Form: DEF 14A

Definitive proxy statements

March 31, 2000

DEF 14A: Definitive proxy statements

Published on March 31, 2000








Table of Contents



SCHEDULE 14A


(Rule 14a-101)



INFORMATION REQUIRED IN PROXY STATEMENT


SCHEDULE 14A INFORMATION


Proxy Statement Pursuant to Section 14(a) of the Securities




Exchange Act of 1934 (Amendment No.  )


     
Filed by the registrant [X]

     
Filed by a party other than the registrant [   ]

     
Check the appropriate box:

     
[   ]  Preliminary proxy statement















  [    ] 
Confidential, for Use of the Commission Only (as permitted by
Rule  14a-6(e)(2))


     
[X]  Definitive proxy statement

     
[   ]  Definitive additional materials

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


OMEGA HEALTHCARE INVESTORS, INC.







(Name of Registrant as Specified in Its Charter)












(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)



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:





























PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
VOTING SECURITIES
PROPOSAL 1 -- ELECTION OF DIRECTORS
COMPARISON OF CUMULATIVE TOTAL RETURN*
CERTAIN TRANSACTIONS






OMEGA HEALTHCARE INVESTORS, INC.


900 Victors Way, Suite 350


Ann Arbor, Michigan 48108



(734) 887-0200


NOTICE OF ANNUAL MEETING OF SHAREHOLDERS


May 3, 2000



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:



























  1. 
To elect three members of the Board of Directors;
 
  2. 
To transact such other business as may properly come before the
meeting or any adjournment thereof.


     
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.





























 
By order of the Board of Directors
 
 
SUSAN ALLENE KOVACH
 
Corporate Secretary



March 31, 2000


Ann Arbor, Michigan





Table of Contents



OMEGA HEALTHCARE INVESTORS, INC.


900 Victors Way, Suite 350


Ann Arbor, Michigan 48108



(734) 887-0200








PROXY STATEMENT



FOR



ANNUAL MEETING OF SHAREHOLDERS



May 3, 2000


     
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.







VOTING SECURITIES


     
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.







PROPOSAL 1 — ELECTION OF DIRECTORS


     
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.





Table of Contents



     
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.






















































































                     
Year First Expiration
Became a of Term as
Directors Director Business Experience During Past 5 Years Director





Essel W. Bailey (55)
1992
Mr. Bailey has been President and Chief Executive Officer of the
Company since its formation in 1992 and Chairman of the Company
since July 1995. Prior to forming Omega, Mr. Bailey was a
Managing Director of Omega Capital, a healthcare investment
partnership, from 1986 to 1992. Mr. Bailey currently is a
Director, President and Chief Executive Officer of Omega
Worldwide, Inc. (“Worldwide”), a NASDAQ listed company
that provides investment advisory services and holds equity and
debt interests in companies engaged in providing sale/leaseback
financing to healthcare service providers throughout the world.
He also is a director of Principal Healthcare Finance Limited
(“Principal”), a company that finances healthcare
facilities in the United Kingdom; and Principal Healthcare
Finance Trust, an Australian unit trust that is wholly owned by
Worldwide and that finances healthcare facilities in Australia.
Mr. Bailey was formerly a director of Evergreen Healthcare,
Inc., which was a NYSE listed company engaged in the operation of
long-term healthcare facilities, and of Vitalink Pharmacy
Services, Inc., a NYSE listed company operating institutional
pharmacies serving the long-term care industry in the United
States.
2002



Martha A. Darling (55)
1998
Ms. Darling is a graduate of Reed College and the Woodrow Wilson
School at Princeton University. She currently serves as a
consultant to non-profit organizations. She has worked in
political economics and strategic planning and most recently was
Senior Manager of the Commercial Airplane Group at The Boeing
Company in Seattle, Washington, where she also served as Board
Vice President of King County’s Harborview Medical Center.
Her career has included roles in strategic planning for Seattle
First National Bank, 3 1/2  years as Legislative
Assistant to U.S. Senator Bill Bradley, with responsibility for
the Finance Committee, and one year as a White House Fellow
serving at the U.S. Department of Treasury as Executive Assistant
to Secretary W. Michael Blumenthal.
2002



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Year First Expiration
Became a of Term as
Directors Director Business Experience During Past 5 Years Director





James E. Eden (62)
1993
Mr. Eden is President of Eden & Associates, Inc. which
provides consulting and management oversight services to the
senior housing and healthcare industries. He is also Chairman and
principal owner of Senior Living Properties, LLC which owns 88
licensed nursing homes and assisted living facilities in Illinois
and Texas, and serves as Chairman and Chief Executive Officer of
Oakwood Living Centers, Inc., which owns seven licensed nursing
homes in Massachusetts and Virginia. From 1976 to 1992, he held
various positions in healthcare, ultimately serving as Executive
Vice President of Marriott Corporation and General Manager of its
Senior Living Services Division. Mr. Eden is also a
director of United Vanguard Homes, the Alliance for Aging
Research, Peak Medical Corporation, Hearthstone Assisted Living,
and Omega Worldwide, Inc.
2000



Thomas F. Franke (70)
1992
Mr. Franke is Chairman and principal owner of Cambridge Partners,
Inc., an owner, developer and manager of multifamily housing in
Grand Rapids and Ann Arbor, Michigan. He also is the principal
owner of private healthcare firms operating in the United States
and the United Kingdom and a private hotel firm in the United
Kingdom. Mr. Franke is a director of Principal Healthcare
Finance Limited and Omega Worldwide, Inc.
2000



Henry H. Greer (62)
1998
Mr. Greer was President and Chief Operating Officer of SEI
Investments (NASDAQ:SEIC), a leading provider of software and
processing services to bank trust departments and provider of
mutual fund services to banks, insurance and investment firms,
from 1990 to 1999, when he retired. Mr. Greer held senior
management positions in leading financial services and technology
companies for more than twenty-five years prior to joining SEI
Investments, including positions at IBM and AutEx, a provider of
financial and technology services to the brokerage and
institutional investor community, where he was President and
Chief Operating Officer. Mr. Greer is a director of SEI
Investments and Astea International. Mr. Greer is a graduate
of Dartmouth College.
2001



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Year First Expiration
Became a of Term as
Directors Director Business Experience During Past 5 Years Director





Harold J. Kloosterman (58)
1992
Mr. Kloosterman was formerly a Managing Director of Omega Capital
from 1986 to 1992. He is a director of Omega Worldwide, Inc. Mr.
Kloosterman has been involved in the acquisition, development
and management of commercial and multifamily properties since
1978. He has been a senior officer of LaSalle Partners, Inc., and
in 1985 he formed Cambridge Partners, Inc., where he serves as
President. At Cambridge, he has been involved in the development
and management of commercial, apartment and condominium projects
in Grand Rapids and Ann Arbor, Michigan and in the Chicago area.
2002



Bernard J. Korman (68)
1993
Mr. Korman is Chairman of the Board of Trustees of Philadelphia
Health Care Trust, a private healthcare foundation, and Chairman
of the Board of NutraMax Products, Inc., a public consumer
healthcare products company. He formerly was President, Chief
Executive Officer and Director of MEDIQ Incorporated (healthcare
services) from 1977 to 1995. Mr. Korman also is a director of the
following public companies: The New America High Income Fund
(financial services), The Pep Boys, Inc. (auto supplies), Kranzco
Realty Trust (real estate investment trust), and NutraMax
Products, Inc. (consumer healthcare products) and Omega
Worldwide, Inc.
2000



Edward Lowenthal (55)
1995
Mr. Lowenthal is President and Chief Executive Officer of
Wellsford Real Properties, Inc. (AMEX:WRP), a real estate
merchant bank, and was President of the predecessor of Wellsford
Residential Properties Trust since 1992. Mr.  Lowenthal also
serves as director of Corporate Renaissance Group, Inc., a
mutual fund; Equity Residential Properties Trust; Great Lakes
REIT; and Omega Worldwide, Inc.
2001



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Year First Expiration
Became a of Term as
Directors Director Business Experience During Past 5 Years Director





Robert L. Parker (65)
1992
Mr. Parker is a Consultant to, and formerly was Chairman of, the
Company from March 1992 to 1995. He was a Managing Director
of Omega Capital from 1986 to 1992. From 1972 through 1983,
Mr. Parker was a senior officer of Beverly Enterprises, the
largest operator of long-term care facilities in the United
States. At the time of his retirement in 1983, Mr. Parker
was Executive Vice President of Beverly Enterprises.
Mr. Parker is a registered architect, and is licensed in
California and Oklahoma. Mr. Parker served as a director of
GranCare, Inc., a public company engaged in the operation of
long-term care facilities from 1995 to 1997, and of Vitalink
Pharmacy Services, Inc., a publicly traded institutional
pharmacy, during 1997. Mr. Parker has served as director of
Principal Healthcare Finance Limited since 1995 and of First
National Bank of Bethany, Oklahoma and is Chairman of the Board
of Directors of Omega Worldwide, Inc.
2001



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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:
















































































































                 
Number of
Shares of
Common Stock
Beneficially Percent
Beneficial Owner Owned of Class




Merrill Lynch & Co., Inc.

(On behalf of Merrill Lynch Asset Management Group)
1,136,750 5.42%

World Financial Center, North Tower

250 Vesey Street

New York, NY 10381



     
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.

































































































































































































































































                 
Number of
Shares of
Common Stock
Beneficially Percent
Beneficial Owner Owned of Class




Essel W. Bailey, Jr. 
353,122 (1)(2) 1.77%



James P. Flaherty
13,903 (3) *



F. Scott Kellman
57,516 (4) 0.29%



Susan A. Kovach
23,506 (5) 0.12%



Laurence D. Rich
21,874 (6) .11%



David A. Stover
81,128 (7)(8) 0.41%



Martha A. Darling
4,566 (9) *



James E. Eden
14,501 (10) *



Thomas F. Franke
48,276 (10)(11) 0.24%



Henry H. Greer
900 (15) *



Harold J. Kloosterman
48,226 (10)(12) 0.24%



Bernard J. Korman
325,500 (15) 1.63%



Edward Lowenthal
11,299 (13) *



Robert L. Parker
97,025 (14) 0.49%



Directors and executive officers as a group (14 persons)
1,101,342 5.51%









*  Less than 0.10%



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





































  (1) 
Includes shares owned jointly by Mr. Bailey and his wife,
plus 7,755 shares held solely in Mrs. Bailey’s name.
Mr. Bailey disclaims any beneficial interest in the shares
held solely by Mrs. Bailey.
 
  (2) 
Includes stock options that are currently exercisable within
60 days to acquire 31,667 shares, and 75,539 unvested shares
of Restricted Stock, of which 63,321 shares, 8,516 shares, 2,327
shares and 1,375 shares were granted in February of 2000,
January of 2000, January of 1999, and December of 1997,
respectively.
 
  (3) 
Includes 3,030 unvested shares of Restricted Stock, of which
1,380 shares and 1,650 shares were granted in January of 1999 and
December of 1997, respectively.


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  (4) 
Includes 44,412 unvested shares of Restricted Stock, of which
35,258 shares, 7,097 shares, 1,294 shares and 763 shares were
granted in February 2000, January 2000,
January 1999, and December 1997, respectively.
 
  (5) 
Includes 22,577 unvested shares of Restricted Stock of which
18,708 shares, 3,355 shares and 514 shares were granted in
February  2000, January 2000 and January 1999
respectively.
 
  (6) 
Includes 21,247 unvested shares of Restricted Stock, of which
17,269 shares, 3,548 shares and 430 shares were granted in
February  2000, January 2000, and January 1999,
respectively.
 
  (7) 
Includes shares owned jointly by Mr. Stover and his wife,
plus 931 shares held solely in Mrs. Stover’s name.
 
  (8) 
Includes 39,862 unvested shares of Restricted Stock, of which
31,444 shares, 6,129 shares, 1,464 shares and 825 shares were
granted in February 2000, January 2000,
January 1999, and December 1997, respectively.
 
  (9) 
Includes stock options that currently are exercisable within
60 days to acquire 3,666 shares and 300 unvested shares of
Restricted Stock granted in January 2000.




























































(10) 
Includes stock options that currently are exercisable within
60 days to acquire 1,001 shares and 300 unvested shares of
Restricted Stock granted in January 2000.
 
(11) 
Includes 34,675 shares owned by a family limited liability
company (Franke Family LLC) of which Mr. Franke is a Member.
 
(12) 
Includes shares owned jointly by Mr. Kloosterman and his
wife, and 23,269 shares held solely in
Mrs. Kloosterman’s name.
 
(13) 
Includes 1,000 shares held in a private profit sharing plan for
the benefit of Mr. Lowenthal and 300 unvested shares of
Restricted Stock granted in January 2000.
 
(14) 
Includes 3,393 shares owned by a private pension plan for
Mr. Parker’s benefit and 3,000 shares owned by a trust
of which Mr. Parker is sole trustee. Also includes stock
options that currently are exercisable within 60 days to
acquire 1,001 shares and 300 unvested shares of Restricted Stock
granted in January 2000.
 
(15) 
Includes 300 unvested shares of Restricted Stock granted in
January 2000.


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:

























































  1) 
Assist the Company in attracting and retaining talented and
well-qualified executives.
 
  2) 
Reward performance and initiative.
 
  3) 
Be competitive with other healthcare real estate investment
trusts.
 
  4) 
Be significantly related to accomplishments and the
Company’s short-term and long-term successes, particularly
measured in terms of growth in Funds from Operations.
 
  5) 
Encourage executives to achieve meaningful levels of ownership of
the Company’s stock.


     
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 Committee of the Board
 
 
Thomas F. Franke, Chairman
 
James E. Eden
 
Henry H. Greer


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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Other Restricted Securities All
Annual Stock Underlying LTIP Other
Name and Compensation Award(s) Options/ Payouts Compensation
Principal Position Year Salary($) Bonus($) ($)(1) ($) SARs(#) ($) ($)(2)










Essel W. Bailey, Jr. 
1999 440,000 66,000 185,897(3 ) 50,000 (85,229 )

Chairman, President
1998 420,000 75,000 152,865(3 ) 252,043

and CEO
1997 400,000 60,000 139,027(3 ) 105,000 109,272



F. Scott Kellman
1999 245,000 55,000 122,140(4 ) 27,500 (19,559 )

Chief Operating
1998 236,000 65,000 102,311(4 ) 37,092

Officer
1997 220,000 35,000 82,701(4 ) 62,500 65,375



Susan A. Kovach
1999 130,000 26,000 20,793(5 ) 17,500 9,385

Vice President,
1998 120,000 15,000 7,788(5 ) 1,800

Secretary and General Counsel
1997 10,000 20,000



Laurence D. Rich
1999 120,000 27,500 13,749(6 ) 15,000 9,330

Vice President of Acquisitions



David S. Stover
1999 218,500 47,500 113,098(7 ) 27,500 9,644

Vice President and
1998 210,000 55,000 90,944(7 ) 30,910

Chief Financial Officer
1997 195,000 30,000 68,817(7 ) 62,500 50,941















































(1) 
“Other Annual Compensation” includes the aggregate of
perquisites and other personal benefits, securities or properties
that exceed 10% of salary and bonus of each named executive.
 
(2) 
Consists of Company contributions to its 401(k) Profit-Sharing
Plan and provisions for each participant (or reversal of prior
year provisions) under the Company’s 1993 Deferred
Compensation Plan, except as follows: with respect to
Mr. Bailey, such amount includes $219,525 for 1998 from the
settlement of the Directors’ Retirement Plan in 1998; with
respect to Mr. Kellman, such amount includes a payment in
1999 of $8,036 in consideration of acceleration of certain
options (see “Certain Transactions”); with respect to
Ms. Kovach, such amount includes a payment in 1999 of $3,325
in consideration of acceleration of certain options; with
respect to Mr. Rich, such amount includes a payment in 1999
of $2,700 in consideration of acceleration of certain options;
and with respect to Mr. Stover, such amount includes a
payment in 1999 of $7,562 in consideration of acceleration of
certain options.
 
(3) 
On January 31, 2000, January 4, 1999 and
December 19, 1997, Mr. Bailey was awarded 8,516 shares,
4,655 shares, and 5,500 shares, respectively, of restricted
common stock of the Company. The fair value of each award, based
on the market prices of the common stock at the date of award,
was $66,000, $140,500, and $203,500 for the awards with respect
to 2000, 1999, and 1997, respectively. With respect to the 2000
grant, one-half of the shares are to be released 180 days
following the grant date, with the balance to be released on the
anniversary of the grant. With respect to the 1999 and 1997
grants, one-quarter of the shares were released 180 days
following the grant date, with the balance to be released 25% per
year on the anniversary of the grant in each of the following
three years. Pursuant to the Plan, the recipient receives
dividends on unvested shares. The number of unreleased shares and
value of Mr. Bailey’s restricted stock awards as of
the end of last year were 6,948 shares and $88,153, of which
3,246 shares were released in January 2000.
 
(4) 
On January 31, 2000, January 4, 1999 and
December 19, 1997, Mr. Kellman was awarded 7,097
shares, 2,590 shares, and 3,050 shares, respectively, of
restricted common stock of the Company. The fair value of each
award, based on the market prices of the common stock at the date
of award, was $55,000, $78,200, and $112,850 for the awards with
respect to 2000, 1999, and 1997, respectively. With respect to
the 2000 grant, one-half of the shares are to be released
180 days following the grant date, with the balance to be
released on the anniversary of the grant. With respect to the
1999 and 1997 grants, one-quarter of the shares were released
180 days following the grant date, with the balance to be
released 25% per year on the anniversary of the grant in each of
the following three years. Pursuant to the Plan, the recipient
receives dividends on unvested shares. The number of shares and
value of Mr.  Kellman’s


10




Table of Contents











































restricted stock awards as of the end of last year were 4,223
shares and $53,579 of which 2,166 shares were released in
January 2000.
 
(5) 
On January 31, 2000 and January 4, 1999,
Ms. Kovach was awarded 3,355 shares and 1,030 shares,
respectively, of restricted common stock of the Company. The fair
value of each award, based on the market prices of common stock
at the date of the award, was $26,000 and $31,100 for the awards
with respect to 2000 and 1999, respectively. With respect to the
2000 grant, one-half of the shares are to be released
180 days following the grant date, with the balance to be
released on the anniversary of the grant. With respect to the
1999 grant, one-quarter of the shares were released 180 days
following the grant date, with the balance to be released 25%
per year on the anniversary of the grant in each of the following
three years. Pursuant to the Plan, the recipient receives
dividends on unvested shares. The number of unreleased shares and
value of Ms. Kovach’s restricted stock awards at the
end of last year were 772 shares and $9,795, of which 258 shares
were released in January 2000.
 
(6) 
On January 31, 2000 Mr. Rich was awarded 3,548 shares
of restricted common stock of the Company. The fair value of the
award, based on the market price of common stock on the date of
the award, was $27,500. With respect to this grant, one-half of
the shares are to be released 180 days following the grant
date, with the balance to be released on the anniversary of the
grant. Pursuant to the Plan, the recipient receives dividends on
unvested shares. The number of unreleased shares and value of
Mr. Rich’s restricted stock awards at the end of last
year were 646 shares and $8,196 from a 1999 grant awarded before
Mr. Rich became an officer, of which 216 shares were
released in January 2000.
 
(7) 
On January 31, 2000, January 4, 1999 and
December 19, 1997, Mr. Stover was awarded 6,129 shares,
2,930 shares, and 3,300 shares, respectively, of restricted
common stock of the Company. The fair value of each award, based
on the market prices of the common stock at the date of award,
was $47,500, $88,400, and $122,100, for the award in 2000, 1999,
and 1997, respectively. With respect to the 2000 grant, one-half
of the shares are to be released 180 days following the
grant date, with the balance to be released on the anniversary of
the grant. With respect to the 1999 and 1997 grants, one-quarter
of the shares were released 180 days following the grant
date, with the balance to be released 25% per year on the
anniversary of the grant in each of the following three years.
Pursuant to the Plan, the recipient receives dividends on
unvested shares. The number of shares and value of
Mr. Stover’s restricted stock awards as of the end of
last year were 4,209 shares and $53,402, of which 1,920 shares
were released in January 2000.


11




Table of Contents



Options/ SAR Grants in Last Fiscal Year

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




















































































































































































































                                                         
Individual Grants(1) Potential Realizable

Value at Assumed
Number of % of Total Annual Rates of Stock
Securities Options/SARs Exercise Price Appreciation for Grant
Underlying Granted to or Base
Date
Options/SAR Employees in Price Expiration Option Term Present
Name Granted Fiscal Year ($/Share) Date(2) 5%($)(3) 10%($)(3) Value($)(4)









Essel W. Bailey, Jr
50,000 19.34% 30.188 1/4/09 1,063,886 2,771,067 N/A















































(1) 
During 1999, the Company offered certain holders of options the
opportunity to accelerate the expiration date of options in
consideration of a cash payment of 11 cents per share for the
1999 grant. Options that were granted during 1999 to officers and
were canceled pursuant to this arrangement are as follows:
Mr. Stover 27,500 shares, Mr. Kellman 27,500 shares,
Mr. Flaherty 22,500 shares, Ms. Kovach 17,500 shares,
and Mr. Rich 15,000 shares. See “Certain
Transactions.”
 
(2) 
Incentive stock options expire 10 years from the date of
grant (January 4, 2009), while non-qualified options expire
11 years after date of grant (January 4, 2010).
 
(3) 
The assumed annual rates of appreciation of 5% and 10% would
result in the price of the Company’s stock increasing, at
the expiration date of the options, to $49.18 and $51.63 for the
incentive stock and non-qualified stock, respectively, and $78.30
and $86.13 for the incentive stock and non-qualified stock,
respectively.
 
(4) 
The Company does not elect to provide grant date present value as
an alternative to disclosing potential realizable value.


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:




































































































































































































































                                 
Number of Securities In-the-Money
Underlying Unexercised Options/SARs
Shares Options/SARs at at Fiscal
Acquired on Value Fiscal Year-End(#) Year-End($)
Exercise Realized Unexercisable(U) Unexercisable(U)
Name (#) ($) Exercisable(E) Exercisable(E)






Essel W. Bailey, Jr
-0- -0- 85,000 (U) 0 (U)
128,720 (E) 0 (E)



F. Scott Kellman
-0- -0- 0 (U) 0 (U)
27,880 (E) 0 (E)



David A. Stover
-0- -0- 0 (U) 0 (U)
15,936 (E) 0 (E)



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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Table of Contents









COMPARISON OF CUMULATIVE TOTAL RETURN*















Among: 
Omega Healthcare Investors, Inc.



All REIT Index**



S&P 500 Index



LINE GRAPH
























































































































































































































































































































                         
OHI INDEX ALL REITs S&P INDEX




12/31/95
100 100 100

3/31/96
137 103 105

6/30/96
135 107 110

9/30/96
151 114 113

12/31/96
173 136 123

3/31/97
166 136 126

6/30/97
177 144 148

9/30/97
200 160 159

12/31/97
220 161 164

3/31/98
238 160 187

6/30/98
218 153 193

9/30/98
208 136 174

12/31/98
196 131 211

3/31/99
154 124 221

6/30/99
177 137 237

9/30/99
149 125 222

12/31/99
94 123 255

































 * 
Total return assumes reinvestment of dividends.
 
** 
The All REIT Index is published by National Association of Real
Estate Investment Trusts, Inc. (“NAREIT”), Washington,
D.C. It is comprised of all REITs traded on the New York Stock
Exchange, the American Stock Exchange and NASDAQ National Market
System. A list of those REITs is available by request to the
Company or NAREIT.


     
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.







CERTAIN TRANSACTIONS


     
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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260,000 shares of Series B preferred stock. Of the 8,500,000
shares of Worldwide received by the Company, approximately
5,200,000 were distributed on April 2, 1998 to the
shareholders of the Company on the basis of one Worldwide share
for every 3.77 common shares of the Company held by shareholders
of the Company on February 1, 1998. Of the remaining
3,300,000 shares of Worldwide received by the Company, 2,300,000
shares were sold by the Company on April 3, 1998 for net
proceeds of approximately $16,250,000 in a secondary offering
pursuant to a registration statement of Worldwide. The market
value of the distribution to shareholders approximated
$39 million or $1.99 per share.


     
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

14




Table of Contents




proprietary feeling among employees and directors and to further
align the interests of employees and directors with those of the
Company’s other shareholders. The maximum amount that an
employee may borrow under the Borrowing Program depends upon the
employee’s salary level, with the maximum loan amount for
employees at the lower end of the salary range being $20,000, and
the maximum loan amount for employees at the upper end of the
salary range being $300,000. The maximum loan amount for
directors is $300,000. Each loan bears interest at the
Company’s borrowing cost, as determined by the
Company’s management in its sole discretion. Interest is
payable quarterly, and all principal and accrued and unpaid
interest is due five years from the date of the loan. Upon
receipt by an employee of a cash bonus from the Company, the
employee is obligated to make a principal reduction payment equal
to 10% of the amount of the net cash bonus. The loans are
secured by pledges of the stock purchased with the proceeds of
the loans. The Board of Directors has amended the Borrowing
Program to provide that, upon the occurrence of a change in
control, employees who are not directors are permitted to repay
the balance of loans made prior to March 20, 2000 in full
prior to December 31, 2000 by tendering their pledged shares
of Company stock. In such case, the loan will be deemed
satisfied regardless of whether the pledged shares have a market
value less than the outstanding loan balance. If an employee does
not want to surrender the Company stock, the loan may continue.
In that case, during the repayment period, the employee may
prepay the outstanding loan balance by tendering shares of
Company stock with a market value equal to the outstanding loan
balance. As long as a loan is not in default, the borrower may
vote the shares purchased and is entitled to receive all
dividends paid on the shares. At December 31, 1999, the
following loans were outstanding to executive officers and
non-employee directors:







































































































         
Name of Director
or Executive Officer Amount Borrowed



Essel W. Bailey, Jr.
$ 195,707



James E. Eden
$ 262,587



James P. Flaherty
$ 262,632



Thomas F. Franke
$ 262,587



Harold J. Kloosterman
$ 262,587



Bernard J. Korman
$ 300,000



Edward Lowenthal
$ 187,472



Robert L. Parker
$ 299,955



David A. Stover
$ 296,847



     
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

15




Table of Contents




are subject to an excise tax, the Company will pay the officer
such additional amount as is necessary to put the officer in the
same after-tax position as if no excise tax were imposed. In the
event of a dispute regarding the Change of Control Agreement, the
Company is required to pay the officer’s costs of
litigation.


     
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:












































































































                 
No. of Options
Accelerated and
Executive Officer Canceled Payment




James P. Flaherty
74,167 $ 6,408



F. Scott Kellman
88,963 $ 8,036



Susan A. Kovach
37,500 $ 3,325



Laurence D. Rich
30,000 $ 2,700



David A. Stover
84,653 $ 7,562



     
In connection with the 1994 relocation of F. Scott Kellman, Chief
Operating Officer, from the Philadelphia metropolitan area to
Ann Arbor, Michigan, the Company loaned him $220,000 to enable
him to purchase a home in Ann Arbor, all of which has been repaid
except $62,000. The loan is secured by a lien on
Mr. Kellman’s residence, and bears interest at 7.05%
per annum. Interest is payable monthly, and principal
installments are payable annually.

     
Finally, in connection with the Company’s acquisition of
facilities operated by Raintree Healthcare Corporation prior to
its February 29, 2000 bankruptcy filing, the Company created
a special purpose acquisition subsidiary, in which the Company
acquired only preferred stock. Mr. Bailey contributed
$22,500 to the subsidiary, in exchange for which he received all
of the common and voting shares in the subsidiary.

RELATIONSHIP WITH INDEPENDENT AUDITORS

     
Ernst & Young LLP audited the Company’s financial
statements for each of the years ended December 31, 1997,
1998 and 1999. Representatives of Ernst & Young LLP are
expected to be present at the Annual Meeting and will be given
the opportunity to make a statement if they desire to do so. It
is also expected that they will be available to respond to
appropriate questions from shareholders at the Annual Meeting.

SHAREHOLDERS PROPOSALS

     
November 6, 2000 is the date by which proposals of
shareholders intended to be presented at the Annual Meeting of
Shareholders, held on or about April 17, 2001, must be
received by the Company for inclusion in the Company’s proxy
statement and form of proxy relating to that meeting.

16



Table of Contents



EXPENSES OF SOLICITATION

     
The total cost of this solicitation will be borne by the Company.
In addition to use of the mails, proxies may be solicited by
directors, officers and regular employees of the Company
personally and by telephone, telex or facsimile. The Company may
reimburse persons holding shares in their own names or in the
names of the nominees for expenses such persons incur in
obtaining instructions from beneficial owners of such shares. The
Company has also engaged Georgeson & Company Inc. to solicit
proxies for a fee not to exceed $7,500 plus out-of-pocket
expenses.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     
Edward Lowenthal’s Form 4 for the month of August, 1999
was required to be filed by September 10, 1999 and was
filed on November 9, 1999.

OTHER MATTERS

     
The Board of Directors knows of no other business to be presented
at the Annual Meeting, but if other matters do properly come
before the Annual Meeting, it is intended that the persons named
in the proxy will vote on said matters in accordance with their
best judgment.




















 
ESSEL W. BAILEY, JR.
 
President and Chief Executive Officer


March 31, 2000


Ann Arbor, Michigan


17



Table of Contents




OMEGA HEALTHCARE INVESTORS, INC.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS


PROXY

The undersigned hereby appoints Susan Allene Kovach and David A. Stover and each
of them, as proxies, each with the power to appoint his or her substitute to
represent and to vote as designated below, all the shares of Common Stock of
Omega Healthcare Investors, Inc. held of record by the undersigned on February
29, 2000 at the Annual Meeting of Stockholders to be held on May 3, 2000 or any
adjournment thereof.

In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the meeting and at any adjournment thereof.

This Proxy when properly executed will be voted in the manner directed herein by
the undersigned. If no specification is made, the Proxy will be voted FOR the
election of the directors named in the Proxy Statement.

If any nominee named above declines or is unable to serve as a director, the
persons named as proxies, and each of them, shall have full discretion to vote
for any other person who may be nominated.


(Continued, and to be marked, dated and signed, on the other side)


SEE REVERSE

SIDE










- FOLD AND DETACH HERE -







Table of Contents



/x/ (Please mark your

votes as in this

example.


The Directors recommend a vote FOR Proposals 1 and 2.
















































                 
FOR WITHHELD Nominees:



1.
Election of
Directors
/  /
/  /
James E.
Eden

Thomas F. Franke

Bernard J. Korman


[INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee’s name in the space provided below.]











  NOTE: Please sign exactly as

name appears on this Proxy. When

shares are held by joint

tenants, both should sign. When

signing as attorney, executor,

administrator, trustee or

guardian, please give full title

as such. If a corporation,

please sign in full corporate

name by President or other

authorized officer. If a

partnership, please sign in

partnership name by authorized

person.











  Please check the box if you plan

to attend the Annual Meeting in

person. / /
























       
SIGNATURE(S)   DATE













  NOTE:   Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such. This proxy will not be used if you attend the meeting
in person and so request.









- FOLD AND DETACH HERE -