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discussion and analysis, the summary compensation table, and the other related tables and disclosure."

Required Vote and Recommendation

        Because the vote is advisory, it is not binding on our company, our Board of Directors, or the Compensation Committee of our Board of Directors. Our Board of Directors and the Compensation Committee will take into account the outcome of the vote, however, when designing future executive compensation programs.

        For purposes of the vote on Proposal 3, abstentions and broker non-votes will not be counted as votes cast and this will have no effect on the result of the vote although they will count towards the presence of a quorum for Proposal 3. Properly executed, unrevoked proxies will be voted FOR Proposal 3 unless a vote against Proposal 3 or abstention is specifically indicated in the proxy.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE
COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS,
AS DISCLOSED IN THIS PROXY STATEMENT.

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PROPOSAL 4
AMENDMENT TO CHARTER
TO INCREASE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK

        At the 2012 Annual Meeting, stockholders will be asked to approve an amendment to our Articles of Amendment and Restatement, as amended and supplemented (or Charter) which would increase the number of authorized shares of our common stock, $0.01 par value per share, from 45,000,000 to 60,000,000 shares. On January 10, 2012, our Board of Directors adopted a resolution setting forth this proposed amendment to our Charter and declaring it advisable, and directed that this proposed amendment be submitted to our stockholders for consideration at the 2012 Annual Meeting.

        As of April 2, 2012, our company had 30,411,774 shares of common stock outstanding. As of April 2, 2012, our company also had 2,000,000 shares of Series C Cumulative Convertible Preferred Stock (or Series C Preferred Stock) outstanding, which is convertible into 2,000,000 shares of common stock based upon a conversion price of $19.25 per share as of April 2, 2012. Our company through subsidiaries has issued partnership units of such subsidiaries (or Units) that are convertible into, or exchangeable for, at our option, shares of common stock. As of April 2, 2012, Units convertible into, or exchangeable for, 23,294 shares of common stock at a price of $17.00 per share were outstanding. As of April 2, 2012, our company also had granted, and had outstanding, options to purchase 170,334 shares of common stock and had options available but not yet granted to purchase 271,221 shares of common stock. As a result, we have committed to the potential issuance of an additional 2,464,849 shares of common stock, in the aggregate, leaving 12,123,377 authorized shares of common stock uncommitted and available for future issuance.

        Authorized and unissued shares of common stock and any additional shares of common stock to be authorized pursuant to the proposed amendment to our Charter may be issued from time to time as our Board of Directors deems appropriate. The Board may authorize the issuance of shares of common stock, whether now or hereafter authorized, or securities or rights convertible into shares of common stock, for such consideration as the Board may deem advisable, subject to such restrictions or limitations, if any, as may be set forth in our Charter or Bylaws or Maryland law.

        We believe the ability to issue additional shares of common stock provides our company with valuable financing options, including direct issuance, as part of an offering of convertible preferred stock or convertible bond, as acquisition consideration or as a stock dividend, among other possible financing structures. As of the date of this proxy statement, we have no present undisclosed plans to issue additional shares of common stock.

        We believe that our company has a sufficient number of authorized but unissued shares of common stock to complete any potential new financing transaction that would include the issuance or contingent issuance of shares of common stock. However, if any such transaction should be completed, the remaining authorized but unissued shares of common stock available could be insufficient to permit our company to engage in certain future financing transactions. The Board of Directors therefore believes that it is important to increase the number of authorized shares of common stock to provide our company with flexibility to act promptly with respect to any future transactions which the Board determines to be in the best interests of our stockholders.

        The increase in the number of authorized shares of common stock could have an anti-takeover effect, although this is not the intent of the Board of Directors in proposing the amendment. For instance, our authorized but unissued capital stock could be issued in one or more transactions that would make more difficult or costly, and less likely, to execute a takeover of us. As of the date of this proxy statement, we are not aware of any attempt or plan to obtain control of us.

        If the proposed amendment to our Charter is approved, any or all of the additional authorized shares of common stock may be issued without further action by the stockholders and without first

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offering such shares to the stockholders. The issuance of additional shares of common stock otherwise than on a pro-rata basis to all current stockholders would have the effect of reducing the proportionate stock interest of our current stockholders.

        The full text of the amendment to Section 7.1 of the Charter is set forth in Appendix A attached hereto, which assumes that Proposal 4 is approved by our stockholders.

        If the proposed amendment to our Charter is approved by our stockholders, it will become effective upon filing, and acceptance for record, of articles of amendment as required by Maryland law.

Required Vote and Recommendation

        The affirmative vote of the holders of two-thirds (2/3rds) of the outstanding shares of common stock of our company is required for approval of this proposed amendment to our Charter. For purposes of the vote on Proposal 4, abstentions and broker non-votes will have the effect of a vote AGAINST the Proposal. However, because Proposal 4 is a "routine" matter on which a broker is generally empowered to vote, it is unlikely that any broker non-votes will occur. Properly executed, unrevoked proxies will be voted FOR Proposal 4 unless a vote against Proposal 4 or abstention is specifically indicated in the proxy.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
APPROVAL OF THE AMENDMENT TO THE CHARTER TO
INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK.

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EXECUTIVE OFFICERS

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EXECUTIVE COMPENSATION DISCUSSION AND ANALYSIS

Executive Summary

20112012 Business Highlights

        20112012 represented a year focused on capitalizing on opportunities for long-term growth for our company and stockholders.

        We have adhered to a disciplined investment underwriting policy and do not make investments in assets believed by management to be overpriced. This disciplined investment policy allowed us to weather the current challenging economic environment and positioned us well to take advantage of investment opportunities going forward.opportunities.

        Also, we have continued our marketing strategy designed to enhance awareness of our company among local and regional operators of skilled nursing, assisted living, independent living and memory care and independent living properties in certain states. The marketing campaign highlights our low-levered balance sheet, our access to capital to invest, our ability and interest in doing small transactions, our strong but small management team and our many years in the industry.

        As a direct result of these efforts, in 20112012 we grew substantially by purchasing real estate assets of approximately $106.5$161.1 million, includingexcluding transaction fees, and provided $67.7 million of assets comprisedinvestment commitments, including the purchase of skilled nursing properties, properties providing combinations of independent living, skilled nursing or assisted living servicesland. Also during 2012, we funded a $5.1 million bridge loan and originated a vacant parcel of land held for future development of a 120-bed skilled nursing property.$10.6 million mortgage and construction loan. Our 20112012 year-over-year revenue growth was 15.6%10.4% and our year-over-year normalized funds from operations growth was 31.0%11.0%.

        In addition, we increased our liquidity during 20112012 by entering into a new $210.0$240.0 million unsecured revolving credit agreement which provides the opportunity to increase the availability up to a total of $250.0$350.0 million. Also, we sold $50.0 million aggregate principal amount of 4.8%12-year 5.0% senior unsecured term notes and entered into an Amended and Restated Note Purchase and Private Shelf Agreement which providesin the possible issuanceamount of up to an additional $100.0 million unsecured fixed-rate term notes during a three-year issuance period.

        During 2011, we sold 3,990,000 shares of common stock in an underwritten public offering for net proceeds of $103.6$85.8 million. The net proceeds were used to redeem all of our 8.0% Series F Cumulative Preferred Stock (or Series F preferred stock).

        Finally, as the stock performance graph in our Form 10-K for 20112012 shows, $100 invested in LTC common stock on December 31, 20062007 would be worth $155.58$191.91 on December 31, 2011,2012, as compared to $93.11$130.39 from a like investment in the NAREIT Equity REIT Index, or $98.76$108.59 in the Standard & Poors 500 Stock Index.

20112012 Compensation Highlights

        We seek to closely align the interests of our named executive officers (or NEOs) with those of our stockholders. Accordingly, we have structured our executive compensation program to support this alignment, with relatively lower base salaries and by delivering a greater proportion of total compensation through annual bonus and long-term equity incentive opportunities.

        In view of their accomplishments and our financial performance during 2011,2012, the Compensation Committee recommended and the Board approved:

•

Base salary increases for executives and other members of the management team;



•

Annual bonuses for the NEOs with respect to 2011 performance consistent with our business results.2012 performance.

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20112012 "Say-On-Pay" Vote

        At LTC's 20112012 Annual Meeting of Stockholders, approximately 85%94% of the votes cast in the advisory "say-on-pay" vote were voted for approval of the named executive officer compensation as disclosed in the 20112012 proxy statement. The Board of Directors and Compensation Committee has considered the results of the 20112012 "say-on-pay" vote and believes that the overwhelming support by our stockholders indicates they generally are supportive of our approach to executive compensation. This support was one of the factors the Board of Directors and Compensation Committee took into account

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in not making material changes to our compensation philosophy for executive officers or the components of executive compensation. The Board of Directors and Compensation Committee will continue to consider "say-on-pay" votes in formulating future executive compensation policies and decisions.

20112012 Corporate Governance Highlights

        We seek to maintain good governance standards, including with respect to the oversight of our compensation policies and practices. Following are highlights of the policies and practices in effect during 2011:2012:

•

The leadership structure for our Board consists of an Executive Chairman and a separate Chief Executive Officer. In addition, we maintain a separate "lead independent director" role;



•

The Compensation Committee is comprised solely of independent directors; and



•

We have stock ownership guidelines in place for our executives and independent directors and all executives and directors are in compliance.

We encourage you to read this Executive Compensation Discussion and Analysis for a detailed discussion of our executive compensation program, including information about the fiscal 20112012 compensation of the NEOs.

Executive Compensation Program Philosophy and Objectives

        We endeavor to ensure that the compensation programs for our executive officers are effective in attracting and retaining key executives responsible for our company's success and are administered in appropriate fashion in the long-term interests of our company and our stockholders. Through the oversight of the Compensation Committee, we seek to align total compensation for executive management with our overall performance as well as the individual performance of each executive officer.

        Our executive compensation policies may be summarized as follows:

(1)

Our compensation programs are designed to attract, motivate and retain qualified key executives;



(2)

An executive's salary, bonuses and incentive compensation and other benefit programs should reflect both our company's performance as a whole and the executive's individual performance and effort; and



(3)

Our compensation programs should enable the executive to have a financial interest in our company that parallels the financial interests of our stockholders.

Executive Compensation Program Elements

        We seek to achieve our compensation program objectives through the following key compensation elements: base salary, annual bonus opportunity, long-term equity incentive opportunity and severance upon termination of the executive officers' employment under certain conditions or change in control

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of our company. We believe that each element of our executive compensation program helps us to achieve one or more of our compensation objectives as follows:

        Base salary—attract, motivate, and retain qualified key executives. We believe the base salary should reflect job responsibilities, value to our company, individual performance/expertise and competitiveness of the market for the executive's services/salary norms for persons in comparable positions at comparable companies.

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        Annual bonuses—reward company performance and individual performance and effort. We believe the annual bonus should be linked to individual performance and to our company's performance as a whole, and where practicable, should be related to variables under our management's control.

        Long-term equity incentives—align executives' financial interests with those of our stockholders. We believe that long-term compensation should motivate and reward the creation and preservation of long-term stockholder value.

        Severance—attract, motivate and retain qualified key executives. We believe that providing our executives with severance and other benefits upon termination of employment or change in control is consistent with the severance protections offered by similar companies and is an integral part of total executive compensation.

        Base salaries and severance are designed primarily to attract, motivate and retain qualified key executives. These are the elements of our executive compensation program where the value of the benefit in any given year is typically not variable. We believe that it is important to provide executives with predictable benefit amounts that reward the executive's continued service. Base salaries are paid out on a short-term basis and are intended to attract and motivate executives. Severance and other benefits are paid out on a longer-term basis such as upon termination of employment or change in control of our company and are designed to aid in retaining executives.

        Annual bonuses are designed to reward performance, both at the company and individual level. Annual bonuses are paid out on a short-term basis and are designed to reward performance for that period.

        Long-term equity incentives are intended to align executives' and stockholders' interests. Long-term equity incentives are typically earned and paid out on a longer-term basis and are designed to reward performance over one or more years.

Compensation Committee

        The Compensation Committee reviews and approves the compensation of our executive officers and determines our general compensation policy. The Compensation Committee is also responsible for the administration of our Equity Participation Plans. During 2008, we adopted the 2008 Equity Participation Plan under which 600,000 shares of common stock have been reserved for awards, including nonqualified stock options grants and restricted common stock grants to officers, employees, non-employee directors and consultants. The Compensation Committee is authorized to determine the options and restricted common stock awards to be granted under such plan and the terms and provisions of such options and restricted common stock awards. The Compensation Committee determines the base salary, annual bonus and long-term equity incentives of our Chief Executive Officer. Wendy L. Simpson, our Chief Executive Officer and President, recommends to the Compensation Committee the base salary, annual bonus and long-term compensation levels for all of our other officers. None of the other executive officers had any role in determining or recommending the form or amount of the compensation of the other executive officers.

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Competitive Considerations

        In determining the level and composition of compensation for the executive officers, the Compensation Committee considers various corporate performance measures, both in absolute terms and in relation to similar companies, and individual performance measures. Although the Compensation Committee considers funds from operations per share as an important measure of our performance, the Compensation Committee does not apply any specific quantitative formula in making compensation decisions. The Compensation Committee also may evaluate the following factors in

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establishing executive compensation: (a) comparative compensation surveys and other material concerning compensation levels and stock grants at similar companies; (b) our historical compensation levels and stock awards; (c) overall competitive environment for executives and the level of compensation necessary to attract and retain executive talent; (d) financial performance of other real estate investment trusts relative to market condition; and (e) from time to time, the Compensation Committee may seek the advice of an independent compensation consultant in assessing its overall compensation philosophy. The Compensation Committee assigns no specific weight to any of the factors discussed above in establishing executive compensation. In determining the appropriate levels of compensation to be paid to executive officers, we do not generally factor in amounts realized from prior compensation.

        While the Compensation Committee may review broad-based third party compensation surveys in determining the reasonableness of our executive officers compensation, compensation levels are not set by reference to any percentile or benchmark within any peer group of companies or otherwise. Consistent with our compensation philosophies described above, our goal is to provide each executive officer with a current compensation package that is at market based upon the Compensation Committee's perception of comparable executives at comparable companies, including real estate investment trusts.

Compensation Consultant

        Pursuant to its charter, the Compensation Committee has the authority to engage independent compensation consultants and other professionals to assist in the design, formulation, analysis, and implementation of compensation programs for our executive officers. The Compensation Committee's practice has been to retain an independent compensation consultant approximately every three years to assist the Compensation Committee with its responsibilities related to our executive officer and director compensation. In November 2010, the Compensation Committee retained Pearl Meyer & Partners (or PM&P) as an independent compensation consultant to assistconduct a comprehensive review of our company's executive compensation programs. PM&P provided a report of its review to the Compensation Committee with its responsibilities relatedin February 2011. A discussion of that 2011 PM&P report is contained in the Executive Compensation Discussion and Analysis of our proxy statement last year. The Compensation Committee continued to our company'sreference the comprehensive 2011 PM&P report in making executive and Boardcompensation decisions for 2012, but did not obtain a new or updated report from PM&P or other compensation consultant to assist in determining or recommending the amount or form of Directorexecutive compensation programs.in 2012. The scope of the consulting services provided by PM&P was limited to the services it provided directly to the Compensation Committee on executive compensation matters. During the year ended December 31, 2011, PM&P and its affiliates were not retained by the management of our company to provide services related to executive compensation.

Executive Compensation Review

        PM&P was engaged by the Compensation Committee to conduct a comprehensive review of our executive compensation programs. The initial phase of the review was conducted during November and December 2010 and included the following:

•

Assisting with the development of a comparative Peer Group for compensation comparisons; consisting of healthcare and other California real estate investment trusts (or REITs) with total assets and market capitalization generally similar to LTC.



•

Conducting a preliminary review of the competitiveness of current compensation levels, programs and arrangements provided to our executive officers, including the named executive officers.

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•

An assessment of compensation and incentive plan provisions among the Peer Group REITs.



•

Conducting a competitive assessment of our non-employee director compensation program, performed for the Governance Committee.

        The competitive Peer Group included the following six health care REITs and nine apartment, office or diversified REITs:

        Due to the differences in total assets between LTC and the Peer Group companies, regression analysis was utilized to size-adjust the data and develop estimated market levels of compensation based on LTC's total asset size. The regressed Peer Group data was combined with data from selected compensation surveys to develop estimated market levels for our executives. The compensation surveys included real estate industry surveys (National Associates of Real Estate Investment Trusts Compensation Survey and National Real Estate Compensation & Benefits Survey) as well as general industry surveys (Mercer Executive Compensation Survey and Watson Wyatt Top Management Compensation Survey). PM&P compared LTC's 2010 total direct compensation (base salary, annual and long-term incentives) for each executive position against the market compensation levels for similar executives in the Peer Group and the compensation surveys. LTC's aggregate total direct compensation was slightly below the market 50^th percentile on a size adjusted basis.

        The second phase of the engagement began in January 2011 and focused on providing the Compensation Committee with a more comprehensive review of LTC's compensation programs; the second phase consisted of the following activities:

•

PM&P conducted confidential interviews with selected executives and the members and the chair of the Compensation Committee. Through these interviews PM&P gathered background information regarding the company's current compensation structure as well as management's and the Compensation Committee members' perceptions of the programs. Observations gathered through the interviews were summarized and reported to the Committee.



•

Additional analyses related to equity plan share allocations and utilization, executive beneficial ownership and CEO employment agreement terms among Peer Group REITs.



•

Development of program recommendations and compensation actions for the Committee to consider based on the competitive findings from the first and second phases of the engagement.

        The Compensation Committee utilized the findings from the PM&P review to provide some guidance with executive compensation decisions in 2011. During 2011, the Compensation Committee worked with PM&P to:

•

Refine and articulate our philosophy and objectives for executive compensation, and



•

Review our annual bonus program and long-term equity incentive program and grant practices.

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        For further information as to the Compensation Committee's use of the findings from the PM&P engagement and other factors that were considered in determining 2011 compensation levels, see the discussion below concerning fiscal 2011 compensation.

Executive Compensation Practices

Base Salaries

        Base salaries are reviewed and adjusted by the Compensation Committee on an annual basis. We typically pay base salaries in cash at regular intervals throughout the year. The Compensation Committee seeks to ensure that the base salaries are established at levels considered appropriate in light of responsibilities and duties of our executive officers as well as at levels competitive to amounts paid to executive officers of other real estate investment trusts. In determining an individual executive's actual base salary, the Compensation Committee also considers other factors, which may include the executive's past performance and contributions to our success.

        Our named executive officers each have an employment agreement (see "Description of Employment Agreements" below) granting them the contractual right to receive a fixed base salary as disclosed in the "Summary Compensation Table" below.

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        Based on the findings from the PM&P review and recommendations received from the Chief Executive Officer (except with respect to the Chief Executive Officer's own salary) and taking into account the company's performance and the 2011 PM&P report, the Compensation Committee approved the following increases to base salaries for the named executive officers (excluding the Chief Executive Officer) to more closely align the executives' compensation with compensation in the peer group.officers. Base salary increases were effective June 1, 2011. In approving the salary increases, the Compensation Committee took into consideration the company's performance and PM&P's 2010 executive compensation review.2012. The following table summarizes salary adjustments approved by the Compensation Committee for 2011.2012.

Annual Bonuses

        Bonuses are awarded based on our overall performance and individual performance of each executive officer. We typically pay annual cash bonuses; however, bonuses may be awarded in other forms, such as stock awards, in lieu of cash payments. Bonus amounts awarded may vary from year to year and are typically paid, or awarded, at the end of the period for which performance is being rewarded. Annual bonuses for executive officers are awarded by the Compensation Committee after considering the Chief Executive Officer's recommendations.

        In formulating bonus recommendations, the Chief Executive Officer took into consideration the company's performance (as summarized below), individual executive performance, the competitive market findings in the PM&P report, and the executive's total compensation package including base salary, equity awards and annual dividends earned on outstanding unvested equity awards.

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        In determining bonuses, the Compensation Committee evaluates the performance of our company for the year compared to other real estate investment trusts and the overall market. Accomplishments during 20112012 included the following:

•

Acquired 9 senior housing properties with a total of 1,134522 skilled nursing beds 40and 130 assisted living units and 53 independent living136 memory care units for $105.7$161.1 million, includingexcluding transaction fees;



•

Acquired four vacant parcels of land for $5.6 million, excluding transaction fees, and committed to provide a total of $44.0 million to develop a 143-bed skilled nursing property, a 60-unit memory care property and two assisted living and memory care combination properties with a total of 158 units;



•

Originated and funded a $5.1 million two-year interest-only bridge loan secured by a 70-unit assisted living property;



•

Originated a $10.6 million mortgage and construction loan secured by a skilled nursing property and a vacant parcel of land held for future development ofupon which a 120-bed106-bed replacement facility will be constructed;



•

Committed to provide $18.0 million to renovate three skilled nursing property for $0.9 million, including transaction fees;properties with a total of 356 beds and expand two assisted living properties with a total of 100 units to add a total of 43 memory care units and 21 assisted living units



•

Increased our unsecured revolving credit agreement from $110.0to $240.0 million with the opportunity to $210.0increase the credit amount up to a total of $350.0 million at the sameand lowered interest rates of 150to 125 basis points over LIBOR, based on current leverage ratios;ratios at the time of the amendment; and



•

Entered into an Amended and Restated Note Purchase and Private Shelf Agreement which provides for the possible issuance of up to an additional $100.0 million of senior unsecured fixed-rate term notes during a three-year issuance period;



•

Sold $50.0$85.8 million aggregate principal amount of 4.8%5.0% senior unsecured notes fully amortizing to maturity; andmaturity in July 2024;

        The Compensation Committee does not rely upon any specific performance targets or measurements related to our company when determining bonuses. Overall company performance is evaluated relative to stockholder value and return over the year, revenue growth, new investment levels relative to market constraints and external factors outside the control of our company.

        In considering the Chief Executive Officer's bonus recommendations, the Compensation Committee seeks to ensure that bonuses are established at levels considered appropriate in light of responsibilities and duties of our executive officers as well as at levels competitive to amounts paid to executive officers of other real estate investment trusts. In determining the individual bonus amounts the Compensation Committee considered the responsibilities and duties of our executive officers, the executive officers total compensation package including raises and equity awards, competitive amounts paid to executive officers at other real estate investment trusts, and the executive's performance and contributions to our success.

        There are no specific performance targets or measurements for our executive officers that impact their bonuses. None of our executive officers have a contractual right to receive a fixed actual or target bonus for any given year. However, Ms. Simpson's employment agreement provides for an annual target bonus equal to 100% of her base salary awarded at the sole discretion of the Board of Directors. The following table shows the aggregate 20112012 bonuses awarded to our Named Executive Officers for services provided in 2011,2012, which amounts are reflected in the "Summary Compensation Table" below. Discretionary cash bonuses awarded for 2011 performance, successes detailed by bullet points above, were paid in 2012. Ms. Simpson's entire 2011 bonus was in the form of a long-term bonus in a grant of restricted common shares, as detailed in the schedule below.

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Long-Term Equity Incentives

        Long-term incentives are designed to align the executives' financial interests with those of our stockholders. Therefore, our long-term incentive compensation for our executive officers has historically taken the form of a mix of restricted common stock and stock option awards. The Compensation Committee does not have a formula for determining the mix of restricted common stock and/or stock options awarded. Awards are made on an individual basis and are not granted at any pre-determined time during the year. Restricted common stock and stock option awards typically vest ratably over a three to five-year period and are generally subject to the individual executive officer's continued employment. The level of long-term incentive compensation is determined by the Compensation Committee based on an evaluation of competitive factors in conjunction with total compensation provided to each individual executive officer. The relevant weight given to each of these factors varies from individual to individual. Stock price performance has not been a factor in determining annual compensation because the price of our common stock is subject to a variety of factors outside of our control. We do not have an exact formula for allocating between cash and non-cash compensation. Nor do we have a policy for allocating between long-term and currently paid out compensation.

        The grant date of an equity award is typically the date the Compensation Committee approves the equity award. The grant date may also be a future date from the date of approval as specified by the board resolution. In no instances has the grant date been retroactive or prior to the date the Compensation Committee approved the equity award. For long-term incentive awards in the form of stock options, the exercise price is the closing price of our company's stock as reported by the NYSE on the grant date. The Compensation Committee has not and does not time the granting of equity awards with any favorable or unfavorable news released by us.

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        During 2008, we adopted the 2008 Equity Participation Plan (or 2008 Plan) under which awards may be granted including stock options (incentive or non-qualified), stock appreciation rights, restricted common stock, deferred stock and dividend equivalents. We reserved 600,000 shares of common stock for issuance under this plan. As of December 31, 2011,2012, there were 327,421236,921 shares of common stock reserved for issuance under the 2008 Plan. The 2008 Plan is administered by the Compensation Committee which sets the terms and provisions of the awards granted under the plan. Incentive stock options, stock appreciation rights, restricted common stock, deferred stock and dividend equivalents may only be awarded to officers and other full-time employees to promote our long-term performance and specifically, to retain and motivate senior management to achieve a sustained increase in stockholder value. Non-qualified stock options, stock appreciation rights, restricted common stock, deferred stock and dividend equivalents may be awarded to non-employee directors, officers, employees, consultants and other key persons who provide services to us. The Compensation Committee reviews and evaluates the overall compensation package of the executive officers and determines the awards based on our overall performance and the individual performance of the executive officers.

        During 2011, no restricted common shares were awarded to the Named Executive Officers. In January 2012, the Compensation Committee approved an award of restricted common shares to the Chief Executive Officer. In JanuaryMs. Simpson. During 2012, the Chief Executive Officer recommended and the Compensation Committee approved an award of restricted common shares to Ms. Shelley-Kessler and

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Mr. Malin. The following table shows the awards, which reflect the aggregate long-term equity incentives awarded to our Named Executive Officers to date in 2012.

⁽¹⁾

Awarded in 2012 as part of bonus but related to services provided in 2011. These shares will vest on June 15, 2015.

⁽²⁾

Awarded 6,100 shares in 2012 as part of the bonuses but related to services provided in 2011. These shares will vest on January 10, 2016. Awarded 10,000 shares in 2012 as part of bonuses related to services provided in 2012. These shares will vest on December 20, 2015.

        Subsequent to December 31, 2012, the Compensation Committee approved an award of 20,000 restricted common shares to Ms. Simpson as part of bonuses but related to services provided in 2012. These shares will vest on June 1, 2016. In approving the restricted common stock awards, the Compensation Committee took into consideration the executive's historical performance and contributions, total ownership levels and the value of equity delivered historically, the below-market positioning of the executives' base salaries and the company's desire to retain the executives by providing a meaningful long-term incentive award to each executive which is aligned with stockholder interests. The magnitude of the awards combined with a future vesting date effectively serves as a retention vehicle.

Severance and Other Benefits Upon Termination of Employment or Change in Control

        As discussed in greater detail in the section "Employment Agreements" below, we have provided our executive officers with severance and other benefits upon termination of employment or a change in control of our company. We believe that we need to provide our executive officers with severance protections that are competitive with severance protections offered by companies similar to ours. We believe the severance protections we have provided our executive officers are consistent with our compensation objective to attract, motivate and retain qualified key executives.

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        We believe that severance should be payable to our executive officers if their employment is terminated for any reason, except for a termination for cause or a voluntary resignation. The amount of cash severance we have agreed to pay and other severance benefits we extend to our executive officers upon such an occurrence is intended to help them avoid financial hardship during the period of time when the executive officer is likely to be unemployed and seeking new employment. If the executive officer's employment is terminated for any reason, except for a termination for cause or a voluntary resignation without a good reason, then we have agreed to pay the officer a lump sum severance payment equal to the following:

        Additionally, we have agreed to extend medical and dental insurance coverage for up to 18 months at our expense to the executive officer. We have agreed to provide Ms. Simpson with health insurance benefits for life if Ms. Simpson's employment terminates for any reason except for a termination for cause or a voluntary resignation without good reason. We may elect to pay Ms. Simpson a one-time cash payment of $250,000 in lieu of continuing health insurance benefits.

        Further, under the standard terms of our equity award agreements, unvested options, restricted stock, and other equity awards will accelerate and vest if the employment of a grantee terminates for any reason, such as, death, disability, termination without cause, or a resignation with good reason.

We believe that severance should be payable to our executive officers upon a change of control because a change of control transaction creates uncertainty regarding the continued employment of the executive officers. The amount of cash severance we have agreed to pay and other severance benefits

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we extend to our executive officers upon a change of control is intended to encourage the executive officers to remain employed by us during an important time when their prospects for continued employment following the change of control transaction are often uncertain.

        Upon a change in control of our company whether or not the officer's employment is terminated, we have agreed to pay the officer a severance payment in cash equal to the following:

        Further, upon a change of control all stock options and/or restricted common stock automatically vest. We have agreed to provide Ms. Simpson with health insurance benefits for life upon change of control of our company whether or not Ms. Simpson's employment is terminated. We may elect to pay Ms. Simpson a one-time cash payment of $250,000 in lieu of continuing health insurance benefits. The Compensation Committee believes that a change of control typically results in a constructive termination of the executive officer's employment and therefore designed severance protection effective upon a change of control, rather than actual termination in the event of a change of control of our company.

        We have agreed to provide Mr. Dimitriadis with health insurance benefits for life and Mr. Dimitriadis' two dependents with health insurance benefits until they reach the age of 22.

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However, we may elect to pay Mr. Dimitriadis a one-time cash payment of $250,000 in lieu of continuing health insurance benefits for Mr. Dimitriadis and his two dependents.

        The Compensation Committee believes that there are several situations that could result in continuing health care coverage not being available to these executives as a result of an action taken by us or a transaction involving our company. The provision of continuing health insurance benefits was included in the evaluation of the overall compensation package we have provided to our top two executive officers. The buyout clause was designed to limit our exposure to increasing health insurance costs.

        If any payment or benefit received by Mr. Dimitriadis or Ms. Simpson from us subjects them to excise taxes under the "golden parachute" rules on payments and benefits, then they will be entitled to receive an additional amount (a "gross-up payment" to make the officer whole for these excise taxes and for all taxes on the gross-up payment). Notwithstanding the foregoing, we will have no liability if an executive officer's employment is terminated for cause or by voluntary resignation without a good reason.

401(k) Savings Plan

        We have a 401(k) Savings Plan which is a defined contribution plan covering all of our employees. Each year participants may contribute up to 15% of pre-tax annual compensation. In 20112013, the contributions may not exceed $16,500,$17,500, or $22,000$23,000 if the employee is 50 years or older. We match up to 3% of salaries for our vice presidents and contribute 3% of the individual's salary for staff that open an account. We will not contribute any amount, nor match contributions for our executive officers at the senior vice president level and higher.

Benefits

        With limited exceptions, the Compensation Committee's policy is to provide benefits to executive officers that are substantially the same as those offered to other officers of our company at or above the level of vice president. Except for the lifetime health insurance benefits described in "Severance

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and Other Benefits Upon Termination of Employment or Change in Control" above and the supplemental medical insurance discussed below, the employee benefits programs in which our executive officers participate (which provide benefits such as medical, dental and vision benefits coverage, life insurance protection, and 401(k) savings plan) are generally the same programs offered to all of our full-time employees. Our officers at the level of vice president and above are eligible to participate in a supplemental medical insurance program which provides participants with reimbursements for eligible out-of-pocket medical expenses such as primary insurance co-payments, deductibles, and certain elective medical procedures not covered by the employee's primary insurance policy. Amounts reimbursed to our executive officers during 20112012 are included in the "Summary Compensation Table" below.

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Stock Ownership Guidelines

        We encourage our executives to hold our company's stock on a long-term basis. The following table represents the company's stock ownership guidelines for our executive officers and independent directors:

        The company's stock ownership guidelines recommend that the Executive Chairman, Chief Executive Officer, Chief Financial Officer, Senior Vice Presidents and Vice Presidents achieve the targeted level of ownership within three years from the date of hire, promotion or appointment. Also, the stock ownership guidelines recommend that the independent directors achieve the targeted level of ownership within three years from date of election. At this time all of our executive officers and independent directors hold at least the full amount of the guideline. The Nominating and Governance Committee has requested and receives from the company a quarterly report on executive and independent director stock ownership of company stock. Additionally, we do not have any policies regarding the ability of executives to hedge the economic risk of ownership in our company's stock.

Tax and Accounting Considerations

Policy with Respect to Section 162(m)

        Section 162(m) of the Code denies deduction for Federal income tax purposes for certain compensation in excess of $1,000,000 paid to certain executive officers, unless certain performance, disclosure, stockholder approval and other requirements are met. The Compensation Committee periodically reviews the effects of its compensation programs with regard to Code Section 162(m). We periodically evaluate alternatives to ensure executive compensation is reasonable, performance-based, and consistent with our overall compensation objectives. The Compensation Committee reserves the right to design programs that recognize a full range of performance criteria important to our success, even where the compensation paid under such programs may not be deductible. Interpretations of and changes in the tax laws and other factors beyond the Compensation Committee's control may affect the deductibility of certain compensation payments. The Compensation Committee may consider various alternatives to preserve the deductibility of compensation payments and benefits to the extent reasonably practicable and to the extent consistent with its other compensation objectives.

Compensation Risk Assessment

        We have reviewed our compensation policies and practices to determine whether risks arising from our compensation policies and practices for employees are reasonably likely to have a material adverse effect on our company. The review included assessment of our various compensation programs and consideration of risk mitigating factors. We believe that our compensation policies and practices for employees do not present risks that are reasonably likely to have a material adverse effect on our company. We generally take a conservative approach to managing our business. Although some risk taking is necessary to manage and grow any business, we believe our compensation policies and practices do not encourage unnecessary or excessive risk taking and do not promote short term rewards

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for management decisions that could pose long term risks to our company. With particular respect to compensation of our executive officers:

•

the Compensation Committee exercises significant discretion in determining cash bonuses and equity awards to executive officers;



•

awards of restricted stock with long term vesting periods provides executive officers with an incentive to make decisions that contribute to long term performance of our company; and



•

stock ownership guidelines for executive officers further aligns their personal wealth with the long term performance of our company.

SUMMARY COMPENSATION TABLE

        This table presents information regarding compensation of our Named Executive Officers for services provided in 2012, 2011 2010 and 2009.2010.

⁽¹⁾

Bonuses awarded for 2012, 2011 2010 and 20092010 performance were paid in 2012, 20112012 and 2010,2011, respectively.

⁽²⁾

Represents the fair value on the grant date of the stock awards and option awards granted, as required by SEC rules. Under U.S. generally accepted accounting principles, compensation expense with respect to stock awards and option awards granted is generally recognized over the vesting periods applicable to the awards. For a discussion of the assumptions and methodologies used to value the stock awards and option awards granted refer toNote 10. Equity of Notes to Consolidated Financial Statements included in the Company's 20112012 Annual Report on Form 10-K.

⁽³⁾

Represents supplemental health insurance benefits and our match of up to 3% of the individual's salary under our 401(k) savings plan for our vice presidents. During 2012, 2011, and executive2010, Mr. Dimitriadis and Mses. Simpson and Shelley-Kessler were not eligible for 401(k) matching. During 2012 and 2011, Messrs. Malin and Stokes were not eligible for 401(k) matching. During 2010, Messrs. Malin and Stokes received the following 401(k) matching and supplemental health insurance benefits.

⁽⁴⁾

Amount represents bonuses paidMs. Simpson was awarded 20,000 restricted common shares on January 7, 2013 for services provided in 2012 but related2012. These shares will all vest on June 1, 2016.

⁽⁵⁾

Ms. Shelley-Kessler and Mr. Malin were each awarded 10,000 restricted common shares on December 20, 2012. These awards relate to services provided in 2011. Additionally, 2012 and these shares will all vest on December 20, 2015.

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⁽⁶⁾

Named Executive Officers received the following restricted common stock awards on January 10, 2012. This award relates to services provided in 2011.

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The shares granted to Ms. Shelley-Kessler and Mr. Malin will all vest on January 10, 2016. The shares granted to Ms. Simpson will all vest on June 15, 2015.

⁽⁵⁾⁽⁷⁾

In December 2010, Ms. Shelley-Kessler and Messrs. Malin and Stokes were each awarded 30,300 shares of restricted common stock as part of their promotion. These shares vest ratably over a five-year period from the grant date.

⁽⁶⁾

Amount represents bonuses paid in 2010 but related to services provided in 2009. Additionally, Named Executive Officers received the following restricted common stock awards on March 1, 2010. This award relates to services provided in 2009 and vests ratably over a three-year period from the grant date for Ms. Shelley-Kessler and Messrs. Malin and Stokes. The shares granted to Ms. Simpson will vest ratably over a five-year period with the first date of vesting being December 31, 2010.

Description of Employment Agreements

        The following table provides details regarding the employment agreements for our Named Executive Officers during the year ended December 31, 2011:2012:

⁽¹⁾

Mr. Dimitriadis' employment agreement provides Mr. Dimitriadis with health insurance benefits for life and his two dependents with health insurance benefits until they reach the age of 22. However, we may elect to pay Mr. Dimitriadis a one-time cash payment of $250,000 in lieu of continuing health insurance benefits for Mr. Dimitriadis and his two dependents. See "Severance and Other Benefits Upon Termination of Employment or Change in Control" above for further discussion.

⁽²⁾

Ms. Simpson's employment agreement provides Ms. Simpson with health insurance benefits for life if Ms. Simpson's employment with us is terminated for any reason, except for a termination for cause or a voluntary resignation without a good reason, or upon a change in control of our company whether or not Ms. Simpson's employment is terminated. However, we may elect to pay Ms. Simpson a one-time cash payment of $250,000 in lieu of continuing health insurance benefits. See "Severance and Other Benefits Upon Termination of Employment or Change in Control" above for further discussion.

        The employment agreements provide that the base salaries may be increased at the discretion of our Board. Any increase in base salary will automatically amend each executive's respective employment agreement to provide that thereafter the executive's annual base salary will not be less than the increased base salary approved by our Board. During the term of his employment by us, each officer will devote the time necessary to provide the services reasonably required by our Board and will not, without the express approval of our Board, engage for his own account or for the account of any other person or entity, in a business which competes with us.

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Grants of Plan Based Awards

        During the year ended December 31, 2011,2012, our Compensation Committee did not award restricted common stock or stock options under our 2008 Equity Participation Plan to our Named Executive Officers. During 2012, our Compensation Committee awarded 62,200 restricted common shares under our 2008 Equity

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Participation Plan to Mses. Simpson and Shelley-Kessler and Mr. Malin. The following table provides the detail regarding these restricted common stock awards.

⁽¹⁾

Awarded in 2012 as part of bonuses but related to services provided in 2011. These shares will vest on June 15, 2015.

⁽²⁾

Awarded in 2012 as part of bonuses but related to services provided in 2011. These shares will vest on January 10, 2016.

⁽³⁾

Awarded in 2012 as part of bonuses related to services provided in 2012. These shares will vest on December 20, 2015.

Outstanding Equity Awards at Year-End

        The following table presents information regarding the outstanding equity awards held by each Named Executive Officer as of December 31, 2011.2012.

⁽¹⁾

The market value is the number of shares that have not vested multiplied by the closing price of our common stock as reported by the NYSE on December 30, 2011,31, 2012, the last trading day of 2011.2012.

⁽²⁾

Vested May 15, 2010.

⁽³⁾

Vests as follows: 10,000 on May 15, 2008, 2009 and 2010.

⁽⁴⁾

VestedVests as follows: 19,932 on May 10, 2007.December 31, 2013; 19,933 on December 31, 2014; 30,000 on June 15, 2015.

⁽⁵⁾

Vests as follows: 1,352 on March 1, 2013; 6,060 on December 14, 2013, 2014 and 2015; 6,100 on January 10, 2016; 10,000 on June 8, 2008, 2009 and 2010.December 20, 2015.

⁽⁶⁾

Vests as follows: 8,128 on February 27, 2012; 19,932 on December 31, 2012 and 2013; 19,933 on December 2014.

⁽⁷⁾

Vests as follows: 1,875 on February 27, 2012; 1,352 on March 1, 2012 and 2013; 6,060 on December 14, 2012, 2013, 2014 and 2015.

⁽⁸⁾

Vests as follows: 1,231 on February 27, 2012; 1,194 on March 1, 2012; 1,193 on March 1, 2013; 6,060 on December 14, 2012, 2013, 2014 and 2015; 6,100 on January 10, 2016; 10,000 on December 20, 2015.

⁽⁹⁾⁽⁷⁾

VestsSubsequent to December 31, 2013, 879 restricted common shares vested as follows: 1,094 on February 27, 2012; 880scheduled on March 1, 2012; 8792013 and the vesting of 18,180 restricted common shares were accelerated as a result of Mr. Stokes retirement on March 1, 2013; 6,060 on December 14, 2012, 2013, 2014 and 2015.31, 2013.

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Option Exercises and Stock Vested During 20112012

        The following table shows the number and value of stock options exercised and the number of shares and value of restricted common stock that vested related to each of our Named Executive Officers during the year ended December 31, 2011.2012.

⁽¹⁾

The value realized is the difference between the market price of the underlying securities at exercise, as measured by the closing price of our common stock as reported by NYSE on the date of exercise, and the exercise price times the number of shares acquired on exercise.

⁽²⁾

The value realized is the number of shares that vested multiplied by the closing price of our common stock as reported by the NYSE on the vesting date. This differs from the compensation expense disclosed in the "Summary Compensation Table" which is determined using the fair value on the grant date of the stock award.

Potential Payments Upon Termination or Change In Control

        We have provided our executive officers with employment contracts that provide certain benefits depending on the circumstances surrounding their termination of employment with us. In addition to the benefits described below, upon termination of employment with us, the executive officer is generally entitled to amounts or benefits earned or accrued during the term of employment, including earned but unpaid salary. We have calculated the amount of any potential payments as if the termination or change of control occurred on December 31, 20112012 and therefore used the closing price of our common stock as reported by the NYSE on December 30, 2011,31, 2012, the last trading day of 2011.2012.

Severance and Other Benefits Upon Termination of Employment

        As described above under "Description of Employment Agreements" the employment agreements we have with our executive officers provide for payments of severance and other benefits upon termination of employment. If the executive officer's employment is terminated for any reason, except for a termination for cause or a voluntary resignation without a good reason, then we have agreed to pay the officer a lump sum severance payment equal to four times base salary for Mr. Dimitriadis and Ms. Simpson and one times base salary for Ms. Shelley-Kessler, Messrs. Malin, and Stokes. Additionally, we have agreed to extend medical and dental insurance coverage for up to 18 months, at our expense, to the executive officer. Further, we have agreed to provide Mr. Dimitriadis and Ms. Simpson with health insurance benefits for life and Mr. Dimitriadis' two dependents with health insurance benefits until they reach the age of 22. However, we may elect to pay Ms. Simpson and Mr. Dimitriadis a one-time cash payment of $250,000 each in lieu of continuing health insurance benefits for Ms. Simpson, Mr. Dimitriadis and Mr. Dimitriadis' two dependents. If any payment or benefit received by Mr. Dimitriadis or Ms. Simpson from us subjects them to excise taxes under the "golden parachute" rules on payments and benefits, then we have agreed to provide them an additional "gross-up payment" to make the officer whole for these excise taxes and for all taxes on the gross-up payment.

        The following table lists the Named Executive Officers and the estimated amounts they would have received under their respective employment agreements if their employment with us terminated for any

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reason, except for a termination for cause or a voluntary resignation without a good reason on December 31, 2011:2012:

⁽¹⁾

Represents base salaries and termination provisions in effect at December 31, 2011.2012.

⁽²⁾

The employment agreements state that if the executive officer's employment is terminated upon a change in control of our company then the executive shall not be given the opportunity to participate in any medical or dental insurance coverage. However, if the executive officer's employment is terminated for any reason, except for a termination for cause or a voluntary resignation without a good reason, we have agreed to extend medical and dental insurance coverage for up to 18 months, at our expense, to the executive officer. Estimates provided in this table are based on amounts we paid for medical and dental insurance for our Named Executive Officers in 2011.2012. As described above under "Description of Employment Agreements," we agreed to provide Mr. Dimitriadis with health insurance benefits for life and Mr. Dimitriadis' two dependents with health insurance benefits until they reach the age of 22. However, we may elect to pay Mr. Dimitriadis a one-time cash payment of $250,000 in lieu of continuing health insurance benefits for Mr. Dimitriadis and his two dependents. Also as described above under "Description of Employment Agreements," we agreed to provide Ms. Simpson with health insurance benefits for life if Ms. Simpson's employment with us is terminated for any reason, except for a termination for cause or a voluntary resignation without a good reason. However, we may elect to pay Ms. Simpson a one-time cash payment of $250,000 in lieu of continuing health insurance benefits.

⁽³⁾

Under the standard terms of our option and restricted stock award agreements, the term of any unvested option or restricted stock will accelerate if the employment of the named executive officer terminates for any reason, such as, death, disability, termination without cause, or a resignation with good reason.

⁽⁴⁾

For unvested restricted common stock this amount represents the closing market price as reported by the NYSE on December 31, 2012, the last trading day of 2012. For stock options this amount represents the difference between the exercise price and the closing market price as reported by the NYSE on December 31, 2012, the last trading day of 2012.

⁽⁵⁾

Subsequent to December 31, 2012, Mr. Stokes was paid $250,000 and the vesting of his restricted common stock was accelerated as a result to his retirement on March 31, 2013.

Severance and Other Benefits Upon Change of Control

        As described above under "Description of Employment Agreements" the employment agreements we have with our Named Executive Officers provide for payments of severance and other benefits upon a change of control of our company. Upon a change in control of our company whether or not the Named Executive Officer's employment is terminated, we have agreed to pay the Named Executive Officer a severance payment in cash equal to $5,000,000 for Mr. Dimitriadis, $3,000,000 for Ms. Simpson and two times base salary for Ms. Shelley-Kessler, Messrs. Malin and Stokes. If any payment or benefit received by Mr. Dimitriadis or Ms. Simpson from us subjects them to excise taxes under the "golden parachute" rules on payments and benefits, then we have agreed to provide them an additional "gross-up payment" to make the officer whole for these excise taxes and for all taxes on the gross-up payment. Further, upon a change of control all stock options and/or restricted common stock automatically vest.

        A "Change in Control" occurs if:

        (a)   Any Person or related group of Persons (other than Executive and her Related Persons, our company or a Person that directly or indirectly controls, is controlled by, or is under common control with, our company) is or becomes the Beneficial Owner, directly or indirectly, of securities of our company representing 30% or more of the combined voting power of our company's then outstanding securities;

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        (b)   The stockholders of our company approve a merger or consolidation of our company with any other corporation (or other entity), other than a merger or consolidation which would result in the voting securities of our company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 66²/3% of the combined voting power of the voting securities of the company or such surviving entity outstanding immediately after such merger or consolidation; provided,

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however, that a merger or consolidation effected to implement a recapitalization of our company (or similar transaction) in which no Person acquires 30% or more of the combined voting power of our company's then outstanding securities shall not constitute a Change in Control;

        (c)   The stockholders of our company approve a plan of complete liquidation of the company or an agreement for the sale or disposition by our company of all or substantially all of our company's assets; or

        (d)   A majority of the members of the Board of Directors of our company cease to be Continuing Directors.

        The following table lists the Named Executive Officers and the estimated amounts they would have received under their respective employment agreements if there had been a change of control of our company on December 31, 20112012 whether or not the Named Executive Officer's employment is terminated:

⁽¹⁾

Represents base salaries and change of control provisions in effect at December 31, 2011.2012.

⁽²⁾

The employment agreements state that if the executive officer's employment is terminated upon a change in control of our company then the executive shall not be given the opportunity to participate in any medical or dental insurance coverage. As described above under "Description of Employment Agreements," we agreed to provide Mr. Dimitriadis with health insurance benefits for life and Mr. Dimitriadis' two dependents with health insurance benefits until they reach the age of 22. However, we may elect to pay Mr. Dimitriadis a one-time cash payment of $250,000 in lieu of continuing health insurance benefits for Mr. Dimitriadis and his two dependents. Also as described above under "Description of Employment Agreements," we agreed to provide Ms. Simpson with health insurance benefits for life upon a change in control of our company whether or not Ms. Simpson's employment is terminated. However, we may elect to pay Ms. Simpson a one-time cash payment of $250,000 in lieu of continuing health insurance benefits.

⁽³⁾

For unvested restricted common stock this amount represents the closing market price as reported by the NYSE on December 30, 2011,31, 2012, the last trading day of 2011.2012. For stock options this amount represents the difference between the exercise price and the closing market price as reported by the NYSE on December 30, 2011,31, 2012, the last trading day of 2011.2012.

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DIRECTOR COMPENSATION

        Compensation for our Board of Directors typically consists of quarterly board fees, fees for attending meetings whether in-person or by telephone, and periodic equity awards. The following table presents information regarding the compensation during 20112012 earned by or paid to non-employee members of our Board of Directors. Two members of our Board are also employed by us and therefore are not entitled to receive additional compensation for their services as directors. Compensation information related to our two employee directors is included in the previous discussion and tables related to executive compensation.

Director Compensation for the Year ended December 31, 20112012

⁽¹⁾

See "Equity Awards" below for the aggregate number of stock awards and option awards outstanding at year end. Represents the fair value on the grant date of the stock awards and option awards granted. Under U.S. generally accepted accounting principles, compensation expense with respect to stock awards and option awards granted is generally recognized over the vesting periods applicable to the awards. For a discussion of the assumptions and methodologies used to value the stock awards and option awards granted refer toNote 10. Equity of Notes to Consolidated Financial Statements included in the Company's 20112012 Annual Report on Form 10-K10-K.

Quarterly Board and Meeting Fees

        The following table represents the schedule of meeting fees and quarterly fees for each non-employee director in effect during 2011:2012:

⁽¹⁾

Along with meeting fees and quarterly fees, we reimburse non-employee directors for travel expenses incurred in connection with their duties as our director. Travel expense reimbursements are not included in this table.

⁽²⁾

The board meeting and committee meeting fees are paid to each non-employee director for attendance in person or telephonically at each meeting of the Board of Directors or of any committee meeting held on a day on which the Board of Directors did not meet. If a committee meeting is held on a day on which a meeting of the Board of Directors is held, there is no fee paid for the committee meeting.

Equity Awards

        Directors participate in our 2008 Equity Participation Plan (or the 2008 Plan) which permits the Compensation Committee to grant nonqualified stock options or restricted common shares to directors from time-to-time. In 2011,2012, the Compensation Committee granted 1,5002,000 shares of restricted common stock to Ms. Shapiro, Messrs. Hendrickson and King and Dr. Triche at $28.70$31.87 per share. These shares vest ratably over a three-year period from the grant date. The following table presents the number of

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outstanding and unexercised option awards and the number of unvested shares of restricted common stock held by each of our non-employee directors at December 31, 2011.2012.

⁽¹⁾

3,334 vested on May 15, 2010

⁽²⁾

5,000 vested on July 30, 2010, 2011 and 2012

⁽³⁾

3,333 vested on May 15, 2008 and 2009; 3,334 vested on May 15, 2010

⁽²⁾

3,334 vested on May 15, 2010

⁽³⁾

5,000 vested on July 30, 2010 and 2011; 5,000 will vest on July 30, 2012

⁽⁴⁾

Vests as follows: 334 on May 15, 2012; 333 on May 27, 2012; 334 on May 27, 2013; 500 on June 1, 2012, 2013 and 2014

⁽⁵⁾

Vests as follows: 1,000 on July 30, 2012; 3332014; 666 on May 27, 2012; 33423, 2013; 667 on May 27, 2013; 500 on June 1, 2012, 201323, 2014 and 20142015

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COMPENSATION COMMITTEE REPORT

        The Compensation Committee Report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that we specifically incorporate this information by reference, and shall not otherwise be deemed filed under such Acts.

        The Compensation Committee of the Board of Directors has reviewed and discussed with management the Executive Compensation Discussion and Analysis for 2011.2012. Based on the review and discussions, the Committee recommended to the Board, and the Board has approved, that the Executive Compensation Discussion and Analysis be included in this Proxy Statement.

Compensation Committee Interlocks and Insider Participation

        During 2011,2012, the Compensation Committee consisted of Timothy J. Triche, MD, Edmund C. King and Devra G. Shapiro, all of whom are independent directors. None of the members of the Compensation Committee are, or have been, officers or employees of the company. There are no "interlocks" (as defined by the rules of the SEC) with respect to any member of the Compensation Committee of the Board of Directors.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS

        This table shows information as of April 2, 2012March 31, 2013 with respect to the beneficial ownership of our common stock by (1) each person who is known by us to own beneficially more than 5% of our common shares based on the most recent Schedule 13D or 13G filings made by such person with the Securities and Exchange Commission pursuant to rules and regulations promulgated under the Exchange, (2) each director and director nominee, (3) each Named Executive Officer identified in the Summary Compensation Table above, and (4) the current directors and executive officers as a group.

^*

Less than 1%

^?+

Does not include information concerning directors Andre C. Dimitriadis and Wendy L. Simpson, each of whom is also an executive officer, which information is provided above.

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⁽¹⁾

Except as otherwise noted below, all shares are owned beneficially by the individual or entity listed with sole voting and/or investment power.

⁽²⁾

For purposes of computing the percentages, the number of shares outstanding on April 2, 2012March 31, 2013 was 430,411,774.30,712,510.

⁽³⁾

Based upon information contained in a Schedule 13G filed with the SEC on February 10, 2012 by Deutsche Bank AG, RREEF America L.L.C. (or RREEF), Deutsche Investment Management Americas (or DIMA) and Oppenheim Asset Management Services S.á.r.l (or OAMS) with respect to the ownership of our common stock as of December 30, 2011, the Private Clients and Asset Management business group (or PCAM) of Deutsche Bank AG and its subsidiaries (including RREEF, DIMA or OAMS) and affiliates (or collectively, DBAG) beneficially own 3,335,537shares. Of this amount, Deutsche Bank AG has sole voting power over 1,968,640 shares and sole dispositive power over 3,335,537 shares, RREEF has sole voting power over 1,843,103 shares and sole dispositive power over 3,210,000 shares, DIMA has sole voting power and sole dispositive power over 119,269 shares and OAMS has sole voting power and sole dispositive power over 6,268 shares.

⁽⁴⁾

Based upon information contained in a Schedule 13G/A filed with the SEC on February 9, 20127, 2013 by The Vanguard Group, Inc. (or VGI) with respect to the ownership of our common stock as of December 31, 2011,2012, VGI beneficially owns 3,194,2623,826,452 shares. VGI has the sole voting power of 43,59093,790 shares and sole power to dispose of or to direct the disposition of 3,150,6723,748,762 shares. Vanguard Fiduciary Trust Company (or VFTC), a wholly-owned subsidiary of VGI, is the beneficial owner of 43,59044,990 shares of our common stock outstanding as a result of its serving as investment manager of collective trust accounts. VFTC directsVanguard Investments Australia, Ltd. (or VIA), a wholly-owned subsidiary of VGI, is the votingbeneficial owner of these shares.81,500 shares of our common stock outstanding as a result of its serving as investment manager of Australian investment offerings.

⁽⁵⁾⁽⁴⁾

Based upon information contained in the a Schedule 13G/A filed with the SEC on FebruaryApril 10, 20122013 by BlackRock, Inc. (or BlackRock) with respect to the ownership of our common stock as of December 30, 2011,March 28, 2013, BlackRock beneficially owns 2,661,3473,060,578 shares. BlackRock has the sole voting power and sole power to dispose of or to direct the disposition of 2,661,3473,060,578 shares.

⁽⁶⁾⁽⁵⁾

Based upon information contained in National Health Investors, Inc.'s (or NHI) Annual Report on Form 10-K for the year ended December 31, 2011 filed with the SEC and with respect to the ownership of our common stock as of December 31, 2011, NHI directly owns 293,800 shares and has sole voting and dispositive power over these shares. Based upon NHI's Annual Report on Form 10-K for the year ended December 31, 2012 filed with the SEC, NHI did not disclose any changes to their ownership of our common stock. Additionally, NHI owns our Series C Cumulative Convertible Preferred Stock, which has an option to convert at a price of $19.25 per share into 2,000,000 shares of common stock.stock as of December 31, 2012. For the purpose of computing this percentage, the number of shares subject to conversion is deemed to be outstanding only for the calculation of NHI's percent of class calculation.

⁽⁷⁾⁽⁶⁾

Based upon information contained in a Schedule 13G13G/A filed with the SEC on January 27, 2012February 14, 2013 by Vanguard Specialized Funds—Vanguard REIT Index (or Vanguard REIT) with respect to ownership of our common stock as of December 31, 2011,2012, Vanguard REIT beneficially owns and has sole voting power over 1,681,4392,015,633 shares.

⁽⁷⁾

Includes 10,000 shares of common stock held in two irrevocable trusts for his daughters.

⁽⁸⁾

Includes shares purchasable by such individual upon exercise of outstanding options that are presently exercisable or will become exercisable within 60 days of April 2, 2012March 31, 2013 as follows:

⁽⁹⁾

Includes 1,000 shares of common stock held by spouse in an individual retirement account.

⁽¹⁰⁾

Includes 550 shares of common stock held in an individual retirement account.

⁽¹¹⁾

Includes 1,6851,575 shares of common stock held by spouse in an individual retirement account.

⁽¹²⁾

25,000 of the shares beneficially owned have been pledged as security.

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Securities Authorized for Issuance under Equity Compensation Plans

        Securities authorized for issuance under equity compensation plans as of December 31, 20112012 is as follows: