SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
FORM 10-K/A
[X] AMENDMENT NO. 2 TO JOINT ANNUAL REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ___________.
Commission file number 0-9109 Commission file number 0-9110
MEDITRUST CORPORATION MEDITRUST OPERATING COMPANY
(Exact name of registrant as specified in its charter) (Exact name of registrant as specified in its charter)
Delaware Delaware
(State or other jurisdiction of incorporation or (State or other jurisdiction of incorporation or
organization) organization)
95-3520818 95-3419438
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
909 HIDDEN RIDGE, SUITE 600 909 HIDDEN RIDGE, SUITE 600
IRVING, TEXAS IRVING, TEXAS
75038 75038
(Address of principal executive offices, including zip (Address of principal executive offices, including zip
code) code)
(214) 492-6600 (214) 492-6600
(Registrant's telephone number, including area code) (Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class and Name of Each Exchange on Which Title of Each Class and Name of Each Exchange on Which
Registered Registered
- ------------------------------------------------------------ ------------------------------------------------------------
1
Common Stock $0.10 Par Value, Common Stock $0.10 Par Value,
New York Stock Exchange New York Stock Exchange
9% Convertible Debentures due 2002,
New York Stock Exchange
7.5% Convertible Debentures due 2001,
New York Stock Exchange
7.6% Notes due 2001,
New York Stock Exchange
Cumulative Redeemable Preferred Stock represented by
depository shares representing 1/10th of a share of
Series A Preferred Stock,
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None None
-------------------------------------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No __
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. Yes No _X_
Aggregate market value of the paired voting stock of Meditrust
Corporation and of Meditrust Operating Company held by non-affiliates as of
March 28, 2001 was $414,918,242 based upon the closing price of $3.59 on the New
York Stock Exchange Composite Tape (for this computation, the registrants have
excluded the market value of all the shares of common stock reported as
beneficially owned by executive officers and directors of the registrants). The
number of shares of common stock, par value $0.10 per share, outstanding as of
April 27, 2001 for Meditrust Corporation was 144,341,666 and Meditrust Operating
Company was 143,036,289.
The following documents are incorporated by reference into the indicated Part of
this Joint Annual Report on Form 10-K/A:
DOCUMENT PART
None
For the purpose of this Joint Annual Report on Form 10-K/A, Meditrust
Corporation and Meditrust Operating Company are referred to as "Meditrust" and
"Operating," respectively, and "The Meditrust Companies," collectively.
Meditrust also refers, as the context may require, to Meditrust, the
Massachusetts Business Trust ("Meditrust's Predecessor"). As used in this Part
III, the term "Shares" and "Paired Common Stock" are defined as shares of paired
common stock of Meditrust and Operating.
Items 10, 11, 12 and 13 of this Joint Annual Report on Form 10-K are
hereby amended and restated in full by adding those Items as follows:
Part III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS
Directors of The Meditrust Companies
The respective Boards of Directors of each of Meditrust and Operating
are divided into three classes. Each class has a term of three years and the
terms are staggered so that in each year only one class of Directors for each of
Meditrust and Operating is elected.
3
Current Directors
of
The Meditrust Companies
DIRECTOR OF DIRECTOR OF
MEDITRUST OPERATING
NAME AND PRINCIPAL AND ITS AND ITS TERMS
OCCUPATION OR EMPLOYMENT AGE PREDECESSOR SINCE PREDECESSOR SINCE EXPIRE
- ------------------------ --- ----------------- ----------------- ------
William C. Baker 68 2000 1991 2003
Former Chairman
Santa Anita Realty Enterprises, Inc. and
Santa Anita Operating Company
Clive D. Bode 57 1999 1999 2002
Chairman of the Board
Director, Kelley, Hart & Hallman
William G. Byrnes 50 2000 1998 2001
Financial Consultant, Private Investor
and Director
JDN Realty Corporation
Francis W. Cash 59 2000 2000 2001
Chief Executive Officer and
President of Meditrust
Chief Executive Officer and President
of Operating
James P. Conn 63 1995 2000 2002
Former Managing Director and Chief
Investment Officer of Financial
Security Assurance, Inc.
John C. Cushman, III 60 1996 2000 2003
President and Chief Executive Officer
of Cushman Realty Corporation
Stephen E. Merrill 54 1998 1998 2002
President, Bingham Consulting
Group, LLC
William C. Baker has been a Director of Operating since October 1991 and
was appointed a Director of Meditrust in April 2000. Mr. Baker served as
President and Treasurer of Operating from August 1998 through April 2000. Mr.
Baker was Chief Executive Officer of Santa Anita Realty Enterprises, Inc. and
Santa Anita Operating Company from April 1996 to December 1998. Mr. Baker was
the President of Red Robin International, Inc. from 1993 to 1995, a private
investor from 1988 to 1992 and Chairman of the Board and Chief Executive Officer
of Del Taco, Inc. from 1976 to 1988. He served as Chairman of the Board of Coast
Newport Properties from 1991 to 1999. Mr. Baker is a director of Callaway Golf
Company and Public Storage, Inc.
Clive D. Bode has been Chairman of the Boards of Directors of Meditrust and
Operating since October 1999. Mr. Bode has been a special advisor to certain
members of the Bass Family of Fort Worth, Texas for the past 10 years. Mr. Bode
is also a director of Kelly, Hart & Hallman, a Fort Worth based law firm.
4
William G. Byrnes has been a Director of Operating since 1998 and was
appointed a Director of Meditrust in April 2000. Mr. Byrnes served as Chief
Executive Officer of Meditrust from January 2000 through Mr. Cash's appointment
in April 2000. He was previously a Distinguished Professor of Finance at
Georgetown University from August 1988 to May 1999 and was associated with Alex.
Brown and Sons, investment bankers, from 1981 through 1998. Mr. Byrnes is a
Financial Consultant and Private Investor and is a Director of JDN Realty
Corporation, a real estate development and asset management company traded on
the New York Stock Exchange, a director of Security Capital Preferred Growth
Incorporated and non-executive Chairman of Pulpfree, Inc.
Francis W. Cash has been President and Chief Executive Officer of Meditrust
and President and Chief Executive Officer of Operating since April 17, 2000. Mr.
Cash was also the Treasurer of Operating from April 17, 2000 until June 2000, at
which time David L. Rea joined The Meditrust Companies and became Treasurer of
Operating. Mr. Cash was the Chairman of the Board, Chief Executive Officer,
President and a director of Mariner Healthcare Group, Inc. from September 8,
1999 until March 2000. From July 1995 to August 1999, Mr. Cash served as
President and Chief Executive Officer of Red Roof Inns, Inc. ("Red Roof Inns").
He also served as Chairman of the Board of Red Roof Inns from June 1996 to
August 1999. Prior to his service at Red Roof Inns, Mr. Cash served as President
and Chief Operating Officer of NovaCare, Inc. from October 1992 to June 1995.
Prior to that, Mr. Cash served in a number of senior executive positions for 18
years at Marriott Corporation, most recently as President, Marriott Service
Group.
James P. Conn has been a Director of Meditrust since 1995 and was appointed
a Director of Operating in April 2000. Mr. Conn was the Managing Director and
Chief Investment Officer of Financial Security Assurance, Inc. from 1992 through
1998. He was also the President and Chief Executive Officer of Bay Meadows
Operating Company from 1988 to 1992. Mr. Conn is a trustee of Gabelli Equity
Trust, Gabelli Global Multimedia Trust, Gabelli Utility Trust and a member of
the Board of Directors of First Republic Bank. Mr. Conn is also a trustee of
Gabelli Asset Fund, Gabelli Growth Fund and Gabelli Westwood Funds.
John C. Cushman, III has been a Director of Meditrust since 1996 and was
appointed a Director of Operating in April 2000. Mr. Cushman has been the
President and Chief Executive Officer of Cushman Realty Corporation since 1978.
He is a director of National Golf Properties, Inc., Los Angeles Turf Club,
Incorporated, Digital Gene Technologies, Inc., Cushman Realty Corporation,
Cushman Winery Corporation and Inglewood Park Cemetery.
Stephen E. Merrill has been a Director of The Meditrust Companies since May
1998. Mr. Merrill is the President of Bingham Consulting Group, LLC and was Of
Counsel to the law firm Choate, Hall & Stewart from March 1997 to February 1999.
Previously, Mr. Merrill served as Governor of the State of New Hampshire from
1993 through 1997. He was senior partner in the law firm Merrill & Broderick
from 1989 through 1993 and served as Attorney General for the State of New
Hampshire from 1985 through 1989. Mr. Merrill also served as legal counsel and
Chief of Staff to the Governor of New Hampshire from 1982 through 1985.
Executive Officers of The Meditrust Companies
Incorporated by reference to Item 4a of The Meditrust Companies' Joint
Annual Report on Form 10-K filed for the fiscal year ended December 31, 2000
under the caption "Executive Officers of the Registrants."
5
Family Relationships
There are no family relationships among any of the Directors or executive
officers of The Meditrust Companies.
Section 16 (a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the executive officers and directors of The Meditrust Companies, and persons who
own more than 10% of a registered class of The Meditrust Companies' equity
securities, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission and the New York Stock Exchange. Officers,
directors and greater than 10% beneficial owners are required by SEC regulation
to furnish The Meditrust Companies with copies of all Section 16(a) forms they
file. To our knowledge, based solely on our review of Forms 3 and 4 and
amendments thereto furnished to The Meditrust Companies during its most recent
fiscal year, Forms 5 and amendments thereto furnished to The Meditrust Companies
with respect to its most recent fiscal year and written representations
furnished to The Meditrust Companies, no officer, Director or 10% beneficial
owner of The Meditrust Companies failed to timely file a required report, except
the David L. Rea filed a timely Form 3 listing him incorrectly as an executive
officer of Meditrust instead of Operating. Mr. Rea subsequently filed a
corrected Form 3, but such corrected filing was inadvertently filed after the
deadline.
6
ITEM 11. EXECUTIVE COMPENSATION
Executive Compensation -- Meditrust
The following table provides information with respect to the
compensation that Meditrust paid in 1998, 1999, and 2000 to those individuals
who served as Meditrust's Chief Executive Officer, the four most highly
compensated executive officers other than the Chief Executive Officer, and two
former executive officers who are no longer with Meditrust or its subsidiaries
whose base salary and bonus exceeded $100,000 for the fiscal year ended December
31, 2000.
MEDITRUST SUMMARY COMPENSATION TABLE
Long-Term
Compensation Awards
------------------------
Securities All other
Annual Compensation Restricted Under-Lying Compen-
Name and Principal ------------------- Stock Options/ sation
Position Year Salary($) Bonus($) Awards($) SARS(#) ($)
- -------------------------- ---- --------- -------- --------- ---------- ---------
Francis W. Cash(1) 2000 -- -- -- -- --
Chief Executive Officer and 1999 -- -- -- -- --
President 1998 -- -- -- -- --
Michael F. Bushee 2000 392,900 425,000(2) 178,200(3) -0- 23,682(6)
Chief Operating Officer 1999 300,000 221,607(2) 95,600(4) -0- 6,627
1998 300,000 194,718(2) 1,125,000(5) 150,000 6,627
David L. Rea(7) 2000 -- -- -- -- --
Chief Financial Officer and 1999 -- -- -- -- --
Treasurer 1998 -- -- -- -- --
John F. Schmutz(7) 2000 -- -- -- -- --
Senior Vice President and 1999 -- -- -- -- --
General Counsel 1998 -- -- -- -- --
Debora A. Pfaff 2000 169,121 280,000(8) 118,800(9) -0- 20,310(10)
Vice President of Operations 1999 124,100 60,000(8) -0- -0- 17,481
1998 101,323 60,000(8) -0- 25,458 31,138
Michael S. Benjamin 2000 351,018 215,000(11) 178,200(12) -0- 82,409(15)
Former Senior Vice President 1999 300,000 221,607(11) 95,600(13) -0- 6,786
and Secretary 1998 300,000 194,718(11) 1,125,000(14) 150,000 6,786
Laurie T. Gerber 2000 300,000 215,000(16) 178,200(17) -0- 22,970(20)
Former Chief Financial 1999 275,000 215,000(16) 95,600(18) -0- 6,157
Officer 1998 250,000 150,000(16) 1,125,000(19) 150,000 6,157
David F. Benson(21) 2000 37,781 -0- -0- -0- -0-(25)
Former Chief Executive 1999 500,000 10,096(22) 95,600(23) -0- 6,860
Officer and President 1998 500,000 319,912(22) 2,812,500(24) 375,000 6,860
William G. Byrnes(26) 2000 -0- -0- 82,750(27) 75,000 100,000(28)
Former Chief Executive 1999 -0- -0- -0- -0- -0-
Officer and President 1998 -0- -0- -0- -0- -0-
7
- ------------------------
(1) Mr. Cash became Chief Executive Officer and President of Meditrust and
Operating on April 17, 2000. Mr. Cash was paid by Operating for his services as
an officer of both Meditrust and Operating. See "Operating Summary Compensation
Table" INFRA.
(2) Mr. Bushee received his bonus for 2000 in cash. Mr. Bushee received his
bonuses for 1999 and 1998 in cash and Shares. For 1999, $215,000 was cash and
$6,607 was Shares (428 Shares at $15.44 per Share on January 4, 2000). For 1998,
$150,000 was cash and $44,718 was Shares (1,646 Shares in four installments at
$36.38, $30.94, $26.81 and $16.00 per Share in January, April, July and October,
1998). All issuance prices were the closing prices for Shares on the New York
Stock Exchange on the respective dates of issuance.
(3) Mr. Bushee received an award of 30,000 shares of restricted stock on January
3, 2000 and the fair market value of a Share on the date of grant was $5.94. The
restricted stock vests on the earlier of the 8th year or upon achievement the
following performance criteria: achievement of Funds from Operations of $2.92 in
2000, $3.10 in 2001, $3.28 in 2002, $3.48 in 2003, $3.69 in 2004. All of the
restricted stock immediately vests upon a change of control of Meditrust and
dividends, if and when declared, are payable on the restricted stock. The value
of the restricted stock as of December 29, 2000 was $76,800 based on the closing
market price as reported on the New York Stock Exchange on December 29, 2000 of
$2.56.
(4) Mr. Bushee received an award of 10,000 shares of restricted stock on August
5, 1999 and the fair market value of a Share on the date of grant was $9.56. The
restricted stock vests on the earlier of the 8th year or upon achievement the
following performance criteria: achievement of Funds from Operations of $2.92 in
2000, $3.10 in 2001, $3.28 in 2002, $3.48 in 2003, $3.69 in 2004. All of the
restricted stock immediately vests upon a change of control of Meditrust and
dividends, if and when declared, are payable on the restricted stock. The value
of the restricted stock as of December 29, 2000 was $25,600 based on the closing
market price as reported on the New York Stock Exchange on December 29, 2000 of
$2.56.
(5) Mr. Bushee received an award of 50,000 shares of restricted stock on July
31, 1998 and the fair market value of a Share on the date of grant was $22.50.
The restricted stock vests on the earlier of the 8th year or upon achievement
the following performance criteria: achievement of Funds from Operations of
$2.92 in 2000, $3.10 in 2001, $3.28 in 2002, $3.48 in 2003, $3.69 in 2004. All
of the restricted stock immediately vests upon a change of control of Meditrust
and dividends, if and when declared, are payable on the restricted stock. The
value of the restricted stock as of December 29, 2000 was $128,000 based on the
closing market price as reported on the New York Stock Exchange on December 29,
2000 of $2.56.
(6) Includes $14,233 in health insurance premiums paid by Meditrust, $2,422 in
disability insurance premiums paid by Meditrust, $1,627 in life insurance
premiums paid by Meditrust and a $5,400 car allowance.
(7) Messrs. Rea and Schmutz were paid by Operating for their services as
officers of both Meditrust and Operating. See "Operating Summary Compensation
Table" INFRA.
(8) Ms. Pfaff received her bonuses for 2000, 1999 and 1998 in cash.
(9) Ms. Pfaff received an award of 20,000 shares of restricted stock on January
3, 2000 and the fair market value of a Share on the date of grant was $5.94. The
restricted stock vests on the earlier of the 8th year or upon achievement the
following performance criteria: achievement of Funds from Operations of $2.92 in
2000, $3.10 in 2001, $3.28 in 2002, $3.48 in 2003, $3.69 in 2004. All of the
restricted stock immediately vests upon a change of control of Meditrust and
dividends, if and when declared, are payable on the restricted stock. The value
of the restricted stock as of December 29, 2000 was $51,200 based on the closing
market price as reported on the New York Stock Exchange on December 29, 2000 of
$2.56.
(10) Includes $14,233 in health insurance premiums paid by Meditrust, $1,254 in
disability insurance premiums paid by Meditrust, $1,627 in life insurance
premiums paid by Meditrust and a stock grant of $3,196.
8
(11) Mr. Benjamin received his bonus for 2000 in cash. Mr. Benjamin received his
bonuses for 1999 and 1998 in cash and Shares. For 1999, $215,000 was cash and
$6,607 was Shares (428 Shares at $15.44 per Share on January 4, 2000). For 1998,
$150,000 was cash and $44,718 was Shares (1,646 Shares in four installments at
$36.38, $30.94, $26.81 and $16.00 per Share in January, April, July and October,
1998). All issuance prices were the closing prices for Shares on the New York
Stock Exchange on the respective dates of issuance.
(12) Mr. Benjamin received an award of 30,000 shares of restricted stock on
January 3, 2000 and the fair market value of a Share on the date of grant was
$5.94. The restricted stock vests on the earlier of the 8th year or upon
achievement the following performance criteria: achievement of Funds from
Operations of $2.92 in 2000, $3.10 in 2001, $3.28 in 2002, $3.48 in 2003, $3.69
in 2004. All of the restricted stock immediately vests upon a change of control
of Meditrust and dividends, if and when declared, are payable on the restricted
stock. The value of the restricted stock as of December 29, 2000 was $76,800
based on the closing market price as reported on the New York Stock Exchange on
December 29, 2000 of $2.56.
(13) Mr. Benjamin received an award of 10,000 shares of restricted stock on
August 5, 1999 and the fair market value of a Share on the date of grant was
$9.56. The restricted stock vests on the earlier of the 8th year or upon
achievement the following performance criteria: achievement of Funds from
Operations of $2.92 in 2000, $3.10 in 2001, $3.28 in 2002, $3.48 in 2003, $3.69
in 2004. All of the restricted stock immediately vests upon a change of control
of Meditrust and dividends, if and when declared, are payable on the restricted
stock. The value of the restricted stock as of December 29, 2000 was $25,600
based on the closing market price as reported on the New York Stock Exchange on
December 29, 2000 of $2.56.
(14) Mr. Benjamin received an award of 50,000 shares of restricted stock on July
31, 1998 and the fair market value of a Share on the date of grant was $22.50.
The restricted stock vests on the earlier of the 8th year or upon achievement
the following performance criteria: achievement of Funds from Operations of
$2.92 in 2000, $3.10 in 2001, $3.28 in 2002, $3.48 in 2003, $3.69 in 2004. All
of the restricted stock immediately vests upon a change of control of Meditrust
and dividends, if and when declared, are payable on the restricted stock. The
value of the restricted stock as of December 29, 2000 was $128,000 based on the
closing market price as reported on the New York Stock Exchange on December 29,
2000 of $2.56.
(15) Includes $14,233 in health insurance premiums paid by Meditrust, $1,995 in
disability insurance premiums paid by Meditrust, $1,627 in life insurance
premiums paid by Meditrust, a $4,554 car allowance and forgiveness of $60,000 of
debt. Excludes the Severance Payment of $4,745,421 received by Mr. Benjamin upon
his termination of employment with Meditrust on December 29, 2000. See
explanation of Mr. Benjamin's severance provision at "Employment Arrangements"
INFRA.
(16) Ms. Gerber received her bonuses for 2000, 1999 and 1998 in cash.
(17) Ms. Gerber received an award of 30,000 shares of restricted stock on
January 3, 2000 and the fair market value of a Share on the date of grant was
$5.94. The restricted stock vests on the earlier of the 8th year or upon
achievement the following performance criteria: achievement of Funds from
Operations of $2.92 in 2000, $3.10 in 2001, $3.28 in 2002, $3.48 in 2003, $3.69
in 2004. All of the restricted stock immediately vests upon a change of control
of Meditrust and dividends, if and when declared, are payable on the restricted
stock. The value of the restricted stock as of December 29, 2000 was $76,800
based on the closing market price as reported on the New York Stock Exchange on
December 29, 2000 of $2.56.
(18) Ms. Gerber received an award of 10,000 shares of restricted stock on August
5, 1999 and the fair market value of a Share n the date of grant was $9.56. The
restricted stock vests on the earlier of the 8th year or upon achievement the
following performance criteria: achievement of Funds from Operations of $2.92 in
2000, $3.10 in 2001, $3.28 in 2002, $3.48 in 2003, $3.69 in 2004. All of the
restricted stock immediately vests upon a change of control of Meditrust and
dividends, if and when declared, are payable on the restricted stock. The value
of the restricted stock as of December 29, 2000 was $25,600 based on the closing
market price as reported on the New York Stock Exchange on December 29, 2000 of
$2.56.
(19) Ms. Gerber received an award of 50,000 shares of restricted stock on July
31, 1998 and the fair market value of a Share on the date of grant was $22.50.
The restricted stock vests on the earlier of the 8th year or upon achievement
the following performance criteria: achievement of Funds from Operations of
$2.92 in 2000, $3.10 in 2001, $3.28 in 2002, $3.48 in 2003, $3.69 in 2004. All
of the restricted stock immediately vests upon a change of control of Meditrust
and dividends, if and when declared, are payable on the restricted stock. The
value of the restricted stock as of December 29, 2000 was $128,000 based on the
closing market price as reported on the New York Stock Exchange on December 29,
2000 of $2.56.
9
(20) Includes $14,233 in health insurance premiums paid by Meditrust, $1,710 in
disability insurance premiums paid by Meditrust, $1,627 in life insurance
premiums paid by Meditrust and a $5,400 car allowance. Excludes the Severance
Payment of $4,357,835 received by Ms. Gerber upon her termination of employment
with Meditrust on December 29, 2000. See explanation of Ms. Gerber's severance
provision at "Employment Arrangements" INFRA.
(21) Mr. Benson ceased to serve as Meditrust's Chief Executive Officer and
President on February 1, 2000.
(22) Mr. Benson received his bonus for 1999 in Shares and 1998 in cash and
Shares. For 1999, Mr. Benson received $10,096 in Shares (654 Shares at $15.44
per Share on January 4, 2000). For 1998, $250,000 was cash and $69,912 was
Shares (2,558 Shares in four installments at $36.38, $30.94, $26.81 and $16.00
per Share in January, April, July and October, 1998). All issuance prices were
the closing prices for Shares on the New York Stock Exchange on the respective
dates of issuance.
(23) Mr. Benson received an award of 10,000 shares of restricted stock on August
5, 1999 and the fair market value of a Share on the date of grant was $9.56. The
restricted stock vests on the earlier of the 8th year or upon achievement the
following performance criteria: achievement of Funds from Operations of $2.92 in
2000, $3.10 in 2001, $3.28 in 2002, $3.48 in 2003, $3.69 in 2004. All of the
restricted stock immediately vests upon a change of control of Meditrust and
dividends, if and when declared, are payable on the restricted stock. The value
of the restricted stock as of December 29, 2000 was $25,600 based on the closing
market price as reported on the New York Stock Exchange on December 29, 2000 of
$2.56.
(24) Mr. Benson received an award of 125,000 shares of restricted stock on July
31, 1998 and the fair market value of a Share on the date of grant was $22.50.
The restricted stock vests on the earlier of the 8th year or upon achievement
the following performance criteria: achievement of Funds from Operations of
$2.92 in 2000, $3.10 in 2001, $3.28 in 2002, $3.48 in 2003, $3.69 in 2004. All
of the restricted stock immediately vests upon a change of control of Meditrust
and dividends, if and when declared, are payable on the restricted stock. The
value of the restricted stock as of December 29, 2000 was $320,000 based on the
closing market price as reported on the New York Stock Exchange on December 29,
2000 of $2.56.
(25) Excludes the Severance Payment received by Mr. Benson upon his termination
of employment with Meditrust on February 1, 2000. See explanation of Mr.
Benson's severance provision at "Employment Arrangements" INFRA.
(26) Mr. Byrnes ceased to serve as Meditrust's Chief Executive Officer and
President in April 2000.
(27) Mr. Byrnes received an award of 25,000 shares of restricted stock on
September 7, 2000 and the fair market value of a Share on the date of grant was
$3.31. One third of the restricted stock vests for each year of service on the
Board of Directors of Meditrust after September 7, 2000 and dividends, if and
when declared, are payable on the restricted stock . All of the restricted stock
immediately vests upon a change of control of Meditrust. The value of the
restricted stock as of December 29, 2000 was $64,000 based on the closing market
price as reported on the New York Stock Exchange on December 29, 2000 of $2.56.
(28) As compensation for his service as Chief Executive Officer and President of
Meditrust, Mr. Byrnes was issued 50,000 Shares with an approximate value, at the
time of the grant, of $100,000.
10
The following table provides information with respect to stock options
granted by Meditrust in recognition of services rendered in the fiscal year
ended December 31, 2000 to the Meditrust named executive officers. All stock
options are granted at an exercise price equal to the fair market value on the
date of grant.
OPTION GRANTS IN LAST FISCAL YEAR FOR MEDITRUST
Number of
Securities Percent of Total
Underlying Options Granted Exercise or Grant
Options to Employees Base Price Expiration Date Present
Granted(#) in 2000 ($/Share) Date Value($)
---------- ------------- --------- ---------- ------------
Francis W. Cash -0- -- -- -- --
Michael F. Bushee -0- -- -- -- --
David L. Rea -0- -- -- -- --
John F. Schmutz -0- -- -- -- --
Debora A. Pfaff -0- -- -- -- --
Michael S. Benjamin -0- -- -- -- --
Laurie T. Gerber -0- -- -- -- --
David F. Benson -0- -- -- -- --
William G. Byrnes -0- -- -- -- --
The following table provides information with respect to the aggregated
number of options to purchase Shares exercised by the Meditrust named executive
officers as of December 31, 2000. The value of unexercised in-the-money options
is based on the closing price of a Share, as reported on the New York Stock
Exchange, on December 29, 2000 of $2.56, minus the exercise price, multiplied by
the number of Shares underlying the options. An option is "in-the-money" if the
fair market value of the Shares underlying the option exceeds the exercise
price.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES FOR MEDITRUST
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Options at Year-End (#) Year-End ($)
NAME Exercisable/Unexercisable Exercisable/Unexercisable
- ---- -------------------------- -------------------------
Francis W. Cash -- --
Michael F. Bushee 298,330/244,193 -0-/-0-
David L. Rea -- --
John F. Schmutz -- --
Debora A. Pfaff 37,825/40,000 -0-/-0-
Michael S. Benjamin 298,330/244,193 -0-/-0-
Laurie T. Gerber 122,095/148,065 -0-/-0-
David F. Benson -0-/-0- -0-/-0-
William G. Byrnes -0-/75,000 -0-/-0-
11
Executive Compensation -- Operating
The following table provides information with respect to the
compensation that Operating paid in 1998, 1999, and 2000 to those individuals
who served as Operating's Chief Executive Officer, the four most highly
compensated executive officers other than the Chief Executive Officer, and two
former executive officers who are no longer with Operating or its subsidiaries
whose base salary and bonus exceeded $100,000 for the fiscal year ended December
31, 2000.
OPERATING SUMMARY COMPENSATION TABLE
Long-Term
Compensation Awards
------------------------
Securities All other
Annual Compensation Restricted Under-Lying Compen-
Name and Principal ------------------- Stock Options/ sation
Position Year Salary($) Bonus($) Awards($)(a) SARS(#)(a) ($)
- -------------------------- ---- --------- -------- --------- ---------- ---------
Francis W. Cash(1) 2000 553,846 -0- 965,000(2) 2,400,000 797,543(3)
Chief Executive Officer and 1999 -- -- -- -- --
President 1998 -- -- -- -- --
David L. Rea(4) 2000 194,712 -0- 522,000(5) 900,000 184,183(6)
Chief Financial Officer and 1999 -- -- -- -- --
Treasurer 1998 -- -- -- -- --
John F. Schmutz 2000 226,000 40,000 129,585(7) 83,333 587,862(8)
Senior Vice President and 1999 196,539 38,675 -0- 130,000 51,891
General Counsel 1998 169,539 34,000 -0- -0- 15,978(9)
Vito J. Stellato 2000 175,154 35,000 93,300(10) -0- 39,361(11)
Senior Vice President 1999 161,827 -0- -0- -0- 48,478
Human Resources 1998 -- -- -- -- --
Stephen Parker 2000 190,385 -0- 155,500(12) 100,000 18,400(13)
Senior Vice President 1999 -- -- -- -- --
Sales & Marketing 1998 -- -- -- -- --
Bobby G. Moore, III(14) 2000 199,231 17,500 103,665(15) 66,667 418,171(16)
Former Senior Vice President 1999 138,792 -0- -- -- 110,630
and Chief Information Officer 1998 -- -- -- -- 6,536
William F. McCalmont(17) 2000 222,739 -0- -0- -0- -0-(19)
Former Interim President 1999 259,615 150,000 -0- -0- 864,055
La Quinta Inns, Inc. 1998 249,999 100,000 697,000(18) -0- 16,298(20)
William C. Baker(21) 2000 -0- -0- 82,750(22) 75,000 100,000(23)
Former Chief Executive 1999 -0- -0- -0- -0- -0-
Officer, President and 1998 -0- 45,844 -0-(24) -0- -0-(25)
Treasurer
12
- ------------------------
(a) The restricted stock grant to Mr. Schmutz and option grants to Mr. Cash and
Mr. Schmutz, while listed on this table for simplicity, were actually granted by
Meditrust.
(1) Mr. Cash became Chief Executive Officer and President of Operating on April
17, 2000. Accordingly, no compensation information is presented for Mr. Cash for
the years 1999 and 1998.
(2) Mr. Cash received an award of 500,000 shares of restricted stock on April
17, 2000 and the fair market value of a Share on the date of grant was $2.13.
Mr. Cash received such grant of restricted stock in his capacity as an executive
officer of Operating and the restricted stock vests three years from the date of
grant. All of the restricted stock immediately vests upon a change of control of
Meditrust and dividends, if and when declared, are payable on the restricted
stock. The value of the restricted stock as of December 29, 2000 was $1,280,000
based on the closing market price as reported on the New York Stock Exchange on
December 29, 2000 of $2.56.
(3) Including primarily a $600,000 sign-on bonus, $169,659 in moving expenses
and other expenses.
(4) Mr. Rea became Chief Financial Officer and Treasurer of Operating in June
2000. Accordingly, no compensation information is presented for Mr. Rea for the
years 1999 and 1998.
(5) Mr. Rea received an award of 300,000 shares of restricted stock on June 12,
2000 and the fair market value of a Share on the date of grant was $1.94. The
restricted stock vests three years from the date of grant. All of the restricted
stock immediately vests upon a change of control of Meditrust and dividends, if
and when declared, are payable on the restricted stock. The value of the
restricted stock as of December 29, 2000 was $768,000 based on the closing
market price as reported on the New York Stock Exchange on December 29, 2000 of
$2.56.
(6) Including primarily a $150,000 sign-on bonus, a $4,362 car allowance and
certain other moving and other expenses.
(7) Mr. Schmutz received an award of 41,667 shares of restricted stock on
September 7, 2000 and the fair market value of a Share on the date of grant was
$3.31. The restricted stock vests three years from the date of grant. All of the
restricted stock immediately vests upon a change of control of Meditrust and
dividends, if and when declared, are payable on the restricted stock. The value
of the restricted stock as of December 29, 2000 was $106,668 based on the
closing market price as reported on the New York Stock Exchange on December 29,
2000 of $2.56.
(8) Including primarily a special bonus (in lieu of severance) of $532,000, the
payout of a deferred SERP valued at $30,760, a car allowance of $13,150, a
contribution on his behalf in the amount of $7,500 to the Executive Savings Plan
and $1,368 in life insurance premiums paid by Operating.
(9) A portion of this other compensation was paid by La Quinta Inns, Inc. during
the portion of 1998 prior to the July 18, 19998 merger of La Quinta Inns, Inc.
with and into Meditrust.
(10) Mr. Stellato received an award of 30,000 shares of restricted stock on
September 7, 2000 and the fair market value of a Share on the date of grant was
$3.31. The restricted stock vests three years from the date of grant. All of the
restricted stock immediately vests upon a change of control of Meditrust and
dividends, if and when declared, are payable on the restricted stock. The value
of the restricted stock as of December 29, 2000 was $76,800 based on the closing
market price as reported on the New York Stock Exchange on December 29, 2000 of
$2.56.
(11) Including primarily a payout of a deferred SERP valued at $17,999, a
$13,290 car allowance and $1,188 in life insurance premiums paid by Operating.
13
(12) Mr. Parker received an award of 50,000 shares of restricted stock on
September 7, 2000 and the fair market value of a Share on the date of grant was
$3.31. The restricted stock vests three years from the date of grant. All of the
restricted stock immediately vests upon a change of control of Meditrust and
dividends, if and when declared, are payable on the restricted stock. The value
of the restricted stock as of December 29, 2000 was $128,000 based on the
closing market price as reported on the New York Stock Exchange on December 29,
2000 of $2.56.
(13) Includes primarily a $8,377 car allowance, $6,095 in moving expenses and
$1,440 in life insurance premiums paid by Operating.
(14) Mr. Moore ceased to serve as Senior Vice President and Chief Information
Officer of Operating in January 2001.
(15) Mr. Moore received an award of 33,333 shares of restricted stock on
September 7, 2000 and the fair market value of a Share on the date of grant was
$3.31. The restricted stock vests three years from the date of grant. All of the
restricted stock immediately vests upon a change of control of Meditrust and
dividends, if and when declared, are payable on the restricted stock. The value
of the restricted stock as of December 29, 2000 was $85,332 based on the closing
market price as reported on the New York Stock Exchange on December 29, 2000 of
$2.56.
(16) Including primarily a $398,462 Severance Payment, a $13,154 car allowance
and $1,332 in life insurance premiums paid by Operating.
(17) Mr. McCalmont ceased to serve as Interim President of La Quinta Inns, Inc.
in April 2000.
(18) Mr. McCalmont received an award of 50,000 shares of restricted stock on
December 10, 1998 and the fair market value of a Share on the date of grant
was $13.94, which shares were forfeited after Mr. McCalmont's termination
from Operating.
(19) Excludes a $1,773,871 Severance Payment pursuant to the terms of his
severance agreement.
(20) A portion of this other compensation was paid by La Quinta Inns, Inc.
during the portion of 1998 prior to the July 18, 19998 merger of La Quinta Inns,
Inc. with and into Meditrust.
(21) Mr. Baker ceased to serve as Operating's Chief Executive Officer, President
and Treasurer in April 2000.
(22) Mr. Baker received an award of 25,000 shares of restricted stock on
September 7, 2000 and the fair market value of a Share on the date of grant was
$3.31. One third of the restricted stock vests for each year of service on the
Board of Directors of Meditrust after September 7, 2000 and dividends, if and
when declared, are payable on the restricted stock . All of the restricted stock
immediately vests upon a change of control of Meditrust. The value of the
restricted stock as of December 29, 2000 was $64,000 based on the closing market
price as reported on the New York Stock Exchange on December 29, 2000 of $2.56.
(23) As compensation for his service as Chief Executive Officer, President and
Treasurer of Operating, Mr. Baker was issued 50,000 Shares with an approximate
value, at the time of the grant, of $100,000.
(24) On July 31, 1998, Operating issued 75,000 Shares of restricted stock at
$22.50 per Share to Mr. Baker, which as of the grant date had a value of
$1,687,500. As of December 31, 1998 the restricted stock had a value of
$1,125,000. This grant was forfeited on January 4, 1999. Dividends were paid in
August, September and November of 1998.
(25) Excludes severance payments of $1,723,800 paid to Mr. Baker.
14
The following table provides information with respect to stock options
granted by Operating in recognition of services rendered in the fiscal year
ended December 31, 2000 to the Operating named executive officers. All stock
options were granted at an exercise price equal to the fair market value on the
date of grant and will vest 25% per year over four years from the date of grant.
OPTION GRANTS IN LAST FISCAL YEAR FOR OPERATING
Number of
Securities Percent of Total
Underlying Options Granted Exercise on Grant
Options to Employees Base Price Expiration Date Present
Granted(#) in 2000 ($/Share) Date Value($)
---------- ------------------ --------- -------------- ------------
Francis W. Cash 600,000 11.475 4.0312 4/17/2010 335,340
600,000 11.475 5.3750 4/17/2010 241,740
1,200,000 22.95 6.7188 4/17/2010 361,080
John F. Schmutz 83,333 1.6 3.3125 9/7/2010 124,800
Bobby G. Moore, III 66,667 1.3 3.3125 9/7/2010 99,840
Vito J. Stellato 60,000 1.1 3.3125 9/7/2010 89,856
David L. Rea 450,000 8.6 1.9375 6/12/2010 398,610
450,000 8.6 2.9063 6/12/2010 288,990
Stephen Parker 100,000 1.9 3.3125 9/7/2010 149,760
William L. McCalmont -0- -0- -- -- --
William C. Baker 75,000 1.4 3.3125 9/7/2006 112,320
The following table provides information with respect to the aggregated
number of options to purchase Shares exercised by the Operating named executive
officers as of December 31, 2000. The value of unexercised in-the-money options
is based on the closing price of a Share, as reported on the New York Stock
Exchange, on December 29, 2000 of $2.56, minus the exercise price, multiplied by
the number of Shares underlying the options. An option is "in-the-money" if the
fair market value of the Shares underlying the option exceeds the exercise
price.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES FOR OPERATING
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Options at Year-End (#) Year-End ($)
Name Exercisable/Unexercisable Exercisable/Unexercisable(2)
- ---- -------------------------- -----------------------------
Francis W. Cash -0-/2,400,000 -0-/-0-
John F. Schmutz 65,000/148,333 -0-/-0-
Bobby G. Moore, III(1) 12,500/137,500 -0-/-0-
15
Vito J. Stellato 60,000/120,000 -0-/-0-
David L. Rea 0/900,000 -0-/279,000
Stephen Parker 0/100,000 -0-/-0-
William L. McCalmont 0/0 -0-/-0-
William C. Baker -0-/75,000 -0-/-0-
- --------------------
(1) Mr. Moore's options were forfeited after Mr. Moore terminated employment
with Operating.
Compensation of Directors
The Meditrust Companies pay each Director who is not otherwise an
employee of The Meditrust Companies a fee of $30,000 per year for services as a
Director plus $1,000 per day for attendance at each meeting of the full Board of
Directors. In addition, the Chairman and each member of a committee of the Board
of Directors are paid $1,250 and $1,000, respectively, for attendance at a
committee meeting. The Meditrust Companies reimburse the Directors for travel
expenses incurred in connection with their duties as Directors of The Meditrust
Companies. In addition, The Meditrust Companies from time to time pays Directors
additional fees in connection with various special projects.
Employment Arrangements
EMPLOYMENT ARRANGEMENT WITH CHIEF EXECUTIVE OFFICER AND PRESIDENT
FRANCIS W. CASH. Effective April 17, 2000, Francis W. Cash ("Mr. Cash") entered
into an Employment Agreement with Meditrust. Mr. Cash's Employment Agreement
provides that he will serve as President and Chief Executive Officer of
Meditrust until the third anniversary of the effective date of the Employment
Agreement, at which time the Employment Agreement will be renewed automatically
thereafter for successive one-year terms unless six (6) months notice of
non-renewal is given by either party to the other. Mr. Cash is eligible to
receive an annual bonus to be determined by the Compensation Committee of an
amount between 100% and 200% of his base compensation.
Upon termination of Mr. Cash's employment due to death or disability of
Mr. Cash, Meditrust shall pay to Mr. Cash (or his beneficiary in the event of
his death) any base salary, bonus or other compensation earned but not paid and
the pro rata amount of the annual base target bonus payable. Additionally,
Meditrust will continue to provide health benefits for at least two years.
Upon termination of Mr. Cash's employment by Meditrust other than for
cause or by Mr. Cash for "Good Reason," Meditrust shall pay Mr. Cash, in
addition to the amounts described in the immediately preceding paragraph, a lump
sum payment equal to two times the sum of Mr. Cash's base salary and base target
bonus. Further, 20% of the original number of Mr. Cash's Performance Shares and
Options covering 20% of the original number of Shares in each Option shall
accelerate and become vested and exercisable. Additionally, Meditrust will
continue to provide health benefits for at least two years.
If a "Change in Control" (as defined in Mr. Cash's Employment
Agreement) occurs and Mr. Cash's employment is terminated within two years of
such Change in Control as a result of an Executive Termination Event (as defined
in Mr. Cash's Employment Agreement), Mr. Cash shall be entitled to the following
severance benefits: (i) an amount equal to three times the average of his annual
base salary (for the three fiscal years preceding the Change in Control) and
three times the average of his cash bonuses paid (for the two fiscal years
preceding the Change in Control); (ii) an amount equal to Mr. Cash's full base
salary through the termination date and the pro rata amount of the maximum base
target bonus available during such year; and
16
(iii) all unvested equity, including Performance Shares and Options, shall
become fully vested and exercisable. Additionally, Meditrust will purchase Mr.
Cash's house at market value, provide certain outplacement assistance and will
continue to provide health benefits for the balance of the term.
EMPLOYMENT ARRANGEMENT WITH EXECUTIVE OFFICER MICHAEL F. BUSHEE.
Effective January 1, 1999, Michael F. Bushee ("Mr. Bushee") entered into an
Employment Agreement with Meditrust. Mr. Bushee's Employment Agreement
provides that he will serve as the Chief Operating Officer of Meditrust until
the third anniversary of the effective date of the Employment Agreement. The
Employment Agreement is automatically extended for an additional one-year
term unless either of the parties thereto elects to terminate the Employment
Agreement by notice in writing at least 90 days prior to the end of the term
of such Employment Agreement. Mr. Bushee is eligible to receive an annual
bonus to be determined by the Compensation Committee of an amount up to 100%
of his base compensation. Upon termination of employment due to the death or
disability of Mr. Bushee, all unexercisable stock options and non-vested
stock-based grants and performance units will immediately vest and will be
exercisable for 90 days. Additionally, Meditrust will provide health
insurance coverage for at least two years.
If Mr. Bushee's employment is terminated by Mr. Bushee for "good
reason," or if Meditrust terminates his employment without "cause," Meditrust
will pay Mr. Bushee a severance payment equal to, at a minimum, two times the
sum of his average base compensation (determined in accordance with the
respective Employment Agreement) and average incentive compensation (determined
in accordance with the respective Employment Agreement) (the "Severance
Payment").
If a "Change in Control" (as defined in the Employment Agreement)
occurs and Mr. Bushees's employment is terminated for any reason other than
death, disability or voluntary resignation within two years of such Change in
Control, Meditrust must pay Mr. Bushee a lump sum amount equal to Mr. Bushee's
Severance Payment and all stock options and other stock-based awards and
performance units will become immediately exercisable or non-forfeitable.
EMPLOYMENT ARRANGEMENT WITH EXECUTIVE OFFICER DAVID L. REA. Effective
June 12, 2000, David L. Rea ("Mr. Rea") entered into an Employment Agreement
with Meditrust. Mr. Rea's Employment Agreement provides that he will serve as
Executive Vice President, Chief Financial Officer and Treasurer of Meditrust
until the third anniversary of the effective date of the Employment Agreement,
at which time the Employment Agreement will be renewed automatically thereafter
for successive one-year terms unless six (6) months notice of non-renewal is
given by either party to the other. Mr. Rea is eligible to receive an annual
bonus to be determined by the Compensation Committee of an amount between 75%
and 150% of his base compensation.
Upon termination of Mr. Rea's employment due to death or disability of
Mr. Rea, Meditrust shall pay to Mr. Rea (or his beneficiary in the event of his
death) any base salary, bonus or other compensation earned but not paid and the
pro rata amount of the annual base target bonus payable. Additionally, Meditrust
will continue to provide health benefits for at least two years.
Upon termination of Mr. Rea's employment by Meditrust other than for
cause or by Mr. Rea for "Good Reason," Meditrust shall pay Mr. Rea, in addition
to the amounts described in the immediately preceding paragraph, a lump sum
payment equal to two times the sum of Mr. Rea's base salary and base target
bonus. Further, 20% of the original number of Mr. Rea's Performance Units and
Options covering 20% of the original number of Shares in each Option shall
accelerate and become vested and exercisable. Additionally, Meditrust will
continue to provide health benefits for at least two years.
If a "Change in Control" (as defined in Mr. Rea's Employment Agreement)
occurs and Mr. Rea's employment is terminated within two years of such Change in
Control as a result of an Executive Termination Event (as defined in Mr. Rea's
Employment Agreement), Mr. Rea shall be entitled to the following severance
benefits: (i) an amount equal to three times the average of his annual base
salary (for the three fiscal years
17
preceding the Change in Control) and three times the average of his cash bonuses
paid (for the two fiscal years preceding the Change in Control); (ii) an amount
equal to Mr. Rea's full base salary through the termination date and the pro
rata amount of the maximum base target bonus available during such year; and
(iii) all unvested equity, including Performance Units and Options, shall become
fully vested and exercisable. Additionally, Meditrust will purchase Mr. Rea's
house at market value, provide certain outplacement assistance and will continue
to provide health benefits for the balance of the term.
EMPLOYMENT ARRANGEMENT WITH EXECUTIVE OFFICER JOHN F. SCHMUTZ.
Effective December 17, 1999, John F. Schmutz ("Mr. Schmutz") received certain
letter agreements from Operating providing (i) that he shall become eligible for
a lump sum severance benefit including a payment of $500,000 and continuation of
medical benefits at Operating's expense for two years in lieu of any other
compensation except for vested interests in all stock options and other
stock-based awards and performance units which will become immediately
exercisable and non-forfeitable and (ii) the terms and conditions upon which
certain Performance Units (as defined in the letter agreements) shall become
payable.
If a "Change of Control" (as defined in the letter agreements) occurs,
if Mr. Schmutz's employment is terminated for any reason other than for cause or
in the event of death or disability all Performance Units shall immediately vest
in full with the value of each such Performance Unit determined in accordance
with the terms of the letter agreements.
EMPLOYMENT ARRANGEMENT WITH EXECUTIVE OFFICER STEPHEN T. PARKER.
Effective May 3, 2000, Stephen T. Parker ("Mr. Parker") received certain letter
agreements from Operating. Mr. Parker's letter agreements provide that he will
serve as Senior Vice President of Sales & Marketing and his employment may be
terminated with or without cause by either party. Mr. Parker is eligible to
receive an annual bonus with a target of 40% of his base compensation.
If Mr. Parker is terminated without cause, Operating will pay Mr.
Parker one year's salary and a prorated bonus for the year of termination of
employment.
If a "Change of Control" (as defined in the respective letter
agreement) occurs, if Mr. Parker's employment is terminated for any reason other
than for cause or in the event of death or disability all Performance Units (as
defined in the respective letter agreement) shall immediately vest in full with
the value of each Unit determined by the respective letter agreement.
EMPLOYMENT ARRANGEMENT WITH EXECUTIVE OFFICER VITO J. STELLATO.
Effective January 4, 1999, Vito J. Stellato ("Mr. Stellato") received certain
letter agreements from Operating. Mr. Stellato's letter agreements provide that
he will serve as Senior Vice President of Human Resources and his employment may
be terminated with or without cause by either party. Mr. Stellato is eligible to
receive an annual bonus with a target of 40% of his base compensation.
If Mr. Stellato is terminated without cause, Operating will pay Mr.
Stellato two years' salary and a prorated bonus for the year of termination of
employment.
If a "Change of Control" (as defined in the respective letter
agreements) occurs, if Mr. Stellato's employment is terminated for any reason
other than for cause or in the event of death or disability all Performance
Units (as defined in the respective letter agreement) shall immediately vest in
full with the value of each Unit determined by the respective letter agreement.
EMPLOYMENT ARRANGEMENT WITH EXECUTIVE OFFICER DEBORA A. PFAFF.
Effective January 1, 1999, Debora A. Pfaff, Vice President of Operations, ("Ms.
Pfaff") entered into a Severance
18
Agreement, as amended by a First Amendment to Severance Agreement dated January
2000 with Meditrust. The Severance Agreement provides that Ms. Pfaff shall
remain with Meditrust as Vice President of Operations until December 31, 2002
(the "Anticipated Termination Date") and continue to implement the strategic
plan of The Meditrust Companies.
If Ms. Pfaff's employment is terminated by Ms. Pfaff for "good reason,"
or if Meditrust terminates her employment without "cause," Meditrust will pay
Ms. Pfaff a severance payment based upon her base salary and bonus for the three
(3) immediately preceding fiscal years. Ms. Pfaff shall be eligible to be paid a
bonus up to 100% of her base salary on December 31, 2000, December 31, 2001, and
December 31, 2002, provided, however, that with respect to each such bonus
payment, 80% of each such bonus shall be based on performance criteria and 20%
of each such bonus payment shall be discretionary. If Ms. Pfaff is terminated
other than "For Good Cause" or in a "Termination for Good Reason" prior to the
Anticipated Termination Date, Ms. Pfaff shall be paid the maximum bonus payments
that would have been paid on December 31st of each year after such termination.
If a "Change of Control" (as defined in the Severance Agreement) occurs
and Ms. Pfaff's employment is terminated for any reason other than death,
disability or voluntary resignation within nine (9) months following such Change
in Control, Meditrust must pay Ms. Pfaff a lump sum amount equal to MS. Pfaff's
Severance Payment and all stock options and other stock-based awards and
performance units will become immediately exercisable or non-forfeitable.
EMPLOYMENT SEPARATION AGREEMENT WITH FORMER CHIEF EXECUTIVE OFFICER
DAVID F. BENSON. On January 28, 2000, David F. Benson and The Meditrust
Companies entered into a separation agreement terminating the Employment
Agreement entered into as of January 1, 1999, by and between Meditrust and Mr.
Benson, (the "Separation Agreement"). The Separation Agreement governs the
separation of Mr. Benson from The Meditrust Companies and confirms his
resignation from the office of Chief Executive Officer of Meditrust. As part of
the Separation Agreement Mr. Benson received a severance payment of $8,995,000
in cash and 155,000 Shares (which represented the vesting of previously awarded
Performance Units), and, to the extent he had participated in such plans prior
to the separation, the continuation for a five year period of participation in
The Meditrust Companies' group health and dental plans and in the life and
disability insurance plans. Both Mr. Benson and The Meditrust Companies agreed
to release and discharge all charges, complaints, claims, causes of action,
damages and debts that related in any manner to Mr. Benson's employment with or
termination of employment from The Meditrust Companies. As part of the
Separation Agreement Mr. Benson agreed to provide consulting services to The
Meditrust Companies for a ten (10) month period for which The Meditrust
Companies agreed to pay him a fee of $400,000.
EMPLOYMENT SEVERANCE ARRANGEMENT WITH FORMER EXECUTIVE OFFICER B.G.
MOORE. Effective January 4, 1999, B.G. Moore ("Mr. Moore") received certain
letter agreements from Operating. Mr. Moore's letter agreements provided that he
would serve as Vice President and Chief Information Officer of La Quinta Inns,
Inc. Mr. Moore ceased to serve in such capacity effective January 2001. Pursuant
to certain letter agreements, Mr. Moore received a severance payment of two
years salary and the full vesting of performance shares previously earned.
EMPLOYMENT RELEASE AGREEMENT WITH FORMER EXECUTIVE OFFICERS MICHAEL S.
BENJAMIN AND LAURIE T. GERBER. Effective December 19, 2000, Michael S. Benjamin
and Laurie T. Gerber (each an " Executive") entered into Release Agreements
terminating their Employment Agreements entered into as of January 1, 1999, by
and between each Executive and Meditrust. The Release Agreements govern the
separation of each Executive from Meditrust and confirm the resignation of Mr.
Benjamin as Senior Vice President and Secretary and Ms. Gerber as Chief
Financial Officer. Pursuant to their respective Employment Agreements each
Executive received a Severance Payment under their respective Release Agreement.
Mr. Benjamin received a Severance Payment of $4,745,421 in cash and 90,000
Shares (which represent the vesting of previously awarded Performance Units).
Ms. Gerber received a Severance Payment of $4,357,835 in cash and 90,000 Shares
(which represent the vesting of previously awarded Performance Units).
19
The Executives each received medical and dental coverage for three years. Each
Executive and Meditrust agreed to release and discharge all charges, complaints,
claims, causes of action, damages and debts that related in any manner to either
Executive's employment with or termination of employment from Meditrust.
Compensation Committee Interlocks and Insider Participation
Meditrust and Operating have each established a Compensation Committee
consisting of Messrs. Stephen E. Merrill, William C. Baker, Clive D. Bode,
Francis W. Cash and John C. Cushman, III. Mr. Baker, the former Chief Executive
Officer, President and Treasurer of Operating, ceased to serve in such capacity
in April 2000. Mr. Cash has been the Chief Executive Officer and President of
Meditrust and Operating since April, 2000. Messrs. Merrill, Bode and Cushman are
not, and have not been, officers or employees nor do they have any other
business relationship or affiliation with The Meditrust Companies, other than
through serving on the Board of Directors. Messrs. Merrill, Bode and Cushman
have not had any relationships with either Meditrust or Operating requiring
disclosure under applicable rules and regulations.
20
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Principal and Management Shareholders of The Meditrust Companies
The following table sets forth as of December 31, 2000 except as
otherwise noted, the number of Shares beneficially owned, directly or
indirectly, by (i) each of the Directors of each of The Meditrust Companies,
(ii) all persons who served as chief executive officer of either of The
Meditrust Companies for the year ended December 31, 2000, (iii) each of the
named executive officers for the year ended December 31, 2000, (iv) all
Directors and current executive officers of The Meditrust Companies as a group,
and (v) all persons who, to the knowledge of The Meditrust Companies,
beneficially own five percent or more of the Shares as of December 31, 2000.
Unless otherwise indicated, all information concerning beneficial ownership was
provided by the respective Director, executive officer or five percent
beneficial owner, as the case may be. All Directors and current executive
officers have a mailing address of La Quinta Inns, Inc., 909 Hidden Ridge, Suite
600, Irving, TX 75038.
Amount and Nature of
Name of Beneficial Owner Beneficial Ownership(1) Percent of Class
- ------------------------ ----------------------- ----------------
DIRECTORS AND CURRENT EXECUTIVE OFFICERS:
William C. Baker 176,400 *
Clive D. Bode 865,000 *
William G. Byrnes 211,517 *
Francis W. Cash 500,000 *
James P. Conn 84,909 *
John C. Cushman, III 332,817(2) *
Stephen E. Merrill 37,565 *
Michael F. Bushee 106,178 *
David L. Rea 300,000 *
John F. Schmutz 47,827 *
Debora A. Pfaff 32,442 *
Stephen Parker 50,000 *
Vito J. Stellato 30,265 *
Bobby G. Moore, III 33,333 *
All Directors and current executive officers of
The Meditrust Companies as a group 2,808,253(3) 2.0%
5% SHAREHOLDERS:
Joint Schedule 13G-A Filing(4):
Sid R. Bass, Inc. 2,442,067(5) 1.7%
Lee M. Bass, Inc. 2,442,067(6) 1.7%
The Bass Management Trust 2,714,164(7) 1.9%
The Airlie Group, L.P. 269,633(8)(9)
William P. Hallman, Jr. 300,002(10)
Annie R. Bass Grandson's Trust for Lee M. Bass 527,188(11)
Annie R. Bass Grandson's Trust for Sid R. Bass 527,188(12)
Peter Sterling 337,600(13)
Hyatt Anne Bass Successor Trust 1,013,918(14)
Samantha Sims Bass Successor Trust 1,013,918(15)
TF Investors, L.P. 32,783(16)
FW Trinity Limited Investors, L.P. 419,398(17)
Sterling 1990 Trust 106,999(18)
Lee C. Hallman Trust 30,000(19)
Mary S. Hallman Trust 30,000(20)
William P. Hallman III Trust 30,000(21)
Herbert T. Hughes 45,000
Total 12,281,925 8.5%
22
Merrill Lynch & Co., Inc. 14,516,387(22) 10.1%
------------------------
FORMER EXECUTIVE OFFICERS:
Michael S. Benjamin 104,527 *
David F. Benson 179,835 *
Laurie T. Gerber 95,634 *
* Denotes less than 1%.
(1) Unless otherwise indicated, the number of Shares stated as being owned
beneficially includes (i) Shares beneficially owned by spouses, minor
children and/or other relatives in which the Director or officer may share
voting power and (ii) any of the Shares listed as being subject to options
exercisable within sixty days of December 31, 2000
(2) Includes 306,591 Shares beneficially owned by Mr. Cushman as Trustee of
the Cushman Family Trust
(3) Does not include an aggregate of 8,701 Shares owned by or for parents,
spouses or children, as to which Shares the Directors or officers disclaim
any beneficial interest.
(4) Information reported in a Schedule 13G-A filed February 14, 2001. The
principal business office for each reporting person set forth in the
Schedule 13G-A is 201 Main Street, Suite 3200, Fort Worth, Texas 76102.
Clive D. Bode, The Meditrust Companies' Chairman, is also a reporting
person within the Schedule 13G-A, although, for purposes of this table,
his shares are presented above under the heading "Directors and Current
Executive Officers." The aggregate number of shares reported in this
Schedule 13G-A, including Mr. Bode's 865,000 shares, is 12,281,925 or 8.8%
of the class.
(5) Mr. Sid R. Bass, solely in his capacity as President of Sid R. Bass, Inc.,
may also be deemed a beneficial owner of such Shares.
(6) Mr. Lee M. Bass, solely in his capacity as President of Lee M. Bass, Inc.,
may also be deemed a beneficial owner of such Shares.
(7) Mr. Perry R. Bass, solely in his capacity as sole Trustee and as one of
two trustors of The Bass Management Trust, may also be deemed a beneficial
owner of such Shares.
(8) Mr. Dort A. Cameron, III, solely in his capacity as one of two general
partners of EBD L.P., which is the sole general partner of The Airlie
Group, L.P., may also be deemed a beneficial owner of such Shares.
(9) Mr. William P. Hallman, Jr., solely in his capacity as President and sole
stockholder of TMT-FW, Inc., which is one of two general partners of EBD
L.P., which is the sole general partner of The Airlie Group, L.P., may
also be deemed a beneficial owner of such Shares.
(10) This amount does not include (a) 527,188 Shares held by Annie R. Bass
Grandson's Trust for Lee M. Bass of which Mr. Hallman is the Trustee, (b)
527,188 Shares held by Annie R. Bass Grandson's Trust for Sid R. Bass of
which Mr. Hallman is the Trustee, (c) 32,783 Shares held by TF Investors,
L.P., which is indirectly controlled by Trinity Capital Management, Inc.,
of which Mr. Hallman is the President and sole stockholder, (d) 269,633
Shares held by The Airlie Group, L.P., which is indirectly controlled by
TMT-FW, Inc. of which Mr. Hallman is the President and sole stockholder,
(e) 106,999 Shares held by the 1990 Sterling Trust, of which Mr. Hallman
is a trusteee and (f) 419,398 Shares held by FW Trinity Limited Investors,
L.P., which is indirectly controlled by TF-FW Investors, Inc. of which Mr.
Hallman is President and one of two stockholders.
22
(11) Mr. Hallman, solely in his capacity as Trustee of the Annie R. Bass
Grandson's Trust for Lee M. Bass, may also be deemed a beneficial owner of
such Shares.
(12) Mr. Hallman, solely in his capacity as Trustee of the Annie R. Bass
Grandson's Trust for Sid R. Bass, may also be deemed a beneficial owner of
such Shares.
(13) This amount does not include 419,398 Shares held by FW Trinity Limited
Investors, L.P., whose sole general partner is TF-TW Investors, Inc., of
which Mr. Sterling is one of two stockholders.
(14) Panther City Production Company, solely in its capacity as sole shareholder
of Panther City Investment Company, the Trustee of the Hyatt Anne Bass
Successor Trust, may also be deemed a beneficial owner of such Shares.
(15) Panther City Production Company, solely in its capacity as sole shareholder
of Panther City Investment Company, the Trustee of Samantha Sims Bass
Successor Trust, may also be deemed a beneficial owner of such Shares.
(16) Mr. Hallman, solely in his capacity as President and sole stockholder of
Trinity Capital Management, Inc., the sole general partner of TF Investors,
L.P., may also be deemed a beneficial owner of such Shares.
(17) Mr. Hallman, solely in his capacity as President and one of two
stockholders of TF-FW Investors, Inc., which is the sole general partner of
FW Trinity Limited Investors, L.P., may also be deemed a beneficial owner
of such Shares. Mr. Sterling, solely in his capacity as one of two
stockholders of TF-TW Investors, Inc., which is the sole general partner of
FW Trinity Limited Investors, L.P., may also be deemed a beneficial owner
of such Shares.
(18) Mr. Hallman, solely in his capacity as Trustee of the Sterling 1990 Trust,
may also be deemed a beneficial owner of such Shares.
(19) Mr. W. R. Cotham, solely in his capacity as Trustee of the Lee C. Hallman
Trust, may also be deemed a beneficial owner of such Shares.
(20) Mr. W. R. Cotham, solely in his capacity as Trustee of the Mary S. Hallman
Trust, may also be deemed a beneficial owner of such Shares.
(21) Mr. W. R. Cotham solely in his capacity as Trustee of the William P.
Hallman III Trust, may also be deemed a beneficial owner of such Shares.
(22) Information provided is based solely on information contained in a Schedule
13G/A filed by Merrill Lynch & Co., Inc. on behalf of Merrill Lynch
Investment Managers, on February 6, 2001.
The information reflected for certain beneficial owners listed under the heading
"5% Shareholders" is based on statements and reports filed with the SEC and
furnished to The Meditrust Companies by such holders. No independent
investigation concerning the accuracy thereof has been made by The Meditrust
Companies.
23
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On March 4, 1998, Meditrust provided acquisition financing in the
amount of $24,228,723 to an entity in which Mr. Bushee owns a 2.5% equity
interest, for the development of 134 acres of land in Jupiter, Florida. The loan
balance on April 27, 2001 was $10,085,092.
24
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, the registrants have duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
MEDITRUST CORPORATION
By: /s/ David L. Rea
-----------------------------
David L. Rea
Chief Financial Officer and
Treasurer
Dated: April 30, 2001
25
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, the registrants have duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
MEDITRUST OPERATING COMPANY
By: /s/ David L. Rea
-----------------------------
David L. Rea
Chief Financial Officer and
Treasurer
Dated: April 30, 2001
26
EXHIBITS INDEX
EXHIBIT NO. TITLE METHOD OF FILING
- -------------------- --------------------------------------------- ---------------------------------
10.1 Pfaff Severance Letter Agreement Included in this filing
10.2 Pfaff Severance Agreement Included in this filing
10.3 First Amendment to Pfaff Severance Agreement Included in this filing
10.4 Schmutz Severance Letter Agreement Included in this filing
10.5 Form of Performance Units Award Letter Agreement Included in this filing