DEF 14A: Definitive proxy statements

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SCHEDULE 14A

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

     
Filed by the registrant [X]

     
Filed by a party other than the registrant [   ]

     
Check the appropriate box:

     
[   ]  Preliminary proxy statement

     
[X]  Definitive proxy statement

     
[   ]  Definitive additional materials

     
[   ]  Soliciting material pursuant to Rule
14a-11(c) or Rule 14a-12

Payment of filing fee (Check the appropriate box):

     
[X]  No fee required.

     
[   ]  Fee computed on table below per
Exchange Act Rules 14a-6(i)(4) and 0-11.

     
(1)  Title of each class of securities to which transaction
applies:

     
(2)  Aggregate number of securities to which transaction
applies:

     
(3)  Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it was
determined):

     
(4)  Proposed maximum aggregate value of transaction:

     
(5)  Total fee paid:

     
[   ]  Fee paid previously with preliminary
materials.

     
[   ]  Check box if any part of the fee is
offset as provided by Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its
filing.

     
(1)  Amount previously paid:

     
(2)  Form, schedule or registration statement no.:

     
(3)  Filing party:

     
(4)  Date filed:

OMEGA HEALTHCARE INVESTORS, INC.

900 Victors Way, Suite 350

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To the Shareholders:

     
The Annual Meeting of Shareholders of Omega Healthcare Investors,
Inc. will be held at the offices of the Company at 900 Victors
Way, Suite 350, Ann Arbor, Michigan on Wednesday,
May 3, 2000, at 11:00 a.m., for the following purposes:

     
The nominees for election as directors are James E. Eden,
Thomas F. Franke and Bernard J. Korman, each of whom
presently is serving as a director of the Company.

     
The Board of Directors has fixed the close of business on
February 29, 2000 as the record date for the determination
of shareholders who are entitled to notice of and to vote at the
meeting or any adjournments thereof.

     
We encourage you to attend the meeting. Whether you are able to
attend or not, we urge you to indicate your vote on the enclosed
proxy card FOR the election of directors as set forth in the
attached Proxy Statement. Please sign, date and return the proxy
card promptly in the enclosed envelope. If you attend the
meeting, you may vote in person even if you previously have
mailed a proxy card.

March 31, 2000

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OMEGA HEALTHCARE INVESTORS, INC.

900 Victors Way, Suite 350

     
The accompanying proxy is solicited by the Board of Directors of
Omega Healthcare Investors, Inc. (the “Company”) to be
voted at the Annual Meeting of Shareholders to be held
May 3, 2000, and any adjournments of the meeting (the
“Annual Meeting”). It is anticipated that this proxy
material will be mailed on or about March 31, 2000 to
shareholders of record on February 29, 2000.

     
A copy of the Annual Report of the Company for the year ended
December 31, 1999, including financial statements, is
enclosed herewith. THE COMPANY WILL PROVIDE, WITHOUT CHARGE TO
ANY PERSON SOLICITED HEREBY, UPON THE WRITTEN REQUEST OF SUCH
PERSON, A COPY OF THE COMPANY’S ANNUAL REPORT ON
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1999 FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION. SUCH REQUESTS SHOULD
BE DIRECTED TO SUSAN ALLENE KOVACH, VICE PRESIDENT, GENERAL
COUNSEL AND CORPORATE SECRETARY, AT THE COMPANY’S PRINCIPAL
EXECUTIVE OFFICES.

     
A shareholder giving a proxy has the power to revoke it at any
time before it is exercised. A proxy may be revoked by filing
with the Secretary of the Company (i) a signed instrument
revoking the proxy or (ii) a duly executed proxy bearing a
later date. A proxy also may be revoked if the person executing
the proxy is present at the meeting and elects to vote in person.
If the proxy is not revoked, it will be voted by those named in
the proxy.

     
The outstanding voting securities of the Company, as of
February 29, 2000, consisted of 19,956,339 shares of common
stock, par value $.10 per share (“Common Stock”). Each
holder of record of Common Stock as of the close of business on
February 29, 2000 is entitled to notice of and to vote at
the Annual Meeting or any adjournments thereof. Each holder of
shares of Common Stock is entitled to one vote per share on all
matters properly brought before the Annual Meeting. Shareholders
are not permitted to cumulate votes for the purpose of electing
directors or otherwise.

     
Pursuant to the Company’s Articles of Incorporation, the
directors have been divided into three groups. At this
year’s Annual Meeting, three directors will be elected in
one group to hold office for a term of three years or, in each
case, until their respective successors have been duly elected
and qualified. The remaining directors shall continue in office
until their respective terms expire or until their successors
have been duly elected and qualified.

     
The nominees for election to the three positions of director to
be voted upon at this year’s annual meeting are
James E. Eden, Thomas F. Franke and Bernard J.
Korman. Unless authority to vote for the election of directors
has been specifically withheld, the persons named in the
accompanying proxy intend to vote for the election of
Messrs. Eden, Franke and Korman to hold office as directors
for a term of three years each or until their respective
successors have been duly elected and qualified. The affirmative
vote of a majority of all votes cast at the Annual Meeting is
required for the election of a director.

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If any nominee becomes unavailable for any reason (which event is
not anticipated), the shares represented by the enclosed proxy
may (unless the proxy contains instructions to the contrary) be
voted for such other person or persons as may be determined by
the holders of the proxies. In no event would the proxy be voted
for more than three nominees.

     
The following information relates to the nominees for election as
directors of the Company and the other persons whose terms as
directors continue after this meeting.

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PRINCIPAL SHAREHOLDERS

     
The Company believes that, at February 29, 2000, the
following owned beneficially more than 5% of the outstanding
shares of the Company’s Common Stock:

     
The following table sets forth certain information regarding
beneficial ownership of the Company’s Common Stock as of
February 29, 2000 (i) by each of the Company’s
directors and executive officers and (ii) by all directors
and executive officers as a group. Except as indicated in the
footnotes to this table, the persons named in the table have sole
voting and investment power with respect to all shares of Common
Stock shown as beneficially owned by them, subject to community
property laws where applicable.

The business address of all the above persons is 900 Victors Way,
Suite 350, Ann Arbor, Michigan 48108.

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DIRECTORS AND OFFICERS OF THE COMPANY

Board of Directors and Committees of the Board

     
The Board of Directors held 11 meetings during 1999. The Board of
Directors has an Audit Committee, consisting of
Messrs. Korman and Kloosterman and Ms. Darling, a
Compensation Committee, consisting of Messrs. Franke, Eden
and Greer, a Nominating Committee, consisting of
Messrs. Bailey, Lowenthal and Parker, and an Independent
Directors Committee, consisting of Ms. Darling and
Mr. Greer.

     
The Audit Committee, which met three times in 1999, selects the
Company’s independent accountants, approves the compensation
to be paid to such accountants and reports to the Board
concerning the scope of audit procedures.

     
The Compensation Committee met twice during 1999 and has
responsibility for the compensation of the Company’s key
management personnel and administration of the Company’s
Amended and Restated Stock Option and Restricted Stock Plan and
the Company’s 1993 Deferred Compensation Plan.

     
The Nominating Committee, which did not meet during 1999, reviews
suggestions of candidates for director made by directors,
shareholders, management and others, and makes recommendations to
the Board of Directors regarding the composition of the Board of
Directors and nomination of individual candidates for election
to the Board of Directors. Suggestions by shareholders for
candidates should be submitted in writing to the office of the
President, Omega Healthcare Investors, Inc., 900 Victors Way,
Suite 350, Ann Arbor, Michigan 48108.

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The Independent Directors Committee, which met four times during
1999, has responsibility for passing upon those issues with
respect to which a conflict may exist between the Company and
Omega Worldwide, Inc., including issues with respect to the
Opportunity Agreement between them and the allocation of costs
between the Company and Worldwide pursuant to the Services
Agreement between them.

Compensation Committee Report

     
The Compensation Committee (the “Committee”) is
composed of outside directors who have never served as officers
of the Company. The Committee administers the Company’s
Amended and Restated Stock Option and Restricted Stock Plan, and
1993 Deferred Compensation Plan, and has responsibility for other
incentive and benefit plans. The Committee determines the
compensation of the Company’s executive officers and reviews
with the Board of Directors all aspects of compensation for the
Company’s executive officers.

     
The policy of the Company and the guidelines followed by the
Committee provide that compensation to the Company’s
executive officers should achieve the following objectives:

     
The Company’s compensation practices embody the principle
that annual bonuses should be based primarily on achieving
Company objectives that enhance long-term shareholder value, and
that meaningful stock ownership by management, including
participation in various benefit plans providing for stock
options, restricted stock and retirement, is desirable in
aligning shareholder and management interests.

     
The Company’s approach to base compensation levels is to
offer competitive salaries in comparison with prevailing market
practices. The Committee annually examines market compensation
levels and trends. Additionally, for this purpose, the Committee
also considers the pool of executives who currently are employed
in similar positions in public companies, with emphasis on
salaries paid by real estate investment trusts.

     
The Committee evaluates executive officer salary decisions in
connection with an annual review and input from the Chief
Executive Officer. This annual review considers the
decision-making responsibilities of each position and the
experience, work performance and team-building skills of each
incumbent. The Committee views work performance as the single
most important measurement factor, followed by team-building
skills and decision-making responsibilities.

     
For executives other than the Chief Executive Officer, the
Committee gives consideration to both overall Company performance
and the performance of the specific areas of the Company under
the incumbent’s direct control. This balance supports the
accomplishment of overall objectives and rewards individual
contributions by executive officers. Individual annual bonuses
for each named executive are consistent with market practices for
positions with comparable decision-making responsibilities.

     
In determining the compensation of the Company’s Chief
Executive Officer, as well as the other Executive Officers, the
Committee takes into account various qualitative and quantitative
indicators of corporate and individual performance in
determining the level and the composition of compensation. While
the Committee considers such performance measures as growth in
assets, market capitalization, dividends, earnings and funds from
operations, the Committee does not apply any specific
quantitative formula in making compensation decisions. The
Committee also values the importance of achievements that may be
difficult to quantify and recognizes such qualitative factors.

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The compensation for Essel W. Bailey, Jr., the
Company’s Chief Executive Officer, was established at
$440,000 in January 1999, and a cash bonus for 1999
performance of $66,000 was awarded in January 2000. In addition,
in January 2000 Mr. Bailey was granted 8,516 shares of
restricted stock under the Company’s Amended and Restated
Stock Option and Restricted Stock Plan. The award vests one-half
in July 2000 and one-half in January 2001.

     
Mr. Bailey’s base salary and bonus were established in
light of his duties and the scope of his responsibilities in the
context of the policies and guidelines enumerated above. In the
Committee’s evaluation of total compensation for
Mr. Bailey, it gives appropriate weight to his leadership in
the growth of the Company’s assets, in obtaining financing
for that growth, and in accomplishing the Company’s
short-term and long-term objectives.

Compensation of Directors

     
The Company pays each non-employee director a fee of
$20,000 per year for services as a director, plus $1,500 for
services as a Committee Chairperson and $500 for attendance at a
meeting of the Board of Directors, or any Committee thereof. In
addition, the Company reimburses the directors for travel
expenses incurred in connection with their duties as directors.
Employee directors receive no compensation for service as
directors.

     
Mr. Parker, who formerly served as Chairman of the Board,
provided consulting services to the Company in 1999 in addition
to his service as a director. In his capacity as senior advisor
for the Company, Mr. Parker received $3,000 monthly.

     
Directors are eligible to participate in the Company’s
Amended and Restated Stock Option and Restricted Stock Plan. Each
non-employee director was awarded options with respect to 10,000
shares at the date the Plan was adopted or on his or her
subsequent election as a director of the Company, and each
non-employee director is to be granted an additional option grant
with respect to 1,000 shares on or after each anniversary of the
initial grant. All grants have been and are to be at an exercise
price equal to 100% of the fair market value of the
Company’s common stock on the date of the grant.
Non-employee director options vest one third after each year for
three years. Each non-employee director also is awarded annually
300 shares of restricted stock, with each such grant of
restricted stock shares vesting six months after the date of
grant.

     
In addition, a borrowing program was adopted to enable directors
and employees to borrow funds from the Company with which to
purchase shares of the Company’s common stock pursuant to
the exercise of stock options. See “Certain
Transactions,” below, for a more complete description of the
borrowing program.

Compensation of Executive Officers

     
The following table sets forth, for the years ended
December 31, 1999, 1998 and 1997, the compensation for
services in all capacities to the Company of those persons who
were at December 31, 1999 (i) the chief executive
officer and (ii) the other executive officers of the Company
whose total 1999 salary and bonus exceeded $100,000.

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Options/ SAR Grants in Last Fiscal Year

     
The following table sets forth certain information concerning
options/ SARs granted during 1999 to the named executive.

Aggregated Options/ SAR Exercises in Last Fiscal Year and
Fiscal Year-End Option/ SAR Values

     
The following table summarizes options and SARs exercised during
1999 and presents the value of unexercised options and SARs held
by the named executives at Year-End:

Long-Term Incentive Plan

     
For the period from August 14, 1992 (date of commencement of
operations of the Company) through December 31, 1999, the
company had no long-term incentive plans.

Defined Benefit or Actuarial Plan

     
For the period from August 14, 1992 (date of commencement of
operations of the Company) through December 31, 1999, the
Company had no pension plans.

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LINE GRAPH

     
THIS GRAPH REPRESENTS HISTORICAL STOCK PRICE PERFORMANCE AND IS
NOT NECESSARILY INDICATIVE OF ANY FUTURE STOCK PRICE PERFORMANCE.

     
THE REPORT OF THE COMPENSATION COMMITTEE AND THE PERFORMANCE
GRAPH THAT APPEARS ABOVE SHALL NOT BE DEEMED TO BE SOLICITING
MATERIAL OR TO BE FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES
EXCHANGE ACT OF 1934 OR INCORPORATED BY REFERENCE IN ANY DOCUMENT
SO FILED.

     
The Company leases 5,823 square feet of office space at
905 West Eisenhower Circle, Suite 110, Ann Arbor,
Michigan 48103, from Circle Partners, a general partnership whose
general partners are Essel W. Bailey, Jr., President and Chief
Executive Officer of the Company, and Thomas F. Franke, a
director of the Company. During 1998, the Company moved its
principal executive offices to 900 Victors Way, Suite 350,
Ann Arbor, Michigan 48108 and entered into a sublease agreement
with respect to 1,900 square feet of the Eisenhower space on
December 14, 1998. The Company entered into a second
sublease agreement with respect to an additional 3,000 square
feet of the Eisenhower space in July, 1999. The current lease
expires, concurrently with the expiration of the subleases, on
October 31, 2000. Rent payments totaling $104,057 were made
to Circle Partners in 1999. Current annual rent income on the
subleases is $78,611.

     
In November, 1997 the Company formed Omega Worldwide, Inc., a
company which, among other things, furnishes asset management
services and management advisory services to firms extending
financing to providers of healthcare services, particularly
healthcare services to the elderly, throughout the world. On
April 2, 1998, the Company contributed substantially all of
its investment in Principal Healthcare Finance Limited
(“Principal”) to Worldwide in exchange for
8,500,000 shares of Worldwide Common Stock and

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The Company and Worldwide have entered into an Opportunity
Agreement to provide each other with rights to participate in
certain transactions and make certain investments. The
Opportunity Agreement provides, subject to certain terms, that,
regardless of whether the following kinds of investments (each a
“REIT Opportunity”) first come to the attention of the
Company or Worldwide, the Company will have the right to: make
any investment within the United States (a) in real estate,
real estate mortgages, real estate derivatives or entities that
invest exclusively in or have a substantial portion of their
assets in any of the foregoing, so long as the Company’s
REIT status would not be jeopardized by the investment; and
(b) that, if made by a REIT, would not result in the
termination of the REIT’s status as a REIT under
Sections 856 through 860 of the Internal Revenue Code
(“Code”). However, Worldwide will have the right,
regardless of whether the following kinds of investments (each a
“Worldwide Opportunity”) first come to the attention of
the Company or Worldwide, to: (a) provide advisory services
and/or management services to any healthcare investors, wherever
located; (b) acquire or make debt and/or equity investments
(through a joint venture or otherwise) in any healthcare
investor or in healthcare real estate-related assets outside the
United States: (c) make investments in any entity conducting
healthcare operations; and (d) make any other real estate,
finance or other investments not customarily undertaken by a
qualified REIT. If Worldwide declines to pursue a Worldwide
Opportunity, it must offer that opportunity to the Company, and
if the Company declines to pursue a REIT Opportunity, it must
offer that opportunity to Worldwide. Each of the Company and
Worldwide may participate, in its discretion, in any REIT
Opportunity or Worldwide Opportunity that the other requests be
pursued jointly. The terms upon which each of the Company and
Worldwide elect to participate in such an opportunity will be
negotiated in good faith and must be mutually acceptable to the
respective boards of directors of the Company and Worldwide, with
the affirmative votes of the independent directors of the boards
of directors of the Company and Worldwide. Each of the Company
and Worldwide has agreed to notify the other of and make
available to the other investment opportunities developed by such
party or of which such party becomes aware but is unable or
unwilling to pursue. The Opportunity Agreement has a term of ten
years and automatically renews for successive five-year terms
unless terminated. In response to an opportunity offered to the
Company by Worldwide, the Company acquired the equivalent of up
to 9.9% of the common shares of Principal Healthcare Finance
Trust (“the Trust”), an Australian unit trust, which
owns 40 nursing home facilities and 475 assisted living units in
New South Wales.

     
The Company and Worldwide have entered into a Services Agreement
pursuant to which the Company provides shared management and
other employees, office space and administrative services to
Worldwide. Worldwide reimburses the Company quarterly for a
portion of the Company’s overhead expenses such as rent,
compensation and utilities, based on a formula determined by
dividing the value of the assets managed by Worldwide at the end
of each fiscal quarter by the sum of the value of the assets of
Worldwide and assets managed by the Company at the end of each
fiscal quarter. During the year ended December 31, 1999,
indirect costs allocated to Worldwide under the Services
Agreement totaled $754,000.

     
The Company has invested approximately $1,615,000 in Principal
Healthcare Finance Limited (“Principal”) as of
December 31, 1999. As of that date, Principal owns and
leases 235 nursing homes in the British Isles. Essel W. Bailey,
Jr., Chairman, President and Chief Executive Officer of the
Company, and Company directors Thomas F. Franke, Harold J.
Kloosterman, Bernard J. Korman and Robert L. Parker, have
invested in the aggregate, directly or indirectly, $2,170,000 in
Principal.

     
On January 14, 1998, the Board of Directors adopted a
program (the “Borrowing Program”) pursuant to which the
Company has agreed to lend funds to employees and directors to
enable them to purchase the Company’s common stock through
the exercise of stock options. The goal of the Borrowing Program
is to increase ownership of the Company’s common stock by
employees and directors, and, as a result, to foster a

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The aggregate outstanding principal balance of loans made under
the Borrowing Program to employees who are not directors or
executive officers is $168,963. On December 1, 1999, as
payment in full for his promissory note in the amount of $296,189
executed under the Borrowing Program, F. Scott Kellman, the
Company’s Chief Operating Officer, tendered to the Company
18,157 shares of common stock in the Company.

     
The Board of Directors has approved amended and restated Change
of Control Agreements between the Company and its executive
officers. Each Change of Control Agreement provides that the
Company will pay to the applicable executive officer as a
termination payment a lump sum amount equal to three times (five
times solely as to Mr. Bailey) the executive officer’s
total annual compensation (salary, cash bonus, and value of
restricted stock grant, whether or not vested) for the most
recent year if a change of control of the Company occurs and
within three (3) years after the change of control either
(i) the Company terminates, without cause, the employment of
an executive officer who, at the time of the change of control,
has been employed by the Company for at least two years, or
(ii) the executive officer who has been employed by the
Company for at least two years at the time of the change in
control terminates his or her employment for good reason.
“Good reason” is defined to include diminution in the
officer’s position or duties, reduction in compensation or
benefits, relocation of the Company’s headquarters or the
officer’s place of employment to more than fifty miles away,
or the expiration of 180 days following the occurrence of a
change in control. For three years following such termination of
employment, an executive officer also will be entitled to other
employee benefits substantially similar to those in effect at the
time of the executive officer’s termination. In addition,
the agreements provide that if any of the payments or benefits
received by the officer pursuant to the Change of Control
Agreement or pursuant to any other arrangement with the Company
are “parachute payments” that

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The Board of Directors has approved an amendment to the
Company’s 1993 Amended and Restated Stock Option and
Restricted Stock Plan. The amendment provides for immediate
vesting of all stock options and restricted stock (except for
certain grants that vest based on the performance of the
Company’s common stock price) upon the occurrence of a
change in control. The amendment also clarifies that the
Compensation Committee may accelerate the vesting of stock
options or restricted stock if a participant’s employment is
terminated.

     
On December 30, 1998, the Company made a $6,000,000 loan to
Oakwood Living Centers of Massachusetts, Inc., an affiliate of
Oakwood Living Centers, Inc., of which James E. Eden, a
director of the Company, also is Chairman and Chief Executive
Officer. The loan is secured by a second mortgage lien on six
skilled nursing facilities located in Massachusetts, bears
interest at 14% per annum and currently is past due. The Company
believes that the loan is adequately secured and is evaluating
its remedies.

     
On December 2, 1999, the Company accelerated the expiration
of stock options previously granted to certain officers and
employees upon payment of amounts determined by the Compensation
Committee to be appropriate based upon utilization of the
Black-Scholes methodology of valuing stock options. The Company
paid a total of $38,000 to twenty-two employees who were holders
of options for 431,830 shares, including the following amounts
paid to certain executive officers in connection therewith: