SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(MARK ONE)
[X] AMENDMENT NO. 1 TO JOINT ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF
THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED) FOR THE FISCAL YEAR
ENDED DECEMBER 31, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED) 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 (Exact name of registrant as specified
in its charter) in its charter)
Delaware Delaware
-------- --------
(State or other jurisdiction of (State or other jurisdiction of
incorporation or organization) incorporation or organization)
95-3520818 95-3419438
---------- ----------
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
197 First Avenue, Suite 300 197 First Avenue, Suite 100
Needham Heights, Massachusetts 02194-9127 Needham Heights, Massachusetts 02194-9127
----------------------------------------- -----------------------------------------
(Address of principal executive (Address of principal executive
offices including zip code) offices including zip code)
(781) 433-6000 (781) 453-8062
-------------- --------------
(Registrant's telephone number, (Registrant's telephone number,
including area code) including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
MEDITRUST CORPORATION MEDITRUST OPERATING COMPANY
--------------------- ---------------------------
Title of Each Class and Name of Title of Each Class and Name of
--------------------------------- ----------------------------------
Each Exchange on Which Registered Each Exchange on Which Registered
---------- ----------
Common Stock $.10 Par Value, Common Stock $.10 Par Value,
New York Stock Exchange New York Stock Exchange
9% Convertible Debentures due 2002,
New York Stock Exchange
7 1/2% Convertible Debentures due 2001,
New York Stock Exchange
7.375% Notes due 2000,
New York Stock Exchange
7.6% Notes due 2001,
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None None
Indicate by check mark whether the registrants (1) have 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
registrants were required to file such reports), and (2) have 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 registrants' knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K/A, or any amendment to
this Form 10-K/A.
---
Aggregate market value of the paired voting stock of Meditrust Corporation and
of Meditrust Operating Company held by non-affiliates as of December 31, 1997
was $3,227,685,000. The number of shares of common stock, par value $.10 per
share, outstanding as of December 31, 1997 for Meditrust Corporation was
89,433,302 and Meditrust Operating Company was 88,127,925.
The following documents are incorporated by reference into the indicated Part of
this Form 10-K/A.
Document Part
-------- ----
Amended Current Report on Form 8-K/A dated February 26, 1998 II
2
Item 4a.
EXECUTIVE OFFICERS OF THE REGISTRANTS
The following information relative to Realty's executive officers is
given as of April 29, 1998:
Name Age Position with Realty
---- --- --------------------
Abraham D. Gosman 69 Chairman
David F. Benson 49 President and Director
Michael F. Bushee 40 Chief Operating Officer
Michael S. Benjamin 40 Senior Vice President, Secretary
and Corporate Counsel
Laurie T. Gerber 40 Chief Financial Officer
Stephen C. Mecke 35 Vice President of Development
Debora A. Pfaff 34 Vice President of Operations
Stephen H. Press 61 Vice President
John G. Demeritt 38 Controller
Richard W. Pomroy 40 Vice President of Property Management
John E. Ryan, Jr. 48 Vice President of Acquisitions
Abraham D. Gosman has been Chairman of Realty since its organization in
1985 and was the Chief Executive Officer from February 1991 to November 5, 1997.
Mr. Gosman is also Chief Executive Officer of Operating. Mr. Gosman is also
founder, Chairman of the Board, CEO and President of PhyMatrix Corporation, a
provider of managerial/administrative services to a variety of specialized
medical care and treatment providers, which completed its initial public
offering in January 1996 (NASDAQ/PHMX); and founder and Chairman of the Board of
CareMatrix Corporation (Amex: CMD), an operator and developer of assisted living
facilities, which completed its initial public offering in October 1996. Mr.
Gosman was the Chief Executive Officer and Chairman of the Board of The Mediplex
Group, Inc. ("Mediplex"), an operator and developer of health care facilities,
from August 1990 until June 1994, when Mediplex was acquired by Sun Healthcare
Group, Inc. Mr. Gosman has been in the health care and development business for
more than thirty years.
David F. Benson has been President of Realty since September 1991 and
Treasurer since 1996. Prior to that, he was Treasurer of Realty from January
1986 to May 1992. He was Treasurer of Mediplex from January 1986 through June
1987. He was previously associated with Coopers & Lybrand, independent
accountants, from 1979 to 1985. Mr. Benson is also a Trustee of Mid-Atlantic
Realty Trust, a shopping center REIT, traded on the American Stock Exchange, a
Director of Harborside Healthcare
3
Corporation, a long-term care company, and a Director of Nursing Home
Properties, Plc, a UK company specializing in the purchase and leasing of
purpose-built nursing homes.
Michael F. Bushee has been Chief Operating Officer of Realty since
September 1994. He was Senior Vice President of Operations of Realty from
November 1993 through August 1994, Vice President from December 1989 to October
1993, Director of Development from January 1988 to December 1989 and has been
associated with Realty since April 1987. He was previously associated with The
Stop & Shop Companies, Inc., a retailer of food products and general
merchandise, for three years and Wolf & Company, P.C., independent accountants,
for four years.
Michael S. Benjamin has been Senior Vice President, Secretary and
General Counsel of Realty since October 1993. He was Vice President, Secretary
and General Counsel from May 1992 to October 1993, Secretary and General Counsel
from December 1990 to May 1992 and Assistant Counsel to Realty from November
1989 to December 1990. His previous association was with the law firm of Brown,
Rudnick, Freed & Gesmer, from 1983 to 1989.
Laurie T. Gerber, a Certified Public Accountant, joined Realty in
December 1996 as Chief Financial Officer. Prior to joining Realty, she was a
partner in the accounting firm of Coopers & Lybrand, L.L.P., where she worked
for 14 years.
Stephen C. Mecke has been Vice President of Development since October
1995 and has been Realty's Director of Development since June 1992. He was
previously the manager of underwriting at Continental Realty Credit Inc., a
commercial mortgage company, from October 1988 to June 1992.
Debora A. Pfaff has been Vice President of Operations since October
1995 and has been Realty's Director of Operations since September 1992. Ms.
Pfaff was previously Senior Manager with KPMG Peat Marwick where she worked from
1985 to 1992.
Stephen H. Press has been Vice President of Acquisitions of Realty
since October 1993 and previously held this position with Realty from June 1987
to December 1990. He was Vice President of Development and Regulatory Affairs
for Integrated Health Services, Inc., a medical services company, from April
1991 to October 1993.
John G. Demeritt has been Controller of Realty since October 1995.
Prior to that, he was Corporate Controller of CMG Information Services, Inc., an
information service provider, from 1994 to 1995. He was Vice President of
Finance and Treasurer of Salem Sportswear Corporation, a manufacturer and
marketer of licensed sports apparel, from June 1991 to November 1993. He was
Controller of Scitex America Corporation, a manufacturer and distributor of
electronic prepress equipment, from August 1986 to June 1991, and was previously
associated with Laventhol & Horwath, independent accountants, from 1983 to 1986.
Richard W. Pomroy has been Vice President of Property Management since
October 1997 and has been Director of Property Management since 1994. Prior to
joining Realty, he was a project manager responsible for the management and
development of construction projects at Continuum Care Corporation, an operator
of nursing homes, subacute health care centers, and rehabilitation facilities.
Mr. Pomroy began his career in the real estate industry as an architectural
project manager, and gained additional property management experience as senior
project manager, and later as vice president of construction, for several Boston
area general contracting firms.
4
John E. Ryan, Jr. has been Vice President of Acquisitions at Realty
since October 1997. Most recently he was Vice President of Acquisitions for
Harborside Healthcare Corporation, a major regional owner and operator of
nursing homes, where Mr. Ryan was responsible for new business development. In
this position he directed the company's rapid growth, leading to an initial
public offering in June 1996. With over 20 years of health care finance and
acquisition experience, Mr. Ryan has previously worked as a commercial and
investment banker for several banking firms. Mr. Ryan is responsible for new
business development and marketing for Realty's health care investments.
The following information relative to Operating's executive officers is
given as of April 29, 1998:
Name Age Position with Operating
---- --- -----------------------
Abraham D. Gosman 69 Chairman and Chief Executive Officer
Edward J. Robinson 57 Chief Operating Officer
Abraham D. Gosman has been the Chairman and Chief Executive Officer of
Operating since November 5, 1997. He has been Chairman of Realty since its
organization in 1985 and was Realty's Chief Executive Officer from February 1991
to November 5, 1997. Mr. Gosman is also founder, Chairman of the Board, CEO and
President of PhyMatrix Corporation, a provider of managerial/administrative
services to a variety of specialized medical care and treatment providers, which
completed its initial public offering in January 1996 (NASDAQ/PHMX); and founder
and Chairman of the Board of CareMatrix Corporation (Amex: CMD), an operator and
developer of assisted living facilities, which completed its initial public
offering in October 1996. Mr. Gosman was the Chief Executive Officer and
Chairman of the Board of Mediplex Group, an operator and developer of health
care facilities, from August 1990 until June 1994, when Mediplex was acquired by
Sun Healthcare Group, Inc. Mr. Gosman has been in the health care and
development business for more than thirty years.
Edward J. Robinson was appointed Chief Operating Officer of Operating
in April 1998. Mr. Robinson was formerly President and Chief Operating Officer
of Avon Products, Inc. since November 1993, and had been a Director of Avon
since May 1992. He joined Avon in April 1989 as Executive Vice President and
Chief Financial Officer. Immediately prior to joining Avon, he had served as
Executive Vice President--Finance and Chief Financial Officer of RJR Nabisco,
Inc. since 1987. Mr. Robinson was associated with RJR Nabisco, Inc. and its
predecessor companies, Nabisco Brands, Inc. and Standard Brands Incorporated,
for 16 years serving in a number of senior financial positions, including
Controller, Treasurer and Chief Financial Officer.
5
Item 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is incorporated herein by
reference to the "Consolidated Financial Statements", "Notes to Consolidated
Financial Statements" and "Report of Independent Accountants" in the Amended
Current Report on Form 8-K/A dated February 26, 1998.
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULES
To the Shareholders and Directors of The Meditrust Companies:
Our report on the consolidated financial statements of The Meditrust Companies,
Meditrust Corporation and Meditrust Operating Company, has been incorporated by
reference in this Form 10-K/A from The Meditrust Companies' Amended Current
Report on Form 8-K/A dated February 26, 1998. In connection with our audits of
such financial statements, we have also audited the related financial statement
schedules listed in the index on page 51 of the Form 10-K.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.
Boston, Massachusetts Coopers & Lybrand L.L.P.
January 30, 1998
The Financial Statement Schedules of Meditrust Corporation have not been
amended; such Schedules appear under Item 8 of the Joint Form 10-K of The
Meditrust Companies, beginning on page 36 thereof.
6
PART III
General
As used in this Part III, Meditrust means Realty or, as the context may
require, Meditrust, the Massachusetts business trust ("Meditrust's
Predecessor"), and the term "Shares" means shares of beneficial interest of
Meditrust's Predecessor or Shares of paired common stock of Realty and
Operating, as the context may require. The mergers of Meditrust's Predecessor
with and into Santa Anita Realty Enterprises, Inc. ("SAE"), with SAE as the
surviving corporation, and Meditrust Acquisition Corporation with and into
Santa Anita Operating Company ("SOA" and together with SAE, "Santa Anita"),
with SAO as the surviving corporation, are herein referred to as the "Santa
Anita Mergers." All Share prices and numbers of Shares have been adjusted to
reflect the Santa Anita Mergers.
Item 10.
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS
Executive Officers of The Meditrust Companies
Incorporated by reference to Item 4a of this Form 10-K/A under the caption
"Executive Officers of the Registrants."
Directors of The Meditrust Companies
The respective Boards of Directors of each of The Meditrust Companies 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 The
Meditrust Companies is elected.
Current Directors
Director of
Name and Principal Named Entity or its
Occupation or Employment Age Director of Predecessor Since Term Expires
- ---------------------------------- ----- ------------------------- -------------------- --------------
Donald J. Amaral ................. 45 Meditrust and Operating 1997 and 1997 1999 and 1999
President and Chief Executive
Officer of Coram HealthCare
Corp., a health care provider
William C. Baker ................. 64 Operating 1991 2000
Chief Executive Officer of The
Santa Anita Companies, a division
of Operating
David F. Benson .................. 49 Meditrust and Operating 1991 and 1997 1998 and 1998
President and Treasurer of
Meditrust
Nancy G. Brinker ................. 51 Meditrust and Operating 1998 and 1998 1998 and 1998
Founding Chairman, Susan G.
Komen Breast Cancer Foundation
Edward W. Brooke ................. 78 Meditrust and Operating 1985 and 1997 2000 and 2000
Retired
William G. Byrnes ................ 47 Meditrust and Operating 1998 and 1998 1998 and 1998
Professor of Finance, Georgetown
University Business School
7
Director of
Name and Principal Named Entity or its
Occupation or Employment Age Director of Predecessor Since Term Expires
- ---------------------------------------- ----- ------------------------- -------------------- --------------
James P. Conn .......................... 60 Meditrust 1995 1999
Managing Director and Chief
Investment Officer of Financial
Security Assurance, Inc., an
insurance company
John C. Cushman, III ................... 57 Meditrust 1996 2000
President and Chief Executive
Officer of Cushman Realty
Corporation, a commercial real
estate brokerage firm
C. Gerald Goldsmith .................... 70 Meditrust and Operating 1997 and 1997 2000 and 2000
Independent investor and financial
consultant
Abraham D. Gosman ...................... 69 Meditrust and Operating 1985 and 1997 2000 and 2000
Chairman of The Meditrust
Companies and Chief Executive
Officer of Operating
Philip Lowe ............................ 81 Meditrust and Operating 1987 and 1997 1998 and 1998
Principal of Philip L. Lowe and
Associates, a consulting firm .........
Thomas J. Magovern ..................... 55 Meditrust and Operating 1985 and 1997 1998 and 1998
Regional Vice President, Real Estate
Asset Management, Summit Bank, a
New Jersey banking institution
Gerald Tsai, Jr. ....................... 69 Meditrust and Operating 1992 and 1997 1999 and 1999
Chairman, Chief Executive Officer
and President of Delta Life
Corporation, an annuity company
Donald J. Amaral has been a Director of The Meditrust Companies since
October 1997. Mr. Amaral has served as director, President and Chief Executive
Officer of Coram HealthCare Corp. since October 13, 1995. Previously, he was
President and Chief Operating Officer of OrNda Healthcorp from April 1994 to
August 1995, and served in various executive positions with Summit Health Ltd.
from October 1989 to April 1994, including President and Chief Executive
Officer between October 1991 and April 1994. Summit was merged into OrNda in
April 1994. Prior to joining Summit, Mr. Amaral was President and Chief
Operating Officer of Mediplex from 1986 until October 1989. Mr. Amaral is also
a member of the Board of Directors of Summit Care Corporation.
William C. Baker has been a Director of Operating since November 1997.
Prior to such date, he served as Chairman of the Board of SAE, and Chairman of
the Board and Chief Executive Officer of SAO from August 1996 through the
completion of the Santa Anita Mergers and as a Director from 1991 through the
completion of the Santa Anita Mergers. Mr. Baker was Chief Executive Officer of
SAE from April l996 to August 1996. Mr. Baker was the President of Red Robin
International, Inc. (restaurant company) from 1993 to 1995, a private investor
from 1988 to 1992 and Chairman of the Board and Chief Executive Officer of Del
Taco, Inc. (restaurant franchises) from 1976 to 1988. He has also served as
Chairman of the Board of Coast Newport Properties (real estate brokers) since
1991. Mr. Baker is a Director of Callaway Golf Company (golf equipment) and
Public Storage, Inc. (REIT).
David F. Benson has been a Director of The Meditrust Companies since
November 1997. Mr. Benson has been President and Treasurer of Meditrust since
November 1997. Prior to such time, Mr. Benson served as a Trustee and President
of Meditrust's Predecessor from September 1991 and Treasurer from October 1996,
in each case through the completion
8
of the Santa Anita Mergers. Mr. Benson also served as Treasurer of Meditrust
from January 1986 to May 1992. He was Treasurer of Mediplex from January 1986
through June 1987. He was previously associated with Coopers & Lybrand L.L.P.,
independent accountants, from 1979 to 1985. Mr. Benson is a trustee of
Mid-Atlantic Realty Trust and a member of the Board of Directors of Harborside
Healthcare Corporation and Nursing Home Properties, Plc.
Nancy G. Brinker has been a Director of The Meditrust Companies since
April 1998. She has served as Founding Chairman of the Susan G. Komen Breast
Cancer Foundation since 1982, and she has been a healthcare consultant since
1992. She was Chief Executive Officer of In Your Corner, Inc., a health and
wellness products and information company from October 1995 to April 1998. She
is a member of the Board of Directors of Physician Reliance Network, Inc.
Edward W. Brooke has been a Director of The Meditrust Companies since
November 1997. Prior to such date, he served as a Trustee of Meditrust's
Predecessor from 1985 through the completion of the Santa Anita Mergers. Mr.
Brooke was a partner of O'Connor & Hannan, a Washington, D.C. law firm, from
1979 until January 1997. From 1979 until October 1990 he was Of Counsel to
Csaplar & Bok, a Boston law firm. He was United States Senator from
Massachusetts from January 1967 to January 1979 and the Massachusetts Attorney
General from 1963 to 1967.
William G. Byrnes has been a Director of The Meditrust Companies since
April 1998. He has been appointed a Distinguished Teaching Professor of Finance
at the Georgetown University Business School, effective July 1998. He was a
Managing Director of BT Alex. Brown (and its predecessor, Alex. Brown & Sons
Incorporated) from 1981 through February 1998. He is a member of the Board of
Directors of JDN Realty Corporation.
James P. Conn has been a Director of Meditrust since November 1997. Prior
to such date, he served as a Director of SAE and SAO from 1995 through the
completion of the Santa Anita Mergers. Mr. Conn has been the Managing Director
and Chief Investment Officer of Financial Security Assurance, Inc. (insurance)
since 1992. He was also the President and Chief Executive Officer of Bay
Meadows Operating Company (horse racing) from 1988 to 1992. Mr. Conn is a
Trustee of Gabelli Equity Trust and Gabelli Global Multimedia Trust (investment
companies).
John C. Cushman, III has been a Director of Meditrust since November 1997.
Prior to such date, he served as a Director of SAE and SAO from 1996 through
the completion of the Santa Anita Mergers. 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. (golf course owner).
C. Gerald Goldsmith has been a Director of The Meditrust Companies since
November 1997. Prior to such date, he served as a Trustee of Meditrust's
Predecessor from August 1997 through the completion of the Santa Anita Mergers.
Mr. Goldsmith was Chairman and President of I.C.D., a New York Stock Exchange
listed company from 1972 to 1976, and since then he has been an independent
investor and financial advisor. He currently serves as a Director of Nine West
Group, Inc., Palm Beach National Bank & Trust Company, American Banknote
Corporation and Innkeepers USA Trust. He also serves as Chairman of the Board
of Intercoastal Health Foundation.
Abraham D. Gosman is the Chairman of the Boards of Directors of The
Meditrust Companies and Chief Executive Officer of Operating. Mr. Gosman has
been the Chairman of the Boards of Directors of The Meditrust Companies since
November 1997. Prior to such time, Mr. Gosman was Chairman of Meditrust's
Predecessor from its organization in 1985 through the completion of the Santa
Anita Mergers and became Chief Executive Officer of Meditrust's Predecessor in
February 1991. Mr. Gosman is also the Chairman of the Board, Chief Executive
Officer and President of PhyMatrix Corp., a publicly traded physician practice
management company which renders managerial and administrative services to a
variety of specialized medical care and treatment providers. Additionally, Mr.
Gosman is Chairman of the Board of CareMatrix Corporation, a publicly traded
company which provides a full range of quality senior residential services in
assisted living settings. Mr. Gosman was the Chief Executive Officer of The
Mediplex Group, Inc. ("Mediplex"), an operator and developer of health care
facilities, from its inception in 1983 until 1988 and from 1990 until June
1994, when Mediplex was acquired by Sun Healthcare Group, Inc. Mr. Gosman has
been in the health care and development business for more than 30 years.
Philip L. Lowe has been a Director of The Meditrust Companies since
November 1997. Prior to such date, he served as a Trustee of Meditrust's
Predecessor from 1987 through the completion of the Santa Anita Mergers. Mr.
Lowe has been a principal of Philip L. Lowe and Associates, a consulting firm,
and its predecessors, for more than five years and until March 1997 had been a
Director of Analog Devices, Inc. for 17 years.
9
Thomas J. Magovern has been a Director of The Meditrust Companies since
November 1997. Prior to such date, he served as a Trustee of Meditrust's
Predecessor from 1985 through the completion of the Santa Anita Mergers. Mr.
Magovern has been a Regional Vice President, Real Estate Asset Management of
Summit Bank (successor to United Jersey Bank), a New Jersey banking
institution, since November 1995. He was a principal of Nationwide Financial
Corp., a real estate consulting firm from September 1993 to October 1995. Mr.
Magovern was Executive Vice President of Northeast Savings, F.A. from January
1991 until February 1993. Prior to that time he had been Senior Vice President
of City Savings Bank, F.S.B. from April 1989 until January 1991 and a Vice
President of that bank for more than five years.
Gerald Tsai, Jr. has been a Director of The Meditrust Companies since
November 1997. Prior to such date, he served as a Trustee of Meditrust's
Predecessor from 1992 through the completion of the Santa Anita Mergers. Mr.
Tsai, the Chairman, Chief Executive Officer and President of Delta Life
Corporation, an annuity company, since February 1993. Mr. Tsai retired in 1991
as Chairman of the Executive Committee of the Board of Directors of Primerica
Corporation, a diversified financial services company, which position he held
since December 1988. From January 1987 to December 1988, Mr. Tsai was Chairman,
and from April 1986 to December 1988, he was Chief Executive Officer of
Primerica Corporation. He is a director of Rite Aid Corporation, Sequa
Corporation, Triarc Companies, Inc., Proffitt's, Inc. and Zenith National
Insurance Corp. Mr. Tsai is also a Trustee of Boston University and New York
University Medical Center.
In the event that the La Quinta merger is consummated, the Boards of
Directors of The Meditrust Companies intend to elect Thomas M. Taylor, age 55,
as a Director of each of The Meditrust Companies, with his terms to expire in
2000. Mr. Taylor has been President of each of Thomas M. Taylor & Co., a Texas
based investment consulting firm, and TMI-FW, Inc., an investment advisor to
Tundra Investors L.P., since 1985. He is Chairman of the Board of La Quinta and
also serves on the Board of Directors of each of Encal Energy Limited,
MacMillan Bloedel Limited, Moore Corporation, Kirby Corporation and John Wiley
& Sons.
Family Relationships
There are no family relationships among any of the Directors, executive
officers or persons nominated or chosen to become a Director or executive
officer of the The Meditrust Companies.
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely upon a 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 Form except for Mr. John
G. Demeritt, Controller of Meditrust who, prior to November 5, 1997 was a
reporting person. Mr. Demeritt failed to file a Form 5 for 1996 to reflect the
grant of 35,000 options on September 1, 1996. A Form 4 disclosing this grant
was filed on August 27, 1997.
Item 11
EXECUTIVE COMPENSATION
Meditrust
The following table sets forth the compensation paid to those individuals
who served as Meditrust's Chief Executive Officer, or in a similar capacity,
and the four other most highly compensated executive officers other than the
Chief Executive Officer, or such individuals who served in a similar capacity,
in 1997 for services rendered in all capacities to Meditrust and its
subsidiaries during the fiscal years ended December 31, 1997, 1996 and 1995.
10
Summary Compensation Table
Long-Term
Compensation
Annual Compensation Awards
-------------------------------------------------------------- -------------
All Other Securities
Compensation Underlying
Name and Principal Position Year Salary($) Bonus($) ($)(1) Options (#)
- --------------------------------- ------------- ----------- ------------- ---------------- -------------
Abraham D. Gosman ............... 1997(2) 759,420 726,562(3) 148,568(4) 1,201,600
Chairman and former Chief 1996 900,000 885,938(3) 179,249(4) 0
Executive Officer 1995 767,559 834,375(3) 375,754(4) 0
David F. Benson ................. 1997 350,000 391,384(5) 6,610 480,640
President and Treasurer 1996 290,000 335,997(5) 6,370 0
and current Chief Executive 1995 275,000 123,060(5) 6,240 0
Officer
Michael S. Benjamin ............. 1997 200,000 238,141(6) 6,536 360,480
Senior Vice President, Secretary 1996 175,000 240,318(6) 6,305 0
and General Counsel 1995 165,000 84,459(6) 6,175 0
Michael F. Bushee ............... 1997 200,000 238,141(6) 6,377 360,480
Chief Operating Officer 1996 175,000 240,318(6) 6,305 0
1995 165,000 84,459(6) 6,175 0
Laurie T. Gerber ................ 1997 155,000 149,525(7) 5,907 120,160
Chief Financial Officer 1996(8) 6,458 13,370(7) 0 0
John G. Demeritt ................ 1997 77,000 25,000(9) 5,308 0
Controller 1996 70,000 11,521(9) 5,258 0
1995(10) 23,333 0 0 0
- ----------------
(1) Includes 401(k) plan contributions of $4,008, $4,750, $4,750, $4,750,
$4,750 and $4,750 in 1997, $4,750, $4,750, $4,750, $4,750, $0 and $4,750
in 1996, and $4,620, $4,620, $4,620, $4,620, $0 and $0 in 1995, and term
life insurance premium payments of $737, $1,860, $1,785, $1,627, $1,157
and $558 in 1997, $785, $1,620, $1,555, $1,555, $0 and $508 in 1996, and
$0, $1,620, $1,555, $1,555, $0 and $0 in 1995, on behalf of Messrs.
Gosman, Benson, Benjamin, Bushee, Ms. Gerber and Mr. Demeritt,
respectively.
(2) Mr. Gosman became an employee of Operating on November 5, 1997 and ceased
to be the Chief Executive Officer of, or otherwise employed by, Meditrust
on such date. Information provided with respect to 1997 is for the period
January 1, 1997 through November 4, 1997. After such date, Mr. Benson
began serving in a similar capacity for Meditrust for the remainder of the
fiscal year ended December 31, 1997.
(3) For the years 1997, 1996 and 1995, figures relate to Meditrust's issuance
to Mr. Gosman of (i) 22,530 Shares in three equal installments valued at
$30.27, $31.89 and $34.59 per Share on April 1, 1997, July 1, 1997 and
October 1, 1997; (ii) 30,040 Shares in four equal installments valued at
$27.88, $28.09, $29.23 and $32.77 per Share on April 12, 1996, July 8,
1996, October 3, 1996 and January 3, 1997; and (iii) 30,040 Shares in four
equal installments valued at $24.55, $28.50, $28.82 and $29.23 per Share
on April 4, 1995, July 3, 1995, October 2, 1995 and January 2, 1996. All
issuance prices are the closing prices for Shares on the New York Stock
Exchange on the respective dates of issuance.
(4) $143,822, $173,714 and $371,134 of which reflects the current dollar value
of the benefit to Mr. Gosman of the portion of the premium paid by
Meditrust in 1997, 1996 and 1995, respectively, with respect to a
split-dollar life insurance agreement (see "Further Information Regarding
the Boards of Directors and Executive Officers" below for a description of
such agreement). The benefit for each of 1997, 1996 and 1995 was
determined by calculating the time value of money (using the applicable
short-term federal funds rate of 5.68%, 5.76% and 6.62%, respectively) of
the portion of the premium paid by Meditrust in 1997 ($2,532,082) relating
to non-term life insurance for the period from May 19, 1997 (the date on
which the premium was paid) until June 18, 1998 (which is the earliest
date on which Meditrust could terminate the agreement and obtain a refund
of the premium paid); in 1996 ($2,951,045) for the period from May 19,
1996 until June 18, 1997; and in 1995 ($2,969,260) for the period from May
19, 1995 to June 18, 1997. Operating assumed the obligations of Meditrust
under such split-dollar life insurance agreement on November 5, 1997.
11
(5) For the years 1997, 1996 and 1995, $167,286, $121,832 and $48,060 of which
relates to Meditrust's issuance to Mr. Benson of (i) 5,097 Shares in three
installments valued at $30.27, $31.89 and $36.31 per Share on April 1,
1997, July 1, 1997 and October 10, 1997; (ii) 514 Shares and 3,827 Shares
valued at $27.88 and $28.09 per Share on April 12, 1996 and July 8, 1996;
and 1,730 Shares in four equal quarterly installments valued at $24.55,
$28.50, $28.82 and $29.23 per Share on April 4, 1995, July 3, 1995,
October 2, 1995 and January 2, 1996. All issuance prices are the closing
prices for Shares on the New York Stock Exchange on the respective dates
of issuance.
(6) For the years 1997, 1996 and 1995, $86,875, $130,318 and $29,459 of which
relates to Meditrust's issuance to Messrs. Benjamin and Bushee of (i)
2,734 Shares in installments valued at $30.27, $31.89 and $36.38 per Share
on April 1, 1997, July 1, 1997 and January 2, 1998; (ii) 308, 2,792, 1,135
and 307 Shares valued at $27.88, $28.09, $29.23 and $32.77 per Share on
April 12, 1996, July 8, 1996, October 3, 1996 and January 3, 1997; and
(iii) 1,017 Shares in four equal quarterly installments valued at $24.55,
$28.50, $28.82 and $29.23 per Share on April 4, 1995, July 3, 1995,
October 2, 1995 and January 2, 1996. All issuance prices are the closing
prices for Shares on the New York Stock Exchange on the respective dates
of issuance.
(7) For the years 1997 and 1996, $39,472 and $13,370 of which relates to
Meditrust's issuance to Ms. Gerber of (i) 1,224 Shares in three equal
installments valued at $30.27, $31.89 and $34.59 per Share on April 1,
1997, July 1, 1997 and October 10, 1997 and (ii) 408 Shares valued at
$32.77 per Share on January 3, 1997. All issuance prices are the closing
prices for Shares on the New York Stock Exchange on the respective dates
of issuance.
(8) Ms. Gerber commenced her employment with Meditrust in December 1996.
(9) For the years 1997 and 1996, $37,957 and $6,488 of which relates to
Meditrust's issuance to Mr. Demeritt of (i) 664 Shares in four equal
quarterly installments valued at $30.27, $31.89, $34.59 and $36.375 per
Share on April 1, 1997, July 1, 1997, October 1, 1997 and January 2, 1998;
and (ii) 220 Shares in four equal quarterly installments valued at $27.88,
$28.09, $29.23 and $32.77 per Share on April 12, 1996, July 8, 1996,
October 3, 1996 and January 3, 1997. All issuance prices are the closing
prices for Shares on the New York Stock Exchange on the respective dates
of issuance.
(10) Mr. Demeritt commenced his employment with Meditrust in September 1995.
The following table sets forth information concerning the grant of stock
options to the following persons during the fiscal year ended December 31,
1997:
12
Option Grants in Last Fiscal Year
Number of Percent of Total Exercise
Securities Options Granted Based Grant Date
Underlying to Employees Price Expiration Present
Name Options Granted(#) in 1997 ($/Share) Date Value ($)(1)
- ----------------------------- -------------------- ------------------ ----------- ------------ -------------
Abraham D. Gosman ........... 1,201,600 46 32.77 8/07 4,049,392
David F. Benson ............. 480,640 18 32.77 8/07 1,619,757
Michael S. Benjamin ......... 360,480 14 32.77 8/07 1,214,818
Michael F. Bushee ........... 360,480 14 32.77 8/07 1,214,818
Laurie T. Gerber ............ 120,160 5 32.77 8/07 404,939
John G. Demeritt ............ 0 0 -- -- 0
- ----------------
(1) In accordance with Securities and Exchange Commission rules, the
Black-Scholes option pricing model was used to estimate the grant date
present value of the options set forth in this table. The option pricing
model assumed an estimated volatility of 16%, dividend yield of 7.9%,
risk-free rate of return ranging from 5.9 to 6.7% and an expected life of
four years from the date of grant.
The following table sets forth information concerning exercises of stock
options by the following persons during the fiscal year ended December 31, 1997
and the number and value of their stock options at December 31, 1997:
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Shares Value Options at 12/31/97 (#) at 12/31/97($)
Acquired on Realized Exercisable/ Exercisable/
Name Exercise (#) ($)(1) Unexercisable Unexercisable(2)
- ----------------------------- -------------- ---------- ------------------------- ------------------------
Abraham D. Gosman ........... 0 $ 0 277,994/1,201,600 $4,036,136/$4,633,610
David F. Benson ............. 0 0 90,968/480,640 1,111,980/ 1,853,444
Michael S. Benjamin ......... 0 0 32,043/360,480 370,234/ 1,390,083
Michael F. Bushee ........... 0 0 32,043/360,480 370,234/ 1,390,083
Laurie T. Gerber ............ 0 0 0/120,160 0/ 463,361
John G. Demeritt ............ 14,018 48,696 28,038/0 230,624/ 0
- ----------------
(1) Market value of underlying securities at exercise, less the exercise price.
(2) Market value of $36.625 as of December 31, 1997, less the exercise price.
13
Report of the Compensation Committee(1)
The Santa Anita Mergers occurred on November 5, 1997. In the Santa Anita
Mergers, Meditrust's Predecessor was treated as the acquiring entity for
accounting purposes, even though it was not the surviving legal entity.
Accordingly, this report of the Compensation Committee discusses the
compensation paid by the acquiring entity, Meditrust's Predecessor, for the
period prior to the Santa Anita Mergers and by the surviving entity, Meditrust,
for the period subsequent to the Santa Anita Mergers.
Following the Santa Anita Mergers, a new Compensation Committee was
appointed and the strategic direction of Meditrust changed significantly. The
Compensation Committee retained the services of an independent consulting and
research firm, Strategic Compensation Research Associates, to review the total
compensation programs of the executives whom Meditrust would need to attract
and retain. The consultant advised the Compensation Committee that the total
compensation programs were significantly below the levels necessary to attract
and retain the future talent needed, and were insufficient in the key areas of
strong interest to investors, specifically performance-based long-term
incentives and stock ownership by the executives.
Upon review of the consultant's recommendations, the Compensation
Committee has determined to implement a compensation program for executives
that provides significant rewards for strong financial performance by providing
cash payments contingent upon attaining performance targets and by increasing
the level of executives' stock ownership of Meditrust. To that end, the
Compensation Committee has determined to adopt a short-term and long-term cash
bonus program and to make grants of options and restricted stock to designated
executives.
Under the annual bonus program (the "Annual Bonus Program"), eligible
employees will receive a specified percentage of their base salary if
preestablished performance targets are met. Under the long-term bonus program
(the "Long-Term Bonus Program"), eligible employees will receive "cash units"
that will appreciate in value depending upon the attainment of preestablished
performance targets over a four year period. Finally, the Compensation
Committee anticipates making significant grants of options and restricted stock
to certain executives to increase their stake in Meditrust and more closely
align their interests with that of shareholders. In furtherance of this
objective and after consultation with the consultant, the Compensation
Committee has approved the granting of options to purchase approximately
1,200,000 Shares to employees of Meditrust.
As will be described more fully in The Meditrust Companies' Joint Proxy
Statement/Prospectus to be filed in connection with the proposed La Quinta
merger, shareholders of Meditrust will be asked to approve (i) the adoption of
the Annual Bonus Program and the Long-Term Bonus Program and (ii) the amendment
of Meditrust's 1995 Share Award Plan. Shareholder approval will permit
Meditrust to implement its compensation strategy and, to the extent possible,
preserve deductibility of the compensation under the Code.
The following report concerns the earlier 1997 philosophy and compensation
actions during the period prior to the Santa Anita Mergers.
In determining the compensation to be paid to Meditrust's executive
officers, the Compensation Committee strives to (i) reward executives for
achievement of Meditrust's strategic goals and the enhancement of shareholder
value, (ii) recognize superior performance as compared to that of competing
businesses and (iii) attract, motivate and retain highly-trained and talented
executives who are vital to Meditrust's long-term success. Individual
compensation packages are generally set at levels believed by the Compensation
Committee to correspond to the median range of compensation paid to individuals
serving in comparable positions at other real estate investment trusts with
publicly-traded securities and other entities with which Meditrust must compete
for executive and professional resources. In 1997, Meditrust's compensation
package was comprised of a base salary, an annual cash bonus, long-term
incentives in the form of stock options and stock grants and other benefits
typically offered to executives by major corporations.
- ----------------
(1) The report of the Compensation Committee shall not be deemed to be
incorporated by reference by any general statement incorporating by
reference this Form 10-K/A into any filings of The Meditrust Companies
pursuant to the Securities Act or the Exchange Act, except to the extent
The Meditrust Companies specifically incorporate this report by reference
therein, and shall not be deemed soliciting material or otherwise deemed
filed under either of such Acts.
14
Salaries
During 1997, the Board of Trustees of Meditrust's Predecessor, on the
recommendation of the Compensation Committee, increased the salaries paid to
each of the four most highly compensated executive officers of Meditrust other
than Mr. Gosman (collectively, the "Senior Executives"). These salary
increases, as well as those of other Meditrust executives, were based on
cost-of-living adjustments, position tenure, subjective assessments of
individual performance, comparability considerations (including Meditrust's
financial performance relative to its competitors) and competitive data,
including asset growth, revenue growth, cash flow growth and total return to
shareholders. In setting compensation levels for 1997, the Compensation
Committee gave considerable weight to Meditrust's favorable 1996 financial
results (including the 43% increase in Meditrust's assets, 16% increase in
Meditrust's revenues and 7% increase in cash flow). Performance assessments
were also given greater weight in the Compensation Committee's determinations
relative to the other factors.
Mr. Gosman's 1997 base salary was paid pursuant to the provisions of his
employment agreement (the "Employment Agreement") with Meditrust which was
entered into on January 1, 1993 with an original term of four years, and which
was extended for one additional year. The terms of the Employment Agreement,
including salary terms, were determined through negotiations between Mr. Gosman
and the Compensation Committee. Factors considered by the Compensation
Committee in the course of those negotiations included Mr. Gosman's unique
insight and experience in the health care industry, his leadership abilities,
his past contributions to the success of Meditrust, his perceived importance to
the continued success of Meditrust, his original four-year commitment to lead
Meditrust and Meditrust's financial performance, as measured by asset growth,
revenue growth, cash flow growth and total return to shareholders, under Mr.
Gosman's leadership. Subsequent to the Santa Anita Mergers, Mr. Gosman was
employed by Operating and not by Meditrust, and the Employment Agreement was
assumed by Operating .
Under certain circumstances, Section 162(m) of the Internal Revenue Code
denies a deduction for compensation in excess of $1 million paid to an
individual who is the chief executive officer or one of the four next most
highly paid officers of a corporation. In general, compensation from all
sources is taken into account, including salary, bonus and income realized from
the exercise of non-qualified stock options. Because it is a real estate
investment trust, and based on the advice of counsel, Meditrust believes that
the denial of deductions by Section 162(m) is not likely to have any material
adverse impact on Meditrust. A real estate investment trust is subject to tax
on its "real estate investment trust taxable income," which is taxable income
subject to adjustments and reduced by a deduction for dividends paid. Meditrust
expects to pay sufficient dividends such that it will have no real estate
investment trust taxable income even if Section 162(m) were to be applicable to
compensation paid to one or more of its officers.
Bonus Awards
Executive officers of Meditrust were awarded cash bonuses in 1997 based on
the Compensation Committee's assessment of Meditrust's and the employees'
performance. The performance measures reviewed by the Compensation Committee
included Meditrust's revenue growth, cash flow growth and total return to
shareholders compared to that of its competitors. These measures were assigned
approximately equal weight in the Compensation Committee's determinations.
Meditrust's performance in each of these measures generally compared favorably
to its competitors' corresponding results. The increases in the bonuses paid to
executive officers in 1997 over those paid in 1996 were based in large part on
these results.
Pursuant to the Employment Agreement, Mr. Gosman received bonus
compensation in 1997 which consisted of Shares. In its 1992 negotiations
regarding the amount of bonus compensation to be paid to Mr. Gosman each year
during the original four-year term of the Employment Agreement, the Board of
Directors considered the performance measures listed above, Mr. Gosman's unique
abilities and experience and his perceived contributions to Meditrust's
financial performance in 1991 and 1992. Mr. Gosman's annual bonus under the
Employment Agreement is paid in Shares in order to further align his interests
with those of Meditrust's shareholders.
Equity Incentive Plans
The Compensation Committee administers Meditrust's 1995 Share Award Plan.
Stock options and stock grants are awarded under this plan in order to provide
incentives to Directors, officers and key employees of Meditrust to maximize
their efforts on behalf of Meditrust, to attract and retain those highly
competent individuals upon whose judgment, initiative
15
and leadership Meditrust's continuing success largely depends and to align the
interests of the Directors, officers and key employees of Meditrust with those
of Meditrust's shareholders. The size of individual option and stock grants is
determined by the Compensation Committee based on its comparison of option and
stock grants to executives with similar responsibilities in other companies and
the executive's level of responsibility and relative importance to the
operations of Meditrust. In recognition of Meditrust's favorable 1996 financial
results, the Compensation Committee granted stock awards in 1997 to the Senior
Executives, as reflected in certain of the tables appearing above.
It is the present policy of the Compensation Committee to review
periodically Meditrust's stock option and stock grant award levels and the
over-all effectiveness of Meditrust's equity incentive plans in achieving the
objectives of Meditrust.
Other Compensation Plans
Meditrust maintains certain broad-based employee benefit plans in which
Mr. Gosman and the Senior Executives participated. These plans include a 401(k)
savings plan, life, disability and health insurance plans and allowances for
automobile use. These plans are not directly or indirectly tied to Meditrust's
performance.
Submitted by,
C. Gerald Goldsmith, Chairman
Thomas J. Magovern
Gerald Tsai, Jr.
16
Executive Compensation--Operating
The following table sets forth the compensation paid to any individual who
served as Operating's (or its predecessor's) Chief Executive Officer and the two
other most highly compensated executive officers other than the Chief Executive
Officers who served as executive officers during 1997 for services rendered in
all capacities to Operating and its subsidiaries during the fiscal years ended
December 31, 1997, 1996 and 1995.
Summary Compensation Table
Annual Compensation
--------------------------------------------------------
All Other
Compensation
Name and Principal Position Year Salary($) Bonus($) ($)(1)
- ----------------------------------------------- ---------- ----------- -------------- ------------
Abraham D. Gosman ............................. 1997(2) 140,580 0 26,616(3)
Chairman and Chief Executive Officer
William C. Baker .............................. 1997 300,000 350,000(4) 4,352
former Chairman and Chief Executive Officer; 1996 225,000 250,000 3,264
currently Chief Executive Officer of The Santa 1995 0 0 0
Anita Companies, a division of Operating
Clifford C. Goodrich .......................... 1997 252,000 60,000(4) 1,987
Executive Vice President 1996 252,000 70,000 1,987
1995 242,000 50,000 1,987
Thomas S. Robbins ............................. 1997 174,000 10,000(4) 853
Vice President 1996 174,000 27,000 925
1995 161,333 23,000 721
- ----------------
(1) Includes 401(k) plan contribution of $741, $0, $0 and $265 in 1997, $0, $0,
$0 and $370 in 1996, and $0, $0, $0 and $186 in 1995, and term life
insurance premium payments of $136, $4,352, $1,987 and $588 in 1997, $0,
$3,264, $1,987 and $535 in 1996, and $0, $0, $1,987 and $535 in 1995, on
behalf of Messrs. Gosman, Baker, Goodrich and Robbins, respectively.
(2) Mr. Gosman became the Chief Executive Officer of Operating on November 5,
1997. He was not otherwise employed by Operating until that date.
Information provided with respect to 1997 is for the period November 5,
1997 through December 31, 1997.
(3) Reflects the current dollar value of the benefit to Mr. Gosman of the
portion of the premium paid by Operating in 1997 with respect to a
split-dollar life insurance agreement (see "Further Information Regarding
the Boards of Directors and Executive Officers" below for a description of
such agreement). The benefit for 1997 was determined by calculating the
time value of money (using the applicable short-term federal funds rate of
5.68%) of the portion of the premium paid by the employer in 1997
($468,600) relating to non-term life insurance for the period from May 19,
1997 (the date on which the premium was paid) until June 18, 1998 (which
is the earliest date on which the employer could terminate the agreement
and obtain a refund of the premium paid). Operating assumed the
obligations of Meditrust under such split-dollar life insurance agreement
on November 5, 1997.
(4) Does not include severance payments of $1,583,233, $786,138 and $451,256
paid in 1997 to Messrs. Baker, Goodrich and Robbins.
17
The following table sets forth information concerning exercises of stock
options by the following persons during the fiscal year ended December 31, 1997
and the number and value of their stock options at December 31, 1997:
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
Number of Unexercised Value of Unexercised
Shares Value Options at 12/31/97 In-the-Money Options
Acquired on Realized (#) Exercisable/ at 12/31/97($) Exercisable/
Name Exercise(#) ($)(1) Unexercisable Unexercisable(2)
- ------------------------------ ------------- ---------- ----------------------- ----------------------------
Abraham D. Gosman ............ 0 0 0 0
William C. Baker ............. 0 0 75,000/0 1,603,125/0
Clifford C. Goodrich ......... 0 0 74,000/0 1,291,450/0
Thomas S. Robbins ............ 0 0 27,500/0 518,943/0
- ----------------
(1) Market value of underlying securities at exercise, less the exercise price.
(2) Market value of $36.625 as of December 31, 1997, less the exercise price.
18
Report of the Compensation Committee(2)
The Santa Anita Mergers occurred on November 5, 1997. In the Santa Anita
Mergers, Meditrust Acquisition Company merged with and into Operating, with
Operating as the surviving legal entity. Prior to the Santa Anita Mergers,
Meditrust Acquisition Company conducted virtually no business other than
entering into the various transactions necessary to consummate the Santa Anita
Mergers. Accordingly, this report of the Compensation Committee of Operating
(the "Operating Compensation Committee") discusses the compensation paid by the
surviving entity, Operating (formerly known as Santa Anita Operating Company),
and not by Meditrust Acquisition Company, since Meditrust Acquisition Company
had no operations or employees prior to the Santa Anita Mergers. Upon the
consummation of the Santa Anita Mergers, the Board of Directors appointed all
new members to serve on the Operating Compensation Committee. Accordingly, none
of the current members of the Operating Compensation Committee was a member
prior to the Santa Anita Mergers and, therefore, none took part in the
compensation decisions prior to the Santa Anita Mergers.
Also following the Santa Anita Mergers, the strategic direction of
Operating changed significantly. The Operating Compensation Committee retained
the services of an independent consulting and research firm, Strategic
Compensation Research Associates, to review the total compensation programs,
for current executives and for executives whom Operating would need to attract
and retain in a variety of industries. The consultant advised the Operating
Compensation Committee that the total compensation programs were significantly
below the levels necessary to attract and retain the future talent needed, and
were insufficient in key areas of strong interest to investors, especially in
the area of performance-based long-term incentives and stock ownership by the
executives.
The consultant recommended extensive changes to the total compensation
programs for Operating executives. Upon review of the consultant's
recommendations, the Operating Compensation Committee has determined to
implement a performance-based compensation program for executives that provides
significant rewards for strong financial performance by providing cash payments
contingent upon attaining performance targets and by increasing the level of
executives' stock ownership in Operating. To that end, the Operating
Compensation Committee has determined to adopt a short-term and long-term cash
bonus program and to make grants of options and restricted stock to designated
executives.
Under the annual bonus program (the "Annual Bonus Program"), eligible
employees will receive a specified percentage of their base salary if
preestablished performance targets are met. Under the long-term bonus program
(the "Long-Term Bonus Program"), eligible employees will receive "cash units"
that will appreciate in value depending upon the attainment of preestablished
performance targets over a four year period. Finally, the Operating
Compensation Committee anticipates making relatively large grants of options
and restricted stock to certain executives to increase their stake in Operating
and more closely align their interests with that of shareholders. In
furtherance of this objective and after consultation with the consultant, the
Operating Compensation Committee has approved the granting of options to
purchase 5,158,000 Shares to employees of Operating, including the grant to Mr.
Gosman of an option to purchase 1,600,000 Shares at $30.75 per Share, a portion
of which (i.e., the portion of the option to purchase shares in excess of the
Stock Plan's current annual limit) is contingent upon approval of the amendment
to Operating's 1995 Share Award Plan by Operating shareholders.
As will be described more fully in The Meditrust Companies' Joint Proxy
Statement/Prospectus to be filed in connection with the proposed La Quinta
merger, shareholders of Operating will be asked to approve (i) the adoption of
the Annual Bonus Program and the Long-Term Bonus Program and (ii) the amendment
of Operating's 1995 Share Award Plan. Shareholder approval will permit
Operating to implement its compensation strategy and, to the extent possible,
preserve deductibility of the compensation under the Code.
The consultant advised that these changes should focus on future retention
and motivation, not on past events.
- ----------------
(2) The report of the Operating Compensation Committee shall not be deemed to
be incorporated by reference by any general statement incorporating by
reference this Form 10-K/A into any filings of the Companies pursuant to
the Securities Act or the Exchange Act, as amended, except to the extent
the Companies specifically incorporate this report by reference therein,
and shall not be deemed soliciting material or otherwise deemed filed
under either of such Acts.
19
The following report concerns the earlier 1997 philosophy and compensation
actions during the period prior to the Santa Anita Mergers.
Salaries
As a result of the Santa Anita Mergers, Mr. Gosman become an employee of
Operating, rather than Meditrust, as of November 5, 1997. Mr. Gosman's 1997
base salary was paid pursuant to the provisions of the Employment Agreement
with Meditrust which was entered into on January 1, 1993 with an original term
of four years, and which was extended for one additional year. Operating
assumed the obligations of Meditrust under the Employment Agreement effective
November 5, 1997. The terms of the Employment Agreement, including salary
terms, were determined through negotiations between Mr. Gosman and Meditrust's
Predecessor's Compensation Committee. Factors considered by Meditrust's
Predecessor's Compensation Committee in the course of those negotiations
included Mr. Gosman's unique insight and experience, his leadership abilities,
his past contributions to the success of Meditrust, his perceived importance to
the continued success of Meditrust, his initial four-year commitment to lead
Meditrust and Meditrust's financial performance, as measured by asset growth,
revenue growth, cash flow growth and total return to shareholders, under Mr.
Gosman's leadership.
To the extent readily determinable, and as one of the factors in its
consideration of compensation matters, the Operating Compensation Committee
considers the anticipated tax treatment to Operating and to the executives of
various payments and benefits. Some types of compensation payments and their
deductibility depend upon the timing of an executive's vesting or exercise of
previously granted rights. Further interpretations of and changes in the tax
laws and other factors beyond the Operating Compensation Committee's control
also affect the deductibility of compensation. For these and other reasons, the
Committee will not necessarily limit executive compensation to that deductible
under Section 162(m) of the Internal Revenue Code. The Operating Compensation
Committee will consider various alternatives to preserving the deductibility of
compensation payments and benefits to the extent reasonably practicable and to
the extent consistent with its other compensation objectives.
Bonus Awards
Executive officers of Operating were awarded cash bonuses in 1997 based on
the Operating Compensation Committee's assessment of Operating's performance in
1997. The performance measures reviewed by the Operating Compensation Committee
included Operating's financial performance compared to that of its competitors.
In addition, certain executive officers received severance payments in
connection with the Santa Anita Mergers.
Equity Incentive Plans
The Operating Compensation Committee administers Operating's 1995 Share
Award Plan. Stock options and stock grants are awarded under this plan in order
to provide incentives to Directors, officers and key employees of Operating to
maximize their efforts on behalf of Operating, to attract and retain those
highly competent individuals upon whose judgment, initiative and leadership
Operating's continuing success largely depends and to align the interests of
the Directors, officers and key employees of Operating with those of
Operating's shareholders. The size of individual option and stock grants is
determined by the Operating Compensation Committee based on its comparison of
option and stock grants to executives with similar responsibilities in other
companies and the executive's level of responsibility and relative importance
to the operations of Operating.
It is the present policy of the Operating Compensation Committee to review
periodically Operating's stock option and stock grant award levels and the
over-all effectiveness of Operating's equity incentive plans in achieving the
objectives of Operating.
Other Compensation Plans
Operating maintains certain broad-based employee benefit plans in which
Mr. Gosman and senior executives participated. These plans include a 401(k)
savings plan, life, disability and health insurance plans and allowances for
automobile use. These plans are not directly or indirectly tied to Operating's
performance.
Submitted by,
C. Gerald Goldsmith, Chairman
Thomas J. Magovern
Gerald Tsai, Jr.
20
Performance Graph(1)
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total shareholder return on the shares of Meditrust's
Predecessor and The Meditrust Companies against the cumulative market-weighted
return of the Standard & Poor's Composite 500 Stock Index and the National
Association of Real Estate Investment Trusts ("NAREIT") All REIT Total Return
Index (which is comprised of all tax-qualified real estate investment trusts,
without regard to investment focus, listed on the New York Stock Exchange,
American Stock Exchange and NASDAQ National Market System) for the period of
five fiscal years commencing January 1, 1993 and ending December 31, 1997.
12/31/92 1993 1994 1995 1996 1997
Meditrust $ 100.00 $ 113.18 $ 114.84 $ 141.97 $ 174.15 $ 204.05
S&P 500 $ 100.00 $ 109.99 $ 111.43 $ 153.13 $ 188.29 $ 251.13
NAREIT $ 100.00 $ 118.55 $ 119.50 $ 141.38 $ 191.93 $ 228.13
- ----------------
(1) Assumes that the value of an investment in Shares and each index was $100
on December 31, 1992 and that all dividends were reinvested on a monthly
basis.
Further Information Regarding the Boards of Directors and Executive Officers
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 Boards of
Directors. In addition, the Chairman and each member of a committee of the
Boards 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 pay Directors
additional fees in connection with various special projects. On November 1,
1997, Meditrust's Predecessor issued to Mr. Brooke 6,033 Shares, valued at
approximately $250,747, for services to Meditrust's Predecessor during 1997.
Prior to the Santa Anita Mergers, Meditrust's Predecessor maintained a
Trustee Retirement Plan for Trustees of Meditrust's Predecessor who had served
on the Board for at least five years and who were not employed by Meditrust's
Predecessor upon their retirement from the Board. Pursuant to the plan,
Meditrust's Predecessor was obligated to issue to each eligible retired Trustee
annual installments of Shares having a fair market value equal to the amount of
the basic Trustee fee paid to such Trustee (most recently $30,000) during the
last full year of such Trustee's service on the Board plus the amount payable
to such Trustee for attendance at six Board meetings (most recently $6,000)
during such year. Annual benefits will be paid for the number of years equal to
the number of years that the retired Trustee served on the Board. During 1997,
Meditrust's Predecessor paid $36,000 to each of Messrs. Cataldo and Carey,
former Trustees of Meditrust's Predecessor, in the form of shares of beneficial
interest, pursuant to such plan. The Board has decided to terminate such plan
as it relates to existing Directors and to replace it with a stock-based
compensation program consisting of Share grants and future stock options.
Based upon a compensation consultant's recommendations, the Board of
Directors of each of The Meditrust Companies has adopted a new Directors Stock
Based Compensation Plan (each, a "Director Plan"). Pursuant to the Director
Plan, each Director is awarded 4,000 Shares, plus an additional 1,500 Shares
for each prior year of service to Meditrust's Predecessor, contingent upon the
Director relinquishing his rights under the former retirement plan. The 4,000
Shares vest upon the Director's resignation from the Board if the Director has
served on the Board or the Board of Meditrust's Predecessor for at least three
years, subject to early vesting upon the death of the Director or a change of
control. The 1,500 Shares multiplied by the number of previous years of service
will vest at the rate of 1,500 Shares per year commencing on the Director's
resignation from the Board as long as the retired Director continues to provide
advice and counsel to the Board, subject to early vesting upon the death of the
Director or a change of control. In addition, each Director will be awarded
stock options with respect to 1,500 Shares on an annual basis, subject to a
four-year vesting schedule. Within 90 days after any Shares vest under the
Director Plan, either Meditrust or Operating will have the right to purchase
such vested Shares from its Directors at the higher of the then fair market
value or $31.25 per Share. In addition, each Director has the right to require
the respective company to purchase the Shares within 90 days after they have
vested at the higher of the then fair market value or $31.25 per Share.
21
During 1996, Meditrust granted secured loans aggregating up to $240,000 to
David F. Benson, with a weighted average interest rate of approximately 6% per
annum. As of December 31, 1997, the balance outstanding on these loans was
$163,278. The loans are due May 19, 1999.
Effective January 1, 1993, Abraham D. Gosman entered into the Employment
Agreement pursuant to which he served as Chief Executive Officer of Meditrust's
Predecessor. The Employment Agreement had an initial term of four years and was
extended through December 31, 1997. Effective upon the completion of the Santa
Anita Mergers on November 5, 1997, the Employment Agreement was assumed by
Operating. Mr. Gosman's base compensation was $900,000 per year. In addition,
Mr. Gosman received annually 30,040 Shares during the term of the Employment
Agreement pursuant to Meditrust's or Operating's equity incentive plans. In the
event of a "Change of Control" (which was defined as the acquisition by any
person or group of 20% or more of the Shares, but only if a majority of the
"Continuing Directors" (defined in the Employment Agreement generally as the
current Directors and any Director nominated or elected by the current
Directors) disapproved of such acquisition), Mr. Gosman would be paid his base
salary through the remaining term of the Employment Agreement, less the amount
of salary and benefits payable to Mr. Gosman by a new employer. Mr. Gosman
could, upon 30 days' prior written notice to Operating, demand the present
value of such amount in a lump sum. Mr. Gosman was also entitled to participate
in benefit plans of Operating until he was employed by a new employer. In the
event of a termination resulting from a cause other than death, disability or a
"Termination For Cause" (defined in the Employment Agreement as a termination
due to a material breach of the Employment Agreement or the commission of
certain other wrongful acts), Mr. Gosman would have been paid his base salary
for one year, less the amount of compensation payable to Mr. Gosman by a new
employer. In the event of a Termination For Cause or termination after such
annual review of the Board of Directors, Mr. Gosman would not be entitled to
receive any severance payments.
In May 1995, Meditrust's Predecessor entered into a split-dollar agreement
with a trust established by Mr. Gosman (the "Insurance Trust"), pursuant to
which Meditrust and the Insurance Trust share in the premium costs of a life
insurance policy purchased by the Insurance Trust that will pay a benefit of
approximately $50 million upon the death of Mr. Gosman. Effective upon the
completion of the Santa Anita Mergers on November 5, 1997, the split-dollar
agreement was assumed by Operating. Pursuant to such agreement, Operating has
agreed to advance the portion of the policy premiums not related to the term
life insurance portion of the policy. Operating is entitled to reimbursement of
the amounts advanced, without interest, upon the first to occur of (a) Mr.
Gosman ceasing to be employed by Operating, (b) the death of Mr. Gosman or (c)
the surrender of the policy. The balance of the benefit is payable to the
Insurance Trust. Operating's right to reimbursement is secured by an assignment
of the life insurance policy and a promissory note of Mr. Gosman in the amount
of the excess, if any, of the premiums paid by Operating over the cash
surrender value of the insurance policy.
In connection with the split-dollar agreement, Mr. Gosman agreed with
Operating that if the split-dollar agreement is in effect at the time of his
death and the net death benefit payable to the Insurance Trust is at least $24
million, then no Shares owned by Mr. Gosman at his death will be sold by any of
his heirs during the first year following his death and no more than 120,160 of
such Shares will be sold during any three-month period in the second, third and
fourth years following his death.
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 April 15, 1998, except as otherwise
noted, the number of Shares beneficially owned, directly or indirectly, by the
chief executive officers, current executive officers, each of the four most
highly compensated executive officers for the year ended December 31, 1997 and
each Director, as well as all Directors and current executive officers of The
Meditrust Companies as a group. To the knowledge of The Meditrust Companies, no
person owns 5% or more of the Shares as of April 15, 1998.
22
Shares Beneficially Owned as a
Percentage of Shares
Shares Subject to Outstanding
Shares Beneficially Options Exercisable --------------------------------
Owned as of Within 60 days of Pre-La Quinta Post-La Quinta
Name of Beneficial Owner April 15, 1998 (1) April 15, 1998 Merger Merger (2)
- ----------------------------------------------- --------------------- -------------------- --------------- ---------------
Directors and Executive Officers:
Abraham D. Gosman ............................. 1,222,404(3) 277,994 1.4% *
Donald J. Amaral .............................. 0 0 * *
William C. Baker .............................. 356,400 75,000 * *
David F. Benson ............................... 109,721(4) 90,968 * *
Nancy G. Brinker .............................. 1,500 0 * *
Edward W. Brooke .............................. 165,817(5) 72,096 * *
William G. Byrnes ............................. 5,182 0 * *
James P. Conn ................................. 2,300 0 * *
John C. Cushman, III .......................... 156,100 0 * *
C. Gerald Goldsmith ........................... 0 0 * *
J. Terrence Lanni ............................. 10,000 0 * *
Philip L. Lowe ................................ 75,700 72,096 * *
Thomas J. Magovern ............................ 56,775 48,064 * *
Gerald Tsai, Jr ............................... 57,677 48,064 * *
Michael S. Benjamin ........................... 45,285 32,043 * *
Michael F. Bushee ............................. 46,936 32,043 * *
John G. Demeritt .............................. 1,450 28,038 * *
Laurie T. Gerber .............................. 1,634 0 * *
Clifford C. Goodrich .......................... 96,227 74,000 * *
Thomas S. Robbins ............................. 17,328 13,000 * *
All Directors and current executive officers of
The Meditrust Companies as a group (17) 2,313,431(6) 748,368 2.6% 1.6%
- ----------
* 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 Shares listed as being subject to options
exercisable within 60 days of April 15, 1998.
(2) Assumes 43.2 million Shares are issued and the maximum allowable amount of
cash is elected in the La Quinta merger, which assumptions are being used
solely for illustrative purposes.
(3) Includes 194,659 Shares owned by A.M.A. Financial Corporation, of which Mr.
Gosman is President and a 98% shareholder.
(4) Does not include 120 Shares owned by Mr. Benson's children, as to which
Shares Mr. Benson disclaims any beneficial interest.
(5) Does not include 1,201 Shares owned by Mr. Brooke's wife, 2,763 Shares
owned of record by Mr. Brooke as custodian for his son and 1,321 Shares
owned of record by Mr. Brooke as trustee for his grandchildren, as to
which Shares Mr. Brooke disclaims any beneficial interest.
(6) Does not include an aggregate of 5,405 Shares owned by or for parents,
spouses or children, as to which Shares the Directors or officers disclaim
any beneficial interest.
23
Item 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Meditrust currently subleases its principal executive offices from
Continuum Care of Massachusetts, Inc. ("CCM"), which is wholly-owned by Mr.
Gosman and his two adult sons, on the same terms and conditions as CCM's lease
with its landlord. The lease provides for an average annual rental fee of
$181,776 over the initial five-year term of the lease, which expires on March
31, 1999. The lease term may be extended for an additional term of one year and
ten months. Operating currently subleases its office from Meditrust.
In April 1995, Meditrust provided $11,287,581 of financing to an affiliate
of Life Care Centers of America, Inc. ("Life Care") for the construction of a
health care facility in West Bridgewater, Massachusetts. Life Care retained CCM
to construct the facility pursuant to a turnkey development agreement in such
amount, of which approximately $561,943 remains payable under the terms of the
agreement. Final payment will occur upon the achievement of specified
performance criteria by the facility.
During 1995, 1996 and 1997, Meditrust agreed to provide mortgage and
sale/leaseback financing in the aggregate amount of $262,953,180 (of which
$206,486,473 had been funded through March 23, 1998) to entities controlled
directly or indirectly by Mr. Gosman and which are currently outstanding for
the construction and/or permanent financing of 10 health care facilities
located in Palm Beach, Florida (four facilities), Princeton, New Jersey,
Needham, Massachusetts, Dedham, Massachusetts, Park Ridge, New Jersey,
Deerfield Beach, Florida, Boynton Beach, Florida, Jensen Beach, Florida and
Bonita Springs, Florida.
During 1996 and 1997, Meditrust provided mortgage financing in the
aggregate amount of $118,475,000 (of which $92,541,251 had been funded through
January 22, 1998) to certain limited partnerships in which Mr. Gosman holds a
minority equity interest, for the construction and/or permanent financing of 13
medical office buildings in the States of Nevada, Arizona, Florida and Texas.
Mr. Gosman owns from 7.125% to 47.5% of the aggregate interests in such limited
partnerships. On January 22, 1998 and on January 30, 1998, Meditrust acquired
all of the assets of, or all of the partnership interests in, 11 of such
limited partnerships for an aggregate purchase price of $110,527,841, and
currently leases the medical office buildings directly to the occupants
thereof. As of March 23, 1998, two of such limited partnerships remained
financed by Meditrust in the aggregate amount of $36,980,000 (of which
$18,252,026 had been funded through March 23, 1998) for the construction and/or
permanent financing of two medical office buildings located in Phoenix, Arizona
and Las Vegas, Nevada.
On February 23, 1998, Meditrust entered into a letter of intent for the
construction and permanent financing of a medical office building to be located
in Morristown, New Jersey, with a committed amount of $25,695,000, with an
entity in which Mr. Gosman holds a 12% minority equity interest. This
transaction is expected to close in April 1998.
On March 4, 1998 Meditrust provided acquisition financing in the amount of
$24,228,723 to an entity in which Mr. Gosman owns a 42.5% equity interest and
Mr. Bushee owns a 2.5% equity interest, for the development of 134 acres of
land in Jupiter, Florida, $17,835,216 of which had been funded as of March 23,
1998.
Operating paid $500,000 and $250,000 to Chancellor Aviation Corporation
and Magnum Aviation Services Corporation, respectively, each of which is owned
by Mr. Gosman, in connection with certain services rendered to Meditrust in
1997.
All of the terms and conditions of the above transactions and arrangements
were approved by the disinterested Directors of Meditrust or Operating, as
applicable. Such Boards of Directors believe that Meditrust or Operating
entered into the above transactions in the ordinary course of its business, and
the terms of these transactions and arrangements are fair as to Meditrust or
Operating and were made on terms not less favorable to Meditrust or Operating
than those prevailing at the time for comparable transactions and arrangements
with other persons.
24
PART IV
Item 14.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
No financial statements have been filed as a part of this report other
than those incorporated by reference in Item 8.
2. Financial Statement Schedules Page(s)
Report of Independent Accountants
on Financial Statement Schedules.......................... 6
II. Valuation and Qualifying Accounts............ Previously filed
III. Real Estate and Accumulated Depreciation..... Previously filed
IV. Mortgage Loans on Real Estate................ Previously filed
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not required
under the related instructions, are inapplicable or have been disclosed in the
notes to consolidated financial statements, and therefore, have been omitted.
3. Exhibits
Exhibits required as part of this report are listed in the index
appearing on pages 30 through 37.
EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS
Meditrust Corporation Amended - Incorporated by reference to Exhibit 4.1 to Joint
and Restated 1995 Share Registration Statement on Form S-8 of Meditrust
Award Plan Corporation and Meditrust Operating Company
(File Nos. 333-39771 and 333-39711-01)
Meditrust Operating Company - Incorporated by reference to Exhibit 4.2 to Joint
Amended and Restated 1995 Registration Statement on Form S-8 of Meditrust
Share Award Plan Corporation and Meditrust Operating Company
(File Nos. 333-39771 and 333-39771-01)
Employment Agreement with - Incorporated by reference to Exhibit 10.1 to the
Abraham D. Gosman Form 10-Q of Meditrust for the quarter ended
March 31, 1993.
(b) Reports on Form 8-K. Santa Anita and The Meditrust Companies each filed
one report on Form 8-K during the quarter ended December 31, 1997.
(i) Santa Anita
Joint Current Report on Form 8-K, event date October 2, 1997.
(ii) Meditrust Corporation and Meditrust Operating Company. Joint
Current Report on Form 8-K, event date November 5, 1997.
25
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
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/ Laurie T. Gerber
------------------------------------------------
Laurie T. Gerber
Chief Financial Officer
(and Principal Financial and Accounting Officer)
Dated: April 30, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Name Title Date
---- ----- ----
/s/ Abraham D. Gosman Chairman of the Board of April 30, 1998
- -------------------------- Directors
Abraham D. Gosman
/s/ David F. Benson Director, President and April 30, 1998
- -------------------------- Treasurer (Principal Executive
David F. Benson Officer)
/s/ Donald J. Amaral Director April 30, 1998
- --------------------------
Donald J. Amaral
/s/ Nancy G. Brinker Director
- -------------------------- April 30, 1998
Nancy G. Brinker
/s/ Edward W. Brooke Director April 30, 1998
- --------------------------
Edward W. Brooke
/s/ William G. Byrnes Director
- --------------------------- April 30, 1998
William G. Byrnes
/s/ James P. Conn Director April 30, 1998
- --------------------------
James P. Conn
/s/ John C. Cushman, III Director April 30, 1998
- --------------------------
John C. Cushman, III
/s/ C. Gerald Goldsmith Director April 30, 1998
- --------------------------
C. Gerald Goldsmith
26
Name Title Date
---- ----- ----
/s/ Philip L. Lowe Director April 30, 1998
- --------------------------
Philip L. Lowe
/s/ Thomas J. Magovern Director April 30, 1998
- --------------------------
Thomas J. Magovern
/s/ Gerald Tsai, Jr Director April 30, 1998
- --------------------------
Gerald Tsai, Jr.
27
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
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/ Abraham D. Gosman
---------------------------------------
Abraham D. Gosman
Chairman of the Board, Chief Executive
Officer and Treasurer
Dated: April 30, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Name Title Date
---- ----- ----
/s/ Abraham D. Gosman Chairman of the Board of April 30, 1998
- -------------------------- Directors, Chief Executive
Abraham D. Gosman Officer and Treasurer (Principal
Executive, Financial and
Accounting Officer)
/s/ Donald J. Amaral Director April 30, 1998
- --------------------------
Donald J. Amaral
/s/ William C. Baker Director April 30, 1998
- --------------------------
William C. Baker
/s/ David F. Benson Director April 30, 1998
- --------------------------
David F. Benson
/s/ Nancy G. Brinker Director
- -------------------------- April 30, 1998
Nancy G. Brinker
/s/ Edward W. Brooke Director April 30, 1998
- --------------------------
Edward W. Brooke
/s/ William G. Byrnes Director
- --------------------------- April 30, 1998
William G. Byrnes
/s/ C. Gerald Goldsmith Director April 30, 1998
- --------------------------
C. Gerald Goldsmith
28
Name Title Date
---- ----- ----
/s/ Philip L. Lowe Director April 30, 1998
- --------------------------
Philip L. Lowe
/s/ Thomas J. Magovern Director April 30, 1998
- --------------------------
Thomas J. Magovern
/s/ Gerald Tsai, Jr Director April 30, 1998
- --------------------------
Gerald Tsai, Jr.
29
EXHIBITS
Exhibit
No Title Method of Filing
- ------- ----- ----------------
2.1 Third Amended and Restated Agreement and
Plan of Merger dated as of April 13,
1997, by and among Santa Anita Realty
Enterprises, Inc., Santa Anita Operating
Company, Meditrust and Meditrust
Acquisiton Company.................... Incorporated by reference to Exhibit 2.1 to the Joint
Registration Statement on Form S-3 of Santa Anita Realty
Enterprises, Inc. and Santa Anita Operating Company (File
Nos. 333-34831 and 333-34831-01)
2.2 Agreement and Plan of Merger, dated as
of January 2, 1998 by and among
La Quinta Inns, Inc., Meditrust Corporation
and Meditrust Operating Company....... Incorporated by reference to Exhibit 10.1 to the Joint
Current Report on Form 8-K of Meditrust Corporation and
Meditrust Operating Company, event date January 3, 1998
2.3 Agreement and Plan of Merger dated as of
January 11, 1998 among Meditrust
Corporation, Meditrust Operating Company
and Cobblestone Holdings, Inc......... Incorporated by reference to Exhibit 2 to the Joint Current
Report on Form 8-K of Meditrust Corporation and Meditrust
Operating Company, event date January 11, 1998
3.1 Certificate of Merger merging Meditrust
with and into Santa Anita Realty
Enterprises, Inc. filed with the
Secretary of State of Delaware on
November 5, 1997...................... Incorporated by reference to Exhibit 3.1 to the Joint
Registration Statement on Form S-3 of Meditrust Corporation
and Meditrust Operating Company (File Nos. 333-40055 and
333-40055-1)
30
Exhibit
No Title Method of Filing
- -------- ----- ----------------
3.2 Certificate of Amendment of Certificate
of Incorporation of Meditrust
Corporation filed with the Secretary of
State of Delaware on November 5, 1997... Incorporated by reference to Exhibit 3.2 to the Joint
Registration Statement on Form S-3 of Meditrust Corporation
and Meditrust Operating Company (File Nos. 333-40055 and
333-40055-1)
3.3 Certificate of Merger merging Meditrust
Acquisiton Company with and into Santa
Anita Operating Company filed with the
Secretary of State of Delaware on
November 5, 1997....................... Incorporated by reference to Exhibit 3.3 to the Joint
Registration Statement on Form S-3 of Meditrust Corporation
and Meditrust Operating Company (File Nos. 333-40055 and
333-40055-1)
3.4 Certificate of Amendment of
Certificate of Incorporation of
Meditrust Operating Company
filed with the Secretary of
State of Delaware on November 5, 1997.. Incorporated by reference to Exhibit 3.4 to the Joint
Registration Statement on Form S-3 of Meditrust Corporation
and Meditrust Operating Company (File Nos. 333-40055 and
333-40055-1)
3.5 Restated Certificate of Incorporation of
Meditrust Corporation filed with the
Secretary of State of Delaware on
March 2, 1998........................... Incorporated by reference to Exhibit 3.2 to the Joint
Registration Statement on Form S-4 of Meditrust Corporation
and Meditrust Operating Company (File Nos. 333-47737 and
333-47737-01)
3.6 Restated Certificate of Incorporation of
Meditrust Operating Company filed with
the Secretary of State of Delaware on
March 2, 1998.......................... Incorporated by reference to Exhibit 3.4 to the Joint
Registration Statement on Form S-4 of Meditrust Corporation
and Meditrust Operating Company (File Nos. 333-47737 and
333-47737-01)
31
Exhibit
No Title Method of Filing
- -------- ----- ----------------
3.7 Amended and Restated By-laws of
Meditrust Corporation................. Incorporated by reference to Exhibit 3.5 to the Joint
Registration Statement on Form S-4 of Meditrust Corporation
and Meditrust Operating Company (File Nos. 333-47737 and
333-47737-01)
3.8 Amended and Restated By-Laws of
Meditrust Operating Company........... Incorporated by reference to Exhibit 3.6 to the Joint
Registration Statement on Form S-4 of Meditrust Corporation
and Meditrust Operating Company (File Nos. 333-47737 and
333-47737-01)
4.1 Pairing Agreement by and between
Meditrust Corporation (formerly
known as Santa Anita Realty
Enterprises, Inc.) and Meditrust
Operating Company (formerly known as
Santa Anita Operating Company
dated as of December 20, 1979......... Incorporated by reference to Exhibit 5 to Joint
Registration Statement on Form 8-A of Santa Anita Operating
Company filed February 5, 1980
4.2 First Amendment to Pairing Agreement, by
and between Meditrust Corporation and
Meditrust Operating Company, dated
November 6, 1997...................... Incorporated by reference to Exhibit 4.4 to Joint
Registration Statement on Form S-8 of Meditrust Corporation
and Meditrust Operating Company (File Nos. 333-39771 and
333-39771-01
4.3 Second Amendment to Pairing Agreement,
by and between Meditrust Corporation
and Meditrust Operating Company, dated
February, 1998........................ Incorporated by reference to Exhibit 4.3 to the Joint
Registration Statement on Form S-4 of Meditrust Corporation
and Meditrust Operating Company (File Nos. 333-47737 and
333-47737-01)
32
Exhibit
No Title Method of Filing
- -------- ----- ----------------
4.4 Rights Agreement, dated June 15,
1989, among Meditrust Corporation
(formerly known as Santa Anita
Realty Enterprises, Inc.), Meditrust
Operating Company (formerly known
as Santa Anita Operating
Company), and Boston EquiServe, as
Rights Agent.......................... Incorporated by reference to Exhibit 2.1 to Joint
Registration Statement on Form 8-A of Santa Anita Realty
Enterprises, Inc., filed June 19, 1989)
4.5 Appointment of Boston EquiServe as
Rights Agreement, dated October 24,
1997.................................. Incorporated by reference to Exhibit 4.6 to Joint
Registration Statement on Form S-8 of Meditrust Corporation
and Meditrust Operating Company (File Nos. 333-39771 and
333-39771-01)
4.6 Meditrust Corporation Amended and
Restated 1995 Share Award Plan........ Incorporated by reference to Exhibit 4.1 to Joint
Registration Statement on Form S-8 of Meditrust Corporation
and Meditrust Operating Company (File Nos. 333-39771 and
333-39771-01)
4.7 Meditrust Operating Company Amended and
Restated 1995 Share Award Plan........ Incorporated by reference to Exhibit 4.2 to Joint
Registration Statement on Form S-4 of Meditrust Corporation
and Meditrust Operating Company (File Nos. 333-47737 and
333-47737-01)
33
Exhibit
No Title Method of Filing
- ------- ----- ----------------
4.8 Form of Fiscal Agency Agreement
dated November 15, 1993 between
Meditrust and Fleet National Bank
as fiscal agent.......................... Incorporated by reference to Exhibit 4.7 to Form 10-K of
Meditrust for the fiscal year ended December 31, 1993
4.9 Form of 6 7/8% Convertible
Debenture due 1998....................... Incorporated by reference to Exhibit 4.8 to Form 10-K
of Meditrust for the fiscal year ended December 31, 1993
4.10 Form of Indenture dated April 23, 1992
between Meditrust and Fleet National
Bank, as trustee ........................ Incorporated by reference to Exhibit 4 to the
Registration Statement on Form S-3 of Mediturst
(File No. 33-45979)
4.11 Form of 9% convertible Debenture
due 2002 ................................ Incorporated by reference to Exhibit 4.1 to the
Registration Statement on Form S-3 of Meditrust
(File No. 33-45979)
4.12 Form of Indenture dated March 9,
1994 between Meditrust and Shawmut
Bank as Trustee.......................... Incorporated by reference to Exhibit 4 to the Registration
Statement on Form S-3 of Meditrust (File No. 33-50835)
34
Exhibit
No Title Method of Filing
- -------- ----- ----------------
4.13 Form of 7 1/2% Convertible
Debenture due 2001..................... Incorporated by reference to Exhibit 4 to the Registration
Statement on Form S-3 of Meditrust (File No. 33-50835)
4.14 Form of Second Supplemental Indenture
dated as of July 28, 1995 between
Meditrust and Fleet National Bank, as
trustee................................ Incorporated by reference to Exhibit 4.1 to the Current
Report on Form 8-K of Meditrust dated July 27, 1995
4.15 Form of 8.54% Convertible Senior Note
due July 1, 2000...................... Incorporated by reference to Exhibit 4.1 to the Current
Report on Form 8-K of Meditrust dated July 27, 1995
4.16 Form of 8.56% Convertible Senior Note
due July 1, 2002...................... Incorporated by reference to Exhibit 4.1 to the Current
Report on Form 8-K of Meditrust dated July 27, 1995
4.17 Form of Distribution Agreement dated
August 10, 1995 between Meditrust,
Goldman, Sachs & Co. and other
underwriters relating to $200,000,000
of Medium-term Notes.................. Incorporated by reference to Exhibit 4.1 to the Current
Report on Form 8-K of Meditrust dated August 8, 1995
4.18 Form of Third Supplemental Indenture
dated as of August 10, 1995 between
Meditrust and Fleet National Bank..... Incorporated by reference to Exhibit 4.2 to the Current
Report on Form 8-K of Meditrust dated August 8, 1995
4.19 Form of Fixed Rate Senior Medium-term
Note.................................. Incorporated by reference to Exhibit 4.3 to the Current
Report on Form 8-K of Meditrust dated August 8, 1995
35
Exhibit
No Title Method of Filing
- ---------- ----- ----------------
4.20 Form of Floating Rate Medium-term
Note ................................ Incorporated by reference to Exhibit 4.4 to the Current
Report on Form 8-K of Meditrust dated August 8, 1995
4.21 Form of First Supplemental Indenture
dated as of July 26, 1995 between
Meditrust and Fleet National Bank..... Incorporated by reference to Exhibit 4.1 to the Current
Report on Form 8-K of Meditrust dated July 13, 1995
4.22 Form of 7.375% Note due July 15, 2000.. Incorporated by reference to Exhibit 4.1 to the Current
Report on Form 8-K of Meditrust dated July 13, 1995
4.23 Form of 7.60% Note due July 15, 2001.. Incorporated by reference to Exhibit 4.1 to the Current
Report on Form 8-K of Meditrust dated July 13, 1995
4.24 Form of Fourth Supplemental Indenture
dated as of September 5, 1996, between
Meditrust and Fleet National Bank .... Incorporated by reference to Exhibit 4.1 to the Current
Report on Form 8-K of Meditrust dated July 13, 1995
4.25 Form of 7.82% Note due
September 10, 2026 ................... Incorporated by reference to Exhibit 4.1 to the Current
Report on Form 8-K of Meditrust dated July 13, 1995
4.26 Form of Seventh Supplemental Indenture
dated August 12, 1997 between Meditrust
and Fleet National Bank .............. Incorporated by reference to Exhibit 4.1 to the Current Report
on Form 8-K of Meditrust dated July 13, 1995
4.27 Form of Remarketed Reset Note due
August 15, 2002 ....................... Incorporated by reference to Exhibit 4.1 to the Current Report
on Form 8-K of Meditrust dated July 13, 1995
4.28 Form of Fifth Supplemental Indenture
dated as of August 12, 1997 between
Meditrust and Fleet National Bank ..... Incorporated by reference to Exhibit 4.1 to the Current Report on
Form 8-K of Meditrust dated July 13, 1995
4.29 Form of 7% Notes due August 15, 2007 ... Incorporated by reference to Exhibit 4.1 to the Current Report on
Form 8-K of Meditrust dated July 13, 1995
4.30 Form of Sixth Supplemental Indenture
dated as of August 12, 1997 between
Meditrust and Fleet National Bank ...... Incorporated by reference to Exhibit 4.1 to the Current Report
on Form 8-K of Meditrust dated July 13, 1995
4.31 Form of 7.114% Note due
August 15, 2011 ........................ Incorporated by reference to Exhibit 4.1 to the Current Report
on Form 8-K of Meditrust dated July 13, 1995
10.1 Amended and Restated Lease Agreement
between Mediplex of Queens, Inc. and
QPH, Inc. dated December 30, 1986..... Incorporated by reference to Exhibit 2.2 to the Form 8-K of
Meditrust dated January 13, 1987
10.2 Form of Lease for Carmel, New York and
Scotia, New York facilities............ Incorporated by reference to Exhibit 10.5 to the
Registration Statement on Form S-11 (File No. 33-7483)
36
Exhibit
No Title Method of Filing
- --------- ----- ----------------
10.3 Revolving Credit Agreement dated
as of October 23, 1997 between the
Company and Via Banque................. *
10.4 Revolving Credit Agreement dated
September 15, 1997 among the
Company, various financial institutions
and Fleet National Bank, as Agent, and
Morgan Guaranty Trust Company of
New York and First Union National
Bank of North Carolina, as Co-Agents... *
11 Statement Regarding Computation of
Per Share Earnings.................... *
21 Subsidiaries of the Registrant........ *
23 Consent of Coopers & Lybrand L.L.P.... Filed herewith
27 Financial Data Schedule .............. Incorporated by reference to Exhibit 27 to
the Current Report on Form 8-K, dated
February 26, 1998
99 Consolidated Financial Statements,
Notes to Consolidated Financial Statements
and Report of Independent Accountants ... Incorporated by reference to Exhibit 99 to the Amended
Current Report on Form 8-K/A dated February 26, 1998.
* Previously filed.
37