DEF 14A: Definitive proxy statements
Published on March 4, 1997
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OMEGA HEALTHCARE INVESTORS, INC.
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(Name of Registrant as Specified in Its Charter)
OMEGA HEALTHCARE INVESTORS, INC.
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
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or Item 22(a)(2) of Schedule 14A.
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OMEGA HEALTHCARE INVESTORS, INC.
905 WEST EISENHOWER CIRCLE, SUITE 110
ANN ARBOR, MICHIGAN 48103
(313) 747-9790
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 15, 1997
To the Shareholders:
The Annual Meeting of Shareholders of Omega Healthcare Investors, Inc.
will be held at the offices of the Company at 905 West Eisenhower Circle, Suite
110, Ann Arbor, Michigan on Tuesday, April 15, 1997, at 11:00 a.m., for the
following purposes:
1. To elect three members of the Board of Directors; and
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 is presently serving as a director
of the Company.
The Board of Directors has fixed the close of business on March 12,
1997 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 have previously mailed a
proxy card.
By order of the Board of Directors
ESSEL W. BAILEY, JR.
President and Secretary
March 13, 1997
Ann Arbor, Michigan
1
OMEGA HEALTHCARE INVESTORS, INC.
905 WEST EISENHOWER CIRCLE, SUITE 110
ANN ARBOR, MICHIGAN 48103
(313) 747-9790
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
APRIL 15, 1997
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 April 15, 1997, and any adjournments of the meeting
(the "Annual Meeting"). It is anticipated that this proxy material will be
mailed on or about March 13, 1997 to shareholders of record on March 12, 1997.
A copy of the Annual Report of the Company for the year ended December
31, 1996, 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, 1996 FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION. SUCH REQUESTS SHOULD BE DIRECTED TO DAVID A. STOVER, CHIEF
FINANCIAL OFFICER, 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 may also 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 therein named.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The outstanding voting securities of the Company as of February 28,
1997, consisted of 18,784,560 shares of Common Stock, par value $.10 per share
("Common Stock"). Shareholders of record as of the close of business on March
12, 1997 are 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.
2
PRINCIPAL SHAREHOLDERS
At February 28, 1997, the following was the only person known to the
Company to own beneficially more than 5% of the outstanding shares of Common
Stock.
(1) Information derived from Form 13G filed on February 5th, 1997 by
Cohen & Steers Capital Management, Inc., an investment advisor registered under
Section 203 of the Investment Advisors Act of 1940. Such firm has both sole
power to vote (or to direct the vote) and sole power to dispose (or to direct
disposition) of 1,127,170 shares.
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of February 28, 1997 (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.
* Less than 0.10%
The business address of all the above persons is 905 W. Eisenhower Circle,
Suite 110, Ann Arbor, Michigan 48103.
(1) Includes shares owned jointly by Mr. Bailey and his wife, plus 5,714
shares held solely in Mrs. Bailey's name. Mr. Bailey disclaims any
beneficial interest in the shares held solely by Mrs. Bailey.
(2) Includes 9,125 shares of Restricted Stock, of which 8,325 shares and
800 shares were granted in January of 1997 and 1996, respectively.
See Summary Compensation Table.
(3) Includes stock options that are currently exercisable within 60 days
to acquire 46,383 shares.
(4) Includes stock options that are currently exercisable within 60 days
to acquire 31,000 shares, and 6,357 shares of Restricted Stock, of
which 4,700 shares, 1,029 shares and 628 shares were granted in
January 1997, 1996 and 1995 respectively. See Summary Compensation
Table.
(5) Includes stock options that are currently exercisable within 60 days
to acquire 9,792 shares, and 4,618 shares of Restricted Stock, of
which 3,700 shares, 786 shares and 132 shares were granted in January
1997, 1996 and 1995, respectively. See Summary Compensation Table.
3
(6) Includes stock options that are currently exercisable within 60 days
to acquire 11,999 shares. Also includes 200 shares of Restricted
Stock which were granted in January 1997.
(7) Includes 975 shares owned by a trust of which Mr. Franke is sole
trustee.
(8) Includes 1,511 shares owned jointly by Mr. Kloosterman and his wife,
and 8,269 owned directly by his wife.
(9) Includes stock options that are currently exercisable within 60 days
to acquire 10,999 shares, and 200 shares of Restricted Stock which
were granted in January 1997.
(10) Includes 1,000 shares held in a private profit sharing plan for the
benefit of Mr. Lowenthal, stock options that are currently
exercisable within 60 days to acquire 3,333 shares and 200 shares of
Restricted Stock granted in January 1997.
(11) 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.
(12) Includes stock options that are currently exercisable within 60 days
to acquire 45,333 shares, and 200 unvested shares of Restricted
Stock, which were granted in January of 1997.
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ELECTION OF DIRECTORS
Pursuant to the Company's Articles of Incorporation, the directors have
been divided into three groups. At the 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 shall have been duly elected and qualified. The
remaining directors shall continue in office until their respective terms
expire and until their successors have been duly elected and qualified.
The nominees for election to the three positions of director to be voted
upon at the 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.
If any nominee becomes unavailable for any reason (which event is not
anticipated), the shares represented by the enclosed proxy may (unless such
proxy contains instructions to the contrary) be voted for such other person or
persons as may be determined by the holders of such 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.
5
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The Board of Directors held 9 meetings during 1996. Each director attended
not less than 75% of all meetings of the Board and of the committees on which
he served.
The Board of Directors has an Audit Committee, consisting of Messrs.
Korman, Kloosterman and Franke, a Compensation Committee, consisting of Messrs.
Franke, Eden and Lowenthal, and a Nominating Committee, consisting of Messrs.
Bailey and Parker. The Audit Committee, which met twice in 1996, 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 1996 and has responsibility
for the compensation of the Company's key management personnel and
administration of the Company's 1993 Stock Option and Restricted Stock Plan, as
amended, and the Company's 1993 Deferred Compensation Plan.
The Nominating Committee, which met once during 1996, 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., 905 West Eisenhower Circle, Suite 110, Ann Arbor,
Michigan 48103.
6
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
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 on a day on which the Board of Directors does not itself meet. 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, provides ongoing
consulting services to the Company in addition to his service as a director. In
his capacity as senior advisor for the Company Mr. Parker currently receives
$5,500 monthly.
Directors are eligible to participate in the 1993 Retirement Plan for
Directors, whereby individuals who subsequently terminate their service as a
director with at least five years service are entitled to receive an annual
retirement benefit from the Company equal to the aggregate annual director
retainer in effect at the time of the director's termination from the Board.
Benefits under the 1993 Retirement Plan for Directors will be paid for a period
equal to the number of years of service that the director served as a director
of the Board. Upon death of a director, any benefits under the Plan will be
paid to his or her surviving spouse of at least one year in accordance with the
same payment schedule set forth above until receipt of the maximum benefit to
which the director would have been entitled had he or she survived or until the
death of the eligible spouse, whichever occurs first. All of the present
directors are participants under the Plan.
Directors participate in the Company's 1993 Stock Option and Restricted
Stock Plan, as amended. Each non-employee director was awarded options with
respect to 10,000 shares at the date the Plan was adopted or on his 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 annually
awarded 200 shares of Restricted Stock, with each such grant of Restricted
Stock shares vesting six months after the date of grant.
In addition, directors are eligible to participate in the Company's 1993
Deferred Compensation Plan. The Company's 1993 Deferred Compensation Plan
provides for the granting of units to key personnel and directors. On a
participant's severance from the Company by death, retirement, resignation or
otherwise, the participant will receive, over a ten-year period, an amount
equal to the excess of the fair market value of a share of common stock of the
Company at the date of death, retirement, or resignation, over the fair market
value of a share of common stock of the Company at the date of award, times the
number of units awarded. In addition, the participant will receive an amount
equivalent to dividends that would have been paid on a similar number of shares
of common stock since the date of the award, plus interest thereon at 8% per
year. If the death, retirement or resignation occurs prior to five years
subsequent to the date of the award, the amounts otherwise payable are reduced
by 20% for each year short of five years. The Plan is administered by the
Compensation Committee of the Board of Directors. Each non-employee director
was granted 3,500 units on March 5, 1993, or at the time of his appointment as
a director, and no further units shall be awarded to any such director under
the Plan.
7
EXECUTIVE COMPENSATION
The following table sets forth for the years ended December 31, 1996,
1995, and 1994, the compensation for services in all capacities to the Company
of those persons who were at December 31, 1996 (i) the chief executive officer
and (ii) the other executive officers of the Company whose total 1996 salary
and bonus exceeded $100,000.
SUMMARY COMPENSATION TABLE
(1) "Other Annual Compensation" includes the aggregate of perquisites and
other personal benefits, securities or properties which 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 under the Company's 1993 Deferred
Compensation Plan.
(3) On January 22, 1997, January 17, 1996, and January 13, 1995, Mr. Bailey
was awarded 8,325 shares, 2,400 shares, and 2,062 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
$267,400, $63,900, and $50,000 for the award in 1997, 1996 and 1995,
respectively. With respect to the grant in 1997, one-quarter of the award
was deemed to have been earned in the year prior to the award, with the
balance earned in three equal annual installments beginning in the year of
award and for each of the following two years. One-quarter of the shares
are scheduled to be released in the year of grant, with the balance
released 25% per year in January of each of the following three years.
With respect to the grants in 1996 and 1995, one-third of each award was
deemed to have been earned in the year prior to the award, with the
balance earned equally in the year of the award and the following year.
Additionally, with respect to the grants in 1996 and 1995, one-third of
the shares for each award are scheduled to be released to Mr. Bailey
following each of three consecutive six-month vesting periods. Pursuant
to the Plan, the recipient receives dividends on unvested shares. The
number of shares and value of Mr. Bailey's restricted stock awards as of
the end of last year were 9,125 shares and $303,400, of which 800 shares
were released in January 1997.
(4) On January 22, 1997, January 17, 1996 and January 13, 1995, Mr. Kellman
was awarded 4,700 shares, 1,715 shares and 1,567 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
$151,000, $45,700 and $38,000 for the award in 1997, 1996 and 1995,
respectively. With respect to the grant in 1997, one-quarter of the award
was deemed to have been earned in the year prior to the award, with the
balance earned in three equal annual installments beginning in the year of
award and for each of the following two years. One-quarter of the shares
are scheduled to be released in the year of grant, with the balance
released 25% per year in January of each of the following three years.
With respect to the grants for 1996 and 1995, one-fifth of the award was
deemed to have been earned prior to the award, with the balance earned in
four equal annual installments beginning in the year of award and for each
of the following three years. Additionally, with respect to the grants for
1996 and 1995, one-fifth of the shares are scheduled to be released six
months after the grant, with the balance released 20% per year in January
for each of the following four years. Pursuant to the Plan, the recipient
receives dividends on unvested shares. The number of shares and value of
Mr. Kellman's restricted stock awards as of the end of last year were
6,357 shares and $211,400 of which 656 were released on January 1997.
8
(5) On January 22, 1997, January 17, 1996 and January 13, 1995, Mr. Stover was
awarded 3,700 shares, 1,310 shares and 330 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
$119,000, $34,900 and $8,000 for the award in 1997, 1996 and 1995,
respectively. With respect to the grant in 1997, one-quarter of the award
was deemed to have been earned in the year prior to the award, with the
balance earned in three equal annual installments beginning in the year of
award and for each of the following two years. One-quarter of the shares
are scheduled to be released in the year of grant, with the balance
released 25% per year in January of each of the following three years.
With respect to the grants for 1996 and 1995, one-fifth of the award was
deemed to have been earned prior to the award, with the balance earned in
four equal annual installments beginning in the year of award and for each
of the following three years. With respect to the grants for 1996 and
1995, one-fifth of the shares are scheduled to be released six months
after the grant, with the balance released 20% per year in January for
each of the following four 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 4,618
shares and $153,500, of which 328 were released on January 1997.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning options/SARs
granted during 1996 to the named executives:
(1) Incentive stock options expire 10 years from date of grant (January 17,
2006), while non-qualified options expire 11 years after date of grant.
(2) 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 $45.54 and $75.97, respectively.
(3) The Company does not elect to provide grant date present value as an
alternative to disclosing potential realizable value.
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AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
The following table summarizes options and SARs exercised during 1996 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, 1996, 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, 1996, the Company had no pension plans.
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 1993 Stock Option and Restricted Stock Plan, as
amended, 1993 Deferred Compensation Plan, 401-K Profit Sharing 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.
Compensation Policies. 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 stock.
10
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 are currently 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.
Finally, 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.
Chief Executive Officer Compensation: 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.
The compensation for Essel W. Bailey, Jr., the Company's Chief Executive
Officer, was established at $325,000 in January 1996, and a cash bonus for 1996
performance of $375,000 awarded in January 1997. In addition, in January 1997,
Mr. Bailey was granted 45,000 stock options and 8,325 shares of restricted
stock under the Company's 1993 Stock Option and Restricted Stock Plan, as
amended.
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.
Grants of options were made based on the Committee's conclusions as to
appropriate levels of participation for the Company's Chief Executive Officer,
with a particular sensitivity to the Company's objective of aligning
shareholder and management interest. The 8,325 shares of restricted stock were
granted on January 22, 1997, as a bonus for 1996 performance and for continued
employment in 1997 through 1999. The award vests one-quarter in July 1997, with
the balance vesting one-quarter each January of 1998, 1999 and 2000.
Compensation Committee of the Board
Thomas F. Franke, Chairman
James E. Eden
Edward Lowenthal
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COMPARISON OF CUMULATIVE TOTAL RETURN *
Among: Omega Healthcare Investors, Inc.
All REIT's Index **
S&P 500 Index
* 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.
IT SHOULD BE NOTED THAT THIS GRAPH REPRESENTS HISTORICAL STOCK PRICE
PERFORMANCE AND IS NOT NECESSARILY INDICATIVE OF ANY FUTURE STOCK PRICE
PERFORMANCE.
THE FOREGOING REPORT OF THE COMPENSATION COMMITTEE AND THE PERFORMANCE
GRAPH THAT APPEARS IMMEDIATELY AFTER SUCH REPORT 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 space for its principal executive offices 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. Rent payments totaling $91,425 were made to Circle
Partners in 1996. The Company currently makes monthly payments of $7,850 to the
partnership pursuant to a five-year lease involving 5,823 square feet of office
space. The current lease was consummated November 1995.
The Company has invested, directly or indirectly, approximately $30
million in Principal Healthcare Finance Limited ("Principal") as of December
31, 1996. As of that date, Principal owns and leases 42 nursing homes in the
British Isles. Essel W. Bailey, Jr., President and Chief Executive Officer and
a director, and directors Thomas F. Franke, Harold J. Kloosterman, Bernard J.
Korman, and Robert J. Parker, have invested in the aggregate, directly or
indirectly, $2,170,000 in Principal.
In connection with the 1994 relocation of F. Scott Kellman, Executive Vice
President, 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 $77,000. The loan is secured by a second
mortgage on Mr. Kellman's residence, bears interest at 7.05% payable monthly,
along with annual principal installments. Concurrent with Mr. Kellman's
appointment as Executive Vice President, the Company agreed to a severance
arrangement whereby a payment of two year's base compensation (currently
$440,000) is due in the event Mr. Kellman's employment is terminated without
cause or in the event of his disability.
Mr. Bernard J. Korman, a Director of the Company, was named Chairman of
Graduate Health System, Inc. during 1995. The Company leases three medical
office buildings to Graduate Hospital Corporation, a subsidiary of Graduate
Health System, Inc., pursuant to leases negotiated and executed by the Company
in October 1993, prior to the designation of Mr. Korman as a Director of the
Company. Rental income of $3,645,000 was received by the Company under these
lease agreements during 1996.
12
RELATIONSHIP WITH INDEPENDENT AUDITORS
Ernst & Young LLP audited the Company's financial statements for each of
the years ended December 31, 1994, 1995 and 1996. 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 13, 1997 is the date by which proposals of shareholders intended
to be presented at the Annual Meeting of Shareholders, held on or about April
15, 1998, must be received by the Company for inclusion in the Company's proxy
statement and form of proxy relating to that meeting.
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
$7,000 plus out-of-pocket expenses.
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 Secretary
March 13, 1997
Ann Arbor, Michigan
13
PROXY
OMEGA HEALTHCARE INVESTORS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Essel W. Bailey, Jr., David A. Stover and Don
M. Pearson, and each of them, as proxies, each with the power to appoint his
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 March 12, 1997 at the Annual Meeting of Stockholders to be held
on April 15, 1997 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)
- FOLD AND DETACH HERE -