our directors, officers and employees to act with integrity
and to conduct themselves and our business in a way that protects our reputation
for fairness and honesty. Consistent with these principles, our Global Code of
Ethics and Business Conduct and our Global Anti-Corruption Policy, we have
established the policies and practices described below with respect to political
contributions and other public policy matters.
● |
Political
Contributions and Expenditures. We
do not use corporate funds or resources for direct contributions to
political candidates, parties or campaigns. Corporate resources include
non-financial donations, such as the use of our property in a political
campaign or our employees use of work time, e-mail and telephones to
solicit for a political cause or candidate. |
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Public Policy
Advocacy. We do not have a political
action committee. However, we may advocate a position, express a view or
take other appropriate action with respect to legislative or political
matters affecting our company or our interests. We may also ask our
employees to make personal contact with governmental officials or to write
letters to present our position on specific issues. Any such advocacy is
done in compliance with applicable laws and
regulations. |
Care Capital
Properties 2017 Proxy Statement
Table of Contents
● |
Individual
Political Activity. We believe that
our directors, officers and employees have rights and responsibilities to
participate in political activities as citizens, including voting in
elections, keeping informed on political matters, serving on civic bodies,
contributing financially to political action committees, and contributing
financially to, and participating in the campaigns of, the political
candidates of their choice. Accordingly, our directors, officers and
employees are not constrained from engaging in political activities,
making political contributions, expressing political views or taking
action on any political or legislative matter, so long as they are acting
in their individual capacity, on their own time and at their own expense.
Directors, officers and employees acting in their individual capacity must
not give the impression that they are speaking on our behalf or
representing our company in such activities. |
● |
Relationships
with Government Officials. Our
directors, officers and employees may not maintain any relationship or
take any action with respect to public officials that could impugn our
integrity or reputation. In particular, our directors, officers and
employees may not offer, promise or give anything of value, including
payments, entertainment and gifts, to any government official, employee,
agent or other intermediary of the United States government or any
domestic or foreign government. |
How to Communicate with
Directors |
Stockholders and other parties interested
in communicating directly with our Board or any director on Board-related issues
may do so by writing to Board of Directors, c/o Corporate Secretary, Care
Capital Properties, Inc., 191 North Wacker Drive, Suite 1200, Chicago, Illinois
60606, or by submitting an e-mail to bod@carecapitalproperties.com.
Additionally, stockholders and other parties interested in communicating
directly with the Chairman of the Board or with the independent directors as a
group may do so by writing to Chairman, Care Capital Properties, Inc., 191 North
Wacker Drive, Suite 1200, Chicago, Illinois 60606, or by sending an e-mail to
independentbod@carecapitalproperties.com. Communications addressed to our Board
or individual members of the Board are screened by our Corporate Secretary for
appropriateness before distributing to the Board, or to any individual director
or directors, as applicable.
Board Structure and
Processes
Our Board recognizes that one of its key
responsibilities is to evaluate and determine its optimal structure so as to
provide effective oversight of management and a fully engaged, high-functioning
Board. The Board understands that no single approach to Board leadership is
universally accepted and that the appropriate leadership structure may vary
based on a companys size, industry, operations, history and culture. Consistent
with this understanding, our Board, led by our Nominating Committee, annually
assesses its structure in light of our operating and governance environment at
the time to ensure it remains in our best interests and the interests of our
stockholders. Following its most recent review, the Board has determined that
our existing leadership structureunder which an independent, non-executive
chair leads our Boardis effective, provides the appropriate balance of
authority between those persons charged with overseeing our company and those
who manage it on a day-to-day basis and achieves the optimal governance model
for us and for our stockholders at the current time.
Under our Bylaws and Guidelines on
Governance, our Board has discretion to determine whether to separate or combine
the roles of Chief Executive Officer and Chairman of the Board as part of the
evaluation of its structure. Mr. Crocker, a well-respected and recognized leader
in the real estate industry, has served as our independent, non-executive
Chairman since our spin-off from Ventas in 2015, and our Board continues to
believe that the separation of the roles of Chairman and Chief Executive Officer
is most advantageous to us and our stockholders under current circumstances. Mr.
Crocker possesses extensive knowledge of the issues, opportunities and risks
facing us, our business and our industry and has demonstrated the vision and
leadership necessary to focus the Boards time and attention on the most
critical matters and to facilitate constructive dialogue among Board members on
strategic issues. These leadership attributes are uniquely important to our
company given the value to our business of opportunistic capital markets
execution and our culture of proactive engagement and risk management. Moreover,
the separated roles enable Mr. Lewis to exhibit decisive leadership, clear
accountability and consistent communication of our message and strategy to all
of our stakeholders, while mitigating governance risks and countervailing any
unwarranted concentration of power into the Chief Executive Officer.
www.carecapitalproperties.com/investors
Table of Contents
Board and Committee
Evaluations |
Pursuant to our Guidelines on Governance,
our Board and its committees conduct annual self-evaluations under the direction
of the Nominating Committee. The evaluations are intended to provide the Board
and its committees with an opportunity to assess their performance for the
purpose of improving their processes and effectiveness. As part of this
self-evaluation, directors consider and provide feedback on a range of issues,
including interactions with and information flow from management, the nature and
scope of agenda items, adequacy and efficiency of meetings, Board structure and
composition, committee composition and responsibilities, processes to ensure
open communication and timely action, the effectiveness of executive sessions,
and the Boards role in strategic planning. In addition, directors conduct a
limited peer review. The results of the Board and committee self-evaluations are
discussed with the full Board.
Compensation Committee Interlocks and Insider
Participation |
During the year ended December 31, 2016,
Ms. Reiss and Messrs. Malehorn and Workman served on our Compensation Committee.
No member of the Compensation Committee is, or has been, employed by us or our
subsidiaries. None of our executive officers serves on the board of directors of
any entity that has one or more of its executive officers serving as a member of
our Board or our Compensation Committee.
Independent Compensation
Consultant |
Under its charter, our Compensation
Committee has authority to retain, and approve the terms of engagement and fees
paid to, compensation consultants, outside counsel and other advisors that the
Compensation Committee deems appropriate, in its sole discretion, to assist it
in discharging its duties. Any compensation consultant engaged by our
Compensation Committee reports to the Compensation Committee and receives no
fees from us that are unrelated to its role as advisor to our Board and its
committees. Our Compensation Committee meets regularly with the compensation
consultant without management present. Although a compensation consultant may
periodically interact with company employees to gather and review information
related to our executive compensation program, this work is done at the
direction and subject to the oversight of the Compensation Committee. Under the
Compensation Committee charter, any compensation consultant retained by our
Compensation Committee must be independent, as determined annually by the
Compensation Committee in its reasonable business judgment, considering the
specific independence factors set forth in Rule 10C-1 under the Securities
Exchange Act of 1934, as amended (the Exchange Act), and all other relevant
facts and circumstances.
Willis Towers Watson has served as our
Compensation Committees independent compensation consultant since 2015. In
August 2015, our Compensation Committee retained Willis Towers Watson to advise
it on matters related to our executive compensation levels and program design
for 2016. Our Compensation Committee reviews the scope of work provided by
Willis Towers Watson on an annual basis and, in connection with Willis Towers
Watsons engagement in 2015, determined that Willis Towers Watson met the
independence criteria under the Compensation Committee charter. Willis Towers
Watson and its affiliates did not perform any consulting services for us
unrelated to executive and director compensation during the year ended December
31, 2016, and Willis Towers Watsons work for the Board and its committees has
raised no conflict of interest.
Care Capital
Properties 2017 Proxy Statement
Table of Contents
Committees
Our Board has five standing committees
that perform certain delegated functions for the Board: (1) the Audit Committee;
(2) the Compensation Committee; (3) the Executive Committee; (4) the Investment
Committee; and (5) the Nominating Committee. Each of the Audit, Compensation and
Nominating Committees operates under a written charter that is available in the
Corporate Governance section of our website at www.carecapitalproperties.com/investors/corporate-governance. We also provide copies of the Audit, Compensation and
Nominating Committee charters, without charge, upon request to our Corporate
Secretary at Care Capital Properties, Inc., 191 North Wacker Drive, Suite 1200,
Chicago, Illinois 60606. Information on our website is not a part of this Proxy
Statement.
Audit Committee |
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Our Audit Committee assists our Board in
fulfilling its responsibilities relating to our accounting and financial
reporting practices, including oversight of the quality and integrity of our
financial statements; our compliance with legal and regulatory requirements; the
qualifications, independence and performance of our independent registered
public accounting firm and the performance of our internal audit
function.
The Audit Committee maintains free and
open communication with the Board, our independent registered public accounting
firm, our internal auditor and our financial and accounting management. Our
Audit Committee meets separately in executive session, outside the presence of
management, with both our independent registered public accounting firm and our
internal auditor at each regularly scheduled meeting and at other times as
necessary or desirable.
Our Board has determined that each member
of the Audit Committee is independent and satisfies the independence standards
of the Sarbanes-Oxley Act of 2002 and related rules and regulations of the SEC
and the NYSE listing standards, including the additional independence
requirements for audit committee members. The Board has also determined that
each member of the Audit Committee is financially literate and qualifies as an
audit committee financial expert for purposes of the SECs rules. |
www.carecapitalproperties.com/investors
Table of Contents
Compensation Committee |
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Our Compensation Committee has primary
responsibility for the design, review, approval and administration of all
aspects of our executive compensation program. The Compensation Committee
reviews the performance of, and makes all compensation decisions for, each of
our executive officers other than our Chief Executive Officer. With respect to
our Chief Executive Officer, the Compensation Committee reviews his performance
and makes compensation recommendations to the independent members of our Board.
Our Compensation Committee also reviews and makes recommendations to the Board
regarding non-employee director compensation.
The Compensation Committee meets regularly
throughout the year to review our compensation philosophy and its continued
alignment with our business strategy and to consider and approve our executive
compensation program for the subsequent year. In consultation with a nationally
recognized, independent compensation consultant, the Compensation Committee
discusses changes, if any, to the program structure, assesses the appropriate
peer companies for benchmarking purposes, sets base salaries and incentive award
opportunities, establishes the applicable performance measures and related goals
under our incentive plans, evaluates performance in relation to the established
measures and goals and determines annual cash and long-term equity incentive
awards for our executive officers.
Our executive officers provide support to
our Compensation Committee by coordinating meeting logistics, preparing and
disseminating relevant financial and other information regarding us and the
companies in our compensation peer group as a supplement to the comparative
market data prepared by our independent compensation consultant and making
recommendations with respect to performance measures and related goals. Our
Chief Executive Officer attends meetings at the Compensation Committees request
and recommends to the Compensation Committee compensation changes affecting our
other executive officers. However, our Chief Executive Officer plays no role in
setting his own compensation. Our General Counsel and Corporate Secretary also
attends meetings at the Compensation Committees request to act as secretary and
record the minutes of the meetings, provide updates on legal developments and
make presentations regarding certain organizational matters. Our Compensation
Committee meets separately in executive session, without management present, at
each regularly scheduled meeting and at other times as necessary or
desirable.
The Compensation Committee meets during
the first quarter of each year to review the achievement of pre-established
performance goals for the prior year, to determine the appropriate annual cash
and long-term equity incentive awards for executive officers based on that
prior-year performance, to certify the payout levels under any performance-based
restricted stock units granted to executive officers in previous years, and, as
appropriate, to approve grants of equity awards to our executive officers. Our
executive officers provide support to our Compensation Committee in this
process, and the Chief Executive Officer makes incentive award recommendations
with respect to the other executive officers.
Our Board has determined that each member
of the Compensation Committee is independent and satisfies the independence
standards of the Exchange Act and the related NYSE listing standards, including
the additional independence requirements for compensation committee members. The
Board has also determined that each member of the Compensation Committee meets
the additional requirements for outside directors set forth in Section 162(m)
of the Internal Revenue Code of 1986, as amended (the Code), and non-employee
directors set forth in Rule 16b-3 under the Exchange Act. |
Executive Committee |
|
Our Board has delegated to our Executive
Committee the power to direct the management of our business and affairs in
emergency situations during intervals between meetings of the Board, except for
matters specifically reserved for our Board and its other committees. The
Executive Committee exercises its delegated authority only under extraordinary
circumstances and has not held a meeting to date. |
Care Capital
Properties 2017 Proxy Statement
Table of Contents
Investment Committee |
|
The function of our Investment Committee
is to review and approve proposed acquisitions and dispositions of properties
and other investments meeting applicable criteria, in accordance with our
Investment and Divestiture Approval Policy. The Investment Committee meets on an
ad hoc basis throughout the year as matters that require its approval
arise. |
Nominating Committee |
|
Our Nominating Committee oversees our
corporate policies and other corporate governance matters, as well as matters
relating to the practices and procedures of our Board, including the following:
identifying, selecting and recommending to the Board qualified
director-nominees; making recommendations to the Board regarding its committee
structure and composition; overseeing an annual evaluation of the Board and its
committees; reviewing and recommending to the Board any changes to our corporate
governance guidelines and our corporate code of ethics; periodically reviewing
and recommending to the Board changes to our organizational documents; and
generally advising the Board on corporate governance and related
matters.
Our Board has determined that each member
of the Nominating Committee is independent and satisfies the NYSE listing
standards. |
Meetings and Attendance
Our Board held a total of seven meetings
in 2016. Evidencing a strong commitment to our company, each director attended
100% of the total meetings of the Board and the committees on which he or she
served that were held in 2016. The table below provides current membership and
2016 meeting information for each of our Board committees.
Name |
|
Audit Committee |
|
Compensation Committee |
|
Executive Committee |
|
Investment Committee |
|
Nominating Committee |
Douglas Crocker II* |
|
✓ |
|
|
|
Chair |
|
Chair |
|
|
John S. Gates, Jr.* |
|
✓ |
|
|
|
|
|
|
|
Chair |
Ronald G. Geary* |
|
Chair |
|
|
|
|
|
✓ |
|
|
Raymond J. Lewis |
|
|
|
|
|
✓ |
|
✓ |
|
|
Jeffrey A. Malehorn* |
|
|
|
✓ |
|
✓ |
|
✓ |
|
|
Dale Anne Reiss* |
|
|
|
Chair |
|
✓ |
|
|
|
✓ |
John L. Workman* |
|
|
|
✓ |
|
|
|
|
|
✓ |
Total Meetings in 2016 |
|
5 |
|
7 |
|
0 |
|
5 |
|
2 |
* |
Independent Director |
|
Chairman of the
Board |
Our independent directors meet in
executive session, outside the presence of management, at each regularly
scheduled quarterly Board meeting and at other times as necessary or desirable.
The Chairman chairs all regularly scheduled executive sessions of the Board and
all other meetings of the independent directors. Members of our Audit,
Compensation and Nominating Committees also meet in executive session, outside
the presence of management, at each regularly scheduled committee meeting and at
other times as necessary or desirable.
We strongly encourage, but do not require,
directors to attend our annual meetings of stockholders. All directors attended
our 2016 annual meeting, and we expect each of our directors to attend this
years Annual Meeting.
www.carecapitalproperties.com/investors
Table of Contents
Director Compensation
Our Board believes that the compensation
paid to our non-employee directors should be competitive with our peer group
used for executive compensation purposes, as well as public companies of similar
enterprise value, market capitalization and total assets, and should enable us
to attract and retain individuals of the highest quality to serve as our
directors. In addition, the Board believes that a significant portion of
non-employee director compensation should align director interests with the
long-term interests of our stockholders. Accordingly, non-employee directors
receive a combination of cash and equity-based compensation for their services.
Each of these components is described below. We also reimburse each non-employee
director for travel and other expenses associated with attending Board and
committee meetings, director education programs and other Board-related
activities. Mr. Lewis, the only member of the Board employed by us, does not
receive compensation for his service as a director.
Our director compensation program provides
that the cash compensation paid to, or earned by, our non-employee directors
will be comprised of the following components:
|
|
✔ |
Board retainer
of $19,000 for each calendar quarter of service; |
✔ |
Beginning in
October 2016, Board or committee chair retainer for each calendar quarter
of service, as follows: |
● |
Non-executive
Chairman |
|
$12,500 |
● |
Audit Committee
chair |
|
$3,750 |
● |
Compensation Committee
chair |
|
$2,500 |
● |
Nominating Committee
chair |
|
$1,875 |
● |
Investment Committee
chair |
|
$1,875 |
|
except that
the non-executive Chairman does not receive an additional retainer fee for
also serving as the chair of one or more of the committees for which a
quarterly chair retainer is paid; and |
✔ |
Fee of $1,500
for each Board meeting attended in excess of the eighth Board meeting held
during the year and $1,500 for each Audit, Compensation or Nominating
Committee meeting attended in excess of the eighth such committee meeting,
as applicable, held during the year (in each case, including telephonic
meetings, but excluding meetings of 30 minutes or less). |
|
|
Pursuant to our Non-Employee Director
Deferred Stock Compensation Plan (the Director Deferred Plan), non-employee
directors may elect to defer receipt of all or a portion of their cash retainer
and meeting fees. Deferred fees are credited to each participating director in
the form of stock units, based on the fair market value of our common stock on
the deferral date. At the prior election of the participating director, dividend
equivalents on the stock units are either paid in cash or credited as additional
units. Upon termination of a participating directors service on the Board, or
at such later time as he or she has previously designated, the directors stock
unit account is settled in whole shares of our common stock on a one-for-one
basis and distributed either in one lump sum or installments over a period of
not more than ten years, at the directors prior election. Fractional stock
units are paid out in cash.
Equity-Based
Compensation |
Our director compensation program provides
that, on the date of election to the Board, each of our non-employee directors
will receive an annual equity grant under our 2015 Incentive Plan having a grant
date fair value of $114,000, in the form of restricted stock or restricted stock
units, at the directors prior election. Shares of restricted stock and
restricted stock units granted to our non-employee directors vest in full on the
day immediately prior to the next annual meeting of stockholders, subject to the
applicable directors continued service on our Board and with accelerated
vesting upon death, disability or a change in control. In the case of initial
appointment or election to the Board other than by stockholders at an annual
meeting, a non-employee director would receive a pro rata portion of the annual
equity grant (determined by reference to the number of days remaining in the
current term).
On the date of the 2016 annual meeting,
each non-employee director received the annual equity grant described above in
the form of restricted stock, which will vest in full on the day immediately
prior to the Annual Meeting.
Care Capital
Properties 2017 Proxy Statement
Table of Contents
Review of Non-Employee Director
Compensation |
Our Compensation Committee is responsible
for annually reviewing the amount and types of compensation to be paid to our
non-employee directors and recommending any changes to our non-employee director
compensation program for approval by our Board. As part of its annual review,
the Compensation Committee may consider information contained in surveys
compiled by organizations such as the National Association of Real Estate
Investment Trusts or the National Association of Corporate Directors and may
retain an independent compensation consultant to advise it on appropriate
director compensation levels.
In 2016, our Compensation Committee
retained Willis Towers Watson to advise it on matters related to non-employee
director compensation levels and program design. After consultation with Willis
Towers Watson, the Compensation Committee recommended, and our Board approved,
the Board and committee chair retainers described above, effective October 1,
2016.
Minimum Share Ownership Guidelines for Non-Employee
Directors |
Our minimum share ownership guidelines
require that each non-employee director maintain ownership of a minimum number
of shares of our common stock having a value of not less than five times the
then current annual cash retainer (presently $76,000) paid to such director for
service on our Board (excluding, among other things, any additional retainer
that may be paid for service as the Chairman or as a committee member or chair).
Each non-employee director must satisfy the minimum share ownership levels
within five years from the date that he or she first becomes subject to the
guidelines (or, upon any increase in the annual cash retainer, within five years
from the date of such increase to satisfy the guidelines with respect to such
incremental amount) and, until such time, must retain 100% of the shares of our
common stock or stock units granted to him or her as compensation minus any
shares withheld by us under our share withholding program to pay taxes on the
vesting of shares. Compliance with the guidelines is reviewed on July 1 of each
year. All of our non-employee directors are currently in compliance with, or in
the transition period for, these guidelines.
2016 Non-Employee Director Compensation
Table |
The following table sets forth the
compensation awarded or paid to, or earned by, our non-employee directors during
2016.
Name |
|
Fees Earned or Paid in Cash
1 ($) |
|
Stock Awards
2 ($) |
|
Total ($) |
Douglas Crocker II |
|
$ |
88,500 |
|
$ |
114,000 |
|
$ |
202,500 |
John S. Gates, Jr. |
|
|
77,875 |
|
|
114,000 |
|
|
191,875 |
Ronald G. Geary |
|
|
79,750 |
|
|
114,000 |
|
|
193,750 |
Jeffrey A. Malehorn |
|
|
76,000 |
|
|
114,000 |
|
|
190,000 |
Dale Anne Reiss |
|
|
78,500 |
|
|
114,000 |
|
|
192,500 |
John L. Workman |
|
|
76,000 |
|
|
114,000 |
|
|
190,000 |
1 |
The amounts shown in the
Fees Earned or Paid in Cash column reflect quarterly retainer fees described above,
including Board and Committee chair retainer fees, effective October 1,
2016, paid as follows: to Mr. Crocker for service as the non-executive
Chairman in the amount of $12,500; to Mr. Geary for service as the Audit
Committee chair in the amount of $3,750; to Ms. Reiss for service as the
Compensation Committee chair in the amount of $2,500; and to Mr. Gates for
service as the Nominating Committee chair in the amount of $1,875. Mr.
Crocker did not receive an additional fee for his service as the
Investment Committee chair. We did not pay any meeting fees in
2016.
With respect to the amounts shown
in this column, Messrs. Crocker and Malehorn elected to defer all or a
portion of their retainer and meeting fees pursuant to the Director
Deferred Plan and were credited with stock units in the following amounts:
Mr. Crocker, $88,500 or 3,171 units; and Mr. Malehorn, $38,000 or 1,366
units. |
2 |
The amounts shown in the
Stock Awards column represent the full grant date fair value, calculated in accordance
with FASB Accounting Standards Codification Topic 718, CompensationStock
Compensation (FASB ASC 718), of shares of restricted stock granted to
each non-employee director in 2016. See Note 12 of the Notes to Combined
Consolidated Financial Statements included in our 2016 Form 10-K for a
discussion of the relevant assumptions used in calculating grant date fair
value. Directors are generally entitled to dividends paid, on a current
basis, on unvested shares of restricted stock. As of December 31, 2016,
Mr. Crocker held 9,168 unvested shares of restricted stock and each of the
other non-employee directors held 4,274 unvested shares of restricted
stock. |
www.carecapitalproperties.com/investors
Table of Contents
Audit Committee Matters
Another purpose of the Annual Meeting is the ratification of the selection of our independent registered
public accounting firm for 2017. In order to make your voting decision, we are providing you with information regarding the factors that the Audit Committee considered in selecting the independent registered public
accounting firm, the policies and practices used by the Audit Committee to provide effective oversight of that
firm and the fees charged by our independent registered public accounting firm for 2016 and 2015. |
Proposal No. 2: Ratification of the
Selection of KPMG LLP as Our Independent Registered Public Accounting Firm for
Fiscal Year 2017
Our Board has approved the Audit
Committees selection of KPMG as our independent registered public accounting
firm for fiscal year 2017 and is submitting such selection for ratification by
our stockholders. In making its selection, the Audit Committee carefully
considered KPMGs qualifications, including the qualifications of KPMGs audit
engagement team, the internal quality control procedures that KPMG has
established and any material issues raised by the most recent internal quality
control review of KPMG performed by the Public Company Accounting Oversight
Board (PCAOB). The Audit Committee also evaluated matters regarding auditor
independence, including whether the provision of non-audit services would impair
KPMGs independence.
Although ratification of the selection of
KPMG is not required by our Bylaws or otherwise, the Board values our
stockholders views and believes such submission is appropriate as a matter of
good corporate practice. If our stockholders fail to ratify this selection, it
will be considered a recommendation to the Audit Committee and the Board to
consider the selection of a different firm, and the Audit Committee and the
Board may select another independent registered public accounting firm for 2017
without resubmitting the matter to the stockholders. Even if the selection is
ratified, the Audit Committee may, in its discretion, select a different
independent registered public accounting firm at any time during the year if it
determines that such a change would be in our best interests and the best
interests of our stockholders.
We expect that a representative of KPMG
will be present at the Annual Meeting to respond to appropriate questions and
will have the opportunity to make a statement if he or she so
desires.
The affirmative vote of a majority of the
shares present in person or represented by proxy at the Annual Meeting is
required to ratify the selection of KPMG as our independent registered public
accounting firm for fiscal year 2017. Abstentions will have the same effect as
votes against such proposal, and broker non-votes will have no
effect.
|
Our Board recommends that you vote FOR
the ratification of the selection of KPMG LLP as our independent registered
public accounting firm for fiscal year 2017. |
|
Care Capital
Properties 2017 Proxy Statement
Table of Contents
|
Audit Committee Matters |
|
21 |
Audit Committee Report
Management has primary responsibility for
the preparation, presentation and integrity of our financial statements and the
financial reporting process, including our system of internal controls, subject
to oversight by the Audit Committee on behalf of our Board. In the performance
of its oversight function, the Audit Committee reviewed and discussed with
management our audited financial statements for the year ended December 31,
2016, including the quality, not just the acceptability, of our accounting
principles, the reasonableness of significant judgments, and the clarity of
disclosures in our financial statements.
The Audit Committee also reviewed and
discussed with the independent registered public accounting firm, who is
responsible for expressing an opinion as to the conformity of those audited
financial statements with accounting principles generally accepted in the United
States, its judgments as to the quality, not just the acceptability, of our
accounting principles and such other matters required to be discussed by
Statement on Auditing Standards No. 1301, Communications with Audit Committees.
The Audit Committee also received the written disclosures and the letter from
the independent registered public accounting firm required by applicable PCAOB
rules regarding the independent registered public accounting firms
communications with the Audit Committee concerning independence and discussed
with the independent registered public accounting firm that firms independence
from our company and its management. In addition, the Audit Committee considered
the compatibility of non-audit services with the independent registered public
accounting firms independence.
Our Audit Committee has discussed with the
independent registered public accounting firm the overall scope and plans for
its audit. The Audit Committee meets regularly with the independent registered
public accounting firm, with and without management present, to discuss the
results of its examination of our financial statements, its evaluations of our
internal controls, and the overall quality of our financial
reporting.
In reliance on the reviews and discussions
referred to above, the Audit Committee recommended to the Board that the audited
financial statements be included in our 2016 Form 10-K for filing with the SEC.
The Audit Committee also recommended, and the Board approved, the selection of
our independent registered public accounting firm for fiscal year
2017.
Ronald G. Geary, Chair
Douglas Crocker
II
John S. Gates, Jr.
The foregoing report of the Audit
Committee does not constitute soliciting material and shall not be deemed filed,
incorporated by reference into or a part of any other CCP filing (including any
future filings) under the Securities Act of 1933, as amended (the Securities
Act) or the Exchange Act, except to the extent we specifically incorporate such
report by reference therein.
www.carecapitalproperties.com/investors
Table of Contents
22 |
|
Audit Committee Matters |
|
Audit and Non-Audit Fees
The following table shows information
about the fees billed for professional services rendered by KPMG during or
related to the years ended December 31, 2016 and 2015. KPMG has served as our
independent registered public accounting firm since August 2015. KPMG was also
engaged by Ventas to audit our financial statements for the years ended December
31, 2014 and 2013 in connection with our Registration Statement on Form 10
relating to our spin-off from Ventas.
|
|
2016 |
|
2015 |
Audit Fees 1 |
|
$ |
1,325,000 |
|
$ |
902,300 |
Audit-Related Fees |
|
|
|
|
|
|
Tax
Fees |
|
|
|
|
|
|
All
Other Fees |
|
|
|
|
|
|
Total |
|
$ |
1,325,000 |
|
$ |
902,300 |
1 |
Audit Fees included the aggregate
fees billed for professional services rendered by KPMG for the audits of
our annual combined consolidated financial statements, the reviews of our
quarterly combined consolidated financial statements, the 2016 audit of
internal control over financial reporting, advice on audit and accounting
matters that arose during, or as a result of, the audits or the reviews of
our quarterly financial statements, and work on securities offerings and
other filings with the SEC, including comfort letters and
consents. |
KPMG was not engaged to, and did not,
provide any audit-related services, tax services or other services to us during
2016 or 2015.
Policy on Pre-Approval of Audit and Permissible Non-Audit
Services |
Consistent with the requirements of the
SEC and the PCAOB, our Audit Committee has responsibility for retaining,
compensating and overseeing the work of our independent registered public
accounting firm. In recognition of this responsibility, the Audit Committee has
implemented procedures relating to the pre-approval of all audit and permissible
non-audit services performed by the independent registered public accounting
firm to ensure that the provision of such services and related fees do not
impair the firms independence.
In accordance with these procedures, the
annual audit services and related fees of the independent registered public
accounting firm are subject to specific approval by our Audit Committee. Prior
to its engagement, which typically occurs during the first quarter of each
fiscal year, the independent registered public accounting firm must provide the
Audit Committee with an engagement letter outlining the scope of proposed audit
services for that year and the related fees. If agreed to by the Audit
Committee, the engagement letter will be formally accepted as evidenced by its
execution by the chair of the Audit Committee. The Audit Committee will then
review and approve, if necessary, any changes in terms, conditions and fees
resulting from changes in audit scope, company structure or other
matters.
In addition, our Audit Committee may grant
pre-approval for those permissible non-audit services that it believes would not
impair the independence of the independent registered public accounting firm.
However, the Audit Committee may not grant approval for any services categorized
by the SEC as Prohibited Non-Audit Services. Generally, at or prior to the
beginning of each fiscal year, management submits to the Audit Committee a list
of certain non-audit services and related fees expected to be rendered by the
independent registered public accounting firm during that year. Following
review, the Audit Committee pre-approves the non-audit services within each
category, and the fees for each category are budgeted. The term of any
pre-approved non-audit service is 12 months from the date of pre-approval,
unless the Audit Committee specifically provides for a different period. Fee
levels for all non-audit services to be provided by the independent registered
public accounting firm are established periodically by the Audit Committee, and
any proposed services exceeding those levels require separate pre-approval by
the Audit Committee. Upon request, the independent registered public accounting
firm must provide detailed supporting documentation to the Audit Committee
regarding the particular services to be provided. To obtain approval of other
permissible non-audit services, management must submit to the Audit Committee
those non-audit services for which it recommends the Audit Committee engage the
independent registered public accounting firm, and both management and the
independent registered public accounting firm must confirm to the Audit
Committee that each non-audit service for which approval is requested is not a
Prohibited Non-Audit Service.
Our Chief Accounting Officer is
responsible for tracking all fees for pre-approved non-audit services provided
by the independent registered public accounting firm, and at each regularly
scheduled Audit Committee meeting, management reports on the pre-approved
non-audit services provided during the quarter and year-to-date and the fees
incurred for such services during such periods.
Care Capital
Properties 2017 Proxy Statement
Table of Contents
Executive Compensation
In this section of the Proxy Statement, we review our compensation philosophy, the objectives and elements
of our compensation program, its alignment with our performance and the 2016 compensation decisions
regarding our named executive officers.
|
Executive Officers
Set forth below is certain biographical
information about our executive officers. Ages shown for all executive officers
are as of the date of the Annual Meeting.
Name and
Position |
|
Age |
|
Business
Experience |
Raymond J. Lewis Chief Executive
Officer |
|
52 |
|
Mr. Lewiss biographical information
is set forth under Corporate GovernanceProposal No. 1: Election of
Directors in this Proxy Statement. |
Lori B. Wittman Executive Vice President and Chief Financial
Officer |
|
58 |
|
Ms. Wittman has been our Executive
Vice President and Chief Financial Officer since our spin-off from Ventas
in 2015. She previously served as Senior Vice President, Capital Markets
and Investor Relations of Ventas from 2013 to 2015 and as Vice President,
Capital Markets and Investor Relations of Ventas from 2011 to 2013. From
2006 to 2011, she was the Chief Financial Officer and Managing Principal
of Big Rock Partners, a real estate private equity firm with over $500
million of assets under management at its peak. Before that, she served as
Senior Vice President and Treasurer for General Growth Properties, Inc.
and held various capital markets and finance positions with Heitman,
Homart Development Company, Citibank and Mellon Bank. Ms. Wittman received
a B.A. in Geography and Sociology from Clark University, a Masters in City
Planning from the University of Pennsylvania and an M.B.A. from the
University of Chicago. She has been a member of the Board of Directors of
IMH Financial Corporation since July 2014. |
Timothy A. Doman Executive Vice President and Chief Operating
Officer |
|
51 |
|
Mr. Doman has been our Executive
Vice President and Chief Operating Officer since our spin-off from Ventas
in 2015. From 2002 to 2015, he held various senior management positions of
increasing responsibility at Ventas, most recently serving as its Senior
Vice President and Chief Portfolio Officer. Before that, Mr. Doman was a
senior asset manager for GE Capital Real Estate, where he managed a
commercial real estate equity and loan portfolio, Vice President of Asset
Management at Kemper Corporation and a senior appraiser for Arthur
Andersen & Co. Mr. Doman received his B.B.A. in Real Estate and
Finance from the University of Wisconsin and an M.B.A. in Finance from
Indiana University. |
Kristen M. Benson Executive Vice President, General Counsel and
Corporate Secretary |
|
44 |
|
Ms. Benson has been our Executive
Vice President, General Counsel and Corporate Secretary since our spin-off
from Ventas in 2015. From 2004 to 2015, she held various senior management
positions of increasing responsibility at Ventas, most recently serving as
its Senior Vice President, Associate General Counsel and Corporate
Secretary. Before that, Ms. Benson was an associate at the law firm of
Sidley Austin LLP in Chicago, Illinois, where her principal practice areas
were securities, mergers and acquisitions and corporate finance. She
received her J.D. from the University of Virginia School of Law and her
B.B.A. summa cum laude in Finance and Computer Applications from the
University of Notre Dame. Ms. Benson is admitted to the Bar in Illinois
and currently serves on the Legal Advisory Board of World Business
Chicago. |
www.carecapitalproperties.com/investors
Table of Contents
24 |
|
Executive Compensation |
|
Compensation Committee Report
The Compensation Committee has reviewed
and discussed the Compensation Discussion and Analysis required by Item 402(b)
of Regulation S-K with management and based on such review and discussions, has
recommended to the Board that the Compensation Discussion and Analysis be
included in this proxy statement and incorporated by reference in the 2016 Form
10-K.
Dale Anne Reiss, Chair
Jeffrey A.
Malehorn
John L. Workman
The foregoing report of the
Compensation Committee does not constitute soliciting material and shall not be
deemed filed, incorporated by reference into or a part of any other CCP filing
(including any future filings) under the Securities Act or the Exchange Act,
except to the extent we specifically incorporate such report by reference
therein.
Compensation Discussion and
Analysis
This Compensation Discussion and Analysis,
or CD&A, describes the principles, objectives, policies and arrangements of
our executive compensation program and the compensation decisions made under
those programs for 2016. This CD&A focuses on the compensation of our named
executive officers for 2016, who were:
Name |
|
Title |
Raymond J. Lewis |
|
Chief Executive Officer |
Lori B. Wittman |
|
Executive Vice President and Chief Financial
Officer |
Timothy A. Doman |
|
Executive Vice President and Chief Operating
Officer |
Kristen M. Benson |
|
Executive Vice President, General Counsel and Corporate
Secretary |
Our executive compensation programs are
designed to attract, retain and motivate talented executives, to reward
executives for the achievement of pre-established quantitative and qualitative
goals consistent with our strategic plan and to link compensation to company
performance. To that end, we compensate our named executive officers based on
policies and arrangements that are intended to closely link compensation to
performance. These policies and arrangements, in planned combination, are
designed to generate rewards for achievement of high-level company and
individual performance and discourage excessive short-term risk taking. We
believe this balance is essential to align management with the long-term
interests of our stockholders.
In 2016, we compensated our executives
primarily through base salary, annual cash incentive compensation and long-term
equity incentive compensation. Our executive compensation philosophy emphasizes
performance-based incentive compensation over fixed cash compensation, so that a
significant majority of total direct compensation is variable, contingent upon
meeting or exceeding pre-established performance goals and not guaranteed. In
addition, a large percentage of incentive compensation is in the form of equity
awards that are either granted to reward past performance or are earned over a
three-year performance period. Even though a portion of these equity awards are
fully earned for performance that has already been achieved at the time of
grant, the awards vest over time to provide additional retention benefits and
create greater alignment with stockholders. We believe that the emphasis on
incentive-based compensation appropriately focuses our executive officers on the
creation of long-term value and encourages prudent evaluation of
risks.
Care Capital
Properties 2017 Proxy Statement
Table of Contents
|
Executive Compensation |
|
25 |
2016 Business and Financial
Highlights |
We are a self-administered, self-managed
REIT with a diversified portfolio of skilled nursing facilities (SNFs) and
other healthcare assets operated by private regional and local care providers.
We primarily generate our revenues by leasing our properties to unaffiliated
tenants under long-term triple-net leases, pursuant to which the tenants are
obligated to pay all property-related expenses, including maintenance,
utilities, repairs, taxes, insurance and capital expenditures. In addition, we
originate and manage a small portfolio of secured and unsecured loans, made
primarily to our SNF operators and other post-acute care providers, and own a
specialty valuation firm. We aim to create long-term stockholder value through
the payment of consistent cash dividends and the growth of our asset base and
cash flow.
As of December 31, 2016, our portfolio
consisted of 345 properties operated by 38 private regional and local care
providers, spread across 36 states and containing a total of approximately
38,000 beds/units. We conduct all of our operations through our wholly owned
operating partnership, Care Capital Properties, LP, and its
subsidiaries.
We delivered strong results in 2016, while
generating robust cash flow to reinvest in our business. Our normalized funds
from operations (FFO) of $3.05 per share* exceeded the high end of our
guidance range and enabled us to pay a secure annual dividend of $2.28 per
share. During the year, we made significant progress on each of our four
strategic priorities of migrating to a permanent capital structure; optimizing
our portfolio; building out our standalone infrastructure; and making value
enhancing investments:
|
|
✓ |
We refinanced or fixed the rates on $1.2
billion of floating rate bank debt that was put in place at the
time of our spin-off from Ventas, thereby
strengthening our liquidity and lengthening and staggering our debt
maturities, and at year end, 84% of our debt was
fixed rate, our weighted average maturity was 6.4 years and our weighted average interest rate was 3.8%;
|
✓ |
We invested $38 million in development or
redevelopment of our assets, disposed of 18 non-strategic real
estate assets for gross proceeds of $124 million
and enhanced our strategic relationships by repositioning assets and restructuring certain of our leases;
|
✓ |
We invested in, and built out, our
organizational infrastructure, including people, processes, systems
and tools, which enabled us to operate
independently following our successful matriculation off of our
transition services agreement with Ventas,
and relocated to our new corporate office; and |
✓ |
We invested $61 million in new transactions
with our preferred operators, including consummating a sale- leaseback transaction of six assets for $36
million. |
|
|
2016 Compensation Program Changes and Incentive
Awards |
Following our spin-off from Ventas in
2015, our Compensation Committee undertook a thorough review of our overall
executive compensation program, with guidance from Willis Towers Watson, for the
purpose of implementing a public company executive compensation program that
would motivate superior results and that was aligned with recognized best
practices. Based on this review, the Compensation Committee modified the design
and structure of our long-term incentive program for 2016 such that a greater
percentage of compensation would be based on the achievement of pre-established
quantitative performance goals and total shareholder return (TSR). For 2016,
25% of the long-term target incentive opportunity for our named executive
officers was granted in early 2016 in the form of performance-based restricted
stock units (PSUs) that may vest and settle in shares of our common stock in
2019 based on our three-year TSR performance relative to a specified performance
peer group, with 50% of the PSUs vesting for performance at the 25th
percentile, 100% of the PSUs vesting for performance at the 50th
percentile and 200% of the PSUs vesting for performance at the 80th
percentile, or any linear interpolation for performance between the
25th and 80th percentiles. The remaining 75% of the
long-term incentive opportunity was awarded in the form of restricted stock
granted retrospectively in early 2017 based on the achievement of specified
performance goals during 2016, 50% of which was based on the attainment of
quantitative measures and 50% of which was based on the evaluation of certain
qualitative factors. The Compensation Committee will continue to evaluate our
executive compensation program for further refinements that it deems necessary
to support our business objectives and that are responsive to evolving best
practices.
Overall, our executive compensation
program is structured to be strongly aligned with our performance, and the
performance measures established by our Compensation Committee are designed to
drive the achievement of key business, financial and operational annual and
long-term results, in addition to individual contributions. In determining
_______
* |
See Annex A for a reconciliation
of normalized FFO per share to net income attributable to CCP per share
computed in accordance with U.S. generally accepted accounting principles
(GAAP). |
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26 |
|
Executive Compensation |
|
our named executive officers 2016
incentive compensation, the Compensation Committee rigorously evaluated company
and individual performance relative to the pre-established quantitative and
qualitative goals under our annual cash and long-term incentive plans.
Accordingly, the cash incentive awards granted to our named executive officers
for 2016 performance ranged from 101.6% to 121.7% of their respective target
opportunities, and the restricted stock awards granted to our named executive
officers for 2016 performance ranged from 116.7% to 135.4% of their respective
target opportunities, in each case generally reflecting above target
achievement. No payouts in 2016 were made under the PSU portion of the long-term
equity incentive plan, as those awards will not vest or settle in shares of our
common stock until 2019, if at all.
Compensation Policies and Practices Good
Governance |
Consistent with our commitment to strong
corporate governance and accountability and responsiveness to our stockholders,
our Board and Compensation Committee have implemented the following compensation
policies and practices, which are intended to drive performance and create
further alignment with our stockholders long-term interests:
|
|
✓ |
The structure of our executive compensation
program includes a balanced mix of cash and equity compensation, with a strong emphasis on performance-based incentive
awards. |
✓ |
Our executive officers incentive award
opportunities are capped, and the value of their awards is
determined by the Compensation Committees
assessment of performance with respect to multiple performance
measures, including TSR, that are designed to
promote the creation of stockholder value. |
✓ |
The long-term equity incentive awards earned by
our executive officers for prior-year performance have time-based vesting schedules to enhance retention and
alignment with long-term stockholder value. |
✓ |
The competitiveness of our executive
compensation program is assessed by comparison to the median of a
group of peer companies that are comparable to us
in terms of industry, asset class, size and operations. |
✓ |
Our Compensation Committee is comprised solely
of independent directors and engages an independent compensation consultant to advise it on matters related
to our executive compensation program. |
✓ |
Our employment and severance agreements with
executive officers do not provide single-trigger change of control benefits or tax gross-ups, the latter of
which are specifically prohibited under our Guidelines on Governance. |
✓ |
We maintain meaningful stock ownership
guidelines for our executive officers and non-employee directors
that promote a long-term stockholder
perspective. |
✓ |
Our recoupment policy enables our Board to
claw back incentive compensation in the event of a financial restatement. |
✓ |
Our executive officers receive limited
benefits, if any, that are not otherwise generally available to all
of our employees. |
✓ |
We prohibit our executive officers and
directors from engaging in derivative and other hedging
transactions in our securities, and we
restrict our executive officers and directors from holding our securities
in margin accounts or otherwise pledging
our securities to secure loans without the prior approval of the
Audit Committee (no executive officer or
director pledged or held our securities in margin accounts at any
time during 2016). |
|
|
Because we were an emerging growth
company, as defined in the Jumpstart Our Business Startups Act, prior to
January 1, 2017, we were not required to submit an advisory vote to approve our
executive compensation to stockholders in connection with our 2016 annual
meeting. Nevertheless, as part of our investor relations program, we regularly
communicate with our investors and actively engage with them throughout the year
at industry conferences and otherwise. We solicit their feedback on executive
compensation and corporate governance matters, among other topics. Our goal is
to understand the issues that our stockholders tell us matter most to them and
to be responsive to, and address, their concerns and observations. Based on our
discussions, we learned that our stockholders generally support our corporate
governance practices and view our executive compensation programs
favorably.
Care Capital
Properties 2017 Proxy Statement
Table of Contents
|
Executive Compensation |
|
27 |
Our Compensation Committee adopted a
compensation philosophy that establishes the framework for designing, setting
and administering executive compensation programs that closely support our
business strategies. This compensation philosophy reflects the following five
guiding principles:
✔ |
Simplicity and flexibility Executive compensation programs must be simple in design to
promote effective administration, communication and understanding, yet
evolve over time to meet the changing dynamics of our business and stage
of development as an organization. |
|
✔ |
Competitiveness We
must be able to effectively attract and retain talent needed to deliver
industry-leading performance. Accordingly,
compensation should be targeted generally at the market median of
healthcare and other comparable REITs, but also should consider the
experiences, skills, abilities and performance of individual
executives. |
✔ |
Ownership orientation
Equity incentive compensation should encourage executives to maintain
meaningful stock ownership to align with long-term stockholder value
creation. |
✔ |
Driving performance
The majority of pay opportunity should be delivered through variable,
incentive-based rewards that are designed with sufficient leverage to
permit above-market compensation when performance warrants and
below-market compensation when performance falls short of expectations and
industry standards. Established goals need
to align with our short-term business strategy and long-term value
creation and generally be based on objective measures, but should allow
the Compensation Committee discretion to evaluate quantitative and
qualitative factors to appropriately reward executives for overall company
performance and individual contributions. |
✔ |
Balance Our
executive compensation programs should balance short-term results and
decision-making with long-term performance and stockholder value creation,
incentivizing executives to make prudent business decisions and avoid
excessive risk. |
|
Objectives of Our Compensation
Program |
We recognize that effective compensation
strategies are critical to recruiting, incentivizing and retaining key employees
who contribute to our long-term success and thereby create value for our
stockholders. Accordingly, our compensation program is designed to achieve the
following primary objectives:
|
|
✔ |
attract, retain and motivate
talented executives; |
✔ |
reward performance that meets or
exceeds pre-established quantitative and qualitative goals consistent with
our strategic plan, while maintaining alignment with
stockholders; |
✔ |
provide balanced incentives that
discourage excessive risk-taking; |
✔ |
retain sufficient flexibility to
permit our executive officers to manage risk and adjust appropriately to
meet rapidly changing market and business conditions; |
✔ |
evaluate performance by balancing
consideration of those measures that management can directly and
significantly influence with market forces that management cannot control
(such as monetary policy and interest rate expectations), but that impact
stockholder value; |
✔ |
encourage executives to become and
remain long-term stockholders of our company; and |
✔ |
maintain compensation and corporate
governance practices that support our goal to deliver sustained, superior
returns to stockholders. |
|
|
We seek to align the interests of our
executive officers and stockholders by maintaining a performance- and
achievement-oriented environment that provides executives with the opportunity
to earn market-competitive levels of cash and equity compensation for strong
performance measured against key financial and strategic goals that we believe
create long-term stockholder value.
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28 |
|
Executive Compensation |
|
Benchmarking and Comparable
Companies |
In August 2015, our Compensation Committee
retained Willis Towers Watson as its independent compensation consultant to
advise it on matters related to our named executive officers compensation
levels and program design for 2016. At the time of engagement, our Compensation
Committee reviewed Willis Towers Watsons independence, determined that Willis
Towers Watson met the independence criteria under the Compensation Committee
charter and determined that Willis Towers Watsons engagement raised no
conflicts of interest.
For benchmarking purposes, Willis Towers
Watson provided our Compensation Committee with comparative market data on
compensation practices and programs based on its analysis of a group of peer
companies (the Comparable Companies) and provided guidance on compensation
trends and best practices. Using this market data, as supplemented by data
compiled in surveys conducted by NAREIT, in the case of Ms. Benson, due to the
limited number of direct position matches among the peer companies, Willis
Towers Watson advised the Compensation Committee and made recommendations with
respect to program design and setting base salaries and incentive award
opportunities for our executive officers for 2016.
In evaluating the compensation levels for
our named executive officers, our Compensation Committee, in consultation with
Willis Towers Watson, considered the competitive positioning of our executive
compensation levels relative to compensation data for the Comparable Companies
with respect to the following components of pay: base salary; target total cash
compensation (base salary plus target annual incentive award); long-term equity
incentives (annualized expected value of long-term equity incentive awards); and
target total direct compensation (base salary plus target annual incentive award
and annualized expected value of long-term equity incentive awards). Consistent
with our compensation philosophy, our Compensation Committee generally targets
our named executive officer compensation levels to the median of the Comparable
Companies for each of these components. Nevertheless, there may be some
variation in the pay mix such that target amounts for individual compensation
elements, while intended to approximate the market median, may be slightly above
or below the competitive range for that element. Target total direct
compensation for a named executive officer may also vary outside of the
competitive range of the 50th percentile of survey data, where used, due to factors such as performance
and contribution, range of data available, factors or responsibilities unique to
the executives role, and market and economic conditions. Internal pay
comparisons among certain named executive officers are taken into consideration
for purposes of the Compensation Committees determination of pay mix and target
total direct compensation. Our 2016 executive compensation program was designed
to deliver compensation levels above or below median if performance exceeded or
failed to achieve the goals established for the annual cash and long-term equity
incentive awards. We believe this methodology is appropriate for our operating
style and reflects the need to attract, retain and stretch top executive
talent.
The group of Comparable Companies consists
of healthcare and other REITs similar to us in terms of size (generally falling
within a range of 0.5x to 2.5x our total capitalization), asset class and
operating model. Our Compensation Committee reviews the Comparable Companies
annually to evaluate whether their size and operating dynamics remain comparable
to ours and may change the composition of the group from time to time, as
appropriate. In addition, the Comparable Companies may change from one year to
the next due to mergers, go private transactions and other similar events. For
purposes of evaluating the compensation of our executive officers in 2016, the
Compensation Committee approved the 17 companies identified below as the
appropriate Comparable Companies. These companies are the same ones used by our
Compensation Committee for purposes of evaluating the post-spin-off compensation
of our executive officers in 2015. The Comparable Companies, in general,
reported compensation data for executive positions with responsibilities similar
in breadth and scope to those of our executive officers (although to a limited
extent for Ms. Benson), and we believe these companies commonly compete with us
for executive talent and stockholder investment.
BioMed Realty Trust, Inc. (formerly
BMR) |
|
Lexington Realty Trust (LXP) |
|
Sabra Health Care REIT, Inc.
(SBRA) |
EPR
Properties (EPR) |
|
Medical Properties Trust, Inc. (MPW) |
|
Spirit Realty Capital, Inc. (SRC) |
Healthcare Realty Trust Incorporated (HR) |
|
National Health Investors, Inc. (NHI) |
|
STORE Capital Corporation (STOR) |
Healthcare Trust of America, Inc. (HTA) |
|
National Retail Properties, Inc. (NNN) |
|
Strategic Hotels & Resorts, Inc. (BEE) |
Hersha Hospitality Trust (HT) |
|
Omega Healthcare Investors, Inc. (OHI) |
|
Sunstone Hotel Investors, Inc. (SHO) |
LaSalle Hotel Properties (LHO) |
|
Pebblebrook Hotel Trust (PEB) |
|
|
After consultation with Willis Towers
Watson, in August 2016, the Compensation Committee modified the Comparable
Companies for 2017 compensation purposes, eliminating National Retail
Properties, Inc. and Spirit Realty Capital, Inc. because of their size and
retail focus, and replacing BioMed Realty Trust, Inc. and Strategic Hotels &
Resorts, Inc., which had been taken private in
late 2015, with Physicians Realty Trust (DOC)
and LTC Properties, Inc. (LTC).
Care Capital
Properties 2017 Proxy Statement
Table of Contents
|
Executive Compensation |
|
29 |
Our executive compensation philosophy
promotes a compensation mix that emphasizes variable, performance-based pay and
aligns with long-term stockholder value. We believe that an emphasis on
incentive compensation creates greater alignment with the interests of our
stockholders, ensures that our business strategy is executed by decision-makers
in a manner that emphasizes the creation of long-term value over short-term
results, and encourages prudent evaluation of risks. Accordingly, our
compensation structure is designed such that a significant portion of our named
executive officers target total direct compensation is in the form of equity
awards that are either granted to reward past performance and vest over time or
are earned over a three-year performance period. Even though a portion of these
equity awards are fully earned for performance that has already been achieved at
the time of grant, the vesting schedule is designed to provide additional
retention benefits and create greater alignment with stockholders.
As described above, the Compensation
Committee modified our long-term incentive compensation program for 2016 to
award 25% of the long-term target incentive opportunity in the form of PSUs
granted in early 2016, with the potential to vest from 0% to 200% and settle in
shares of our common stock in 2019, depending upon our three-year TSR
performance relative to a specified performance peer group. The remaining 75% of
the long-term incentive opportunity was awarded in the form of restricted stock
granted retrospectively in early 2017, subject to multi-year vesting, based on
the achievement of specified performance goals during 2016 that were equally
weighted between quantitative and qualitative measures. The Compensation
Committee will continue to evaluate the mix of compensation elements for
alignment with stockholder interests and business strategy.
The following charts illustrate the mix of
target total direct compensation for our named executive officers for 2016,
reflecting the percentage of their compensation that was performance-based and
at-risk. Mr. Lewiss target total direct compensation reflects a heavier
weight on performance-based incentive compensation due to his leadership role as
our Chief Executive Officer and to demonstrate even greater alignment between
his compensation structure and the interests of our stockholders.
|
2016 Target Total Direct Compensation Mix* |
|
|
|
|
CEO |
Average of Other NEOs |
|
|
|
|
|
|
80%
Performance-Based Incentive Compensation |
71%
Performance-Based Incentive Compensation |
|
* Totals may not add due to
rounding.
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30 |
|
Executive Compensation |
|
Elements of Our Compensation
Program |
The following table summarizes the key
elements of our 2016 executive compensation program:
Element |
Description |
Rationale |
Base
Salary |
Fixed compensation delivered in cash;
reviewed annually and adjusted, if appropriate |
Provides base amount of market competitive
pay |
Annual
Cash Incentive Award |
Variable cash compensation based on
performance against financial and qualitative goals |
Motivates and rewards achievement of key
financial results for the year |
Long-Term Equity Incentive Award |
PSUs |
Variable compensation with payout in shares
of common stock based on three-year TSR relative to a specified peer
group; performance-based vesting equal to 50% of shares at 25th
percentile, 100% of shares at 50th percentile and 200% of
shares at 80th percentile |
Directly aligns interests of executive
officers with creation of long-term stockholder value by linking potential
payouts to stock price performance and promotes retention |
Restricted Stock |
Variable compensation with award in shares
of common stock based on performance against financial and qualitative
goals; time-based vesting in three annual installments |
Directly aligns interests of executive
officers with creation of long-term stockholder value and promotes
retention |
Base
Salary
We consider base salary to be an important
component of each named executive officers total compensation package, as it
provides a fixed component of compensation that reflects the executives
position and responsibilities. Base salary is generally targeted to approximate
the competitive market median of the Comparable Companies, but may deviate from
this target based on an individuals sustained performance, contributions,
leadership, experience, expertise and specific roles within our company as
compared to the benchmark data. Our Compensation Committee reviews base salaries
annually and may make adjustments to better match competitive market levels or
to recognize an executives promotion, professional growth and development or
increased responsibilities. The Compensation Committee also considers the
success of each executive officer in developing and executing our strategic
plans, exercising leadership and creating stockholder value.
In determining 2016 base salaries for our
named executive officers, the Compensation Committee analyzed base salary
information of the Comparable Companies contained in a report prepared by Willis
Towers Watson and, in the case of Ms. Benson, also considered information from
the 2015 NAREIT Compensation Survey due to the limited number of direct position
matches available from the Comparable Companies proxy statements, For 2016, the
Compensation Committee (and the independent members of our Board, in the case of
Mr. Lewis) approved the following base salary increases for the named executive
officers:
|
|
Base Salary |
|
|
|
|
2016 |
|
2015 |
|
% Change |
Raymond J. Lewis |
|
$ |
776,250 |
|
$ |
750,000 |
|
3.5% |
Lori B. Wittman |
|
|
439,875 |
|
|
425,000 |
|
3.5% |
Timothy A. Doman |
|
|
439,875 |
|
|
425,000 |
|
3.5% |
Kristen M. Benson |
|
|
362,250 |
|
|
350,000 |
|
3.5% |
Annual Cash
Incentive Compensation
Our Compensation Committee believes that a
substantial portion of each named executive officers compensation should be in
the form of incentive compensation and views the annual cash incentive plan as a
key method for implementing our performance-based compensation philosophy. For
2016, we provided our named executive officers with an annual opportunity to
earn cash incentive awards for the achievement of pre-established quantitative
and qualitative goals, including tailored individual objectives. As a complement
to our long-term equity incentive plan, our annual cash incentive plan is
designed to reward management actions that advance short- and mid-term business
imperatives necessary to build financial success and operational excellence over
the long-term.
Care Capital
Properties 2017 Proxy Statement
Table of Contents
|
Executive Compensation |
|
31 |
Award
Opportunities
At or prior to the beginning of each
performance year, our Compensation Committee establishes a threshold, target and
maximum incentive opportunity (expressed as a percentage of base salary) for
each executive officer under the annual cash incentive plan. For 2016, the
Compensation Committee (and the independent members of our Board, in the case of
Mr. Lewis) approved the following annual cash incentive award
opportunities:
|
|
Threshold |
|
Target |
|
Maximum |
Raymond J. Lewis |
|
80% |
|
200% |
|
300% |
Lori B. Wittman |
|
40% |
|
100% |
|
150% |
Timothy A. Doman |
|
40% |
|
100% |
|
150% |
Kristen M. Benson |
|
40% |
|
100% |
|
150% |
Mr. Lewiss annual cash incentive
opportunity structure has the same leverage as the structures of our other named
executive officers, but his target incentive opportunity is higher, reflecting
market compensation and the view that the Chief Executive Officer has the greatest impact
on, and responsibility for, our overall performance.
Performance
Measures, Weightings and Results
Set forth below is a summary of the annual
cash incentive plan measures and goals for 2016 approved by our Compensation
Committee (and the independent members of our Board, in the case of Mr. Lewis),
including the rationale for such measures, their relative weightings and our
comparable actual results. Consistent with our compensation philosophy, the 2016
annual cash incentive plan measures and goals were established taking into
consideration our strategic plan and were designed to be challenging, but
achievable, and to discourage excessive risk-taking. The quantitative measures
under the annual cash incentive plan often act in tension with each other and
incentivize our executive officers to take actions that both demonstrate
short-term results and are in the long-term interests of our stockholders. If
the performance for a particular measure fails to meet the threshold level,
there is no payout for that measure. Similarly, the performance for each measure
is capped at the maximum level. For performance achievement between the
threshold, target and maximum levels, the payout is interpolated on a
straight-line basis.
|
|
|
Performance Level |
|
Measure |
Weighting |
Rationale |
Threshold |
Target |
Maximum |
Actual
Result |
Total NOI 1 |
25% |
Captures the effect of acquisitions, dispositions, redevelopment
income and portfolio management activities |
$328 million |
$345 million |
$362 million |
$341 million |
Floating Rate Debt 2 |
15% |
Demonstrates risk reduction, given that 100% of our debt at the
time of the spin-off was floating rate debt |
50% |
37.5% |
20% |
16% |
Dispositions |
10% |
Supports strategic priority to optimize the portfolio by divesting
non-strategic assets |
$100 million |
$225 million |
$350 million |
$265
million5 |
Net Debt/ Adjusted EBITDA 3 |
10% |
Reflects the strength of our balance sheet and our ability to
generate sufficient earnings to meet our debt obligations |
5.0x |
4.75x |
4.5x |
4.5x |
Corporate G&A 4 |
5% |
Evidences management of overhead during first full year as a
publicly traded company |
$29 million |
$27 million |
$25 million |
$27 million |
Qualitative Measures |
35% |
Enables the Compensation Committee to assess non-financial
accomplishments and evaluate individual contributions to our
performance |
See
Below |
1 |
Total net operating
income, defined as total revenues, less net gain on lease termination. See
Annex A for a reconciliation of total NOI to net income computed in
accordance with GAAP. |
2 |
As a percentage of total
debt. |
3 |
Net debt to full-year
adjusted earnings before interest, taxes, depreciation and amortization,
plus adjustments for items which may be nonrecurring or recurring in
nature but not consistent in amounts. See Annex A for a reconciliation of
net debt/Adjusted EBITDA to net income computed in accordance with
GAAP. |
4 |
General and administrative
expenses, excluding overhead attributable to our specialty valuation
firm. |
5 |
Actual result includes the
disposition of 20 properties for $141 million for which definitive sale
agreements were executed in 2016, but closing was delayed until 2017 for
tax planning purposes. |
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32 |
|
Executive Compensation |
|
For its qualitative evaluation of our
performance, the Compensation Committee (and the independent members of our
Board, in the case of Mr. Lewis) established the following financial,
operational and strategic objectives, as well as tailored individual objectives
relating to areas of special emphasis within each named executive officers
particular duties and responsibilities, without assigning a specific weight to
any single factor:
|
|
✔ |
completion of value enhancing
acquisitions; |
✔ |
strategic asset re-tenanting and
dispositions; |
✔ |
value-creating redevelopment
investments; |
✔ |
rent collection, lease renewals and
releasing activities; |
✔ |
build out of standalone
infrastructure; |
✔ |
development of people, processes,
systems and tools; |
✔ |
investor transparency, messaging and
communication; |
✔ |
development of a culture of high
performing and engaged employees; |
✔ |
enterprise risk management;
and |
✔ |
development of frequent, detailed
and transparent Board communication and engagement. |
|
|
Earned
Awards
Based on the results summarized in the
table above, we achieved overall performance equal to 113.2% of the target level
with respect to the quantitative measures under the annual cash incentive plan.
In its evaluation of our performance with respect to the qualitative measures
under the annual cash incentive plan, the Compensation Committee recognized our
solid financial and operational results, as well as each individuals
contributions to those results, evidenced primarily by our:
|
|
✔ |
completion of, or the execution of
definitive agreements for, the disposition of $265 million of
non-strategic assets; |
✔ |
portfolio optimization activities,
including various re-leasings and the collection of rent; |
✔ |
new investments in assets and loans
receivable totalling $77 million (including $16 million in working capital
loans), plus $38 million in development and redevelopment
projects; |
✔ |
establishment of a standalone IT
infrastructure and platform, move to our new headquarters and successful
migration from the transition services agreement with
Ventas; |
✔ |
refinancing or fixing the rates on
$1.2 billion of debt through access to multiple capital
markets; |
✔ |
enhancement of portfolio management,
accounting and legal teams and refinement of key business processes,
systems and controls; |
✔ |
introduction of industry leading
supplemental disclosures; and |
✔ |
timely implementation of effective
internal controls. |
|
|
Accordingly, the Compensation Committee
determined that each of our named executive officers, other than Mr. Lewis,
achieved at a high level between target and maximum performance with respect to
the qualitative measures, including his or her tailored individual objectives.
The Compensation Committee and the independent members of our Board determined
that Mr. Lewis achieved between threshold and target performance with respect to
those measures due to his primary responsibility for our acquisitions and
investments, which fell short of our goal in 2016.
Care Capital
Properties 2017 Proxy Statement
Table of Contents
|
Executive Compensation |
|
33 |
In February 2017, our Compensation
Committee (and the independent members of our Board, in the case of Mr. Lewis)
granted cash incentive awards to our named executive officers for 2016
performance ranging from 101.6% to 121.7% of their respective target
opportunities, as follows:
|
|
2016 Annual Cash Incentive
Award |
|
|
% of Target |
|
$ |
Raymond J. Lewis |
|
101.6% |
|
$ |
1,576,883 |
Lori B. Wittman |
|
121.7% |
|
|
535,308 |
Timothy A. Doman |
|
121.7% |
|
|
535,308 |
Kristen M. Benson |
|
121.7% |
|
|
440,842 |
The dollar value of each named executive
officers annual cash incentive award for 2016 is set forth in the Non-Equity
Incentive Plan Compensation column of the 2016 Summary Compensation Table.
However, the portion of these amounts attributable to the $141 million
disposition for which definitive sale agreements were executed in 2016, but
closing was delayed until 2017 for tax planning purposes, have been withheld
from payment to the named executive officers pending the closing of such
disposition.
Long-Term Equity
Incentive Compensation
Our Compensation Committee believes that
the greatest portion of each named executive officers compensation should be in
the form of long-term equity incentive compensation, and for 2016, we provided
our named executive officers with an annual opportunity to earn equity incentive
awards for the achievement of pre-established quantitative and qualitative
goals, including tailored individual objectives. The Compensation Committee also
believes that PSUs and restricted stock, which is the most prevalent form of
long-term equity incentive compensation among the Comparable Companies, provide
the strongest incentives to create and preserve long-term stockholder value.
While our annual cash incentive plan is designed to reward management actions
that positively impact short- and mid-term performance, equity incentive awards
encourage management to create and sustain stockholder value over longer periods
because their value is directly attributable to changes in the price of our
common stock over time. In addition, equity awards promote management retention
because their full value cannot be realized until vesting occurs, which
generally requires continued employment for multiple years.
Award
Opportunities
At or prior to the beginning of each
performance year, our Compensation Committee establishes a target incentive
opportunity (expressed as a percentage of base salary) for each executive
officer under the long-term equity incentive plan. A portion of the target
incentive opportunity is then granted on a prospective basis in the form of
PSUs, which enable the executive officer to earn shares of our common stock
ranging from 0% to 200% of the target award based on our three-year TSR relative
to a specified performance peer group, with 50% of the PSUs vesting for
threshold performance, 100% of the PSUs vesting for target performance and 200%
of the PSUs vesting for maximum performance. For 2016, PSUs accounted for 25% of
the long-term target incentive opportunities of our named executive officers.
The remaining portion of the long-term incentive opportunity is available for
grant on a retrospective basis in the form of restricted stock based on the
achievement of pre-established quantitative and qualitative goals. For this
restricted stock portion, which for 2016 accounted for 75% of the long-term
incentive opportunities, our Compensation Committee establishes a threshold,
target and maximum incentive opportunity (expressed as a percentage of base
salary) for each executive officer. For 2016, the Compensation Committee (and
the independent members of our Board, in the case of Mr. Lewis) approved the
following long-term equity incentive award opportunities:
|
|
PSUs |
|
|
Restricted
Stock |
|
|
Target |
|
|
Threshold |
|
Target |
|
Maximum |
Raymond J. Lewis |
|
|
50% |
|
|
|
|
75% |
|
|
|
150% |
|
|
|
225% |
|
Lori B. Wittman |
|
|
40% |
|
|
|
|
60% |
|
|
|
120% |
|
|
|
180% |
|
Timothy A. Doman |
|
|
40% |
|
|
|
|
60% |
|
|
|
120% |
|
|
|
180% |
|
Kristen M. Benson |
|
|
27.5% |
|
|
|
|
41.25% |
|
|
|
82.5% |
|
|
|
123.75% |
|
Similar to the annual cash incentive plan,
Mr. Lewiss long-term equity incentive opportunity structure has the same
leverage as the structures of our other named executive officers, but his target
incentive opportunity is higher, reflecting market compensation and the view
that the Chief Executive Officer has the greatest impact on, and responsibility
for, our overall performance.
www.carecapitalproperties.com/investors
Table of Contents
34 |
|
Executive Compensation |
|
Performance
Measures, Weightings and Results
Set forth below is a summary of the
long-term equity incentive plan measures and goals for 2016 approved by our
Compensation Committee (and the independent members of our Board, in the case of
Mr. Lewis), including the rationale for such measures, their relative weightings
and our comparable actual results. Consistent with our compensation philosophy,
the 2016 long-term equity incentive plan measures and goals were based in part
on the objectives contained in our strategic plan. They were designed to be
challenging, but achievable, and to discourage excessive risk-taking. Similar to
our annual cash incentive plan, if the performance for a particular measure
fails to meet the threshold level, there is no payout or award for that measure.
Likewise, the performance for each measure is capped at the maximum level. For
performance achievement between the threshold, target and maximum levels, the
payout or award is interpolated on a straight-line basis.
In light of the foregoing, shares of
restricted stock granted under our long-term equity incentive plan, at the time
of their grant, have been fully earned and are not subject to additional
performance-based vesting requirements. However, these shares vest over multiple
years, providing additional retention benefits and creating greater alignment
with stockholders.
PSUs (25% of
Long-Term Incentive)
|
|
|
Performance
Level |
|
Measure |
Weighting |
Rationale |
Threshold |
Target |
Maximum |
Actual
Result |
3-Year Relative TSR
1 |
100% |
Is
the most direct measure of long-term stockholder value creation and
preservation |
25th Percentile |
50th Percentile |
80th Percentile |
N/A |
1 |
Relative
to the constituent companies in the SNL US REIT Healthcare Index
(excluding Global Healthcare REIT Inc.) as of January 1,
2016. |
Restricted Stock
(75% of Long-Term Incentive)
|
|
|
Performance
Level |
|
Measure |
Weighting |
Rationale |
Threshold |
Target |
Maximum |
Actual
Result |
Normalized FFO Per Share
1 |
50% |
A
common measure of operating performance for REITs, can have a significant
impact on the trading price of common stock |
$2.80 |
$2.95 |
$3.10 |
$3.05 |
Qualitative Measures |
50% |
Enables the Compensation
Committee to assess non-financial accomplishments and evaluate individual
contributions to our performance |
See Below |
1 |
Defined
as net income (computed in accordance with GAAP), excluding gains (or
losses) from sales of real estate property and impairment write-downs of
depreciable real estate, plus real estate depreciation and amortization,
and after adjustments for joint ventures, and excluding items which may be
nonrecurring or recurring in nature but not consistent in amounts. See
Annex A for a reconciliation of normalized FFO per share to net income
attributable to CCP per share computed in accordance with
GAAP. |
For its qualitative evaluation of our
performance, the Compensation Committee (and the independent members of our
Board, in the case of Mr. Lewis) established the same financial, operational and
strategic objectives as described above under Annual Cash Incentive
Compensation, as well as tailored individual objectives relating to areas of
special emphasis within each named executive officers particular duties and
responsibilities, without assigning a specific weight to any single
factor.
Earned
Awards
Based on the results summarized in the
table above, we achieved overall performance equal to 133.3% of the target level
with respect to the quantitative measures under the restricted stock portion of
the long-term equity incentive plan. In its evaluation of our performance with
respect to the qualitative measures under the restricted stock portion of the
long-term equity incentive plan, the Compensation Committee recognized our solid
financial and operational results, as well as each individuals contributions to
those results, evidenced primarily by the same accomplishments described above
under Annual Cash Incentive Compensation.
Accordingly, the Compensation Committee
determined that each of our named executive officers, other than Mr. Lewis,
achieved at a high level between target and maximum performance with respect to
the qualitative measures, including his or her tailored individual objectives.
The Compensation Committee and the independent members of our Board determined
that Mr. Lewis achieved between threshold and target performance with respect to
those measures due to his primary responsibility for our acquisitions and
investments, which fell short of our goal in 2016.
Care Capital
Properties 2017 Proxy Statement
Table of Contents
|
Executive Compensation |
|
35 |
In February 2017, our Compensation
Committee (and the independent members of our Board, in the case of Mr. Lewis)
granted restricted stock awards to our named executive officers for 2016
performance ranging from 116.7% to 135.4% of their respective target
opportunities, as follows:
|
|
2016 Long-Term Equity Incentive Award
(Restricted Stock) |
|
|
% of Target |
|
$ |
Raymond J. Lewis |
|
116.7% |
|
$ |
1,358,437 |
Lori B. Wittman |
|
135.4% |
|
|
714,797 |
Timothy A. Doman |
|
135.4% |
|
|
714,797 |
Kristen M. Benson |
|
135.4% |
|
|
404,701 |
Due to the retrospective nature of the
restricted stock portion of the long-term equity incentive plan, under the SECs
disclosure rules, the shares of restricted stock awarded to our named executive
officers for 2016 performance do not appear in the 2016 Summary Compensation
Table, but will be reflected as 2017 compensation in the 2017 Summary
Compensation Table. These shares of restricted stock were granted pursuant to
our 2015 Incentive Plan and vest in three equal annual installments, beginning
on the date of grant, subject to the executives continued employment through
the applicable vesting date.
Shares of restricted stock are granted to
our named executive officers (other than the Chief Executive Officer) on the
date that our Compensation Committee meets to review our performance and
determine the value of the long-term equity incentive awards. Shares of
restricted stock are granted to our Chief Executive Officer on the date that the
independent members of our Board meet to review and approve the Compensation
Committees recommendations with respect to the value of the Chief Executive
Officers long-term equity incentive award. Typically, these meetings of our
Compensation Committee and the independent members of our Board are held on the
same day.
Other
Benefits
Our executive compensation program focuses
on the elements described above, with extremely limited provision of other
benefits. Our named executive officers are generally eligible to participate in
the same benefit programs that we offer to other employees, which in 2016
included the following:
|
|
✓ |
health, dental and vision insurance, of which we paid 90% of
the premiums in 2016; |
✓ |
short-term disability, long-term disability and life insurance
coverage, at no cost to the employee; and |
✓ |
participation in our 401(k) plan, to which we made matching
contributions to participants of up to 3.5% of the employees eligible compensation, capped at the federal limit, in
2016. |
|
|
In addition, in 2016 we provided our named
executive officers with supplemental disability insurance coverage, at no cost
to the executive, which was the only benefit not otherwise available to other
employees.
We believe these benefits are competitive
with overall market practices. Except for the eligibility to participate in, and
our matching contributions to, the 401(k) plan, as described above, we do not
provide our named executive officers with any retirement benefits. See
Employment and Severance Agreements with Named Executive OfficersPension,
Retirement or Similar Benefits.
Minimum Share Ownership Guidelines for
Executive Officers |
Our minimum share ownership guidelines
require each executive officer to maintain a minimum equity investment in our
company based upon a multiple (five times, in the case of the Chief Executive
Officer, and three times, in the case of all other executive officers) of his or
her base salary at the time his or her compliance with the guidelines is
evaluated. Each executive officer must achieve the minimum equity investment
within five years from the date he or she first becomes subject to the
guidelines and, until that time, must retain at least 60% of the shares of our
common stock granted to the executive officer or purchased by the executive officer
through the exercise of stock options. Compliance with the guidelines is
reviewed on July 1 of each year. All of our executive officers are currently in
compliance with, or in the transition period for, these guidelines. Except as
described above, our minimum share ownership guidelines and our 2015 Incentive
Plan do not specify a minimum holding period for stock options, restricted stock
or other equity grants.
www.carecapitalproperties.com/investors
Table of Contents
36 |
|
Executive Compensation |
|
Our Policy for Recoupment of Incentive
Compensation allows us to recapture amounts paid to our executive officers under
certain circumstances. Under this policy, our Compensation Committee may require
an executive officer to repay all or a portion of any excess cash or equity
incentive compensation he or she received during the preceding three-year period
if the incentive compensation was based on achieving certain financial results
that were later required to be restated due to our material noncompliance with
any financial reporting requirement.
Following the SECs adoption of final
rules regarding executive compensation recoupment policies pursuant to the
Dodd-Frank Wall Street Reform and Consumer Protection Act, we will review our
recoupment policy and make any changes necessary to comply with the final
rules.
Compensation Tables
2016 Summary Compensation
Table |
The following table summarizes the
principal components of compensation awarded or paid to, or earned by, our named
executive officers during 2016 and 2015:
Name and Principal
Position |
|
Year |
|
Salary
1 ($) |
|
Bonus ($) |
|
Stock Awards
2 ($) |
|
Option Awards
2 ($) |
|
Non-Equity Incentive
Plan Compensation 3 ($) |
|
All Other Compensation
4 ($) |
|
Total ($) |
Raymond
J. Lewis Chief Executive
Officer
|
|
2016 |
|
$ |
776,250 |
|
$ |
|
$ |
2,296,967 |
|
$ |
818,075 |
|
$ |
1,576,883 |
|
$ |
14,050 |
|
$ |
5,482,225 |
|
2015 |
|
|
278,365 |
|
|
|
|
2,500,000 |
|
|
|
|
|
628,767 |
|
|
604 |
|
|
3,407,736 |
Lori B.
Wittman Executive Vice President & Chief
Financial Officer |
|
2016 |
|
|
439,875 |
|
|
|
|
515,436 |
|
|
145,494 |
|
|
535,308 |
|
|
13,735 |
|
|
1,649,848 |
|
2015 |
|
|
157,740 |
|
|
|
|
1,000,000 |
|
|
|
|
|
178,151 |
|
|
3,230 |
|
|
1,339,121 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy
A. Doman Executive Vice President
& Chief Operating Officer |
|
2016 |
|
|
439,875 |
|
|
|
|
678,002 |
|
|
215,165 |
|
|
535,308 |
|
|
13,255 |
|
|
1,881,605 |
|
2015 |
|
|
157,740 |
|
|
|
|
1,000,000 |
|
|
|
|
|
178,151 |
|
|
1,815 |
|
|
1,337,706 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kristen
M. Benson
5 Executive Vice
President, General Counsel & Corporate
Secretary |
|
2016 |
|
|
362,250 |
|
|
|
|
287,393 |
|
|
80,474 |
|
|
440,842 |
|
|
8,351 |
|
|
1,179,310 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
The amounts shown in the Salary column for 2015 reflect base
salaries earned by the named executive officers for their service to us
following our spin-off from Ventas in August 2015. The annualized base
salaries for 2015 were as follows: Mr. Lewis, $750,000; Ms. Wittman,
$425,000; and Mr. Doman, $425,000. |
2 |
The
amounts shown in the Stock Awards
and Option
Awards columns reflect the full grant date
fair value, calculated in accordance with FASB ASC 718, of (i) for 2016,
the shares of restricted stock and stock options granted to each named
executive officer in January 2016 for their performance in 2015, and the
target PSUs granted to each named executive officer in February 2016
pursuant to our 2016 long-term equity incentive plan and (ii) for 2015,
the shares of restricted stock granted to each named executive officer in
August 2015 in connection with the spin-off. The amounts included in the
Stock Awards column for the PSUs granted during 2016 are calculated based
on the probable satisfaction of the performance conditions for such awards
as of the date of grant. Under FASB ASC 718, the vesting condition related
to the PSUs is considered a market condition and not a performance
condition. Accordingly, there is no grant date fair value below or in
excess of the amounts reflected in the table above for the named executive
officers that could be calculated and disclosed based on achievement of
the underlying market condition. See Note 12 of the Notes to Combined
Consolidated Financial Statements included in our 2016 Form 10-K for a
discussion of the relevant assumptions used in calculating grant date fair
value. For further information on these awards, see the 2016 Grants of
Plan-Based Awards Table and 2016 Outstanding Equity Awards at Fiscal
Year-End Table in this Proxy Statement. Excluded from these amounts, in
accordance with SEC rules, are the shares of restricted stock granted to
the named executive officers in February 2017 for their 2016 performance,
which will be reported as 2017 compensation in the 2017 Summary
Compensation Table. |
3 |
The
amounts shown in the Non-Equity Incentive
Plan Compensation column represent the
amount each named executive officer earned under our annual cash incentive
plan for performance in 2016 and following the spin-off in 2015. The
portion of these amounts attributable to the $141 million disposition for
which definitive sale agreements were executed in 2016, but closing was
delayed until 2017 for tax planning purposes, have been withheld from
payment to the named executive officers pending the closing of such
disposition. Excluded from this column for 2015 are the following amounts
paid by us for services rendered to Ventas prior to the spin-off, for
which Ventas transferred accruals to us in connection with the spin-off:
Mr. Lewis, $964,510; Ms. Wittman, $207,857; and Mr. Doman,
$440,094. |
4 |
The
amounts shown for 2016 in the All Other
Compensation column represent group term
life and supplemental disability insurance premiums paid on behalf of the
named executive officers and our matching contributions to the named
executive officers 401(k) plan accounts ($11,264 for Mr. Lewis and
$10,558 for each of Ms. Wittman and Mr. Doman). |
5 |
Ms. Benson was not a named
executive officer in 2015. |
Care Capital
Properties 2017 Proxy Statement
Table of Contents
|
Executive Compensation |
|
37 |
2016 Grants of Plan-Based Awards
Table |
The following table provides additional
information relating to grants of plan-based awards made to our named executive
officers in 2016:
Name |
Grant Date |
|
|
|
|
|
|
|
All
Other Stock Awards: Number of Shares of Stock or Units
1 (#) |
|
All
Other Option Awards: Number
of Securities Underlying Options
2 (#) |
|
Exercise or Base Price of Option Awards
3 ($/Sh) |
|
Grant Date Fair Value of Stock and Option Awards
4 ($) |
Estimated Possible Payouts Under Non-Equity Incentive Plan
Awards |
|
|
Estimated Future Payouts Under Equity Incentive Plan
Awards |
|
|
Threshold ($) |
|
Target ($) |
|
Maximum ($) |
|
|
Threshold ($/#) |
|
Target ($/#) |
|
Maximum ($/#) |
|
|
Raymond J.
Lewis |
|
5 |
|
$ |
621,000 |
|
$ |
1,552,500 |
|
$ |
2,328,750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6 |
|
|
|
|
|
|
|
|
|
|
|
$ |
582,188 |
|
$ |
1,164,375 |
|
$ |
1,746,563 |
|
|
|
|
|
|
|
|
|
|
|
1/27/16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
63,755 |
|
|
|
|
|
|
$ |
1,908,842 |
1/27/16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
321,456 |
|
$ |
29.94 |
|
|
818,075 |
2/25/16 |
7 |
|
|
|
|
|
|
|
|
|
|
|
|
9,621 |
|
|
19,242 |
|
|
38,484 |
|
|
|
|
|
|
|
|
|
|
388,125 |
Lori
B. Wittman |
|
5 |
|
|
175,950 |
|
|
439,875 |
|
|
659,813 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6 |
|
|
|
|
|
|
|
|
|
|
|
$ |
263,925 |
|
$ |
527,850 |
|
$ |
791,775 |
|
|
|
|
|
|
|
|
|
|
|
1/27/16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,338 |
|
|
|
|
|
|
|
339,486 |
1/27/16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57,851 |
|
|
29.94 |
|
|
145,494 |
2/25/16 |
7 |
|
|
|
|
|
|
|
|
|
|
|
|
4,362 |
|
|
8,723 |
|
|
17,446 |
|
|
|
|
|
|
|
|
|
|
175,950 |
Timothy
A. Doman |
|
5 |
|
|
175,950 |
|
|
439,874 |
|
|
659,813 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6 |
|
|
|
|
|
|
|
|
|
|
|
$ |
263,925 |
|
$ |
527,850 |
|
$ |
791,775 |
|
|
|
|
|
|
|
|
|
|
|
1/27/16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,768 |
|
|
|
|
|
|
|
502,052 |
1/27/16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
85,554 |
|
|
29.94 |
|
|
215,165 |
2/25/16 |
7 |
|
|
|
|
|
|
|
|
|
|
|
|
4,362 |
|
|
8,723 |
|
|
17,446 |
|
|
|
|
|
|
|
|
|
|
175,950 |
Kristen
M. Benson |
|
5 |
|
|
144,900 |
|
|
362,250 |
|
|
543,375 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6 |
|
|
|
|
|
|
|
|
|
|
|
$ |
149,428 |
|
$ |
298,856 |
|
$ |
448,284 |
|
|
|
|
|
|
|
|
|
|
|
1/27/16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,271 |
|
|
|
|
|
|
|
187,774 |
1/27/16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,998 |
|
|
29.94 |
|
|
80,474 |
2/25/16 |
7 |
|
|
|
|
|
|
|
|
|
|
|
|
2,469 |
|
|
4,938 |
|
|
9,876 |
|
|
|
|
|
|
|
|
|
|
99,619 |
1 |
The amounts shown reflect shares of restricted stock
granted to each named executive officer in January 2016 for 2015
performance under our 2015 Incentive Plan. The shares of restricted stock
vest in three equal annual installments, beginning on the date of grant in
the case of Mr. Lewis and beginning on the first anniversary of the date
of grant in the case of the other named executive officers. |
2 |
The amounts shown reflect stock options granted to each
named executive officer in January 2016 for 2015 performance under our
2015 Incentive Plan. These stock options vest in three equal annual
installments, beginning on the date of grant in the case of Mr. Lewis and
beginning on the first anniversary of the date of grant in the case of the
other named executive officers. |
3 |
The stock option exercise price equals the closing price
of our common stock on the date of grant. |
4 |
The amounts shown reflect the full grant date fair
value, calculated in accordance with FASB ASC 718, of the shares of
restricted stock and stock options granted to each named executive officer
in January 2016 for 2015 performance and the target PSUs granted to each
named executive officer in February 2016 under our 2015 Incentive Plan.
The amounts included for the PSUs are calculated based on the probable
satisfaction of the performance conditions for such awards as of the date
of grant. Under FASB ASC 718, the vesting condition related to the PSUs is
considered a market condition and not a performance condition.
Accordingly, there is no grant date fair value below or in excess of the
amounts reflected in the table above for the named executive officers that
could be calculated and disclosed based on achievement of the underlying
market condition. See Note 12 of the Notes to Combined Consolidated
Financial Statements included in our 2016 Form 10-K for a discussion of
the relevant assumptions used in calculating grant date fair
value. |
5 |
The amounts shown represent each named executive
officers threshold, target and maximum annual cash incentive
opportunities for 2016 performance. The actual amount of each named
executive officers award was based on the achievement of certain
performance measures, as discussed in the CD&A, and paid in the first
quarter of 2017. Such earned amounts are shown in the Non-Equity
Incentive Plan Compensation column of the 2016 Summary Compensation
Table. |
6 |
The amounts shown represent each named executive
officers threshold, target and maximum incentive opportunities with
respect to the restricted stock portion of the long-term equity incentive
plan for 2016 performance. The actual amount of each named executive
officers award was based on the achievement of certain performance
measures, as discussed in the CD&A, and granted in February 2017. Such
awards will be reported as restricted stock grants made during 2017 and
are not included in the 2016 Summary Compensation Table. |
7 |
The amounts shown represent each
named executive officers threshold, target and maximum vesting levels for
the 2016 PSUs granted under our 2015 Incentive Plan. The PSUs will vest
and settle in shares of our common stock in 2019, if at all, based on our
three-year TSR relative to a specified performance peer
group. |
www.carecapitalproperties.com/investors
Table of Contents
38 |
|
Executive Compensation |
|
2016 Outstanding Equity Awards at Fiscal
Year-End Table |
At the time of the spin-off, equity awards
outstanding under Ventass equity-based incentive plans held by Ventas employees
who became our employees in connection with the spin-off were converted into
awards in respect of our common stock. The original vesting schedule remains in
effect for all equity awards, with service now measured by reference to our
company.
The following table sets forth information
regarding the equity awards granted to our named executive officers that were
outstanding at December 31, 2016:
|
|
Option
Awards |
|
|
Stock Awards
1 |
Name |
|
Number
of Securities Underlying Options Exercisable (#) |
|
Number
of Securities Underlying Options Unexercisable
2 (#) |
|
Equity Incentive Plan Awards: Number
of Securities Underlying Unexercised Unearned Options (#) |
|
Option Exercise Price ($) |
|
Option Expiration Date |
|
|
Number of Shares or Units that Have
Not Vested 2 (#) |
|
Market Value
of Shares or Units that Have Not Vested
3 ($) |
|
Equity Incentive Plan Awards: Number
of Unearned Shares, Units or Other Rights that Have
Not Vested 4 (#) |
|
Equity Incentive Plan Awards: Market Value of
Unearned Shares, Units or Other Rights that Have Not Vested
3 ($) |
Raymond J.
Lewis |
|
139,802 |
|
|
|
|
|
$ |
27.22 |
|
1/18/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
161,668 |
|
|
|
|
|
|
32.22 |
|
1/23/2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
269,431 |
|
|
|
|
|
|
30.10 |
|
1/29/2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
132,351 |
|
66,174 |
|
|
|
|
38.28 |
|
1/21/2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
107,152 |
|
214,304 |
|
|
|
|
29.94 |
|
1/27/2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
103,015 |
|
$ |
2,575,375 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,621 |
|
$ |
240,525 |
Lori B.
Wittman |
|
1,620 |
|
|
|
|
|
|
27.07 |
|
3/9/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
8,577 |
|
|
|
|
|
|
34.37 |
|
3/8/2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
17,075 |
|
8,536 |
|
|
|
|
29.57 |
|
3/7/2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
9,481 |
|
18,960 |
|
|
|
|
34.16 |
|
3/6/2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57,851 |
|
|
|
|
29.94 |
|
1/27/2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55,246 |
|
|
1,381,150 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,362 |
|
|
109,050 |
Timothy A.
Doman |
|
11,233 |
|
|
|
|
|
|
27.95 |
|
2/25/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
13,542 |
|
|
|
|
|
|
27.07 |
|
3/9/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
29,632 |
|
|
|
|
|
|
34.37 |
|
3/8/2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
33,705 |
|
16,851 |
|
|
|
|
29.57 |
|
3/7/2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
19,832 |
|
39,662 |
|
|
|
|
34.16 |
|
3/6/2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
85,554 |
|
|
|
|
29.94 |
|
1/27/2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
78,019 |
|
|
1,950,475 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,362 |
|
|
109,050 |
Kristen M.
Benson |
|
4,011 |
|
|
|
|
|
|
21.60 |
|
2/26/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
3,178 |
|
|
|
|
|
|
27.95 |
|
2/25/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
3,739 |
|
|
|
|
|
|
27.07 |
|
3/9/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
7,672 |
|
|
|
|
|
|
34.37 |
|
3/8/2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
9,120 |
|
4,559 |
|
|
|
|
29.57 |
|
3/7/2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
5,356 |
|
10,711 |
|
|
|
|
34.16 |
|
3/6/2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,998 |
|
|
|
|
29.94 |
|
1/27/2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,414 |
|
|
1,260,350 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,469 |
|
|
61,725 |
1 |
Excluded
from the table above are shares of restricted stock awarded in February
2017 to each of our named executive officers in recognition of 2016
performance, with grant date fair values as follows: Mr. Lewis,
$1,358,437; Ms. Wittman, $714,797; Mr. Doman, $714,797; and Ms. Benson,
$404,701. These awards will be reported as 2017 compensation in the 2017
Summary Compensation Table. |
Care Capital
Properties 2017 Proxy Statement
Table of Contents
|
Executive Compensation |
|
39 |
2 The unexercisable options and
unvested shares of restricted stock shown in these columns vest or have vested
as follows:
|
|
Mr. Lewis |
Ms. Wittman |
Mr. Doman |
Ms. Benson |
|
|
Options |
Shares |
Options |
Shares |
Options |
Shares |
Options |
Shares |
2017 |
January 21 |
66,174 |
11,565 |
|
|
|
|
|
|
|
January 27 |
107,152 |
21,252 |
19,284 |
3,780 |
28,518 |
5,590 |
10,666 |
2,091 |
|
March 6 |
|
|
9,480 |
1,884 |
19,831 |
3,942 |
5,356 |
1,064 |
|
March 7 |
|
|
8,536 |
1,429 |
16,851 |
2,822 |
4,559 |
763 |
|
March 9 |
|
|
|
9,343 |
|
21,178 |
|
10,444 |
|
August 17 |
|
24,474 |
|
|
|
|
|
|
2018 |
January 27 |
107,152 |
21,251 |
19,284 |
3,779 |
28,518 |
5,589 |
10,666 |
2,090 |
|
March 6 |
|
|
9,480 |
1,884 |
19,831 |
3,941 |
5,355 |
9,846 |
|
August 17 |
|
24,473 |
|
29,368 |
|
29,368 |
|
22,026 |
2019 |
January 27 |
|
|
19,283 |
3,779 |
28,518 |
5,589 |
10,666 |
2,090 |
|
Our named executive officers are
entitled to dividends paid, on a current basis, on unvested shares of
restricted stock. |
3 |
For purposes of the table, the
market value of restricted stock that has not vested is determined by
multiplying the number of shares by $25.00, the closing price of our
common stock on December 30, 2016, and the market value of unearned
shares, units or other rights that have not vested is determined by
multiplying the number of PSUs by $25.00, the closing price of our
common stock on December 30, 2016. |
4 |
In accordance with SEC
rules, PSUs are being reported at the threshold level, which is equal to
50% of the target number of PSUs granted to the named executive officers
in February 2016 under the 2016 long-term equity incentive plan. The PSUs
will vest and settle in shares of our common stock in 2019, if at all,
based on our three-year TSR relative to a specified performance peer
group. Our named executive officers are entitled to accrued dividend
equivalents with respect to the number of PSUs that ultimately
vest. |
2016 Options Exercised and Stock Vested
Table |
The following table sets forth information
regarding the value realized by our named executive officers pursuant to the
exercise or vesting of equity awards during 2016:
|
Option Awards |
Stock Awards |
Name |
Number of Shares Acquired Upon
Exercise (#) |
Value Realized Upon Exercise 1 ($) |
Number of Shares Acquired Upon
Vesting (#) |
Value Realized Upon Vesting 2 ($) |
Raymond J. Lewis |
|
|
72,171 |
$ 2,142,411 |
Lori B. Wittman |
|
|
4,009 |
112,450 |
Timothy A. Doman |
|
|
9,165 |
257,031 |
Kristen M. Benson |
|
|
2,449 |
68,682 |
1 |
Value realized is the difference between the fair market
value of a share of our common stock on the day of exercise and the
exercise price of the option. |
2 |
Value realized is calculated by multiplying the number of
shares that vested by the closing price of our common stock on the vesting
date or, if the vesting occurred on a day the NYSE was closed for trading,
the immediately preceding trading
day. |
www.carecapitalproperties.com/investors
Table of Contents
40 |
|
Executive Compensation |
|
Employment and
Severance Agreements with Named Executive Officers
Our named executive officers are entitled
to receive severance benefits under existing agreements upon certain qualifying
terminations of employment (subject to any required payment delay pursuant to
Section 409A of the Code). Generally, these severance arrangements support
executive retention and continuity of management and provide replacement income
if an executive is terminated involuntarily other than for cause.
None of our executive officers is entitled
to severance benefits solely upon a change in control of our company, nor are
they entitled to any tax gross-ups with respect to payments made in connection
with a change in control. Consistent with our commitment to strong corporate
governance and responsiveness to our stockholders, our Guidelines on Governance
prohibit tax gross-up arrangements.
Employment Agreement with Mr.
Lewis |
We have entered into an employment
agreement with Mr. Lewis providing for an initial three-year term of employment,
which commenced as of August 17, 2015 (subject to automatic one-year renewals
following the initial three-year term, unless either party delivers notice of
non-renewal at least 90 days prior to a renewal date), with an annual base
salary of $750,000 (subject to review for increases, but not decreases, by the
Compensation Committee), a target annual bonus equal to 200% of base salary, and
a target long-term equity incentive award in respect of each year during the
employment period with a target grant date value equal to 200% of base salary.
The employment agreement also provided for an inaugural equity grant of our
restricted stock with a grant date value of $2,500,000 that will vest in three
equal annual installments, beginning on August 17, 2016, generally subject to
Mr. Lewiss continued employment.
Upon termination of Mr. Lewiss employment
by us without cause or by Mr. Lewis for good reason (as each term is defined in
the employment agreement), other than as a result of a notice by us of
non-renewal of the term of employment, the employment agreement generally
provides for:
|
|
✓ |
payment of accrued but unpaid annual base salary and vacation
pay through the date of termination, and any earned but unpaid annual
bonus for periods ending on, or prior to, the date of termination
(Accrued Obligations); |
✓ |
a lump sum cash severance payment equal to two times (or
2.5 times, if such termination occurs during the 12-month period
commencing on the date of a change in control (the Protected Period))
base salary plus target bonus; |
✓ |
full vesting of the inaugural equity grant of our restricted
stock described above; |
✓ |
accelerated vesting of any service-based long-term equity
incentive awards outstanding as of the date of termination that would have
vested if Mr. Lewis had remained employed for an additional 12 months
following the date of termination (or, if such termination occurs during
the Protected Period, full vesting of all long-term equity incentive
awards outstanding as of the date of termination, with performance-based
awards to vest based on the greater of target or actual performance as of
immediately prior to the date of termination, unless the level of
performance was previously determined); |
✓ |
a pro-rated annual bonus for the year of termination,
determined based on actual performance (or target performance, if such
termination occurs during the Protected Period); |
✓ |
health care welfare benefits reimbursement for 24 months;
and |
✓ |
such other benefits required to be paid or provided and that
Mr. Lewis is eligible to receive under our benefit plans (the Other
Benefits). |
|
|
Care Capital Properties 2017 Proxy
Statement
Table of Contents
|
Executive Compensation |
|
41 |
In the event that the circumstance giving
rise to good reason is a notice by us of non-renewal of the term of employment
(which the employment agreement restricts us from giving during the one-year
period following a change in control), the employment agreement provides for
limited severance benefits, which generally consist of:
|
|
✓ |
the Accrued
Obligations; |
✓ |
a lump sum cash severance payment
equal to one times base salary plus target bonus; |
✓ |
accelerated vesting of any
service-based long-term equity incentive awards outstanding as of the date
of termination that would have vested if Mr. Lewis had remained employed
for an additional 12 months following the date of
termination; |
✓ |
health care welfare benefits
reimbursement for 12 months; and |
✓ |
the Other Benefits. |
|
|
Upon a termination of Mr. Lewiss
employment due to his death or disability, the employment agreement provides
for:
|
|
✓ |
payment of the Accrued
Obligations; |
✓ |
a pro-rated annual bonus for the
year of termination, determined based on actual
performance; |
✓ |
full vesting of the inaugural equity
grant of our restricted stock; |
✓ |
accelerated vesting of any
service-based long-term equity incentive awards outstanding as of the date
of termination that would have vested if Mr. Lewis had remained employed
for an additional 12 months following the date of termination;
and |
✓ |
the Other Benefits. |
|
|
Upon termination of Mr. Lewiss employment
by us for cause or by Mr. Lewis without good reason, the employment agreement
will terminate without further obligations to Mr. Lewis, other than the
obligations to provide the Accrued Obligations (excluding, in the case of a
termination for cause, any earned but unpaid annual bonus for periods ending on,
or prior to, the date of termination) and the Other Benefits.
Mr. Lewiss receipt of severance payments
and benefits under the employment agreement is generally contingent on Mr. Lewis
executing a release of claims in favor of us and our affiliates.
The employment agreement subjects Mr.
Lewis to noncompetition, nonsolicitation, noninterference and assistance
covenants that remain in effect for a period of two years following any
termination of employment (except that the noncompetition and nonsolicitation of
certain current or proposed independent contractors, customers, tenants,
operators, managers, financial partners, vendors, suppliers, or other similar
business relations covenants are only in effect for one year following
termination of employment if the termination occurs as a result of a notice by
us of non-renewal of the term of employment). The employment agreement further
subjects Mr. Lewis to perpetual confidentiality and nondisparagement
covenants.
In addition to the foregoing, upon
termination of Mr. Lewiss employment due to death or disability (as such term
in defined in the employment agreement), Mr. Lewiss equity award agreements
provide for vesting in full of any shares of restricted stock or stock options
outstanding as of the date of termination and vesting at the target level of any
PSUs outstanding as of such date.
www.carecapitalproperties.com/investors
Table of Contents
42 |
|
Executive Compensation |
|
Employee Protection and Noncompetition Agreements with Ms.
Wittman,
Mr. Doman and Ms. Benson |
We have entered into employee protection
and noncompetition agreements with each of Ms. Wittman, Mr. Doman and Ms. Benson
(each, an executive). The employee protection and noncompetition agreements
provide for certain payments and benefits upon certain terminations of
employment, including certain terminations of employment following a change in
control.
Upon a termination of an executives
employment by us without cause or by the executive for good reason (as each term
is defined in the applicable employee protection and noncompetition agreement),
the employee protection and noncompetition agreements provide for:
|
|
✓ |
payment of accrued but unpaid base
salary through the date of termination, any earned but unpaid annual bonus
for periods ending on, or prior to, the date of termination, and all
amounts earned and owed (but unpaid) pursuant to our employee benefit
plans (including accrued and unpaid vacation) (Accrued
Amounts); |
✓ |
a lump sum cash severance payment equal to 1.5 times (or two
times, if such termination occurs within one year after the date of a
change in control) base salary plus target bonus for the year of
termination; |
✓ |
a pro-rated annual bonus for the year of termination,
determined based on actual performance (or target performance, if such
termination occurs within one year after the date of a change in control);
and |
✓ |
continuation of medical, dental and
vision benefits (or a medical, dental and vision benefits stipend) for 12
months (or 24 months, if such termination occurs within one year after the
date of a change in control) following the termination. |
|
|
An executives receipt of the payments and
benefits specified above (other than the first item) is contingent on his or her
execution, as applicable, of a release of claims in favor of us and our
affiliates.
Upon termination of an executives
employment due to death or disability, the employee protection and
noncompetition agreements provide for payment of the Accrued Amounts. Upon
termination of an executives employment by us for cause, or as a result of his
or her resignation without good reason, the applicable employee protection and
noncompetition agreement will terminate without further obligations by
us.
The employee protection and noncompetition
agreements subject each executive to noncompetition, nonsolicitation,
noninterference and assistance covenants that remain in effect for a period of
one year following any termination of employment. The employee protection and
noncompetition agreements further subject each executive to perpetual
confidentiality and nondisparagement covenants.
In addition to the foregoing, upon
termination of an executives employment by us without cause or by the executive
for good reason (as each term is defined in the applicable employee protection
and noncompetition agreement), certain of the executives respective equity
award agreements provide for (i) accelerated vesting of any shares of restricted
stock or stock options outstanding as of the date of termination that would have
vested if the executive had remained employed for an additional 12 months
following the date of termination, (ii) vesting at the greater of target or
actual performance levels of any PSUs outstanding as of such date, if such
termination occurs within one year after the date of a change in control, and
(iii) vesting at the target level of any PSUs outstanding as of such date, if
such termination occurs other than within one year after the date of a change in
control, pro-rated for the executives length of service during the applicable
performance period. In the case of the inaugural equity awards granted to each
executive in connection with our spin-off, the shares of restricted stock will
vest in full upon such termination. Upon termination of an executives
employment due to death or disability (as such term is defined in the applicable
employee protection and noncompetition agreement), the executives equity award
agreements provide for vesting in full of any shares of restricted stock or
stock options outstanding as of the date of termination and vesting at the
target level of any PSUs outstanding as of such date.
Care Capital
Properties 2017 Proxy Statement
Table of Contents
|
Executive Compensation |
|
43 |
Potential Payments
upon Termination or Change in Control
The following table presents the estimated
amount of compensation and benefits payable to each named executive officer in
the event of termination (other than for cause or with good reason) or a change
in control, assuming the applicable termination or change in control occurred as
of December 31, 2016. The calculations are intended to provide reasonable
estimates of the potential benefits payable. Receipt of benefits upon
termination is subject to the execution of a general release of claims by the
named executive officer or his or her beneficiary. Although our employment and
employee protection and noncompetition agreements with our named executive
officers contain certain restrictive covenants, including noncompetition and
non-solicitation provisions, no specific value to us has been ascribed to these
covenants in the table.
Name |
Termination Without
Cause or For Good Reason |
Termination Without
Cause or For Good Reason Within One Year Following Change in Control |
Change
in Control Without Termination |
Death or
Disability |
Non-Renewal of
Employment Agreement |
Raymond J. Lewis |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
1 |
$ |
4,657,500 |
|
$ |
5,821,875 |
|
|
|
|
|
|
|
$ |
2,328,750 |
|
Pro-rated Annual Bonus
2 |
|
1,576,883 |
|
|
1,552,500 |
|
|
|
|
$ |
1,576,883 |
|
|
|
|
Vesting of Equity Awards
3 |
|
2,364,800 |
|
|
3,056,425 |
|
$ |
1,832,750 |
|
|
3,056,425 |
|
|
1,752,975 |
|
Continuation of Health Care |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits or Equivalent Sum 4 |
|
44,096 |
|
|
44,096 |
|
|
|
|
|
|
|
|
22,048 |
|
Total* |
$ |
8,643,279 |
|
$ |
10,474,896 |
|
$ |
1,832,750 |
|
$ |
4,633,308 |
|
$ |
4,103,773 |
|
Lori B. Wittman |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
1 |
$ |
1,319,625 |
|
$ |
1,759,500 |
|
|
|
|
|
|
|
|
|
|
Pro-rated Annual Bonus
2 |
|
535,308 |
|
|
439,875 |
|
|
|
|
|
|
|
|
|
|
Vesting of Equity Awards
3 |
|
1,217,792 |
|
|
1,599,225 |
|
$ |
865,025 |
|
$ |
1,599,225 |
|
|
|
|
Continuation of Health Care |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits or Equivalent Sum 4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total* |
$ |
3,072,725 |
|
$ |
3,798,600 |
|
$ |
865,025 |
|
$ |
1,599,225 |
|
|
|
|
Timothy A. Doman |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
1 |
$ |
1,319,625 |
|
$ |
1,759,500 |
|
|
|
|
|
|
|
|
|
|
Pro-rated Annual Bonus
2 |
|
535,308 |
|
|
439,875 |
|
|
|
|
|
|
|
|
|
|
Vesting of Equity Awards
3 |
|
1,645,192 |
|
|
2,168,550 |
|
$ |
1,434,350 |
|
$ |
2,168,550 |
|
|
|
|
Continuation of Health Care |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits or Equivalent Sum 4 |
|
21,635 |
|
|
43,270 |
|
|
|
|
|
|
|
|
|
|
Total* |
$ |
3,521,760 |
|
$ |
4,411,195 |
|
$ |
1,434,350 |
|
$ |
2,168,550 |
|
|
|
|
Kristen M. Benson |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
1 |
$ |
1,086,750 |
|
$ |
1,449,000 |
|
|
|
|
|
|
|
|
|
|
Pro-rated Annual Bonus
2 |
|
440,842 |
|
|
362,250 |
|
|
|
|
|
|
|
|
|
|
Vesting of Equity Awards
3 |
|
950,850 |
|
|
1,383,800 |
|
$ |
833,150 |
|
$ |
1,383,800 |
|
|
|
|
Continuation of Health Care |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits or Equivalent Sum 4 |
|
6,699 |
|
|
13,398 |
|
|
|
|
|
|
|
|
|
|
Total* |
$ |
2,485,141 |
|
$ |
3,208,448 |
|
$ |
833,150 |
|
$ |
1,383,800 |
|
|
|
|
* |
Excludes the Accrued
Obligations, in the case of Mr. Lewis, and the Accrued Amounts, in the case of
each of Ms. Wittman, Mr. Doman and Ms. Benson. Also excludes benefits from
third-party payors under our employer-paid life and disability insurance plans
in the event of the named executive officers death or disability. |
www.carecapitalproperties.com/investors
Table of Contents
44 |
|
Executive Compensation |
|
1 The named executive officers
are entitled to receive a lump sum cash severance payment equal to the following
multiples of base salary plus target bonus:
|
Without Cause or For Good Reason |
|
Without Cause or For Good Reason Within One
Year Following Change in Control |
|
Non-Renewal of Employment Agreement |
Mr.
Lewis |
2x |
|
|
2.5x |
|
|
1x |
|
Ms.
Wittman, Mr. Doman and Ms. Benson |
1.5x |
|
|
2x |
|
|
|
|
2 |
Determined based on actual
performance, in the event of termination without cause or for good reason
or death or disability, or target performance, in the event of termination
without cause or for good reason within one year of a change in
control. |
3 |
Represents the value of the
acceleration of any unvested restricted stock, stock options and PSUs,
based on the closing price of our common stock on December 30, 2016
($25.00). With respect to stock options, amounts reported reflect the
spread, or difference between the exercise price and closing price on
December 30, 2016. |
|
Pursuant to Mr. Lewiss employment
agreement or the terms of the named executive officers award agreements,
as applicable: |
● |
In the event of
termination without cause or for good reason other than within one year
following a change in control, (i) each named executive officer would be
treated as having one additional year of service for purposes of
accelerated vesting of any outstanding unvested restricted stock or stock
options, other than the inaugural grants of restricted stock, which would
vest in full, and (ii) a pro-rated portion of each named executive
officers outstanding PSUs would immediately vest at the target level (and
Mr. Lewis would be treated as having one additional year of service for
purposes of determining the pro-rated portion). |
● |
In the event of termination without
cause or for good reason within one year following a change in control,
(i) each named executive officers outstanding unvested restricted stock
and stock options would vest in full and (ii) each named executive
officers outstanding PSUs would immediately vest at the greater of target
or actual performance levels. |
● |
In the event of a change in control
without termination, (i) each named executive officers unvested
restricted stock and stock options outstanding as of December 31, 2016,
other than the inaugural grants of restricted stock, would vest in
full and (ii) the Compensation Committee would have discretion to
accelerate or determine an appropriate adjustment for each named executive
officers outstanding PSUs. The table above assumes that the Compensation
Committee exercised its discretion to vest outstanding PSUs at the target
level. |
● |
In the event of death or disability,
(i) each named executive officers outstanding unvested restricted stock
and stock options would vest in full and (ii) each named executive
officers outstanding PSUs would immediately vest at the target
level. |
● |
In the event of non-renewal of Mr.
Lewiss employment agreement, (i) Mr. Lewis would be treated as having one
additional year of service for purposes of accelerated vesting of any
unvested restricted stock or stock options, and (ii) a pro-rated portion
of Mr. Lewiss outstanding PSUs would immediately vest at the target level
(and Mr. Lewis would be treated as having one additional year of service
for purposes of determining the pro-rated
portion). |
4 |
Mr. Lewis is entitled to health care
welfare benefits reimbursement for 24 months in the event of termination
without cause or for good reason (including within one year following a
change in control) and 12 months in the event of non-renewal of his
employment agreement. Each of Ms. Wittman, Mr. Doman and Ms. Benson is
entitled to continuation of medical, dental and vision benefits (or a
medical, dental and vision benefits stipend) for 12 months in the event of
termination without cause or for good reason and 24 months if such
termination occurs within one year following a change in
control. |
Pension, Retirement or Similar
Benefits |
We have a qualified defined contribution
retirement savings plan (which we refer to as our 401(k) plan), pursuant to
which our employees, including our named executive officers, are able to
contribute a percentage of their annual compensation on a pre- and post-tax
basis, up to the limits prescribed by the Internal Revenue Service. Each pay
period, we offer a matching contribution for eligible employees who participate
in the 401(k) plan of 100% of the first 1% and 50% of the next 1% to 5% of
eligible compensation contributed (for a total matching contribution of up to
3.5% of an employees eligible compensation). Generally, eligible compensation
used for purposes of calculating contributions under the 401(k) plan is the
amount paid to the employee as base salary and overtime earnings.
Care Capital
Properties 2017 Proxy Statement
Table of
Contents
Equity Compensation
Plan Information
The following table summarizes information
with respect to our equity compensation plans as of December 31,
2016:
Plan Category |
|
(a) Number of Securities
to be Issued upon Exercise of Outstanding Options,
Warrants and Rights |
|
(b) Weighted Average Exercise
Price of Outstanding Options, Warrants and Rights |
|
(c) Number
of Securities Remaining Available for Future Issuance Under
Equity Compensation Plans (Excluding Securities Reflected in
Column (a)) |
Equity compensation plans approved by
stockholders 1 |
|
|
1,543,337 |
|
|
$ |
28.74 |
|
|
|
7,635,655 |
|
Equity compensation plans not
approved by stockholders |
|
|
|
|
|
|
N/A |
|
|
|
|
|
Total |
|
|
1,543,337 |
|
|
$ |
28.74 |
|
|
|
7,635,655 |
|
1 |
These plans, which were approved by
Nationwide Health Properties, LLC, a wholly owned subsidiary of Ventas and
our sole stockholder prior to our spin-off, consist of: (a) the 2015
Incentive Plan; (b) the Director Deferred Plan; and (c) the Employee and
Director Stock Purchase Plan. Under the Director Deferred Plan, our
non-employee directors may receive, in lieu of all or a portion of their
director fees, units that will be settled into shares of our common stock
on a one-for-one basis upon termination of service. Under the Employee and
Director Stock Purchase Plan, our employees and directors may purchase
shares of our common stock at a discount to the market value. As of
December 31, 2016, 6,140,235 shares were available for grant under the
2015 Incentive Plan, 495,420 shares were available for issuance under the
Director Deferred Plan, and 1,000,000 shares were available for issuance
under the Employee and Director Stock Purchase Plan. In connection with
the spin-off, outstanding and unvested shares of Ventas restricted stock
owned by our employees were converted into an aggregate of 125,183 shares
of our restricted stock and outstanding and unexercised options to
purchase Ventas common stock owned by our employees were converted into an
aggregate of 1,047,501 options to purchase our common stock in a manner
intended to preserve the intrinsic value of the stock or
options. |
www.carecapitalproperties.com/investors
Table of
Contents
Stock
Ownership
Directors,
Director-Nominees and Executive Officers
Beneficial Ownership of Our Common
Stock |
The following table shows, as of March 20,
2017, the number of shares of our common stock beneficially owned by each of our
directors and director-nominees, each of our named executive officers, and all
of our directors, director-nominees and executive officers as a group. For
purposes of this table, shares beneficially owned includes shares over which a
person has or shares voting power or investment power (whether or not vested).
Except as otherwise indicated in the footnotes to the table, the named persons
have sole voting and investment power over the shares of our common stock shown
as beneficially owned by them. Each named person is deemed to be the beneficial
owner of shares of our common stock that may be acquired within 60 days of March
20, 2017 through the exercise of stock options or the settlement of stock units,
if any, and such shares are deemed to be outstanding for the purpose of
computing the percentage of the class beneficially owned by such person.
However, any such shares are not deemed to be outstanding for the purpose of
computing the percentage of the class beneficially owned by any other person.
Subject to the preceding sentence, percentages are based on 84,049,574 shares of
our common stock outstanding on March 20, 2017.
Name
of Beneficial Owner |
|
Vested
and Unvested Shares
of Common Stock |
|
|
Shares
Subject to Options Exercisable within 60
Days |
|
Stock
Units That May Be Settled
within 60 Days 1 |
|
Total
Shares of Common Stock Beneficially Owned |
|
Percent of
Class |
Kristen M. Benson |
|
63,458 |
|
+ |
53,657 |
+ |
|
= |
117,115 |
|
* |
Douglas Crocker II |
|
75,119 |
|
+ |
|
+ |
4,431 |
= |
79,550 |
|
* |
Timothy A. Doman |
|
101,734 |
(2) |
+ |
173,144 |
+ |
|
= |
274,878 |
|
* |
John S. Gates, Jr. |
|
27,006 |
(3) |
+ |
|
+ |
|
= |
27,006 |
|
* |
Ronald G. Geary |
|
10,519 |
|
+ |
|
+ |
|
= |
10,519 |
|
* |
Raymond J. Lewis |
|
244,868 |
|
+ |
983,730 |
+ |
|
= |
1,228,598 |
|
1.4% |
Jeffrey A. Malehorn |
|
10,079 |
|
+ |
|
+ |
1,820 |
= |
11,899 |
|
* |
Dale Anne Reiss |
|
9,091 |
(4) |
+ |
|
+ |
|
= |
9,091 |
|
* |
Lori B. Wittman |
|
78,753 |
(5) |
+ |
74,053 |
+ |
|
= |
152,806 |
|
* |
John L. Workman |
|
22,466 |
|
+ |
|
+ |
|
= |
22,466 |
|
* |
All
directors and executive officers as a group (10 persons) |
|
643,093 |
|
+ |
1,284,584 |
+ |
6,251 |
= |
1,933,928 |
|
2.3% |
* |
Less than 1%. |
1 |
Represents units granted under the
Director Deferred Plan in lieu of director fees pursuant to the directors
deferral election. Such units will be settled into shares of our common
stock on a one-for-one basis upon termination of service, subject to the
directors deferral election. |
2 |
Includes 4,435 shares held in trust,
as to which Mr. Doman is the trustee. |
3 |
Includes 20,290 shares held by
Better Point Partners, LP, as to which Mr. Gates is the general partner.
|
Care Capital
Properties 2017 Proxy Statement
Table of
Contents
4 |
Includes 2,375 shares held in trust,
as to which Ms. Reiss is the trustee. |
5 |
Includes 560 shares held in trust,
as to which Ms. Wittman is the trustee. |
Director and Executive Officer 10b5-1
Plans |
From time to time, certain of our
directors and executive officers may adopt non-discretionary, written trading
plans that comply with Rule 10b5-1 under the Exchange Act (10b5-1 plans).
These 10b5-1 plans permit our directors and executive officers to monetize their
equity-based compensation in an automatic and non-discretionary manner over time
and are generally adopted for estate, tax and financial planning purposes. Our
Securities Trading Policy requires preclearance of any 10b5-1 plan by our legal
department and provides that directors and executive officers may enter into,
modify or terminate a 10b5-1 plan only during an open trading window and while
not in possession of material non-public information. Moreover, any such 10b5-1
plan must include a waiting period of no less than 30 days between establishment
or modification of the plan and any transaction pursuant to the plan. In
addition, our Securities Trading Policy generally prohibits our directors and
executive officers from entering into overlapping 10b5-1 plans.
We expect to disclose a directors or
executive officers entrance into, and modification or termination of, a 10b5-1
plan, and sales thereunder, on the Investors section of our website at
www.carecapitalproperties.com/investors. Information on our website is not a part of this Proxy
Statement.
Principal
Stockholders
The following table shows, as of March 20,
2017, the number of shares of our common stock beneficially owned by each person
or group known by us to be the beneficial owner of more than 5% of the
outstanding shares of our common stock. For purposes of this table, shares
beneficially owned includes shares over which a person has or shares voting
power or investment power. Except as otherwise indicated in the footnotes to the
table, the named persons or groups have sole voting and investment power over
the shares of our common stock shown as beneficially owned by them.
Name and Address of Beneficial
Owner |
|
Common Stock Beneficially Owned |
|
Percent of Class 1 |
The Vanguard Group 100 Vanguard Boulevard Malvern, PA
19355 |
|
|
14,490,348 2 |
|
|
17.2% |
BlackRock, Inc. 55
East 52nd Street New York, NY 10055 |
|
|
8,662,770 3 |
|
|
10.3% |
Goldman Sachs Asset
Management, L.P. 200 West Street New York, NY 10282 |
|
|
7,491,570 4 |
|
|
8.9% |
Vanguard Specialized
FundsVanguard REIT Index Fund 100 Vanguard Boulevard Malvern, PA
19355 |
|
|
6,376,206 5 |
|
|
7.6% |
Invesco Ltd. 1555
Peachtree Street NE Suite 1800 Atlanta, GA 30309 |
|
|
5,101,471 6 |
|
|
6.1% |
* |
Represents less than
1%. |
1 |
Percentages are based on 84,049,574
shares of our common stock outstanding on March 20, 2017. |
2 |
Based solely on information
contained in a Schedule 13G/A filed by The Vanguard Group, Inc.
(Vanguard) on February 10, 2017. Vanguard reported that, as of December
31, 2016, it had sole voting power over 154,683 shares of our common
stock, shared voting power over 99,925 shares of our common stock, sole
dispositive power over 14,345,130 shares of our common stock, and shared
dispositive power over 145,218 shares of our common stock. Vanguard is an
investment adviser registered under Section 203 of the Investment Advisers
Act of 1940. Vanguard Fiduciary Trust Company, a wholly owned subsidiary
of Vanguard, is the beneficial owner of 45,293 shares of our common stock
as a result of its serving as investment manager of collective trust
accounts. Vanguard Investments Australia, Ltd., a wholly owned subsidiary
of Vanguard, is the beneficial owner of 209,315 shares of our common stock
as a result of its serving as investment manager of Australian investment
offerings. |
3 |
Based solely on information
contained in a Schedule 13G/A filed by BlackRock, Inc., for itself and for
certain of its affiliates that comprise a 13D group (collectively,
BlackRock), on January 12, 2017. BlackRock reported that, as of December
31, 2016, it had sole voting power over 8,319,932 shares of our common
stock and sole dispositive power over 8,662,770 shares of our common
stock. BlackRock, Inc. is a parent holding company. |
4 |
Based solely on information
contained in a Schedule 13G filed jointly by Goldman Sachs Asset
Management L.P. and GS Investment Strategies LLC (collectively, Goldman)
on January 27, 2017. Goldman reported that, as of December 31, 2016, it
had shared voting power over 7,282,344 shares of our common stock and
shared dispositive power over 7,491,570 shares of our common stock.
Goldman is an investment adviser registered under Section 203 of the
Investment Advisers Act of 1940. |
www.carecapitalproperties.com/investors
Table of
Contents
5 |
Based solely on information
contained in a Schedule 13G/A filed by Vanguard Specialized FundsVanguard
REIT Index Fund (Vanguard REIT Fund) on February 13, 2017. Vanguard REIT
Fund reported that, as of December 31, 2016, it had sole voting power over
6,376,206 shares of our common stock. Vanguard REIT Fund is an investment
company registered under Section 8 of the Investment Company Act of
1940. |
6 |
Based solely on information
contained in a Schedule 13G/A filed by Invesco Ltd., for itself and on
behalf of certain of its subsidiaries (collectively, Invesco), on
February 7, 2017. Invesco reported that, as of December 30, 2016, it had
sole voting power over 2,678,495 shares of our common stock and sole
dispositive power over 5,101,471 shares of our common stock. Invesco Ltd.
is an investment adviser registered under Section 203 of the Investment
Advisers Act of 1940 and a parent holding company.
|
Section
16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires
our directors, officers (as defined in Rule 16a-1 under the Exchange Act) and
persons who own more than 10% of the outstanding shares of our common stock to
file reports of beneficial ownership and changes in such ownership with the SEC.
Based solely on our records and on written representations from certain
reporting persons, we believe that each person who, at any time during 2016, was
a director or officer (as defined in Rule 16a-1 under the Exchange Act) of our
company or beneficially owned more than 10% of the outstanding shares of our
common stock timely filed all reports required to be filed by Section 16(a) of
the Exchange Act.
Care Capital
Properties 2017 Proxy Statement
Table of
Contents
Other
Information
Quorum
The holders of a majority of the shares of
our common stock outstanding as of the close of business on the record date for
the Annual Meeting, March 20, 2017, must be present in person or represented by
proxy to constitute a quorum to transact business at the Annual Meeting.
Stockholders who abstain from voting and broker non-votes are counted for
purposes of establishing a quorum. A broker non-vote occurs when a beneficial
owner does not provide voting instructions to the beneficial owners broker or
custodian with respect to a proposal on which the broker or custodian does not
have discretionary authority to vote.
Who Can
Vote
Only our stockholders of record at the
close of business on the record date are entitled to vote at the Annual Meeting.
As of that date, 84,049,574 shares of our common stock, par value $0.01 per
share, were outstanding. Each share of our common stock entitles the owner to
one vote on each matter properly brought before the Annual Meeting. However,
certain shares designated as Excess Shares (generally any shares owned by a
beneficial owner in excess of 9.0% of our outstanding common stock) or as
Special Excess Shares pursuant to our Amended and Restated Certificate of
Incorporation may not be voted by the record owner of those shares, but instead
will be voted in accordance with Article IX of our Amended and Restated
Certificate of Incorporation.
A list of all stockholders entitled to
vote at the Annual Meeting will be available for inspection by any stockholder
for any purpose reasonably related to the meeting at the Annual Meeting and
during ordinary business hours for the ten days preceding the meeting at our
principal executive offices located at 191 North Wacker Drive, Suite 1200,
Chicago, Illinois 60606.
www.carecapitalproperties.com/investors
Table of
Contents
How to
Vote
You may vote your shares in one of several
ways, depending on how you own your shares:
If you own shares registered in your name
(a stockholder of record), you may:
|
Vote your shares by proxy by calling
(800) 690-6903, 24 hours a day, seven days a week until 11:59 p.m. Eastern
time on May 17, 2017. Please have your proxy card in hand when you call.
The telephone voting system has easy-to-follow instructions and provides
confirmation that the system has properly recorded your
vote. |
|
OR |
|
Vote your shares by proxy via the
website www.proxyvote.com, 24 hours a
day, seven days a week until 11:59 p.m. Eastern time on May 17, 2017.
Please have your proxy card in hand when you access the website. The
website has easy-to-follow instructions and provides confirmation that the
system has properly recorded your vote. |
|
OR |
|
If you have requested or receive
paper copies of our proxy materials by mail, vote your shares by proxy by
signing, dating and returning the proxy card in the postage-paid envelope
provided. If you vote by telephone or over the Internet, you do not need
to return your proxy card by mail. |
|
OR |
|
Vote your shares by attending the
Annual Meeting in person and depositing your proxy card at the
registration desk (if you have requested paper copies of our proxy
materials by mail) or completing a ballot that will be distributed at the
Annual Meeting. |
If you own shares registered in the name
of a broker, bank or other custodian (a beneficial owner), follow the
instructions provided by your broker, bank or custodian to instruct it how to
vote your shares. If you want to vote your shares in person at the Annual
Meeting, contact your broker, bank or custodian to obtain a legal proxy or
brokers proxy card that you should bring to the Annual Meeting to demonstrate
your authority to vote.
If you do not instruct your broker, bank
or custodian how to vote, it will have discretionary authority, under current
NYSE rules, to vote your shares in its discretion on the ratification of the
selection of KPMG LLP as our independent registered public accounting firm for
fiscal year 2017 (Proposal 2). However, your broker, bank or custodian will not
have discretionary authority to vote on the election of directors (Proposal 1).
As a result, if you do not provide instructions to your broker, bank or
custodian, your shares will not be voted on Proposal 1.
All shares
that have been properly voted by proxy and not revoked will be voted at the
Annual Meeting in accordance with the instructions contained in the proxy.
Shares represented by proxy cards that are signed and returned, but do not
contain any voting instructions, will be voted consistent with the Boards
recommendations:
|
|
✓ |
FOR the election of all
director-nominees named in this Proxy Statement (Proposal 1); |
✓ |
FOR the ratification of the
selection of KPMG LLP as our independent registered public accounting firm
for fiscal year 2017 (Proposal 2); and |
✓ |
In the discretion of the proxy holders, on such other business
as may properly come before the Annual Meeting. |
|
|
Care Capital
Properties 2017 Proxy Statement
Table of
Contents
Questions
and Answers
What is a proxy? What
is a proxy statement?
A proxy is a legal designation of a person
to vote on your behalf. A proxy statement is the document we must give to you
when we ask you to sign a proxy. It is required by SEC rules. Our Board has
designated our Chief Executive Officer, Raymond J. Lewis, and our Executive Vice
President and Chief Financial Officer, Lori B. Wittman, as proxies for the
Annual Meeting. By completing and returning the enclosed proxy card, you are
giving each of these officers the authority to vote your shares in the manner
you indicate on your proxy card.
Who can vote at the
Annual Meeting?
You are qualified to vote on all matters
presented to the stockholders at the Annual Meeting if you owned shares of our
common stock at the close of business on the record date, March 20,
2017.
What is the difference
between a stockholder of record and a beneficial owner?
The difference relates to how your
ownership of our common stock is recorded. If your ownership is recorded in your
name with our stock transfer agent, you are a stockholder of record. If
your shares are held by (and in the name of) a broker, bank or other custodian,
you are a beneficial owner of those shares.
What do I need in
order to attend the Annual Meeting in person?
You are entitled to attend the Annual
Meeting only if you were a stockholder of our company as of the close of
business on the record date, March 20, 2017, or you hold a valid proxy for the
meeting. In order to be admitted to the Annual Meeting, you must present photo
identification (such as a drivers license) and proof of ownership of shares of
our common stock on the record date. Proof of ownership can be accomplished
through the following:
|
|
✓ |
a brokerage statement or letter from
your broker or custodian with respect to your ownership of shares of our
common stock on March 20, 2017; |
✓ |
the Notice of Internet Availability
of Proxy Materials; |
✓ |
a printout of the proxy distribution
e-mail (if you receive your materials electronically); |
✓ |
a proxy card; |
✓ |
a voting instruction form;
or |
✓ |
a legal proxy provided by your
broker, bank or other custodian. |
|
|
For the safety and security of our
stockholders, we will be unable to admit you to the Annual Meeting if you do not
present photo identification and proof of ownership of shares of our common
stock or if you otherwise refuse to comply with our security
procedures.
How do I revoke a
vote?
If you are a stockholder of record, you
can revoke your prior vote by proxy if you:
|
|
✓ |
execute and return a later-dated
proxy card before your proxy is voted at the Annual
Meeting; |
✓ |
vote by telephone or over the
Internet no later than 11:59 p.m. Eastern time on May 17,
2017; |
✓ |
deliver a written notice of
revocation to our Corporate Secretary at our principal executive offices
located at 191 North Wacker Drive, Suite 1200, Chicago, Illinois 60606,
before your proxy is voted at the Annual Meeting; or |
✓ |
attend the Annual Meeting and vote
in person (attendance by itself will not revoke your prior vote by
proxy). |
|
|
www.carecapitalproperties.com/investors
Table
of Contents
If you are a beneficial owner, follow the
instructions provided by your broker, bank or other custodian to revoke your
vote by proxy.
How are proxies
solicited, and what is the cost?
We will bear the cost of soliciting
proxies by or on behalf of our Board. In addition to solicitation through the
mail, proxies may be solicited in person or by telephone or electronic
communication by our directors, officers and employees, none of whom will
receive additional compensation for these services. We may also, in the future,
engage a proxy solicitor to distribute and solicit proxies on our behalf and
will pay the proxy solicitor a fee plus reimbursement of reasonable
out-of-pocket expenses for those services. We will also reimburse brokers and
other custodians for their reasonable out-of-pocket expenses incurred in
connection with distributing forms of proxies and proxy materials to beneficial
owners of our common stock.
What is
householding?
To eliminate duplicate mailings, conserve
natural resources and reduce our printing costs and postage fees, we engage in
householding and will deliver a single set of proxy materials (other than proxy
cards, which will remain separate) to our stockholders who share the same
address and who have the same last name or who consent in writing, unless we
have received contrary instructions. If your household receives multiple copies
of our proxy materials, you may request to receive only one copy by contacting
Broadridge Financial Solutions, Inc. at (800) 542-1061 or in writing at
Householding Department, 51 Mercedes Way, Edgewood, NY 11717. Similarly, if your
household receives only one copy of our proxy materials, you may request an
additional copy by contacting Broadridge as indicated above. We will deliver the
requested additional copy promptly following our receipt of your
request.
Other
Matters
The affirmative vote of a majority of the
shares present in person or represented by proxy at the Annual Meeting will be
necessary to approve any other proposal that may properly come before the Annual
Meeting. Accordingly, abstentions will have the same effect as votes against any
such proposal, and broker non-votes will have no effect.
Our Board is not aware of any matters that
are expected to come before the Annual Meeting other than those set forth in the
Notice of Meeting and described in this Proxy Statement. If any other matter
should properly come before the Annual Meeting, the persons named in the
accompanying form of proxy, or their substitutes, will have discretionary voting
authority with respect to any such stockholder proposal.
No dissenters or appraisal rights are
available with respect to the proposals presently being submitted to the
stockholders for their consideration at the Annual Meeting.
Requirements for Submission of Stockholder Proposals, Director
Nominations and Other Business
Under SEC rules, any stockholder proposal
intended to be presented at the 2018 Annual Meeting of Stockholders must be
received by us at our principal executive offices at 191 North Wacker Drive,
Suite 1200, Chicago, Illinois 60606, not later than December 8, 2017 and meet
the requirements of our Bylaws and Rule 14a-8 under the Exchange Act to be
considered for inclusion in our proxy materials for that meeting. Any such
proposal should be sent to the attention of our Corporate Secretary.
Under our Bylaws, stockholders must follow
certain procedures to introduce an item for business or to nominate a person for
election as a director at an annual meeting. For director nominations and other
stockholder proposals, the stockholder must give timely notice in writing to our
Corporate Secretary at our principal executive offices and such proposal must be
a proper subject for stockholder action. To be timely, we must receive notice of
a stockholders intention to make a nomination or to propose an item of business
at our 2018 Annual Meeting of Stockholders at least 120 days, but not more than
150 days, prior to the anniversary of the date of the Annual Meeting (May 18,
2018). As such, any notice not received between December 19, 2017 and January
18, 2018 will be considered untimely. However, if we hold our 2018 Annual
Meeting of Stockholders more than 30 days before or after such anniversary date,
we must receive the notice not earlier than the 150th day prior to the 2018
Annual Meeting date, and not later than the 120th day prior to the 2018 Annual
Meeting date or the tenth day following the date on which we first publicly
announce the date of the 2018 Annual Meeting, whichever occurs later.
Care Capital
Properties 2017 Proxy Statement
Table of
Contents
For any other meeting, we must receive
notice of a stockholders intention to make a nomination or to propose an item
of business not later than the 30th day prior to the date of such meeting or the
tenth day following the date on which we first publicly announce the date of
such meeting, whichever occurs later.
Notices relating to director nominations
and other stockholder proposals must include (among other information, as
specified in our Bylaws):
|
|
✓ |
as to each person proposed to be nominated for election as a
director, all information relating to that person that would be required
to be disclosed in connection with the solicitation of proxies for
election as a director pursuant to Section 14 of the Exchange Act; |
✓ |
as to each other item of business, a brief description of such
business, the stockholders reasons for proposing such business and any
material interest that the stockholder or any of the stockholders
associates may have in such business; |
✓ |
as to the stockholder giving the notice, the stockholders
associates and any proposed director-nominee: the name and address of such
person; the class, series and number of all shares of our capital stock
owned by such person (and the name of the record holder, if beneficially
owned), the date the shares were acquired and any short interest of such
person in our securities; whether and to what extent such person has
engaged in any hedging or derivative transactions in our securities or has
entered into any proxy, contract or understanding relating to voting our
securities during the preceding 12 months; and the investment strategy or
objective of such person; |
✓ |
to the extent known by the stockholder
giving the notice, the name and address of any other stockholder
supporting the proposed director-nominee or other business; and |
|
|
✓ |
a
representation that the stockholder giving the notice intends to appear in
person or by proxy at the meeting. |
|
|
The persons appointed as proxies for our
2017 Annual Meeting will have discretionary voting authority with respect to any
director nomination or other stockholder proposal that properly comes before the
meeting.
Additional Information
A copy of our 2016 Form 10-K and our 2016
Annual Letter to Shareholders accompanies this Proxy Statement. Stockholders may
also obtain a copy of our 2016 Form 10-K, excluding exhibits, without charge,
upon request to our Corporate Secretary at Care Capital Properties, Inc., 191
North Wacker Drive, Suite 1200, Chicago, Illinois 60606. Copies of the exhibits
to our 2016 Form 10-K will be provided to any requesting stockholder, provided
that such stockholder agrees to reimburse us for our reasonable costs to provide
those exhibits.
By Order of the Board of
Directors,
Raymond J.
Lewis
Chief Executive
Officer
Chicago, Illinois
April 7,
2017
www.carecapitalproperties.com/investors
Table of
Contents
Non-GAAP Financial
Measures
Reconciliation
Normalized Funds From Operations*
|
For the Twelve Months Ended
December 31, 2016 |
|
(in
thousands, except per share amounts) |
Net income attributable to CCP |
|
$ |
122,743 |
|
|
Net income attributable to
CCP per share |
|
$ |
1.46 |
|
|
Adjustments: |
|
|
|
|
|
Real estate
depreciation and amortization |
|
|
106,803 |
|
|
Real estate
depreciation related to noncontrolling interests |
|
|
(139 |
) |
|
Impairment on real
estate investments and goodwill |
|
|
18,157 |
|
|
Loss (gain) on real
estate dispositions |
|
|
(2,894 |
) |
|
Subtotal: FFO
add-backs |
|
|
121,927 |
|
|
Subtotal: FFO add-backs per share |
|
$ |
1.46 |
|
|
FFO (NAREIT) attributable to CCP |
|
$ |
244,670 |
|
|
FFO (NAREIT) attributable to
CCP per share |
|
$ |
2.92 |
|
|
Adjustments: |
|
|
|
|
|
Income tax
expense |
|
|
752 |
|
|
Deal
costs |
|
|
3,086 |
|
|
Amortization of
other intangibles |
|
|
688 |
|
|
Loss on
extinguishment of debt |
|
|
5,461 |
|
|
Net gain on lease
termination |
|
|
(7,298 |
) |
|
Impairment on
goodwill |
|
|
3,636 |
|
|
Costs related to the
spin |
|
|
1,605 |
|
|
Other non-cash
items, net |
|
|
2,241 |
|
|
Subtotal: normalized FFO add-backs |
|
|
10,171 |
|
|
Subtotal: normalized FFO add-backs per share |
|
$ |
0.12 |
|
|
Normalized FFO attributable to CCP |
|
$ |
254,841 |
|
|
Normalized FFO attributable
to CCP per share |
|
$ |
3.05 |
|
|
|
* |
Totals and per share amounts may not
add due to rounding. |
www.carecapitalproperties.com/investors
Table of
Contents
Total
Net Operating Income
|
For the Twelve Months Ended
December 31, 2016 |
|
(In
thousands) |
Net
Income |
|
$ |
122,765 |
|
|
Adjustments: |
|
|
|
|
|
Real estate services fee
income |
|
|
(6,595 |
) |
|
Interest and other
income |
|
|
(2,073 |
) |
|
Net gain on lease
termination |
|
|
(7,298 |
) |
|
Interest |
|
|
50,168 |
|
|
Depreciation and
amortization |
|
|
107,561 |
|
|
Impairment on real
estate investments and goodwill |
|
|
21,794 |
|
|
General, administrative
and professional fees |
|
|
34,827 |
|
|
Deal
costs |
|
|
3,086 |
|
|
Loss on extinguishment
of debt |
|
|
5,461 |
|
|
Other expenses,
net |
|
|
4,384 |
|
|
Income
tax expense |
|
|
752 |
|
|
Gain on
real estate dispositions |
|
|
(2,894 |
) |
|
NOI |
|
|
331,938 |
|
|
|
|
Addbacks: |
|
|
|
|
|
Real
estate services fee income |
|
|
6,595 |
|
|
Interest and other income |
|
|
2,073 |
|
|
Total NOI |
|
$ |
340,606 |
|
|
Care Capital
Properties 2017 Proxy Statement
Table of
Contents
Net
Debt to Adjusted EBITDA
|
For
the Twelve Months Ended December 31, 2016 |
|
(Dollars
in thousands) |
Net income |
|
$ |
122,765 |
|
|
Adjustments for investments and dispositions
during the period |
|
|
(1,829 |
) |
|
Adjusted
net income |
|
|
120,936 |
|
|
Add back: |
|
|
|
|
|
Interest |
|
|
50,168 |
|
|
Income
tax expense |
|
|
752 |
|
|
Depreciation and amortization |
|
|
107,561 |
|
|
Impairment on real estate investments and goodwill |
|
|
21,794 |
|
|
Stock-based compensation |
|
|
6,941 |
|
|
Deal
costs |
|
|
3,086 |
|
|
Loss on
extinguishment of debt |
|
|
5,461 |
|
|
Gain on
real estate dispositions |
|
|
(2,894 |
) |
|
Net
gain on lease termination |
|
|
(7,298 |
) |
|
Acquisition depreciation |
|
|
1,833 |
|
|
Transition services fee expense |
|
|
1,605 |
|
|
Other
non-cash items, net |
|
|
2,126 |
|
|
Adjusted
EBITDA |
|
$ |
312,071 |
|
|
As of December 31, 2016: |
|
|
|
|
|
Debt |
|
$ |
1,414,534 |
|
|
Unamortized debt issuance costs |
|
|
18,466 |
|
|
Cash |
|
|
(15,813 |
) |
|
Net
debt (adjusted for unamortized debt issuance costs) |
|
$ |
1,417,187 |
|
|
Net
debt to Adjusted EBITDA |
|
|
4.5x |
|
|
www.carecapitalproperties.com/investors
Table of
Contents
2017
ANNUAL MEETING OF
STOCKHOLDERS
191 North Wacker Drive
Conference Center (10th Floor)
Chicago, Illinois 60606
DRIVING
DIRECTIONS
From the North and Northwest (via I-90/94E) and the South and Southeast (via I-90/94W):
Take exit 51C Washington Blvd E. Turn left (if coming from the North) or right (if coming from the South). Turn left onto North Wacker Drive. 191 North Wacker Drive is a few blocks north on North Wacker Drive on the right.
From the Southwest (via I-55N):
Take I-55N to I-90/94W. Merge onto I-90/94W. Follow the instructions above from I-90/94W.
From the West (via I-290E):
Take I-290E to I-90/94W. Merge onto I-90/94W. Follow the instructions above from I-90/94W.
Table of
Contents
CARE CAPITAL PROPERTIES,
INC.
191 North Wacker Drive
Suite 1200
Chicago, Illinois
60606
VOTE BY INTERNET -
www.proxyvote.com
Use the Internet to
transmit your voting instructions and for electronic delivery of information up
until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date.
Have your proxy card in hand when you access the web site and follow the
instructions to obtain your records and to create an electronic voting
instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY
MATERIALS
If you would like to reduce the
costs incurred by our company in mailing proxy materials, you can consent to
receiving all future proxy statements, proxy cards and annual reports
electronically via e-mail or the Internet. To sign up for electronic delivery,
please follow the instructions above to vote using the Internet and, when
prompted, indicate that you agree to receive or access proxy materials
electronically in future years.
VOTE BY PHONE -
1-800-690-6903
Use any touch-tone
telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time
the day before the cut-off date or meeting date. Have your proxy card in hand
when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the
postage-paid envelope we have provided or return it to Vote Processing, c/o
Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS
FOLLOWS: ☒ |
|
|
KEEP THIS PORTION FOR YOUR
RECORDS |
|
|
DETACH AND
RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND
DATED. |
The Board of Directors
recommends you vote FOR the following (7) directors to terms expiring at
the 2018 Annual Meeting of
Stockholders: |
|
|
|
|
|
|
1. |
|
Election of
directors |
|
|
|
|
|
|
|
|
Nominees |
|
For |
|
Against |
|
Abstain |
1A |
|
Douglas Crocker
II |
|
☐ |
|
☐ |
|
☐ |
1B |
|
John S. Gates,
Jr. |
|
☐ |
|
☐ |
|
☐ |
1C |
|
Ronald G.
Geary |
|
☐ |
|
☐ |
|
☐ |
1D |
|
Raymond J.
Lewis |
|
☐ |
|
☐ |
|
☐ |
1E |
|
Jeffrey A.
Malehorn |
|
☐ |
|
☐ |
|
☐ |
1F |
|
Dale A.
Reiss |
|
☐ |
|
☐ |
|
☐ |
1G |
|
John L.
Workman |
|
☐ |
|
☐ |
|
☐ |
|
|
|
|
|
|
|
|
|
The Board of
Directors recommends you vote FOR the following
proposal: |
|
For |
|
Against |
|
Abstain |
2 |
|
Ratification of the selection of
KPMG LLP as the independent registered public accounting firm for fiscal
year 2017. |
|
☐ |
|
☐ |
|
☐ |
NOTE: THE PROXIES NAMED IN THE PROXY CARD ARE AUTHORIZED TO
VOTE IN THEIR DISCRETION UPON ANY OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE ANNUAL
MEETING. |
Please sign exactly as your
name(s) appear(s) hereon. When signing as attorney, executor,
administrator, or other fiduciary, please give full title as such. Joint
owners should each sign personally. All holders must sign. If a
corporation or partnership, please sign in full corporate or partnership
name, by authorized officer. |
|
|
|
|
|
|
Signature [PLEASE SIGN WITHIN
BOX] |
Date |
|
Signature (Joint Owners) |
Date |
|
Table of
Contents
Important Notice Regarding the
Availability of Proxy Materials for the Annual Meeting: The Notice & Proxy Statement, Form 10-K and Annual
Letter to Shareholders are available at www.proxyvote.com |
|
CARE CAPITAL PROPERTIES,
INC.
Annual Meeting of Stockholders
May 18, 2017 at 8:30 AM Central
Time
This proxy is solicited by or on
behalf of the Board of Directors
The undersigned, revoking all prior
proxies, hereby appoints Raymond J. Lewis and Lori B. Wittman, and each of them,
as proxies with full power of substitution and re-substitution, for and in the
name of the undersigned, to vote all shares of common stock of Care Capital
Properties, Inc., which the undersigned would be entitled to vote if personally
present at the Annual Meeting of Stockholders to be held at 8:30 a.m. local
(Central) time on Thursday, May 18, 2017, at 191 North Wacker Drive, Conference
Center (10th Floor), Chicago, Illinois 60606, and at any adjournment or
postponement thereof, upon the matters described in the accompanying Notice of
Annual Meeting of Stockholders and Proxy Statement, receipt of which is hereby
acknowledged, and upon any other business that may properly come before the
meeting or any adjournment or postponement thereof. Said proxies are directed to
vote on matters described in the Notice of Annual Meeting and Proxy Statement as
indicated on the reverse side hereof, and otherwise in their discretion upon
such other business as may properly come before the meeting or any adjournment
or postponement thereof. When properly executed, this Proxy will be voted as
directed, but if no direction is indicated, this Proxy will be voted (1) FOR
each director-nominee and (2) FOR the ratification of the selection of KPMG LLP
as the independent registered public accounting firm for fiscal year
2017.
Continued and to be signed and dated
on reverse side
This regulatory filing also includes additional resources:
ccp_courtesy-pdf.pdf
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