WASHINGTON,
Rule
SECURITIES EXCHANGE ACT OFof the
☐ | Preliminary Proxy Statement | |
☐ | Confidential, 14a-6(e)(2)) | |
☒ | Definitive Proxy Statement | |
☐ | Definitive Additional Materials | |
☐ | Soliciting Material Pursuant to §240.14a-12 |
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April 27, 2023
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Dear Fellow Stockholder:
Our
We
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We are providing you this Proxy Statement to enable you to give us your input by voting. We hope that you will attend our 2023 annual meeting of stockholders, to be held on May 25, 2023. Details of the business to be conducted at the meeting are set forth in the accompanying Proxy Statement. In the event that you are unable to attend, however, we urge you to vote by mail, phone, or Internet, as described in the following material.
Thank you for your continued support of our company.
Best Regards,
Edward K. Aldag, Jr.
Chairman, President, and Chief Executive Officer
Proxy Statement and Notice of 2023 Annual Meeting i |
Proxy Statement and Notice of 2020 Annual Meeting i
April 23, 202027, 2023
Attached you will find a notice of annual meeting and the Proxy Statement, which contain further information about the items to be voted on at the annual meeting and the annual meeting itself, including the different methods you can use to vote your proxy. Also enclosed are your proxy card, our 20192022 Annual Report onForm 10-K, and our 20192022 Annual Report to stockholders. Only stockholders of record at the close of business on March 20, 202029, 2023 are entitled to receive notice of, to attend, and to vote at the annual meeting and any adjournment thereof.
EVEN IF YOU PLAN TO ATTEND IN PERSON, YOU ARE REQUESTED TO SIGN, DATE, AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING POSTAGE-PAID ENVELOPE, OR VOTE YOUR PROXY BY TELEPHONE OR INTERNET, AT YOUR EARLIEST CONVENIENCE. This will not prevent you from voting your shares in person if you choose to attend the annual meeting.
Any proxy may be revoked at any time prior to its exercise at the annual meeting.
If any of your shares of common stock are held by a broker, bank or other nominee, please follow the instructions you receive from your broker, bank or other nominee to have your shares voted.
A list of the stockholders entitled to vote at the annual meeting will be open to examination by any stockholder, for any purpose germane to the annual meeting, during ordinary business hours, for a period of at least ten days prior to the annual meeting at the principal executive offices of the Company at 1000 Urban Center Drive, Suite 501, Birmingham, Alabama 35242.
By Order of the Board of Directors,
Emmett E. McLean
Executive Vice President, Chief Operating Officer,
and Secretary
ii Proxy Statement and Notice of 2023 Annual Meeting |
ii Proxy Statement and Notice of 2020 Annual Meeting
How to Vote
Your vote is important. You may vote your shares if you were a stockholder of record on March 20, 2020.29, 2023. If you are a registered owner you may vote using any of the following methods:
• | By Internet |
www.voteproxy.com
• | By Telephone |
1-800-PROXIES
(1-800-776-9437)
• | By Mail |
Complete, sign, date, and return your enclosed proxy card.
• | In Person |
At the Annual Meeting
If you own your shares through a bank, broker or other nominee, you should follow the voting instructions provided by your bank, broker or other nominee.
Proxy Statement and Notice of 2020 Annual Meeting iii
Performance Highlights
2019 was atransformative year of incomparable growth and achievement for Medical Properties Trust (“MPT” or the “Company”). We deliveredmarket-leading shareholder returns and believe we are in the early stages of a rapidly developing market for hospital real estate transactions in which MPT is the unquestioned global leader. Additionally, MPT’s access to capital has continued to expand both in improved global pricing andampler sources of debt and equity. We completed approximately $4.5 billion inimmediately accretive investments in the United States, United Kingdom, Germany, Switzerland, Australia, Spain and Portugal, furtherimproving our already diversified global geographic footprint and tenant diversification.
Proxy Statement and Notice of 2023 Annual Meeting iii |
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Performance Highlights During 2022, Medical Properties Trust (“MPT,” the “Company” or “we”) continued to execute its business plan to grow earnings and reallocate capital despite challenging market conditions. We are the first U.S. company of its kind to invest in hospitals globally, and we have established ourselves as a global leader in hospital real estate finance as the second largest non-governmental owner of hospitals in the world. The steady execution of our strategy and business plan continues to deliver strong financial results and long-term value creation. Proven Execution of MPT Strategy
Stockholder Value Creation(2) |
MPT has generated meaningful value for our stockholders over the long-term | ||||||||||||||
| $4.32B | Dividends Paid
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10 | Consecutive Years of Annual Dividend Increases |
Total Stockholder Returns (“TSR”)(2)(4)
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+10% | Outperforming the Health Care Index by +3% | |||||||||
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(1) | Refer to Appendix A for our definition of |
(2) | As of December 31, 2022. |
(3) | Our largest tenant concentration was 19.8% as of
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(4) | Healthcare Index represents the Dow Jones Real Estate Healthcare Index. |
iv Proxy Statement and Notice of 2023 Annual Meeting |
iv Proxy Statement and Notice of 2020 Annual Meeting
Proxy Summary |
Executive Compensation Highlights
Executive Compensation Highlights
Pay for PerformancePay-for-Performance
Our executive compensation program is designed to drive and reward performance over the long term and on an annual basis. The foundational principle of our program is to motivate our executives to achieve the strategies, operational and financial goals, that are designed by our Compensation Committee to create significant value for our stockholders. Executive compensation is directly affected by the level of achievement of these pre-established goals. The effectiveness of our executive compensation program is illustrated by the following:
◆ | Consistent long-term growth in earnings as illustrated by our consistent growth in Normalized FFO(1) over the past several years |
◆ | Even though our executives achieved important operational and financial goals, significant portions of their 2022 compensation were reduced because the Company’s TSR did not meet the goals set out by the Compensation Committee |
◆ | The value to our executives of the equity awards granted as part of their compensation in 2022 was reduced based on the decrease in the market price of our shares, directly aligning our executives with our stockholders. |
We believe that our executive compensation program represents a balanced,pay-for-performance plan approach withonly 6% of our CEO’s compensation guaranteedfixed in the form of base salary and the majority of our equity awards (63%(66% for our CEO) tied to the achievement of operational goals and subject to adjustment based on absolute and relative Total Shareholder Return (“TSR”)TSR performance.
Compensation Governance
We are committed to strong compensation governance:
(1) | Refer to Appendix A for our definition of FFO and Normalized FFO and a reconciliation of net income to FFO and Normalized FFO. | |||
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Key Compensation Practices
In addition to our strong commitment to pay-for-performance, our compensation program and practices also include the following key features:
Alignment with our business plan, which is built on accretive transactions and strong balance sheet management |
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No new employment agreements since 2003 with evergreen provisions, single-trigger change of control provisions or excise tax gross-up provisions |
Appropriate balance between short-term and long-term incentive measures |
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Strong Stockholder Support for our Executive Compensation Program Our 2022 Say-on-Pay vote received over 92% support from our stockholders, which is consistent with our historical support, which has been above 90% since 2016. Our average Say-on-Pay vote results over the past seven years is nearly 95% as compared to approximately 91% in the overall Real Estate Investment Trust (“REIT”) industry.
Our historical | ||||
continue to monitor and review our compensation |
Proxy Statement and Notice of 2023 Annual Meeting v |
Proxy Statement and Notice of 2020 Annual Meeting v
Proxy Summary |
Corporate Governance Highlights
Director Qualifications, Skills, and Experience
Our Ethics, Nominating and Corporate Governance Committee has determined that each of our director nominees possesses the qualifications, skills, and experience to effectively oversee the Company’s long-term business strategy.
In addition to the core competencies noted above, our Board believes that the Company will be best served by directors with a wide array of talents and perspectives to drive innovation, promote critical thinking and enhance discussion. Each of the following additional qualifications meaningfully adds to our Board’s depth. The matrix below indicates the percentage of our director nominees who possess each qualification, skill, or experience.
Director Qualifications and Experience | Strategic Planning | Executive Leadership | Risk Management | REIT / Real Estate | Health Care Industry | Finance & Accounting | Investment | Legal / Regulatory | Cyber | ESG | ||||||||||
Percentage of Directors | 100% | 78% | 100% | 100% | 67% | 67% | 78% | 56% | 33% | 33% |
Board Composition
We have taken meaningful steps to refresh our Board of Directors and have sought to create an effective mix of experience skill and diversity. The majority of our Board is independent, and we recently added a new independent female director in 2020.
Gender | Tenure | Age | ||
Key Director Skills
Corporate Governance Policies
We are committed to strong corporate governance, and our Board has adopted robust governance practices and policies, including the following:including:
◆ | Strong Board Governance |
◆ | History of and commitment to Board diversity and refreshment |
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◆ | Active and |
◆ | Stockholders’ ability to amend |
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Executives require prior authorization to purchase or sell our shares |
◆ | Unclassified Board of Directors |
◆ | Opted out of the Maryland Unsolicited Takeover Act (“MUTA”) |
◆ | No stockholder rights plan (“poison pill”) |
◆ | Regular executive sessions of independent Board members |
◆ | Mandatory director retirement age |
◆ | Clawback |
◆ | Established a political contribution policy |
◆ | Strengthened our corporate policies related to Anti-Corruption and Bribery, Code of Ethics, and Business Conduct |
◆ | Expanded our Code of Ethics and Business Conduct to include third parties |
vi Proxy Statement and Notice of 2023 Annual Meeting |
vi Proxy Statement and Notice of 2020 Annual Meeting
Proxy Summary |
Corporate Responsibility Highlights
As a global leader among healthcare real estate companies, we are committed torecognize the need for strong corporate and social responsibility, and we strive to make a positive difference through our operations.business. Our approach to corporate responsibility includes the following principles:
Environmental Sustainability
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◆ | Continued and accelerated the process of collection and benchmarking our corporate emissions |
◆ | Our corporate office space in London is Building Research Establishment Environmental Assessment Methodology (BREEAM) Excellent certified |
◆ | Our corporate office space in New York City is WELL Gold certified and is projected to |
Our People
We are committed to providing a dynamic and supportive workplace for our employees that encourages both personal and professional growth through significant training and continuing education opportunities.
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◆ | Recognized as one of Modern Healthcare’s Best Places to Work for the second year in a row |
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◆ | Created a Charity and Community Support Committee through which we support health, social, educational and community organizations |
◆ | Contributed to over |
For moreadditional information, regarding our sustainability commitments, please gorefer to the Corporate Responsibility section of our proxythis Proxy Statement on page 1116 and the information provided on our website: https://responsibility.medicalpropertiestrust.com/medicalpropertiestrust.com/corporate-responsibility/
For more information on our sustainability, please review our Corporate Responsibility Report (“CRR”), which can be found on our website: https://www.medicalpropertiestrust.com/corporate-responsibility
* Throughout this Proxy Statement, we include several references to our website or materials available on our website. The information available on, or otherwise accessible through, our website is not incorporated by reference into this Proxy Statement.
Proxy Statement and Notice of 2023 Annual Meeting vii |
Proxy Statement and Notice of 2020 Annual Meeting vii
viii Proxy Statement and Notice of 2023 Annual Meeting |
viii Proxy Statement and Notice of 2020 Annual Meeting
Our Bylaws provide for the election of all directors at each annual meeting of stockholders. The Board, of Directors, at the recommendation of the Ethics, Nominating and Corporate Governance Committee, proposes that the eightnine nominees listed below, all of whom are currently serving on our Board, be elected to serve as directors until the 20212024 annual meeting of stockholders or until their successors are duly elected and qualify. The Board of Directors does not know of any reason why any nominee would not be able to serve as a director. However, if any nominee were to become unable to serve as a director, the Board of Directors may designate a substitute nominee, in which case the persons named as proxies will vote for such substitute nominee.nominee at the 2023 annual meeting of stockholders. Alternatively, the Board of Directors may reduce the number of directors to be elected at the Annual Meeting.annual meeting.
Summary Information about Our Director Nominees
Director Qualifications and Experience
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Director Nominees | Strategic Planning | Executive Leadership | Risk Management | REIT / Real Estate | Health Care Industry | Finance & Accounting | Investment | Legal / Regulatory | Cyber | ESG | ||||||||||||||||||||||||||||||
Edward K. Aldag, Jr. | X | X | X | X | X | X | X | X | ||||||||||||||||||||||||||||||||
G. Steven Dawson | X | X | X | X | X | X | ||||||||||||||||||||||||||||||||||
R. Steven Hamner | X | X | X | X | X | X | X | X | ||||||||||||||||||||||||||||||||
Caterina A. Mozingo | X | X | X | X | X | X | ||||||||||||||||||||||||||||||||||
Emily W. Murphy | X | X | X | X | X | X | X | X | ||||||||||||||||||||||||||||||||
Elizabeth N. Pitman | X | X | X | X | X | X | X | |||||||||||||||||||||||||||||||||
D. Paul Sparks, Jr. | X | X | X | X | X | X | X | |||||||||||||||||||||||||||||||||
Michael G. Stewart | X | X | X | X | X | X | ||||||||||||||||||||||||||||||||||
C. Reynolds Thompson, III | X | X | X | X | X | X | X | X | ||||||||||||||||||||||||||||||||
Percentage of Directors
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Proxy Statement and Notice of 2023 Annual Meeting 1 |
Proxy Statement and Notice of 2020 Annual Meeting 1
Proposal 1: Election of Directors |
Edward K. Aldag, Jr.
Director since: 2004 Founder, Chairman, Chief Executive Officer, and President
Age: 59
Investment (Chair)
Risk |
The Board believes that Mr. Aldag’s position as the founder of our Company, and his extensive experience in the healthcare and REIT industries, make him highly qualified to serve as Chairman of our
Mr. Aldag Mr. Aldag serves on the Mr. Aldag
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G. Steven Dawson
Director since: 2004
Independent Director
Committees: Audit (Chair) Investment |
The Board believes that Mr. Dawson’s substantial experience as a board member and committee chairman
Since 2003, Mr. Dawson has primarily been a private investor Mr. Dawson currently serves on the
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2 Proxy Statement and Notice of 2023 Annual Meeting |
2 Proxy Statement and Notice of 2020 Annual Meeting
Proposal 1: Election of Directors |
R. Steven Hamner
Director since: 2005 Founder, Executive Vice President, and Chief
Age: 66
Investment
Risk |
The Board believes that Mr. Hamner’s position as aco-founder of our Company, and his extensive experience in the real estate and healthcare industries and in the corporate finance sector, make him highly qualified to serve as a member of our
In August and September 2003, Mr. Hamner served as our Executive Vice President and Chief Accounting Officer. From October 2001 through March 2004, he was the Managing Director of Transaction Analysis LLC, a company that provided interim and project-oriented accounting and consulting services to commercial real estate owners and their advisors. From June 1998 to September 2001, he was Vice President and Chief Financial Officer of United Investors Realty Trust, a publicly traded REIT. For the Mr. Hamner received a B.S. in Accounting from Louisiana State University.
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Caterina A. Mozingo
Director since: 2020
Independent Director
Age: 55 Committees: Environmental and Social (Chair) Risk |
The Board believes that Ms. Mozingo’s experience as a certified public accountant and consultant to real estate and healthcare companies, and her experience providing tax consulting services to for profit and
Ms. Mozingo is a Ms. Mozingo is a member of the American Institute of CPAs, and the Alabama Society of CPAs, where she serves on the State Taxation Committee.
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Proxy Statement and Notice of 2023 Annual Meeting 3 |
Proxy Statement and Notice of 2020 Annual Meeting 3
Proposal 1: Election of Directors |
Murphy
Director since: 2022
Independent Director
Committees: Ethics, Nominating and Corporate Governance Environmental and Social | The Board believes that Ms. Murphy’s legal background and extensive knowledge of managing the growth of large organizations make her a valued advisor and highly qualified to serve as a member of our Board. Ms. Murphy is a leading expert in government contracting and government business. She served as Administrator of the U.S. General Services Administration (“GSA”) from 2017 to 2021, leading a workforce of more than 11,000 federal employees and overseeing 371 million square feet of office space and $75 billion in annual contracts. During her time as GSA Administrator, she had ultimate supervisory authority of the Office of High-Performance Green Buildings, as established in 42 U.S. Code § 17092. She was a member of the Federal Acquisitions Security Committee, which dealt with risk management around IT and the IT supply chain. Under her leadership, GSA significantly increased its sales and revenues, saved customer agencies more than $20 billion and recorded the highest customer, vendor, and employee satisfaction scores in the history of the agency. Before her service as the GSA Administrator, Ms. Murphy was GSA’s first Chief Acquisition Officer during the administration of President George W. Bush, where she was responsible for more than $40 billion in acquisition programs. Prior to this, she served at the U.S. Small Business Administration as the Senior Advisor for Government Contracting and Business Development and as Acting Associate Administrator for Government Contracting. In addition to her senior roles in the Executive Branch, Ms. Murphy spent nine years serving in various procurement policy and leadership roles for the House of Representatives, including Counsel and Professional Staff Member to the Committee on Armed Services and Senior Counsel and Policy Director for the Committee on Small Business. In the private sector, Ms. Murphy was the General Counsel and Vice President for Operations for TerreStar National Services, Inc., a wholly owned subsidiary of TerreStar Networks, and practiced government contracts law with the firm of Wiley, Rein & Fielding (now Wiley). She is a graduate of the University of Virginia School of Law and Smith College and is a member of the Young Presidents Organization, the Economic Club of Washington, D.C., and the Chief Executives Organization. She currently serves as Senior Fellow with the Center for Government Contracting at George Mason University’s School of Business. She works as a coach for high growth businesses with CEO Coaching International and serves on the Board of Advisors for SkillStorm and Vita Inclinata. | |||||||
Elizabeth N. Pitman Director since: 2018 Independent Director Age: 59 Committees: Ethics, Nominating and Corporate Governance (Chair) Risk (Chair) Environmental and Social |
The Board believes that Ms. Pitman’s experience as a healthcare lawyer, and her experience providing counsel to publicly traded and privately owned hospitals and healthcare systems,
Ms. Pitman has been an attorney with Holland & Knight, LLP, formerly Waller, Landen, Dortch & Davis, LLP, Ms. Pitman earned a B.S. in Accounting from the University of Alabama and a Juris Doctorate from the University of Alabama School of Law.
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4 Proxy Statement and Notice of 2023 Annual Meeting |
Proposal 1: Election of Directors |
D. Paul Sparks, Jr.
Director since: 2014
Independent Director
Audit Compensation Investment |
The Board believes that Mr.
Mr. Sparks retired in January 2016 after a32-year career in the energy industry. Mr. Sparks has been active in a number of
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4 Proxy Statement and Notice of 2020 Annual Meeting
Michael G. Stewart
Director since: 2016
Lead Independent Director
Committees: Compensation Environmental and Social Ethics, Nominating and Corporate Governance |
The Board believes that Mr. Stewart’s legal background, and his extensive knowledge of healthcare, legal and corporate governance and addressing various healthcare issues, make him a valued advisor and highly qualified to serve as a member of our
Mr. Stewart is presently a private investor. He served as Executive Vice President, General Counsel and Secretary of the Company from 2005 – 2010. Mr. Stewart formerly worked with law firms Berkowitz, Lefkovits, Isom & Kushner (now Baker Donelson) and Constangy, Brooks & Smith, having a law practice that encompassed corporate, healthcare, litigation, employment, and labor. Mr. Stewart also served as Vice President and General Counsel of Complete Health Services, Inc. (later, United Healthcare of the South). Throughout his professional career, he has provided private consulting services to physician groups and other healthcare providers. He is a graduate of Auburn University with a B.S. degree in Business Administration with an emphasis in Information Systems and received his Juris Doctorate degree from the Cumberland School of Law at Samford University.
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Proxy Statement and Notice of 2023 Annual Meeting 5 |
Proposal 1: Election of Directors |
C. Reynolds Thompson, III
Director since: 2016
Independent Director
Audit Investment |
The Board believes that Mr. Thompson’s significant executive experience, and his deep understanding of all aspects of
Mr. Thompson has served as Chairman and Chief Investment Officer of Select Strategies Realty of Cincinnati (“Select”), a privately held real estate investment company that specializes in the development, acquisition, management, and leasing of retail andmixed-use real estate in Mr. Thompson is a member of the Board of Visitors of the Culverhouse College of Business at the University of Alabama. He previously served on the Board of Governors of
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6 Proxy Statement and Notice of 2023 Annual Meeting |
Proposal 1: Election of Directors |
Proxy Statement and Notice of 2020 Annual Meeting 5
Governance Information Regarding Our Board of Directors
Annual Election of Directors
Our Board members stand for election each year. They serve until the next annual meeting of stockholders or until their respective successors are elected and qualify, subject to their prior resignation, retirement, death, disqualification, or removal from office. We do not have a classified board and our charter bars us, absent the approval of our stockholders, from adopting the Maryland Unsolicited Takeover Act, which, among other things, permits the board of directors of a Maryland corporation to classify itself without a stockholder vote. We maintain a majority vote standard and director resignation policy for uncontested director elections.
Independent Directors
A majority of our Board and each of our Audit Committee, the Compensation Committee and the Ethics, Nominating and Corporate Governance Committee is comprised of directors who qualify as independent under the standards of the New York Stock Exchange (the “NYSE”(“NYSE”). Each year, we affirmatively determine that each director deemed independent under NYSE standards has no material relationship with us (either directly or as a partner, stockholder or officer of an organization that has a relationship with us). The Board of Directors has determined that sixseven of the director nominees—G. Steven Dawson, Caterina A. Mozingo, Emily W. Murphy, Elizabeth N. Pitman, D. Paul Sparks, Jr., Michael G. Stewart, and C. Reynolds Thompson, III—have no relationship with us that would interfere with their ability to exercise independent judgment as a member of our Board, and that they otherwise qualify as “independent” under NYSE standards.
Independent Board Leadership
Two of Medical Properties Trust’sour founders serve as members of the Board of Directors.Board. Studies regularly show thatfounder-led companies outperform their peers[i]. We are therefore fortunate not to have to rely exclusively on governance mechanisms to ensure that our Board exercises robust, effective, and independent leadership.
We preserve the benefits thatfounder-led companies enjoyhave by maintaining our founder, Mr. Aldag, as Chairman and Chief Executive Officer. That dynamic is of particular importance in afounder-led company like ours, though we regularly review this structure and its alternatives.
We supplement our Board’s independence with a Lead Independent Director, currently Mr. Stewart, to whom the Board has given substantial powers and authorities. Our Lead Independent Director presides at all meetings of the Board at which the Chairman is not present and at all executive sessions of the independent directors. He serves as principal liaison between the Chairman and the independent directors, advising the Chairman on the quality, quantity and timeliness of the information presented to the Board. He advises the Chairman on the agendas for Board meetings and calls meetings of the independent directors, if deemed necessary or appropriate. The Lead Independent Director also oversees the annual self-evaluation of the Board. The Board can also, at its discretion, supplement the Lead Independent Director’s responsibilities.
We believe there are risks in relying exclusively on independent board chairs or lead independent directors for board independence. We therefore value—and have—strong independent committee chairs on our Board. We also believe that ourfounder-led culture enables robust and honest interactions from all of our Board members, each of whom brings important and diverse skill sets to their jobs. Finally, the Board completes an annual board self-evaluation process that is instituted by our Lead Independent Director and presented to the full Board.
[i]See, Chris Zook,“Founder-Led Companies Outperform the Rest—Here’s Why” inHarvard Business Review, March 24, 2016.
Proxy Statement and Notice of 2023 Annual Meeting 7 |
6 Proxy Statement and Notice of 2020 Annual Meeting
Proposal 1: Election of Directors |
Risk Oversight
Our Board of Directors plays a central role in overseeing and evaluating risks pertinent to our company.Company. While it is management’s responsibility to identify and manage our risk exposure on aday-to-day basis, the Board routinely discusses these risks with management and actively oversees our risk-management procedures and protocols. The BoardRisk Committee regularly receives reports from senior management on areas of material risk to the Company, including operational, financial, legal, regulatory, cybersecurity and strategic risks. In addition, each of the Audit Committee, the Compensation Committee and the Ethics, Nominating and Corporate Governance Committee exercisevarious committees exercises oversight and provides guidance relating to the particular risks within the purview of each committee, as well as making periodic reports to the full Board. Our Board of Directors also oversees risk by means of the required approval by our Board offor significant transactions and other decisions, including material acquisitions or dispositions of property, material capital markets transactions, significant capital improvement projects and important employment-related decisions.
Board Committees and Meetings
Our Board of Directors and our Board’s fourits six standing committees hold regular meetings. In 2019,2022, the Board of Directors met fourfive times; the Audit Committee met five times; the Ethics, Nominating and Corporate Governance Committee met two times;one time; the Compensation Committee met fourthree times; the Risk Committee met one time; and the Investment Committee acted by written consent in nine instances. The Environmental and Social Committee did not meet but approved one small investment via written consent. All other acquisitions were approved by the full Board.in 2022. In 2019,2022, each incumbent director attended at least 75% of (i) the total number of meetings of the Board held during the period for which he or she was a director and (ii) the total number of meetings of all committees of the Board on which the director served during the periods that he or she served.
The Board of Directors regularly meets in executive session without anynon-independent directors present. Mr. Stewart has been designated as the Lead Independent Director and in that capacity presides at these executive sessions. Mr. Stewart may be contacted directly by stockholders at mstewart@mpt.net. TheOur directors of the Company are encouraged to attend our annual meeting of stockholders absent cause. All directors of the Company holding their position at the time of the meeting attended our 20192022 annual meeting of stockholders.
Committees of the Board of Directors
The Board of Directors delegates certain of its functions to its standing committees.
Audit Committee
G. Steven Dawson Chairman
D. Paul Sparks, Jr. C. Reynolds Thompson, III |
| The Board
The Audit Committee oversees (i) our accounting and financial reporting processes, (ii) the integrity and audits of our financial statements, (iii) our compliance with legal and regulatory requirements, (iv) the qualifications and independence of our independent auditors, and (v) the performance of our internal and independent auditors. The specific functions and responsibilities of the Audit Committee are set forth in the Audit Committee Charter, a copy of which is posted on our website at |
8 Proxy Statement and Notice of 2023 Annual Meeting |
Proxy Statement and Notice of 2020 Annual Meeting 7
Proposal 1: Election of Directors |
Compensation Committee
Chairman
Michael G. Stewart
| Pursuant to the NYSE listing standards, in determining the independence of the directors serving on the Compensation Committee, our Board
The principal functions of the Compensation Committee are to evaluate the performance of our executive officers, review and approve the compensation for our executive officers, and review, administer and make recommendations to the full Board
In |
Environmental and Social Committee
Caterina A. Mozingo Chairman Edward K. Aldag, Jr. Elizabeth N. Pitman Michael G. Stewart Emily W. Murphy | The Environmental and Social Committee is tasked with assisting the Board and management in addressing the Company’s activities in the areas of environmental and social responsibility (including its responsibilities to stockholders, employees, tenants, and the communities where it operates). The responsibilities of the Environmental and Social Committee include, among others, advising management with respect to the development, implementation and continuous improvement of programs, policies and practices relating to ESG matters. The Committee oversees the Company’s responsibilities in a wide range of areas, such as environmental, health and safety matters (including, but not limited to, compliance with governmental regulations), environmental sustainability and climate risk and political activities. |
Proxy Statement and Notice of 2023 Annual Meeting 9 |
8 Proxy Statement and Notice of 2020 Annual Meeting
Proposal 1: Election of Directors |
Ethics, Nominating and Corporate Governance Committee
Chairman
Michael G. Stewart |
| The Ethics, Nominating and Corporate Governance Committee is responsible for, among other things, recommending the nomination of qualified individuals to become directors to the full
The Ethics, Nominating and Corporate Governance Committee will consider all potential candidates for nomination for election as directors who are recommended by the Company’s stockholders, directors, officers, or employees. All director recommendations must be made during the time periods provided and must provide the information required by Article II, Section 2.03 of the Company’s Second Amended and Restated
The Board
• directors should possess the highest personal and professional ethics, integrity, and values;
• directors should have, or demonstrate an ability and willingness to acquire in short order, a clear understanding of the fundamental aspects of the Company’s business;
• directors should be committed to representing the long-term interests of our stockholders;
• directors should be willing to devote sufficient time to carry out their duties and responsibilities effectively and should be committed to serving on the Board
• directors should not serve on more than three boards of public companies in addition to our
The Ethics, Nominating and Corporate Governance Committee also takes into consideration the diversity of its Board, including breadth of experience and the ability to bring new and different perspectives to the Board.
The Ethics, Nominating and Corporate Governance Committee recommended the nomination of all |
Proxy Statement and Notice of 2020 Annual Meeting 9
Investment Committee
Edward K. Aldag, Jr. Chairman
G. Steven Dawson R. Steven Hamner D. Paul Sparks, Jr. C. Reynolds Thompson, III | The Investment Committee, |
10 Proxy Statement and Notice of 2023 Annual Meeting |
Proposal 1: Election of Directors |
Risk Committee
Elizabeth N. Pitman Chairman Edward K. Aldag, Jr. Caterina A. Mozingo R. Steven Hamner | The Risk Committee is tasked with assisting the Board in its risk management and risk assessment activities, including through oversight of risks related to (i) business continuity, (ii) revenue concentration and the financial health and operational status of the Company’s tenants and operators, (iii) modifications to the Company’s strategies, (iv) industry trends and general economic conditions, (v) entrance into new markets, (vi) privacy concerns and security breaches and (vii) federal and state regulations. The responsibilities of the Risk Committee also include monitoring guidelines, policies and processes for monitoring and mitigating the various risks facing the Company. |
Governance, Ethics, and Stockholder Communications
Corporate Governance Guidelines. In furtherance of its goal of providing effective governance of the Company’s business and affairs for the long-term benefit of its stockholders, the Board of Directors has adopted Corporate Governance Guidelines. The Corporate Governance Guidelines are posted on our website atwww.medicalpropertiestrust.com. www.medicalpropertiestrust.com.
Code of Ethics and Business Conduct. The Company has adopted a Code of Ethics and Business Conduct, as approved by the Board, of Directors, which applies to all directors, officers, employees, and agents of the Company and its subsidiaries. The Code of Ethics and Business Conduct is posted on our website atwww.medicalpropertiestrust.com.www.medicalpropertiestrust.com/ethics-and-governance. We audit compliance with our Code of Ethics and Business Conduct Policy with each officer director, and employee with a questionnaire that is required to be completed annually. We intend to disclose on our website any amendment to, or waiver of, any provision of the Code of Ethics and Business Conduct applicable to our directors and executive officers that would otherwise be required to be disclosed under the rules of the SEC or the NYSE.
Proxy Access Bylaw Provisions. In 2017, we amended our bylawsBylaws to provide for “proxy access” for our stockholders. The proxy access provision permits a stockholder (or a group of up to 20 stockholders) that has owned at least 3% of our outstanding common stock for at least three years to nominate, and include in our proxy materials, up to the greater of two directors or 20% of the directors then in office; provided that the stockholders and the nominees satisfy the requirements specified in our bylaws.Bylaws.
Stockholder and Interested Party Communications with the Board. Stockholders and all interested parties may communicate with the Board of Directors or any individual director regarding any matter that is within the responsibilities of the Board of Directors.Board. Stockholders and interested parties should send their communications to the Board, of Directors, or an individual director, c/o Secretary, Medical Properties Trust, Inc., 1000 Urban Center Drive, Suite 501, Birmingham, Alabama 35242. The Secretary will review the correspondence and forward any communication to the Board, of Directors, or the individual director, if the Secretary determines that the communication deals with the functions of the Board of Directors or requires the attention of the Board of Directors or the individual director. The Secretary will maintain a log of all communications received from stockholders.
We will provide, free of charge, hard copies of our Annual Report to Stockholders, our Annual Report onForm 10-K, our Quarterly Reports onForm 10-Q, Current Reports onForm 8-K, and all amendments to these reports as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. Also available, free of charge, are hard copies of our Corporate Governance Guidelines and our Code of Ethics and Business Conduct along with the charters of our Ethics, Nominating and Corporate Governance Committee, our Audit Committee, and our Compensation Committee, and our Code of Ethics and Business Conduct.Committee. All of these documents are also available on our website atwww.medicalpropertiestrust.com. www.medicalpropertiestrust.com.
10 Proxy Statement and Notice of 2020 Annual Meeting
We are a global leading provider of real estate capital to hospitals, and the second-largestnon-governmental owner of hospital beds in the United States. We are unique among REITs due to our exclusive focus on investing in hospital real estate. Our hospitals and our tenant operators provided high quality care to millions of patients in the United States and abroad in 2019. Domestically, this included more than 440,000 admissions, 840,000 adjusted admissions, two million ER visits and 250,000 surgeries.
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Environmental Sustainability
We recognize the importance of environmental stewardship and we demonstrate our commitment to sustainability through initiatives at our corporate operations, development projects and to the extent possible ourtriple-net orabsolute-net lease properties. Materially all of our leases aretriple-net orabsolute-net leases, which means our tenants have ultimate responsibility for deciding when and how to implement environmentally sustainable practices at the hospitals they operate.
Therefore, our environmental sustainability initiatives focus on environmental improvements to our corporate operations, environmental risk management in our development projects, and dialoging with our tenants to deliver environmental improvements across our hospital portfolio. To understand the operations of, and environmental improvements needed at, our facilities, we work closely with a third-party to conduct physical inspections of our facilities. We recognize that our operations generate waste and use energy which results in greenhouse gas emissions, and that these actions have an impact on the environment that we strive to reduce.
Corporate Operations
Our commitment to environmental protection and sustainability is confirmed in our company-wide environmental policy which can be found on our website: https://responsibility.medicalpropertiestrust.com/ Additionally, the following highlights reflect several environmental sustainability features at our corporate headquarters.
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This year, we have established a formal Environmental, Social and Governance (“ESG”) Committee with responsibility for driving further environmental performance improvements across all aspects of our business. To ensure that we hold management accountable when it comes to fulfilling our sustainability commitments, we have incorporated ESG performance metrics into our executive compensation program.
Tenant Relationships
Key to our ability to deliver sector-leading growth are the deep, strategic relationships we establish with our tenants. Materially all of our leases aretriple-net orabsolute-net leases, which means our tenants have ultimate responsibility for deciding when and how to implement environmentally sustainable practices at the hospitals they operate. Our strong relationships with our tenants, and the work we do to support them and to promote environmental awareness for our tenants, have led to notable environmental improvements in operations across our portfolio.
Proxy Statement and Notice of 2020 Annual Meeting 11
We actively engage with over 60% of our tenants regarding the environmental sustainability of their properties and operations. Initiatives include a dedicated sustainability section in our regular tenant questionnaires, specifically designed to encourage ongoing environmental performance improvement, and ongoing engagement meetings, during which sustainability initiatives are routinely discussed.
We undertake due diligence on all new and existing tenants, and evaluate environmental risks associated with all real estate investment transactions. In the event that our due diligence uncovers environmental contamination, we work with our tenants to mitigate any issues through:
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Proxy Statement and Notice of 2020 Annual Meeting 13
Climate Change Risk
As part of our commitment to environmental sustainability, we also consider climate change related risks to our business. Extreme weather and changes in precipitation and temperature as a result of climate change, could cause physical damage to, or a change in demand for, our properties. To mitigate these risks, we will continue to collaborate with our tenants and other relevant stakeholders to ensure we are sustainably managing our business and to minimize our impact on the environment.
Our Communities
We provide financial and volunteer support for private and publicnon-profit programs aimed at improving the communities we operate in and public health. Our efforts are coordinated by our Charity and Community Support Committee.
Our People
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For more information regarding our sustainability commitments, please go to the Responsibility section of our website: https://responsibility.medicalpropertiestrust.com/
Proxy Statement and Notice of 2020 Annual Meeting 15
The Audit Committee of our Board of Directors has appointed PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm to audit our financial statements for the year ending December 31, 2020.2023. PricewaterhouseCoopers LLP served as our independent registered public accounting firm during the year that ended December 31, 2019.2022.
16 Proxy Statement and Notice of 2020 Annual Meeting
The Audit Committee of the Board of Directors has selected PricewaterhouseCoopers LLP (“PwC”) as the independent auditor to perform the audit of our consolidated financial statements for the year ending December 31, 2020.2023. PwC, an independent registered public accounting firm, also performed the audit of our consolidated financial statements for 20192022, 2021, and 2018.2020. The Board of Directors has approved the appointment of PwC as the Company’s independent registered public accounting firm for 20202023 based on the recommendation of the Audit Committee.
Representatives of PwC are expected to participate in the Annual Meeting.2023 annual meeting of stockholders. They will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions from our stockholders.
The Audit Committee is directly responsible for the appointment, compensation, and oversight of our independent auditor. In addition to retaining the independent auditor to audit our consolidated financial statements, the Audit Committee may retain the independent auditor to provide other auditing services. The Audit Committee understands the need for our independent auditor to maintain objectivity and independence in its audits of our financial statements.
To help ensure the independence of the independent auditor, the Audit Committee has adopted a policy that all audit andnon-audit services to be performed by its independent auditor must be approved in advance by the Audit Committee. The Audit Committee approved all services provided to us by PwC during the 20192022 and 20182021 calendar years.
The table below sets forth the aggregate fees billed by PwC for audit andnon-audit services:
2019 | 2018 | 2022 | 2021 | |||||||||||||
Audit Fees | $ | 1,232,000 | $ | 1,073,000 | $ | 1,269,500 | $ | 1,295,000 | ||||||||
Audit-Related Fees | — | — | - | - | ||||||||||||
Tax Fees | — | — | - | - | ||||||||||||
All Other Fees | — | — | 26,669 | 28,263 | ||||||||||||
Total | $ | 1,232,000 | $ | 1,073,000 | $ | 1,296,169 | $ | 1,323,263 |
In the above table, in accordance with the SEC’s definitions and rules, “audit fees” are fees for professional services for the audit of a company’s financial statements included in the annual report onForm 10-K, for the review of a company’s financial statements included in the quarterly reports onForm 10-Q, and for services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements; “audit-related fees” are fees for assurance and related services that are reasonably related to the performance of the audit or review of a company’s financial statements; “tax fees” are fees for tax compliance, tax advice, and tax planning; and “all other fees” are fees for any services not included in the first three categories.
12 Proxy Statement and Notice of 2023 Annual Meeting |
Proxy Statement and Notice of 2020 Annual Meeting 17
Proposal 2: Ratification of Independent Registered Public Accounting Firm |
The Audit Committee is composed of three independent directors and operates under a written charter adopted by the Board, of Directors, a copy of which is available on our website. The Board of Directors has determined that each committee member is independent within the meaning of the NYSE listing standards.
Management is responsible for the Company’s accounting and financial reporting processes, including its internal control over financial reporting, and for preparing the Company’s consolidated financial statements. PwC, the Company’s independent auditor, is responsible for performing an audit of our consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (“PCAOB”) and for expressing an opinion as to whether the Company’s consolidated financial statements are fairly presented in all material respects in conformity with generally accepted accounting principles in the United States of America (“GAAP”). In this context, the responsibility of the Audit Committee is to oversee the Company’s accounting and financial reporting processes and the audits of the Company’s consolidated financial statements.
In the performance of its oversight function, the Audit Committee reviewed and discussed with management and PwC the Company’s audited consolidated financial statements as of and for the year ended December 31, 2019.2022. Management and PwC represented to the Audit Committee that the Company’s audited consolidated financial statements as of and for the year ended December 31, 2019,2022, were prepared in accordance with U.S. GAAP. The Audit Committee also discussed with PwC the matters required to be discussed by the Statement of Auditing Standards No. 1301, as amended (“AS No. 1301”), as adopted by the PCAOB. AS No. 1301 sets forth requirements pertaining to the independent auditor’s communications with the Audit Committee regarding the conduct of the audit.
The Audit Committee received the written disclosures and the letter from PwC required by PCAOB Ethics and Independence Rule 3526, Communication with Audit Committees Concerning Independence (“Rule 3526”). Rule 3526 requires the independent auditor to provide written and oral communications prior to accepting an initial engagement conducted pursuant to the standards of the PCAOB and at least annually thereafter regarding all relationships between the auditor and the Company that, in the auditor’s professional judgment, may reasonably be thought to bear on independence, and to confirm that they are independent of the Company within the meaning of the securities acts administered by the SEC. The Audit Committee discussed with PwC any relationships that may impact their objectivity and independence and satisfied itself as to the firm’s independence.
The members of the Audit Committee are not professionally engaged in the practice of accounting or auditing and, as such, rely without independent verification on the information provided to them and on the representations made by management and PwC. Accordingly, the Audit Committee’s oversight does not provide an independent basis to determine that management has maintained appropriate accounting and financial reporting processes, or appropriate internal controls and procedures designed to assure compliance with the accounting standards and applicable laws and regulations. Furthermore, the reviews and discussions of the Audit Committee referred to above do not assure that the audit of the Company’s financial statements has been carried out in accordance with generally accepted auditing standards, that the Company’s audited consolidated financial statements are presented in accordance with GAAP, or that PwC is, in fact, independent.
Based on the Audit Committee’s review and the discussions described above, and subject to the limitations on its role and responsibilities described above and in the Audit Committee Charter, the Audit Committee recommended to the Board of Directors that the audited financial statements as of and for the year ended December 31, 2019,2022, be included in the Company’s 2019 Annual Report onForm 10-K for the year ended December 31, 2022, for filing with the SEC.
The foregoing report is provided by the undersigned members of the Audit Committee of the Board of Directors.Committee.
G. Steven Dawson (Chairman) | D. Paul Sparks, Jr. | C. Reynolds Thompson, III |
Proxy Statement and Notice of 2023 Annual Meeting 13 |
18 Proxy Statement and Notice of 2020 Annual Meeting
The Company asks that you indicate your support for our named executive officerofficers’ compensation as described in the Compensation Discussion and Analysis (“CD&A”) and the accompanying tables and related disclosures beginning on page 2019 of this Proxy Statement. This proposal, commonly known as a“say-on-pay”Say-on-Pay” proposal, is required pursuant to Section 14A of the Exchange Act. While thesay-on-paySay-on-Pay vote is advisory and thereforenon-binding on the Company, the Board, of Directors or the Compensation Committee, it gives our stockholders the opportunity to express their views on our named executive officers’ compensation. Our Board of Directors and Compensation Committee members take the views of our stockholders seriously and take these views into consideration when making executive compensation decisions. This vote is not intended to address any specific item of compensation but rather the overall compensation of our executive officers and the policies and practices described in this Proxy Statement. We conduct an annual,non-bindingsay-on-paySay-on-Pay vote consistent with the recommendation of a majority of our stockholders expressed by vote at our 2017 annual meeting of stockholders.
The Board of Directors and the Compensation Committee will review the voting results of this advisorysay-on-paySay-on-Pay vote and take them into consideration when structuring future executive compensation arrangements. The affirmative vote of the holders of a majority of the shares of common stock represented in person or by proxy at the 2020 Annual Meeting2023 annual meeting of Stockholdersstockholders and entitled to vote on the proposal will be required for approval.
As we describe in further detail in the CD&A, we believe that the experience, abilities, and commitment of our executive officers are unique in the business of investing in hospital real estate and are therefore critical to the long-term achievement of our investment goals. Accordingly, the primary objectives of our executive compensation program are to retain our key leaders, attract future leaders and align our executives’ long-term interest with the interests of our stockholders. The Board of Directors encourages you to carefully review the information regarding our executive compensation program contained in this Proxy Statement.
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As required by Section 14A of the Exchange Act, we are seeking a non-binding, advisory recommendation from our stockholders as to the frequency of future non-binding, advisory votes on the compensation of our named executive officers. Stockholders may vote for a frequency of one, two or three years, or abstain.
We recommend that our stockholders select a frequency of one year, or an annual vote. We believe that this frequency is appropriate because it will continue to enable our stockholders to vote, on a non-binding, advisory basis, on the most recent executive compensation information that is presented in our Proxy Statement, leading to a more meaningful and coherent communication between the Company and our stockholders on the compensation of our named executive officers. An annual advisory vote on executive compensation is consistent with our policy of seeking regular input from, and engaging in discussions with, our stockholders on corporate governance matters and our executive compensation philosophy, policies and practices.
Based on the factors noted above, the Board recommends that future votes on executive compensation occur every year until the next non-binding, advisory vote on the frequency of future non-binding, advisory votes on the compensation of our named executive officers, which will occur no later than our 2029 annual meeting of stockholders. Stockholders are not being asked to approve or disapprove the Board’s recommendation, but rather to indicate their choice among the following frequency options: every year, every two years, or every three years, or to abstain from voting. The Board unanimously recommends that you vote for a frequency of every “ONE YEAR” for future advisory votes on executive compensation.
Proxy Statement and Notice of 2023 Annual Meeting 15 |
Proxy Statement and Notice of 2020 Annual Meeting 19
We are a leading global provider of real estate capital to hospitals, and the second-largest non-governmental owner of hospitals in the world. We are unique among REITs due to our exclusive focus on investing in hospital real estate. Our hospitals and our tenant operators provided high quality care to millions of patients in the United States and abroad in 2022. Domestically, this included approximately 500,000 admissions, nearly two million emergency room visits and 300,000 surgeries.
Environmental Sustainability
We recognize the importance of environmental stewardship, and we demonstrate this through initiatives in our corporate operations, development projects and, to the extent possible, our triple-net or absolute-net lease properties. Materially, all of our leases are triple-net or absolute-net leases, which means our tenants have ultimate responsibility for deciding when and how to implement environmentally sustainable practices at the hospitals they operate. However, we communicate regularly with our tenants regarding sustainability matters and their importance.
Therefore, our environmental sustainability initiatives focus on environmental improvements to our corporate operations, environmental risk management in our development projects, and dialoguing with our tenants to better understand the environmental impact of our facilities. We recognize that our facilities generate waste and use energy and water, which results in greenhouse gas emissions, and that these actions have an impact on the environment. We also work closely with third parties to conduct physical inspections of our facilities.
For more information on our sustainability, please review our CRR which can be found on our website: https://www.medicalpropertiestrust.com/corporate-responsibility
16 Proxy Statement and Notice of 2023 Annual Meeting |
Corporate Responsibility |
Human Capital Management
◆ As of April 2023, we are a team of approximately 124 professionals, and we are committed to providing a challenging and dynamic work environment and to supporting professional and personal growth and development needs. ◆ Our commitment to protecting the rights of our employees, and to keeping them safe, is confirmed in our Company-wide Human Rights Policy, which can be found on our website: https://medicalpropertiestrust.com/corporate-responsibility/. ◆ All employees are also required to adhere to the highest ethical standards, including those confirmed in our Company-wide Code of Ethics and Business Conduct which can be found on our website: https://medicalpropertiestrust.com/corporate-responsibility/. ◆ We offer a competitive benefits package and equal employment opportunities designed to help recruit and retain high-quality, motivated employees, and to ensure their health and security. This includes paid parental leave and incremental coverage for fertility assistance. | Competitive Employee Benefits Top-of-the-line insurance coverage including health, secondary health, dental, vision and life, with individual coverage at no cost to employees 401(k) Plan with employer matching Monthly Fitness Allowance for employees with gym memberships and/or training programs Reimbursement for concierge physician Employee Assistance Program at no cost to employee Open, collaborative workspaces Paid parental leave Personnel development through trainings and conferences, including off-site corporate retreats Additional paid time off day annually for charitable work Incremental coverage for fertility assistance |
◆ | We provide leadership training for employees who are moving into management roles, and we offer other training and continuing education opportunities. We pay expenses when employees attend continuing education courses in order to maintain their professional certifications. We also pay expenses when employees attend seminars and workshops on topics related to their job responsibilities. |
◆ | As part of our ongoing commitment to data privacy and security, we also conduct cybersecurity and security awareness trainings throughout each year. These trainings are also part of the employee onboarding process. |
◆ | We engage legal experts to provide training sessions on matters pertaining to (i) harassment in the workplace, (ii) Family and Medical Leave Act basics, (iii) legal issues in interviewing, (iv) promoting diversity in the workplace and (v) discrimination, disability, and documentation. |
◆ | As in the prior two years, we issued an anonymous, independent employee engagement survey and in 2022, we received a 95% response rate, that covered topics such as company culture, work environment, training and development, and overall job satisfaction. The results of the surveys are presented to management and to the Board and used to assess potential human capital risks and identify opportunities for deeper employee engagement. Such surveys are valuable indicators, and in 2023, we issued another survey and may continue to use them to help manage human capital going forward. |
◆ | We were ranked among the best places to work in healthcare in Modern Healthcare’s Best Places to Work 2022, a premier award program in the top U.S. healthcare news publication. |
Proxy Statement and Notice of 2023 Annual Meeting 17 |
Corporate Responsibility |
◆ | We are firmly committed to providing equal opportunity in all aspects of employment and absolutely forbid discrimination against any person or harassment, intimidation or hostility of any kind, including on the basis of race, ethnicity, religion, color, sex, sexual orientation, sexual or gender identity, age, disability, national origin, military or veteran status, or retaliation against any other characteristic or conduct that may be protected by applicable local, state or federal law. We provide training on anti-harassment policies. |
◆ | Our commitment to a diverse and inclusive workplace is demonstrated by the following (as of April 2023): |
For more information, please go to the Responsibility section of our website: https://medicalpropertiestrust.com/corporate-responsibility/
18 Proxy Statement and Notice of 2023 Annual Meeting |
Executive Summary
Our Unique Business Model
Medical Properties Trust is a multi-facetedglobal organization that acquires and develops healthcare facilities and leases the facilities to healthcare operating companies under long-term net leases. Unlike many otherWe are the first U.S. company of its kind to invest in hospitals globally with approximately $21 billion invested around the world on an adjusted basis(1), as of December 31, 2022. Our diversified geographic footprint spans ten countries and 31 states in the U.S. We are at the forefront of our industry as the global leader in hospital real estate finance, providing crucial financing to our hospital operators, and unlocking significant value to fund critical growth in a vital industry. This sets us apart from most equity REITs, both in the healthcare and otherbroader REIT sectors, and in order to successfully execute our operations also include financing activities whereby we selectively make loans to healthcare operations collateralized by their real estate assets. This makesstrategy and effectively manage our Company quite unique and requirescomplex operations, our executives to haverequire expertise both within the real estate industry and the medical industry in orderhealthcare industry. Furthermore, our global operations add a unique layer of complexity that requires specialized knowledge and understanding of distinct international markets to effectively managesuccessfully execute transactions and operations around the world.
2022 Compensation Highlights
In 2022, our complex operations. We also operateexecutive compensation program continued to emphasize a pay-for-performance structure that rewards long term and annual results consistent with our business plan and strategy and is based on a global scale with properties in eight countries and a diversified geographic footprint in the U.S. spanning 34 states.
2019 Performance Highlightsfollowing key principles:
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◆ | Use incentives that are tied to rigorous performance goals that formulaically adjust payouts and realized compensation to reflect our performance results |
◆ | Allocate the majority of compensation to equity-based awards to further emphasize alignment with our stockholders |
We believe that both the success of our executive compensation program and our commitment to strong compensation governance was exhibited in 2022 as follows:
No Increase to Annual Target Pay | Significant Decline in Equity Value | Decrease in 2022 Cash Bonus Payouts | ||
0% For All NEOs Since 2020 and | -$25 Million | -17% | ||
During this period, our Say-on-Pay Support Has Consistently Been Above 92% | Reduction in our CEO’s “compensation actually paid” in 2022 as compared to the total amounts reported in our Summary Compensation Table, driven by a decline in the fair value of our CEO’s outstanding equity awards | Year-over-year Reduction in Cash Bonus for the CFO (and 21% reduction for the COO), demonstrating our rigorous performance targets |
In 2022, MPT continued to utilize the same compensation program that (i) has been strongly supported by our stockholders, and (ii) provides significant alignment between our NEOs’ compensation and our long-term and annual results. These results are discussed in detail throughout this “Compensation Discussion and Analysis” section for our NEOs: Edward K. Aldag, Jr. – Chairman, President & Chief Executive Officer; R. Steven Hamner – Executive Vice President & Chief Financial Officer; and Emmett E. McLean – Executive Vice President, Chief Operating Officer & Secretary(2).
(1) | Refer to Appendix A for our definition of total adjusted gross assets and a reconciliation of total assets to total adjusted gross assets. |
(2) | On February 16, 2023, Emmett E. McLean notified the Board of Directors of his intent to retire as Executive Vice President, Chief Operating Officer, and Secretary of the Company, effective September 1, 2023. |
Proxy Statement and Notice of 2023 Annual Meeting 19 |
Compensation Discussion and Analysis |
2022 Performance Highlights
Even in 2022’s challenging global, economic and financial environments, we continued to execute our long-term and annual strategies that included selective and accretive investments in hospital real estate and steady earnings growth.
Financial Performance
◆ | Sustained outperformance building on strong |
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$1.1 Billion new investments $13 Billion new |
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◆ | Steady growth in Normalized FFO(1) over the past three years, with an approximate 25% cumulative annual growth rate since the beginning of 2020 |
◆ | Continued to improve tenant diversification with no single property representing more than 3% of our overall portfolio |
◆ | Steady dividend growth with 10 consecutive years of dividend increases that continued in 2022, with 3.6% year-over-year growth |
Dividend per Share Growth
(3.8% CAGR since 2012)
(1) | Refer to Appendix A for our definition of FFO and Normalized FFO and a reconciliation of net income to FFO and Normalized FFO. |
(2) | Our largest tenant concentration was 19.8% as of December 31, 2022 on a total adjusted gross asset basis. Refer to Appendix A for our definition of total adjusted gross assets and a reconciliation of total assets to total adjusted gross assets. |
(3) | As of December 31, 2022. |
Compensation Discussion and Analysis |
Total Stockholder Return Performance
◆ | Our sustained payment of well-covered cash dividends has resulted in exceptional relative value to shareholders in the face of 2022’s global inflation and interest rate spikes |
◆ | $4.32 billion in cumulative dividends paid since IPO |
Cumulative TSR Growth Since-IPO
(Value of $100 invested on July 7, 2005)
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Medical Properties Trust Dow Jones U.S. Real Estate Health Care S&P Global REIT |
Proxy Statement and Notice of 2023 Annual Meeting 21 |
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Stockholder Engagement
Proactive engagement and transparency. | ||||
We actively engage with our stockholders in person and telephonically to ensure that they are fully informed about our executive compensation policies. |
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Review:Review results from the Analyze:Monitor market trends and review compensation policy based on governance trends and stockholder feedback (e.g., benchmarking levels and structural considerations) Engage:Engage with stockholders regarding the core structure and elements of our executive compensation Implement:Implement and adjust compensation program based on feedback from stockholders and current market and governance standards File:Publish annual proxy statement and prepare for |
In 2022, the feedback on our executive compensation program from our stockholder engagement efforts was positive and resulted in consistently strong Say-on-Pay approval. Based on the overwhelmingly positive support of our program from our stockholders, we kept the overall structure of the compensation program and magnitude of target compensation largely unchanged or decreased to further strengthen alignment with our stockholders as further described below in our “Evolution of our Compensation Program”.
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Proxy Statement and Notice of 2020 Annual Meeting 21
Compensation Discussion and Analysis |
EvolvingEvolution of Our Compensation Program and Governance. We have made consistent progress in developing a compensation program. Based on our discussionsprogram that is aligned with stockholders,best market and governance practices. The importance of stockholder engagement is evidenced by the meaningful enhancements we have implemented various improvements to our compensation program inmade over the last several yearsyears:
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2018 and Prior | › Streamlined annual cash incentive measures and clarified rationale for metrics
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› Implemented a clawback policy that applies to both cash and equity compensation
› Established executive stock ownership guidelines, including a minimum of 6x base salary for the CEO
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› Reduced the discretionary portion of annual cash incentives from 35% to 20% › Established an employee-led Green Team › Implemented Company-wide environmental initiatives and
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2020 | › › Incorporated an absolute TSR modifier (in addition to the existing relative TSR modifier) to ensure that our › Refined our executive compensation peer group to include only the most comparable REITs using a transparent selection methodology › Added ESG performance to the annual cash bonus program consistent with our commitment to ESG initiatives › Diversified our Board with one additional female director who is also Latina and | |||||
2021 - 2023 | › Continued to achieve market leading Say-on-Paysupport, › Established two new standing Board committees including an Environmental and › Demonstrated our commitment to Board refreshment and › No increases to target compensation for any of our NEOs despite the significant increase in our size and the complexity of our business › Streamlined CD&A disclosure to enhance pay transparency › Enhanced disclosure on how we determine equity awards and the Compensation Committee’s assessment of the discretionary portion of the bonus program
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Proxy Statement and Notice of 2023 Annual Meeting 23 |
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Compensation Discussion and Analysis |
Compensation Philosophy, Design, and Process
Our executive compensation program is designed to drive and reward performance. Given our unique business model, investor profile and global reach, it is also critical that we attract and retain high caliber executives capable of managing our unique business model with the skills necessaryexpertise in real estate, healthcare, international and financing operations. Our program was designed to successfully managemotivate and reward executives for successful execution of our scope of operations. We place significant value on tying our executives’ compensation to our long-term value creation for our stockholders, while balancing both short-term performance and retention, which we achieve through incorporating both a fixed component (e.g., base salary) and a variable componentbusiness strategy that is tied to both short-term and long-term goals inrigorous performance goals. In recent years, we have made several enhancements but maintained these core elements of our program. The effectiveness of our executive compensation program. Weprogram is illustrated by our significant achievements, including:
◆ | Accretive new investments of over $13 billion since the beginning of 2019 |
◆ | Net income of $902.6 million, representing 37.6% year-over-year growth in 2022 |
◆ | 10 consecutive years of dividend growth per share |
Additionally, we believe that our current executive compensation program represents a balanced and strategically-alignedstrategically aligned pay-for-performance program as demonstrated by the following:
◆ | Approximately |
◆ | The variable components of our compensation program specifically include rigorous performance goals meant to motivate management to execute our business plan tied to accretive growth, strategic financing and raising efficient capital. In our long-term program, our 2022 goals required meaningful growth in terms of FFO per share, EBITDA and acquisitions while also decreasing compensation based on the relative and absolute TSR performance in 2022. |
◆ | The majority of our equity awards |
◆ | Less than 10% of our CEO’s compensation is |
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Proxy Statement and Notice of 2020 Annual Meeting 23
Compensation Discussion and Analysis |
How We DetermineOur Executive Compensation Process
Compensation Committee | Compensation Consultant | Management | ||||||
Provides independent oversight and | Provides guidance to the Compensation Committee throughout the year on compensation matters, including benchmarking for pay levels, pay practices and governance trends |
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Assesses corporate and individual performance as it relates to actual compensation for our NEOs | Assists with peer group selection and analysis | CEO provides input on individual performance for other NEOs and achievements relating to strategicnon-financial business goals | ||||||
Administers our equity incentive programs, including reviewing and approving equity grants to our NEOs
| Reviews and advises on recommendations, plan design and measures |
Role of the Compensation Committee
Pursuant to its charter, the Compensation Committee is responsible for designing our executive compensation plans,program, establishing compensation levels, and measuring the performance of our NEOs. The Compensation Committee, which consists of three independent directors, is responsible for the design, review, and approval of all aspects of our executive compensation program. Among other duties, the Compensation Committee is responsible for the following:
Reviewing and approving, on an annual basis, the corporate incentive goals and objectives relevant to the annual cash bonus plan and performance-based equity awards;
◆ | Reviewing and approving, on an annual basis, the corporate incentive goals and objectives relevant to the annual cash bonus plan and performance-based shares |
Evaluating the performance of our executive officers in light of these goals and objectives;
◆ | Evaluating the performance of our executive officers in light of these goals and objectives |
Evaluating the competitiveness of each executive officer’s total compensation package relative to what other publicly traded and private equity-backed real estate investors may offer; and
◆ | Evaluating the competitiveness of each executive officer’s total compensation package relative to what other publicly traded and private equity-backed real estate investors may offer |
Approving any changes to each of our executive’s total compensation package, including, but not limited to, base salary, annual and long-term incentive award opportunities and payouts, and retention programs.
◆ | Approving any changes to each of our executive’s total compensation package, including, but not limited to, base salary, annual and long-term incentive award opportunities and payouts, and retention programs |
In order to assist the Compensation Committee to design, establishin designing, establishing and monitormonitoring our executive compensation plans, the Compensation Committee has engaged an independent executive compensation consultant, as described below.
Peer Group Data
We use peer group data to ensure that our compensation program remains both appropriate and competitive in relation to those companies with whom we most directly compete for talent and business opportunities, among other things. Constructing an appropriate peer group requires various considerations as no singular company or industry fully captures the scope of our operations. In particular, the complexities faced by our Company as a result of our global operations and the expertise required of our executives given our specialized assets presents a unique challenge in developing an appropriate peer group.
On an annual basis, we review our peer group to ensure the overall composite reflects an appropriate competitor set. Accordingly, we reviewed our peer group based on the following criteria:
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24 Proxy Statement and Notice of 2020 Annual Meeting
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Given the Company’s substantial growth in 2019 (increased in size by approximately 80%) and further expansion internationally, the Compensation Committee reevaluated the constituents of the 2018 peer group based on the criteria above and determined that certain adjustments were necessary in order to maintain an appropriate competitor set that represents the Company’s larger size and more complex scope of operations. The Company carefully selected the peer group to include the most similar competitors based on size and asset holdings, so that comparisons of our compensation structure to such peers would be meaningful.
Based on the approved peer group for 2019, Medical Properties approximates the 75th percentile based on implied equity market capitalization and includes the following companies (ranked by implied equity market capitalization):
Company(1) | Implied Equity Market Cap(2) | Industry | Size | Global | Healthcare Expertise | Specialized REIT | Net Lease REIT | |||||||||||||||||||||||||||
Ventas, Inc. | $ | 21,698.5 | Health Care REIT | ◆ | ◆ | ◆ | ||||||||||||||||||||||||||||
Alexandria Real Estate Equities, Inc. | 18,606.1 | Office REIT | ◆ | ◆ | ◆ | ◆ | ||||||||||||||||||||||||||||
Healthpeak Properties, Inc. | 17,672.7 | Health Care REIT | ◆ | ◆ | ◆ | |||||||||||||||||||||||||||||
Vornado Realty Trust | 13,588.1 | Office REIT | ◆ | ◆ | ||||||||||||||||||||||||||||||
Universal Healthcare Services, Inc. | 12,438.4 | Health Care Facilities | ◆ | ◆ | ◆ | |||||||||||||||||||||||||||||
Medical Properties Trust, Inc. | 10,928.4 | Health Care REIT | ◆ | ◆ | ◆ | ◆ | ◆ | |||||||||||||||||||||||||||
Omega Healthcare Investors, Inc. | 9,847.1 | Health Care REIT | ◆ | ◆ | ◆ | ◆ | ||||||||||||||||||||||||||||
Gaming and Leisure Properties, Inc. | 9,242.6 | Casino REIT | ◆ | ◆ | ◆ | |||||||||||||||||||||||||||||
Iron Mountain Incorporated | 9,156.2 | Specialty REIT | ◆ | ◆ | ◆ | |||||||||||||||||||||||||||||
Kilroy Realty Corporation | 9,064.5 | Office REIT | ◆ | ◆ | ||||||||||||||||||||||||||||||
Douglas Emmett, Inc. | 8,927.9 | Office REIT | ◆ | ◆ | ||||||||||||||||||||||||||||||
SL Green Realty Corp. | 7,668.3 | Office REIT | ◆ | ◆ | ||||||||||||||||||||||||||||||
CyrusOne Inc. | 7,510.9 | Specialty REIT | ◆ | ◆ | ◆ | |||||||||||||||||||||||||||||
Encompass Health Corporation | 6,830.0 | Health Care Facilities | ◆ | ◆ | ||||||||||||||||||||||||||||||
Healthcare Trust of America, Inc. | 6,388.7 | Health Care REIT | ◆ | ◆ | ◆ | |||||||||||||||||||||||||||||
EPR Properties | 5,542.6 | Diversified REIT | ◆ | ◆ | ◆ | ◆ |
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During 2019, the Compensation Committee utilized peer group compensation data to understand the Company’s pay levels and structure as compared to the market. Although the Compensation Committee does not adhere to a specific formula nor
Proxy Statement and Notice of 2020 Annual Meeting 25
does it target a certain percentile of compensation relative to the peer group, it does take into account peer group compensation levels to assess the competitiveness of each NEO’s overall compensation, while also considering factors such as size, scope of operations and our relative performance, as appropriate.
Role of the Compensation Consultant
In 2019,The Compensation Committee recognizes that it is essential to receive objective advice from its outside compensation consultant and, in 2022, the Compensation Committee retained Gressle & McGinley, LLC, a nationally recognized compensation consulting firm (the “Compensation Consultant” or “Gressle & McGinley”). The Compensation Consultant was engaged by and reports directly to the Compensation Committee. Upon the request of the Compensation Committee, a representative of Gressle & McGinley attended meetings of the Compensation Committee and communicated with the Chairman of the Compensation Committee between meetings; however, the Compensation Committee makes all decisions regarding the compensation of our executive officers.
The Compensation Consultant provides various executive compensation services to the Compensation Committee. Generally, these services include, among others, (i) advising the Compensation Committee on the principal aspects of our executive compensation program and director compensation program and evolving industry practices; (ii) presenting information to assist the Compensation Committee in determining the appropriate peer group to be used to evaluate the competitiveness of our compensation program; (iii) providing market information and analysis regarding the competitiveness of our program design and our award values in relationship to our performance; and (iv) preparing recommendations based on the Company’s performance, current market trends and corporate governance matters. The Compensation Committee recognizes that it is essential to receive objective advice from its outside compensation consultant.developments. The Compensation Committee has determined, based on a review of relevant factors, that
Proxy Statement and Notice of 2023 Annual Meeting 25 |
Compensation Discussion and Analysis |
Gressle & McGinley is independent and that their work has not raised any conflict of interests. The Compensation Committee also closely examines the safeguards and steps that Gressle & McGinley takes to ensure that its executive compensation consulting services are objective.
Other than advising the Compensation Committee as described above, Gressle & McGinley did not provide any other services to the Company in 2019.2022.
Role of the Chief Executive Officer
Although executive compensation determinations are ultimately made by the Compensation Committee, the CEO provides additional information to assist the Committee in evaluating and determining executive compensation and provides input on each executive officer’s performance, other than his own.
Use of Peer Group Data
We use peer group data to ensure that our compensation program remains both appropriate and competitive in relation to those companies with whom we most directly compete for talent and business opportunities, among other things. Constructing an appropriate peer group requires various considerations as no single company or industry fully captures the scope of our operations. In particular, the complexities faced by our Company as a result of our global operations and the expertise required of our executives given our specialized assets presents a unique challenge in developing an appropriate peer group.
Beginning in 2020, we refined our peer group identification methodology to include only REITs, with a focus on strategic peers that better reflect the uniqueness of our business, growth initiatives and global operations. On an annual basis, we review our peer group to ensure the overall composition reflects an appropriate competitor set. Accordingly, we reviewed our peer group based on the following criteria:
◆ | Continuity: Sensitivity to peer group continuity to ensure that peer group results are comparable year-over-year and are not arbitrarily adjusted for short-term changes in peer dynamics |
◆ | Size: REITs within an appropriate size range relative to our Company, in terms of total capitalization and ensuring the Company is at the approximate median or above the overall peer set. For 2022, the size range was slightly expanded to account for significant market volatility in the REIT sector and ranged from 0.3x to 3.0x (as compared to 0.4x to 2.5x in 2021). No new companies were added as a result of this change, but it allowed for peer group continuity |
◆ | Global: Companies with a global presence that reflect the same complexities faced by our global operations and challenges associated with operating on an international scale |
◆ | Healthcare Expertise: REITs that primarily invest in medical properties and/or healthcare assets whose executives require expertise in the healthcare/medical sector |
◆ | Specialized REITs: REITs with specialized assets that require executives to have knowledge of the underlying assets |
◆ | Net Lease REITs: REITs with a significant portion of properties leased on a triple-net basis |
During 2022, the Compensation Committee utilized peer group compensation data to understand the Company’s pay levels and structure as compared to the market. Although the Compensation Committee does not adhere to a specific formula nor does it target a certain percentile of compensation, we believe it is important to understand the competitive landscape to effectively assess each NEO’s total compensation opportunity, pay mix and overall governance and market trends. We strive to ensure that our compensation program and opportunities remain equitable and competitive, while also considering factors such as size, scope of operations and our relative performance, as appropriate.
26 Proxy Statement and Notice of 2023 Annual Meeting |
Compensation Discussion and Analysis |
2022 Executive Compensation Peer Group
The approved peer group for 2022 includes the following companies (ranked by total capitalization) with MPT slightly above median of the peer group based on total capitalization:
Company | Total Capitalization(1) | Industry | Size | Global | Healthcare Expertise | Specialized REIT | Net Lease REIT | |||||||||||||||||||||
Welltower Inc. | $47,373 | Health Care REIT | ◆ | ◆ | ◆ | ◆ | ◆ | |||||||||||||||||||||
SBA Communications Corporation (REIT) | $46,466 | Specialty REIT | ◆ | ◆ | ◆ | |||||||||||||||||||||||
Alexandria Real Estate Equities, Inc. | $38,477 | Office REIT | ◆ | ◆ | ◆ | ◆ | ||||||||||||||||||||||
Ventas, Inc. | $30,746 | Health Care REIT | ◆ | ◆ | ◆ | |||||||||||||||||||||||
Boston Properties, Inc. | $27,669 | Office REIT | ◆ | ◆ | ||||||||||||||||||||||||
Iron Mountain Incorporated | $27,577 | Specialty REIT | ◆ | ◆ | ◆ | ◆ | ||||||||||||||||||||||
Healthpeak Properties, Inc. | $20,910 | Health Care REIT | ◆ | ◆ | ◆ | ◆ | ||||||||||||||||||||||
Gaming and Leisure Properties, Inc. | $20,160 | Casino REIT | ◆ | ◆ | ◆ | |||||||||||||||||||||||
Medical Properties Trust, Inc. | $16,139 | Health Care REIT | ◆ | ◆ | ◆ | ◆ | ◆ | |||||||||||||||||||||
Vornado Realty Trust | $15,004 | Office REIT | ◆ | ◆ | ||||||||||||||||||||||||
Healthcare Realty Trust Incorporated(2) | $13,245 | Health Care REIT | ◆ | ◆ | ◆ | |||||||||||||||||||||||
Omega Healthcare Investors, Inc. | $12,028 | Health Care REIT | ◆ | ◆ | ◆ | ◆ | ||||||||||||||||||||||
SL Green Realty Corp. | $9,282 | Office REIT | ◆ | ◆ | ||||||||||||||||||||||||
Kilroy Realty Corporation | $8,944 | Office REIT | ◆ | ◆ | ||||||||||||||||||||||||
Douglas Emmett, Inc. | $8,441 | Office REIT | ◆ | ◆ | ||||||||||||||||||||||||
Hudson Pacific Properties, Inc. | $7,244 | Office REIT | ◆ | ◆ | ◆ | �� | ||||||||||||||||||||||
JBG SMITH Properties | $4,882 | Diversified REIT | ◆ | ◆ | ||||||||||||||||||||||||
(1) | All financial data in $ millions per S&P Capital IQ Pro as of December 31, 2022. |
(2) | Based on the selection criteria above, Healthcare Trust of America, Inc. was removed and replaced with Healthcare Realty Trust Incorporated (the post-Merger entity). |
Proxy Statement and Notice of 2023 Annual Meeting 27 |
Compensation Discussion and Analysis |
Compensation Program Features
The following chart provides an overview of the components of our 2022 executive compensation program, including the objective of each component and how it ties to our overall compensation philosophy, which can be summarized in the following key categories:
Retention | Provide Competitive Pay Opportunities | |||||
Motivate Execution of Business Strategy | Balance Short-Term and Long-Term Performance | |||||
Alignment with Stockholders | Drive Performance Through Rigorous Performance Goals |
Element | Description | Objective | Pay Philosophy Element | |||||||
Base Salary | Based on duties, experience and internal pay equity | Provides a fixed level of cash compensation to attract and retain talented executives | ||||||||
Annual Cash Bonus | 50% Normalized FFO per Share | Aligns our executives with near-term financial goals and strategic priorities, which for 2022 included Normalized FFO growth and managing leverage |
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20% EBITDA/Interest Expense | ||||||||||
10% ESG Initiatives | For 2022 as we remain focused on the importance of ESG for both internal and external stakeholders, we continued to include the achievement of ESG initiatives in our annual cash bonus program as standalone assessment criteria | |||||||||
20% Qualitative Performance | Given that the majority of our compensation is based on pre-established metrics and goals, allows for a subjective assessment of performance on a more holistic basis and considers factors that may not be quantifiable | |||||||||
Time-Based Shares | Vest ratably over 3 years | Promotes retention and aligns executives with stockholders | ||||||||
Performance-Based Shares | 30% FFO per Share Growth | Rewards executives for meaningful FFO per share growth in both the short- and long-term. Achievement of these goals requires significant accretive growth on an annual and cumulative basis |
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40% EBITDA | Ensures that executives are focused on profitability and stockholder value creation through EBITDA growth in both the short-term and long-term periods | |||||||||
30% Acquisitions | Motivates our executives to execute our growth strategy that involves making accretive acquisitions to achieve portfolio growth that would not be achieved through a simpler organic growth model focused only on leasing spreads | |||||||||
Absolute and Relative TSR Modifier | Adjusts payouts to align with long-term stockholder returns on both an absolute and relative basis |
28 Proxy Statement and Notice of 2023 Annual Meeting |
Compensation Discussion and Analysis |
Elements of Pay
Base Pay
Base pay represents fixed cash compensation intended to attract and retain talent and is generally determined based on a review of individual experience, performance, internal pay equity considerations and peer group base pay levels. Although base pay levels are only adjusted periodically, the Compensation Committee reviews levels annually.
The following chart sets forth 20192022 base salaries for our NEOs, which remained the same as 2018 base salaries.unchanged from 2021 amounts.
Named Executive Officer | 2019 Base Salary | |||
Edward K. Aldag, Jr. | $ | 1,000,000 | ||
R. Steven Hamner | $ | 600,000 | ||
Emmett E. McLean | $ | 550,000 |
Named Executive Officer | 2022 Base Salary ($) | |||
Edward K. Aldag, Jr. | 1,000,000 | |||
R. Steven Hamner | 675,000 | |||
Emmett E. McLean | 550,000 |
Most Recent Action by the Compensation Committee | No 2023 salary increases were provided to our NEOs based on the Compensation Committee’s review at year-end 2022. Our CEO and COO’s salary have not been increased since 2018 and our CFO’s salary has not been increased since 2020. |
26 Proxy Statement and Notice of 2020 Annual Meeting
Annual Cash Bonus Plan
During 2019, our named executive officers were eligible to receive an annual cash incentive bonus subject to the achievement of specificpre-determined performance goals. Each NEO’s cash bonus is based on a threshold, target, and maximum amount that is expressed as a percentage of base salary. Annual Cash Bonus Opportunities
For 2019, our NEOs2022, cash bonus opportunities remained the same as 2018 cash bonus opportunities and such opportunitiesfor our NEOs as a percent of base salary were as follows:
Named Executive Officer | Threshold | Target | Maximum | Threshold | Target | Maximum |
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Edward K. Aldag, Jr. | 100 | % | 150 | % | 225 | % | 100% | 200% | 300% |
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R. Steven Hamner | 50 | % | 100 | % | 175 | % | 100% | 150% | 225% |
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Emmett E. McLean | 50 | % | 100 | % | 175 | % | 50% | 100% | 175% |
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Most Recent Action by the Compensation Committee | We make periodic adjustments to target bonus opportunities, which were last adjusted in 2020 in an effort to bring more balance to our compensation pay mix with minimal increases to base salaries. For 2023, annual cash bonus opportunities will continue to remain unchanged for the CEO and CFO. For our COO, Mr. McLean, the maximum payout decreased to 125% (from 175%). |
Annual Cash Bonus Plan Metrics
The cash bonus plan metrics are reviewed annually by the Compensation Committee to ensure continued alignment with our strategic goals for the upcoming year. These metrics may include near-term transactionsgoals are critical to our long-term success and strategiesare designed to be challenging and rigorous to ensure that will ultimately result in profitablewe remain focused on differentiated growth and a strong balance sheet in the long run. Hurdles for these metrics are generally based on our publicly-disclosed guidance and are set at challenging levels that are achievable with significant effort and skill. overall business strategy.
Proxy Statement and Notice of 2023 Annual Meeting 29 |
Compensation Discussion and Analysis |
The 20192022 cash bonus plan metrics are set forth in the following chart:
Performance Metric | Weighting | Threshold | Target | Maximum | 2019 Results | |||||||
Normalized FFO Per Share Growth Encourages focus on profitability as measured by the most frequently used REIT earnings measurement on a per share basis; mitigates the risk ofnon-profitable acquisitions or other low quality growth.
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50% |
$1.37 |
$1.44 |
$1.48 |
$1.48* | |||||||
The Compensation Committee established the target at the midpoint of the estimated range of normalized FFO that we publicly disclosed in early 2019. This goal was intended to be challenging and difficult and represented an increase over 2018 goals. After adjustments for Board-approved strategic acquisitions of $4.5 billion and raising appropriate debt and equity, we achieved normalized FFO of $1.48 per share.
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�� | ||||||||||||
Debt/EBITDA Ratio Motivates management to execute plan to maintain appropriate leverage
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20% |
5.7x |
5.5x |
5.3x |
5.25x* | |||||||
The 5.5x target ratio of net debt to EBITDA was established based on our historical strategies and debt levels as publicly disclosed during recent years. We met the maximum debt / EBITDA goal after we successfully maintained appropriate leverage following a meaningful reduction in 2018.
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G&A as a Percentage of Adjusted Revenue Encourages the effective management of costs including those relating to compensation
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10% |
9.5% |
9.0% |
8.5% |
8.5%* | |||||||
Targets were established at appropriate levels based on historical benchmarks and consistent with industry expectations. We continued to effectively manage cost in 2019 relative to revenue (adjusted to include our pro rata portion of similar revenues in our five real estate joint venture arrangements), achieving the maximum goal.
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Qualitative Performance Review Represents indicators of the executive’s success in fulfilling his responsibilities to the Company and in executing its strategic business plan.
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20% |
Compensation Committee Discretion |
Maximum |
Performance Metric | Weighting | Threshold | Target | Maximum | 2022 Achievement | |||||||||
Normalized FFO Per Share Encourages focus on profitability as measured by the most frequently used REIT earnings measurement on a per share basis; mitigates the risk of non-profitable acquisitions or other low-quality growth
| 50%
| $1.79
| $1.82
| $1.85
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| $1.82
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Target Normalized FFO per share represents an approximate 11% increase over the 2021 cash bonus target and a 4.0% increase over 2021 results as compared to 2.76% for US Healthcare REITs.(1)(2)
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EBITDA/Interest Expense Ratio Motivates management to maintain financial health and a low cost of capital
| 20%
| 3.5x
| 3.7x
| 3.9x
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| 4.3x
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The 3.4x target ratio was established based on our historical strategies and debt levels as publicly disclosed during recent years.
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Environmental, Social and Corporate Governance Encourages management to prioritize and execute on annual ESG initiatives
| 10%
| Compensation Committee’s Assessment
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| Achieved Annual ESG Initiatives
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ESG accomplishments include (i) improved MSCI rating to BBB, (ii) ranked by Modern Healthcare as one of the best places to work for millennials, (iii) engaged multiple advisors to assist in our ESG strategy and environmental data collection and (iv) hired a dedicated ESG professional.
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Qualitative Performance Review Represents indicators of the executive’s success in fulfilling his responsibilities to the Company and in executing its strategic business plan
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20% |
Compensation Committee’s Assessment |
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See Below |
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See below for additional detail on the Compensation Committee’s review of qualitative performance.
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See belowHow We Determined Qualitative Performance for additional detail on the Compensation Committee’s review of qualitative performance
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Proxy Statement and Notice of 2020 Annual Meeting 27
Cash Bonus Plan
The Compensation Committee also assessed qualitative performance of the Company and of each NEO, which accounts for only 20% of the overall bonus. Based on its assessment of the CEO’s and otherOur NEOs’ qualitative performance for 2019, whose performance is most directly tied to the Company’s overall financial and operational accomplishments and accordingly, the Committee determined thatassessed the CEO’s qualitative component was earned at maximum based on the following key considerations:
Year-over year growth in Normalized FFO per share(1) of 4.0% as compared to 2.76% median growth at U.S. Healthcare REITs(2) |
Closed on $1.1 billion in new investments during 2022 |
Ten consecutive years of annual dividend growth, with a 3.8% compound annual growth rate |
Continued to improve tenant diversification by expanding the number of operators to 55 (from 53 in 2021) |
Continued to expand our global footprint with the acquisition of four hospitals in Finland and the acquisition of six additional Priory assets |
(1) | Refer to Appendix A for our definition of FFO and Normalized FFO and a reconciliation of net income to FFO and Normalized FFO. |
(2) | Information based on KeyBanc Equity REIT Leaderboard, published December 31, 2022. |
30 Proxy Statement and Notice of 2023 Annual Meeting |
Compensation Discussion and Analysis |
MPT delivered
Based on the above and the 2022 performance highlights previously discussed under “2022 Performance Highlights”, the Compensation Committee determined that the qualitative component of the 2022 cash bonus program was earned at the full 20%, with overall cash bonus amounts as follows:
Named Executive Officer | 2022 Earned Bonus ($) | 2021 Earned Bonus ($) | % Change | |||
Edward K. Aldag, Jr. | 2,500,000 | 3,000,000 | -17% | |||
R. Steven Hamner | 1,265,625 | 1,518,750 | -17% | |||
Emmett E. McLean | 756,250 | 962,500 | -21% |
2022 Annual Equity Awards
We use a balanced approach to equity compensation and grant a combination of both time-based shares and performance-based shares, with the majority of the awards (approximately 66%) vesting contingent on performance and 100% at-risk. The time-based portion of the award is intended to promote retention, while also subjecting our executives to the same market leadingfluctuations faced by our stockholders.
In 2022, our NEOs were granted time-based shares that vest in equal quarterly installments over three years as follows:
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Target Value of Time-Based Shares ($) |
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Named Executive Officer | 2022(1) | 2021 | % Change | ||||||||||||
Edward K. Aldag, Jr. | 4,250,000 | 4,250,000 | 0% | ||||||||||||
R. Steven Hamner | 2,125,000 | 2,125,000 | 0% | ||||||||||||
Emmett E. McLean | 950,000 | 1,300,000 | -27% | ||||||||||||
NEO Total | 7,325,000 | 7,675,000 | -5% |
(1) | The grant date fair values, computed in accordance with ASC 718, were $4,109,811, $2,054,916, and $918,681 for Messrs. Aldag, Hamner and McLean, respectively. |
The performance-based shares are designed to incentivize performance in both the long-run and short-run. Awards are earned subject to the achievement of three-year goals, while also allowing a portion of the award to be earned subject to the achievement of one-year goals (maximum of 1/3 of the shares). The following chart provides the target value of performance-based shares granted to our NEOs in 2022.
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Target Value of Performance-Based Shares ($) |
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Named Executive Officer | 2022(1) | 2021 | % Change | |||
Edward K. Aldag, Jr. | 8,250,000 | 8,250,000 | 0% | |||
R. Steven Hamner | 4,125,000 | 4,125,000 | 0% | |||
Emmett E. McLean | 1,950,000 | 2,600,000 | -25% | |||
NEO Total | 14,325,000 | 14,975,000 | -4% |
(1) | The grant date fair values, computed in accordance with ASC 718, were $8,270,489, $4,135,256, and $1,954,860 for Messrs. Aldag, Hamner and McLean, respectively. |
Proxy Statement and Notice of 2023 Annual Meeting 31 |
Compensation Discussion and Analysis |
The 2022 performance shares can be earned based on the following goals set by the Compensation Committee, which include both long-term and annual goals to align with our strategic business plan and our commitment to sustained growth that will ultimately drive long-term value creation. The 2022 performance metrics were selected in accordance with our strategic business plan and include goals for FFO per share growth, EBITDA and acquisitions.
| FFO per Share Growth | EBITDA (in millions) ($) | Acquisitions (in millions) ($) | |||||||||||||||||||||
| 2022 | 2024 | 2022 | 2024 | 2022 | 2024 | ||||||||||||||||||
Threshold (50%) | 2.00 | % | 4.00 | % | $ | 1,475.0 | $ | 1,550.0 | $ | 500.0 | $ | 1,500.0 | ||||||||||||
Target (100%) | 4.00 | % | 8.00 | % | $ | 1,487.5 | $ | 1,575.0 | $ | 750.0 | $ | 2,250.0 | ||||||||||||
Maximum (200%)(1) | 6.00 | % | 12.00 | % | $ | 1,500.0 | $ | 1,600.0 | $ | 1,000.0 | $ | 3,000.0 |
(1) | Mr. McLean’s maximum is 150% of target. |
Performance is measured over the three-year performance period and shares are earned based on the three-year performance goals listed above. To further strengthen alignment with our stockholders, any earned shares are subject to both an absolute and relative TSR modifier. One-half of the earned shares will be adjusted between 75% to 125% based on relative TSR performance between the 25th percentile to the 75th percentile, and one-half of the earned shares will be adjusted between 75% to 125% based on absolute TSR performance between 0% and 6% per annum.
To track the milestone progress during the performance period and to incentivize the consistent execution of our strategy and business plan, up to one-third of the target award may be earned at the end of 2022. The Compensation Committee believes that using one-year and three-year goals creates a balanced program that ensures that management remains focused in 2019, including a 39% return that outpacedboth the overall healthcare REIT sector by 1,700 bps.
Closed on $4.5 billion in immediately accretive acquisitions inshort-term and the United States, United Kingdom, Germany, Switzerland, Australia, Spain and Portugal, further improving the Company’s already diversified global geographic footprint, improving our tenant diversification and extending our lease and loan maturity schedule.
Expanded sources of debt and equitylong-term to help fund these new investments, including raising $2.5 billion in common equity, received proceeds of $837 million from an Australian term loan facility, raised £1.0 billion in an inaugural Sterling bond issue with staggered maturities and completed $900 million in unsecured note offerings.
2019 cash bonuses remained flat over 2018 amounts:drive consistent market-leading growth.
Named Executive Officer | 2019 Actual Bonus ($) | 2018 Bonus ($) | % Change | |||||||||
Edward K. Aldag, Jr. | 2,250,000 | 2,250,000 | 0 | % | ||||||||
R. Steven Hamner | 1,050,000 | 1,050,000 | 0 | % | ||||||||
Emmett E. McLean | 962,500 | 962,500 | 0 | % |
How We Determine Annual Equity Awards
Equity compensation is a critical component of our executive compensation program that directly aligns our NEOs’ long-term interests with our stockholders and provides additional retention for our executives. We use a balanced approach to equity compensation by granting a combination of both time-based equity awards and performance-based equity awards, with the majority of the awards (approximately 63%) vesting contingent on performance and 100%at-risk. The time-based portion of the award is intended to promote retention, while also subjecting our executives to the same market fluctuations faced by our stockholders. The performance-based awards are designed to incentivize performanceGrants were approved in both thelong-run andshort-run. The awards are earned subject to the achievement of three-year goals, while also allowing a portion of the award to be earned subject to the achievement ofone-year goals (maximum of 1/3 of the award). The awards are structured this way in order to align management with both the long-tem and short-term goals of the Company.
In 2019, our NEOs were granted time-based shares that vest ratably over three years as follows:
Named Executive Officer | Annual Time-Based (#) | Grant Date Fair Value ($) | ||||||
Edward K. Aldag, Jr. | 266,542 | 5,166,717 | ||||||
R. Steven Hamner | 133,271 | 2,583,358 | ||||||
Emmett E. McLean | 90,283 | 1,702,438 |
28 Proxy Statement and Notice of 2020 Annual Meeting
The following chart provides the target number of performance shares for our NEOs in 2019, as well as the aggregate grant date fair value of such awards, which reflects an increase over 2018 amounts based on the Compensation Committee’s assessment of our NEOs’ overall compensation levels compared to our peer group given the Company’s industry-leading TSR performance and the fact that the grant date stock price significantly increased year-over-year.
Named Executive Officer | Target Number of ROE Shares (#)
| Target Number of (#)
| Target Number of Acquisition Shares (#)
| Aggregate Fair Value ($)
| ||||||||||||
Edward K. Aldag, Jr. | 186,916 | 186,916 | 93,458 | 8,738,092 | ||||||||||||
R. Steven Hamner | 93,458 | 93,458 | 46,729 | 4,369,047 | ||||||||||||
Emmett E. McLean | 84,113 | 84,113 | 42,057 | 3,932,188 |
The 2019 performance-based equity awards can be earnedJanuary 2022 based on the following goals set by the Compensation Committee, which are designed to be consistent with our strategic plan which includes both long-term and annual goals:considerations:
ROE (1) | 2019 EBITDA (in millions) ($) | 2021 EBITDA (in millions) ($) | 2019 Acquisitions (in millions) ($) | 2021-Three Year-Acquisitions (in millions) ($) | Relative TSR vs. the SNL US REIT Healthcare Index(1) | |||||||||||||||||
Maximum (200%) | 13.5 | % | 735 | 840 | 1,000 | 3,000 | 75th Percentile | |||||||||||||||
Target (100%) | 13.0 | % | 700 | 800 | 750 | 2,250 | 55th Percentile | |||||||||||||||
Threshold (50%) | 12.5 | % | 680 | 750 | 500 | 1,500 | 35th Percentile |
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Strong earnings growth including an approximate 34% cumulative annual growth in net income since the beginning of 2020
• |
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The award is measured over
Closed on $1.1 billion in new investments during 2022 and $13 billion since the three-year performance period and earned based on the three-year performance goals as listed above, which is subject to a relative TSR modifier such that any earned shares will be multiplied by 75% for threshold relative TSR performance and 125% for maximum relative TSR performance.One-thirdbeginning of the target award may be earned based on the the 2019 results as shown above, which are also subject to a relative TSR modifier and additional time-based vesting.
How Annual Equity Awards Were Determined for 2019
The Compensation Committee determined the amount of equity awards granted to the NEOs in 2019 by evaluating the Company’s operational and stock performance, both on an absolute basis and relative to its peers. The Compensation Committee further considered the Company’s extraordinary and historic performance in 2019 as well as its sustained outperformance over a multi-year period including the following accomplishments:
Delivered market leading TSR performance, not only in 2019, but also over the longer term generating significant value for our stockholders while outperforming the market:Ten consecutive years of annual dividend growth, with a 3.8% compound annual growth rate
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32 Proxy Statement and Notice of 2023 Annual Meeting |
Proxy Statement and Notice of 2020 Annual Meeting 29
Compensation Discussion and Analysis |
› |
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Most Recent Action by the Compensation Committee | No increases to target equity values for the CEO and CFO in 2022 or 2023. For our COO, Mr. McLean, his target equity values decreased in 2022 and 2023. Additionally, the pay mix of the equity awards was |
(1) |
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(2) |
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Successfully executed our long-term strategic plan, including closing on $4.5 billion in immediately accretive acquisitions that expanded our global geographic footprint and improved our tenant diversification.
Other Benefits
We maintain a 401(k) Retirement Savingsretirement savings plan and annually match 100% of the first 3% of pay contributed, plus 50% of the next 2% of pay contributed, to such plan by any employee (subject to certain tax limitations). We offer medical, dental, and vision plans, and pay the coverage cost under these plans for the NEOs and their families.eligible dependents. Each of our NEOs has an employment agreement with us pursuant to which certain other benefits are provided to them. The material terms of each such employment agreement are set forthdescribed under “Employment Agreements with Named Executive Officers” below.
Proxy Statement and Notice of 2023 Annual Meeting 33 |
Compensation Discussion and Analysis |
Other Aspects of Our Executive Compensation Program
Equity Ownership Guidelines
We believe that equity ownership by our directors and officers can help further align their interests with our stockholders’ interests. To that end, we have adopted equity ownership guidelines applicable to our directors and to executive officers. Failure to meet the ownership levels or show sustained progress towards meeting them, may result in payment to the directors and executive officers of future compensation in the form of equity rather than cash.
With respect to our executive officers andnon-employee directors, the guidelines require ownership of shares of our common stock, including vested and unvested common stock within five years of becoming an executive officer or three years after he or shea non-employee director initially joins the Board, with a value equal to the following multiple of base salary (or annual fee for thenon-employee directors):
Title | Multiple of Base Salary / Annual Fee | Compliance with Guidelines | ||||||
Chairman, Chief Executive Officer and President | 6x | Yes | ||||||
Executive Vice Presidents (including CFO and COO) | 4x | Yes | ||||||
Non-Employee Directors | 3x | * |
* | All of ournon-employee directors and NEOs as of March |
Clawback Policy
In February 2013, the Board adopted a clawback policy applicable to our executive officers. The policy allows for the recoupment of incentive awards (including awards made under our annual cash bonus plan and long-term incentive plans) in
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30 Proxy Statement and Notice of 2020 Annual Meeting
the event the Company is required to restate its financial statements due to the material noncompliance of the Company with financial reporting requirements under the securities laws, as a result of intentional misconduct, fraud or gross negligence.
Each executive officer who is directly responsible for the intentional misconduct, fraud or gross negligence shall reimburse the Company for incentive awards made to that executive officer after January 1, 2013, that would not have been made if the restated financial measures had been reported initially.
In light of the SEC’s adoption of final clawback rules in October 2022 and the NYSE’s issuance of its proposed rule in February 2023, we intend to update our clawback policy to comply with applicable NYSE listing rules when effective.
No Hedging or Pledging
The Company maintains an internal “Insider Trading Policy” that is applicable to our executive officers and directors. Among other things, the policy prohibits any employee of the Company (including directors or executive officers) from (i) engaging in short sales of the Company’s securities and from trading in puts, calls, options or other derivative securities based on the Company’s securities, (ii) engaging in hedging or monetization transactions (which allow a stockholder to continue to own the covered securities, but without the full risks and rewards of ownership) and (iii) pledging the Company’s securities as loan collateral.
Other Practices with Regard to Equity Awards and Purchases and Sales of Shares
The Compensation Committee determines the number of shares underlying grants of restricted stock awards and the executive officers who will receive such awards. All NEOs must receive prior authorization for any purchase or sale of our common stock.
We have never granted stock options to our executive officers, and we have not granted any stock options since those granted to our initial directors in 2004.
34 Proxy Statement and Notice of 2023 Annual Meeting |
Compensation Discussion and Analysis |
Compensation Risk Assessment
During 2019,2022, the Compensation Committee reviewed the potential risks in the Company’s compensation program to ensure that compensation methods do not incentivize our executives to make decisions that, while creating apparent short-term financial and operating success, may in the longer termlonger-term result in future losses and other value depreciation.
After reviewing the analysis, the Compensation Committee concluded that the Company’s compensation policies and practices do not encourage excessive risk taking nor create any risks that would be reasonably likely to have a materially adverse effect on the Company, and it believes that the following risk oversight and compensation design features assist in guarding against excessive risk taking:
Review and approval of corporate objectives by the Compensation Committee to ensure that these goals are aligned with the Company’s annual operating and strategic plans, achieve the proper risk/reward balance, and do not encourage excessive risk taking.
• | Review and approval of corporate objectives by the Compensation Committee to ensure that these goals are aligned with the Company’s annual operating and strategic plans, achieve the proper risk/reward balance, and do not encourage excessive risk taking |
Base salaries consistent with each executive’s responsibilities so that they are not motivated to take excessive risks to achieve a reasonable level of financial security.
• | Base salaries consistent with each executive’s responsibilities so that they are not motivated to take excessive risks to achieve a reasonable level of financial security |
A significant portion of each executive’s compensation is tied to the future stock performance of the Company.
• | A significant portion of each executive’s compensation is tied to the future stock performance of the Company |
Stock compensation and vesting periods for stock awards designed to encourage executives to focus on sustained stock price appreciation.
• | Stock compensation and vesting periods for stock awards designed to encourage executives to focus on sustained stock price appreciation |
• | A mix between cash and equity compensation designed to encourage strategies and actions that are in the long-term best interests of the Company and its stockholders. |
A mix between cash and equity compensation designed to encourage strategies and actions that are in the long-term best interests of the Company and its stockholders.
Proxy Statement and Notice of 2020 Annual Meeting 31
Section 162(m) Policy
Section 162(m)The Compensation Committee’s policy is to consider the tax treatment of the U.S. Internal Revenue Code of 1986 (the “Code”), as amended by the Tax Cuts and Jobs Act of 2017 (the “TCJA”), limits to $1 million the deduction that publicly traded corporations may take for compensation paid to “covered employees” of the corporation. Under a series of private letter rulings issued by the Internal Revenue Service (the “IRS”) prior to the enactment of the TCJA, compensation paid by an operating partnership to executive officers of a REIT that serves as its general partner was not subject to the limitation on deductibility under Section 162(m) to the extent such compensation was attributable to services rendered to the REIT’s operating partnership. In December 2019, the IRS issued proposed Treasury Regulations under Section 162(m) (the “Proposed Regulations”) that overturn the guidance in the private letter rulings and apply Section 162(m)’s $1 million deduction limit to a REIT’s distributive share of any compensation paid by the REIT’s operating partnership to certain current and former executive officers of the REIT. The guidance under the Proposed Regulations would apply to all compensation deductible in tax years ending on or after December 20, 2019 other than compensation paid pursuant to a written binding contract in effect on December 20, 2019 that is not subsequently materially modified. This guidance under the Proposed Regulations represents a significant and unexpected change in IRS guidance regarding the deductibility of compensation for REITs and, to the extent that compensation paid to our executive officers does not qualifywhile simultaneously seeking to provide our executives with appropriate rewards for deduction under Section 162(m), a larger portion of stockholder distributions may be subject to U.S. federal income taxation as dividend income rather than return of capital.
While we continue to assess the impact oftheir performance. Under Section 162(m) of the Code, and the Proposed Regulations on oura publicly-held corporation may not deduct compensation arrangements, the Board of Directors and themore than $1 million paid to any “covered employee.” The Compensation Committee believebelieves that stockholder interests are best served if they retain maximum flexibility to design executive compensation programs that meet stated business objectives. For that reason, while our Board and Compensation Committee have considered the potential effects of Section 162(m) of the Code and the Proposed Regulations on the compensation paid to our named executive officers, the Compensation Committee’s compensation policy and practices are not directly guided by considerations relating to Section 162(m) of the Code. In addition, because we qualify as a REIT under the Code, we generally distribute at least 100% of our net taxable income each year and therefore do not pay federal income tax. As a result, the possible loss of a federal tax deduction would not be expected to have a material impact on us.
Proxy Statement and Notice of 2023 Annual Meeting 35 |
Compensation Discussion and Analysis |
Compensation Committee Report
The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis beginning on page 2019 of this Proxy Statement. Based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.
C. Reynolds Thompson, III. (Chairman) | Michael G. Stewart | D. Paul Sparks, Jr. |
36 Proxy Statement and Notice of 2023 Annual Meeting |
32 Proxy Statement and Notice of 2020 Annual Meeting
Compensation Discussion and Analysis |
The amounts in the table below are a summary of the components of compensation our NEOs received in the last three years:
Year
| Salary ($)
| Bonus(1) ($)
| Stock ($)
| Non-Equity ($)
| All Other ($)
| Total ($)
| ||||||||||||||||||||
Edward K. Aldag, Jr. Chairman, Chief Executive Officer and President | 2019 | 1,000,000 | 450,000 | 13,904,809 | (3) | 1,800,000 | 98,627 | (4) | 17,253,436 | |||||||||||||||||
2018 | 1,000,000 | 450,000 | 9,854,642 | 1,800,000 | 108,623 | 13,213,265 | ||||||||||||||||||||
2017 | 950,000 | 190,000 | 4,628,185 | 1,710,000 | 129,486 | 7,607,671 | ||||||||||||||||||||
R. Steven Hamner Director, Executive Vice President, Chief Financial Officer | 2019 | 600,000 | 210,000 | 6,952,405 | (3) | 840,000 | 61,247 | (5) | 8,663,652 | |||||||||||||||||
2018 | 600,000 | 210,000 | 4,927,321 | 840,000 | 70,359 | 6,647,680 | ||||||||||||||||||||
2017 | 575,000 | 86,250 | 2,314,099 | 776,250 | 54,046 | 3,805,645 | ||||||||||||||||||||
Emmett E. McLean Executive Vice President, Chief Operating Officer and Secretary | 2019 | 550,000 | 192,500 | 5,634,626 | (3) | 770,000 | 61,467 | (6) | 7,208,593 | |||||||||||||||||
2018 | 550,000 | 192,500 | 4,434,590 | 770,000 | 69,622 | 6,016,712 | ||||||||||||||||||||
2017 | 525,000 | 78,750 | 2,082,687 | 708,750 | 75,693 | 3,470,880 |
Name | Year | Salary ($) | Bonus(1) ($) | Stock ($) | Non-Equity ($) | All Other ($) | Total ($) | |||||||||||||||||||||
Edward K. Aldag, Jr. | 2022 | 1,000,000 | 600,000 | 12,380,300 | 1,900,000 | 145,213 | (4) | 16,025,513 | ||||||||||||||||||||
Chairman, Chief Executive | 2021 | 1,000,000 | 600,000 | 12,928,532 | 2,400,000 | 108,097 | 17,036,629 | |||||||||||||||||||||
Officer and President | 2020 | 1,000,000 | 600,000 | 12,732,033 | 2,400,000 | 125,604 | 16,857,637 | |||||||||||||||||||||
R. Steven Hamner | 2022 | 675,000 | 303,750 | 6,190,172 | 961,875 | 32,974 | (5) | 8,163,771 | ||||||||||||||||||||
Director, Executive | 2021 | 675,000 | 303,750 | 6,464,266 | 1,215,000 | 27,313 | 8,685,329 | |||||||||||||||||||||
Vice President, Chief Financial Officer | 2020 | 675,000 | 303,750 | 6,366,029 | 1,215,000 | 61,643 | 8,621,422 | |||||||||||||||||||||
Emmett E. McLean | 2022 | 550,000 | 192,500 | 2,873,541 | 563,750 | 40,690 | (6) | 4,220,481 | ||||||||||||||||||||
Executive Vice President, | 2021 | 550,000 | 192,500 | 4,034,826 | 770,000 | 64,625 | 5,611,951 | |||||||||||||||||||||
Chief Operating Officer and Secretary | 2020 | 550,000 | 192,500 | 4,738,268 | 770,000 | 65,251 | 6,316,019 |
(1) | Reflects the cash bonus earned by our named executive officers for the applicable year based on a qualitative review of individual performance by the Compensation Committee. |
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Represents the aggregate grant date fair value of restricted stock awards, calculated in accordance with FASB ASC Topic 718. For awards subject to performance-based vesting conditions, the value reported reflects the fair value of the award at the grant date based upon the probable outcome of the performance conditions. The reported value for |
(3) | Reflects the cash bonus earned by our named executive officers for the applicable year based on the achievement of specified corporate goals. |
(4) | Represents |
(5) | Represents |
(6) | Represents |
Proxy Statement and Notice of 2023 Annual Meeting 37 |
Proxy Statement and Notice of 2020 Annual Meeting 33
Compensation Discussion and Analysis |
The following table provides information about plan-based awards granted to our NEOs during 2019.2022. For further detail regarding each of these awards, see “Compensation Discussion and Analysis—Elements of Pay.”
Name
| Grant Date
| Estimated Future Payouts UnderNon-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other or Units (#)
| Grant
| Grant Date
|
Estimated Future Payouts Incentive Plan Awards(1)
| Estimated Future Payouts Plan Awards(2)
| All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Option | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Threshold
| Target
| Maximum
| Threshold
| Target
| Maximum
| Threshold ($) | Target ($)
| Maximum ($) | Threshold (#) | Target (#)
| Maximum (#) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Edward K. Aldag, Jr. | 1/23/2019 | 800,000 | 1,200,000 | 1,800,000 | 1/28/2022 | 800,000 | 1,600,000 | 2,400,000 | – | – | – | – | – | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/23/2019 | 118,232 | (3) | 2,053,690 | 1/28/2022 | – | – | – | – | – | – | 188,437 | (3) | 4,109,811 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/23/2019 | 175,234 | (4) | 467,290 | (4) | 1,168,225 | (4) | 8,738,092 | 1/28/2022 | – | – | – | 137,171 | (4) | 365,789 | (4) | 914,473 | (4) | – | 8,270,489 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
12/31/2019 | 148,310 | (5) | 3,113,027 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
R. Steven Hamner | 1/23/2019 | 240,000 | 480,000 | 840,000 | 1/28/2022 | 540,000 | 810,00 | 1,215,000 | – | – | – | – | – | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/23/2019 | 59,116 | (3) | 1,026,845 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/23/2019 | 87,617 | (4) | 233,645 | (4) | 584,113 | (4) | 4,369,047 | 1/28/2022 | – | – | – | – | – | – | 94,219 | (3) | 2,054,916 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
12/31/2019 | 74,155 | (5) | 1,556,513 | 1/28/2022 | – | – | – | 68,586 | (4) | 182,895 | (4) | 457,238 | (4) | – | 4,135,256 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Emmett E. McLean | 1/23/2019 | 220,000 | 440,000 | 770,000 | 1/28/2022 | 220,000 | 440,000 | 770,000 | – | – | – | – | – | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/23/2019 | 53,205 | (3) | 924,171 | 1/28/2022 | – | – | – | – | – | – | 42,122 | (3) | 918,681 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/23/2019 | 78,856 | (4) | 210,283 | (4) | 525,708 | (4) | 3,932,188 | 1/28/2022 | – | – | – | 32,423 | (4) | 86,460 | (4) | 162,113 | (4) | – | 1,954,860 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
12/31/2019 | 37,078 | (5) | 778,267 |
(1) | Represents cash incentive compensation opportunity, which |
(2) | Represents awards of performance-based restricted stock. Dividends are not paid on performance-based awards until the award is earned. |
(3) | Represents the annual time-based restricted stock awards that will vest quarterly over a period of three years. The grant date fair value of the time-based restricted stock |
(4) | Represents |
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38 Proxy Statement and Notice of 2023 Annual Meeting |
34 Proxy Statement and Notice of 2020 Annual Meeting
Compensation Discussion and Analysis |
Outstanding Equity Awards as of December 31, 20192022
The table below shows the outstanding equity awards held by our NEOs as of December 31, 2019.2022. Market values are based on a price of $21.11$11.14 per share, the closing price of our common stock on December 31, 2019.30, 2022, the last trading day of 2022.
Option Awards | Stock Awards |
Option Awards
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Stock Awards
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name
| Number of
| Number of
| Equity
| Option
| Option
| Number of
| Market
| Equity
| Equity
| Number of
| Number of
| Equity
| Option
| Option
| Number of
| Market
| Equity
|
Equity
| ||||||||||||||||||||||||||||||||||||||||||
Edward K. Aldag, Jr. | – | – | – | – | – | 754,076(1) | 15,918,544 | 1,562,829(4) | 32,991,320 | – | – | – | – | – | 253,001 | (1) | 2,818,431 | 858,737 | (4) | 9,566,330 | ||||||||||||||||||||||||||||||||||||||||
R. Steven Hamner | – | – | – | – | – | 378,894(2) | 7,998,452 | 781,417(5) | 16,495,713 | – | – | – | – | – | 126,507 | (2) | 1,409,288 | 429,367 | (5) | 4,783,148 | ||||||||||||||||||||||||||||||||||||||||
Emmett E. McLean | – | – | – | – | – | 307,761(3) | 6,496,835 | 703,278(6) | 14,846,199 | – | – | – | – | – | 65,925 | (3) | 734,405 | 255,786 | (6) | 2,849,456 |
(1) |
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(2) | For Mr. Hamner includes (i) 29,906 shares that vested on January 1, 2023, (ii) 33,790 shares that vest in equal quarterly installments from April 1, 2023 through January 1, 2024 and (iii) 62,811 shares that vest in equal quarterly installments from April 1, 2023 through January 1, 2025. |
(3) | For Mr. McLean includes (i) 17,182 shares that vested on January 1, 2023, (ii) 20,665 shares vest in equal quarterly installments from April 1, |
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(4) |
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For Mr. McLean includes (i) 86,638 shares underlying the 2020 Performance Award†, (ii) 82,688 shares underlying the 2021 Performance Award‡ and (iii) 86,460 shares underlying the 2022 Performance Award* remain unearned. |
† | The |
The |
* | The 2022 Performance Award is earned based on the achievement of FFO per Share Growth, EBITDA and acquisitions goals over a three-year period with the ability to earn up to one-third of the award in 2022 based on one-year goals. Any earned shares are subject to an absolute TSR and relative TSR modifier (based on one-year TSR for any shares earned based on one-year goals and three-year TSR for the majority of the award based on three-year goals) that can increase or decrease the award up to 25%. Up to one-third of the shares subject to the EBITDA award were eligible to be earned if EBITDA was $1.4875 billion for 2022 and 100% of shares are eligible to be earned if EBITDA is $1.575 billion in the third year of the performance period. Up to one-third of the shares subject to the FFO per Share Growth award were eligible to be earned if FFO per Share Growth was 4.0% for 2022 and 100% of shares are eligible to be earned if FFO per Share Growth is 8.0% for the three-year performance period. Up to one-third of the shares subject to the acquisitions award were eligible to be earned if acquisitions were $750 million for 2022 and 100% of shares are eligible to be earned if acquisitions are $2.25 billion for the three-year performance period. Any earned shares vest on the January 1 immediately following the date on which the shares are earned. |
Proxy Statement and Notice of 2023 Annual Meeting 39 |
Proxy Statement and Notice of 2020 Annual Meeting 35
Compensation Discussion and Analysis |
Option Exercises and Stock Vested
The following table sets forth the aggregate number and value of shares of restricted common stock held by our NEOs that vested in 2019.2022. The “Value Realized on Vesting” set forth below is the product of the fair market value of a share of common stock on the vesting date multiplied by the number of shares vesting. We have never issued stock options to our NEOs.
Option Awards | Stock Awards |
Option Awards
|
Stock Awards
| |||||||||||||||||||||||||
Name
| Number of Shares (#)
| Value Realized ($)
| Number of Shares (#)
| Value Realized ($)
| Number of Shares (#)
| Value Realized ($)
| Number of Shares
|
Value Realized ($)
| ||||||||||||||||||||
Edward K. Aldag, Jr. | – | – | 611,894 | 10,278,212 | – | – | 1,655,159 | 37,752,981 | ||||||||||||||||||||
R. Steven Hamner | – | – | 309,949 | 5,217,267 | – | – | 827,573 | 18,876,348 | ||||||||||||||||||||
Emmett E. McLean | – | – | 273,438 | 4,590,361 | – | – | 648,370 | 14,927,196 |
Potential Payments Upon Termination or Change of Control
The following table shows potential payments and benefits that will be provided to our NEOs upon the occurrence of certain termination triggering events. The change-of-control provisions in the employment agreements are designed to align management’s interests with those of our stockholders. See the discussion below under “Employment Agreements with Named Executive Officers” for information about payments upon termination or a change of control. All equity interests included in the termination and change of control calculations represent previously granted restricted stock awards and are valued based on the closing price of our common stock on December 30, 2022, the last trading day of 2022, and an assumed termination of employment on December 31, 2022.
Name | Termination and ($) | Death ($) | Termination ($) | Termination for ($) | ||||||||||
Edward K. Aldag, Jr. |
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Cash Severance | 12,315,384 | (2) | 39,386 | 12,315,384 | (3) | – | ||||||||
Equity-Award Acceleration(1) | 27,202,159 | 27,202,159 | 27,202,159 |
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R. Steven Hamner |
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| ||||
Cash Severance | 6,631,882 | (2) | 23,632 | 6,378,757 | – | |||||||||
Equity-Award Acceleration(1) | 13,601,077 | 13,601,077 | 13,601,077 |
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Emmett, E. McLean |
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Cash Severance | 4,590,751 | (2) | 23,632 | 4,384,501 | – | |||||||||
Equity-Award Acceleration(1) | 6,790,947 | 6,790,947 | 6,790,947 |
|
(1) | As of January 1, 2023, the amount that would accelerate upon a change of control CoC would be reduced to $18,845,379 for Mr. Aldag, $9,422,613 for Mr. Hamner and $4,332,956 for Mr. McLean as a result of shares that vested on January 1, 2023. |
(2) | Amounts exclude tax related payments including any tax gross-ups in connection with a CoC. While the precise amount of any tax-related payments is difficult to calculate and may be mitigated based on a number of considerations, the estimated tax gross-up payments are $0 for Mr. Aldag, Mr. Hamner and Mr. McLean as of December 31, 2022. |
(3) | Amount excludes an estimated tax payment of $5,442,000. |
40 Proxy Statement and Notice of 2023 Annual Meeting |
Compensation Discussion and Analysis |
Employment Agreements with Named Executive Officers
Our three founders have employment agreements that were negotiated in 2003 to market standards uponin connection with our initial equity offering 16 years ago in 2004.offering. Below we describe the terms of these agreements. Because certain market standards have evolved in recent years,since our initial equity offering, we will not enter into any new contracts that include a multi-year evergreen term, single-trigger change of control provisions, or excise tax gross up provisions.
We have employment agreements with Edward K. Aldag, Jr., R. Steven Hamner and Emmett E. McLean. These agreements provide that each NEO agrees to devote substantially all of his business time to our operation. The employment agreement for each of the NEOs provides for an initial three-year term, which is automatically extended for successive one yearone-year periods, unless either party gives notice ofnon-renewal as provided in the agreement.
The executive employment agreements provide for an annual physical at the Company’s expense, a monthly car allowance of $1,000 for Mr. Aldag and $750 for each of Messrs. Hamner and McLean. The NEOs are also reimbursed for the cost of tax preparation and financial planning services, up to $25,000 annually for Mr. Aldag and $10,000 annually for each of Messrs. Hamner and McLean. We also reimburse each executive for the income tax he incurs on the receipt of these tax preparation and financial planning services. The employment agreements also provide that Mr. Aldag will receive up to $20,000 per year in reimbursement for life insurance premiums, which amount increases annually based on the increase in the consumer price index (“CPI”) for such year, and that Messrs. Hamner and McLean will receive up to $10,000 per year in reimbursement for life insurance premiums, which amount increases annually based on the increase in the CPI for such year. We also reimburse each executive for the income tax he incurs on these life insurance premium reimbursements. The NEOs are also reimbursed for the cost of their disability insurance premiums.
The employment agreements provide that the executive officers are eligible to receive the same benefits, including medical insurance coverage and retirement plan benefits in a 401(k) plan, to the same extent as other similarly situated employees, and such other benefits as are commensurate with their position. Participation in employee benefit plans is subject to the terms of said benefit plans as in effect from time to time.time-to-time.
The employment agreements with the NEOs provide for contractual severance benefits and accelerated vesting of equity grants in the event of a change of control, which we believe are common in the REIT industry, are designed to reinforce and encourage the continued attention and dedication of our executive officers to their assigned duties without distraction or fear of job loss in the face of an actual or threatened change of control and to ensure that our management is motivated to negotiate the best merger consideration for our stockholders.
36 Proxy Statement and Notice of 2020 Annual Meeting
If the NEO’s employment ends for any reason, we will pay accrued salary, bonuses, and incentive payments already determined but not yet paid, and other existing obligations. If an NEO’s employment terminates as a result of his “permanent disability” (as defined in the employment agreements), we terminate an NEO’s employment for any reason other than for “cause” (as defined in the employment agreements), or if an NEO terminates his employment for “good reason” (as defined in the employment agreements), we will be obligated to pay (i) a lump sum payment of severance equal to the sum of (x) the product of three and the sum of the salary in effect at the time of termination plus the average cash bonus (or the highest cash bonus, in the case of Mr. Aldag) paid to such executive during the preceding three years, grossed up for taxes in the case of Mr. Aldag, and (y) the incentive bonus prorated for the year in which the termination occurred; (ii) the cost of the executive’s continued participation in the Company’s benefit and welfare plans (other than the 401(k) plan) for a three-year period (a five-year period in the case of Mr. Aldag) following termination; and (iii) continued reimbursement for life insurance premiums and the taxes payable on such amounts for three years following termination (or five years in the case of Mr. Aldag). Additionally, upon such termination, all stock options, if any, and restricted stock held by the executive will become fully vested, and the executive will have whatever period remains under the term of stock options in which to exercise all vested stock options. The employment agreements also provide that the NEOs and their spouses and dependents will be permitted to continue to participate in all employee benefit and welfare plans and programs of the Company other than the 401(k) plan until the earlier of age 65 or such time as the NEO obtains full-time employment with an entity not affiliated with the NEO that provides comparable benefits.
In the event of the death of any of our NEOs, in addition to the accrued salary, bonus, and incentive payments due to them, their restricted stock shall become fully vested, and their respective beneficiaries will have whatever period remains under any outstanding stock options held by the NEO to exercise such stock options. In addition, their estates would be entitled to the NEO’s prorated incentive bonus payable in a lump sum and the NEO’s spouse and each of his dependents shall be covered under the Company’s health insurance program until the earlier of age 65 or such time as the spouse or dependent obtains full-time
Proxy Statement and Notice of 2023 Annual Meeting 41 |
Compensation Discussion and Analysis |
employment with an entity not affiliated with the NEO that provides comparable benefits. The Company shall pay for such coverage for three years (or five years in the case of Mr. Aldag) following the death of the NEO.
In the event that the employment of any of our NEOs ends as a result of a termination by us for cause or by the NEO without good reason, then in addition to the accrued salary, bonuses and incentive payments due to them, the executives would be entitled to exercise any outstanding vested stock options held by the NEO, pursuant to the terms of the grant, but all unvested stock options and restricted stock would be forfeited upon termination.
Upon a change of control, the NEOs will become fully vested in their equity awards. In addition, if the employment of any NEO is terminated by us for cause or by the executive without good reason in connection with a change of control, the executive will be entitled to receive an amount equal to the largest cash compensation paid to the executive for any12-month period during his tenure multiplied by three.
If payments become due as a result of a change of control and the excise tax imposed by Code Section 4999 applies, the terms of the employment agreements require us to gross up the amount payable to the executive by the amount of this excise tax plus the amount of income and other taxes due as a result of the gross up payment.
For an18-month period after termination of an executive’s employment for any reason other than (i) termination by us without cause or (ii) termination by the executive for good reason, each of the executives has agreed not to compete with us by working with or investing in, subject to certain limited exceptions, any enterprise engaged in a business substantially similar to our business as it was conducted during the period of the executive’s employment with us and not to solicit our employees.
42 Proxy Statement and Notice of 2023 Annual Meeting |
Proxy Statement and Notice of 2020 Annual Meeting 37
Potential Payments Upon Termination or Change of Control
The following table shows potential payments and benefits that will be provided to our NEOs upon the occurrence of certain termination triggering events. Thechange-of-control provisions in the employment agreements are designed to align management’s interests with those of our stockholders. See the discussion above under “Compensation of Executive Officers—Employment Agreements with Named Executive Officers” for information about payments upon termination or a change of control. All equity interests included in the termination and change of control calculations represent previously granted restricted stock awards and are valued based on the closing price of our common stock on December 31, 2019, and an assumed termination of employment on December 31, 2019.
Name
| Termination and ($)
| Death ($)
| Termination ($)
| Termination for ($)
| ||||||||||||
Edward K. Aldag, Jr. | – | |||||||||||||||
Cash Severance | 9,935,000 | (2) | 60,000 | 9,935,000 | (3) | |||||||||||
Equity-Award Acceleration(1) | 61,461,258 | 61,461,258 | 61,461,258 | |||||||||||||
R. Steven Hamner | – | |||||||||||||||
Cash Severance | 4,950,000 | (2) | 36,000 | 4,870,500 | ||||||||||||
Equity-Award Acceleration(1) | 30,769,756 | 30,769,756 | 30,769,756 | |||||||||||||
Emmett E. McLean | ||||||||||||||||
Cash Severance | 4,537,500 | (2) | 36,000 | 4,470,500 | ||||||||||||
Equity-Award Acceleration(1) | 26,991,194 | 26,991,194 | 26,991,194 | – |
|
|
|
38 Proxy Statement and Notice of 2020 Annual Meeting
In accordance with Item 402(u) of RegulationS-K, promulgated by the Dodd-Frank Wall Street Reform Act and Consumer Protection Act of 2010, we determined the ratio of the annual total compensation of our CEO, Mr. Aldag, relative to the annual total compensation of our median employee.
For the purposes of reporting annual total compensation and the ratio of annual total compensation of the CEO to the median employee, both the CEO and the median employee’s annual total compensation were calculated consistent with the disclosure requirement underrequirements of the Summary Compensation Table.
The Company’s methodology in determining our median employee is based on 20192022 base salaries (annualized for employees hiredmid-year or who had a leave of absence during the year) plus incentive bonus for all individuals, excluding our CEO, who were employed by us as of December 31, 2019.2022. In accordance with Item 402(u) and instructions thereto, we included all full-time, part-time, temporary and seasonal employees.
After applying the methodology described above, our median employeeemployee’s total compensation using the Summary Compensation Table requirements was $175,927.$197,738. Our CEO’s total compensation as reported in the Summary Compensation Table was $17,253,436. Therefore,$16,025,513.Therefore, our CEO to median employee pay ratio is approximately 98:81:1.
The pay ratio reported above is a reasonable estimate calculated in a manner consistent with SEC rules, based on our internal records and the methodology described above. The SEC rules for identifying the median employee allow companies to adopt a variety of methodologies, to apply certain exclusions and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. Accordingly, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may use different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
Compensation Committee Interlocks and Insider Participation
During 2019,2022, the following directors served on the Compensation Committee: Michael G. Stewart, C. Reynolds Thompson, III (Chair), Michael G. Stewart and D. Paul Sparks, Jr. (chair). No member of the Compensation Committee was an officer or employee of our Company or had any relationships requiring disclosure by us under applicable SEC regulations during 2019.2022. Mr. Stewart served as our Executive Vice President, General Counsel and Secretary from 2005 to 2010. In addition, no executive officer served during 20192022 as a director or a member of the Compensation Committee of any entity that had an executive officer serving as a director or a member of the Compensation Committee of our Board of Directors.Board.
Proxy Statement and Notice of 2020 Annual Meeting 39
Equity Compensation Plan Information
The following table provides information as of December 31, 20192022, regarding shares of common stock that may be issued under our equity compensation plans, consisting of the Amended and Restated 2019 Equity Incentive Plan (the “2019 Plan”).
Plan category
| Number of Securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted (b) | Number of securities (c) | |||||||||
Plan Category
| Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plan (excluding securities referenced in column (a)(c) | |||||||||
Equity compensation plans approved by security holders
| –
| –
| 10,800,039
| |||||||||
Equity compensation plan approved by security holders | – | – | 19,346,557 | |||||||||
Equity compensation plans not approved by security holders
| –
| –
| –
| – | – | – | ||||||
Total
| –
| –
| 10,800,039
| – | – | 19,346,557 |
We have only issued restricted stock and not issued any options, warrants or rights under the 2019 Plan.
Proxy Statement and Notice of 2023 Annual Meeting 43 |
Other Information |
Value of Initial Fixed $100 Investment Based On: | ||||||||||||||||||||||||||||||||
Year | Summary Compensation Table Total for PEO ($) (1) | Compensation Actually Paid to PEO (1)(2) | Average Summary Compensation Table Total for non-PEO Named Executive Officers ($) (1) | Average Compensation Actually Paid to non-PEO Named Executive Officers (1)(2) ($) | Company TSR (3) ($) | Dow Jones Health Care REIT TSR (4) ($) | Net Income (5) ($mm) | Normalized FFO per Share (6) ($) | ||||||||||||||||||||||||
2022 | 16,025,513 | (8,729,616 | ) | 6,192,126 | (4,100,450 | ) | 63.54 | 81.93 | 902.6 | 1.82 | ||||||||||||||||||||||
2021 | 17,036,629 | 33,684,966 | 7,148,640 | 13,836,026 | 124.60 | 104.84 | 656.0 | 1.75 | ||||||||||||||||||||||||
2020 | 16,857,637 | 28,218,059 | 7,468,721 | 12,540,993 | 109.05 | 90.20 | 431.5 | 1.57 |
(1) | For fiscal years 2020, 2021 and 2022, our PEO was Edward K. Aldag, Jr. Chairman, CEO and President, and our other NEOs were R. Steven Hamner, EVP and CFO and Emmett E. McLean, EVP, COO and Secretary |
(2) | The amounts reported represent the “compensation actually paid”, computed in accordance with Item 402(v) of Regulation S-K, but do not reflect the actual amount of compensation earned by or paid in the applicable year. In accordance with Item 402(v) of RegulationS-K, the following adjustments were made to the amount reported in the “Total” column of the Summary Compensation Table for each year to calculate compensation actually paid: |
Adjustments to Determine Compensation “Actually Paid” for PEO (a) | 2022 | 2021 | 2020 | |||||||||
SCT Total Compensation ($) | 16,025,513 | 17,036,629 | 16,857,637 | |||||||||
Grant Date Fair Value of Stock Awards Granted in Fiscal Year | (12,380,300 | ) | (12,928,532 | ) | (12,732,033 | ) | ||||||
Fair Value at Fiscal Year-End of Outstanding and Unvested Stock Awards Granted in Fiscal Year | 8,396,220 | 24,565,926 | 20,856,417 | |||||||||
Change in Fair Value of Outstanding and Unvested Stock Awards Granted in Prior Fiscal Years | (20,548,139 | ) | 4,166,464 | 3,013,007 | ||||||||
Fair Value at Vesting of Stock Awards Granted in Fiscal Year That Vested During Fiscal Year | 762,900 | 1,047,721 | 793,180 | |||||||||
Change in Fair Value as of Vesting Date of Stock Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Met During Fiscal Year | (985,810 | ) | (203,242 | ) | (570,149 | ) | ||||||
Compensation Actually Paid | (8,729,616 | ) | 33,684,966 | 28,218,059 |
44 Proxy Statement and Notice of 2023 Annual Meeting |
Other Information |
Adjustments to Determine Compensation “Actually Paid” for Non-PEOs Named ExecutiveOfficers (Average) | 2022 | 2021 | 2020 | |||||||||
SCT Total Compensation ($) | 6,192,126 | 7,148,640 | 7,468,721 | |||||||||
Grant Date Fair Value of Stock Awards Granted in Fiscal Year | (4,531,857 | ) | (5,249,546 | ) | (5,552,149 | ) | ||||||
Fair Value at Fiscal Year-End of Outstanding and Unvested Stock Awards Granted in Fiscal Year | 3,039,094 | 9,729,908 | 9,116,553 | |||||||||
Change in Fair Value of Outstanding and Unvested Stock Awards Granted in Prior Fiscal Years | (8,678,809 | ) | 1,874,864 | 1,423,515 | ||||||||
Fair Value at Vesting of Stock Awards Granted in Fiscal Year That Vested During Fiscal Year | 276,519 | 422,195 | 342,930 | |||||||||
Change in Fair Value as of Vesting Date of Stock Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Met During Fiscal Year | (397,523 | ) | (90,035 | ) | (258,577 | ) | ||||||
Compensation Actually Paid | (4,100,450 | ) | 13,836,026 | 12,540,993 |
(a) | In making each of the adjustments, the “value” of a stock award is the fair value of the award on the applicable date determined in accordance with FASB ASC Topic 718 using the valuation assumptions we then used to calculate the fair value of our equity awards. The valuation methodology used to calculate fair values did not materially differ from that disclosed at the time of grant. For more information on the valuation of our equity awards, please see the notes to our financial statements that appear in our Annual Report on Form 10-K each fiscal year and the footnotes to the Summary Compensation Table that appears in our annual Proxy Statement. |
(3) | Company TSR is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the price of our common stock at the end and the beginning of the measurement period. |
(4) | Represents the weighted peer group TSR, weighted according to the respective companies’ stock market capitalization at the beginning of each period for which a return is indicated. The peer group used for this purpose is the Dow Jones Health Care REIT Index, a published industry index. |
(5) | The dollar amounts reported represent the amount of net income reflected in the Company’s audited financial statements for the applicable year. |
(6) | Refer to Appendix A for our definition of FFO and Normalized FFO and a reconciliation of net income to FFO and Normalized FFO. While the Company uses numerous financial and non-financial performance measures for the purpose of evaluating performance for the Company’s compensation programs, the Company has determined that Normalized FFO is the financial performance measure that, in the Company’s assessment, represents the most important financial performance measure that is not otherwise required to be disclosed in the Pay Versus Performance table used by the Company to link compensation actually paid to the Company’s NEOs, computed in accordance with Item 402(v) of RegulationS-K, for the most recently completed fiscal year, to Company performance. The Company utilizes Normalized FFO as a performance metric in the Company’s performance-vesting restricted shares that are awarded to the NEOs. |
Most Important Measures for 2022 |
Normalized FFO per Share |
EBITDA/Interest Expense Ratio |
EBITDA |
Acquisitions |
1YR and 3 YR TSR (Absolute and Relative) |
◆ | In 2022, we continued to execute on our strategy including strong financial results and accretive acquisitions, but given the more challenging operating environment, our TSR declined year-over-year |
◆ | Our 2022 compensation actually paid to our CEO reflects a $25 million decline from Summary Compensation Table amounts, driven by the decline in fair value of outstanding equity awards |
Proxy Statement and Notice of 2023 Annual Meeting 45 |
Other Information |
46 Proxy Statement and Notice of 2023 Annual Meeting |
Other Information |
Compensation of Directors
In 2019,2022, the Compensation Committee engaged Gressle & McGinley to assist it in conducting a competitive review of ournon-employee director compensation program. The Compensation Committee took into consideration Gressle & McGinley’s findings and recommendations in determining the compensation structure for ournon-employee directors for 2019.2022.
As compensation for serving on our Board of Directors during 2019,2022, eachnon-employee director received a cash retainer of $105,000.$115,000. In addition, the Lead Independent Director received a cash retainer of $30,000;$50,000; the Audit Committee chairmanchair received a cash retainer of $25,000;$35,000; the Compensation Committee chairmanchair received a cash retainer of $20,000; and$30,000; the Ethics, Nominating and Corporate Governance Committee chairmanchair received $20,000.a cash retainer of $30,000; the Environmental and Social Committee chair received a cash retainer of $30,000; and the Risk Committee chair received a cash retainer of $30,000. Eachnon-employee director was awarded restricted stock awards of 7,2635,241 shares, 8,2425,928 shares and 6,2065,552 shares in 2017, 20182020, 2021 and 2019, respectively.2022, respectively, with the exception of Ms. Murphy, who was awarded a restricted stock award of 6,101 shares in 2022. These awards vest over three years in equal quarterly amounts. We also reimburse our directors for reasonable expenses incurred in attending Board of Director and committee meetings. Our Compensation Committee may change the compensation of ournon-employee directors at its discretion. Directors who are also officers or employees receive no additional compensation for their service as directors.
In addition, pursuant to the Director Retirement Policy adopted by the Compensation Committee in February 2017, each nonemployeenon-employee director receives a single lump sum payment upon retirement equal to the director’s final annual retainer divided by 12 and multiplied by the director’s years of service on the Board.
40 Proxy Statement and Notice of 2020 Annual Meeting
The following Director Compensation Table summarizes the compensation paid to ournon-employee directors for their services during 2019:2022:
Name | Fees
| Stock
| All Other
| Total ($)
| Fees ($) | Stock Awards(1) ($) | All Other Compensation ($) | Total ($) | ||||||||||||||
G. Steven Dawson | 130,000 | 107,798 | – | 237,798 | 150,000 | 125,475 | – | 275,475 | ||||||||||||||
Caterina A. Mozingo | 145,000 | 125,475 | – | 270,475 | ||||||||||||||||||
Emily W. Murphy(2) | 86,250 | 121,288 | – | 207,538 | ||||||||||||||||||
Elizabeth N. Pitman | 105,000 | 107,798 | – | 212,798 | 160,000 | 125,475 | – | 285,475 | ||||||||||||||
D. Paul Sparks, Jr. | 125,000 | 107,798 | – | 232,798 | 130,000 | 125,475 | – | 255,475 | ||||||||||||||
Michael G. Stewart | 135,000 | 107,798 | – | 242,798 | 165,000 | 125,475 | – | 290,475 | ||||||||||||||
C. Reynolds Thompson, III | 125,000 | 107,798 | – | 232,798 | 145,000 | 125,475 | – | 270,475 |
(1) | Based on the grant date fair |
(2) | Emily Murphy joined our Board on February 17, 2022. |
The following table shows outstanding equity awards held by each of ournon-employee directors aton December 31, 2019:2022:
Name | Unvested Stock
| |||
G. Steven Dawson | 7,067 | |||
Caterina A. Mozingo | 7,067 | |||
Emily W. Murphy | 4,574 | |||
Elizabeth N. Pitman | 7,067 | |||
D. Paul Sparks, Jr. | 7,067 | |||
Michael G. Stewart | 7,067 | |||
C. Reynolds Thompson, III | 7,067 |
Proxy Statement and Notice of 2023 Annual Meeting 47 |
Proxy Statement and Notice of 2020 Annual Meeting 41
Other Information |
Share Ownership of Certain Beneficial Owners
The following table provides information about the beneficial ownership of our common stock as of March 20, 2020,29, 2023, by (i) each director of the Company, (ii) each named executive officerNEO of the Company who is not a director, (iii) all directors and executive officers as a group, and (iv) each person known to the Company to be the beneficial owner of more than 5% of the outstanding shares of common stock.
The SEC defines “beneficial ownership” of a security to mean the possession, directly or indirectly, of voting power and/or investment power over such security. A stockholder is also deemed to be, as of any date, the beneficial owner of all securities that such stockholder has the right to acquire within 60 days after that date through (i) the exercise of any option, warrant or right, (ii) the conversion of a security, (iii) the power to revoke a trust, discretionary account or similar arrangement, or (iv) the automatic termination of a trust, discretionary account or similar arrangement. In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, shares of common stock subject to options or other rights (as set forth above) held by that person that are exercisable as of March 20, 202029, 2023 or will become exercisable within 60 days thereafter, are deemed outstanding; however, such shares are not deemed outstanding for purposes of computing the percentage ownership of any other person. Each person named in the table has sole voting and/or investment power with respect to all of the shares of common stock shown as beneficially owned by such person, except as otherwise set forth in the notes to the table.
Name of Beneficial Owner* | Number of Shares Beneficially Owned | Percentage of Shares Outstanding(1) | ||||||
Edward K. Aldag, Jr. | 2,700,478 | * | *(2) | |||||
R. Steven Hamner | 1,608,192 | * | *(3) | |||||
Emmett E. McLean | 1,304,623 | * | *(4) | |||||
G. Steven Dawson | 92,181 | * | *(5) | |||||
Elizabeth N. Pitman | 25,222 | * | *(6) | |||||
D. Paul Sparks, Jr. | 45,319 | * | *(7) | |||||
Michael G. Stewart | 225,056 | * | *(7) | |||||
C. Reynolds Thompson, III | 27,803 | * | *(7) | |||||
Caterina A. Mozingo | 5,241 | * | *(8) | |||||
All directors and executive officers as a group (9 persons) | 6,034,115 | 1.15 | %(9) | |||||
Other Stockholders: | ||||||||
The Vanguard Group, Inc. 100 Vanguard Blvd. Malvern, Pennsylvania 19355 | 79,026,482 | 15.07 | %(10) | |||||
BlackRock Inc. 55 East 52nd Street New York, New York 10055 | 63,329,544 | 12.08 | %(11) | |||||
Cohen & Steers Inc. 280 Park Avenue New York, New York 10017 | 32,102,695 | 6.12 | %(12) | |||||
Massachusetts Financial Services Company 111 Huntington Ave Boston, Massachusetts 02199 | 11,597,625 | 2.21 | %(13) |
Name of Beneficial Owner* | Number of Shares Beneficially Owned | Percentage of Shares Outstanding(1) | ||
Edward K. Aldag, Jr. | 3,116,010 | **(2) | ||
R. Steven Hamner | 1,795,283 | **(3) | ||
Emmett E. McLean | 1,896,228 | **(4) | ||
G. Steven Dawson | 123,336 | **(5) | ||
Caterina A. Mozingo | 26,396 | **(6) | ||
Emily W. Murphy | 15,776 | **(7) | ||
Elizabeth N. Pitman | 46,984 | **(8) | ||
D. Paul Sparks, Jr. | 66,474 | **(6) | ||
Michael G. Stewart | 224,111 | **(6) | ||
C. Reynolds Thompson, III | 45,253 | **(6) | ||
All directors and executive officers as a group (10 persons) | 7,355,851 | 1.22%(9) | ||
Other Stockholders: | ||||
The Vanguard Group, Inc. 100 Vanguard Blvd. Malvern, Pennsylvania 19355 | 88,056,198 | 14.60%(10) | ||
BlackRock Inc. 55 East 52nd Street New York, New York 10055 | 73,409,021 | 12.17%(11) | ||
State Street Corp. 1 Lincoln Street Boston, Massachusetts 02111 | 36,409,732 | 6.04%(12) |
* | Unless otherwise indicated, the address of each named person is c/o Medical Properties Trust, Inc., 1000 Urban Center Drive, Suite 501, Birmingham, Alabama |
** | Less than 1% of outstanding shares of common stock. |
48 Proxy Statement and Notice of 2023 Annual Meeting |
Other Information |
(1) |
|
42 Proxy Statement and Notice of 2020 Annual Meeting
|
(2) | Includes |
(3) | Includes |
(4) | Includes |
(5) | Includes |
(6) | Includes |
|
(7) | Includes |
(8) | Includes 15,351 shares of unvested restricted common stock, which the named officer has no right to sell or pledge. Includes 5,923 shares of common stock held in the director’s spouse’s name. |
(9) | See notes (1) – (8) above. |
(10) | Share and beneficial ownership information was obtained from a Schedule 13G/A filed February |
(11) | Share and beneficial ownership information was obtained from a Schedule 13G/A filed |
|
Share and beneficial ownership information was obtained from a Schedule 13G/A filed February |
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our executive officers, directors and persons who own more than 10% of our common stock to file reports of ownership and changes in ownership with the SEC. SEC rules require us to identify anyone who failed to file on a timely basis reports required by Section 16(a) of the Exchange Act during the most recent fiscal year or prior fiscal years. Based on our review of Forms 3, 4 and 5, or written representations from reporting persons that no Form 5 was required for such persons, we believe that our executive officers, directors and 10% stockholders complied with Section 16(a) filing requirements applicable to them with the exceptions noted below.
Ms. Murphy filed a late report on Form 3 upon her appointment to our Board in February 2022 due to a brief delay in obtaining the necessary filing codes. Messrs. Aldag, Hamner, McLean and Hanna each failed to file one Form 4 in April 2022 pertaining to shares withheld upon vesting of restricted stock to satisfy tax withholding obligations but subsequently reported this share reduction via a Form 5 filing in February 2023. Mr. Dawson filed a late report on Form 4 in March 2023 pertaining to shares acquired and held indirectly through a 401(k) plan by his spouse in September 2022.
Executive Officers
For information regarding Messrs. Aldag and Hamner, please see “Proposal 1—Election of Directors” above.
|
Emmett E. McLean
Age: 67
Founder, Executive Vice President, Chief Operating Officer (since September 2003) and Secretary (since 2010)
|
|
|
•Mr. McLean has served the Company in a number of positions, including Chief Financial Officer (August—September 2003) and Director (September 2003—April 2004). Prior to joining the Company, from 2000—2003, Mr. McLean was a private investor and, for part of that period, served as a consultant to a privately held company. From 1992 to 2000, Mr. McLean worked in the healthcare services industry with two different companies serving in senior positions, including Chief Financial Officer at one of the companies. • Prior to 1992, Mr. McLean worked in the investment banking field with Dean Witter Reynolds (now Morgan Stanley) and Smith Barney (now Citigroup), and in the commercial banking field with Trust Company Bank (now • Mr. McLean has been active in a number of organizations: Mr. McLean is on the Board of Directors of the Alabama Symphony Orchestra, Ronald McDonald House Charities of Alabama, Smile-A-Mile, the Greater Alabama Council Boy Scouts of America, the Mike Slive Foundation, United Way of Central Alabama, the Rotary Club of Birmingham Foundation, UAB Athletics Foundation and the World Games 2022 Birmingham USA. • Mr. McLean received an MBA from the University of Virginia and a B.A. in Economics from The University of North Carolina at Chapel Hill.
|
Proxy Statement and Notice of 2023 Annual Meeting 49 |
Proxy Statement and Notice of 2020 Annual Meeting 43
of the meeting? | At the meeting, our stockholders will vote on the following proposals:
1. To elect the 2. To ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending December 31,
3. To hold anon-binding, advisory vote to approve named executive officer
4. To
In addition, our management will report on our performance at the meeting and respond to appropriate questions from stockholders.
| |||
Who is entitled to |
The record date for the meeting is March
| |||
Am I entitled to vote if |
If you are the beneficial owner of shares held in “street name” by a brokerage firm, bank, or other nominee, your nominee is required to vote the shares in accordance with your instructions. If you do not give instructions to your nominee, your nominee will be entitled to vote your shares on routine items but will not be permitted to do so onnon-routine items. Your nominee will have discretion to vote on Proposal 2 (ratification of auditors) without any instructions from you, but your nominee will not have the ability to vote your uninstructed shares on Proposal 1 (election of directors)
| |||
How many shares |
A quorum must be present at the meeting in order for any business to be conducted. The presence at the meeting, in person or by proxy, of the holders of a majority of the shares of common stock outstanding on the record date, or
| |||
What happens if a |
If a quorum is not present at the scheduled time of the meeting, the holders of a majority of the shares present in person or represented by proxy at the meeting may adjourn the meeting to another place, date, or time until a quorum is present. The place, date, and time of the adjourned meeting will be announced when the adjournment is taken, and no other notice will be given unless the adjournment is to a date more than 120 days after the original record date or if, after the adjournment, a new record date is fixed for the adjourned meeting.
|
50 Proxy Statement and Notice of 2023 Annual Meeting |
44 Proxy Statement and Notice of 2020 Annual Meeting
Information About the Meeting |
How do I vote my |
Voting by telephone or Internet. If you are a registered holder, meaning you hold your shares in your name, you may follow the instructions on the enclosed voting instructions: Bytelephone 1-800-776-9437 or by internet
If you are a beneficial owner of shares held in “street name,” meaning your shares are held in the name of a brokerage firm, bank, or other nominee, you may be eligible to provide voting instructions to your nominee by telephone or on the Internet. A large number of brokerage firms, banks, and other nominees participate in a program provided through Broadridge Financial Solutions that offers telephone and Internet voting options. If your shares are held in “street name” by a brokerage firm, bank, or other nominee that participates in the Broadridge program, you may provide voting instructions to your nominee by telephone or on the Internet by following the instructions set forth on the voting instruction form provided to you.
Voting by mail. If you are a registered stockholder, you may vote by properly completing, signing, dating, and returning the accompanying proxy card. The enclosed postage-paid envelope requires no additional postage if it is mailed in the United States or Canada. If you are a beneficial owner of shares held in “street name,” you may provide voting instructions to the brokerage firm, bank, or other nominee that holds your shares by properly completing, signing, dating, and returning the voting instruction form provided to you by your nominee.
Voting in person at the meeting. If you are a registered stockholder and attend the meeting, you may deliver your completed proxy card in person. In addition, we will make written ballots available to registered stockholders who wish to vote in person at the meeting. If you are a beneficial owner of shares held in “street name” and wish to vote at the meeting, you will need to obtain a proxy form from the brokerage firm, bank, or other nominee that holds your shares that authorizes you to vote those shares.
| |||
Can I change my |
Yes, you may revoke your proxy and change your vote at any time before the polls are closed at the meeting in any of the following ways: (1) by properly completing, signing, dating, and returning another proxy card with a later date; (2) if you are a registered stockholder, by voting in person at the meeting; (3) if you are a registered stockholder, by giving written notice of such revocation to our Secretary prior to or at the meeting; or (4) if you are a beneficial owner of shares held in “street name,” by following the instructions given by the brokerage firm, bank or other nominee that holds your shares. Your attendance at the meeting will not by itself revoke your proxy.
| |||
What happens if I do |
If you are a registered stockholder and submit a properly executed proxy but do not indicate any voting instructions, the proxy holders will vote as the Board
|
Proxy Statement and Notice of 2020 Annual Meeting 45
Will any other |
As of the date hereof, the Board
| |||
How many votes are |
The |
Proxy Statement and Notice of 2023 Annual Meeting 51 |
Information About the Meeting |
promptly tender his or her resignation to the Board for its consideration. The Ethics, Nominating and Corporate Governance Committee will then recommend to the full Board, and the Board will decide, whether to accept or reject the resignation offer or take other action. The Board
The affirmative vote of the holders of a majority of the shares of common stock represented in person or by proxy at the annual meeting and entitled to vote on the proposal is required for approval of each of Proposals 2, 3 and
| ||||
How will abstentions |
Abstentions and brokernon-votes will not be counted as votes for or against any proposal and will not be included in calculating the number of votes necessary for approval of the proposal. In all cases, abstentions and brokernon-votes will be considered present for the purpose of determining the presence of a quorum.
| |||
How will proxies |
The costs of soliciting proxies from our stockholders will be borne by the Company. We will solicit proxies on behalf of the Board
|
46 Proxy Statement and Notice of 2020 Annual Meeting
What is “householding” |
We have adopted a procedure, approved by the SEC, called “householding.” Under this procedure, stockholders of record who have the same address might receive only one copy of this Notice of Annual Meeting and Proxy Statement and the
| |||
How can I obtain |
If you wish to request extra copies of ourForm 10-K, Annual Report or Proxy Statement free of charge, please send your request to Medical Properties Trust, Inc., 1000 Urban Center Drive, Suite 501, Birmingham, Alabama 35242, or visit our website atwww.medicalpropertiestrust.com.
|
52 Proxy Statement and Notice of 2023 Annual Meeting |
Proxy Statement and Notice of 2020 Annual Meeting 47
The Board of Directors has adopted a written related person transaction approval and disclosure policy for the review, approval or ratification of any related person transaction. The policy provides that all related person transactions must be reviewed and approved by a majority of the disinterested directors on our Board of Directors in advance of us or any of our subsidiaries entering into the transaction; provided that, if we or any of our subsidiaries enter into a transaction without recognizing that such transaction constitutes a related party transaction, the approval requirement will be satisfied if such transaction is ratified by a majority of the disinterested directors serving on the Board of Directors promptly after we recognize that such transaction constituted a related person transaction. Disinterested directors are directors who do not have a personal financial interest in the transaction that is adverse to our financial interest or that of our stockholders. The term “related person transaction” refers to a transaction required to be disclosed by us pursuant to Item 404 ofRegulation S-K (or any successor provision) promulgated by the SEC. For purposes of determining whether such disclosure is required, a related person will not be deemed to have a direct or indirect material interest in any transaction that is deemed not to be material (or would be deemed not material if such related person was a director) for purposes of determining director independence pursuant to standards of director independence under the NYSE’s listing standards.
From time to time, including in 2022, we may have employees who are related to our executive officers or directors and whose current annualized compensation (including benefits) exceeds the SEC disclosure threshold of $120,000. The Company evaluates any such employment relationships as related party transactions subject to the Company’s approval and disclosure policies described above. During 2022, Mr. Aldag had two family members employed by the Company; and Mr. Hamner had two family members employed by the Company. Such family members were employed in non-executive positions, and each received total compensation between $120,000 and $455,000. Total compensation was comparable to that of other employees in similar positions, and family member employees were eligible to participate in benefit programs only on the same basis as other eligible employees.
From time to time, we may also engage in ordinary course commercial dealings with unaffiliated companies who may employ in a non-executive capacity, or may have employed in the past, individuals related to one or more of our executive officers or directors. We enter into any such transactions on an arms-length basis on terms that are consistent with similar transactions with other similarly situated customers and vendors. During the year ended December 31, 2022, the Company paid Johnson Healthcare Real Estate (“Johnson”), a hospital development management company, approximately $1.7 million primarily related to construction project management and facility review oversight. Mr. Aldag has a family member currently employed by Johnson in a non-executive capacity.
48 Proxy Statement and Notice of 2020 Annual Meeting
Proxy Statement and Notice of 2023 Annual Meeting 53 |
Stockholder Proposals for Inclusion in Proxy Statement for 20212024 Annual Meeting of Stockholders
To be considered for inclusion in our proxy statement for the 20212024 annual meeting of stockholders, a stockholder proposal submitted pursuant to Exchange ActRule 14a-8 must be received by us no later than the close of business on December 25, 2020.29, 2023. Stockholder proposals must be sent to the Company c/o Secretary, Medical Properties Trust, Inc., 1000 Urban Center Drive, Suite 501, Birmingham, Alabama 35242. We will not be required to include in our proxy statement any stockholder proposal that does not meet all the requirements for such inclusion established by the SEC’s proxy rules and Maryland corporate law.
Other Stockholder Proposals
Our Second Amended and Restated Bylaws provide that a stockholder who desires to propose any business at an annual meeting of stockholders, other than proposals submitted pursuant to Exchange ActRule 14a-8, must give us written notice of such stockholder’s intent to bring such business before such meeting. Such notice is to be delivered to, or mailed postage prepaid, and received by our Secretary at Medical Properties Trust, Inc., 1000 Urban Center Drive, Suite 501, Birmingham, Alabama 35242 not earlier than December 25, 2020,29, 2023, nor later than January 24, 2021,28, 2024, unless our 20212024 annual meeting of stockholders is scheduled to take place before April 21, 202125, 2024 or after July 20, 2021,24, 2024, in which case a timely notice by stockholders must be delivered not earlier than 120 days prior to such annual meeting date and not later than the later of 60 days prior to such annual meeting date and 10 days following the issuance of a press release announcing the meeting date. The stockholder’s written notice must set forth a brief description of the business desired to be brought before the meeting and certain other information as set forth in Section 1.02 of our Second Amended and Restated Bylaws. Stockholders may obtain a copy of our Second Amended and Restated Bylaws by writing to the Company c/o Secretary at the address shown above.
Stockholder Nominations of Directors
In order for an eligible stockholder or group of stockholders to nominate a director nominee for election at our Company’s 20212024 annual meeting pursuant to the proxy access provision of our Second Amended and Restated Bylaws, notice of such nomination and other required information must be received by our Secretary at Medical Properties Trust, Inc., 1000 Urban Center Drive, Suite 501, Birmingham, Alabama 35242 not earlier than December 25, 2020,29, 2023, nor later than January 24, 2021,28, 2024, unless our 20212024 annual meeting of stockholders is scheduled to take place before April 21, 202125, 2024 or after July 20, 2021,24, 2024, in which case a timely notice by stockholders must be delivered not earlier than 120 days prior to such annual meeting date and not later than the later of 60 days prior to such annual meeting date and 10 days following the issuance of a press release announcing the meeting date. In addition, our Second Amended and Restated Bylaws require the eligible stockholder or group of stockholders to update and supplement such information (or provide notice stating that there are no updates or supplements) as of specified dates.
In order to be eligible to utilize these proxy access provisions, a stockholder, or group of no more than 20 stockholders, must, among other requirements:
Have owned shares of common stock equal to at least 3% of the aggregate of the issued and outstanding shares of common stock of the Company continuously for at least the prior three (3) years; and
• | Have owned shares of common stock equal to at least 3% of the aggregate of the issued and outstanding shares of common stock of the Company continuously for at least the prior three (3) years; and |
Represent that such shares were acquired in the ordinary course of business and not with the intent to change or influence control at the Company and that such stockholder or group does not presently have such intent.
• | Represent that such shares were acquired in the ordinary course of business and not with the intent to change or influence control at the Company and that such stockholder or group does not presently have such intent. |
Additionally, all director nominees submitted through these provisions must be independent and meet specified additional criteria set forth in Section 2.17 of our Second Amended and Restated Bylaws. Stockholders will not be entitled to utilize this proxy access right at an annual meeting if the Company receives notice through itits traditional advanced noticeby-law provisions described below that a stockholder intends to nominate a director at such meeting. The maximum number of director nominees that may be submitted pursuant to these provisions may not exceed 20% of the number of directors then in office. The foregoing proxy access right is subject to additional eligibility, procedural and disclosure requirements set forth in our Second Amended and Restated Bylaws.
Proxy Statement and Notice of 2020 Annual Meeting 49
Our Second Amended and Restated Bylaws also provide that a stockholder who desires to nominate directors at a meeting of stockholders but not submit such nomination for inclusion in our proxy statement must give us written notice of such proposed nomination. For our 20212024 annual meeting of stockholders, such notice is to be delivered to, or mailed postage prepaid, and received by our Secretary at Medical Properties Trust, Inc., 1000 Urban Center Drive, Suite 501, Birmingham, Alabama 35242 not earlier than December 25, 2020,29, 2023, nor
54 Proxy Statement and Notice of 2023 Annual Meeting |
Additional Information |
later than January 24, 2021,28, 2024, unless our 20212024 annual meeting of stockholders is scheduled to take place before April 21, 202125, 2024 or after July 20, 2021,24, 2024, in which case a timely notice by stockholders must be delivered not earlier than 120 days prior to such annual meeting date and 10 days following the issuance of a press release announcing the meeting date. The stockholder’s written notice must include the information set forth in Section 2.03 of our Second AmendedBylaws.
Universal Proxy Nominations of Directors
To comply with the universal proxy rules, and Restated Bylaws.in addition to meeting any deadlines as set forth in our Bylaws, stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than March 26, 2024 (or such earlier date as may be set forth in our Bylaws); provided, however, that in the event that the date of the annual meeting is advanced or delayed by more than 30 days from the first anniversary of the date of the preceding year’s annual meeting, notice must be provided by the later of 60 days prior to the date of the annual meeting or the 10th day following the day on which public announcement of the date of the annual meeting is first made.
By Order of the Board of Directors,
Emmett E. McLean
Executive Vice President, Chief Operating Officer
and Secretary
Birmingham, Alabama
April 23, 202027, 2023
50
Proxy Statement and Notice of 2023 Annual Meeting 55 |
Appendix A: Reconciliation of Non-GAAP Financial Measures
We consider non-GAAP financial measures to be useful supplemental measures of our operating performance. A non-GAAP financial measure is a measure of financial performance, financial position, or cash flows that excludes or includes amounts that are not so excluded or included in the most directly comparable measure calculated and Noticepresented in accordance with GAAP. Described below are the non-GAAP financial measures used by management to evaluate our operating performance and that we consider most useful to investors, together with reconciliations of these measures to the most directly comparable GAAP measures.
Funds From Operations and Normalized Funds From Operations
Investors and analysts following the real estate industry utilize funds from operations (“FFO”) as a supplemental performance measure. FFO, reflecting the assumption that real estate asset values rise or fall with market conditions, principally adjusts for the effects of GAAP depreciation and amortization of real estate assets, which assumes that the value of real estate diminishes predictably over time. We compute FFO in accordance with the definition provided by the National Association of Real Estate Investment Trusts, or Nareit, which represents net income (loss) (computed in accordance with GAAP), excluding gains (losses) on sales of real estate and impairment charges on real estate assets, plus real estate depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures.
In addition to presenting FFO in accordance with the Nareit definition, we disclose Normalized FFO, which adjusts FFO for items that relate to unanticipated or non-core events or activities or accounting changes that, if not noted, would make comparison to prior period results and market expectations less meaningful to investors and analysts.
We believe that the use of FFO, combined with the required GAAP presentations, improves the understanding of our operating results among investors and the use of Normalized FFO makes comparisons of our operating results with prior periods and other companies more meaningful. While FFO and Normalized FFO are relevant and widely used supplemental measures of operating and financial performance of REITs, they should not be viewed as a substitute measure of our operating performance since the measures do not reflect either depreciation and amortization costs or the level of capital expenditures and leasing costs (if any not paid by tenant) to maintain the operating performance of our properties, which can be significant economic costs that could materially impact our results of operations. FFO and Normalized FFO should not be considered an alternative to net income (loss) (computed in accordance with GAAP) as indicators of our financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of our liquidity.
Proxy Statement and Notice of 2023 Annual Meeting A-1 |
APPENDIX A |
The following table presents a reconciliation of net income attributable to MPT common stockholders to FFO and Normalized FFO for the years ended December 31, 2022, 2021, 2020 Annual Meeting
For the Years Ended December 31, | ||||||||||||||||
2022 | 2021 | 2020 | 2019 | |||||||||||||
FFO Information | ||||||||||||||||
Net income attributable to MPT common stockholders | $ | 902,597 |
| $ | 656,021 |
| $ | 431,450 |
| $ | 374,684 |
| ||||
Participating securities’ share in earnings |
| (1,602 | ) |
| (2,161 | ) |
| (2,105 | ) |
| (2,308 | ) | ||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net income, less participating securities’ share in earnings | $ | 900,995 |
| $ | 653,860 |
| $ | 429,345 |
| $ | 372,376 |
| ||||
Depreciation and amortization |
| 399,622 |
|
| 374,599 |
|
| 306,493 |
|
| 183,921 |
| ||||
(Gain) loss on sale of real estate |
| (536,887 | ) |
| (52,471 | ) |
| 2,833 |
|
| (41,560 | ) | ||||
Real estate impairment charges |
| 170,582 |
|
| - |
|
| 19,006 |
|
| 21,031 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Funds from operations | $ | 934,312 |
| $ | 975,988 |
| $ | 757,677 |
| $ | 535,768 |
| ||||
Write-off (recovery) of unbilled rent and other |
| 37,682 |
|
| 7,213 |
|
| 26,415 |
|
| (1,713 | ) | ||||
Gain on sale of equity investments |
| - |
|
| (40,945 | ) |
| - |
|
| - |
| ||||
Other impairment charges, net |
| 97,793 |
|
| 39,411 |
|
| - |
|
| 28,089 |
| ||||
Non-cash fair value adjustments |
| (2,333 | ) |
| (8,193 | ) |
| 9,642 |
|
| (6,908 | ) | ||||
Tax rate changes and other |
| 10,697 |
|
| 34,796 |
|
| 9,295 |
|
| (3,929 | ) | ||||
Debt refinancing and unutilized financing costs |
| 9,452 |
|
| 27,650 |
|
| 28,180 |
|
| 6,106 |
| ||||
Acquisition and other transaction costs, net |
| - |
|
| - |
|
| - |
|
| - |
| ||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Normalized funds from operations | $ | 1,087,603 |
| $ | 1,035,920 |
| $ | 831,209 |
| $ | 557,413 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Per diluted share data | ||||||||||||||||
Net income, less participating securities’ share in earnings | $ | 1.50 |
| $ | 1.11 |
| $ | 0.81 |
| $ | 0.87 |
| ||||
Depreciation and amortization |
| 0.67 |
|
| 0.63 |
|
| 0.57 |
|
| 0.43 |
| ||||
(Gain) loss on sale of real estate |
| (0.90 | ) |
| (0.09 | ) |
| 0.01 |
|
| (0.10 | ) | ||||
Real estate impairment charges |
| 0.29 |
|
| - |
|
| 0.04 |
|
| 0.05 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Funds from operations | $ | 1.56 |
| $ | 1.65 |
| $ | 1.43 |
| $ | 1.25 |
| ||||
Write-off (recovery) of unbilled rent and other |
| 0.07 |
|
| 0.01 |
|
| 0.05 |
|
| (0.01 | ) | ||||
Gain on sale of equity investments |
| - |
|
| (0.07 | ) |
| - |
|
| - |
| ||||
Other impairment charges, net |
| 0.16 |
|
| 0.07 |
|
| - |
|
| 0.07 |
| ||||
Non-cash fair value adjustments |
| - |
|
| (0.01 | ) |
| 0.02 |
|
| (0.01 | ) | ||||
Tax rate changes and other |
| 0.02 |
|
| 0.06 |
|
| 0.02 |
|
| (0.01 | ) | ||||
Debt refinancing and unutilized financing costs |
| 0.01 |
|
| 0.04 |
|
| 0.05 |
|
| 0.01 |
| ||||
Acquisition and other transaction costs, net |
| - |
|
| - |
|
| - |
|
| - |
| ||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Normalized funds from operations | $ | 1.82 |
| $ | 1.75 |
| $ | 1.57 |
| $ | 1.30 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
A-2 Proxy Statement and Notice of 2023 Annual Meeting |
APPENDIX A |
Total Adjusted Gross Assets
Total adjusted gross assets is total assets before accumulated depreciation/amortization (adjusted for our investments in unconsolidated real estate joint ventures), assumes material transaction commitments are completed, and assumes cash on hand at period-end and cash generated from or to be generated from transaction commitments or financing activities subsequent to period-end are either used in these transactions or used to reduce debt. We believe total adjusted gross assets is useful to investors as it provides a more current view of our portfolio and allows for a better understanding of our concentration levels as our commitments close. The following table presents a reconciliation of total assets to total adjusted gross assets (in thousands):
As of December 31, | ||||
2022 | ||||
Total assets | $ | 19,658,000 |
| |
Add: | ||||
Accumulated depreciation and amortization |
| 1,193,312 |
| |
Incremental gross assets of our Investments in Unconsolidated Real Estate Joint Ventures (1) |
| 1,698,917 |
| |
Net: | ||||
Reclassification between operators (2) |
| - |
| |
Gross book value of the transactions, net (3) |
| (1,074,024 | ) | |
Decrease in cash from the transactions (4) |
| (235,668 | ) | |
|
|
| ||
Total adjusted gross assets | $ | 21,240,537 |
| |
|
|
|
(1) | Reflects an addition to total assets to present our total share of each joint venture’s gross assets. See below for details of the calculation. While we do not control any of our unconsolidated real estate joint venture arrangements and do not have direct legal claim to the underlying assets of the unconsolidated real estate joint ventures, we believe this adjustment allows investors to view certain concentration information on a basis comparable to the remainder of our real estate portfolio. This presentation is also consistent with how our management team reviews our portfolio (dollar amounts in thousands): |
As of December 31, | ||||
2022 | ||||
Real estate joint venture total gross real estate and other assets | $ | 5,921,188 |
| |
Weighted-average equity ownership percentage |
| 55 | % | |
|
|
| ||
| 3,261,727 |
| ||
Investments in Unconsolidated Real Estate Joint Ventures (A) |
| (1,562,810 | ) | |
|
|
| ||
Incremental gross assets of our Investments in Unconsolidated Real Estate Joint Ventures | $ | 1,698,917 |
| |
|
|
|
(A) Includes amount shown on the “Investments in unconsolidated real estate joint ventures” line on our consolidated balance sheets, along with a CHF 60 million mortgage loan included in the “Mortgage loans” line on our consolidated balance sheet.
(2) | Reflects a reclass of $0.8 billion of gross assets between Springstone and Lifepoint along with a $0.9 billion reclass of gross assets between Steward and Common Spirit Health as part of the transactions described in Note 13 to our Annual Report on Form 10-K. |
Proxy Statement and Notice of 2023 Annual Meeting A-3 |
APPENDIX A |
(3) | Represents the gross book value of assets sold or written off due to the committed transactions, partially offset by the addition of new gross assets from the committed transactions. See detail below (in thousands): |
As of December 31, | ||||
2022 | ||||
Gross book value of assets in transactions | $ | (655,354 | ) | |
Non-cash write-offs related to transactions |
| (418,670 | ) | |
|
|
| ||
Gross book value of the transactions, net | $ | (1,074,024 | ) | |
|
|
|
(4) | Represents cash expected from the proceeds generated by the transactions along with cash on hand to fund the transactions or reduce debt as detailed below (in thousands): |
As of December 31, | ||||
2022 | ||||
Expected cash proceeds generated by (used for) the transactions | $ | 659,000 |
| |
Reduction of revolver balance |
| (894,668 | ) | |
|
|
| ||
Net decrease in cash from the transactions | $ | (235,668 | ) | |
|
|
|
A-4 Proxy Statement and Notice of 2023 Annual Meeting |
APPENDIX A |
Return on Equity
Return on equity as measured by Normalized FFO is derived from amounts included in our U.S. GAAP financial statements. We use Normalized FFO as the numerator for the same reasons we present Normalized FFO, as discussed on page A-1. We use average total equity excluding the effect of accumulated depreciation and amortization similar to the exclusion of depreciation and amortization from Normalized FFO.
Return on equity measures the actual profitability we delivered related to the actual cost of the equity with which we have built our portfolio. Return on equity measured by Normalized FFO should not be considered a substitute for return on equity measured by net income and does not reflect the overall profitability of our business. The following tables reconcile return on equity measured by net income and return on equity measured by Normalized FFO (dollars in thousands):
For the years ended December 31, | ||||
Return on equity measured by net income | 2022 | |||
Numerator: | ||||
Net income attributable to MPT common stockholders | $ | 902,597 | ||
|
| |||
Denominator: | ||||
Beginning total equity | $ | 8,445,671 | ||
Ending total equity | 8,594,407 | |||
Average total equity | $ | 8,520,039 | ||
|
| |||
Return on equity measured by net income | 10.59 | % | ||
|
| |||
For the years ended December 31, | ||||
Return on equity measured by Normalized funds from operations | 2022 | |||
Numerator: | ||||
Normalized funds from operations(1) | $ | 1,087,603 | ||
|
| |||
Denominator: | ||||
Beginning total equity | $ | 8,445,671 | ||
Accumulated depreciation and amortization | 993,100 | |||
Accumulated depreciation and amortization (real estate held for sale) | 113,996 | |||
|
| |||
Adjusted beginning total equity | 9,552,767 | |||
Ending total equity | 8,594,407 | |||
Accumulated depreciation and amortization | 1,193,312 | |||
Accumulated depreciation and amortization (real estate held for sale) | - | |||
|
| |||
Adjusted ending total equity | 9,787,719 | |||
Average adjusted total equity | $ | 9,670,243 | ||
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Return on equity measured by Normalized funds from operations | 11.25 | % | ||
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(1) | See reconciliation on page A-2 |
Proxy Statement and Notice of 2023 Annual Meeting A-5 |
ANNUAL MEETING OF STOCKHOLDERS OF MEDICAL PROPERTIES TRUST, INC. May 21, 2020 GO GREEN e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.astfinancial.com to enjoy online access. Important Notice Regarding Internet AvailabilitySignature of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement, Annual Report and 2019 Form 10-K are available at www.medicalpropertiestrust.comStockholder Date: Signature of Stockholder Date: Note: Please sign date and mailexactly as your proxy cardname or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in the envelope provided as soon as possible. Please detach along perforated line and mail in the envelope provided. 00033333333030300000 8 052120 THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” ALL NOMINEES AND “FOR” PROPOSALS 2 AND 3. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x 1. THISTo elect PROXYeight directors. IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY AND WILL BE VOTED IN ACCORDANCE WITH THE UNDERSIGNED'S INSTRUCTIONS SET FORTH HEREIN. UNLESS DIRECTION IS GIVEN TO THE CONTRARY, THIS PROXY WILL BE VOTED “FOR” ALL NOMINEES AND “FOR” EACH OF PROPOSAL 2 AND 3. 1. To elect eight directors FOR AGAINST ABSTAIN Edward K. Aldag, Jr. G. Steven Dawson R. Steven Hamner Caterina A. Mozingo Elizabeth N. Pitman C. Reynolds Thompson, III D. Paul Sparks, Jr. Michael G. Stewart 2. To ratify the appointment of PricewaterhouseCoopers LLP as independent registered public accounting firm for the fiscal year ending December 31, 2020. 3. Non-binding, advisory approval of the Company's executive compensation. With respect to any other item of business that properly comes before the annual meeting and at any adjournments or postponements thereof, the proxy holders arepartnership name by authorized to vote the undersigned's shares in their discretion.person. To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method. SignatureTHE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” ALL NOMINEES AND “FOR” PROPOSALS 2, 3 AND FOR “1 YEAR” ON PROPOSAL 4. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x Please detach along perforated line and mail in the envelope provided. 00033333333330340000 4 052523 ANNUAL MEETING OF STOCKHOLDERS OF MEDICAL PROPERTIES TRUST, INC. May 25, 2023 Important Notice Regarding Internet Availability of Stockholder Date: SignatureProxy Materials for the Annual Meeting: The Notice and Proxy Statement, Annual Report and 2022 Form 10-K are available at www.medicalpropertiestrust.com Please sign, date and mail your proxy card in the envelope provided as soon as possible. GO GREEN e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.astfinancial.com to enjoy online access. 1. To elect eight directors. O Edward K. Aldag, Jr. O G. Steven Dawson O R. Steven Hamner O Robert E. Holmes, Ph.D. O Sherry A. Kellett O William G. McKenzie O L. Glenn Orr, Jr. O D. Paul Sparks, Jr. FOR ALL NOMINEES WITHHOLD AUTHORITY FOR ALL NOMINEES FOR ALL EXCEPT (See instructions below) INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” and fill in the circle next to each nominee you wish to withhold, as shown here: NOMINEES: THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY AND WILL BE VOTED IN ACCORDANCE WITH THE UNDERSIGNED’S INSTRUCTIONS SET FORTH HEREIN. UNLESS DIRECTION IS GIVEN TO THE CONTRARY, THIS PROXY WILL BE VOTED “FOR” ALL NOMINEES AND “FOR” EACH OF PROPOSALS 2 AND 3 AND FOR “1 YEAR” ON PROPOSAL 4. 1. To elect nine directors Edward K. Aldag, Jr. G. Steven Dawson R. Steven Hamner Caterina A. Mozingo Emily W. Murphy Elizabeth N. Pitman D. Paul Sparks, Jr. Michael G. Stewart C. Reynolds Thompson, III 2. To ratify the appointment of Stockholder Date: Note: titlePricewaterhouseCoopers LLP as such. Ifindependent registered public accounting firm for the signer isfiscal year ending December 31, 2023. 3. To approve, on a corporation, please sign full corporate name by dulynon-binding, advisory basis, the compensation of the Company’s named executive officers. 4. To recommend, on a non-binding, advisory basis, the frequency of future advisory votes on executive compensation. With respect to any other item of business that properly comes before the annual meeting and at any adjournments or postponements thereof, the proxy holders are authorized officer, giving full title as such. If signer is a partnership, please signto vote the undersigned’s shares in partnershipPlease sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full name by authorized person.
their discretion. FOR AGAINST ABSTAIN 2 1 YEAR YEARS 3 YEARS ABSTAIN
0 ————————— 14475 PROXY MEDICAL PROPERTIES TRUST, INC. 20202023 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 21, 202025, 2023 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The 20192023 Annual Meeting of Stockholders of Medical Properties Trust, Inc. (the “Annual Meeting”) will be held at the Comany’s Headquarters located at 1000 Urban Center Drive, Suite 501,The UAB Collat School of Business, 710 13th Street South, Birmingham, Alabama 35233, on May 21, 2020,25, 2023, beginning at 10:30 a.m. Central Time. You can access directions to the Annual Meeting at www.medicalpropertiestrust.com. The undersigned hereby acknowledges receipt of the combined Notice of 20202023 Annual Meeting of Stockholders and Proxy Statement dated April [ ], 2020,27, 2023, accompanying this proxy and to which reference is hereby made, for further information regarding the Annual Meeting and the matters to be considered and voted on by the stockholders at the Annual Meeting. The undersigned hereby appoints Edward K. Aldag, Jr. and R. Steven Hamner, and each of them, attorneys and agents, with full power of substitution, to vote, as the undersigned'sundersigned’s proxy, all the shares of common stock owned of record by the undersigned as of the record date and otherwise to act on behalf of the undersigned at the meeting and any adjournment thereof, in accordance with the instructions set forth herein and with discretionary authority with respect to any other business, not known or determined at the time of the solicitation of this proxy, that properly comes before such meeting or any adjournment thereof. The undersigned hereby revokes any proxy heretofore given and directs said attorneys and agents to vote or act as indicated on the reverse side hereof. 1.1 (Continued and to be signed on the reverse side) 144751.1