UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K/A
(Amendment No. 1)

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
 
THE SECURITIES EXCHANGE ACT OF 1934
 
 
 
For the fiscal year ended December 31, 2014.
 
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
  THE SECURITIES EXCHANGE ACT OF 1934
   
  For the transition period from                     to
 
Commission file number 1-11316

OMEGA HEALTHCARE INVESTORS, INC.
(Exact Name of Registrant as Specified in its Charter)

Maryland
38-3041398
(State or Other Jurisdiction
(I.R.S. Employer Identification No.)
of Incorporation or Organization)
 
   
200 International Circle, Suite 3500
 
Hunt Valley, MD
21030
(Address of Principal Executive Offices)
(Zip Code)

Registrant’s telephone number, including area code: 410-427-1700
 
Securities Registered Pursuant to Section 12(b) of the Act:
 
Title of Each Class
 
Name of Exchange on
Which Registered
 Common Stock, $.10 Par Value
 
New York Stock Exchange
 
Securities registered pursuant to Section 12(g) of the Act:
 
None.
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes          No  

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes          No   

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes          No  

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes           No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer                                                 Accelerated filer                         Non-accelerated filer                       Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes         No   

The aggregate market value of the common stock of the registrant held by non-affiliates was $4,670,627,910.40 as of June 30, 2014, the last business day of the registrant’s most recently completed second fiscal quarter. The aggregate market value was computed using the $36.86 closing price per share for such stock on the New York Stock Exchange on such date.

As of April 23, 2015, there were 182,683,520 shares of common stock outstanding.
 
 
 
 

 

 
EXPLANATORY NOTE

This Amendment No. 1 on Form 10-K/A (the “Amendment”) amends the Annual Report on Form 10-K filed by Omega Healthcare Investors, Inc., for the fiscal year ended December 31, 2014, originally filed with the SEC on February 27, 2015 (the “Original Filing”). This Amendment is being filed to amend Part III of the Original Filing because the Company no longer intends to file a definitive proxy statement for an annual meeting of stockholders within 120 days of the end of its fiscal year ended December 31, 2014. Part IV of the Original Filing is being amended solely to add as exhibits certain new certifications in accordance with Rule 13a-14(a) promulgated by the SEC under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Because no financial statements have been included in this Amendment and this Amendment does not contain or amend any disclosure with respect to Items 307 and 308 of Regulation S-K, paragraphs 3, 4 and 5 of the certifications have been omitted.

Except as described above, no other changes have been made to the Original Filing. The Original Filing continues to speak as of the date of the Original Filing, and the Company has not updated the disclosures contained therein to reflect any events which occurred at a date subsequent to the filing of the Original Filing other than as expressly indicated in this Amendment. Accordingly, this Amendment should be read in conjunction with the Original Filing and the Company’s other filings made with the SEC on or subsequent to February 27, 2015.
 
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OMEGA HEALTHCARE INVESTORS, INC.
ANNUAL REPORT ON FORM 10-K/A
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2014
TABLE OF CONTENTS
           
   
PART III
   
       
Page No.
Item 10.
 
Directors, Executive Officers of the Registrant and Corporate Governance
 
1
 
Item 11.
 
Executive Compensation
 
7
 
Item 12.
 
Security Ownership of Certain Beneficial Owners and Management
 
41
 
Item 13.
 
Certain Relationships and Related Transactions, and Director Independence
 
43
 
Item 14.
 
Principal Accountant Fees and Services
 
43
 
           
   
PART IV
     
           
Item 15.
 
Exhibits
 
46
 
 
iii
 

 

 
PART III

Item 10 – Directors, Executive Officers and Corporate Governance

Information Regarding Directors
 
Our Board of Directors consists of eleven members. Set forth below are the names, ages, biographical data, term of office and certain other information with respect to each member. The Board has identified specific attributes of each director that the Board has determined qualify that person for service on the Board.
               
Director (age as of April 23, 2015)
 
Year First
Became a
Director
 
Business Experience During Past 5 Years
 
Term to
Expire in
 
Thomas F. Franke (85)
 
1992
 
Mr. Franke brings to our Board years of experience in the operation of real estate companies, including long-term care providers. Mr. Franke is Chairman and a principal owner of Cambridge Partners, Inc., an owner, developer and manager of multifamily housing in Grand Rapids, Michigan. He is also a founder in 1992 of Laurel Health Care, Inc. (a private nursing home firm operating in the eastern United States) and serves as the Chairman Emeritus of Laurel. At one time, he was a principal owner of Abacus Hotels LTD. (a private hotel firm in the United Kingdom). Mr. Franke was a founder and previously a Director of Principal Healthcare Finance Limited and Omega Worldwide, Inc.
 
2015
 
               
Bernard J. Korman (83)
 
1993
 
Mr. Korman brings to our Board extensive experience in healthcare, experience as a director of a real estate investment trust (“REIT”), and experience as a Chairman from his former role as Chairman of Pep Boys. Mr. Korman has served as Chairman of the Board since March 8, 2004. Mr. Korman served as Chairman of the Board of Trustees of Philadelphia Health Care Trust, a private healthcare foundation, from December 1995 to June 30, 2010. Mr. Korman is also a Director of The New America High Income Fund, Inc. (NYSE:HYB) (financial services) and a past Director of Medical Nutrition USA, Inc., a nutritional products company and NutraMax Products, Inc., a consumer health care products company. He was formerly President, Chief Executive Officer and Director of MEDIQ Incorporated, a publicly held health care service provider from 1977 to 1995. Mr. Korman served as a Trustee of Kramont Realty Trust (NYSE:KRT), a publicly held REIT, from June 2000 until its merger in April 2005. Mr. Korman also served as a Director of The Pep Boys, Inc. (NYSE:PBY) from 1983, and as Chairman of the Board from May 2003, until his retirement from such Board in September 2004. Mr. Korman was previously a Director of Omega Worldwide, Inc.
 
2015
 
 
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Craig R. Callen (59)
 
2013
 
Mr. Callen brings to our Board financial and operating experience as an advisor, investment banker and board member in the healthcare industry. Mr. Callen is currently a Senior Advisor at Crestview Partners, a private equity firm. Mr. Callen retired as Senior Vice President of Strategic Planning and Business Development for Aetna Inc., where he also served as a Member of the Executive Committee from 2004-2007. In his role at Aetna, Mr. Callen reported directly to the Chairman and CEO and was responsible for oversight and development of Aetna's corporate strategy, including mergers and acquisitions. Prior to joining Aetna in 2004, Mr. Callen was a Managing Director and Head of U.S. Healthcare Investment Banking at Credit Suisse and co-head of Health Care Investment Banking at Donaldson Lufkin & Jenrette. During his 20 year career as an investment banker in the healthcare practice, Mr. Callen successfully completed over l00 transactions for clients and contributed as an advisor to the boards of directors and managements of many of the leading healthcare companies in the U.S. Mr. Callen currently serves as a board member of HMS Holdings, Inc. (NYSE-HSMY), and Classical Homes Preservation Trust. Previously he served on the boards of Symbion, Inc., a Crestview portfolio company, Sunrise Senior Living, Inc. (NYSE-SRZ) and Kinetic Concepts, Inc. (NYSE-KCI). Mr. Callen is a graduate of Boston University and the Harvard Business School.
 
2015
 
               
Norman R. Bobins (72)
 
2015
 
Mr. Bobins brings to our board years of banking experience, financial and accounting knowledge and experience as a director of public companies. Mr. Bobins was named Non-Executive Chairman of The PrivateBank and Trust Company, a bank subsidiary of PrivateBancorp, Inc., in July 2008. From May 2007 until October 2007, Mr. Bobins was Chairman of the Board of LaSalle Bank Corporation and thereafter served as Chairman Emeritus until July 2008. From 2003 to 2007, he was President and Chief Executive Officer of LaSalle Bank Corporation. From 2006 to 2007, he was President and Chief Executive Officer of ABN AMRO North America. Mr. Bobins also serves on the boards of directors of SIMS Metal Management, AAR Corp., AGL Resources Inc., Transco Inc. and RREEF America REIT II, Inc. In the past five years, Mr. Bobins also served on the board of Hyatt Hotels Corporation and Nicor, Inc.
 
2015
 
               
Edward Lowenthal (70)
 
1995
 
Mr. Lowenthal brings to our Board years of experience in the development and operation of real estate. Mr. Lowenthal currently serves as a Director of American Campus Communities (NYSE:ACC) (a public developer, owner and operator of student housing at the university level and serves as a trustee of the Manhattan School of Music). From 2004 to 2013, he was a Director of Desarrolladora Homex (NYSE: HXM) (a Mexican homebuilder) and serves as a Trustee of the Manhattan School of Music. Mr. Lowenthal also served as non-executive Chairman of REIS, Inc. (a public provider of real estate market information and valuation technology (NASDAQ:REIS) from November 2010 until his term expired in 2012. From January 1997 to March 2002, Mr. Lowenthal served as President and Chief Executive Officer of Wellsford Real Properties, Inc. (a real estate merchant bank) and was President of the predecessor of Wellsford Real Properties, Inc. since 1986. He is co-founder of Wellsford Strategic Partners, a private real estate investment company and is non-executive Chairman of Tiburon Lockers, Inc., a private rental locker company.
 
2016
 
 
2
 

 

 
               
Stephen D. Plavin (55)
 
2000
 
Mr. Plavin brings to our Board management experience in the banking and mortgage-based real estate investment trust sector, as well as significant experience in real estate capital markets transactions. Mr. Plavin is a Senior Managing Director of the Blackstone Group (since December, 2012) and the Chief Executive Officer and a Director of Capital Trust, Inc., a New York City-based mortgage REIT that is now managed by Blackstone. He has served as CEO of Capital Trust since 2009. From 1998 until 2009, Mr. Plavin was Chief Operating Officer of Capital Trust and was responsible for all of the lending, investing and portfolio management activities of Capital Trust, Inc. Prior to that time, Mr. Plavin was employed for 14 years with Chase Manhattan Bank and its securities affiliate, Chase Securities Inc. Mr. Plavin held various positions within the real estate finance unit of Chase, and its predecessor, Chemical Bank, and in 1997 he became co-head of global real estate for Chase. Mr. Plavin is also a director of WCI Communities, a privately-held developer of residential communities.
 
2016
 
               
Ben W. Perks (73)
 
2015
 
Mr. Perks brings to our Board years of public company, financial and accounting experience. Mr. Perks was the Executive Vice President and Chief Financial Officer of Navigant Consulting, Inc. (“Navigant”), an NYSE-listed company, from May 2000 until his retirement in August 2007. Prior to joining Navigant, Mr. Perks was with PricewaterhouseCoopers LLP for 32 years, including 22 years as a Partner in the Audit and Financial Advisory Services groups.
 
2016
 
               
Barbara B. Hill (62)
 
2013
 
Ms. Hill brings to our Board years of experience in operating healthcare-related companies. Ms. Hill is currently an Operating Partner of Moelis Capital Partners, a private equity firm, where she focuses on healthcare-related investments and providing strategic and operating support for Moelis’ healthcare portfolio companies. She has served as an Operating Partner of Moelis Capital Partners since March 2011. From March 2006 to September 2010, Ms. Hill served as Chief Executive Officer and a Director of ValueOptions, Inc., a managed behavioral health company, and FHC Health Systems, Inc., its parent company. Prior to that, from August 2004 to March 2006, she served as Chairman and Chief Executive Officer of Woodhaven Health Services, an institutional pharmacy company. In addition, from 2002 to 2003, Ms. Hill served as President and a Director of Express Scripts, Inc., a pharmacy benefits management company. In previous positions, Ms. Hill was responsible for operations nationally for Cigna HealthCare, and also served as the CEO of health plans owned by Prudential, Aetna, and the Johns Hopkins Health System. She was active with the Boards and Committees of the Association of Health Insurance Plans and other health insurance industry groups. Currently, she serves as a Board member of St. Jude Medical Corporation, a medical device company, Revera Inc., a Canadian company operating senior facilities throughout Canada and the U.S. and Integra LifeSciences Holdings Corporation, a medical device company.
 
2017
 
 
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Harold J. Kloosterman (73)
 
1992
 
Mr. Kloosterman brings to our Board years of experience in the development and management of real estate. Mr. Kloosterman has served as President since 1985 of Cambridge Partners, Inc., a company he formed in 1985. 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. Mr. Kloosterman was formerly a Managing Director of Omega Capital from 1986 to 1992. Mr. Kloosterman has been involved in the acquisition, development and management of commercial and multifamily properties since 1978. He has also been a senior officer of LaSalle Partners, Inc. (now Jones Lang LaSalle).
 
2017
 
               
Craig M. Bernfield (54)
 
2015
 
Mr. Bernfield brings to our Board extensive business, managerial and leadership experience with over 20 years of experience as an investor in the skilled nursing facilities (“SNF”) industry. Mr. Bernfield is former Chairman of the Board of Directors and Chief Executive Officer of Aviv REIT, Inc. (“Aviv”) and served in such capacity since he co-founded Aviv Healthcare Properties Limited Partnership in 2005 until our merger with Aviv on April 1, 2015. Prior to co-founding Aviv, Mr. Bernfield was Chief Executive Officer and President of Karell Capital Ventures, Inc. (“KCV”), which he joined in 1990. KCV managed the entities that were combined in 2005 in connection with the formation of our predecessor partnership. Mr. Bernfield has been an investor in the nursing home industry for approximately 20 years and was the co-founder of some of the entities that were combined in 2005.
 
2017
 
               
C. Taylor Pickett (53)
 
2002
 
As Chief Executive Officer of our Company, Mr. Pickett brings to our Board a depth of understanding of our business and operations, as well as financial expertise in long-term healthcare services, mergers and acquisitions. Mr. Pickett has served as the Chief Executive Officer of our Company since 2001. Mr. Pickett is also a Director and has served in this capacity since 2002. Mr. Pickett also serves as a Director of Corporate Office Properties Trust (NYSE: OFC), an office property REIT and a Director of Atherio, a technology, outsourcing, consulting and managed services company. From 1998 to 2001, Mr. Pickett served as the Executive Vice President and Chief Financial Officer of Integrated Health Services, Inc. (“IHS”), a public company specializing in post-acute healthcare services. Mr. Pickett served in a variety of executive roles at IHS from 1993 through 1998. Prior to joining IHS, Mr. Pickett held various positions at PHH Corporation and KPMG Peat Marwick.
 
2017
 

Information Regarding Executive Officers
 
Set forth below are the names, ages, positions and biographical summaries of the experience of our executive officers and key employees.
 
4
 

 

 
C. Taylor Pickett (53) is our Chief Executive Officer and has served in this capacity since June 2001. Further information regarding Mr. Pickett may be found under “Information regarding Directors” above.
 
Daniel J. Booth (51) is our Chief Operating Officer and has served in this capacity since October 2001. From 1993 to October 2001, Mr. Booth served as a member of the management team of Integrated Health Services, Inc., including serving as Senior Vice President, Finance. Prior to joining Integrated Health Services, Inc., Mr. Booth served as a Vice President in the Healthcare Lending Division of Maryland National Bank (now Bank of America).
 
Steven J. Insoft (51) is our Chief Corporate Development Officer and has served in such capacity since April 1, 2015. Mr. Insoft previously served as President and Chief Operating Officer of Aviv since 2012, while previously serving as Chief Financial Officer and Treasurer of Aviv. Prior to joining Aviv in 2005, Mr. Insoft spent eight years as a Vice President and Senior Investment Officer of Nationwide Health Properties, Inc., a publicly-traded REIT. Before that, he was President and Chief Financial Officer of CMI Senior Housing & Healthcare, Inc., a privately-held nursing home and assisted living facility operations and development company, for seven years.
 
R. Lee Crabill, Jr. (61) is our Senior Vice President of Operations and has served in this capacity since July 2001. From 1997 to 2000, Mr. Crabill served as a Senior Vice President of Operations at Mariner Post‑Acute Network, Inc. Prior to joining Mariner Post Acute Network, Inc., Mr. Crabill served as an Executive Vice President of Operations at Beverly Enterprises, Inc.
 
Robert O. Stephenson (51) is our Chief Financial Officer and has served in this capacity since August 2001. From 1996 to July 2001, Mr. Stephenson served as the Senior Vice President and Treasurer of Integrated Health Services, Inc. Prior to joining Integrated Health Services, Inc., Mr. Stephenson held various positions at CSX Intermodal, Inc., Martin Marietta Corporation and Electronic Data Systems.
 
Michael D. Ritz (46) is our Chief Accounting Officer and has served in this capacity since February 2007. From April 2005 to February 2007, Mr. Ritz served as the Vice President, Accounting & Assistant Corporate Controller of Newell Rubbermaid Inc., and from August 2002 to April 2005, Mr. Ritz served as the Director, Financial Reporting of Newell Rubbermaid Inc. From July 2001 through August 2002, Mr. Ritz served as the Director of Accounting and Controller of Novavax Inc.
 
5
 

 

 
Audit Committee
 
The Company has a separately-designated standing Audit Committee. The Audit Committee met seven times in 2014. Its primary function is to assist the Board of Directors in fulfilling its oversight responsibilities with respect to: (i) the financial information to be provided to stockholders and the SEC; (ii) the system of internal controls that management has established; and (iii) the external independent audit process. In addition, the Audit Committee selects our Company’s independent auditors and provides an avenue for communication between the independent auditors, financial management and the Board of Directors. The Audit Committee is comprised of Stephen D. Plavin (Chairman), Barbara B. Hill, Harold J. Kloosterman and Edward Lowenthal.
 
Each of the members of the Audit Committee is independent and financially literate, as required of audit committee members by the NYSE. The Board of Directors has determined that Mr. Plavin is qualified to serve as an “audit committee financial expert” as such term is defined in Item 401(h) of Regulation S-K promulgated by the SEC. The Board of Directors made a qualitative assessment of Mr. Plavin’s level of knowledge and experience based on a number of factors, including his formal education and his experience as Chief Executive Officer of Capital Trust, Inc., a New York City-based mortgage REIT and investment management company, where he is responsible for all management activities. Additionally, Mr. Plavin holds an M.B.A. from J.L. Kellogg Graduate School of Management at Northwestern University.
 
Code of Business Conduct and Ethics
 
We have adopted a written Code of Ethics that applies to all of our directors and employees, including our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer. A copy of our Code of Ethics is available on our website at www.omegahealthcare.com, and print copies are available upon request without charge. You can request print copies by contacting our Chief Financial Officer in writing at Omega Healthcare Investors, Inc., 200 International Circle, Suite 3500, Hunt Valley, Maryland 21030, or by telephone at 410-427-1700. Any amendment to our Code of Ethics or any waiver of our Code of Ethics will be disclosed on our website at www.omegahealthcare.com promptly following the date of such amendment or waiver.
 
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
 
Section 16(a) of the Exchange Act requires our executive officers, directors and persons who beneficially own more than 10% of our Company’s common stock to file initial reports of ownership and reports of changes in ownership with the SEC. SEC regulations require these individuals to give us copies of all Section 16(a) forms they file.
 
Based solely on our review of forms that were furnished to us and written representations from reporting persons, we believe that the executive officers, directors and more than 10% stockholders complied with all filing requirements under Section 16(a) during the year ended December 31, 2014, except as follows: Due to an administrative oversight, Messrs. Pickett, Booth, Stephenson, Crabill and Ritz each filed a late Form 4 report covering two transactions relating to the grant of restricted stock units. Mr. Pickett filed one Form 4 report late relating to one additional transaction. One bona fide gift of securities beneficially owned by Mr. Korman was not timely reported on Form 5.
 
6
 

 

 
Item 11 - Executive Compensation
 
Compensation Discussion and Analysis
 
Our CD&A addresses the following topics:
 
 
the members and role of our Compensation Committee, which we refer to as the “Committee” in this CD&A;
 
 
our compensation-setting process;
 
 
our philosophy and objectives regarding executive compensation;
 
 
the components of our executive compensation program; and
 
 
our compensation decisions for fiscal year 2014 and 2015.
 
The Compensation Committee
 
Thomas F. Franke, Harold J. Kloosterman, Bernard J. Korman, Edward Lowenthal and Stephen D. Plavin are the members of the Committee. Mr. Franke is the Chairman of the Committee. Each member of the Committee qualifies as an independent director under the NYSE listing standards and under our Board of Directors’ standards of independence.
 
The Committee’s responsibilities and functions are governed by its charter, which the Board of Directors has adopted and a copy of which is available at our website at www.omegahealthcare.com. The Committee determines the compensation of our executive officers and reviews with the Board of Directors all aspects of compensation for our executive officers. The Committee also periodically reviews the compensation of our directors and makes recommendations regarding possible adjustments for consideration by the Board of Directors. To the extent not otherwise inconsistent with its obligations and responsibilities, the Committee may form subcommittees (which shall consist of one or more members of the Committee) and delegate authority to such subcommittees as it deems appropriate. The Committee reports to the Board of Directors as it deems appropriate and as the Board of Directors may request.
 
The Committee is also responsible for the following activities in addition to the other activities listed in the Committee’s charter:
 
 
determining and approving the compensation for the Chief Executive Officer and our other named executive officers following an evaluation of their performance in respect of goals and objectives established by the Committee and such other factors as the Committee deems appropriate;
 
 
reviewing and recommending for the Board of Directors’ approval (or approving, where applicable) the adoption and amendment of our director and executive officer incentive compensation and equity-based plans;
 
 
administering our incentive compensation and equity-based plans and approving such awards thereunder as the Committee deems appropriate;
 
 
reviewing and monitoring succession plans for the Chief Executive Officer and our other senior executives;
 
 
preparing, reviewing and discussing with management the CD&A required by SEC rules and regulations, recommending to the Board of Directors whether the CD&A should be included in our proxy statement or other applicable SEC filings;
 
 
overseeing and administering any employment agreements, severance agreements or change of control agreements that are entered into between us and any executive officer; and
 
 
performing such other activities consistent with its charter, our Bylaws, governing law, the rules and regulations of the NYSE and such other requirements applicable to us as the Committee or the Board of Directors deems necessary or appropriate.
 
7
 

 

 
Compensation Committee Meetings and Process
 
The Committee meets as often as necessary to perform its duties and responsibilities. The Committee met four times during the year ended December 31, 2014. The Chairman of the Committee works, from time to time, with the Chief Executive Officer and other members of the Committee to establish the agenda for the Committee’s meetings. The Committee meets in one or more executive sessions each year to evaluate the performance of our named executive officers, to determine their bonuses for the prior year, to establish bonus metrics for the current year, to set salaries for the current year and to approve any grants of equity incentive compensation, as the case may be. Additionally, the Committee meets with Omega’s legal counsel and from time to time with other outside advisors as the Committee determines appropriate.
 
The Committee receives and reviews materials in advance of its meetings. These materials include information that management believes will be helpful to the Committee as well as materials that the Committee may from time to time request. Depending upon the agenda for the particular meeting, these materials may include, among other things:
 
 
reports from compensation consultants or legal counsel;
 
 
an analysis of the compensation of our executives and directors as compared to the compensation paid to the executives and directors by the members of our peer group prepared by members of the Committee, by management at the Committee’s request or by a compensation consultant engaged by the Committee;
 
 
financial reports on year-to-date performance versus budget and compared to prior year performance, as well as other financial data regarding us and our performance;
 
 
reports on our strategic plan and budget for future periods;
 
 
information on the executive officers’ stock ownership and holdings of equity-based incentives; and
 
 
reports on the levels of achievement by each named executive officer of individual and corporate objectives.
 
The Committee periodically engages in a comprehensive review to establish the performance goals for multi-year incentive awards and to enter into new employment agreements with our named executive officers. Our Chief Executive Officer meets with the Committee at least annually to provide information to the Committee regarding management’s views regarding its performance as well as other factors the Chief Executive Officer believes should impact the compensation of our executive officers. In addition, the Chief Executive Officer provides recommendations to the Committee regarding the compensation for each of the named executive officers and the business and performance targets for incentive awards and bonuses.
 
Compensation Committee Advisors
 
The Committee charter grants the Committee the sole and direct authority to engage and terminate advisors and compensation consultants and to approve their fees and retention terms. These advisors and consultants report directly to the Committee, and we are responsible for paying their fees.
 
2013 Executive Compensation Review
 
Beginning in late 2012 and continuing in 2013, the Committee undertook to review and update the Company’s executive compensation program. In connection with the comprehensive review of the compensation system for our named executive officers, the Committee engaged FPL Associates, L.P. (“FPL”) as a consultant to the Committee. FPL has not performed any work for us other than work for which it has been engaged by the Committee from time to time. FPL presented to the Committee FPL’s analysis that included, but was not limited to, recommendations regarding the composition of a peer group of companies that would be the basis for a benchmarking evaluation of the Company’s compensation programs, the status of our current compensation program as compared to those of our peer companies, the methodologies behind the research and analysis it used to prepare the comparisons, the techniques it used to standardize the compensation programs of peer companies in order to permit more accurate comparisons against our programs and a proposed plan covering all aspects of the compensation for our named executive officers. The analysis and process resulted in executive employment agreements with each of our named executive officers that were entered into in November 2013 and have terms that run through December 31, 2016, and the design and implementation of a compensation program including long-term incentives for periods beginning December 31, 2013 and ending December 31, 2016.
 
8
 

 

 
Aviv REIT Merger
 
On April 1, 2015, Aviv REIT Inc. (“Aviv”) merged (the “Merger”), with and into a wholly owned subsidiary of Omega, pursuant to the terms of that certain Agreement and Plan of Merger, dated as of October 30, 2014 (the “Merger Agreement”), by and among the Company, Aviv, OHI Healthcare Properties Holdco, Inc., a direct wholly-owned subsidiary of Omega (“Merger Sub”), OHI Healthcare Properties Limited Partnership (“Omega OP”) and Aviv Healthcare Properties Limited Partnership (the “Aviv OP”).

Prior to April 1, 2015, the Company restructured the manner in which it holds its assets by converting to an umbrella partnership real estate investment trust (“UPREIT”) structure. As a result of this organizational restructuring, substantially all of the Company’s assets are now held by Omega OP, an operating partnership that is a subsidiary of the Company.

The partnership agreement of Omega OP provides, among other things, for limited partnership units structured as profits interests (“LTIP Units”), which are to be used for incentive compensation awards. When earned and vested, LTIP Units are intended to be convertible into limited partnership interest in Omega OP (“OP Units”), at the election of the holder, on a one-to-one basis, subject to conditions on minimum allocation to the capital accounts of the holders of LTIP Unit for federal income tax purposes. Each OP Unit is redeemable at the election of the holder for cash equal to the then fair market value of one share of Omega common stock, subject to the Company’s election to exchange the OP Units tendered for redemption for unregistered shares of Omega Common Stock on a one-for-one basis, and further subject to adjustment as set forth in the partnership agreement.

2015 Executive Compensation Review
 
Beginning in late 2014 and continuing in 2015, the Committee undertook to review and update the Company’s executive compensation program in light of the then pending Merger. The Committee considered that among other changes, the Company’s market capitalization was projected on an estimated basis to increase to roughly $10 billion after the Merger from $6.5 billion before the Merger. In connection with the comprehensive review of the compensation system for our named executive officers, the Committee engaged FPL as a consultant to the Committee. FPL has not performed any work for us other than work for which it was engaged by the Committee. FPL presented to the Committee FPL’s analysis that included, but was not limited to, recommendations regarding the composition of a peer group of companies that would be the basis for a benchmarking evaluation of the Company’s compensation programs, the status of our current compensation program as compared to those of our peer companies, the methodologies behind the research and analysis it used to prepare the comparisons, the techniques it used to standardize the compensation programs of peer companies in order to permit more accurate comparisons against our programs and a proposed plan covering all aspects of the compensation for our named executive officers. The analysis and process resulted in the design and implementation of a compensation program including long-term incentives for the period beginning January 1, 2015 and ending December 31, 2017. In March 2015 (April 1 for Mr. Insoft), the Company entered into executive employment agreements with each of our named executive officers having terms that run through December 31, 2017.
 
2013 Peer Group Benchmarking
 
Based on the analysis provided by FPL and with the input of the members of the Committee, the Committee determined that FPL’s analysis would be benchmarked based on two peer groups of public REITs comparable to the Company that were identified by FPL in December 2013. The “Size Peer Group” consists of the following 11 REITs with market or total capitalization comparable to the Company: BioMed Realty Trust, Inc., Corporate Office Properties Trust, EPR Properties, Federal Realty Investment Trust, Healthcare Realty Trust Incorporated, LTC Properties, Inc., Medical Properties Trust, Inc., National Health Investors, Inc., National Retail Properties, Inc., Realty Income Corporation, and Washington Real Estate Investment Trust. The “Asset Peer Group” is comprised of the following 7 public REITs, all of which operate in the health care sector: HCP, Inc., Health Care REIT, Inc., Healthcare Realty Trust Incorporated, LTC Properties, Inc., Medical Properties Trust, Inc., National Health Investors, Inc., and Ventas, Inc. The Committee recognized that healthcare REITs can be viewed as a sub-sector of the REIT industry since healthcare REITs are often subject to different market conditions than the real estate industry generally, such as the impact of healthcare reimbursement policy. The Committee also recognized that compensation of REIT executives is generally correlated with the size of the REIT. Accordingly, the Committee considered both the Size Peer Group and the Asset Peer Group and with advice from FPL determined that the data relating to the Size Peer Group would be weighted 66-2/3% and the data relating to the Asset Peer Group would be weighted 33-1/3% for purposes of developing peer group compensation data. Analyses performed included a comparison of salaries, annual bonus programs, short term equity based incentive compensation and multi-year equity based incentive compensation of comparable officers for each company as well as total compensation over a three-year period as compared to total shareholder return generated over such period.
 
9
 

 

 
2015 Peer Group Benchmarking
 
Based on analysis provided by FPL and with the input of the members of the Committee, the Committee determined that a new peer group should be composed in light of the projected increase in Omega’s market capitalization of roughly 50% as a result of the then pending Merger. In January 2015, the Committee determined that FPL’s analysis would be benchmarked based on one peer group of public REITs that were identified by FPL as being comparable to the Company after the Merger with Aviv based on asset size, asset class, geography and other factors. The peer group consists of the following 14 REITs: BioMed Realty Trust, Inc., Duke Realty Corporation, EPR Properties, Federal Realty Investment Trust, HCP, Inc., Health Care REIT, Inc., Healthcare Trust of America, LaSalle Hotel Properties, Lexington Realty Trust, National Retail Properties, Inc., Realty Income Corporation, Spirit Realty Capital, Inc., Ventas, Inc. and W.P. Carey, Inc. Analyses performed included a comparison of salaries, annual bonus programs, short term equity based incentive compensation and multi-year equity based incentive compensation of comparable officers for each company as well as total compensation over a three-year period as compared to total shareholder return generated over such period.
 
Compensation Policy and Objectives
 
Our executive compensation programs are designed to attract and retain the highest quality executive talent possible and, more importantly, to provide meaningful incentives for our executives to strive to enhance shareholder value over both near and longer term periods in a manner that balances potentially competing incentives that could create risk. The Compensation Committee’s current executive compensation philosophy is based on these fundamental principles: (i) all compensation should be referenced on an analysis of the practices of appropriate peer groups as well as industry surveys, (ii) compensation grants and changes to compensation should be performance and responsibility based, (iii) base salaries should be at approximately the median for similar positions of the applicable peer groups, and (iv) a substantial portion of executive compensation should be performance-based and tied to shareholder return over time.
 
The policy and the guidelines followed by the Committee historically have been directed toward providing compensation and incentives to our executive officers in order to achieve the following objectives:
 
 
reward performance and initiative;
 
 
be competitive with other REITs viewed as competitors for executive talent;
 
 
be significantly related to accomplishments and our short-term and long-term successes, particularly measured in terms of growth in adjusted funds from operations on a per share basis and total shareholder return;
 
 
structure incentive programs utilizing various performance metrics to minimize the potential for risk associated with over-weighting any particular performance metric;
 
 
align the interests of our executive officers with the interests of our stockholders; and
 
 
encourage and facilitate our executives’ ability to achieve meaningful levels of ownership of our stock.
 
The Role of Stockholder Say-on-Pay Votes
 
The Company provides its stockholders with the opportunity to cast an annual advisory vote on executive compensation (a “say-on-pay proposal”). At the Company’s 2014 annual meeting of stockholders, over 97% of the votes cast were voted in favor of the 2014 say-on-pay proposal. The Committee believes the voting results reflect strong stockholder support for the Company’s approach to executive compensation. The Committee considered these results in designing an executive compensation program going forward as described herein. The Committee will continue to consider the outcome of the Company’s say-on-pay votes when making future compensation decisions for the named executive officers.
 
In considering the voting results of prior say-on-pay proposals, the Committee was aware that the Company’s past practice of granting long-term incentives once every three years resulted in significant year to year variation in the value of grants. Accordingly, for performance periods beginning in 2014, the Committee decided to move from the approach of making grants of long-term incentives every three years to making grants of long-term incentives each year for rolling three year periods.
 
Employment Agreements
 
Effective November 15, 2013, the Committee and the Board of Directors approved new employment agreements with each of C. Taylor Pickett, Daniel J. Booth, Robert O. Stephenson, R. Lee Crabill and Michael D. Ritz, which were each executed on November 15, 2013. Pursuant to the employment agreements, these five senior executives have similarly structured compensation plans consisting of base salary, annual cash bonus opportunity, and long-term incentive opportunity. All of the employment agreements were set to expire on December 31, 2016. These employment agreements were superseded in 2015 by the employment agreements described in the next paragraph.
 
Effective March 31, 2015, the Committee approved new employment agreements (superseding the 2013 employment agreements) with each of C. Taylor Pickett, Daniel J. Booth, Robert O. Stephenson, R. Lee Crabill and Michael D. Ritz, which were each executed as of March 31, 2015. Effective April 1, 2015, the Committee approved an employment agreement with Steven J. Insoft, which was executed as of April 1, 2015. Steven Insoft, previously Aviv’s President and Chief Operating Officer, was appointed as Omega’s Chief Corporate Development Officer effective as of the completion of the Merger with Aviv and, as such, became an Executive Officer of Omega on April 1, 2015. Pursuant to the employment agreements, our six senior executives have similarly structured compensation plans consisting of base salary, annual cash bonus opportunity, and long-term incentive opportunity. All of the employment agreements expire on December 31, 2017. See “Compensation and Severance Agreements” herein.
 
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Elements of Compensation
 
Annual Base Salary
 
Our approach to base compensation levels has been to offer competitive salaries in comparison with prevailing market practices for comparable positions at our peer group companies. The Committee evaluates and reviews the executive officers’ annual base salaries in connection with its annual review of management’s performance and based on input from our Chairman of the Board and our Chief Executive Officer. In undertaking the annual review, the Committee considers the decision-making responsibilities of each position and the experience, work performance and team-building skills of each incumbent officer, as well as our overall performance and the achievement of our strategic objectives and budgets. The Committee generally views work performance as the single most important measurement factor, followed by team-building skills and decision-making responsibilities. The Committee also reviews internal pay equity in the context of the target percentile objectives when making base salary decisions, although neither internal equity nor any percentile target is a dispositive factor. The Committee also considers the effect of increasing base salary on other aspects of the overall compensation program.
 
For 2013 the Committee determined to target executive base salaries at the market median, based on the Size Peer Group weighted at 66-2/3% and Asset Peer Group weighted at 33-1/3%. This determination was based on advice from FPL which noted that this weighting was warranted given the high correlation between size and level of base pay. For 2014, the Committee approved base salary increases of approximately 2.5% for the executive officers, which the Committee determined to be appropriate taking into account the performance of the officers and inflation. For 2015 the Committee determined to target executive base salaries on an aggregate basis at the market median of executive base salaries on an aggregate basis for each member of the peer group. This determination was based on advice from FPL. The base salaries for our named executive officers for 2015 are set forth below.
       
Name
 
2015 Base Salary ($)
 
C. Taylor Pickett
  750,000  
Daniel J. Booth
  470,000  
Steven J. Insoft
  460,000  
Robert O. Stephenson
  450,000  
R. Lee Crabill
  350,000  
Michael D. Ritz
  300,000  

Annual Cash Bonus Opportunity
 
Our historical compensation practices have embodied the principle that annual cash bonuses that are based primarily on achieving objectives that enhance long-term stockholder value are desirable in aligning stockholder and management interests. The Committee strives to award individual annual bonuses for each named executive officer consistent with market practices for positions with comparable decision-making responsibilities and that reward individual contributions by executive officers, all in accordance with the terms of each executive officer’s employment agreement as discussed below.
 
We accrue estimated bonuses for our executive officers throughout the year service is performed relating to such bonuses, and thus bonuses are expensed in the year they are earned, assuming they are approved by our Board of Directors. Each officer must include his bonus in his taxable income in the year in which he receives it.
 
2014 Annual Cash Bonus Opportunity. The Committee established the 2014 cash bonus opportunities for the executive officers named below subject to the achievement of the performance criteria described below:
                         
   
Annual Incentive (% of Base Salary)
 
Name
 
Threshold
   
Target
   
High
 
C. Taylor Pickett
    100 %     125 %     150 %
Daniel J. Booth
    50 %     75 %     100 %
Robert O. Stephenson
    50 %     62.5 %     75 %
R. Lee Crabill
    30 %     50 %     70 %
Michael Ritz
    40 %     50 %     60 %
 
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The Committee established the cash bonus metrics and payout levels as set forth below:
                             
% of Bonus Opportunity
 
Metric
 
Threshold(4)
   
Target(4)
   
High(4)
 
40%
 
Adjusted FFO per share(1)
    $2.69       $2.72       $2.75  
30%
 
Tenant quality(2)
 
Less than 2%
   
Less than 1.5%
   
Less than 1%
 
30%
 
Subjective(3)
                       
 
(1)
Adjusted funds from operations per share. The adjusted FFO metric will be subject to adjustment to reflect the pro forma impact of changes to the Company’s capital structure that were not contemplated in the annual budget approved by the Board of Directors.
 
(2)
2014 uncollected rents as a percentage of 2014 gross revenues.
 
(3)
Subjective determination of the committee, including among other things, factors such as subjective evaluation of individual performance, Funded Debt / Total Asset Value and/or credit rating upgrade from a rating agency.
 
(4)
As to any bonus metric except the subjective metric, if the level of achievement of the relevant performance metric is between threshold and target or between target and high, then the portion of the bonus earned with respect to that metric will be based on linear interpolation.
 
FFO and adjusted FFO are non-GAAP financial measures. The Company calculates and reports FFO in accordance with the definition and interpretive guidelines issued by the National Association of Real Estate Investment Trusts (“NAREIT”), and consequently, FFO is defined as net income available to common stockholders, adjusted for the effects of asset dispositions and certain non-cash items, primarily depreciation and amortization and impairment on real estate assets. Investors and potential investors in the Company’s securities should not rely on non-GAAP financial measures as a substitute for any GAAP measure, including net income. Adjusted FFO is calculated as FFO available to common stockholders excluding the impact of certain non-cash stock-based compensation and certain revenue and expense items as more fully set forth in the reconciliation in the Company’s earnings release included as Exhibit 99.1 to the Form 8-K furnished on February 23, 2015. The Company believes that adjusted FFO provides an enhanced measure of the operating performance of the Company’s core portfolio as a REIT. The Company’s computation of adjusted FFO is not comparable to the NAREIT definition of FFO or to similar measures reported by other REITs.
 
In connection with determining the level of subjective bonus earned with respect to 2014 performance, the Chief Executive Officer provided the Committee with an assessment of each executive officer’s performance in 2014 and his respective contribution to the Company’s success in addressing the uncertain economy and challenging conditions in the capital markets. The Committee, after consultation with the Chief Executive Officer, determined to award each named executive officer the full amount of the subjective portion of his bonus for 2014. The principal factors noted in the assessment of the executive officers’ performance included:
 
 
the entering into a definitive merger agreement to acquire Aviv REIT;
 
 
the issuance of the Company’s $400 million aggregate principal amount of its 4.95% Senior Notes due 2024;
 
 
the payoff and termination of its $200 million 2013 term loan facility;
 
 
the completion of a new $1.2 billion unsecured credit facility;
 
 
the issuance of the Company’s $250 million aggregate principal amount of its 4.50% Senior Notes due 2025;
 
 
the issuance of $63 million of common stock via the Company’s at-the-market equity shelf programs at an average price of $34.33 per share;
 
 
the issuance of $72 million of common stock under, the Company’s Dividend Reinvestment and Common Stock Purchase Plan at an average price of $34.32 per share;
 
 
the payoff of $37 million long-term debt;
 
 
the completion of $566 million in new investments in 2014;
 
 
maintaining modest leverage and significant liquidity, which positioned the Company to take advantage of growth opportunities;
 
 
favorable lease extensions and re-leases; and
 
 
success in portfolio restructurings and workouts.
 
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Adjusted FFO per share for 2014 was $2.85 and tenant quality (uncollected rents as a percentage of gross revenues) for 2014 was 0%, both of which achieved and exceeded the high level of performance under the 2014 annual cash bonus program. Based on the actual performance for the 2014 year of the adjusted FFO and tenant quality components at the high level and the Committee’s determination that the subjective performance goal had been achieved at the high level, the Committee approved the following cash bonuses relating to 2014 performance:
                                         
   
Total Cash Bonus Paid for 2014 ($)
 
    C. Taylor
Pickett
    Daniel J.
Booth
   
Robert O.
Stephenson
   
R. Lee
Crabill
   
Michael D. Ritz
 
Adjusted FFO (40%)
   
430,500
     
180,400
     
123,000
     
94,710
     
65,190
 
Tenant Quality (30%)
   
322,875
     
135,300
     
92,250
     
71,033
     
48,893
 
Individual/Subjective Measures (30%)
   
322,875
     
135,300
     
92,250
     
71,032
     
48,892
 
Total Cash Bonus Paid for 2014
   
1,076,250
     
451,000
     
307,500
     
236,775
     
162,975
 
 
2015 Annual Cash Bonus Opportunity. The Committee established the 2015 cash bonus opportunities for the executive officers named below subject to the achievement of the performance criteria established below:
                         
   
Annual Incentive (% of Base Salary)
 
Name
 
Threshold
   
Target
   
High
 
C. Taylor Pickett
   
100
%    
125
%    
150
%
Daniel J. Booth
   
50
%    
75
%    
100
%
Stephen J. Insoft
   
50
%    
75
%    
100
%
Robert O. Stephenson
   
50
%    
75
%    
100
%
R. Lee Crabill
   
40
%    
60
%    
80
%
Michael Ritz
   
40
%    
60
%    
80
%
 
Steven Insoft’s 2015 bonus will not be prorated and will be based on his full annual rate of base salary for 2015 reflecting the Committee’s assessment of the value of his contribution in connection with the completion of the Merger with Aviv.
 
The Committee established the cash bonus metrics and payout levels as set forth below:
                 
% of Bonus Opportunity
 
Metric
 
Threshold(4)
 
Target(4)
 
High(4)
40%
 
Adjusted FFO per share(1)
 
$2.98
 
$3.01
 
$3.04
30%
 
Tenant quality(2)
 
Less than 2%
 
Less than 1.5%
 
Less than 1%
30%
 
Subjective(3)
         
 
 
(1)
Adjusted funds from operations per share. The adjusted FFO metric will be subject to adjustment to reflect the pro forma impact of changes to the Company’s capital structure that were not contemplated in the annual budget approved by the Board of Directors.
 
(2) 
2015 uncollected rents as a percentage of 2015 gross revenues.
 
(3)
Subjective determination of the committee, including among other things, factors such as subjective evaluation of individual performance, Funded Debt / Total Asset Value and/or credit rating upgrade from a rating agency.
 
(4)
As to any bonus metric except the subjective metric, if the level of achievement of the relevant performance metric is between threshold and target or between target and high, then the portion of the bonus earned with respect to that metric will be based on linear interpolation.
 
Stock Incentive Awards
 
Stock Incentives for 2011-2013
 
For the period of January 1, 2011 through December 31, 2013, the Committee considered granting equity-based awards in a manner that would provide executives the opportunity to earn, for superior total shareholder return performance above target levels, compensation at the 75th percentile of 2010 peer group. However, the Committee noted that the grant date fair value of performance-based awards is significantly discounted to reflect the risk of achievement of the performance goals, and as a result, the potential realizable value of performance awards at the 75th percentile for high performance would be higher than the level the Committee viewed as appropriate at the time. As a result, the Committee determined that stock incentive grants would be based on potentially realizable values rather than the grant date fair value for accounting purposes, reducing the size of the awards from the levels initially considered. “Potential realizable value” or “targeted realizable value” refers to the projected estimated accrued taxable compensation through December 31, 2013 (including for this purpose the performance restricted stock units (“PRSUs”) with a performance period ending December 31, 2013 that vest in 2014), assuming that Total Shareholder Return is at the threshold, target or high level.
 
The program for 2011 – 2013 was designed as a three-year compensation program, with multi-year PRSUs and time-based restricted stock granted once at the beginning of the cycle, and annual PRSUs granted in each calendar year. The 2011-2013 equity compensation program was comprised of a restricted stock grant, a multi-year PRSU grant and three annual PRSU grants for each named executive officer. Taking all equity compensation awards for the three-year period ending December 31, 2013 into account, 50% of the total equity compensation opportunity at target was performance-based, with the actual number of shares earned based on Total Shareholder Return performance. All equity compensation awards for 2011 – 2013 were earned and vested by December 31, 2013, except for the multi-year PRSUs all of which were earned at the high level as of December 31, 2013, but were subject to quarterly vesting in 2014.
 
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The multi-year PRSUs were granted under the Omega Healthcare Investors, Inc. 2013 Stock Incentive Plan. Each multi-year PRSU award entitled the officer to receive following the end of the performance period a number of shares of common stock that would vary depending on the level of performance (threshold, target or high) over the performance period. The number of shares attributable to the multi-year PRSUs that would be earned depended on the levels (threshold, target or high) of absolute total shareholder return, calculated in accordance with a methodology under the PRSU agreements (“absolute TSR” or “TSR”), and “relative TSR” (defined below) achieved over the three year performance period ending December 31, 2013 as set forth in the table below, with absolute TSR having a 75% weighting and relative TSR having a 25% weighting. “Relative TSR” means TSR ranked on a percentile basis relative to the average total shareholder return achieved by the companies comprising the MSCI U.S. REIT Index for the same period for which TSR is calculated and using the same methodology used for calculating TSR as described above. If performance had been below threshold, no shares under the PRSUs would have been be earned. If performance had been between threshold and target or between target and high, the number of shares earned under the PRSUs would have been determined under an interpolation formula. The baseline stock price from which TSR was measured for the multi-year PRSUs over the three-year performance period ending December 31, 2013 was $21.31, the volume-weighted average price (“VWAP”) for the Company’s common stock for the month of December 2010.
                         
Absolute TSR-Based PRSUs
 
Threshold
 
Target
 
High
TSR (annualized and compounded annually for the multi-year PRSUs)
   
8
%
   
10
%
   
12
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Relative TSR-Based PRSUs
                       
Percentile vs. Peer Group
   
50
th
   
65
th
   
80
th
 
The multi-year PRSU awards granted by the Committee as of January 1, 2011 allowed the named executive officers to earn the number of shares shown in the applicable column (threshold, target or high) of the chart below depending on performance.
 
2011 - 2013
Multi-Year Incentive Award
Absolute Total Shareholder Return Metric
(75% Weighting)
                         
Name
 
Threshold
8%
   
Target
10%
   
High
12%
 
C. Taylor Pickett
   
10,178
     
66,173
     
117,608
 
Daniel J. Booth
   
5,761
     
37,274
     
70,566
 
Robert O. Stephenson
   
4,064
     
28,153
     
44,713
 
R. Lee Crabill
   
2,575
     
20,156
     
32,327
 
Michael D. Ritz
   
1,012
     
5,105
     
8,193
 
 
2011 - 2013
Multi-Year Incentive Award
Relative Total Shareholder Return Metric
(25% Weighting)
                         
Name
 
Threshold
50th %-ile
   
Target
65th %-ile
   
High
80th %-ile
 
C. Taylor Pickett
   
3,392
     
22,058
     
39,203
 
Daniel J. Booth
   
1,920
     
12,424
     
23,522
 
Robert O. Stephenson
   
1,354
     
9,384
     
14,904
 
R. Lee Crabill
   
858
     
6,718
     
10,775
 
Michael D. Ritz
   
337
     
1,702
     
2,731
 
 
Our absolute TSR and our relative TSR for the three year period ended December 31, 2013 were 68.1% and the 90th percentile, respectively, and accordingly the multi-year PRSUs were earned at the high level. The multi-year PRSUs that were earned under the preceding table vested quarterly in 2014 (the year following completion of the three-year performance period).
 
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The number of earned and vested multi-year PRSUs were paid in equal quarterly amounts in Omega common stock, along with dividend equivalents to be paid in cash, within ten (10) days following the last day of each calendar quarter in 2014.
 
Dividend equivalents declared with respect to the applicable performance period accrued on PRSUs that subsequently vested and were paid at the date the shares attributable to vested PRSUs are distributable.
 
Stock Incentives from December 31, 2013 Forward
 
Overview
 
The Committee designed, with assistance and advice from FPL, a new long-term incentive compensation program for periods beginning in 2014. The Committee noted that the Company’s historical practice of granting long-term incentive compensation only once every three years resulted in a substantial portion of long-term incentive compensation depending on market price fluctuations during the final month of the three-year performance period. The Committee noted that its past practice of granting long-term incentive awards only once every three years created the appearance of significantly higher compensation (based on the grant date fair value of the full award) in the year of grant than in the remaining years of the program, even though the existing awards are earned over three years (subject to vesting over an additional year in the case of the multi-year PRSUs). Accordingly, rather than making a single round of restricted stock and PRSU awards for the 2014-2016 performance cycle with no additional long-term incentive awards until 2017, the Committee decided to implement a new long-term incentive compensation program effective January 1, 2014 with smaller annual equity grants than previous equity grants made once every three years. As a result, the long-term incentive compensation program was shifted from sequential “end-to-end” grant cycles (i.e., 2008-2010, 2011-2013) to “rolling three-year” grant cycles (i.e., 2014-2016, 2015-2017, 2016-2018). The Committee worked with FPL to determine the appropriate size of the annual awards and appropriate adjustments to reflect the transition to an annual grant cycle. As of November 15, 2013, the Committee approved the grant, effective January 1, 2014, of long-term incentive compensation awards to each of the officers as the first grant under the new annual rolling three year long-term incentive compensation program. As of November 15, 2013, the Committee also approved the grant, effective December 31, 2013, of one-time transition awards to each of the officers to make up for the lost compensation opportunity that the officers would otherwise suffer in the Company’s transition in 2014 from the three-year end-to-end long-term incentive compensation program to the annual rolling three-year long-term incentive compensation program.
 
Like the 2010 process, as part of the 2013 process, the Committee considered granting equity-based awards in a manner that would provide executives the opportunity to earn, for superior Total Shareholder Return performance above target levels, compensation at the 75th percentile of 2013 peer group. However, the Committee noted that the grant date fair value of performance-based awards is significantly discounted to reflect the risk of achievement of the performance goals, and that as a result the potential realizable value of performance awards at the 75th percentile for high performance would be higher than the level that the Committee viewed as appropriate at the time. As a result, in 2013 the Committee determined that stock incentive grants would be based on potentially realizable value rather than the grant date fair value for accounting purposes, reducing the size of the awards from the levels initially considered. Accordingly, the number of shares of common stock of the Company issuable under the annual grants and the transition grants are based on targeted realizable value potentially realizable by each officer, rather than the estimated compensation expense to be recognized by the Company for accounting purposes. The Company expects that the compensation expense associated with the annual and transition grants for accounting purposes will be substantially less than the targeted realizable value potentially realizable by the officers. Targeted realizable value includes projected dividends and reflects potential accrued taxable income at various levels of the Company’s performance as described below.
 
The significant features of the long-term incentive compensation grants are summarized below. The descriptions of the timing of payment below assumes that the officer has not elected to defer receipt of the common stock or dividend equivalents under the Company’s Deferred Stock Plan.
 
One-Time Transition Grants effective December 31, 2013
 
The Committee noted that transitioning from the prior three-year end-to-end long-term incentive compensation program to the annual rolling three-year long-term incentive compensation program would result in a vesting shortfall until the fourth year of rolling three-year grants. FPL calculated this shortfall to be 175% of the targeted realizable value of each executive’s annual grants described below. The Committee determined to address this shortfall by making one-time transition grants of time-based restricted stock units (“RSUs”) and PRSUs for the period from December 31, 2013 through December 31, 2016 with the projected realizable values at target shown in the table below. The threshold, target and high levels of long-term incentive compensation reflect the aggregate projected realizable value from the vesting of time-based RSUs and from PRSUs based on TSR performance at the indicated performance level over the performance period.
 
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Projected Aggregate Targeted Realizable
Value
Transition Grants* ($)
 
Name
 
Threshold
   
Target
   
High
 
C. Taylor Pickett
   
3,598,312
     
7,425,496
     
13,558,791
 
Daniel J. Booth
   
2,113,236
     
4,076,529
     
7,276,645
 
Robert O. Stephenson
   
1,491,260
     
3,117,939
     
5,737,421
 
R. Lee Crabill
   
1,100,234
     
2,213,936
     
4,042,656
 
Michael D. Ritz
   
215,215
     
440,967
     
1,213,120
 
   
 
*           Represents aggregate projected accrued taxable income realizable by the officer through December 31, 2016. The Company’s anticipated compensation expense is expected to be materially lower. See “Overview” above.
 
The Committee determined that the target realizable value of the transition grants should be split equally between time-based RSUs as a retention incentive and PRSUs as a performance incentive.
 
Restricted Stock Unit Awards. The number of shares of the Company’s common stock subject to the transition RSU grants was determined based on FPL’s calculation of the number of shares projected to produce as of December 31, 2016, one-half of the targeted realizable value at target in the table immediately above. Each RSU award is subject to three-year ratable vesting (1/3 per year) on December 31, 2014, 2015 and 2016 and will be subject to the officer’s continued employment on the vesting date, except in the case of death, “disability,” termination by the Company without “cause,” or resignation for “good reason” (as those terms are defined in the award agreement, each a “Qualifying Termination”) that occurs after, or within 60 days before, a “change in control” (as defined in the award agreement), in which case vesting is accelerated 100%. Dividend equivalents accrue on the RSUs and will be paid currently on unvested and vested units. The number of vested RSUs will be paid in Company common stock upon vesting.
 
The time-based RSUs granted by the Committee as of December 31, 2013 were for the number of shares shown in the chart below.
           
Name
  12/31/2013 Grants of
Time-Based Restricted Stock Units
 
C. Taylor Pickett
   
90,149
   
Daniel J. Booth
   
49,491
   
Robert O. Stephenson
   
37,853
   
R. Lee Crabill
   
26,878
   
Michael D. Ritz
   
5,354
   
 
Performance Restricted Stock Unit Awards. The number of shares of Company common stock subject to the transition grants of PRSUs at each performance level (threshold, target and high) is that number of shares that is projected to produce as of December 31, 2016, an amount equal to the targeted realizable value shown in the table above less the targeted realizable value attributable to the RSUs under the transition grants. Therefore, the total number of shares issued under the PRSUs if target performance is achieved will be equal to the number of shares subject to the RSUs under the transition grant. The total number of shares issued under the PRSUs if threshold performance is achieved will be less, and if high performance is achieved will be more, than the number of shares subject to the RSUs under the transition grant. The PRSUs are split into three component grants relating to the one-, two- and three-year performance periods starting December 31, 2013, respectively. The Committee determined to more heavily weight the three-year performance period by allocating 42.8% of targeted realizable value of the transition PRSUs to the three-year performance period component and 28.6% to each of the one-year and two-year performance period components. The number of PRSUs that will be earned for each performance period will depend 50% on the level of absolute TSR and 50% on the level of relative TSR achieved over the performance periods ending December 31, 2014, December 31, 2015 and December 31, 2016, respectively, as set forth in the table below.
 
TSR-Based PRSUs
 
Threshold
 
Target
 
High
 
TSR (annualized and compounded annually)
 
 8%
 
     10%    
 
 12%
 
               
Relative TSR-Based PRSUs
             
Basis Points
 
-300
 
0
 
+300
 
 
If TSR is between threshold and target or between target and high, TSR is rounded to the closet 0.5% percentage points and the number of PRSUs earned is determined by interpolation. If Relative TSR is between threshold and target or between target and high, Relative TSR is rounded to the closest 50 basis points and the number of PRSUs earned is determined by interpolation. The baseline stock price from which TSR will be measured for the PRSUs over each of the three performance periods is $31.43, the average closing price per share of the Company’s common stock for November and December 2013. Absolute TSR or TSR is determined by reference to the total aggregate change in the Company’s stock price per share over the performance period plus dividends per share declared with respect to the performance period. Relative TSR means the Company’s TSR as compared to the total shareholder return reported for the MSCI U.S. REIT Index for the performance period. For calculating absolute TSR and relative TSR, the starting and ending stock prices used are the November and December average closing price per share at the beginning and the end of the performance periods.
 
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The number of shares earned under the PRSUs will be determined as of the last day of each performance period. The earned PRSUs vest on the last day of the performance period, subject to the officer’s continued employment on the vesting date, except in the case of a Qualifying Termination or a change in control. If the Qualifying Termination is not in connection with a change in control, vesting will be prorated based on days elapsed through the date of the Qualifying Termination. If a change in control occurs, the performance period will end on the date of the change in control. If the Officer is employed on the date of the change in control or has a Qualifying Termination within 60 days after the change in control, depending on the level of TSR and Relative TSR as of the date of the change in control, all, a portion or none of the PRSUs will be earned and vested on the date of the change in control.
 
The PRSU awards granted by the Committee as of December 31, 2013 allow the officers to earn a number of shares shown in the applicable column (threshold, target or high) of the chart depending on the level of absolute (50% weighting) and relative TSR (50% weighting) performance over the applicable performance period as set forth above.
 
PRSUs Granted 12/31/2013 for 12/31/2013-12/31/2014
Performance Period
                         
Name
 
Threshold
   
Target
   
High
 
C. Taylor Pickett
   
554
     
25,782
     
63,620
 
Daniel J. Booth
   
1,312
     
14,154
     
33,826
 
Robert O. Stephenson
   
88
     
10,826
     
27,006
 
R. Lee Crabill
   
366
     
7,688
     
18,970
 
Michael D. Ritz
   
44
     
1,532
     
6,468
 
 
PRSUs Granted 12/31/2013 for 12/31/2013-12/31/2015
Performance Period
                         
Name
 
Threshold
   
Target
   
High
 
C. Taylor Pickett
   
554
     
25,783
     
63,621
 
Daniel J. Booth
   
1,313
     
14,155
     
33,826
 
Robert O. Stephenson
   
89
     
10,826
     
27,004
 
R. Lee Crabill
   
365
     
7,686
     
18,968
 
Michael D. Ritz
   
44
     
1,530
     
6,468
 
 
PRSUs Granted 12/31/2013 for 12/31/2013-12/31/2016
Performance Period
                         
Name
 
Threshold
   
Target
   
High
 
C. Taylor Pickett
   
828
     
38,584
     
95,208
 
Daniel J. Booth
   
1,964
     
21,182
     
50,620
 
Robert O. Stephenson
   
133
     
16,201
     
40,413
 
R. Lee Crabill
   
547
     
11,504
     
28,387
 
Michael D. Ritz
   
66
     
2,292
     
9,679
 
 
The earned and vested PRSUs will be paid in Company common stock, along with dividend equivalents to be paid in cash, within ten (10) days following the last day of the performance period or on the date of a change in control, if earlier.
 
Dividend equivalents declared with respect to the applicable performance period accrue on PRSUs that subsequently vest. Accrued dividend equivalents will be paid to the officer at the date the shares attributable to vested PRSUs are distributable.
 
The ending stock price for measuring absolute TSR and relative TSR for the transition PRSUs that were subject to a one year performance period ending December 31, 2014 was $38.32, the average closing price per share of the Company’s common stock for November and December 2014. This represented TSR of approximately 29%, well in excess of the 12% level required to earn the PRSUs at the high level. As a result, the absolute TSR-based transition PRSUs that were subject to a one year performance period ending December 31, 2014 were earned at the high level. The Company’s TSR for the one year period ending December 31, 2014 was 211 basis points higher than the MSCI U.S. REIT Index for the same period. As a result, the relative TSR-based transition PRSUs that were subject to a one year performance period ending December 31, 2014 were earned at a level between the target and high levels and the number of relative TSR-based transition PRSUs earned was determined by rounding 211 basis points to 200 basis points and then applying interpolation in accordance with the requirements of the PRSU agreements. This resulted in a number of relative TSR-based transition PRSUs being earned that was 198% of the number of units at target level and 80% of the number of units at high.
 
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Annual Grants for Rolling Three-Year Periods commencing January 1, 2014
 
As mentioned above under the heading “Overview” herein, as of November 15, 2013 the Committee approved the grant, effective January 1, 2014, of long-term incentive compensation awards to each of the officers as the first grant under the new annual rolling three year long-term incentive compensation program (as well as the one-time transition grant effective December 31, 2013 discussed above under the heading “One-Time Transition Grants effective December 31, 2013”). The Committee based the size of the grants of RSUs and PRSUS effective January 1, 2014 on FPL’s calculation of the grant levels that would provide each officer an opportunity to earn that number of shares of common stock of the Company over a three year period that would produce the targeted realizable value (including dividends) as of December 31, 2016 shown in the table below. The threshold, target and high levels of long-term incentive reflect the aggregate projected realizable value from the vesting of time-based RSUs and from PRSUs based on TSR performance at the indicated performance level over the performance period.
 
Targeted Realizable Value
Annual Grants for 2014-2016 Performance Period*($)
                         
Name
 
Threshold
   
Target
   
High
 
C. Taylor Pickett
   
2,056,178
     
4,243,141
     
7,747,880
 
Daniel J. Booth
   
1,207,563
     
2,329,445
     
4,158,083
 
Robert O. Stephenson
   
849,292
     
1,781,680
     
3,278,526
 
R. Lee Crabill
   
628,705
     
1,265,106
     
2,310,089
 
Michael D. Ritz
   
121,550
     
251,981
     
693,211
 
   
 
*
 
Represents projected accrued taxable income realizable by the officer as of December 31, 2016. The Company’s anticipated compensation expense is expected to be materially lower. See “Overview” above.
 
The Committee determined that the target realizable value of the annual long-term incentive compensation grants should be split equally between RSUs as a retention incentive and PRSUs as a performance incentive.
 
Restricted Stock Unit Awards. The number of shares of Company common stock subject to the annual RSU award was determined based on FPL’s calculation of the number of shares projected to produce as of December 31, 2016, one-half of the taxable compensation amount at target in the table immediately above. Each RSU award is subject to three-year cliff vesting on December 31, 2016 and will be subject to the officer’s continued employment on the vesting date, except in the case of a Qualifying Termination. If the Qualifying Termination is not in connection with a change in control, the officer will vest in the percentage of the RSUs set forth below.
         
Year of Qualifying Termination
    Percentage Vested  
2014
   
331/3%
 
2015
   
662/3%
 
2016
   
100%
 
 
If the Qualifying Termination occurs after, or within 60 days before, a change in control, vesting will be accelerated 100%. Dividend equivalents accrue on the RSU awards and will be paid currently on unvested and vested units. The number of vested RSUs will be paid in Company common stock upon vesting.
 
The time-based RSUs granted as of January 1, 2014 were for the number of shares shown in the chart below.
           
Name
   
1/1/2014 Grants of
Time-Based Restricted Stock Units
 
C. Taylor Pickett
   
51,514
   
Daniel J. Booth
   
28,281
   
Robert O. Stephenson
   
21,630
   
R. Lee Crabill
   
15,359
   
Michael D. Ritz
   
3,059
   
 
Performance Restricted Stock Unit Awards. The total number of shares of Company common stock subject to annual grants of PRSUs at each performance level (threshold, target and high) is that number of shares that is projected to produce as of December 31, 2016, an amount equal to the targeted realizable value shown in the table above, less the projected taxable compensation amount attributable to the RSUs under the annual grants. Therefore, like the transition grants, the total number of shares issued under these PRSUs if target performance is achieved will be equal to the number of shares subject to the RSUs under the annual grant. Similarly, the total number of shares issued under the PRSUs if threshold performance is achieved will be less, and if high performance is achieved will be more, than the number of shares subject to the RSUs under the annual grant.
 
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The level of PRSUs that will be earned will be based (i) 50% on the level of absolute TSR and (ii) 50% on the level of relative TSR achieved over the three year performance period ending December 31, 2016, as set forth in the same table that applies to the transition grants of PRSUs above.
 
The PRSU awards granted by the Committee as of January 1, 2014 allow the officers to earn a number of shares shown in the applicable column (threshold, target or high) of the chart depending on the level of performance over the three year performance period ending December 31, 2016.
 
PRSUs Granted 1/1/2014 for 1/1/2014-12/31/2016
Performance Period
                         
Name
 
Threshold
   
Target
   
High
 
C. Taylor Pickett
   
1,106
     
51,514
     
127,114
 
Daniel J. Booth
   
2,622
     
28,280
     
67,584
 
Robert O. Stephenson
   
104
     
21,630
     
53,956
 
R. Lee Crabill
   
730
     
15,358
     
37,900
 
Michael D. Ritz
   
52
     
3,060
     
12,922
 
 
The baseline stock price from which TSR will be measured for the PRSUs over the three year performance period ending December 31, 2016 is $31.43, the average closing price per share of the Company’s common stock for November and December 2013.
 
The number of shares earned under the PRSUs will be determined as of the last day of the performance period. 25% of the earned PRSUs will vest on the last day of each quarter in 2017, subject to the officer’s continued employment on the vesting date, except in the case of a Qualifying Termination or a change in control. If the Qualifying Termination is not in connection with a change in control, vesting will be prorated based on days elapsed through the date of the Qualifying Termination or will be accelerated 100% if the Qualifying Termination occurs on or after December 31, 2016. Like the transition grants of PRSUs, if a change in control occurs, the performance period will end on the date of the change in control. If the officer is employed on the date of the change in control or has a Qualifying Termination within 60 days after the change in control, depending on the level of TSR and Relative TSR as of the date of the change in control, all, a portion or none of the PRSUs will be earned and vested on the date of the change in control. The earned and vested PRSUs will be paid in Company common stock, along with dividend equivalents to be paid in cash, within ten (10) days following the last day of the performance period or on the date of a change in control, if earlier.
 
Dividend equivalents declared with respect to the applicable performance period accrue on PRSUs that subsequently vest and are paid. Accrued dividend equivalents are paid to the employee at the date the shares attributable to vested PRSUs are distributable.
 
 Annual Grants for Rolling Three-Year Periods commencing January 1, 2015
 
Overview
 
On March 30, 2015, the Compensation Committee approved the grant to the officers of long-term incentive compensation awards, effective March 31, 2015 (April 1, 2015 with respect to Steven Insoft) and subject to forfeiture if the Merger did not occur. The material terms (other than amounts) of the 2015 long-term incentive awards are similar to the long-term incentive awards previously granted effective January 1, 2014. However, the 2015 long-term incentive compensation awards approved by the Compensation Committee include, as part of the awards, LTIP Units of the Omega OP, which are earned based on Omega’s TSR performance. LTIP Units that become earned and vested are convertible on one-for-one basis into OP Units, which in turn can generally be redeemed for cash or Omega common stock.
 
The significant features of the long-term incentive compensation grants are summarized below. The descriptions of the timing of payment below assume that the officer has not elected to defer receipt of the Omega common stock or dividend equivalents under Omega’s Deferred Stock Plan.
 
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Description of Grants
 
Each officer’s grant, effective March 31, 2015 (or April 1, 2015 for Steven Insoft), included time-based RSUs, PRSUs and performance-based LTIP Units. The RSUs and PRSUs provide an opportunity to earn a number of shares of common stock of Omega over a three year period commencing January 1, 2015. The LTIP Units provide an opportunity to earn a number of LTIP Units in Omega’s OP over the same three year period. The aggregate opportunity provides each officer with the ability to earn a number of shares of Omega common stock and a number of LTIP Units that together would produce the projected estimated accrued economic value (including dividends and distributions) as of December 31, 2017 shown in the table below. The threshold, target and high levels of long-term incentive compensation are based in part on absolute TSR performance and relative TSR performance for the performance period as compared to the MSCI U.S. REIT Index. The methodology for determining these amounts was as follows. FPL estimated median total annual compensation on an aggregate basis, using grant date fair value data, for the top five executive officers at the companies in Omega’s peer group used for benchmarking. Target median total annual compensation for the top five executive officers of Omega on an aggregate basis was designed to be generally in line with the median total annual compensation on an aggregate basis for the peer group. Compensation for threshold performance was designed, based on grant date fair values, to approximate 75% of compensation for target performance, and high performance was designed, based on grant date fair values, to approximate 150% of compensation for target performance. The aggregate compensation at the threshold, target and high performance levels, based on grant date fair values, was then converted into projected estimated accrued economic value using a conversion factor intended to replicate Omega’s estimated ratio of grant date fair value of 2014 compensation for the top five executive officers at each performance level to the projected estimated economic value of 2014 compensation for the top five executive officers at each performance level. The aggregate amount was then allocated among the top five executive officers of Omega by the Compensation Committee in a manner that generally preserved internal pay equity while making adjustments that the Compensation Committee determined to be appropriate and taking into account that Steven Insoft would be one of the top five executive officers for 2015 subsequent to the completion of the Merger.
 
Projected Aggregate Accrued Taxable
 Long-term Incentive Compensation Opportunity
Annual Grant for 2015 Performance Period*
                         
Name
 
Threshold
   
Target
   
High
 
C. Taylor Pickett
  $
2,029,342
    $
4,189,297
    $
7,701,840
 
Daniel J. Booth
  $
1,191,394
    $
2,298,272
    $
4,134,338
 
Steven J, Insoft
  $
1,114,602
    $
2,162,884
    $
3,903,904
 
Robert O. Stephenson
  $
1,037,770
    $
2,027,628
    $
3,673,701
 
R. Lee Crabill
  $
597,225
    $
1,224,772
    $
2,273,384
 
Michael D. Ritz
  $
224,070
    $
434,100
    $
973,560
 
   
*           Represents projected estimated accrued economic value realizable by the officer as of December 31, 2017. The amounts of the 2015 long-term incentive compensation grants are based on projected estimated accrued economic value potentially realizable by each officer, rather than the estimated compensation expense to be recognized by Omega under generally accepted accounting principles (“GAAP”). Omega expects that the compensation expense associated with the annual grants under GAAP will be substantially less than the projected estimated accrued economic value realizable by the officers. Projected estimated accrued economic value reflects the amount at various levels of performance and includes projected dividends and distributions.
 
Time-based Restricted Stock Unit Awards. Each officer’s 2015 annual long-term incentive compensation award consists in part of a time-based RSU award. The number of shares of Omega common stock subject to the RSU award is projected to produce as of December 31, 2017, one-half of the projected estimated accrued economic value at target in the table above.
 
The number of shares subject to the time-based RSUs granted as of March 31, 2015 (April 1, 2015 as to Steven Insoft) are shown in the chart below:
           
Name
 
Number of Time-Based Restricted
Stock Units
 
C. Taylor Pickett
    48,256    
Daniel J. Booth
    26,473    
Steven J. Insoft
    24,914    
Robert O. Stephenson
    23,356    
R. Lee Crabill
    14,108    
Michael D. Ritz
    5,000    
 
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Each RSU award is subject to three-year cliff vesting on December 31, 2017 and is subject to the officer’s continued employment on the vesting date, except in the case of a Qualifying Termination. If the Qualifying Termination is not in connection with a change in control, the officer will vest in the percentage of the RSUs set forth below.
         
Year of Qualifying Termination
    Percentage Vested  
2015
   
331/3%
 
2016
   
662/3%
 
2017
   
100%
 
 
If the Qualifying Termination is in connection with a change in control, vesting will be accelerated and the award will vest at 100%. Dividend equivalents accrue on the RSU awards and will be paid currently on unvested and vested units. The number of vested RSUs will be paid in Omega common stock upon vesting.
 
Performance Restricted Stock Unit Awards. Additionally, each officer’s 2015 annual long-term incentive compensation consists in part of an award of PRSUs. The number of shares of Omega common stock subject to PRSUs at each performance level (threshold, target and high) is projected to produce as of December 31, 2017, the projected estimated accrued economic value shown in the table above, less the projected estimated accrued economic value attributable to the RSUs and LTIP Units. Therefore, the total number of shares issued under the PRSUs, if target performance is achieved, will be equal to one-half the number of shares subject to the time-based RSUs. Similarly, the total number of shares issued under the PRSUs if threshold performance is achieved will be less, and if high performance is achieved will be more, than one-half the number of shares subject to the RSUs.
 
The level of PRSUs that will be earned will be based on the level of relative TSR achieved over the three year performance period ending December 31, 2017, as set forth in the table below:
 
Relative TSR-Based PRSUs
 
Threshold
 
Target
 
High
 
Basis Points
 
-300
 
0
 
+300
 
 
If Relative TSR is between threshold and target or between target and high, Relative TSR is rounded to the closest 50 basis points and the number of PRSUs earned is determined by interpolation. The baseline stock price from which Relative TSR will be measured for the PRSUs over the three year performance period ending December 31, 2017 is $38.32, the average closing price per share of Omega Common Stock for November and December 2014.
 
The PRSU awards granted by the Compensation Committee effective as of March 31, 2015 (April 1, 2015 as to Steven Insoft) allow the Executive Officers to earn a number of shares shown in the applicable column (threshold, target or high) of the chart below depending on the level of Relative TSR achieved over the three year performance period ending December 31, 2017:
                         
Name
 
Threshold
   
Target
   
High
 
C. Taylor Pickett
   
779
     
24,128
     
58,945
 
Daniel J. Booth
   
1,386
     
13,237
     
31,357
 
Steven J. Insoft
   
1,223
     
12,457
     
29,651
 
Robert O. Stephenson
   
1,059
     
11,678
     
27,947
 
R. Lee Crabill
   
276
     
7,054
     
17,467
 
Michael D. Ritz
   
250
     
2,500
     
8,000
 
 
The number of shares earned under the PRSUs will be determined as of the last day of the performance period. The performance period normally ends at December 31, 2017. 25% of the earned PRSUs will vest on the last day of each quarter in 2018, subject to the officer’s continued employment on the vesting date, except in the case of a Qualifying Termination. If the Qualifying Termination is not in connection with a change in control, vesting will be prorated based on days elapsed in the performance period through the date of the Qualifying Termination or will be accelerated 100% if the Qualifying Termination occurs on or after December 31, 2017. If a change in control occurs during the three year performance period, the performance period will end on the date of the change in control. If the officer is employed on the date of a change in control or has a Qualifying Termination in connection with a change in control, depending on the level of Relative TSR as of the date of the change in control, all, a portion, or none of the PRSUs will be earned and vested on the date of the change in control.
 
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The earned and vested PRSUs will be paid in Omega common stock within ten days following vesting or on the date of a change in control, if earlier.
 
Dividend equivalents payable to shareholders of record after January 1, 2015 accrue on PRSUs that are subsequently earned at the end of the performance period. Accrued dividend equivalents will be paid to the officer within ten days following the last day of the performance period and dividend equivalents earned thereafter on the earned and unvested PRSUs are paid currently.
 
LTIP Units. The remainder of each officer’s 2015 annual long-term incentive compensation consists of an award of performance-based LTIP Units. As of March 31, 2015 (or April 1, 2015 for Steven Insoft), each officer received a number of LTIP Units projected to produce as of December 31, 2017, the projected estimated accrued economic value shown in the table above for the high level, less the projected estimated accrued economic value attributable to the RSUs and the PRSUs at the high level.
 
Earning and Vesting of LTIP Units. The number of LTIP Units earned (“Earned LTIP Units”) by each officer is determined based on the level of absolute TSR achieved over the three year performance period ending December 31, 2017, based on the following table:
 
TSR-Based LTIP Units
   
Threshold
 
Target
 
High
TSR (annualized and compounded annually)
   
8
%  
10
 
12
 
If TSR is between threshold and target or between target and high, TSR is rounded to the closet 0.5% percentage points and the number of LTIP Units earned is determined by interpolation. The baseline stock price from which TSR will be measured for the LTIP Units over the three year performance period ending December 31, 2017 is $38.32, the average closing price per share of Omega common stock for November and December 2014.
 
The total number of LTIP Units earned at each performance level (threshold, target and high) corresponds to that number of shares of Omega Common Stock that is projected to produce as of December 31, 2017, the projected accrued economic value shown in the table above, less the projected accrued economic value attributable to the RSUs and PRSUs. Therefore, the total number of Earned LTIP Units if target performance is achieved will be equal to one-half the number of shares subject to the time-based RSUs. Similarly, the total number of Earned LTIP Units if threshold performance is achieved will be less, and if high performance is achieved will be more, than one-half the number of shares subject to the RSUs. All LTIP Units that have not become Earned LTIP Units as of the last day of the performance period are forfeited as of the last day of the performance period.
 
The LTIP Unit awards granted by the Compensation Committee effective as of March 31, 2015 (April 1, 2015 as to Steven Insoft) allow the officers to earn a number of LTIP Units shown in the applicable column (threshold, target or high) of the chart below depending on the level of TSR over the three year performance period ending December 31, 2017:
                     
Name
 
Threshold
 
Target
 
High
 
C. Taylor Pickett
   
779
   
24,128
   
58,945
 
Daniel J. Booth
   
1,386
   
13,237
   
31,357
 
Steven J. Insoft
   
1,223
   
12,457
   
29,651
 
Robert O. Stephenson
   
1,059
   
11,678
   
27,947
 
R. Lee Crabill
   
276
   
7,054
   
17,467
 
Michael D. Ritz
   
250
   
2,500
   
8,000
 
 
Earned LTIP Units are subject to time-based vesting. 25% of the Earned LTIP Units will vest on the last day of each quarter in 2018, subject to the officer’s continued employment on the vesting date, except in the case of a Qualifying Termination. If the Qualifying Termination is not in connection with a change in control, vesting will be prorated based on days elapsed in the performance period through the date of the Qualifying Termination or will be accelerated 100% if the Qualifying Termination occurs on or after December 31, 2017. If a change in control occurs during the three year performance period, the performance period will end on the date of the change in control. If the officer is employed on the date of a change in control or has a Qualifying Termination in connection with a change in control, depending on the level of TSR as of the date of the change in control, all, a portion, or none of the LTIP Units will be earned and vested on the date of the change in control.
 
22
 
 
Distributions to Holders of LTIP Units. While the officers hold LTIP Units that are both unvested and unearned, they will receive distributions from OHI LP when a distribution is paid to holders of LP Units of an amount per LTIP Unit (the “Interim Distribution”), and a corresponding allocation of “Net Income and Net Loss” (as defined in the Partnership Agreement) per LTIP Unit, equal to (i) 10% of the regular periodic distributions per LP Unit paid by OHI LP to LP Unit holders and a corresponding percentage allocation of Net Income and Net Loss attributable to the regular periodic distributions per LP Unit and (ii) 0% of the special distributions and other distributions not made in the ordinary course per LP Unit paid by OHI LP to LP Unit holders and a corresponding 0% allocation of Net Income and Net Loss attributable to the special distributions and other distributions per LP Unit not made in the ordinary course.
 
Additionally, within ten business days after the date any LTIP Units are earned, the officer holding such LTIP Units will receive a distribution from OHI LP per Earned LTIP Unit (and a corresponding allocation of Net Income and Net Loss per Earned LTIP Unit) equal to the excess of: (i) the amount of distributions from OHI LP that would have been paid per LTIP Unit if the LTIP Unit had been an LP Unit on January 1, 2015 over (ii) the Interim Distribution per LTIP Unit.
 
In addition, with respect to distributions and allocations of Net Income and Net Loss that accrue following the date that any LTIP Units become an Earned LTIP Unit, whether vested or unvested, the officer will receive with respect to each such LTIP Unit, distributions and allocations of Net Income and Net Loss pursuant to the partnership agreement of Omega OP determined without regard to the adjustments described above.
 
Other Benefits
 
All employees may participate in our 401(k) Retirement Savings Plan (the “401(k) Plan”). We provide this plan to help our employees save some amount of their cash compensation for retirement in a tax efficient manner. Under the 401(k) Plan, employees are eligible to make contributions, and we, at our discretion, may match contributions and make a profit sharing contribution. We do not provide an option for our employees to directly invest in our stock under the 401(k) Plan.
 
We provide a competitive benefits package to all full-time employees which includes health and welfare benefits, such as medical, dental, disability insurance and life insurance benefits. The plans under which these benefits are offered do not discriminate in scope, terms or operation in favor of officers and directors and are available to all salaried employees. We have no structured executive perquisite benefits (e.g., club memberships or company vehicles) for any executive officer, including the named executive officers, and we currently do not provide supplemental pensions to our employees, including the named executive officers.
 
Tax Deductibility of Executive Compensation
 
The SEC requires that this report comment upon our policy with respect to Section 162(m) of the Internal Revenue Code. Section 162(m) disallows a federal income tax deduction for compensation over $1.0 million to any of the named executive officers (other than the Chief Financial Officer) unless the compensation is paid pursuant to a plan that is performance-related, non-discretionary and has been approved by our stockholders. We believe that, because we qualify as a REIT under the Internal Revenue Code and therefore are not subject to federal income taxes on our income to the extent distributed, the payment of compensation that does not satisfy the requirements of Section 162(m) will not generally affect our net income, although to the extent that compensation does not qualify for deduction under Section 162(m), a larger portion of stockholder distributions may be subject to federal income taxation as dividend income rather than return of capital. We do not believe that Section 162(m) will materially affect the taxability of stockholder distributions, although no assurance can be given in this regard due to the variety of factors that affect the tax position of each stockholder. For these reasons, Section 162(m) does not directly govern the Committee’s compensation policy and practices.
 
Risk Associated with Compensation
 
We believe that risks arising from our compensation policies and practices for our employees are not reasonably likely to have a material adverse effect on the Company. In addition, the Committee believes that the mix and design of the elements of executive compensation do not encourage management to assume excessive risks.
 
The Committee considered various factors that have the effect of mitigating risk and, with assistance of FPL, reviewed the elements of executive compensation to determine whether any portion of executive compensation encourages excessive risk taking. The Committee concluded that the following risk oversight and compensation design features guard against excessive risk-taking:
 
 
The Company has developed and adheres to effective processes for developing strategic and annual operating plans and approval of portfolio and capital investments;
 
 
The Company has strong internal financial controls;
 
 
Base salaries are consistent with each executive’s responsibilities so that they are not motivated to take excessive risks to achieve a reasonable level of financial security;
 
23
 

 

 
 
The determination of incentive awards is based on a review of a variety of indicators of performance as well as a meaningful subjective assessment of personal performance, thus diversifying the risk associated with any single indicator of performance;
 
 
The design of our multi-year compensation plan rewards executives for driving sustainable growth for stockholders over three-year performance periods;
 
 
The transition to rolling annual grants of long-term incentive compensation increases the importance of sustained long-term performance over time and reduces the influence of trading fluctuations within the final month of an end-to-end three-year program;
 
 
The vesting periods for equity compensation awards encourage executives to focus on maintaining dividends and stock price appreciation; and
 
 
The mix between fixed and variable, annual and long-term and cash and equity compensation is designed to encourage balanced strategies and actions that are in the Company’s long-term best interests.
 
Compensation Committee Report
 
The following is a report by the Compensation Committee regarding our executive officer compensation program.
 
The Compensation Committee has reviewed and discussed with management the disclosure set forth under the heading “Compensation Discussion and Analysis” above and, based on such review and discussion, the Compensation Committee has recommended to the Board that such “Compensation Discussion and Analysis” be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.
 
 
Compensation Committee of the Board of Directors
   
 
Thomas F. Franke, Chairman
 
Harold J. Kloosterman
 
Bernard J. Korman
 
Edward Lowenthal
 
Stephen D. Plavin
 
24
 

 

 
Summary Compensation Table
 
The following table summarizes the compensation of our “named executive officers” for the years ended December 31, 2014, 2013 and 2012. Our named executive officers are our Chief Executive Officer, our Chief Financial Officer and the three other most highly compensated executive officers.
                                               
                               
Non-Equity
             
                               
Incentive
             
                   
Stock
   
Option
   
Plan
   
All Other
       
       
Salary
   
Bonus
   
Awards
   
Awards
    Compensation    
Compensation
   
Total
 
Name and Principal Position
  Year  
($)
   
($)(1)
   
($)(2)
   
($)
   
($)(3)
   
($)(4)
   
($)
 
(A)
 
(B)
 
(C)
   
(D)
   
(E)
 
(F)
   
(G)
   
(I)
   
(J)
 
C. Taylor Pickett
 
2014
    717,500       322,875       2,994,453             753,375       15,600       4,803,803  
Chief Executive Officer
 
2013
    700,000       315,000       5,534,915             735,000       15,300       7,300,215  
   
2012
    636,000       190,800       502,234             763,200       15,000       2,107,234  
                                                             
Daniel J. Booth
 
2014
    451,000       135,300       1,623,937             315,700       15,600       2,541,537  
Chief Operating Officer
 
2013
    440,000       132,000       3,028,252             308,000       15,300       3,923,552  
   
2012
    403,500       80,700       300,799             322,800       15,000       1,122,799  
                                                             
Robert O. Stephenson
 
2014
    410,000       92,250       1,262,864             215,250       15,600       1,995,964  
Chief Financial Officer
 
2013
    400,000       90,000       2,316,305             210,000       15,300       3,031,605  
   
2012
    351,000       52,650       191,593             210,600       15,000       820,843  
                                                             
R. Lee Crabill
 
2014
    338,250       71,033       893,363             165,743       15,600       1,483,989  
Senior Vice-President of
 
2013
    330,000       69,300       1,641,187             161,700       15,300       2,217,487  
Operations
 
2012
    315,750       41,048       138,436             164,190       15,000       674,424  
                                                             
Michael D. Ritz
 
2014
    271,625       48,893       233,477             114,083       15,600       683,678  
Chief Accounting Officer
 
2013
    265,000       47,700       425,116             111,300       15,300       864,416  
   
2012
    242,000       21,780       35,122             87,120       15,000       401,022  
 

(1)
Bonuses are reported in the year earned, whether or not paid before year end. Reflects the subjective component of annual cash bonus program payments as described under “Elements of Compensation — Annual Cash Bonus Opportunity.”
 
(2)
Represents the fair value for accounting purposes as of the date of grant (excluding the effect of estimated forfeitures). The fair value of PRSUs is based on the probable outcome of the performance conditions as of the grant date. For 2014, includes the grant date fair value of the PRSUs granted January 2014. For 2013, includes the grant date fair value of the annual RSUs and PRSUs granted January 2013 and the transition grants granted as of December 31, 2013. For 2012, includes the annual PRSUs granted in January 2012.
 
(3)
Bonuses are reported in the year earned, whether or not paid before year end. Represents the objective performance components (adjusted FFO per share and tenant quality) of annual cash bonus program payments as described under “Elements of Compensation — Annual Cash Bonus Opportunity.”
 
(4)
“All Other Compensation” reflects 401(k) matching contributions. In accordance with SEC rules, dividend equivalents associated with PRSUs are not included in “All Other Compensation” because those amounts were factored into the grant date fair values.
 
25
 

 

 
Grants of Plan Based Awards
 
The following table contains information relating to the plan based awards grants made in 2014 to our named executive officers under the Omega Healthcare Investors, Inc. 2013 Stock Incentive Plan and is intended to supplement the 2014 Summary Compensation Table above.
                                                   
Grant Date
 
                Estimated Future Payouts    
Estimated Future Payouts
   
Fair Value
 
       
Date of
      Under Non-Equity Incentive    
Under Equity Incentive
   
of Stock
 
       
Compensation
      Plan Awards     Plan Awards    
and Option
 
   
Grant
 
Committee
 
Grant
       
Target
   
High
               
High
   
Awards
 
Name
 
Type
 
Action
 
Date
 
Threshold ($)
   
($)
   
($)
   
Threshold (#)
   
Target (#)
    (#)    
($)(1)
 
C. Taylor
 
Annual Cash
                                                   
Pickett
 
Bonus(Objective
                                                   
   
Metrics)(2)
 
01/15/2014
 
01/15/2014
    502,250       627,813       753,375                            
   
RSUs(3)
 
11/15/2013
 
01/01/2014
                                                1,535,117  
   
PRSUs(4)
 
11/15/2013
 
01/01/2014
                            1,106       51,514       127,114       1,459,336  
                                                                     
Daniel J.
 
Annual Cash
                                                               
Booth
 
Bonus(Objective
                                                               
   
Metrics)(2)
 
01/15/2014
 
01/15/2014
    157,850       236,775       315,700                                  
   
RSUs(3)
 
11/15/2013
 
01/01/2014
                                                    842,774  
   
PRSUs(4)
 
11/15/2013
 
01/01/2014
                            2,622       28,280       67,584       781,164  
                                                                     
Robert O.
 
Annual Cash
                                                               
Stephenson
 
Bonus(Objective
                                                               
 
 
Metrics)(2)
 
01/15/2014
 
01/15/2014
    143,500       179,375       215,250                                  
   
RSUs(3)
 
11/15/2013
 
01/01/2014
                                                    644,574  
   
PRSUs(4)
 
11/15/2013
 
01/01/2014
                            104       21,630       53,956       618,290  
                                                                     
R. Lee
 
Annual Cash
                                                               
Crabill
 
Bonus(Objective
                                                               
   
Metrics)(2)
 
01/15/2014
 
01/15/2014
    71,033       118,388       165,743                                  
   
RSUs(3)
 
11/15/2013
 
01/01/2014
                                                    457,698  
   
PRSUs(4)
 
11/15/2013
 
01/01/2014
                            730       15,358       37,900       435,665  
                                                                     
Michael D.
 
Annual Cash
                                                               
Ritz
 
Bonus(Objective
                                                               
   
Metrics)(2)
 
01/15/2014
 
01/15/2014
    76,055       95,069       114,083                                  
   
RSUs(3)
 
11/15/2013
 
01/01/2014
                                                    91,158  
   
PRSUs(4)
 
11/15/2013
 
01/01/2014
                            52       3,060       12,922       142,318  
 

(1)
Represents the fair value as of the applicable grant date. See the Option Exercises and Stock Vested table below for information regarding amounts earned with respect to awards vesting in 2014.
 
(2)
Reflects the range of bonus payments that were possible as of the grant date under the objective metric components of our annual cash bonus program for 2014. The actual bonuses earned in 2014 under the objective metric components are reflected in the Summary Compensation Table above under the caption “Non-Equity Incentive Plan Compensation.” For more information regarding annual bonus opportunities including the subjective component, see the discussion under “Annual Cash Opportunity” in the Compensation Discussion and Analysis section of this Filing.
 
(3)
RSUs subject to three-year cliff vesting on December 31 2016 subject to continued employment on the vesting date except in the case of a Qualifying Termination that occurs after, or within 60 days before, a “change in control,” in which case the RSUs fully vest. Dividend equivalents accrue on the RSUs and will be paid currently on unvested and vested units. See “Stock Incentives from 2013 Forward —  Annual Grants for Rolling Three-Year Periods commencing January 1, 2014  — Restricted Stock Unit Awards.”
 
(4)
Reflects the range of shares that may be earned by each named executive officer, based on the level of performance over the performance period. The actual number of PRSUs earned is based on performance for the periods ending December 31, 2016. For each performance period, the number of shares that will be earned depends on the levels of absolute TSR (50% weighting) and relative TSR (50% weighting). Vesting occurs quarterly in 2017, subject to continued employment on the vesting date, except in the case of a Qualifying Termination or a change in control. If the Qualifying Termination is not in connection with a change in control, vesting will be prorated based on days elapsed through the date of the Qualifying Termination. The performance period will end on the date of a change in control. If the Officer is employed on the date of the change in control or has a Qualifying Termination within 60 days before the change in control, depending on the level of TSR and Relative TSR as of the date of the change in control, all, a portion or none of the PRSUs will be earned and vested on the date of the change in control. Dividend equivalents accrue on PRSUs that subsequently vest. Accrued dividend equivalents are only payable if and to the extent of vesting of the PRSUs. “Stock Incentives from 2013 Forward —  Annual Grants for Rolling Three-Year Periods commencing January 1, 2014  — Performance Restricted Stock Unit Awards.”
 
26
 

 

 
Outstanding Equity Awards at Fiscal Year End
 
The following sets forth information regarding outstanding equity awards held by our named executive officers as of December 31, 2014. Since the information is set forth as of December 31, 2014, it does not include equity awards that vested as of December 31, 2014 or the awards granted in 2015. There are no options outstanding.
                             
    Stock Awards  
                         
Equity
 
                         
Incentive
 
                         
Plan Awards:
 
                         
Market or
 
                         
Payout
 
                   
Equity Incentive
   
Value of
 
             
Market Value
   
Plan Awards:
   
Unearned
 
       
Number of
   
of
   
Number of
   
Shares, Units
 
       
Shares
   
Shares or Units of
   
Unearned
   
or
 
       
or Units of Stock
   
Stock
   
Shares, Units or
   
Other Rights That
 
       
That Have
   
That Have
   
Other Rights That
   
Have Not
 
       
Not Vested
   
Not Vested
   
Have Not Vested
   
Vested
 
Name
      (#)    
($)(1)
    (#)    
($)(1)
 
C. Taylor Pickett
 
Transition 2014-2015 Absolute PRSUs(2)
                  31,811       1,307,114  
   
Transition 2014-2015 Relative PRSUs(2)
                  31,810       1,307,073  
   
Transition 2014-2016 Absolute PRSUs(2)
                  47,604       1,956,048  
   
Transition 2014-2016 Relative PRSUs(2)
                  47,604       1,956,048  
   
Transition RSUs(3)
    60,099       2,348,081                  
   
2014-2016 Absolute PRSUs(4)
                    63,557       2,611,557  
   
2014-2016 Relative PRSUs(4)
                    63,557       2,611,557  
   
2014-2016 RSUs(5)
    51,514       2,012,652                  
                                     
Daniel J. Booth
 
Transition 2014-2015 Absolute PRSUs(2)
                    16,913       694,955  
   
Transition 2014-2015 Relative PRSUs(2)
                    16,913       694,955  
   
Transition 2014-2016 Absolute PRSUs(2)
                    25,310       1,039,988  
   
Transition 2014-2016 Relative PRSUs(2)
                    25,310       1,039,988  
   
Transition RSUs(3)
    32,994       1,289,076                  
   
2014-2016 Absolute PRSUs(4)
                    33,792       1,388,513  
   
2014-2016 Relative PRSUs(4)
                    33,792       1,388,513  
   
2014-2016 RSUs(5)
    28,281       1,104,939                  
                                     
Robert O. Stephenson
 
Transition 2014-2015 Absolute PRSUs(2)
                    13,502       554,797  
   
Transition 2014-2015 Relative PRSUs(2)
                    13,502       554,797  
   
Transition 2014-2016 Absolute PRSUs(2)
                    20,207       830,306  
   
Transition 2014-2016 Relative PRSUs(2)
                    20,206       830,265  
   
Transition RSUs(3)
    25,235       985,944                  
   
2014-2016 Absolute PRSUs(4)
                    26,978       1,108,526  
   
2014-2016 Relative PRSUs(4)
                    26,978       1,108,526  
   
2014-2016 RSUs(5)
    21,630       845,084                  
                                     
R. Lee Crabill
 
Transition 2014-2015 Absolute PRSUs(2)
                    9,484       389,698  
   
Transition 2014-2015 Relative PRSUs(2)
                    9,484       389,698  
   
Transition 2014-2016 Absolute PRSUs(2)
                    14,194       583,231  
   
Transition 2014-2016 Relative PRSUs(2)
                    14,193       583,190  
   
Transition RSUs(3)
    17,919       700,082                  
   
2014-2016 Absolute PRSUs(4)
                    18,950       778,656  
   
2014-2016 Relative PRSUs(4)
                    18,950       778,656  
   
2014-2016 RSUs(5)
    15,359       600,076                  
                                     
Michael D. Ritz
 
Transition 2014-2015 Absolute PRSUs(2)
                    3,234       132,885  
   
Transition 2014-2015 Relative PRSUs(2)
                    3,234       132,885  
   
Transition 2014-2016 Absolute PRSUs(2)
                    4,840       198,876  
   
Transition 2014-2016 Relative PRSUs(2)
                    4,839       198,835  
   
Transition RSUs(3)
    3,569       139,454                  
   
2014-2016 Absolute PRSUs(4)
                    6,461       265,482  
   
2014-2016 Relative PRSUs(4)
                    6,461       265,482  
   
2014-2016 RSUs(5)
    3,059       119,515                  
 
27
 

 

 

 
(1)
Based on closing price of our common stock as of December 31, 2014. Includes value of dividend equivalent rights accrued with respect to PRSUs.
           
(2)
Represents transition PRSUs granted as of December 31, 2013 for the performance period indicated at the high performance level. The number of PRSUs that will be earned for each performance period will depend 50% on the level of absolute TSR and 50% on the level of relative TSR achieved over the applicable performance period. The earned PRSUs vest on the last day of the performance period, subject to the officer’s continued employment on the vesting date, except in the case of a Qualifying Termination or a change in control. If the Qualifying Termination is not in connection with a change in control, vesting will be prorated based on days elapsed through the date of the Qualifying Termination. The performance period will end on the date of a change in control. If the Officer is employed on the date of the change in control or has a Qualifying Termination within 60 days before the change in control, depending on the level of TSR and Relative TSR as of the date of the change in control, all, a portion or none of the PRSUs will be earned and vested on the date of the change in control.
 
(3)
Represents transition RSUs granted as of December 31, 2013 that vest ratably (13 per year) on December 31, 2014, 2015 and 2016 subject to continued employment on the vesting date, except in the case of a Qualifying Termination that occurs after, or within 60 days before a “change in control,” in which cases the RSUs fully vest. Dividend equivalents are paid currently on unvested and vested units.
 
(4)
Represents annual PRSUs granted as of January 1, 2014 for the three year performance period ending December 31, 2016 indicated at the high performance level. The number of PRSUs that will be earned for each performance period will depend 50% on the level of absolute TSR and 50% on the level of relative TSR achieved over the applicable performance period. The earned PRSUs vest quarterly in the year following the last day of the performance period, subject to the officer’s continued employment on the vesting date, except in the case of a Qualifying Termination or a change in control. If the Qualifying Termination is not in connection with a change in control, vesting will be prorated based on days elapsed through the date of the Qualifying Termination. The performance period will end on the date of a change in control. If the Officer is employed on the date of the change in control or has a Qualifying Termination within 60 days before the change in control, depending on the level of TSR and Relative TSR as of the date of the change in control, all, a portion or none of the PRSUs will be earned and vested on the date of the change in control.
 
(5)
Represents time-based RSUs granted as of January 1, 2014. Each RSU award is subject to three-year cliff vesting on December 31, 2016 and will be subject to the officer’s continued employment on the vesting date and will be subject to the officer’s continued employment on the vesting date, except in the case of a Qualifying Termination. Dividend equivalents accrue on the RSU awards and will be paid currently on unvested and vested units.
 
Because actual TSR exceeded the high performance level for the last performance period, applicable guidance from the SEC requires the table above to reflect PRSUs that remain subject to performance conditions at the high performance level. Actual performance may vary materially. The supplemental table below provides information regarding unvested PRSUs held at December 31, 2014 at threshold, target and high performance.
 
28
 

 

                                                     

Supplemental Information on Unvested PRSUs held at December 31, 2014

 

 
        Threshold     Target     High  
        Number                                
        of Shares     Market           Market           Market  
        or Units     Value of     Number     Value of     Number of     Value of  
        of Stock     Shares     of Shares     Shares     Shares     Shares  
        That     or Units     or Units     or Units     or Units     or Units  
        Have     of Stock     of Stock     of Stock     of Stock     of Stock  
        Not     That Have     That Have     That Have     That Have     That Have  
        Vested     Not Vested     Not Vested     Not Vested     Not Vested     Not Vested  
Name       (#)     ($)      (#)     ($)      (#)     ($)  
C. Taylor Pickett   Transition 2014-2015     277       11,382       12,892       529,732       31,811       1,307,114  
    Absolute PRSUs(2)                                                
    Transition 2014-2015     277       11,382       12,891       529,691       31,810       1,307,073  
    Relative PRSUs(2)                                                
    Transition 2014-2016     414       17,011       19,292       792,708       47,604       1,956,048  
    Absolute PRSUs(2)                                                
    Transition 2014-2016     414       17,011       19,292       792,708       47,604       1,956,048  
    Relative PRSUs(2)                                                
    2014-2016 Absolute PRSUs(4)     553       22,723       25,757       1,058,355       63,557       2,611,557  
    2014-2016 Relative PRSUs(4)     553       22,723       25,757       1,058,355       63,557       2,611,557  
                                                     
Daniel J. Booth   Transition 2014-2015     657       26,996       7,078       290,835       16,913       694,955  
    Absolute PRSUs(2)                                                
    Transition 2014-2015     656       26,955       7,077       290,794       16,913       694,955  
    Relative PRSUs(2)                                                
    Transition 2014-2016     982       40,350       10,591       435,184       25,310       1,039,988  
    Absolute PRSUs(2)                                                
    Transition 2014-2016     982       40,350       10,591       435,184       25,310       1,039,988  
    Relative PRSUs(2)                                                
    2014-2016 Absolute PRSUs(4)     1,311       53,869       14,140       581,013       33,792       1,388,513  
    2014-2016 Relative PRSUs(4)     1,311       53,869       14,140       581,013       33,792       1,388,513  
                                                     
Robert O. Stephenson   Transition 2014-2015     45       1,849       5,413       222,420       13,502       554,797  
    Absolute PRSUs(2)                                                
    Transition 2014-2015     45       1,808       5,413       222,420       13,502       554,797  
    Relative PRSUs(2)                                                
    Transition 2014-2016     67       2,753       8,101       332,870       20,207       830,306  
    Absolute PRSUs(2)                                                
    Transition 2014-2016     66       2,712       8,100       332,829       20,206       830,265  
    Relative PRSUs(2)                                                
    2014-2016 Absolute PRSUs(4)     52       2,137       10,815       444,388       26,978       1,108,526  
    2014-2016 Relative PRSUs(4)     52       2,137       10,815       444,388       26,978       1,108,526  
                                                     
R. Lee Crabill   Transition 2014-2015     183       7,519       3,843       157,909       9,484       389,698  
    Absolute PRSUs(2)                                                
    Transition 2014-2015     182       7,478       3,843       157,909       9,484       389,698  
    Relative PRSUs(2)                                                
    Transition 2014-2016     274       11,259       5,752       236,350       14,194       583,231  
    Absolute PRSUs(2)                                                
    Transition 2014-2016     273       11,218       5,752       236,350       14,193       583,190  
    Relative PRSUs(2)                                                
    2014-2016 Absolute PRSUs(4)     365       14,998       7,679       315,530       18,950       778,656  
    2014-2016 Relative PRSUs(4)     365       14,998       7,679       315,530       18,950       778,656  
                                                     
Michael D. Ritz   Transition 2014-2015     22       904       765       31,434       3,234       132,885  
    Absolute PRSUs(2)                                                
    Transition 2014-2015     22       904       765       31,434       3,234       132,885  
    Relative PRSUs(2)                                                
    Transition 2014-2016     33       1,356       1,146       47,089       4,840       198,876  
    Absolute PRSUs(2)                                                
    Transition 2014-2016     33       1,356       1,146       47,089       4,839       198,835  
    Relative PRSUs(2)                                                
    2014-2016 Absolute PRSUs(4)     26       1,068       1,530       62,868       6,461       265,482  
    2014-2016 Relative PRSUs(4)     26       1,068       1,530       62,868       6,461       265,482  
 
29
 

 

 
Option Exercises and Stock Vested for 2014
 
The following table sets forth information regarding the vesting of stock awards for our named executive officers in 2014. No options were outstanding or exercised in 2014. In 2014, the following awards vested:
 
 
The 2011 multi-year Absolute and Relative incentive awards that had a performance period that began on January 1, 2011 and ended December 31, 2013. These awards vested on a prorated basis quarterly in 2014.
 
The 2013 transition Absolute and Relative incentive awards that had a performance period that began on December 31, 2013 and ended on December 31, 2014. The Absolute incentive awards vested at the high and the Relative incentive awards vested between target and high.
 
The 2013 RSU awards vest ratably on December 31, 2014, 2015 and 2016 in equal increments. In 2014 one-third of the 2013 transition RSU awards vested on December 31, 2014.
 
Name
 
 Number of Shares
Acquired on Vesting
(1)
   
Value Realized
on Vesting ($)
(2)
 
C. Taylor Pickett(3)
   
244,175
     
9,539,904
 
Daniel J. Booth
   
141,132
     
5,514,040
 
Robert O. Stephenson(4)
   
96,543
     
3,771,948
 
R. Lee Crabill
   
69,150
     
2,701,677
 
Michael D. Ritz(5)
   
18,354
     
717,104
 
 

(1)
Represents the vesting of the above noted awards in 2014, whether or not the underlying shares were issued before year end.
 
(2)
Based on closing price of our stock as of the December 31, 2014.
 
(3)
Mr. Pickett deferred receipt of all 156,811 2011 multi-year Absolute and Relative incentive awards and all 30,050 RSUs that vested on December 31, 2014.
 
(4)
Mr. Stephenson deferred receipt of all 59,616 2011 multi-year Absolute and Relative incentive awards.
 
(5)
Mr. Ritz deferred receipt of 10,924 2011 multi-year Absolute and Relative incentive awards and 5,363 2013 transition Absolute and Relative incentive awards that vested on December 31, 2014.
 
Nonqualified Deferred Compensation
 
Our Deferred Stock Plan enables our directors and executive officers to defer receipt of stock issuable upon the vesting of equity awards, subject to the terms of the plan and agreements approved by the Compensation Committee for such purpose. This plan is intended to permit our directors and officers to delay the timing of taxation of equity awards that they have earned to satisfy their tax planning goals and thereby assist in the retention of directors and officers. The terms and conditions will be reflected in a deferral agreement approved by the Compensation Committee. If a participant makes a deferral election, the deferred shares will not be issued when vested but rather at a later date or event specified in the deferral agreement.
 
Unless otherwise determined by the Compensation Committee, all stock that is deferred will accrue dividend equivalents. Under the terms of the Deferred Stock Plan, the Compensation Committee may provide in the applicable agreement that dividend equivalents will be deferred along with the stock or may give the participant the right to elect to receive the dividend equivalents currently or defer them. If a participant makes a deferral election, the dividend equivalents will be deferred until the date or event specified in the participant’s agreement. Under the terms of the plan, the Compensation Committee may allow a participant to elect, or may require, that deferred dividend equivalents will be converted into common stock under a conversion formula or instead that the dividend equivalents will not be converted but the amount will be increased by an interest rate specified by the Compensation Committee. Under the existing deferral agreements, the Committee has provided that a participant may elect when making a deferral election (a) to convert dividend equivalents into the right to receive additional shares of common stock based on the trading price of common stock on the date that dividends are paid and have the additional shares issued when the deferred stock is issued, (b) to accrue interest on a quarterly basis on dividend equivalents at the Company’s average borrowing rate for the previous quarter and have the interest paid in cash when the deferred stock is issued, or (c) to have dividend equivalents paid in cash currently when they are earned.
 
Messrs. Pickett, Stephenson and Ritz elected to defer receipt of the common stock issuable upon vesting of the 2013 annual PRSUs pursuant to the Deferred Stock Plan. No other named executive officer deferred compensation or had a deferred compensation balance at December 31, 2014. The following table shows nonqualified deferred compensation activity for our named executive officers in 2014.
 
30
 

 

 
   
Executive
   
Company
   
Aggregate
         
Aggregate
 
   
Contributions
   
Contributions
   
Earnings
   
Aggregate
   
Balance
 
   
in last
   
in last
   
in last
   
Withdrawal/
   
at Last
 
   
Fiscal Year
   
Fiscal Year
   
Fiscal Year
   
Distributions
   
Fiscal Year
 
Name
 
($)(1)(2)
   
($)
   
($)
   
($)
   
($)(2)(3)
 
C. Taylor Pickett
    7,300,659             484,543             9,342,848  
Daniel J. Booth
                             
Robert O. Stephenson
    2,329,236             184,213             3,105,635  
R. Lee Crabill
                             
Michael D. Ritz
    636,297             33,752             778,550  
 

(1)
Based on closing price of our common stock as of the date of vesting of stock awards deferred in the following amounts: Mr. Pickett — 186,861 shares; Mr. Stephenson — 59,617 shares; Mr. Ritz — 16,286 shares.
 
(2)
The fair value for accounting purposes as of the date of grant is included in the Stock Awards column of the Summary Compensation table, and is quantified in the Grants of Plan Based Awards table above.
 
(3)
Based on closing price of our common stock as of December 31, 2014.
 
Compensation and Severance Agreements
 
C. Taylor Pickett Employment Agreement
 
We entered into an employment agreement with C. Taylor Pickett, dated as of March 31, 2015, as our Chief Executive Officer. The agreement is set to expire on December 31, 2017.
 
Mr. Pickett’s current base salary is $750,000 per year and may not be decreased during the term of the employment agreement. His employment agreement provides that he will be eligible to earn an annual bonus of 100%, 125% and 150%, respectively, for threshold, target and high performance, respectively, of his annual base salary. For a discussion of actual bonus arrangements for 2014 and 2015, see “Annual Cash Bonus Opportunity” herein.
 
If during the term of the employment agreement we terminate Mr. Pickett’s employment without “cause” or if he resigns for “good reason,” we will pay him severance equal to three times the sum of his then current annual base salary plus his average annual bonus over the last three completed fiscal years, which amount will be paid in installments over the 36-month-period following his termination. If any payments would be subject to the excise tax associated with parachute payments in connection with a change in control, the severance payments (and any other payments or benefits) under any other agreements will be reduced to the maximum amount that can be paid without incurring an excise tax, but only if that would result in the Officer retaining a larger after-tax amount. “Cause” is defined in the employment agreement to include events such as willful refusal to perform duties, willful misconduct in performance of duties, unauthorized disclosure of confidential company information, or fraud or dishonesty against us. “Good reason” is defined in the employment agreement to include events such as our material breach of the employment agreement or our relocation of Mr. Pickett’s employment to more than 50 miles away without his consent.
 
Mr. Pickett is required to execute a release of claims against us as a condition to the payment of severance benefits. Severance is not paid if the term of the employment agreement expires.
 
Mr. Pickett is restricted from using any of our confidential information during his employment and for two years thereafter or from using any trade secrets during his employment and for as long thereafter as permitted by applicable law. During the period of employment and for three years thereafter, Mr. Pickett is obligated not to provide managerial services or management consulting services to a “competing business” within the states in which the Company does business. Competing business is defined to include a list of named competitors and any other business with the primary purpose of leasing assets to healthcare operators or financing ownership or operation of senior, retirement, long-term care or healthcare-related real estate. In addition, during the period of employment and for three years thereafter, Mr. Pickett agrees not to solicit clients or customers with whom he had material contact or to solicit our management level employees. However, if Mr. Pickett remains employed by us through the date the term of the employment agreement expires, December 31, 2017, the noncompetition and nonsolicitation provisions also expire on that date.
 
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Daniel J. Booth Employment Agreement
 
We entered into an employment agreement with Daniel J. Booth, dated as of March 31, 2015, as our Chief Operating Officer. The agreement is set to expire on December 31, 2017.
 
Mr. Booth’s current base salary is $470,000 per year and may not be decreased during the term of the employment agreement. His employment agreement provides that he will be eligible to earn an annual bonus of 50%, 75% and 100%, respectively, for threshold, target and high performance, respectively, of his annual base salary. For a discussion of actual bonus arrangements for 2014 and 2015, see “Annual Cash Bonus Opportunity” herein.
 
If during the term of the employment agreement we terminate Mr. Booth’s employment without “cause” or if he resigns for “good reason,” we will pay him severance equal to two times the sum of his then current annual base salary plus his average annual bonus over the last three completed calendar years, which amount will be paid in installments over the 24-month period following his termination. If any payments would be subject to the excise tax associated with parachute payments in connection with a change in control, the severance payments (and any other payments or benefits) under any other agreements will be reduced to the maximum amount that can be paid without incurring an excise tax, but only if that would result in the Officer retaining a larger after-tax amount. “Cause” is defined in the employment agreement to include events such as willful refusal to perform duties, willful misconduct in performance of duties, unauthorized disclosure of confidential company information, or fraud or dishonesty against us. “Good reason” is defined in the employment agreement to include events such as our material breach of the employment agreement or our relocation of Mr. Booth’s employment to more than 50 miles away without his consent.
 
Mr. Booth is required to execute a release of claims against us as a condition to the payment of severance benefits. Severance is not paid if the term of the employment agreement expires.
 
Mr. Booth is restricted from using any of our confidential information during his employment and for two years thereafter or from using any trade secrets during his employment and for as long thereafter as permitted by applicable law. During the period of employment and for two years thereafter, Mr. Booth is obligated not to provide managerial services or management consulting services to a “competing business” within the states in which the Company does business. Competing business is defined to include a list of named competitors and any other business with the primary purpose of leasing assets to healthcare operators or financing ownership or operation of senior, retirement, long-term care or healthcare-related real estate. In addition, during the period of employment and for two years thereafter, Mr. Booth agrees not to solicit clients or customers with whom he had material contact or to solicit our management level employees. However, if Mr. Booth remains employed by us through the date the term of the employment agreement expires, December 31, 2017, the noncompetition and nonsolicitation provisions also expire on that date.
 
Steven J. Insoft Employment Agreement
 
We entered into an employment agreement with Steven J. Insoft, dated as of April 1, 2015, as our Chief Corporate Development Officer. The agreement is set to expire on December 31, 2017.
 
Mr. Insoft’s current base salary is $460,000 per year and may not be decreased during the term of the employment agreement. His employment agreement provides that he will be eligible to earn an annual bonus of 50%, 75% and 100%, respectively, for threshold, target and high performance, respectively, of his annual base salary. For a discussion of actual bonus arrangements for 2014 and 2015, see “Annual Cash Bonus Opportunity” herein.
 
If during the term of the employment agreement we terminate Mr. Insoft’s employment without “cause” or if he resigns for “good reason,” we will pay him severance equal to one and three-quarters (or if less, a multiple equal to the period of years then remaining in the term) times the sum of his then current annual base salary plus his average annual bonus over the last three completed calendar years, which amount will be paid in installments over the 21-month period following his termination (or if less, the period of time then remaining in the term). If any payments would be subject to the excise tax associated with parachute payments in connection with a change in control, the severance payments (and any other payments or benefits) under any other agreements will be reduced to the maximum amount that can be paid without incurring an excise tax, but only if that would result in the Officer retaining a larger after-tax amount. “Cause” is defined in the employment agreement to include events such as willful refusal to perform duties, willful misconduct in performance of duties, unauthorized disclosure of confidential company information, or fraud or dishonesty against us. “Good reason” is defined in the employment agreement to include events such as our material breach of the employment agreement or our relocation of Mr. Insoft’s employment to more than 20 miles away without his consent.
 
32
 

 

 
Mr. Insoft is required to execute a release of claims against us as a condition to the payment of severance benefits. Severance is not paid if the term of the employment agreement expires.
 
Mr. Insoft is restricted from using any of our confidential information during his employment and for two years thereafter or from using any trade secrets during his employment and for as long thereafter as permitted by applicable law. During the period of employment and for twenty-one months thereafter, Mr. Insoft is obligated not to provide managerial services or management consulting services to a “competing business” within the states in which the Company does business. Competing business is defined to include a list of named competitors and any other business with the primary purpose of leasing assets to healthcare operators or financing ownership or operation of senior, retirement, long-term care or healthcare-related real estate. In addition, during the period of employment and for twenty-one months thereafter, Mr. Insoft agrees not to solicit clients or customers with whom he had material contact or to solicit our management level employees. However, if Mr. Insoft remains employed by us through the date the term of the employment agreement expires, December 31, 2017, the noncompetition and nonsolicitation provisions also expire on that date.
 
Robert O. Stephenson Employment Agreement
 
We entered into an employment agreement with Robert O. Stephenson, dated as of March 31, 2015, as our Chief Financial Officer. The agreement is set to expire on December 31, 2017.
 
Mr. Stephenson’s current base salary is $450,000 per year may not be decreased during the term of the employment agreement. His employment agreement provides that he will be eligible to earn 50%, 75% and 100%, respectively, for threshold, target and high performance, respectively, of his annual base salary. For a discussion of actual bonus arrangements for 2014 and 2015, see “Annual Cash Bonus Opportunity” herein.
 
If during the term of the employment agreement we terminate Mr. Stephenson’s employment without “cause” or if he resigns for “good reason,” we will pay him severance equal to one and one-half times the sum of his then current annual base salary plus his average annual bonus over the last three completed calendar years, which amount will be paid in installments over the 18-month-period following his termination. If any payments would be subject to the excise tax associated with parachute payments in connection with a change in control, the severance payments (and any other payments or benefits) under any other agreements will be reduced to the maximum amount that can be paid without incurring an excise tax, but only if that would result in the Officer retaining a larger after-tax amount. “Cause” is defined in the employment agreement to include events such as willful refusal to perform duties, willful misconduct in performance of duties, unauthorized disclosure of confidential company information, or fraud or dishonesty against us. “Good reason” is defined in the employment agreement to include events such as our material breach of the employment agreement or our relocation of Mr. Stephenson’s employment to more than 50 miles away without his consent.
 
Mr. Stephenson is required to execute a release of claims against us as a condition to the payment of severance benefits. Severance is not paid if the term of the employment agreement expires.
 
Mr. Stephenson is restricted from using any of our confidential information during his employment and for two years thereafter or from using any trade secrets during his employment and for as long thereafter as permitted by applicable law. During the period of employment and for 18 months thereafter, Mr. Stephenson is obligated not to provide managerial services or management consulting services to a “competing business” within the states in which the Company does business. Competing business is defined to include a list of named competitors and any other business with the primary purpose of leasing assets to healthcare operators or financing ownership or operation of senior, retirement, long-term care or healthcare-related real estate. In addition, during the period of employment and for 18 months thereafter, Mr. Stephenson agrees not to solicit clients or customers with whom he had material contact or to solicit our management level employees. However, if Mr. Stephenson remains employed by us through the date the term of the employment agreement expires, December 31, 2017, the noncompetition and nonsolicitation provisions also expire on that date.
 
R. Lee Crabill, Jr. Employment Agreement
 
We entered into an employment agreement with R. Lee Crabill, dated as of March 31, 2015, as our Senior Vice President of Operations. The agreement is set to expire on December 31, 2017.
 
Mr. Crabill’s current base salary is $350,000 per year and may not be decreased during the term of the employment agreement. His employment agreement provides that he will be eligible to earn 40%, 60% and 80%, respectively, for threshold, target and high performance, respectively, of his annual base salary. For a discussion of actual bonus arrangements for 2014 and 2015, see “Annual Cash Bonus Opportunity” herein.
 
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If during the term of the employment agreement we terminate Mr. Crabill’s employment without “cause” or if he resigns for “good reason,” we will pay him severance equal to one and one-half times the sum of his then current annual base salary plus his average annual bonus over the last three completed calendar years, which amount will be paid in installments over the 18-month-period following his termination. If any payments would be subject to the excise tax associated with parachute payments in connection with a change in control, the severance payments (and any other payments or benefits) under any other agreements will be reduced to the maximum amount that can be paid without incurring an excise tax, but only if that would result in the Officer retaining a larger after-tax amount. “Cause” is defined in the employment agreement to include events such as willful refusal to perform duties, willful misconduct in performance of duties, unauthorized disclosure of confidential company information, or fraud or dishonesty against us. “Good reason” is defined in the employment agreement to include events such as our material breach of the employment agreement or our relocation of Mr. Crabill’s employment to more than 50 miles away without his consent.
 
Mr. Crabill is required to execute a release of claims against us as a condition to the payment of severance benefits. Severance is not paid if the term of the employment agreement expires.
 
Mr. Crabill is restricted from using any of our confidential information during his employment and for two years thereafter or from using any trade secrets during his employment and for as long thereafter as permitted by applicable law. During the period of employment and for 18 months thereafter, Mr. Crabill is obligated not to provide managerial services or management consulting services to a “competing business” within the states in which the Company does business. Competing business is defined to include a list of named competitors and any other business with the primary purpose of leasing assets to healthcare operators or financing ownership or operation of senior, retirement, long-term care or healthcare-related real estate. In addition, during the period of employment and for 18 months thereafter, Mr. Crabill agrees not to solicit clients or customers with whom he had material contact or to solicit our management level employees. However, if Mr. Crabill remains employed by us through the date the term of the employment agreement expires, December 31, 2017, the noncompetition and nonsolicitation provisions also expire on that date.
 
Michael D. Ritz Employment Agreement
 
We entered into an employment agreement with Michael D. Ritz, dated as of March 31, 2015, as our Chief Accounting Officer. The term of the agreement expires on December 31, 2017.
 
Mr. Ritz’s current base salary is $300,000 per year and may not be decreased during the term of the employment agreement. His employment agreement provides that he will be eligible to earn 40%, 60% and 80%, respectively, for threshold, target and high performance, respectively, of his annual base salary. For a discussion of actual bonus arrangements for 2014 and 2015, see “Annual Cash Bonus Opportunity” herein.
 
If during the term of the employment agreement we terminate Mr. Ritz’ employment without “cause” or if he resigns for “good reason,” we will pay him severance equal to one times the sum of his then current annual base salary plus his average annual bonus over the last three completed calendar years, which amount will be paid in installments over the 12-month-period following his termination. If any payments would be subject to the excise tax associated with parachute payments in connection with a change in control, the severance payments (and any other payments or benefits) under any other agreements will be reduced to the maximum amount that can be paid without incurring an excise tax, but only if that would result in the Officer retaining a larger after-tax amount. “Cause” is defined in the employment agreement to include events such as willful refusal to perform duties, willful misconduct in performance of duties, unauthorized disclosure of confidential company information, or fraud or dishonesty against us. “Good reason” is defined in the employment agreement to include events such as our material breach of the employment agreement or our relocation of Mr. Ritz’ employment to more than 50 miles away without his consent.
 
Mr. Ritz is required to execute a release of claims against us as a condition to the payment of severance benefits. Severance is not paid if the term of the employment agreement expires.
 
Mr. Ritz is restricted from using any of our confidential information during his employment and for two years thereafter or from using any trade secrets during his employment and for as long thereafter as permitted by applicable law. During the period of employment and for one year thereafter, Mr. Ritz is obligated not to provide managerial services or management consulting services to a “competing business” within the states in which the Company does business. Competing business is defined to include a list of named competitors and any other business with the primary purpose of leasing assets to healthcare operators or financing ownership or operation of senior, retirement, long-term care or healthcare-related real estate. In addition, during the period of employment and for one year thereafter, Mr. Ritz agrees not to solicit clients or customers with whom he had material contact or to solicit our management level employees. However, if Mr. Ritz remains employed by us through the date the term of the employment agreement expires, December 31, 2017, the noncompetition and nonsolicitation provisions also expire on that date.
 
34
 

 

 
Potential Payments Upon Termination or Change of Control
 
The table below illustrates the incremental or accelerated compensation that would have been payable in the event of the events identified below, as if they had occurred as of December 31, 2014. For equity awards, the amounts in the table below reflect the fair market value of the stock that would be issuable as result of the acceleration of the vesting of equity awards in connection with the events identified, based on the $39.07 per share closing price of our common stock at December 31, 2014.
 
The occurrence of a change of control does not increase severance benefits or bonus payments that would otherwise be payable. However, in the case of the transition RSUs granted in 2013 and the RSUs granted on January 1, 2014, vesting is accelerated 100% upon a Qualifying Termination that occurs after, or within 60 days before, a change in control. In addition, vesting of the PRSUs granted in 2013 is accelerated upon a change in control but only as to those PRSUs earned based on performance through the date of the change in control. For a description of the vesting of RSUs and PRSUs, see “Stock Incentives Awards” herein.
 
The term “Qualifying Termination” refers to death, disability, termination without “cause”, or resignation for “good reason.” For a description of circumstances constituting “cause” and “good reason” and related information, see the discussion of each officer’s employment agreement above.
 
35
 

 

   
Triggering Event as of December 31, 2014
 
   
Involuntary Without
Cause or
Voluntary for
Good Reason
($)
   
Death
($)
   
Disability
($)
   
Change in
Control
Without
Termination
($)
   
Involuntary
Without Cause
or Voluntary
for Good
Reason Upon
a Change
in Control
($)
 
C. Taylor Pickett:
                                       
Severance
   
5,232,750
     
     
     
     
5,232,750
 
Bonus
   
     
1,076,250
     
     
     
 
Accelerated Vesting of Equity Awards:
                                       
Transition RSUs(1)
   
     
     
     
     
2,348,068
 
2013-2015 Transition PRSUs(2)
   
1,119,642
     
1,119,642
     
1,119,642
     
2,239,284
     
2,239,284
 
2013-2016 Transition PRSUs(2)
   
932,662
     
932,662
     
932,662
     
2,797,985
     
2,797,985
 
2014-2016 PRSUs(2)
   
1,245,213
     
1,245,213
     
1,245,213
     
3,735,639
     
3,735,639
 
2014-2016 RSUs(3)
   
670,884
     
670,884
     
670,884
     
     
2,012,652
 
Total Value:
   
9,201,151
     
5,044,651
     
3,968,401
     
8,772,908
     
18,366,378
 
Daniel J. Booth:
                                       
Severance
   
1,765,000
     
     
     
     
1,765,000
 
Bonus
   
     
451,000
     
     
     
 
Accelerated Vesting of Equity Awards:
                                       
Transition RSUs(1)
   
     
     
     
     
1,289,076
 
2013-2015 Transition PRSUs(2)
   
596,742
     
596,742
     
596,742
     
1,193,484
     
1,193,484
 
2013-2016 Transition PRSUs(2)
   
499,499
     
499,499
     
499,499
     
1,498,497
     
1,498,497
 
2014-2016 PRSUs(2)
   
666,890
     
666,890
     
666,890
     
2,000,671
     
2,000,671
 
2014-2016 RSUs(3)
   
368,313
     
368,313
     
368,313
     
     
1,104,939
 
Total Value:
   
3,896,444
     
2,582,444
     
2,131,444
     
4,692,652
     
8,851,667
 
Robert O. Stephenson:
                                       
Severance
   
1,050,375
     
     
     
     
1,050,375
 
Bonus
   
     
307,500
     
     
     
 
Accelerated Vesting of Equity Awards:
                                       
Transition RSUs(1)
   
     
     
     
     
985,931
 
2013-2015 Transition PRSUs(2)
   
474,850
     
474,850
     
474,850
     
949,701
     
949,701
 
2013-2016 Transition PRSUs(2)
   
394,928
     
394,928
     
394,928
     
1,184,785
     
1,184,785
 
2014-2016 PRSUs(2)
   
527,274
     
527,274
     
527,274
     
1,581,821
     
1,581,821
 
2014-2016 RSUs(3)
   
281,695
     
281,695
     
281,695
     
     
845,084
 
Total Value:
   
2,729,122
     
1,986,247
     
1,678,747
     
3,716,307
     
6,597,697
 
 
 
36
 

 

 
 
   
Triggering Event as of December 31, 2014
 
   
Involuntary Without
Cause or
Voluntary for
Good Reason
($)
   
Death
($)
   
Disability
($)
     
Change in
Control
Without
Termination
($)
   
Involuntary
Without Cause
or Voluntary
for Good
Reason Upon
a Change
in Control
($)
 
R. Lee Crabill:
                                       
Severance
   
843,882
     
     
     
     
843,882
 
Bonus
   
     
236,775
     
     
     
 
Accelerated Vesting of Equity Awards:
                                       
Transition RSUs(1)
   
     
     
     
     
700,095
 
2013-2015 Transition PRSUs(2)
   
333,808
     
333,808
     
333,808
     
667,615
     
667,615
 
2013-2016 Transition PRSUs(2)
   
278,079
     
278,079
     
278,079
     
834,236
     
834,236
 
2014-2016 PRSUs(2)
   
371,263
     
371,263
     
371,263
     
1,113,788
     
1,113,788
 
2014-2016 RSUs(3)
   
200,025
     
200,025
     
200,025
     
     
600,076
 
Total Value:
   
2,027,057
     
1,419,950
     
1,183,175
     
2,615,639
     
4,759,692
 
Michael D. Ritz:
                                       
Severance
   
415,250
     
     
     
     
415,250
 
Bonus
   
     
162,975
     
     
     
 
Accelerated Vesting of Equity Awards:
                                       
Transition RSUs(1)
   
     
     
     
     
139,441
 
2013-2015 Transition PRSUs(2)
   
110,275
     
110,275
     
110,275
     
220,550
     
220,550
 
2013-2016 Transition PRSUs(2)
   
85,967
     
85,967
     
85,967
     
257,901
     
257,901
 
2014-2016 PRSUs(2)
   
114,772
     
114,772
     
114,772
     
344,317
     
344,317
 
2014-2016 RSUs(3)
   
39,838
     
39,838
     
39,838
     
     
119,515
 
Total Value:
   
766,102
     
513,827
     
350,852
     
822,768
     
1,496,974
 
 

(1)
In the event of a Qualifying Termination that occurs after or within 60 days before a change in control, the Transition RSUs would vest 100%. See“Stock Incentives from December 31, 2013 Forward — One-Time Transition Grants effective December 31, 2013 — “Restricted Stock Unit Awards.” Transition RSUs that actually vested at December 31, 2014 have not been included in the numbers shown in the table.
           
(2)
In the event of a Qualifying Termination that is not in connection with a change in control, PRSUs that are actually earned based on performance determined as of the end of the full performance period would vest pro rata based on days elapsed through the date of termination.  Although performance is not determinable until the end of the performance period in the case of a Qualifying Termination that is not in connection with a change in control, for purposes of this table we have assumed in such case that performance for the full period would be at high for the absolute TSR awards that have a performance period starting December 31, 2013 and ending December 31, 2015 and between target and high for the absolute TSR awards that have a performance period starting December 31, 2013 and January 1, 2014 and ending December 31, 2016 and between target and high for the relative TSR awards for the awards granted on December 31, 2013 and January 1, 2014.  In the event of a change in control, the performance period ends.  If the executive is employed on the date of the change in control or had a Qualifying Termination within 60 days before the date of the change in control, the Transition PRSUs granted as of December 31, 2013 and the annual PRSUs granted as of January 1, 2014 would vest based on actual performance through the date of the change in control as follows.  Assuming that the sale price per share of common stock in a hypothetical change in control on December 31, 2014 were equal to the closing price per share on December 31, 2014, the absolute TSR portion of the December 31, 2013 Transition PRSUs for the performance period ending December 31, 2015 would vest at the high level,  the absolute TSR portion of the December 31, 2013 Transition PRSUs for the performance period ending December 31, 2016 and the January 1, 2014 Annual PRSUs would vest at the level between target and high at the 10.75% level. For purposes of this table, we have assumed that the relative TSR portion of the December 31, 2013 Transition PRSUs for the performance periods ending December 31, 2015 and December 31, 2016 and the relative TSR portion of the January 1, 2014 Annual PRSUs would have vested between target and high at the 200 basis point level in the event of a Qualified Termination upon a change in control as of December 31, 2014. See “Stock Incentives from December 31, 2013 Forward — One-Time Transition Grants effective December 31, 2013 — Performance Restricted Stock Unit Awards” and  “Stock Incentives from December 31, 2013 Forward — Annual Grants for Rolling Three-Year Periods Commencing January 1, 2014 -- Performance Restricted Stock Unit Awards.” Transition PRSUs that actually vested at December 31, 2014 have not been included in the numbers shown in the table.
 
(3)
In the event  of a Qualifying Termination that occurs after, or within 60 days before, a change in control, the annual RSU award granted on January 1, 2014 would vest 100%.  In addition, if a Qualifying Termination occurred at December 31, 2014 and that was more than 60 days before a change in control, one-third of the annual RSU award granted on January 1, 2014 would vest.  See “Stock Incentives from 2013 Forward —  Annual Grants for Rolling Three-Year Periods commencing January 1, 2014  — Restricted Stock Unit Awards.”
 
37
 
Compensation of Directors
 
Our non-employee directors are entitled to receive (i) an annual cash retainer of $37,500 payable in quarterly installments of $9,375; (ii) a quarterly grant of shares of common stock equal to the number of shares determined by dividing the sum of $12,500 by the fair market value of the common stock on the date of each quarterly grant, currently set at February 15, May 15, August 15 and November 15; and (iii) an annual grant of 3,000 shares of restricted stock, with an additional 500 restricted shares granted to the Chairman of the Board annually. In addition, the Chairman of the Board receives an additional annual cash payment of $39,500, the Chairman of the Audit Committee receives an additional annual cash payment $17,500, the Chairman of the Compensation Committee receives an additional annual cash payment of $12,000 and all other committee chairmen receive additional annual cash payments of $10,000 per committee chaired. We also pay each non-employee director a fee of $1,500 per meeting for attendance at each regularly scheduled or special meeting of the Board of Directors or committee of the Board of Directors, whether in person or telephonic.
 
The annual grants of restricted stock described above vest in three annual installments over three years. The annual restricted stock grants to non-employee directors were made commencing in 2013 and in future years as of the date of the annual meeting and commenced vesting on the anniversary of the annual meeting date. Before 2013, the annual restricted stock grants were made in January of each year and vesting commenced on the following January 1. To make up for the delayed grant date and delayed vesting in transitioning to the new annual grant schedule in 2013, on January 29, 2013 the Compensation Committee made a one-time special grant of 1,250 shares of restricted stock to each non-employee director (1,458 shares in the case of the Chairman of the Board), representing 5/12 of the normal annual restricted stock to non-employee directors. The vesting of non-employee director restricted stock is subject to the director’s continuing service on each vesting date, other than in the case of the director’s death, disability, mandatory retirement in accordance with the Company’s mandatory retirement policy for directors, or change in control of the Company in which case the restricted stock fully vests.
 
In addition, we reimburse the directors for travel expenses incurred in connection with their duties as directors. Employee directors receive no compensation for service as directors.
 
The table below sets forth the compensation paid to our non-employee directors for 2014:
                                 
Name
 
Fees earned or
paid in cash ($)
   
Stock
Awards
 ($)(1)
   
Option
Awards
($)
   
Total
($)
 
Craig R. Callen
   
 64,500
     
 157,382
     
     
 221,882
 
Thomas F. Franke
   
 75,000
     
 157,382
     
     
 232,382
 
Barbara B. Hill
   
 66,000
     
 157,382
     
     
 223,382
 
Harold J. Kloosterman
   
 83,500
     
 157,382
     
     
 240,882
 
Bernard J. Korman
   
 107,000
     
 175,277
     
     
 282,277
 
Edward Lowenthal
   
 80,500
     
 157,382
     
     
 237,882
 
Stephen D. Plavin
   
 86,500
     
 157,382
     
     
 243,882
 
   
 
(1)           Represents the fair value dollar amount on the grant date of the stock grants set forth below:
 
38
 

 

 
                       
Name
 
Grant Date
    Shares Awarded(1)     Grant Date
Fair Value ($)
 
Craig R. Callen
 
2/14/2014
5/15/2014
6/12/2014
8/15/2014
11/17/2014
     
398
347
3,000
332
331
(2)(2)(2)(2)(2)    
12,501
12,513
107,370
12,516
12,482
 
Thomas F. Franke
 
2/14/2014
5/15/2014
6/12/2014
8/15/2014
11/17/2014
     
398
347
3,000
332
331
     
12,501
12,513
107,370
12,516
12,482
 
Barbara B. Hill
 
2/14/2014
5/15/2014
6/12/2014
8/15/2014
11/17/2014
     
398
347
3,000
332
331
     
12,501
12,513
107,370
12,516
12,482
 
Harold J. Kloosterman
 
2/14/2014
5/15/2014
6/12/2014
8/15/2014
11/17/2014
     
398
347
3,000
332
331
(2)(2)(2)(2)(2)    
12,501
12,513
107,370
12,516
12,482
 
Bernard J. Korman
 
2/14/2014
5/15/2014
6/12/2014
8/15/2014
11/17/2014
     
398
347
3,500
332
331
 
 
(2)
   
12,501
12,513
125,265
12,516
12,482
 
Edward Lowenthal
 
2/14/2014
5/15/2014
6/12/2014
8/15/2014
11/17/2014
     
398
347
3,000
332
331
(2)(2)
 
(2)(2)
   
12,501
12,513
107,370
12,516
12,482
 
Stephen D. Plavin
 
2/14/2014
5/15/2014
6/12/2014
8/15/2014
11/17/2014
     
398
347
3,000
332
331
     
12,501
12,513
107,370
12,516
12,482
 
   
 
(1)
The total number of unvested shares of restricted stock held by each of our non-employee directors as of December 31, 2014 was: Messrs. Franke, Kloosterman, Lowenthal and Plavin: 6,833 each; Ms. Hill and Mr. Callen: 5,000 each; and Mr. Korman: 7,971.
 
(2)
All of the shares awarded to Mr. Callen and Mr. Kloosterman and partial shares awarded to Mr. Korman and Mr. Lowenthal in 2014 were deferred pursuant to the Deferred Stock Plan described under “Nonqualified Deferred Compensation.”
 
39
 

 

 
Compensation Committee Interlocks and Insider Participation
 
Thomas F. Franke, Harold J. Kloosterman, Bernard J. Korman, Edward Lowenthal and Stephen D. Plavin were members of the Compensation Committee for the year ended December 31, 2014, and during such period, there were no Compensation Committee interlocks or insider participation in compensation decisions.
 
40
 

 

 
Item 12 - Security Ownership of Certain Beneficial Owners and Management
 
The following table sets forth information regarding the beneficial ownership of our common stock as of April 23, 2015 for:
 
 
each of our directors and the named executive officers appearing in the table under “Executive Compensation — Summary Compensation Table” included elsewhere in this Filing; and
 
 
all persons known to us to be the beneficial owner of more than 5% of our outstanding common stock.
 
Beneficial ownership of our common stock, for purposes of this Filing, includes shares of our common stock as to which a person has voting and/or investment power, or the right to acquire such power within 60 days of April 23, 2015. Except for shares of restricted stock and unvested units as to which the holder does not have investment power until vesting or as otherwise indicated in the footnotes, the persons named in the table have sole voting and investment power with respect to all shares of our common stock shown as beneficially owned by them, subject to community property laws where applicable.  The “Common Stock Beneficially Owned” columns do not include unvested restricted stock units (“RSUs”), unvested performance restricted stock units (“PRSUs”) and deferred stock units under our Deferred Compensation Plan (except to the extent such units vest or the applicable deferral period expires within 60 days of April 23, 2015) or common stock issuable in respect of OP Units. Accordingly, we have provided supplemental information regarding deferred stock units, unvested RSUs, and earned but not yet vested PRSUs under the caption “Common Stock Equivalents.” For information regarding unearned, unvested PRSUs for performance periods not yet completed, see “Outstanding Equity Awards at Fiscal Year End” below.
 
The business address of the directors and executive officers is 200 International Circle, Suite 3500, Hunt Valley, Maryland 21030. As of April 23, 2015, there were 182,683,520 shares of our common stock outstanding and no preferred stock outstanding.
                                                 
                   
Other Common Stock
Equivalents
 
    Common Stock
Beneficially Owned
          Deferred     Operating     Percent of Class
including
 
Beneficial Owner
 
Number of
Shares
   
Percent of
Class
   
Unvested
RSUs​(1)
    Stock
Units​(2)
    Partnership
Units (3)
    Common Stock
Equivalents​(4)
 
Craig M. Bernfield
    2,715,403 (5)     1.47 %                 2,797,835 (5)     2.79 %
Norman R. Bobins
    39,107 (6)     *                           *  
Daniel J. Booth
    209,766       0.11 %     87,748                     0.15 %
Craig R. Callen
    3,000       *               9,554 (7)             *  
R. Lee Crabill
    90,296       *       47,386                       *  
Thomas F. Franke
    112,425 (8)     *                               *  
Barbara B. Hill
    8,880 (9)     *                               *  
Steven J. Insoft
    1,280,160 (10)     0.70     35,982               78,741 (10)     0.71 %
Harold J. Kloosterman
    22,069 (11)     *               36,814 (12)             *  
Bernard J. Korman
    610,057     0.33 %             9,252 (13)             0.31 %
Edward Lowenthal
    42,247 (14)     *               3,566               *  
Ben W. Perks
    39,878 (15)     *                               *  
C. Taylor Pickett
    247,163       0.14 %     159,869       239,131               0.33 %
Stephen D. Plavin
    66,836 (16)     *                               *  
Michael D. Ritz
    4,027       *       11,628       19,927               *  
Robert O. Stephenson
    165,713       *       70,222       79,489               0.16 %
Directors and executive officers as a group (16 persons)
    5,657,027       3.04 %     412,835       397,733       2,876,576       4.72 %
5% Beneficial Owners:(17)
                                               
The Vanguard Group, Inc.
    18,215,197 (18)     9.97 %                                
BlackRock, Inc.
    10,728,762 (19)     5.87 %                                
Vanguard Specialized Funds –  Vanguard REIT Index Fund
    9,445,045 (20)     5.17 %                                
   
*
Less than 0.10%

41
 

 

(1)
Includes unvested RSUs, which in each case vest more than 60 days from April 23, 2015, subject to continued employment. Each unit represents the right to receive one share of common stock. See “Outstanding Equity Awards at Fiscal Year End.”
 
(2)
Deferred stock units representing the deferral of vested equity awards pursuant to the Company’s Deferred Stock Plan. Includes deferred stock units associated with RSUs and PRSUs vesting within 60 days which the holder has elected to defer. The deferred stock units will not be converted until the date or event specified in the applicable deferred stock agreement. See “Nonqualified Deferred Compensation.”
 
(3)
Messrs. Bernfield, Bobins, Insoft and Perks beneficially own limited partnership units (“Aviv OP Units”) in Aviv Healthcare Properties Limited Partnership ( “Aviv OP”). In connection with the Company’s acquisition of Aviv, the Company plans to cause Aviv OP to distribute all of OP Units of Omega OP held by Aviv OP (or equivalent value) to holders of Aviv OP Units. OP Units are redeemable at the election of the holder for cash equal to the then fair market value of one share of our common stock, subject to the Company’s election to exchange the Omega OP Units tendered for redemption for unregistered shares of Omega Common Stock on a one-for-one basis, in each case subject to adjustment.  The amounts shown above reflect the number of OP Units to be distributed to the beneficial owner in the Aviv OP Distribution.
 
(4)
Percent of class reflects 182,683,520 outstanding shares of common stock outstanding as of April 23, 2015, plus a total of 15,154,199 common stock equivalents, consisting of 463,800 unvested restricted stock units, 405,926 deferred stock units, 5,119,172 options and approximately 9,165,301  shares issuable in respect of OP Units to be distributed to the holders of Aviv OP Units.
 
(5)
Common Stock Beneficially Owned includes exercisable stock options of 2,175,265 shares held by Mr. Bernfield and 154,766 exercisable stock options held by each of the Generation Trust f/b/o Jamie Lauren Bernfield c/u Bernfield Exempt Family Trust dated December 20, 2012 and the Generation Trust f/b/o Sari Jessica Bernfield c/u Bernfield Exempt Family Trust dated December 20, 2012, trusts for the benefit of Mr. Bernfield’s children of which Mr. Bernfield’s spouse serves as trustee.   Operating Partnership Units includes OP Units to be distributed in the Aviv OP Distribution in approximately  the following amounts: (i)  179,118 OP units in respect of Aviv OP Units held by CMB Aviv Acquisition, L.L.C., a limited liability company of which Mr. Bernfield is the sole member and manager and (ii) 2,797,835 OP units to be distributed in respect of Aviv OP Units held by Craig M. Bernfield C Unit, L.L.C., a limited liability company of which Mr. Bernfield is a member and the sole manager. A total of 16,066 of the OP Units to be beneficially owned by Mr. Bernfield upon the Aviv OP Distribution are to be distributed in respect of Aviv OP Units held by Mr. Bernfield subject to a phantom unit award grant to Mr. Insoft. Mr. Bernfield disclaims beneficial ownership of the securities held by Craig M. Bernfield C Unit, L.L.C. and such trusts except to the extent of his pecuniary interest therein.
 
(6)
Includes 26,012 options exercisable into shares of Omega common stock.
 
(7)
Includes deferred stock units with respect to 5,000 shares of restricted stock, subject to forfeiture until vested.
 
(8)
Includes (a) 47,182 shares owned by a family limited liability company (Franke Family LLC) of which Mr. Franke is a member and (b) 5,416 shares of restricted stock, subject to forfeiture until vested. Mr. Franke has pledged 100,557 shares to secure borrowings that may be from time to time outstanding under a lending facility.
 
(9)
Includes 5,000 shares of restricted stock, subject to forfeiture until vested.
 
(10)
Common Stock Beneficially Owned includes exercisable stock options for  1,150,110  shares.  Operating Partnership Units includes 78,742 OP Units to be distributed in the Aviv OP Distribution in respect of Aviv  OP units held by Steven J. Insoft Investments, L.L.C., which is 99% owned by Mr. Insoft and 1% owned by his wife, Susan M. Insoft. Such Aviv OP units are also pledged as collateral to secure a loan in favor of Mr. Insoft. Does not include 16,066 OP Units to be distributed in respect of Aviv OP Units subject to a phantom unit award grant to Mr. Insoft because Mr. Insoft does not have the right to acquire voting of dispositive power with respect to such securities within 60 days.
 
(11)
Includes shares owned jointly by Mr. Kloosterman and his wife.
 
(12)
Includes deferred stock units with respect to 5,416 shares of restricted stock, subject to forfeiture until vested.
 
(13)
Includes deferred stock units with respect to 6,319 shares of restricted stock, subject to forfeiture until vested.
 
(14)
Includes 5,416 shares of restricted stock, subject to forfeiture until vested.
 
(15)
Includes exercisable stock options for 26,012 options shares of common stock.
 
(16)
Includes 5,416 shares of restricted stock, subject to forfeiture until vested. The remainder of Mr. Plavin’s shares are owned jointly with Mr. Plavin’s wife.
 
(17)
Except as otherwise indicated below, information regarding 5% beneficial owners is based on information reported on Schedule 13G filings by the beneficial owners indicated with respect to the common stock of Omega. Does not reflect common stock of Omega which such beneficial owners may have received in respect of Aviv common stock that such beneficial owners may have held as of the effective time of the Aviv merger, since such beneficial owners have not reported their beneficial ownership following the effective time of the merger.
 
(18)
Based on a Schedule 13 G/A filed by The Vanguard Group, Inc. on February 11, 2015. The Vanguard Group, Inc. is located at 100 Vanguard Blvd. Malvern, PA 19355. Includes 103,000 shares of common stock over which The Vanguard Group Inc. has shared voting power and 190,487 shares of common stock over which The Vanguard Group, Inc. has shared dispositive power.
 
(19)
Based on a Schedule 13 G/A filed by BlackRock Inc. on January 23, 2015. BlackRock Inc. is located at 55 East 52nd Street New York, New York 10022.
   
(20)
Based on a Schedule 13 G/A filed by The Vanguard Group, Inc. on February 6, 2015. Vanguard Specialized Funds — Vanguard REIT Index Fund is located at 100 Vanguard Blvd. Malvern, PA 19355.
 
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Item 13 - Certain Relationships and Related Transactions, and Director Independence
 
Policy on Related Party Transactions
 
We have a written policy regarding related party transactions under which we have determined that we will not engage in any purchase, sale or lease of property or other business transaction in which our officers or directors have a direct or indirect material interest without the approval by resolution of a majority of those directors who do not have an interest in such transaction. It is generally our policy to enter into or ratify related party transactions only when our Board of Directors, acting through our Audit Committee, determines that the related person transaction in question is in, or is not inconsistent with, our best interests and the interests of our stockholders.
 
As part of our acquisition of entities owning 143 skilled nursing facilities in June 2010, we acquired entities owning skilled nursing facilities with existing leases in place to Laurel Heath Care Management Company (“Laurel”). Thomas F. Franke, a member of our Board of Directors, is the Chairman Emeritus of Laurel and owns less than 0.5% of Laurel. Mr. Franke’s son is a member of the board of directors of Laurel, and his children and their spouses, together with trusts for their benefit, beneficially own approximately 20% of Laurel. Trusts for the benefit of Mr. Frank’s grandchildren beneficially own approximately an additional 13.5% of Laurel. Our lease with Laurel generated approximately $1 million of rental income in 2014. On December 17, 2014, Aviv acquired a portfolio of 28 facilities and one office building for $305 million that are leased to Laurel. Together, these leases to Laurel provide for a total of approximately $27 million of annual rental income to the Company.

Security Deposit Indemnification Agreements. Prior to 2002, certain of the entities that were combined in connection with the formation of Aviv’s predecessor partnership distributed security deposits paid by certain of their tenants to the owners of those entities in exchange for an agreement by those owners to repay the amounts distributed if and when the applicable tenant became entitled to a return of the security deposit or the deposit was otherwise applied under the applicable lease. These arrangements were kept in place in connection with the formation of Aviv’s predecessor partnership. As of December 31, 2014, entities controlled by Mr. Bernfield were obligated to potentially reimburse approximately $292,000.

Director Independence

Our Corporate Governance Guidelines and the NYSE listing standards require that at least a majority of our directors, and all of the members of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee, be “independent.” The NYSE standards provide that, to qualify as an “independent” director, in addition to satisfying certain bright-line criteria, the Board must affirmatively determine that a director has no material relationship with us (either directly or as a partner, stockholder or officer of an organization that has a relationship with the company). The Board has affirmatively determined that each of our directors satisfies the bright-line independence criteria of the NYSE and that none has a relationship with us that would interfere with such person’s ability to exercise independent judgment as a member of the Board. Therefore, we believe that all of these directors, who constitute a majority of the Board, are independent under the NYSE rules.

Item 14 - Principal Accounting Fees and Services
 
Fees
 
The following table presents fees for professional audit services rendered by Ernst & Young LLP for the audit of our Company’s annual financial statements for the fiscal years 2014 and 2013 and fees billed for other services rendered by Ernst & Young LLP during those periods, all of which were pre-approved by the Audit Committee.
                 
   
Year Ended December 31,
 
   
2014 ($)
   
2013 ($)
 
Audit Fees
   
 1,144,000
     
 964,000
 
Audit-Related Fees
   
 65,000
     
 —
 
Tax Fees
   
 262,000
     
 —
 
All Other Fees
   
 —
     
 —
 
Total
   
 1,471,000
     
 964,000
 
 
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Audit Fees
 
The aggregate fees billed by Ernst & Young LLP for professional services rendered to our Company for the audit of our Company’s annual financial statements for fiscal years 2014 and 2013, the audit of the effectiveness of our Company’s internal control over financial reporting related to Section 404 of the Sarbanes-Oxley Act of 2002 for fiscal years 2014 and 2013, the reviews of the financial statements included in our Company’s Forms 10-Q for fiscal years 2014 and 2013, and services relating to securities and other filings with the SEC, including comfort letters and consents, were approximately $1,144,000 and $964,000, respectively.
 
Audit Related Fees
 
Ernst & Young LLP was engaged to perform services for our Company relating to due diligence related to mergers and acquisitions, accounting consultations and audits in connection with acquisitions, internal control reviews, attest services that are not required by statute or regulation, or consultation concerning financial accounting and reporting standards for fiscal years 2014 and 2013. These services cost $65,000 and $0 for the fiscal years ended 2014 and 2013.
 
Tax Fees
 
The aggregate fees billed by Ernst & Young LLP for professional services to our Company relating to tax compliance, tax planning and tax advice for fiscal year 2014 were approximately $262,000. Ernst & Young LLP was not engaged to perform any tax services in fiscal year 2013.
 
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All Other Fees
 
No other professional services were rendered or fees billed by Ernst & Young LLP in 2014 or 2013.
 
Determination of Auditor Independence
 
The Audit Committee considered the provision of non-audit services by our independent auditor and has determined that the provision of such services was consistent with maintaining the independence of Ernst & Young LLP.
 
Audit Committee’s Pre-Approval Policies and Procedures
 
The Audit Committee’s current practice is to pre-approve all audit services and all permitted non-audit services to be provided to our Company by our independent auditor; provided, however, pre-approval requirements for non-audit services are not required if all such services: (1) do not aggregate to more than five percent of total revenues paid by us to our accountant in the fiscal year when services are provided; (2) were not recognized as non-audit services at the time of the engagement; and (3) are promptly brought to the attention of the Audit Committee and approved prior to the completion of the audit by the Audit Committee.
 
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PART IV

Item 15 - Exhibits and Financial Statement Schedules

(a)(1) Listing of Consolidated Financial Statements

The following consolidated financial statements beginning on page F-1 are filed as part of the Original Filing:
 
Title of Document
   
Page
Number 
Reports of Independent Registered Public Accounting Firm
 
F-1
Consolidated Balance Sheets as of December 31, 2013 and 2012
 
F-3
Consolidated Statements of Operations for the years ended December 31, 2013, 2012 and 2011
 
F-4
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2013, 2012 and 2011
 
F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2013, 2012 and 2011  
F-6
Notes to Consolidated Financial Statements 
 
F-8
 
(a)(2) Listing of Financial Statement Schedules. The following consolidated financial statement schedules are filed as part of the Original Filing:
 
Schedule III – Real Estate and Accumulated Depreciation
 
F-47
Schedule IV – Mortgage Loans on Real Estate                                 
 
F-48
 
All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable or have been omitted because sufficient information has been included in the notes to the Financial Statements.

(a)(3) Listing of Exhibits — The Exhibit Index is incorporated by reference herein.
 
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EXHIBIT INDEX
INDEX TO EXHIBITS TO 2014 FORM 10-K

EXHIBIT
NUMBER
 
DESCRIPTION
2.1
Securities Purchase Agreement dated November 17, 2009 between CapitalSource Inc., CHR HUD Borrower LLC, CSE Mortgage LLC, CSE SLB LLC, CSE SNF Holding LLC and Omega Healthcare Investors, Inc. (Incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed November 23, 2009).
2.2
Agreement and Plan of Merger, dated as of October 30, 2014, by and among Omega Healthcare Investors, Inc., OHI Healthcare Properties Holdco, Inc., OHI Healthcare Properties Limited Partnership, L.P., Aviv REIT, Inc., and Aviv Healthcare Properties Limited Partnership (Incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed on November 5, 2014).
3.1
Amended and Restated Bylaws. (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on April 20, 2011).
3.2
Articles of Amendment and Restatement of Omega Healthcare Investors, Inc. (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on June 14, 2010).
4.0
See Exhibits 3.1 to 3.2.
4.1
Indenture, dated as of March 19, 2012, among Omega Healthcare Investors, Inc., each of the subsidiary guarantors listed therein and U.S. Bank National Association, as trustee, relating to the 5.875% Senior Notes due 2024. (Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed on March 19, 2012).
4.1A
Form of 5.875% Senior Notes due 2024. (Incorporated by reference to Exhibit A of Exhibit 4.2 to the Company’s Current Report on Form 8-K, filed on March 19, 2012).
4.1B
Form of Subsidiary Guarantee relating to the 5.875% Senior Notes due 2024. (Incorporated by reference to Exhibit E of Exhibit 4.2 to the Company’s Current Report on Form 8-K, filed on March 19, 2012).
4.1C
First Supplemental Indenture, dated as of July 2, 2012, among Omega Healthcare Investors, Inc., each of the Subsidiary Guarantors listed on Schedule I thereto, OHI Asset HUD SF, LLC, OHI Asset (IN) Greensburg, LLC, OHI Asset (IN) Indianapolis, LLC, OHI Asset (IN) Wabash, LLC and OHI Asset (IN) Westfield, LLC and U.S. Bank National Association, as trustee, together with Second Supplemental Indenture, dated as of August 9, 2012, among Omega Healthcare Investors, Inc., each of the Subsidiary Guarantors listed on Schedule I thereto, each of the New Subsidiaries listed on Schedule II thereto and U.S. Bank National Association, as trustee, that Third Supplemental Indenture, dated as of September 24, 2012, among Omega Healthcare Investors, Inc., each of the Subsidiary Guarantors listed on Schedule I thereto, each of the New Subsidiaries listed on Schedule II thereto and U.S. Bank National Association, as trustee, and that Fourth Supplemental Indenture, effective as of December 31, 2012, among Omega Healthcare Investors, Inc., each of the Subsidiary Guarantors listed on Schedule I thereto, each of the New Subsidiaries listed on Schedule II thereto and U.S. Bank National Association, as trustee. (Incorporated by reference to Exhibit 4.1C to the Company’s Annual Report on Form 10-K, filed on February 28, 2013).
4.1D
Fifth Supplemental Indenture, dated as of August 1, 2013, among Omega Healthcare Investors, Inc., each of the Subsidiary Guarantors listed on Schedule I thereto, each of the New Subsidiaries listed on Schedule II thereto and U.S. Bank National Association, as trustee (Incorporated by reference to Exhibit 4.3 to the Company’s Quarterly Report on Form 10-Q, filed on November 7, 2013) and that Sixth Supplemental Indenture, dated as of October 23, 2013 among Omega Healthcare Investors, Inc., each of the Subsidiary Guarantors listed on Schedule I thereto, each of the New Subsidiaries listed on Schedule II thereto and U.S. Bank National Association, as trustee (Incorporated by reference to Exhibit 4.1D to the Company’s Annual Report on Form 10-K, filed on February 11, 2014).
4.1E
Seventh Supplemental Indenture, dated as of February 14, 2014, among Omega Healthcare Investors, Inc., each of the subsidiary guarantors listed therein and U.S. Bank National Association, as trustee (Incorporated by reference to Exhibit 4.3A to the Company’s Quarterly Report on Form 10-Q, filed on August 6, 2014) and that Eighth Supplemental Indenture, dated as of June 27, 2014, among Omega Healthcare Investors, Inc., each of the subsidiary guarantors listed therein and U.S. Bank National Association, as trustee (Incorporated by reference to Exhibit 4.3B to the Company’s Quarterly Report on Form 10-Q, filed on August 6, 2014).
4.1F
Ninth Supplemental Indenture, dated as of November 25, 2014, among Omega Healthcare Investors, Inc., each of the subsidiary guarantors listed therein and U.S. Bank National Association, as trustee and that certain Tenth Supplemental Indenture, dated as of January 23, 2015, among Omega Healthcare Investors, Inc., each of the subsidiary guarantors listed therein and U.S. Bank National Association, as trustee.#
 

 

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4.2
Indenture, dated as of February 9, 2010, among Omega Healthcare Investors, Inc., each of the subsidiary guarantors listed therein and U.S. Bank National Association, as trustee, related to the 7.50% Senior Notes due 2020, including the Form of 7.5% Senior Notes and Form of Subsidiary Guarantee related thereto. (Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed on February 10, 2010).
4.2A
First Supplemental Indenture, dated as of June 23, 2010, among Omega Healthcare Investors, Inc., each of the Subsidiary Guarantors listed on Schedule I thereto, each of the New Subsidiaries listed on Schedule II thereto and U.S. Bank National Association, as trustee, together with Second Supplemental Indenture, dated as of September 2, 2010, among Omega Healthcare Investors, Inc., each of the Subsidiary Guarantors listed on Schedule I thereto, OHI Asset (MI), LLC and U.S. Bank National Association, as trustee, and Third Supplemental Indenture, dated as of January 13, 2011, among Omega Healthcare Investors, Inc., each of the Subsidiary Guarantors listed on Schedule I thereto, OHI Asset II (FL) Lender, LLC and U.S. Bank National Association, as trustee. (Incorporated by reference to Exhibit 4.2A to the Company’s Annual Report on Form 10-K, filed on February 28, 2011).
4.2B
Fourth Supplemental Indenture, dated as of June 10, 2011, among Omega Healthcare Investors, Inc., each of the Subsidiary Guarantors listed on Schedule I thereto, OHI Asset HUD WO, LLC, OHI Asset (MD), LLC and U.S. Bank National Association, as trustee. (Incorporated by reference to Exhibit 4.2A to the Company’s Annual Report on Form 10-K, filed on February 27, 2012).
4.2C
Fifth Supplemental Indenture, dated as of July 2, 2012, among Omega Healthcare Investors, Inc., each of the Subsidiary Guarantors listed on Schedule I thereto, OHI Asset HUD SF, LLC, OHI Asset (IN) Greensburg, LLC, OHI Asset (IN) Indianapolis, LLC, OHI Asset (IN) Wabash, LLC and OHI Asset (IN) Westfield, LLC and U.S. Bank National Association, as trustee, together with that Sixth Supplemental Indenture, dated as of August 9, 2012, among Omega Healthcare investors, Inc., each of the Subsidiary Guarantors listed on Schedule I thereto, each of the New Subsidiaries listed on Schedule II thereto and U.S. Bank National Association, as trustee, that certain Seventh Supplemental Indenture, dated as of September 24, 2012, among Omega Healthcare investors, Inc., each of the Subsidiary Guarantors listed on Schedule I thereto, each of the New Subsidiaries listed on Schedule II thereto and U.S. Bank National Association, as trustee, and that Eighth Supplemental Indenture, effective as of December 31, 2012, among Omega Healthcare Investors, Inc., each of the Subsidiary Guarantors listed on Schedule I thereto, each of the New Subsidiaries listed on Schedule II thereto and U.S. Bank National Association, as trustee. (Incorporated by reference to Exhibit 4.2C to the Company’s Annual Report on Form 10-K, filed on February 28, 2013).
4.2D
Ninth Supplemental Indenture, dated as of August 1, 2013, among Omega Healthcare Investors, Inc., each of the Subsidiary Guarantors listed on Schedule I thereto, each of the New Subsidiaries listed on Schedule II thereto and U.S. Bank National Association, as trustee (Incorporated by reference to Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q, filed on November 7, 2013) and that Tenth Supplemental Indenture, dated as of October 23, 2013 among Omega Healthcare Investors, Inc., each of the Subsidiary Guarantors listed on Schedule I thereto, each of the New Subsidiaries listed on Schedule II thereto and U.S. Bank National Association, as trustee (Incorporated by reference to Exhibit 4.2D to the Company’s Annual Report on Form 10-K, filed on February 11, 2014).
4.2E
Eleventh Supplemental Indenture, dated as of February 14, 2014, among Omega Healthcare Investors, Inc., each of the subsidiary guarantors listed therein and U.S. Bank National Association, as trustee (Incorporated by reference to Exhibit 4.1A to the Company’s Quarterly Report on Form 10-Q, filed on August 6, 2014) and that Twelfth Supplemental Indenture, dated as of June 27, 2014, among Omega Healthcare Investors, Inc., each of the subsidiary guarantors listed therein and U.S. Bank National Association, as trustee (Incorporated by reference to Exhibit 4.1B to the Company’s Quarterly Report on Form 10-Q, filed on August 6, 2014).
4.2F
Thirteenth Supplemental Indenture, dated as of November 25, 2014, among Omega Healthcare Investors, Inc., each of the subsidiary guarantors listed therein and U.S. Bank National Association, as trustee and that certain Fourteenth Supplemental Indenture, dated as of January 23, 2015, among Omega Healthcare Investors, Inc., each of the subsidiary guarantors listed therein and U.S. Bank National Association, as trustee.#
4.3
Indenture, dated as of October 4, 2010, by and among Omega Healthcare Investors, Inc., each of the Subsidiary Guarantors listed on Schedule I thereto and U.S. Bank National Association, as trustee, related to the 6.75% Senior Notes due 2022, including the Form of 6.75% Senior Notes and Form of Subsidiary Guarantee related thereto. (Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed on October 5, 2010).
 
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4.3A
First Supplemental Indenture, dated as of January 13, 2011, among Omega Healthcare Investors, Inc., each of the Subsidiary Guarantors listed on Schedule I thereto, OHI Asset II (FL) Lender, LLC and U.S. Bank National Association, as trustee. (Incorporated by reference to Exhibit 4.3A to the Company’s Annual Report on Form 10-K, filed on February 28, 2011).
4.3B
Second Supplemental Indenture, dated as of June 10, 2011, among Omega Healthcare Investors, Inc., each of the Subsidiary Guarantors listed on Schedule I thereto, OHI Asset HUD WO, LLC, OHI Asset (MD), LLC and U.S. Bank National Association, as trustee. (Incorporated by reference to Exhibit 4.2A to the Company’s Annual Report on Form 10-K, filed on February 27, 2012).
4.3C
Third Supplemental Indenture, dated as of July 2, 2012, among Omega Healthcare investors, Inc., each of the Subsidiary Guarantors listed on Schedule I thereto, OHI Asset HUD SF, LLC, OHI Asset (IN) Greensburg, LLC, OHI Asset (IN) Indianapolis, LLC, OHI Asset (IN) Wabash, LLC and OHI Asset (IN) Westfield, LLC and U.S. Bank National Association, as trustee, together with that Fourth Supplemental Indenture, dated as of August 9, 2012, among Omega Healthcare investors, Inc., each of the Subsidiary Guarantors listed on Schedule I thereto, each of the New Subsidiaries listed on Schedule II thereto and U.S. Bank National Association, as trustee, that certain Fifth Supplemental Indenture, dated as of September 24, 2012, among Omega Healthcare investors, Inc., each of the Subsidiary Guarantors listed on Schedule I thereto, each of the New Subsidiaries listed on Schedule II thereto and U.S. Bank National Association, as trustee, and that Sixth Supplemental Indenture, effective as of December 31, 2012, among Omega Healthcare Investors, Inc., each of the Subsidiary Guarantors listed on Schedule I thereto, each of the New Subsidiaries listed on Schedule II thereto and U.S. Bank National Association, as trustee. (Incorporated by reference to Exhibit 4.3C to the Company’s Annual Report on Form 10-K, filed on February 28, 2013).
4.3D
Seventh Supplemental Indenture, dated as of August 1, 2013, among Omega Healthcare Investors, Inc., each of the Subsidiary Guarantors listed on Schedule I thereto, each of the New Subsidiaries listed on Schedule II thereto and U.S. Bank National Association, as trustee (Incorporated by reference to Exhibit 4.2 to the Company’s Quarterly Report on Form 10-Q, filed on November 7, 2013) and that Eighth Supplemental Indenture, dated as of October 23, 2013 among Omega Healthcare Investors, Inc., each of the Subsidiary Guarantors listed on Schedule I thereto, each of the New Subsidiaries listed on Schedule II thereto and U.S. Bank National Association, as trustee (Incorporated by reference to Exhibit 4.3D to the Company’s Annual Report on Form 10-K, filed on February 11, 2014).
4.3E
Ninth Supplemental Indenture, dated as of February 14, 2014, among Omega Healthcare Investors, Inc., each of the subsidiary guarantors listed therein and U.S. Bank National Association, as trustee (Incorporated by reference to Exhibit 4.2A to the Company’s Quarterly Report on Form 10-Q, filed on August 6, 2014) and that Tenth Supplemental Indenture, dated as of June 27, 2014, among Omega Healthcare Investors, Inc., each of the subsidiary guarantors listed therein and U.S. Bank National Association, as trustee (Incorporated by reference to Exhibit 4.2B to the Company’s Quarterly Report on Form 10-Q, filed on August 6, 2014).
4.3F
Eleventh Supplemental Indenture, dated as of November 25, 2014, among Omega Healthcare Investors, Inc., each of the subsidiary guarantors listed therein and U.S. Bank National Association, as trustee and that certain Twelfth Supplemental Indenture, dated as of January 23, 2015, among Omega Healthcare Investors, Inc., each of the subsidiary guarantors listed therein and U.S. Bank National Association, as trustee.#
4.4
Indenture, dated as of March 11, 2014, by and among Omega, the guarantors named therein, and U.S. Bank National Association, as trustee related to the 4.95% Senior Notes due 2024, including the Form of 4.95% Senior Notes and Form of Subsidiary Guarantee related thereto. (Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed on March 11, 2014).
4.4A
First Supplemental Indenture, dated as of June 27, 2014, among Omega Healthcare Investors, Inc., each of the subsidiary guarantors listed therein and U.S. Bank National Association, as trustee (Incorporated by reference to Exhibit 4.4 to the Company’s Quarterly Report on Form 10-Q, filed on August 6, 2014).
4.4B
Second Supplemental Indenture, dated as of November 25, 2014, among Omega Healthcare Investors, Inc., each of the subsidiary guarantors listed therein and U.S. Bank National Association, as trustee and that certain Third Supplemental Indenture, dated as of January 23, 2015, among Omega Healthcare Investors, Inc., each of the subsidiary guarantors listed therein and U.S. Bank National Association, as trustee#
4.5
Indenture, dated as of September 11, 2014, by and among Omega, the subsidiary guarantors named therein, and U.S. Bank National Association, as trustee related to the 4.50% Senior Notes due 2025, including the Form of 4.50% Senior Notes and Form of Subsidiary Guarantee related thereto. (Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed on September 11, 2014).
 
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4.5A
First Supplemental Indenture, dated as of November 25, 2014, among Omega Healthcare Investors, Inc., each of the subsidiary guarantors listed therein and U.S. Bank National Association, as trustee and that certain Second Supplemental Indenture, dated as of January 23, 2015, among Omega Healthcare Investors, Inc., each of the subsidiary guarantors listed therein and U.S. Bank National Association, as trustee.#
10.1
Form of Directors and Officers Indemnification Agreement. (Incorporated by reference to Exhibit 10.11 to the Company’s Quarterly Report on Form 10-Q, filed on August 14, 2000).
10.2
Form of Officers’ Multi-Year Performance Restricted Stock Unit Award for 2011 to 2014 (Incorporated by reference to Exhibit 10.12 of the Company’s Annual Report on Form 10-K, filed on February 27, 2012).+
10.3
Amended and Restated Deferred Stock Plan, dated October 16, 2012, and forms of related agreements (Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, filed November 7, 2012).
10.4
Credit Agreement, dated as of June 27, 2014, among Omega Healthcare Investors, Inc., certain subsidiaries of Omega Healthcare Investors, Inc. identified therein as guarantors, the lenders named therein and Bank of America, N.A., as administrative agent for such lenders. (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed July 2, 2014).
10.5
Form of Equity Distribution Agreement, dated March 18, 2013, entered into by and between Omega Healthcare Investors, Inc. and each of BB&T Capital Markets, a division of BB&T Securities, LLC, Credit Agricole Securities (USA) Inc., J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. LLC, RBC Capital Markets, LLC, RBS Securities Inc., Stifel, Nicolaus & Company, Incorporated, SunTrust Robinson Humphrey, Inc. and UBS Securities LLC. (Incorporated by reference to Exhibit 1.1 of the Company’s Current Report on Form 8-K, filed March 19, 2013).
10.6
Omega Healthcare Investors, Inc. 2013 Stock Incentive Plan (Incorporated by reference to Annex A to the Registrant’s Proxy Statement on Schedule 14A filed on April 22, 2013). +
10.7
Form of Officer Deferred Performance Restricted Stock Unit Agreement (Incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q, filed on August 5, 2013). +
10.8
Employment Agreement, dated November 15, 2013, between Omega Healthcare Investors, Inc. and C. Taylor Pickett (Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed on November 19, 2013). +
10.9
Employment Agreement, dated November 15, 2013, between Omega Healthcare Investors, Inc. and Daniel Booth (Incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K, filed on November 19, 2013). +
10.10
Employment Agreement, dated November 15, 2013, between Omega Healthcare Investors, Inc. and Robert O. Stephenson (Incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K, filed on November 19, 2013). +
10.11
Employment Agreement, dated November 15, 2013, between Omega Healthcare Investors, Inc. and R. Lee Crabill (Incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K, filed on November 19, 2013). +
10.12
Employment Agreement, dated November 15, 2013, between Omega Healthcare Investors, Inc. and Michael Ritz (Incorporated by reference to Exhibit 10.5 of the Company’s Current Report on Form 8-K, filed on November 19, 2013). +
10.13
Form of Time-Based Restricted Stock Unit Agreement for Transition Grants (2013) (Incorporated by reference to Exhibit 10.6 of the Company’s Current Report on Form 8-K, filed on November 19, 2013). +
10.14
Form of Performance-Based Restricted Stock Unit Agreement for Transition Grants (2013) (Incorporated by reference to Exhibit 10.7 of the Company’s Current Report on Form 8-K, filed on November 19, 2013). +
10.15
Form of Time-Based Restricted Stock Unit Agreement for Annual Grants (commencing 2014) (Incorporated by reference to Exhibit 10.8 of the Company’s Current Report on Form 8-K, filed on November 19, 2013). +
10.16
Form of Performance-Based Restricted Stock Unit Agreement for Annual Grants (commencing 2014) (Incorporated by reference to Exhibit 10.9 of the Company’s Current Report on Form 8-K, filed on November 19, 2013). +
10.17
Ownership Limit Waiver Agreement, dated as of October 30, 2014, by and between Omega Healthcare Investors, Inc. and LG Aviv L.P. (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on November 5, 2014).
 
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12.1
Ratio of Earnings to Fixed Charges.#
12.2
Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends.#
21
Subsidiaries of the Registrant. #
23
Consent of Independent Registered Public Accounting Firm.
31.1
Certification of the Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.#
31.2
Certification of the Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002.#
31.3
Certification of the Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.*
31.4
Certification of the Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1
Certification of the Chief Executive Officer under Section 906 of the Sarbanes- Oxley Act of 2002.#
32.2
Certification of the Chief Financial Officer under Section 906 of the Sarbanes- Oxley Act of 2002.#
101.INS
XBRL Instance Document.#
101.SCH
XBRL Taxonomy Extension Schema Document. #
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document. #
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document. #
101.LAB
XBRL Taxonomy Extension Label Linkbase Document. #
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document. #
 
*
Exhibits that are filed herewith.
+
Management contract or compensatory plan, contract or arrangement.
Previously filed or furnished, as applicable, as an exhibit to the Company’s Annual Report on Form 10-K filed with the SEC on February 27, 2015.
 
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SIGNATURES

Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
       
  OMEGA HEALTHCARE INVESTORS, INC.  
       
  By:
/s/ C. Taylor Pickett
 
     C. Taylor Pickett  
     Chief Executive Officer  
 
Date: April 30, 2015

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