-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BDmo/VFB9j2Aa4U1bBfNvDtgty1GXUOitFlICbsnshMUx0QRWEDcIiC+6fCxvazC 4XJ0cXFnyEHsV2bPvTzJgg== 0000950135-97-001744.txt : 19970410 0000950135-97-001744.hdr.sgml : 19970410 ACCESSION NUMBER: 0000950135-97-001744 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970507 FILED AS OF DATE: 19970409 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEDITRUST CENTRAL INDEX KEY: 0000774350 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 046532031 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-09582 FILM NUMBER: 97577212 BUSINESS ADDRESS: STREET 1: 197 FIRST AVE CITY: NEEDHAM STATE: MA ZIP: 02194 BUSINESS PHONE: 6174336000 MAIL ADDRESS: STREET 1: 197 FIRST AVENUE CITY: NEEDHAM STATE: MA ZIP: 02194 DEF 14A 1 MEDITRUST 1 SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ] - -------------------------------------------------------------------------------- Check the appropriate box: [ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [X] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12 MEDITRUST (Name of Registrant as Specified In Its Charter) MEDITRUST (Name of Person(s) Filing Proxy Statement) PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX): [X] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. 1) Title of each class of securities to which transaction applies: 2) Aggregate number of securities to which transaction applies: 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11: 4) Proposed maximum aggregate value of transaction: 5) Total fee paid: Set forth the amount on which the filing fee is calculated and state how it was determined. [ ] Fee paid previously with preliminary materials. [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. 1) Amount Previously Paid: 2) Form, Schedule or Registration Statement No.: 3) Filing Party: 4) Date Filed: - -------------------------------------------------------------------------------- 2 MEDITRUST NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 7, 1997 The annual meeting of shareholders of Meditrust will be held at Fleet Bank, N.A., 75 State Street, 8th Floor, Boston, Massachusetts, on Wednesday, May 7, 1997 at 4:00 o'clock in the afternoon for the following purposes: 1. To fix the number of trustees and elect a Board of Trustees for the ensuing year. 2. To consider and act upon such other business, matters or proposals as may properly come before the Meeting. The Board of Trustees has fixed the close of business on March 31, 1997 as the record date for determining the shareholders having the right to receive notice of and to vote at the Meeting. By Order of the Board of Trustees /s/ Michael S. Benjamin MICHAEL S. BENJAMIN Senior Vice President and Secretary Needham Heights, Massachusetts April 10, 1997 WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO SIGN, DATE AND MAIL PROMPTLY THE ENCLOSED PROXY WHICH IS BEING SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. A RETURN ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES IS ENCLOSED FOR THAT PURPOSE. RETURNING THE ENCLOSED PROXY WILL NOT AFFECT YOUR RIGHT TO ATTEND THE MEETING AND VOTE YOUR SHARES IN PERSON. 3 MEDITRUST 197 FIRST AVENUE NEEDHAM HEIGHTS, MASSACHUSETTS 02194 ------------------------ PROXY STATEMENT ANNUAL MEETING OF SHAREHOLDERS MAY 7, 1997 INTRODUCTION This Proxy Statement is furnished in connection with the solicitation by and on behalf of the Board of Trustees of Meditrust, a Massachusetts business trust (the "Company"), of proxies for use at the annual meeting of shareholders of the Company and at any adjournment or adjournments thereof (the "Meeting") to be held, pursuant to the accompanying Notice of Annual Meeting, at 4:00 p.m. on May 7, 1997 at Fleet Bank, N.A., 75 State Street, 8th Floor, Boston, Massachusetts. The Company expects to mail this Proxy Statement and the accompanying form of proxy to shareholders on or about April 10, 1997. VOTING AND REVOCATION OF PROXIES Valid proxies will be voted as specified thereon at the Meeting. Any shareholder giving a proxy in the accompanying form retains the power to revoke it at any time prior to the exercise of the powers conferred thereby by (a) delivering written notice of such revocation to Michael S. Benjamin, Esquire, Senior Vice President and Secretary, Meditrust, 197 First Avenue, Needham Heights, Massachusetts 02194; (b) delivering a duly executed proxy bearing a later date to the Secretary of the Company; or (c) appearing at the Meeting and requesting the return of his proxy. Any shareholder who attends the Meeting in person will not be deemed thereby to revoke the proxy unless such shareholder affirmatively indicates thereat his intention to vote the shares in person. ANNUAL REPORT The Annual Report of the Company for the fiscal year ended December 31, 1996, including financial statements, audited and reported upon by Coopers & Lybrand L.L.P., independent accountants, is being mailed herewith to each of the Company's shareholders of record at the close of business on March 31, 1997. VOTING SECURITIES, PRINCIPAL HOLDERS THEREOF AND HOLDINGS BY CERTAIN EXECUTIVE OFFICERS The holders of record of shares of beneficial interest of the Company ("Shares") at the close of business on March 31, 1997 are entitled to vote at the Meeting. On that date there were outstanding and entitled to vote 61,495,104 Shares. Each shareholder has one vote for each Share held by such shareholder of record on the matters listed in the Notice of Annual Meeting. 4 No one was known by the Company to own beneficially more than 5% of the Company's outstanding Shares on March 31, 1997, except as shown in the following table:
SHARES BENEFICIALLY PERCENTAGE OF NAME AND ADDRESS OWNED(1) SHARES - ---------------- ------------ ------------- Franklin Resources, Inc....................... 3,202,838(2) 5.3% 77 Mariners Island Blvd. San Mateo, CA 94404
- --------------- (1) None of such Shares are known to be Shares with respect to which the holder has the right to acquire beneficial ownership. (2) Based on information concerning beneficial ownership of Shares as of December 31, 1996 as set forth in the Schedule 13G of Franklin Resources, Inc. dated February 13, 1997. - ---------------------- The following table sets forth information concerning ownership of Shares by certain executive officers of the Company:
SHARES SUBJECT SHARES TO OPTIONS BENEFICIALLY EXERCISABLE WITHIN PERCENTAGE OF OWNED AS OF 60 DAYS OF SHARES 3/31/97(1) 3/31/97 OUTSTANDING ------------ ------------------ ------------- Abraham D. Gosman....................... 978,564(2) 211,353 1.6% David F. Benson......................... 66,137 55,706 (3) Michael S. Benjamin..................... 21,719 13,333 (3) Michael F. Bushee....................... 23,092 13,333 (3) Stephen H. Press........................ 24,024 23,332 (3)
- --------------- (1) Unless otherwise indicated, the number of Shares stated as being owned beneficially includes (i) Shares beneficially owned by spouses, minor children and/or other relatives in which the executive officer may share voting or investment power and (ii) any Shares listed as being subject to options exercisable within 60 days of March 31, 1997. (2) Includes 162,000 Shares owned by A.M.A. Financial Corporation, of which Mr. Gosman is President and a 98% shareholder. (3) Less than 1%. EXECUTIVE COMPENSATION REPORT OF THE PERSONNEL AND COMPENSATION COMMITTEE In determining the compensation to be paid to the Company's executive officers, the Personnel and Compensation Committee (the "Compensation Committee") strives to (i) reward executives for achievement of the Company's strategic goals and the enhancement of shareholder value, (ii) recognize superior Company performance as compared to that of competing businesses and (iii) attract, motivate and retain highly-trained and talented executives who are vital to the Company's long-term success. Individual compensation packages are generally set at levels believed by the Compensation Committee to correspond to 2 5 the median range of compensation paid to individuals serving in comparable positions at other real estate investment trusts with publicly-traded securities (including those comprising the National Association of Real Estate Investment Trusts Index referred to in the performance graph set forth hereinafter). At present, the Company's compensation package is comprised of a base salary, an annual cash bonus, long-term incentives in the form of stock options and stock grants (which are awarded by the Stock Option Committee) and other benefits typically offered to executives by major corporations. SALARIES During 1996, the Board of Trustees, on the recommendation of the Compensation Committee, increased the salaries paid to each of the four most highly compensated executive officers of the Company other than Mr. Gosman (collectively, the "Senior Executives"). These salary increases, as well as those of other Company executives, were based on cost-of-living adjustments, position tenure, subjective assessments of individual performance, comparability considerations (including the Company's financial performance relative to its competitors) and competitive data, including asset growth, revenue growth, cash flow growth and total return to shareholders. In setting compensation levels for 1996, the Compensation Committee gave considerable weight to the Company's favorable 1995 financial results (including the 18.6% increase in the Company's assets, 21% increase in the Company's revenues and 40.8% increase in cash flow). The 1995 financial results generally exceeded management's expectations, which further influenced the Compensation Committee's decision to increase salaries. Performance assessments were also given greater weight in the Compensation Committee's determinations relative to the other factors. Mr. Gosman's 1996 base salary was paid pursuant to the provisions of his employment agreement (the "Employment Agreement") with the Company which was entered into on January 1, 1993 with an original term of four years. The terms of the Employment Agreement, including salary terms, were determined through negotiations between Mr. Gosman and the Compensation Committee. Factors considered by the Compensation Committee in the course of those negotiations included Mr. Gosman's unique insight and experience in the health care industry, his leadership abilities, his past contributions to the success of the Company, his perceived importance to the continued success of the Company, his four-year commitment to lead the Company and the Company's financial performance, as measured by asset growth, revenue growth, cash flow growth and total return to shareholders, under Mr. Gosman's leadership. Under certain circumstances, Section 162(m) of the Internal Revenue Code denies a deduction for compensation in excess of $1 million paid to an individual who is the chief executive officer or one of the four next most highly paid officers of a corporation. In general, compensation from all sources is taken into account, including salary, bonus and income realized from the exercise of non-qualified stock options. Because it is a real estate investment trust, and based on the advice of counsel, the Company believes that the denial of deductions by Section 162(m) would have no adverse impact on the Company. A real estate investment trust is subject to tax on its "real estate investment trust taxable income," which is taxable income subject to adjustments and reduced by a deduction for dividends paid. The Company expects to pay sufficient dividends such that it will have no real estate investment trust taxable income even if Section 162(m) were to be applicable to compensation paid to one or more of its officers. BONUS AWARDS Executive officers of the Company were awarded cash bonuses in 1996 based on the Compensation Committee's assessment of the Company's performance in 1996. The performance measures reviewed by the Compensation Committee included the Company's revenue growth, cash flow growth and total return to shareholders compared to that of its competitors. These measures were assigned approximately equal weight in the Compensation Committee's determinations. The Company's performance in each of these measures 3 6 generally compared favorably to its competitors' corresponding results. The increases in the bonuses paid to executive officers in 1996 over those paid in 1995 were based in large part on these results. Pursuant to the Employment Agreement, Mr. Gosman received bonus compensation in 1996 which consisted solely of Shares. In its 1992 negotiations regarding the amount of bonus compensation to be paid to Mr. Gosman each year during the four-year term of the Employment Agreement, the Board of Trustees considered the performance measures listed above, Mr. Gosman's unique abilities and experience and his perceived contributions to the Company's financial performance in 1991 and 1992, including the approximately 57% and 10% total returns (comprised of stock price appreciation and dividend yield) on Shares in 1991 and 1992, respectively. Mr. Gosman's annual bonus under the Employment Agreement is paid in Shares in order to further align his interests with those of the Company's shareholders. OTHER COMPENSATION PLANS The Company maintains certain broad-based employee benefit plans in which Mr. Gosman and the Senior Executives participated. These plans include a 401(k) savings plan, life, disability and health insurance plans and allowances for automobile use. These plans are not directly or indirectly tied to Company performance. Submitted by, Thomas J. Magovern, Chairman Philip L. Lowe Frederick W. Zuckerman REPORT OF THE STOCK OPTION COMMITTEE The Board's Stock Option Committee administers the Company's 1988 Stock Option Plan and the Amended and Restated 1992 Equity Incentive Plan. Stock options and stock grants are awarded under these plans in order to provide incentives to trustees, officers and key employees of the Company to maximize their efforts on behalf of the Company, to attract and retain those highly competent individuals upon whose judgment, initiative and leadership the Company's continuing success largely depends and to align the interests of the trustees, officers and key employees of the Company with those of the Company's shareholders. The size of individual option and stock grants is determined by the Stock Option Committee based on its comparison of option and stock grants to executives with similar responsibilities in other companies and the executive's level of responsibility and relative importance to the operations of the Company. In recognition of the Company's favorable 1995 financial results, the Stock Option Committee granted stock awards in 1996 to the Senior Executives, as reflected in certain of the tables appearing hereinafter. It is the present policy of the Stock Option Committee to review periodically the Company's stock option and stock grant award levels and the over-all effectiveness of the Company's equity incentive plans in achieving the objectives of the Company. Submitted by, Gerald Tsai, Jr., Chairman Edward W. Brooke 4 7 The following table sets forth the compensation paid to the Company's Chief Executive Officer (the "CEO") and the four most highly compensated executive officers other than the CEO in 1996 for services rendered in all capacities to the Company and its subsidiaries during the fiscal years ended December 31, 1996, 1995 and 1994. SUMMARY COMPENSATION TABLE
ALL OTHER ANNUAL COMPENSATION COMPENSATION NAME AND ---------------------------- ------------ PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(1) - ------------------------------------------------- ---- --------- -------- ------ Abraham D. Gosman................................ 1996 900,000 885,938(2) 179,249(3) Chairman and CEO 1995 767,559 834,375(2) 375,754(3) 1994 900,000 806,250(2) 5,344 David F. Benson.................................. 1996 290,000 335,997(4) 6,370 President and Treasurer 1995 275,000 123,060(4) 6,240 1994 250,000 65,253(4) 5,367 Michael S. Benjamin.............................. 1996 175,000 240,318(5) 6,305 Senior Vice President and Secretary 1995 165,000 84,459(5) 6,175 1994 150,000 40,191(5) 5,138 Michael F. Bushee................................ 1996 175,000 240,318(5) 6,305 Chief Operating Officer 1995 165,000 84,459(5) 6,175 1994 150,000 40,191(5) 5,096 Stephen H. Press................................. 1996 150,000 79,523(6) 5,677 Vice President of Acquisitions 1995 143,000 63,143(6) 5,537 1994 130,000 30,000 5,105
- --------------- (1) Includes 401(k) plan contribution of $4,750, $4,750, $4,750, $4,750 and $4,750 in 1996, $4,620, $4,620, $4,620, $4,620 and $4,610 in 1995, and $4,583, $4,589, $4,609, $4,610 and $4,619 in 1994, and term life insurance premium payments of $785, $1,620, $1,555, $1,555 and $927 in 1996, $0, $1,620, $1,555, $1,555, and $927 in 1995, and $761, $778, $529, $486 and $486 in 1994, on behalf of Messrs. Gosman, Benson, Benjamin, Bushee and Press, respectively. (2) For the years 1996, 1995 and 1994, relates to the Company's issuance to Mr. Gosman of (i) 25,000 shares in four equal quarterly installments valued at $33.50, $33.75, $35.125 and $39.375 per Share on April 12, 1996, July 8, 1996, October 3, 1996 and January 3, 1997; (ii) 25,000 shares in four equal quarterly installments valued at $29.50, $34.25, $34.625 and $35.125 per Share on April 4, 1995, July 3, 1995, October 2, 1995 and January 2, 1996; and (iii) 25,000 shares in four equal quarterly installments valued at $33.125, $33.875, $31.625 and $30.375 per Share on April 11, 1994, July 6, 1994, October 4, 1994 and January 3, 1995. All issuance prices were the closing prices for Shares on the New York Stock Exchange on the respective dates of issuance. (3) $173,714 and $371,134 of which reflects the current dollar value of the benefit to Mr. Gosman of the portion of the premium paid by the Company in 1996 and 1995, respectively, with respect to a split-dollar life insurance agreement (see "Further Information Regarding the Board of Trustees and Executive Officers" below for a description of such agreement). The benefit for each of 1996 and 1995 was determined by calculating the time value of money (using the applicable short-term federal funds rate of 5.76% and 6.62%) of the premium paid by the Company in 1996 ($2,951,045) for the period from May 19, 1996 (the date on which the premium was paid) until June 18, 1997 (which is the earliest date on which the Company could terminate the agreement and obtain a refund of the premium paid); and in 1995 ($2,969,260) for the period from May 19, 1995 to June 18, 1997. (4) For the years 1996, 1995 and 1994, $121,832, $48,060 and $20,253 of which relates to the Company's issuance to Mr. Benson of (i) 428 Shares and 3,185 Shares valued at $33.50 and $33.75 per Share on 5 8 April 12, 1996 and July 8, 1996; (ii) 1,440 Shares in four equal quarterly installments valued at $29.50, $34.25, $34.625 and $35.125 per Share on April 4, 1995, July 3, 1995, October 2, 1995 and January 2, 1996; and (iii) 628 Shares in four equal quarterly installments valued at $33.125, $33.875, $31.625 and $30.375 per Share on April 11, 1994, July 6, 1994, October 4, 1994 and January 3, 1995. All issuance prices were the closing prices for Shares on the New York Stock Exchange on the respective dates of issuance. (5) For the years 1996, 1995 and 1994, $130,318, $29,459 and $10,191 of which relates to the Company's issuance to each of Messrs. Benjamin and Bushee of (i) 257, 2,324, 945 and 256 Shares valued at $33.50, $33.75, $35.125 and $39.375 per Share on April 12, 1996, July 8, 1996, October 3, 1996 and January 3, 1997; (ii) 847 Shares in four equal quarterly installments valued at $29.50, $34.25, $34.625 and $35.125 per Share on April 4, 1995, July 3, 1995, October 2, 1995 and January 2, 1996; and (iii) 316 Shares in four equal quarterly installments valued at $33.125, $33.875, $31.625 and $30.375 per Share on April 11, 1994, July 6, 1994, October 4, 1994 and January 3, 1995. All issuance prices were the closing prices for Shares on the New York Stock Exchange on the respective dates of issuance. (6) For the years 1996 and 1995, $24,523 and $8,144 of which relates to the Company's issuance to Mr. Press of (i) 692 Shares in four equal quarterly installments valued at $33.50, $33.75, $35.125 and $39.375 per Share on April 12, 1996, July 8, 1996, October 3, 1996 and January 3, 1997 and (ii) 244 Shares in four equal quarterly installments valued at $29.50, $34.25, $34.625 and $35.125 per Share on April 4, 1995, July 3, 1995, October 4, 1995 and January 2, 1996. All issuance prices were the closing prices for Shares on the New York Stock Exchange on the respective dates of issuance. The following table sets forth information concerning exercises of stock options by the following persons during the fiscal year ended December 31, 1996 and the number and value of their stock options at December 31, 1996.
VALUE OF NUMBER OF UNEXERCISED UNEXERCISED IN-THE-MONEY SHARES OPTIONS AT OPTIONS AT ACQUIRED ON VALUE 12/31/96(#) 12/31/96($) EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/ NAME (#) ($)(1) UNEXERCISABLE UNEXERCISABLE(2) ---- ----------- -------- ------------- ---------------- Abraham D. Gosman................. 0 0 191,353/40,000 2,713,728/395,000 David F. Benson................... 0 0 35,706/40,000 413,457/395,000 Michael S. Benjamin............... 13,333 64,998 0/26,667 0/263,337 Michael F. Bushee................. 13,333 63,332 0/26,667 0/263,337 Stephen H. Press.................. 20,000 140,000 23,332/11,668 230,403/115,221
- --------------- (1) Market value of underlying securities at exercise, less the exercise price. (2) Market value of $40.00 as of December 31, 1996, less the exercise price. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to the Company during its most recent fiscal year, Forms 5 and amendments thereto furnished to the Company with respect to its most recent fiscal year and written representations furnished to the Company, no officer, director or 10% beneficial owner failed to timely file a required Form except that John G. Demeritt, the Company's Controller filed a Form 4 for a transaction which occurred on June 18, 1996 approximately ten (10) days after the filing deadline. 6 9 PERFORMANCE GRAPH(1) Set forth below is a line graph comparing the yearly percentage change in the cumulative total shareholder return on the Company's Shares against the cumulative market-weighted return of the Standard & Poor's Composite 500 Stock Index and the National Association of Real Estate Investment Trusts ("NAREIT") All REIT Total Return Index (which is comprised of all tax-qualified real estate investment trusts, without regard to investment focus, listed on the New York Stock Exchange, American Stock Exchange and NASDAQ National Market System) for the period of five fiscal years commencing January 1, 1992 and ending December 31, 1996. [GRAPH]
MEASUREMENT PERIOD (FISCAL YEAR COVERED) MEDITURST S&P 500 NAREIT 12/31/91 100.00 100.00 100.00 1992 110.36 107.67 112.18 1993 124.91 118.43 132.98 1994 126.75 119.97 134.05 1995 156.68 164.88 158.60 1996 192.25 202.74 215.30
- --------------- (1) Assumes that the value of an investment in Meditrust Shares and each index was $100 on December 31, 1991 and that all dividends were reinvested on a monthly basis. ITEM I ELECTION OF TRUSTEES It is the intention of the persons named as proxies in the accompanying form of proxy (unless otherwise indicated) to vote such proxies to elect the nominees for trustee named in the following table, all of whom are currently members of the Board of Trustees. If elected, the nominees will serve as trustees until the next scheduled annual meeting and until their successors are chosen and qualified. In the event that any of the nominees becomes unavailable (which is not now anticipated by the Company), the persons named as proxies have discretionary authority to vote for a substitute or to reduce the number of trustees to be fixed and elected. The Board of Trustees, which currently consists of seven persons, has no reason to believe that any of said persons will be unwilling or unable to serve if elected. The trustees will be elected by a plurality of the votes cast at the Meeting by the holders of Shares entitled to vote at the Meeting. The affirmative vote of the holders of a majority of the outstanding Shares of the Company present or represented at the Meeting and 7 10 entitled to vote thereat is required to fix the number of trustees for the ensuing year, provided that such majority is at least a majority of the outstanding Shares entitled to vote at the Meeting. Abstentions and broker non-votes with regard to any item being acted upon at the Meeting will not be treated as votes cast.
SHARES SUBJECT SHARES SHARES TO OPTIONS BENEFICIALLY OWNED BENEFICIALLY EXERCISABLE AS A PERCENTAGE OF NAME AND PRINCIPAL OCCUPATION OR TRUSTEE OWNED AS OF WITHIN 60 DAYS SHARES OUTSTANDING EMPLOYMENT AGE SINCE 3/31/97(1) OF 3/31/97 AS OF 3/31/97 -------------------------------- --- ------- ---------- -------------- ------------------ Abraham D. Gosman..................... 68 1985 978,564(2) 211,353 1.6% Chairman and Chief Executive Officer of the Company David F. Benson....................... 48 1991 66,137 55,706 (3) President and Treasurer of the Company Edward W. Brooke...................... 77 1985 92,555(4) 40,000 (3) Partner in the law firm of O'Connor & Hannan Philip L. Lowe........................ 79 1987 43,000(5) 40,000 (3) Principal of Philip L. Lowe and Associates, a consulting firm Thomas J. Magovern.................... 54 1985 27,250 20,000 (3) Regional Vice President, Real Estate Asset Management, Summit Bank, a New Jersey banking institution Gerald Tsai, Jr....................... 68 1992 28,000 20,000 (3) Chairman, Chief Executive Officer and President of Delta Life Corporation, an annuity company Frederick W. Zuckerman................ 62 1990 25,000 20,000 (3) General Partner, Zuckerman, Firstenberg and Associates LLC, an investment banking and financial advisory firm All trustees and officers as a group (14 in number)...................... -- -- 1,353,747(6) 480,389 2.2%
- --------------- (1) Unless otherwise indicated, the number of Shares stated as being owned beneficially includes (i) Shares beneficially owned by spouses, minor children and/or other relatives in which the trustee may share voting or investment power and (ii) any Shares listed as being subject to options exercisable within 60 days of March 31, 1997. (2) Includes 162,000 Shares owned by A.M.A. Financial Corporation, of which Mr. Gosman is President and a 98% shareholder. (3) Less than 1%. (4) Does not include 817 Shares owned by Mr. Brooke's wife, 2,271 Shares owned of record by Mr. Brooke as custodian for his son and 2,100 Shares owned of record by Mr. Brooke as trustee for his grandchildren, as to which Shares Mr. Brooke disclaims any beneficial interest. (5) Does not include 1,500 Shares owned by Mr. Lowe's wife, as to which Shares Mr. Lowe disclaims any beneficial interest. 8 11 (6) Does not include an aggregate of 7,038 Shares owned by or for parents, spouses or children, as to which Shares the trustees or officers disclaim any beneficial interest. Abraham D. Gosman has been the Chairman of the Company since its organization in 1985 and became Chief Executive Officer in February 1991. Mr. Gosman is also the Chairman of the Board, Chief Executive Officer and President of PhyMatrix Corp., a publicly traded physician practice management company which renders managerial and administrative services to a variety of specialized medical care and treatment providers. Additionally, Mr. Gosman is Chairman of the Board of CareMatrix Corporation, a publicly traded company which provides a full range of quality senior residential services in assisted living settings. Mr. Gosman was the Chief Executive Officer and Chairman of the Board of The Mediplex Group, Inc. ("Mediplex"), an operator and developer of health care facilities, from August 1990 until June 1994, when Mediplex was acquired by Sun Healthcare Group, Inc. Mr. Gosman has been in the health care and development business for more than thirty years. David F. Benson has been President of the Company since September 1991 and Treasurer since October 1996. Mr. Benson also served as Treasurer of the Company from January 1986 to May 1992. He was Treasurer of Mediplex from January 1986 through June 1987. He was previously associated with Coopers & Lybrand L.L.P., independent accountants, from 1979 to 1985. Mr. Benson is a trustee of Mid-Atlantic Realty Trust and a member of the Board of Directors of Harborside Healthcare Corporation and Nursing Home Properties, Plc. Edward W. Brooke has been a partner of O'Connor & Hannan, a Washington, D.C. law firm since 1979. From 1979 until October 1990 he was Of Counsel to Csaplar & Bok, a Boston law firm. He was United States Senator from Massachusetts from January 1967 to January 1979 and the Massachusetts Attorney General from 1963 to 1967. Philip L. Lowe has been a principal of Philip L. Lowe and Associates, a consulting firm, and its predecessors for more than five years and until March 1997 had been a director of Analog Devices, Inc. for 17 years. Thomas J. Magovern has been a Regional Vice President, Real Estate Asset Management of Summit Bank (successor to United Jersey Bank), a New Jersey banking institution, since November 1995. He was a principal of Nationwide Financial Corp., a real estate consulting firm from September 1993 to October 1995. Mr. Magovern was Executive Vice President of Northeast Savings, F.A. from January 1991 until February 1993. Prior to that time he had been Senior Vice President of City Savings Bank, F.S.B. from April 1989 until January 1991 and a Vice President of that bank for more than five years. Gerald Tsai, Jr. has been the Chairman, Chief Executive Officer and President of Delta Life Corporation, an annuity company, since February 1993. Mr. Tsai retired in 1991 as Chairman of the Executive Committee of the Board of Directors of Primerica Corporation (a diversified financial services company), which position he held since December 1988. From January 1987 to December 1988, Mr. Tsai was Chairman, and from April 1986 to December 1988, he was Chief Executive Officer of Primerica Corporation. He is a director of Rite Aid Corporation, Sequa Corporation, Triarc Companies, Inc., Proffitt's, Inc. and Zenith National Insurance Corp. Mr. Tsai is also a Trustee of Boston University and New York University Medical Center. Frederick W. Zuckerman has been a general partner in the merchant banking and financial advisory firm of Zuckerman, Firstenberg & Associates LLC, since January 1995. He was Vice President and Treasurer of International Business Machines Corporation, an information technology corporation, from September 1993 to January 1995. He was Senior Vice President and Treasurer of RJR Nabisco, Inc., a consumer food and tobacco producer, from February 1991 to September 1993. Mr. Zuckerman was Vice President and Treasurer of Chrysler Corporation, a motor vehicle manufacturer, from December 1981 until September 1990. Mr. 9 12 Zuckerman is a director of The Singapore Fund, The Turner Corporation, The Japan Equity Fund, NVR, Inc., Olympic Financial Ltd., Caere Corp. and Designer Holdings, Inc. The Board of Trustees of the Company met 14 times in 1996. Each trustee attended at least 75% of the meetings of the Board of Trustees and all committees on which he served in 1996. The Executive Committee, consisting of Messrs. Brooke, Gosman and Zuckerman, exercises all the powers of the Board of Trustees between meetings of the Board of Trustees, except such powers as are reserved to the Board of Trustees by law. The Executive Committee met 23 times in 1996. The Audit Committee, consisting of Messrs. Lowe, Magovern and Tsai, confers with Coopers & Lybrand L.L.P., independent accountants, regarding the plans, scope and results of their audits and any recommendations they may have with respect to internal accounting controls and other matters relating to accounting procedures and the books and records of the Company. The Audit Committee met four times in 1996. The Nominating Committee, consisting of Messrs. Gosman and Brooke, makes recommendations to the Board of Trustees concerning the Board's size and composition and suggests prospective candidates for trustee. The Nominating Committee met once during 1996. The Nominating Committee will consider shareholder recommendations for nominees for trustee. Shareholders of the Company wishing to make recommendations should write to the Nominating Committee c/o Michael S. Benjamin, Esquire, Senior Vice President and Secretary, Meditrust, 197 First Avenue, Needham Heights, Massachusetts 02194. The Personnel and Compensation Committee, consisting of Messrs. Magovern, Lowe and Zuckerman, reviews the compensation of and other employment matters relating to the Company's officers and administrative employees. The Personnel and Compensation Committee met two times in 1996. The Stock Option Committee, consisting of Messrs. Tsai and Brooke, administers the Company's 1988 Stock Option Plan and Amended and Restated 1992 Equity Incentive Plan. The Stock Option Committee did not hold any formal meetings during 1996. The Finance Committee, consisting of Messrs. Zuckerman, Benson and Tsai, reviews and recommends to the Board debt and equity financing opportunities available to the Company. The Finance Committee did not hold any formal meetings during 1996. The Company pays each trustee who is not otherwise an employee of the Company a fee of $30,000 per year for services as a trustee plus $1,000 per day for attendance at each meeting of the full Board of Trustees. In addition, the Chairman and each member of a committee of the Board of Trustees are paid $1,250 and $1,000, respectively, for attendance at a committee meeting. The Company reimburses the trustees for travel expenses incurred in connection with their duties as trustees of the Company. In addition, the Company from time to time pays trustees additional fees in connection with various special projects. FURTHER INFORMATION REGARDING THE BOARD OF TRUSTEES AND EXECUTIVE OFFICERS In March 1996, the Company issued to Mr. Robert Cataldo, a former Trustee of the Company who resigned on January 31, 1997, 7,435 Shares valued at approximately $250,000 and on January 31, 1997 paid $57,500 to Mr. Cataldo, all for services to the Company relating to the negotiation of selected loans. In December 1996, the Company issued to Mr. Brooke 3,039 Shares valued at approximately $117,000 for services to the Company during 1996. In July 1996 and January 1997, the Company issued to Mr. Hugh L. Carey, a former Trustee of the Company who resigned on February 12, 1996, 7,380 Shares valued at approximately $250,000, and 3,726 Shares valued at approximately $150,000, respectively, for services rendered to the Company in 1996. 10 13 The Company has adopted a Deferred Compensation Plan for trustees of the Company pursuant to which the trustees may defer receipt of fees. Currently, no trustee participates in such plan. In January 1996, the Company adopted a Trustee Retirement Plan for trustees of the Company who have served on the Board for at least five years and who are not employed by the Company upon their retirement from the Board. Pursuant to the plan, the Company will issue to each eligible retired trustee annual installments of Shares having a fair market value equal to the amount of the basic trustee fee paid to such trustee (currently $30,000) during the last full year of such trustee's service on the Board plus the amount payable to such trustee for attendance at six Board meetings (currently $6,000) during such year. Annual benefits will be paid for the number of years equal to the number of years that the retired trustee served on the Board. During 1996, the Company granted secured loans aggregating up to $240,000 to David F. Benson, with a weighted average interest rate of approximately 6% per annum. As of December 31, 1996, the balance outstanding on these loans was $151,039, all of which is payable on or before August 1, 1997. There are no family relationships among any of the trustees or executive officers of the Company. Effective January 1, 1993, Abraham D. Gosman entered into the Employment Agreement pursuant to which he will serve as Chief Executive Officer of the Company. The Employment Agreement had an initial term of four years and has been extended through December 31, 1997. Mr. Gosman's base compensation is $900,000 per year. In addition, Mr. Gosman will receive annually 25,000 Shares during the term of the Employment Agreement pursuant to the Company's Amended and Restated 1992 Equity Incentive Plan. In the event of a "Change of Control" (which is defined as the acquisition by any person or group of 20% or more of the Shares, but only if a majority of the "Continuing Trustees" (defined in the Employment Agreement generally as the current trustees and any trustee nominated or elected by the current trustees) disapprove of such acquisition), Mr. Gosman shall be paid his base salary through the remaining term of the Employment Agreement, less the amount of salary and benefits payable to Mr. Gosman by a new employer. Mr. Gosman may upon 30 days' prior written notice to the Company demand the present value of such amount in a lump sum. Mr. Gosman shall also be entitled to participate in benefit plans of the Company until he is employed by a new employer. In the event of a termination resulting from a cause other than death, disability or a "Termination For Cause" (defined in the Employment Agreement as a termination due to a material breach of the Employment Agreement or the commission of certain other wrongful acts), Mr. Gosman shall be paid his base salary for one year, less the amount of compensation payable to Mr. Gosman by a new employer. In the event of a Termination For Cause or termination after such annual review of the Board of Trustees, Mr. Gosman is not entitled to receive any severance payments. In May 1995, the Company entered into a Split-Dollar Agreement with a trust established by Mr. Gosman (the "Insurance Trust"), pursuant to which the Company and the Insurance Trust share in the premium costs of a life insurance policy purchased by the Insurance Trust that will pay a benefit of approximately $50 million upon the death of Mr. Gosman. Pursuant to such agreement, the Company has agreed to advance the portion of the policy premiums not related to the term life insurance portion of the policy. The Company is entitled to reimbursement of the amounts advanced, without interest, upon the first to occur of (a) Mr. Gosman ceasing to be employed by the Company, (b) the death of Mr. Gosman or (c) the surrender of the policy. The Company's right to reimbursement is secured by an assignment of the life insurance policy and a promissory note of Mr. Gosman in the amount of the excess, if any, of the premiums paid by the Company over the cash surrender value of the insurance policy. In connection with the Split-Dollar Agreement, Mr. Gosman agreed with the Company that if the Split-Dollar Agreement is in effect at the time of his death and the net death benefit payable to the Insurance Trust is at least $24 million, then no shares owned by Mr. Gosman at his death will be sold by any of his heirs during 11 14 the first year following his death and no more than 100,000 of such Shares will be sold during any three-month period in the second, third and fourth years following his death. CERTAIN TRANSACTIONS The Company currently leases its principal executive offices from Continuum Care of Massachusetts, Inc. ("CCM"), which is wholly-owned by Mr. Gosman and his two adult sons. The lease provides for an average annual rental fee of $181,776 over the initial five-year term of the lease, which expires on March 31, 1999. The lease term may be extended for an additional term of one year and ten months. In April 1995, the Company provided $11,287,581 of financing to an affiliate of Life Care Centers of America, Inc. ("Life Care") for the construction of a health care facility in West Bridgewater, Massachusetts. Life Care retained CCM to construct the facility pursuant to a turnkey development agreement in such amount, of which approximately $800,000 has not yet been paid. Final payment will occur upon the achievement of specified performance criteria by the facility. During 1995 and 1996, the Company agreed to provide mortgage and sale/leaseback financing in the aggregate amount of $150,355,342 (of which $119,753,456 had been funded through March 21, 1997) to entities controlled directly or indirectly by Mr. Gosman for the construction and permanent financing of six health care facilities located in Palm Beach, Florida (three facilities), Princeton, New Jersey, Needham, Massachusetts and Dedham, Massachusetts. During 1995, 1996 and 1997, the Company also agreed to provide mortgage financing in the aggregate of $229,050,342 (of which $175,075,157 had been funded through March 21, 1997) to certain limited partnerships affiliated with the DASCO Companies in which Mr. Gosman holds a minority equity interest. Mr. Gosman owns from 7.125% to 47.5% of the aggregate interests in such limited partnerships. The Company paid $80,220 and $40,110 to Chancellor Aviation Corporation and Magnum Aviation Services Corporation, respectively, each of which is owned by Mr. Gosman, in connection with certain services rendered to the Company in 1996. All of the terms and conditions of the above transactions and arrangements were approved by the Company's Independent Trustees. The Board of Trustees believes that the Company entered into the above transactions in the ordinary course of its business, and the terms of these transactions and arrangements are fair as to the Company and were made on terms not less favorable to the Company than those prevailing at the time for comparable transactions and arrangements with other persons. INDEPENDENT ACCOUNTANTS Coopers & Lybrand L.L.P. were the independent accountants of the Company for fiscal 1996. The Board of Trustees intends to select the independent accountants of the Company for fiscal 1997 at its annual meeting on May 7, 1997. Representatives of Coopers & Lybrand L.L.P. will be present at the Meeting and will be afforded an opportunity to make a statement if they desire to do so. Such representatives of Coopers & Lybrand L.L.P. will also be available at that time to respond to appropriate questions addressed to the officer presiding at the Meeting. PROPOSALS BY SHAREHOLDERS If any shareholder intends to present a proposal at the Company's next Annual Meeting of Shareholders and wishes to request that the same be included in the proxy statement and form of proxy to be furnished on 12 15 behalf of the Board of Trustees with respect to such meeting, a copy of such proposal, meeting the eligibility standards promulgated by the Securities and Exchange Commission, must be received by the Company at its principal executive offices, 197 First Avenue, Needham Heights, Massachusetts 02194 Attention: Michael S. Benjamin, Esquire, Senior Vice President and Secretary on or before December 15, 1997. OTHER MATTERS The Board of Trustees knows of no business, matters or proposals which will be presented for consideration at the Meeting other than as discussed above. However, if any such business, matters or proposals should come before the Meeting, it is the intention of the persons named in the enclosed form of proxy to vote the proxies with respect to any such business, matters or proposals in accordance with their best judgment. The cost of preparing, assembling and mailing the proxy material will be borne by the Company. The Company will request persons, firms and corporations holding Shares in their names, or in the name of their nominees, which Shares are beneficially owned by others, to send proxy material to and obtain proxies from such beneficial owners. The Company will reimburse such holders for their reasonable expenses in so doing. Employees of the Company may solicit proxies by use of telegraphic and telephonic communications, in addition to the use of the mails. By Order of the Board of Trustees /s/ Michael S. Benjamin MICHAEL S. BENJAMIN Senior Vice President and Secretary April 10, 1997 THE DECLARATION OF TRUST ESTABLISHING MEDITRUST, DATED AUGUST 6, 1985, AS AMENDED (THE "DECLARATION"), A COPY OF WHICH IS DULY FILED IN THE OFFICE OF THE SECRETARY OF STATE OF THE COMMONWEALTH OF MASSACHUSETTS, PROVIDES THAT THE NAME "MEDITRUST" REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY; AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF THE COMPANY SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, THE COMPANY. ALL PERSONS DEALING WITH THE COMPANY, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF THE COMPANY FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION. 13 16 PROXY FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 7, 1997 MEDITRUST The undersigned, having received the Notice of Annual Meeting and the Board of Trustees' Proxy Statement, hereby appoint(s) Abraham D. Gosman, Edward W. Brooke and David F. Benson, and each of them, Proxies of the undersigned (with full power of substitution) to attend the above Annual Meeting of Shareholders of Meditrust to be held May 7, 1997, and all adjournments thereof (the "Meeting"), and there to vote all shares of beneficial interest of Meditrust that the undersigned would be entitled to vote, if personally present, in regard to all matters which may come before the Meeting. The undersigned hereby confer(s) upon the Proxies, and each of them, discretionary authority (i) to consider and act upon such business, matters or proposals other than the proposals set forth below as may properly come before the Meeting and (ii) with respect to the election of trustees in the event that any of the nominees is unable or unwilling to serve if elected. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER SPECIFIED HEREIN. IF NO SPECIFICATION IS MADE, THE PROXIES INTEND TO VOTE (I) TO FIX THE NUMBER OF TRUSTEES AT SEVEN, AND (II) FOR ALL NOMINEES. [X] Please mark votes as in this example 1. To fix the number of trustees at seven and to vote for the election of [ ] FOR all nominees [ ] WITHHELD from all nominees all nominees listed below (except as otherwise indicated). NOMINEES: Abraham D. Gosman David F. Benson Edward W. Brooke Thomas J. Magovern Philip L. Lowe Gerald Tsai, Jr. and Frederick W. Zuckerman - ------------------------------------------------------------------------------------------------------------------------------------ For, except vote withheld from nominee(s) listed above THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES CONTINUED AND TO BE SIGNED AND DATED ON REVERSE SIDE (SEE REVERSE SIDE) IN SIGNING, PLEASE WRITE NAME(S) EXACTLY AS APPEARING IN THE IMPRINT ON MARK HERE FOR THIS CARD. FOR SHARES HELD JOINTLY, EACH JOINT OWNER SHOULD SIGN. IF ADDRESS CHANGE SIGNING AS EXECUTOR, OR IN ANY OTHER REPRESENTATIVE CAPACITY, OR AS AN AND NOTE BELOW [ ] OFFICER OF A CORPORATION, PLEASE INDICATE YOUR FULL TITLE AS SUCH. Date: ----------------------------------------------------- ---------------------------------------------------- Signature Date: ----------------------------------------------------- ---------------------------------------------------- Signature
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