UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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Soliciting Material Pursuant to §240.14a-12
Omega Healthcare Investors, Inc.
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OMEGA HEALTHCARE INVESTORS, INC.
303 International Circle, Suite 200
Hunt Valley, Maryland 21030
(410) 427-1700
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
June 3, 20212022
To our Stockholders:
The Annual Meeting of Stockholders of Omega Healthcare Investors, Inc. (“Omega” or the “Company”) will be held virtually via live webcast at www.virtualshareholdermeeting.com/OHI2021OHI2022 on Thursday,Friday, June 3, 2021,2022, at 10:00 A.M. EDT. This year, we are again adopting a virtual format for our Annual Meeting to enable universal access and a consistent experience to all stockholders regardless of location, and in response to the current restrictions on, and health advice against, public gatherings considering the existing coronavirus emergency.Meeting. For further information on how to participate in the Annual Meeting via live webcast, please consult the section captioned “Quorum and Voting” on page 1 of this Proxy Statement. The virtual Annual Meeting is being held for the following purposes:
1.
To elect eight members to Omega’s Board of Directors;
2.
To ratify the selection of Ernst & Young LLP as our independent auditor for fiscal year 2021;2022;
3.
To hold an advisory vote on executive compensation; and
4.
To transact such other business as may properly come before the meeting or any adjournment or postponement thereof.
The nominees for election as directors are Kapila K. Anand, Craig R. Callen, Dr. Lisa C. Egbuonu-Davis, Barbara B. Hill, Kevin J. Jacobs, Edward Lowenthal, C. Taylor Pickett, Stephen D. Plavin, and Burke W. Whitman. Edward Lowenthal will retire from the Board of Directors at the completion of the Annual Meeting and is not standing for re-election. Each of the director nominees presently serves as a director of Omega.
Our Board of Directors has fixed the close of business on April 6, 20212022 as the record date for the determination of stockholders who are entitled to notice of and to vote at our Annual Meeting or any adjournments or postponements thereof. On or about April 23, 2021,19, 2022, we will first mail to our stockholders our 20212022 Proxy Statement and Annual Report to Stockholders for fiscal year 2020.2021.
Whether you are able to virtually attend the Annual Meeting or not, we urge you to indicate your vote (i) FOR the election of the director nominees, (ii) FOR the ratification of the selection of Ernst & Young LLP as our independent auditor, and (iii) FOR the approval of the Company’s executive compensation in an advisory vote, by completing, signing, dating and returning your proxy card or by Internet or telephone voting as described in the proxy statement. If you virtually attend the Annual Meeting, you may vote your shares even if you have previously mailed a proxy card or otherwise submitted a vote by Internet or telephone voting.
By order of Omega’s Board of Directors,
C. Taylor Pickett
April 23, 202119, 2022
Hunt Valley, Maryland
| | | YOUR VOTE IS IMPORTANT. Whether or not you plan to virtually attend the meeting, please vote by using the Internet website or toll-free telephone number shown on the proxy card, or completing, signing, dating and mailing the proxy card promptly in the enclosed envelope. It is important that you return the proxy card or otherwise submit a vote on the Internet or by telephone promptly whether or not you plan to virtually attend the meeting, so that your shares are properly voted. | | |
| | | If you hold shares through a broker, bank or other nominee (in “street name”), you may receive a separate voting instruction form, or you may need to contact your broker, bank or other nominee to determine whether you will be able to vote electronically using the Internet or telephone. | | |
OMEGA HEALTHCARE INVESTORS, INC.
303 International Circle, Suite 200
Hunt Valley, Maryland 21030
(410) 427-1700
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
June 3, 20212022
The accompanying proxy is solicited by the Board of Directors to be voted at the Annual Meeting of Stockholders of Omega Healthcare Investors, Inc. (the “Annual Meeting”) to be held virtually via live webcast at www.virtualshareholdermeeting.com/OHI2021OHI2022 on Thursday,Friday, June 3, 2021,2022, at 10:00 A.M. EDT, and any adjournments or postponements of the meeting. This year, we are again adopting a virtual format for our Annual Meeting to enable universal access and a consistent experience to all stockholders regardless of location, and in response to the current restrictions on, and health advice against, public gatherings considering the existing coronavirus emergency.Meeting. For further information on how to participate in the Annual Meeting via live webcast, please consult the section captioned “Quorum and Voting” on page 1 of this Proxy Statement.
This Proxy Statement, and our Annual Report to Stockholders for fiscal year 2020,2021, which includes our Annual Report on Form 10-K filed with the SEC on February 22, 2021,17, 2022, are available electronically at www.proxyvote.com or www.omegahealthcare.com. and are first being mailed to our stockholders on or about April 19, 2022.
RECORD DATE
Our Board of Directors has fixed April 6, 2021,2022, as the record date for the determination of stockholders entitled to notice of, and to vote at, the Annual Meeting and any adjournment or postponement thereof. As of the close of business on the record date, there were 234,077,052238,206,457 shares of our common stock, par value $0.10 per share, outstanding and entitled to vote. As of the record date, our directors and executive officers beneficially owned 0.37%less than one percent of the shares of our common stock.
QUORUM AND VOTING
Quorum
Holders of a majority of the outstanding shares of our common stock entitled to vote at the Annual Meeting as of the record date must be present virtually in person or represented by proxy at the Annual Meeting to constitute a quorum for the conduct of business at the Annual Meeting. Proxies marked as abstaining and “broker non-votes” will be treated as shares present for purposes of determining the presence of a quorum.
Voting
If your shares are registered directly in your name with our transfer agent, you are a “stockholder of record.” Stockholders of record may vote by:
•
Online Internet Voting: Go to http://www.proxyvote.com and follow the instructions
•
By Telephone: Call toll-free 1-800-690-6903 and follow the instructions
•
By Mail: Complete, sign, date and return your proxy card in the enclosed envelope
•
Virtually In-Person: Virtually attend the Annual Meeting and vote your shares
If your shares are registered in the name of your broker, bank or other nominee, you are the “beneficial owner” of those shares and those shares are considered as held in “street name.” If you are a beneficial owner of shares registered in the name of your broker, bank or other nominee, you should have received a proxy card and voting instructions with these proxy materials from that organization rather than directly from us. Simply complete and mail the proxy card to ensure that your vote is counted. You may be eligible to vote your shares electronically over the Internet or by telephone. A large number of banks and brokerage firms offer Internet and telephone voting. If your bank, brokerage firm or other nominee does not offer Internet or telephone
voting information, please complete and return your proxy card in the self-addressed, postage-paid envelope provided. You may also virtually attend the Annual Meeting and vote your shares.
If you plan to vote other than by virtually attending the Annual Meeting and voting your shares, your vote must be received by 11:59 p.m. EDT, on June 2, 2021.2022.
Attending the Annual Meeting
The Annual Meeting will be a completely virtual meeting of stockholders, which will be conducted exclusively by live webcast. You are entitled to participate in the Annual Meeting only if you were a stockholder of the Company as of the close of business on the record date or if you hold a valid proxy for the Annual Meeting. There is no physical location for this meeting.
You can attend the Annual Meeting online, vote and submit questions during the meeting by visiting www.virtualshareholdermeeting.com/OHI2021OHI2022 and entering the 16-digit control number printed on your proxy card. Stockholders may submit questions or comments pertinent to meeting matters by using the question feature at the bottom of the screen on the Annual Meeting website after they log in or during the Annual Meeting. The Company mayQuestions relevant to meeting matters will be answered during the meeting, subject to time constraints. We will post responses to such questions not be ableanswered due to answer all questions posed.time constraints on our Investor Relations webpage. In order for the Company to address as many stockholders as possible during the meeting, we ask that questions or comments be limited to a maximum of two per stockholder. Please ensure that questions are concise and cover only one topic per question. Questions from multiple stockholders on the same topic or that are otherwise related may be grouped, summarized and answered together.
The Annual Meeting will begin promptly at 10:00 A.M. EDT, on June 3, 2021.2022. We encourage you to access the meeting prior to the start time in order to log in to the live webcast and test your computer audio system. Technical support, including related technical support phone numbers, will be available on the virtual meeting platform. Please follow the registration instructions below in “—“— Registering for the Annual Meeting.Meeting.”
The virtual meeting platform is fully supported across browsers (MS Edge, Firefox, Chrome and Safari) and devices (desktops, laptops, tablets and cell phones) running the most up-to-date version of applicable software and plug-ins. Note: Internet Explorer is not a supported browser. Participants should ensure that they have a strong WiFi connection wherever they intend to participate in the meeting. We encourage you to access the meeting prior to the start time. If you encounter any technical difficulties, technical support, including related technical support phone numbers, will be available on the virtual meeting platform.
Registering for the Annual Meeting
You do not need to register to virtually attend the Annual Meeting on the Internet. Please follow the instructions on the proxy card that you received with this Proxy Statement. To access the meeting, you will need the 16-digit control number printed on your proxy card.
Ability to Revoke Proxies
A stockholder voting by proxy has the power to revoke it at any time before it is exercised. A proxy may be revoked by filing with our Secretary (i) a signed instrument revoking the proxy or (ii) a duly executed proxy bearing a later date. A proxy also may be revoked if the person executing the proxy is virtually present at the Annual Meeting and elects to vote in person. If the proxy is not revoked, it will be voted by those named in the proxy.
Broker Non-Votes
A “broker non-vote” occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that proposal and has not received instructions with respect to that proposal from the beneficial owner. The vast majority of our stockholders hold their shares through a broker, trustee or other nominee rather than directly in their own name. Each stockholder should instruct his/her/its broker on how to vote on the issues presented for consideration. Brokers who do not receive instructions are entitled to vote those shares ONLY with respect to the ratification of the selection of Ernst & Young LLP as our independent auditor for fiscal year 2021,2022, but not with respect to any other matter to be presented at the Annual Meeting.
STOCK OWNERSHIP INFORMATION
The following table sets forth information regarding the beneficial ownership of our common stock as of April 6, 20212022 for:
•
each of our directors and the executive officers appearing in the table under “Executive Compensation Tables and Related Information, Summary Compensation Table” included elsewhere in this Proxy Statement; 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 Proxy Statement, 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 6, 2021.2022. 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 time-based restricted stock units (“RSUs”), unvested performance-based 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 6, 2021)2022) or common stock issuable in respect of operating partnership units (“OP Units”) or profits interests in OHI Healthcare Properties Limited Partnership (“Omega OP”). Accordingly, we have provided supplemental information regarding deferred stock units, unvested RSUs, OP Units and earned but not yet vested PRSUs and profits interests in Omega OP (“Profits Interest Units”) under the caption “Other Common Stock Equivalents.” For information regarding unearned, unvested PRSUs and Profits Interest Units 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 303 International Circle, Suite 200, Hunt Valley, Maryland 21030. As of April 6, 2021,2022, there were 234,077,052238,206,457 shares of our common stock outstanding and no preferred stock outstanding.
| | | | Common Stock
Beneficially Owned | | | Other Common
Stock Equivalents | |
| Beneficial Owner | | | Number of
Shares | | | Percentage
of
Class | | | Unvested
Units(1) | | | Deferred
Stock
Units(2) | | | Operating
Partnership
Units(3) | | | Percent of
Class
including
Common
Stock
Equivalents(4) | |
| Kapila K Anand | | | | | 13,676(5) | | | | | | * | | | | | | — | | | | | | — | | | | | | — | | | | | | * | | |
| Daniel J. Booth | | | | | 154,792 | | | | | | * | | | | | | 194,553 | | | | | | — | | | | | | 143,728 | | | | | | 0.20% | | |
| Craig R. Callen | | | | | 45,142 | | | | | | * | | | | | | 8,025 | | | | | | 46,216 | | | | | | 5,836 | | | | | | * | | |
| Barbara B. Hill | | | | | 31,310 | | | | | | * | | | | | | 6,173 | | | | | | — | | | | | | 5,558 | | | | | | * | | |
| Steven J. Insoft | | | | | 209,588 | | | | | | * | | | | | | 181,186 | | | | | | — | | | | | | 213,488(6) | | | | | | 0.25% | | |
| Kevin J. Jacobs | | | | | 3,173(7) | | | | | | * | | | | | | — | | | | | | — | | | | | | — | | | | | | * | | |
| Edward Lowenthal | | | | | 56,934 | | | | | | * | | | | | | 4,630 | | | | | | 15,519 | | | | | | 4,169 | | | | | | * | | |
| Gail D. Makode | | | | | — | | | | | | * | | | | | | 15,989 | | | | | | — | | | | | | — | | | | | | * | | |
| C. Taylor Pickett | | | | | 4,575 | | | | | | * | | | | | | 379,721 | | | | | | 498,056 | | | | | | 269,468 | | | | | | 0.48% | | |
| Stephen D. Plavin | | | | | 94,753(8) | | | | | | * | | | | | | — | | | | | | — | | | | | | — | | | | | | * | | |
| Robert O. Stephenson | | | | | 222,506 | | | | | | 0.10% | | | | | | 172,288 | | | | | | — | | | | | | 125,763 | | | | | | 0.21% | | |
| Burke W. Whitman | | | | | 18,585(9) | | | | | | * | | | | | | — | | | | | | — | | | | | | — | | | | | | * | | |
Directors, director
nominee and
executive officers as a
group (12 persons) | | | | | 855,034 | | | | | | 0.37% | | | | | | 962,565 | | | | | | 559,791 | | | | | | 768,010 | | | | | | 1.30% | | |
| | | | Common Stock
Beneficially Owned | | | Other Common
Stock Equivalents | |
| Beneficial Owner | | | Number
of
Shares | | | Percentage of
Class | | | Unvested
Units(1) | | | Vested
Profits
Interest
Units(2) | | | Deferred
Stock
Units(3) | | | Operating
Partnership
Units(4) | | | Percent of
Class
including
Common
Stock
Equivalents(5) | |
| Kapila K. Anand | | | | | 14,676 | | | | | | * | | | | | | — | | | | | | — | | | | | | 7,605 | | | | | | — | | | | | | * | | |
| Daniel J. Booth | | | | | 186,567 | | | | | | * | | | | | | 68,495 | | | | | | — | | | | | | — | | | | | | 237,713 | | | | | | 0.20% | | |
| Craig R. Callen | | | | | 45,142 | | | | | | * | | | | | | — | | | | | | 10,401 | | | | | | 50,259 | | | | | | 13,861 | | | | | | * | | |
| Dr. Lisa C. Egbuonu-Davis | | | | | 3,387(6) | | | | | | * | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | * | | |
| Barbara B. Hill | | | | | 31,310 | | | | | | * | | | | | | — | | | | | | 6,400 | | | | | | — | | | | | | 11,731 | | | | | | * | | |
Steven J. Insoft(7) | | | | | 180,929 | | | | | | * | | | | | | 29,390 | | | | | | — | | | | | | — | | | | | | 319,946(8) | | | | | | 0.22% | | |
| Kevin J. Jacobs | | | | | 9,635(9) | | | | | | * | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | * | | |
Edward Lowenthal(10) | | | | | 73,379 | | | | | | * | | | | | | — | | | | | | 3,969 | | | | | | — | | | | | | 8,799 | | | | | | * | | |
| Gail D. Makode | | | | | 1,000 | | | | | | * | | | | | | 27,946 | | | | | | — | | | | | | — | | | | | | — | | | | | | * | | |
| C. Taylor Pickett | | | | | 4,575 | | | | | | * | | | | | | 148,570 | | | | | | — | | | | | | 575,539 | | | | | | 260,310(11) | | | | | | 0.40% | | |
| Stephen D. Plavin | | | | | 94,753(12) | | | | | | * | | | | | | — | | | | | | 3,969 | | | | | | — | | | | | | — | | | | | | * | | |
| Robert O. Stephenson | | | | | 238,968 | | | | | | 0.10% | | | | | | 63,217 | | | | | | — | | | | | | — | | | | | | 225,128 | | | | | | 0.21% | | |
| Burke W. Whitman | | | | | 25,034(13) | | | | | | * | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | * | | |
*
Less than 0.10%
(1)
Includes RSUs and earned but unvested PRSUs and Profits Interest Units that in each case vest more than 60 days from April 6, 2021,2022, subject to continued employment. RSUs and time-based Profits Interest Units are subject to additional vesting in connection with a Qualifying Termination or Retirement. Earned but not yet vested PRSUs and performance-based Profits Interest Units held by the executive officers vest quarterly in 2021the year following the end of the applicable performance period subject to continued employment, except in the case of a Qualifying Termination, Retirement or change in control in which case they will vest sooner.are also subject to vesting. Each unit represents the right to receive one share of common stock. See “Outstanding Equity Awards at Fiscal Year End.” Unvested Profits Interest Units held by the directors other than Mr. Pickett vest upon completion of the current one-year term, subject to accelerated vesting in connection with death, disability of change in control.
(2)
Includes earned but unvested Profits Interest Units that are scheduled to vest within 60 days from April 6, 2022, subject to continued service, but which can be converted to OP units if certain tax-related conditions are met.
(3)
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)(4)
OP Units are redeemable at the election of the holder for cash equal to the value of one share of our common stock priced at the average closing price for the 10-day trading period ending on the date of the holder’s notice of election to redeem the OP Units, subject to the Company’s election to exchange the OP Units tendered for redemption for shares of Omega common stock on a one-for-one basis, in each case subject to adjustment.
(4)(5)
Percent of class reflects 234,077,052238,206,457 shares of common stock outstanding as of April 6, 2021,2022, plus a total of 8,049,1098,220,982 common stock equivalents, consisting of 1,091,945474,730 unvested restricted stock units and Profits Interest Units, 559,791649,848 deferred stock units, approximately 7,071,665 OP Units and approximately 6,397,373 OP24,739 vested Profits Interest Units.
(5)(6)
Includes 4,5973,387 shares of restricted stock, subject to forfeiture until vested.
(6)(7)
Mr. Insoft’s employment terminated effective January 1, 2022.
(8)
Includes securities held by a limited liability company controlled by Mr. Insoft. Does not include 32,130 OP Units subject to a phantom unit award grant to Mr. Insoft because Mr. Insoft does not have the right to acquire voting or dispositive power with respect to such securities within 60 days.
(7)(9)
Includes 3,1736,462 shares of restricted stock, subject to forfeiture until vested.
(8)(10)
Includes 4,597 shares16,445 deferred stock units that are scheduled to vest on the date of restricted stock, subject to forfeiture until vested,the 2022 Annual Meeting upon Mr. Lowenthal’s retirement. Mr. Lowenthal will retire as a member of the Board upon the completion of his current term as a director as of the Annual Meeting in accordance with our director retirement policy.
(11)
Excludes 225,000 OP Units that Mr. Pickett gifted an irrevocable trust for the benefit of his spouse and 33,963son on September 3, 2021, over which Mr. Pickett has no voting power.
(12)
Includes 60,447 shares of common stock which are held by a limited liability company, of which the reporting person is the manager.
(9)(13)
Includes 4,5973,949 shares of restricted stock, subject to forfeiture until vested.
(10)(14)
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.
(15)
Based on a Schedule 13G/A filed with the SEC on February 10, 20212022 by The Vanguard Group, Inc., including on behalf of certain subsidiaries. The Vanguard Group, Inc. is located at 100 Vanguard Blvd., Malvern, PA 19355. The Vanguard Group, Inc. has shared voting power with respect to 689,387352,837 of the shares, sole dispositive power with respect to 31,254,57334,251,208 of the shares and shared dispositive power with respect to 869,456567,292 of the shares.
(12)(16)
Based on a Schedule 13G/A filed with the SEC on January 27, 202125, 2022 by BlackRock, Inc., including on behalf of certain subsidiaries. BlackRock Inc. is located at 55 East 52nd Street, New York, NY 10055. BlackRock, Inc. has sole voting power with respect to 25,809,74525,866,801 of the shares and sole dispositive power with respect to 27,113,630 of the shares.
(13)
Based on a Schedule 13G filed with the SEC on February 10, 2021 by State Street Corporation, including on behalf of certain subsidiaries. State Street Corporation is located at State Street Financial Center, One Lincoln Street, Boston, MA 02111. State Street Corporation has shared voting power with respect to 10,403,248 of the shares and shared dispositive power with respect to 11,768,44828,244,262 of the shares.
BOARD COMMITTEES AND CORPORATE GOVERNANCE
Board of Directors and Committees of the Board
The members of the Board of Directors on the date of this Proxy Statement and the Committees of the Board on which they serve are identified below.
Director | | | | | | | Board | | | Audit
Committee | | | Compensation
Committee | | | Investment Committee | | | Nominating
and
Corporate
GovernanceInvestment
Committee
| | | Nom./Corp.
Gov. Committee | | | | | |
Kapila K. | | | | Director | | | | | |
| | | | | Anand | | | Member | | | Chair | | | | | | Member | | | | | | | | |
Craig R. | | | | Callen | | | Chair | | | Member | | | | | | Chair | | | Member | | | | | |
Barbara B. | | | | Egbuonu-Davis | | | Member | | | | | | | | | | | | | | | | | |
| | | | | Hill | | | Member | | | | | | Member | | | | | | Member | | | | | |
Kevin J. | | | | Jacobs | | | Member | | | Member | | | | | | Member | | | | | | | | |
| | | | | |
Edward Lowenthal | | | Member | | | | | | Chair | | | | | | Member | | | | | |
C. Taylor | | | | Pickett | | | Member | | | | | | | | | Member | | | | | | | | |
Stephen D. | | | | Plavin | | | Member | | | | | | Member | | | | | | Chair | | | | | |
Burke W. | | | | Whitman | | | Member | | | Member | | | Member | | | | | | | | | | | |
Effective immediately following the Annual Meeting, the Board of Directors has appointed Mr. WhitmanDr. Egbuonu-Davis to the Compensation CommitteeNominating and Mr. Jacobs to each of the Audit Committee and InvestmentCorporate Governance Committee.
The Board of Directors held elevensix meetings during 2020.2021. Each member of the Board of Directors attended more than 75% of the meetings of the Board of Directors and of the committees of which such director was a member in 2020.2021. While we invite our directors to attend our annual meeting of stockholders, the Company currently does not have a formal policy regarding director attendance. Mr. Pickett chaired Omega’s 20202021 annual meeting of stockholders, and was the sole representativea total of thesix members of our Board of Directors at such meeting.virtually participated in our 2021 annual meeting of stockholders.
Director Independence
All of the members of the Board of Directors meet the NYSE listing standards for independence, other than our Chief Executive Officer, Mr. Pickett. While the Board of Directors has not adopted any categorical standards of independence, in making these independence determinations, the Board of Directors noted that no director other than Mr. Pickett (a) received direct compensation from our Company other than director annual retainers and meeting fees, (b) had any relationship with our Company or a third party that would preclude independence or (c) had any material business relationship with our Company and its management, other than as a director of our Company. Each of the members of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee meets the NYSE listing standards for independence.
Board Leadership Structure
Since 2001, an independent non-employee director has served as our Chair of the Board of Directors rather than the Chief Executive Officer. We separate the roles of Chief Executive Officer and Chair of the Board in recognition of the difference between the two roles. The Chief Executive Officer is responsible for implementing the strategic direction for the Company as approved by the Board of Directors and the management of the day-to-day operations of the Company, while the Chair of the Board provides guidance to the Chief Executive Officer and sets the agenda for and presides over meetings of the Board. Mr. Callen, as Chair of the Board, presides over any meeting, including regularly scheduled executive sessions of the non-management directors. If Mr. Callen is not present at such a session, the presiding director is chosen by a vote of those present at the session.
implementing risk management strategies that are appropriate for the Company’s business and risk profile, integrating consideration of risk and risk management into the Company’s decision-making process and communicating information with respect to material risks to the Board or the appropriate committee.
Portfolio and investment risk is one of the principal risks faced by the Company. We manage portfolio and investment risk by, among other things, seeking Investment Committee and/or Board approval for new investments over designated thresholds and providing detailed underwriting information on such proposed investments to the Investment Committee or the Board, as the case may be. In addition, our full Board regularly reviews the performance, credit information and coverage ratios of our operators.
Consistent with the rules of the NYSE, the Audit Committee reviews and discusses with management, periodically, as appropriate, policies with respect to risk assessment and risk management, the Company’s financial risk exposures and the steps management has taken to monitor and control such exposures, it being understood that it is the job of management to assess and manage the Company’s exposure to risk and that the Audit Committee’s responsibility is to discuss guidelines and policies by which risk assessment and risk management are undertaken. The Audit Committee also monitors the implementation and administration of the Company’s Code of Business Conduct and Ethics.
The Vice President of Information Technology, who reports directly to the Company’s Chief Financial Officer, oversees our information security program, which is aligned to industry recognized cybersecurity frameworks. In addition, we maintain an Information Security Incident Response Plan, conduct cybersecurity training for all employees on an annual basis and conduct periodic assessments by third parties to assess our vulnerability management and security controls and to assist us in identifying and mitigating security risks. The Audit Committee reviews and discusses with management periodicallyquarterly the Company’s program, policies and procedures related to information security and data protection, including data privacy and network security, as they relate to financial reporting, while the Board periodically reviews these cyber-related risks as they impact at the enterprise at large. The Audit Committee also monitors the implementation and administration of the Company’s Code of Business Conduct and Ethics.
The Compensation Committee reviews risks associated with the Company’s compensation plans and arrangements. While each committee monitors certain risks and the management of such risks, the full Board is regularly informed about such matters. The full Board generally oversees enterprise risk management and enterprise risk management issues otherwise arising in the Company’s business and operations.
Selected Areas of Board and Committee Oversight in 20202021
| | | | | | | | Audit and
Finance
Committee | | | Compensation
Committee | | | NominatingNom. &
and Corporate
GovernanceCorp. Gov.
Committee
| | | Investment
Committee | | | Full Board of
of Directors | |
| Corporate Strategy | | | | | |
| | | | | Area of Oversight | | | | | |
| | | | | Corporate Strategy | | | | | | | | | | | | | | | • | | | | | |
| | | | | Portfolio Management | | | | | | | | | | | | | | | • | | | | | |
| | | | | | | | | • | | |
| | Enterprise Risk Management | | | | | | | | | | | | | | | • | | | | | |
| | | | | | | | | • | | |
| | Privacy and Data Security | | | | | | | | | | | | | | | • | | | | | |
| | | | | | | | | • | | |
| | Code of Business Conduct and Ethics | | | | | • | | | | | | | | | | | | | | | | | | | | | | | | • | | |
| Board and Executive•
Compensation
| | | | | |
| | | | | Board and Executive Compensation | | | | | | • | | | | | | | | | • | | | | | | | | | • | | |
| ESG | | | | | | | | | | | | | | | | | • | | | | | | | | | | | | • | | |
| Board and Executive Succession | | | | | | | | | | | | | | | | | • | | | | | | | | | | | | • | | |
| Investment Activity | | | | | | | | | | | | | | ESG/D&I | | | | | | | | | • | | | | | | • | | | | | |
| |
Jacobs and Mr. JacobsWhitman each qualify 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 has determined that:that (i) Ms. Anand qualifies as an audit committee financial expert based on her substantial experience in accounting and auditing as a partner of KPMG LLP and as a public company audit committee member, (ii) Mr. Whitman qualifies as an audit committee financial expert based on his substantial financial management experience in the healthcare sector, including as a public company chief financial officer and chief executive officer, and (iii) Mr. Jacobs qualifies as an audit committee financial expert based on his substantial financial management experience, including as a public company chief financial officer.
The Compensation Committee has responsibility for determining the compensation of our executive officers and administering our equity incentive plan. During 2020,2021, the Compensation Committee met fourthree times. The responsibilities of the Compensation Committee are more fully described in its Charter, which is available on our website at www.omegahealthcare.com.
The Investment Committee works with management to develop strategies for growing our portfolio and has authority to approve investments up to established thresholds. The Investment Committee met fourfive times during 2020.2021.
The Nominating and Corporate Governance Committee met fourseven times during 2020.2021. The Nominating and Governance Committee has responsibility for identifying potential nominees to the Board of Directors and reviewing their qualifications and experience, for developing and implementing policies and practices relating to corporate governance, and for overseeing the Company’s progress on ESG and human resources initiatives.
In addition to the standing Committees listed above, the Board has established a Special Administrative Committee under the Company’s equity incentive plan consisting solely of Mr. Pickett, with the authority to allocate and grant awards thereunder to employees of Omega and its affiliates who are not executive officers of Omega up to a maximum number of units or shares authorized by the Compensation Committee from time to time. In addition, the Board has formed, and may from time to time form, such other committees as it deems appropriate to fulfill its responsibilities, including to execute capital markets and other activity.
Identification of Director Nominees and Board Diversity
The process for identifying and evaluating nominees to the Board is initiated by identifying candidates who meet the criteria for selection as a nominee and have the specific qualities or skills being sought based on input from members of the Board of Directors and, if the Nominating and Corporate Governance Committee deems appropriate, a third-party search firm. Nominees for director are selected based on their depth and breadth of experience, industry experience, financial background, integrity, ability to make independent analytical inquiries and willingness to devote adequate time to director duties, among other criteria.
through www.esg.omegahealthcare.com and through the ESG tab of our corporate website www.omegahealthcare.com.
Our areas of focus include the following:
Environmental Responsibility
We place a high priority on the protection of our assets, communities, and the environment. Based on our business model, the properties in our portfolio are primarily net leased to our tenants, and each tenant is generally responsible for maintaining the buildings, including controlling their energy usage and the implementation of environmentally sustainable practices at each location. Many of our tenants demonstrate a focus on positive environmental and social impacts through their corporate responsibility programs. We support theirour tenants’ operations and work with them to promote environmental responsibility at the properties we own and to reiterate the importance of energy efficient facilities, including by:
•
providing capital to our operators to add or upgrade to energy-efficient emergency power generators to limit disruption to patient care in the event of a power outage,outage;
•
supporting compliance with prevailing environmental laws and regulations throughout our new development, major renovation and capital expenditure projects,projects; and
•
promoting the adoption of specific environmental practices in our sustainable and innovative new developments, including, but not limited to, the installation of occupancy sensors and water-efficient plumbing fixtures, the use of low VOC paints and adhesives and the use of energy-efficient lighting, with over 51%52% of Omega’s development from 2015 to 20202021 having been built to Leadership in Energy and Environmental Design (“LEED”) certification standards.
Operations & Maintenance. WeMaintenance, and where we also promote energy efficiency with features such as an automatic lighting control system, water efficient features, low-VOC paints and floor adhesives and a single-stream recycling service.
Social Responsibility, Equal Opportunity and Diversity and Inclusion
We are committed to providing a positive and engaging work environment for our employees and taking an active role in the betterment of the communities in which our employees live and work. Our employees are provided a competitive benefits program, including comprehensive healthcare benefits and a 401(k) plan with a matching contribution from the Company, the opportunity to participate in our employee stock purchase program, bonus and incentive pay opportunities, competitive paid time-off benefits and paid parental leave, wellness programs, continuing education and development opportunities and periodic engagement surveys. In addition, we believe that giving back to our community is an extension of our mission to improve the lives of our stockholders, our employees and their families. The Company hasour employees’ families, and we have implemented a matching program for charitable contributions of employees.
•
Omega is one of 380 companies globally
included in 2021 and fewer than 15 REITs
The Company has a long-standing commitment to being an equal opportunity employer and has implemented Equal Employer Opportunity policies. In 2021,2022, Omega was included in the Bloomberg Gender-Equality Index (GEI) for the secondthird consecutive year — one of 380414 companies globally, and fewer thanone of fifteen U.S. REITs, to be included in the 20212022 index. In addition, beginning in 2020, the Companywe have implemented several initiatives to further itsour commitment to diversity and inclusion within itsour workforce and Board, in itsour local community and in the industry in which it operates,we operate, particularly in light of the racial and social justice challenges that were highlighted in 2020 and during the pandemic.
•
Workforce and Board: The Company hasWe have expanded itsour recruitment practices to reach more diverse candidates for employment and Board positions and is developinghave developed an internship program with a focus on increasing diversity in the pipeline of eligible employees. In 2021, the Company also began implementing mandatory diversity and inclusion training for our Board members and employees. Three of our eight Board nominees are women, two of whom are racial minorities and one of whom
AUDIT COMMITTEE AND INDEPENDENT AUDITOR MATTERS
The Audit Committee’s purpose is to oversee the accounting and financial reporting processes of our Company, the audits of our financial statements, the qualifications of the public accounting firm engaged as our independent auditor to prepare and issue an audit report on our financial statements and the related internal control over financial reporting, and the performance of our independent auditors. The Audit Committee has the sole authority and responsibility to select, evaluate and, when appropriate, replace our Company’s independent auditors, as well as determine the amount of the fees paid to the Company’s independent auditors. The Audit Committee’s function is more fully described in its charter, which is available on our website at www.omegahealthcare.com. The Board of Directors and the Audit Committee review the Audit Committee Charter annually.
The Board of Directors has determined that each Audit Committee member is independent under the standards of director independence established under our corporate governance policies and the NYSE listing requirements and is also “independent” for purposes of Section 10A(m)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In addition, the Board of Directors has determined that Ms. Anand, Mr. Jacobs and Mr. Whitman each qualify as an “audit committee financial expert,” as defined by SEC rules.
Management is responsible for the preparation, presentation and integrity of our financial statements, accounting and financial reporting principles, internal control over financial reporting and procedures designed to ensure compliance with accounting standards, applicable laws and regulations. Our Company’s independent auditor, Ernst & Young LLP, is responsible for auditing and expressing opinions on the conformity of our Company’s consolidated financial statements with accounting principles generally accepted in the United States, and the effectiveness of our Company’s internal control over financial reporting based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”).
Audit Committee Report
The Audit Committee, with respect to the audit of the Company’s 20202021 audited consolidated financial statements, reports as follows:
•
The Audit Committee has reviewed and discussed with management and Ernst & Young LLP the 20202021 audited financial statements in the Company’s Annual Report on Form 10-K, including a discussion of the quality — not just the acceptability — of the accounting principles, and the reasonableness of significant judgments;
•
The Audit Committee discussed with Ernst & Young LLP such other matters as are required to be discussed with the Audit Committee under generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (“PCAOB”) (including Auditing Standard No. 1301 “Communications with Audit Committees”);
•
The Audit Committee has received written disclosures and the letter from Ernst & Young LLP required by the PCAOB regarding Ernst & Young LLP’s communications with the Audit Committee concerning independence and has discussed with Ernst & Young LLP its independence from the Company;
•
The Audit Committee discussed with the Company’s auditors the overall scope and plans for their respective audits, and then met with the auditors, with and without management present, to review the results of their examinations, their evaluations of the Company’s internal controls and the overall quality of the Company’s financial reporting;
•
The Audit Committee reviewed the professional services provided by Ernst & Young LLP discussed below, considered whether provision of such services is compatible with maintaining auditor independence and concluded that the services provided by Ernst & Young LLP with respect to the 20202021 audit were compatible with maintaining auditor independence; and based on these reviews and
discussions, the Audit Committee recommended to the Board of Directors that the Company’s 20202021 audited financial statements be included in the Company’s Annual Report on Form 10-K.
Audit Committee of the Board of Directors
Kapila K. Anand, Chair
Craig R. Callen
Kevin J. Jacobs
Burke W. Whitman
Independent Auditors
Ernst & Young LLP audited our consolidated financial statements as of December 31, 20202021 and 20192020 and for each of the years ended December 31, 2021, 2020, 2019, and 2018.2019. Representatives of Ernst & Young LLP are expected to be present at the Annual Meeting and will be given the opportunity to make a statement if they desire to do so. It is also expected that they will be available to respond to appropriate questions from stockholders at the Annual Meeting. Approval of our independent auditors is not a matter required to be submitted to stockholders; however, the Board of Directors considers the selection of the independent auditor to be an important matter of stockholder concern and is submitting the selection of Ernst & Young LLP for ratification by stockholders as a matter of good corporate practice.
Fees
The following table presents fees for professional services rendered by Ernst & Young LLP for the audit of our Company’s annual financial statements for the fiscal years 20202021 and 20192020 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, | | | Year Ended December 31, | |
| | | 2020 | | 2019 | | | 2021 | | 2020 | |
| Audit Fees | | | $ | 1,774,000 | | | | $ | 1,896,000 | | | | | $ | 1,827,000 | | | | $ | 1,774,000 | | |
| Audit-Related Fees | | | | — | | | | | — | | | | | | — | | | | | — | | |
| Tax Fees | | | | 1,009,000 | | | | | 1,096,000 | | | | | | 992,000 | | | | | 1,009,000 | | |
| All Other Fees | | | | 3,000 | | | | | 2,000 | | | | | | 1,000 | | | | | 3,000 | | |
| Total | | | $ | 2,786,000 | | | | $ | 2,994,000 | | | | | $ | 2,820,000 | | | | $ | 2,786,000 | | |
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 20202021 and 2019,2020, 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 20202021 and 2019,2020, the reviews of the financial statements included in our Company’s Forms 10-Q for fiscal years 20202021 and 2019,2020, and services relating to securities and other filings with the SEC, including comfort letters and consents, were approximately $1,774,000$1,827,000 and $1,896,000,$1,774,000, respectively.
Audit Related Fees
Ernst & Young LLP was not 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 20202021 and 2019.2020.
Tax Fees
The tax fees billed by Ernst &Young LLP to our Company for tax compliance and preparation services for fiscal years 20202021 and 20192020 were approximately $802,000$854,000 and $815,000,$802,000, respectively. The tax fees billed by Ernst & Young LLP to our Company for tax advice and tax planning services for fiscal years 20202021 and 20192020 were approximately $207,000$138,000 and $281,000,$207,000, respectively.
All Other Fees
The aggregate other fees billed by Ernst & Young LLP to our Company for access to an online accounting research tool for fiscal years 20202021 and 20192020 were approximately $3,000$1,000 and $2,000,$3,000, respectively.
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
The Audit Committee has policies and procedures that require the pre-approval by the Audit Committee of all fees paid to, and all services performed by, our Company’s 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 fees 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 by the Audit Committee prior to the completion of the audit.
In the first half of each year, the Audit Committee approves the proposed services, including the nature, type and scope of service contemplated and the related fees, to be rendered by the firm during the year. In addition, Audit Committee pre-approval is also required for those engagements that may arise during the course of the year that are outside the scope of the initial services and fees approved by the Audit Committee. For each category of proposed service, the independent auditing firm is required to confirm that the provision of such services does not impair its independence. Pursuant to the Sarbanes Oxley Act of 2002, the fees and services provided as noted in the table above were authorized and approved by the Audit Committee in compliance with its pre-approval policies and procedures described herein.
PROPOSAL 3 — ADVISORY VOTE ON EXECUTIVE COMPENSATION
Background on Advisory Vote
Federal legislation (Section 14A of the Exchange Act) requires that we periodically include in our Proxy Statement a non-binding stockholder vote on our executive compensation as described in this Proxy Statement (commonly referred to as “Say-on-Pay”). In an advisory vote in 2017, our stockholders voted to recommend, and the Board adopted, holding a Say-on-Pay vote on an annual basis.
Our Executive Compensation Program
As described more fully in our Compensation Discussion and Analysis section of this Proxy Statement (“CD&A”) and the related tables and narrative, we design our executive compensation program to reward, retain and, in the case of new hires, attract executive officers to support our business strategy, achieve our short-term and long-term goals, and provide continued success for our operators, stockholders, employees and communities. At the core of our executive compensation program is our pay-for-performance philosophy that links competitive levels of compensation to achievements of our overall strategy and business goals, as well as predetermined objectives. We believe our executive compensation program is strongly aligned with the interests of our stockholders and sound corporate governance principles.
The Compensation Committee engages in an annual review to establish the annual salaries and the terms and conditions of annual cash bonus opportunities, long-term incentive awards and employment agreements with our executive officers. The compensation programs for 2019 and 20202020-2022 were described in the CD&A included in the Company’s proxy statement for our 20202021 annual meeting of stockholders, at which approximately 96%97% of the votes cast approved the Company’s executive compensation in the advisory “Say-on-Pay” vote, continuing a long-term trend of significant shareholder support. As a result, the Compensation Committee has generally maintained the same construct of its executive compensation program.
Say on Pay Support
(% of votes cast)
We urge you to read the CD&A section of this Proxy Statement for the details on the Company’s executive compensation program, including the executive compensation programs implemented for 2019-2021 and 2020-2022. Our executive compensation programs emphasize pay for performance, such that the interests of all of our executive officers are aligned with the interests of stockholders. For a detailed description of how we have structured performance-based compensation programs and the recent results, see “Compensation Discussion and Analysis — Pay for Performance Alignment.”
Proposed Vote
The following resolution will be submitted for a stockholder vote at the Annual Meeting:
RESOLVED, that the Company’s stockholders approve the compensation of the Company’s executive officers as described in the Proxy Statement issued in connection with the 20212022 Annual Meeting of stockholders, including in the “Compensation Discussion and Analysis” section, the compensation tables and the other narrative compensation disclosures contained therein.
Because the vote is advisory, the outcome of the vote will not be binding upon the Board of Directors, the Compensation Committee or the Company, and neither the Board of Directors nor the Compensation Committee will be required to take any action as a result of the outcome of the vote on this proposal; however, the Compensation Committee will consider the outcome of the vote when evaluating future executive compensation arrangements.
COMPENSATION DISCUSSION AND ANALYSIS
Compensation Discussion and Analysis
Our Compensation Discussion and Analysis (“CD&A”) addresses the following topics:
•
20202021 Achievements and Performance Results;
•
Pay for Performance Alignment;
•
Summary of Executive Compensation Program and Governance Practices;
•
Components of Omega’s Executive Compensation Program;
•
Omega’s Compensation Decisions and Results for 2020;2021; and
•
Omega’s Compensation Decisions for 2021.2022.
20202021 Achievements and Performance Results
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With our industry faced with the challengescontinued challenge of an unprecedentedthe pandemic beginning in 2020,2021, we are grateful for how Omega, our employees, our operating partners and federal and state governments were ablegovernment agencies continued to respondpartner in responding to this crisis.crisis and for the continued reduction in severity of cases among our residents during 2021. Our operating partners, who worked bravely to protect and care for their residents, werecontinued to be supported by our operations team, which maintained dialogue with them throughout the pandemic, sharingshared best practices and protocols helping source scarce personal protective equipment, and actingacted as a preferred capital provider where prudent. Our employees, over half of whom worked remotely through the pandemic, were able to maintain continuity of operations and were largely healthy through this crisis. Additionally,Omega also continued to source and invest in 2020, government relief measures atancillary technology solutions that enhance the infrastructure of long-term care providers and our operators.
At the same time, our operators remained challenged by the pandemic and, in particular, its impact on both occupancy and labor. These issues were compounded by the limited federal and state levels offered meaningfulfinancial support the industry
received during the year. As a result, a few of our operators were unable to pay rent in the second half of the year, which we were able to offset manyin part in 2021 through the application of operator collateral. Our decades of experience in dealing with operator workouts and the strong demand for senior healthcare assets from long-term investors supported our ability to navigate such issues, often with limited diminution to the long-term economics of the financial impactsbusiness. This demand allowed Omega, in some situations, to enhance operator credit by selling non-core assets at solid prices and redeploying those proceeds to achieve rent equivalents materially in line with prior rents. In 2021, for example, we were able complete the Company’s skilled nursing facility operators,transition out of our Daybreak portfolio and to a lesser extent assisted living facility operators. We believe this governmental support has highlighted their understanding ofstructure our transition from the vital role our asset classes of skilled nursing and assisted living facilities play within the healthcare continuum.
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As such, while the COVID-19 pandemic continues to have a significant impact onsignificantly impacted Omega’s operators, and we continue to monitor the impact of governmental support, for the year ended December 31, 2020,2021, the Company collected substantially all of the contractual rentswas able to support and mortgage payments owed to it from operators (other than operators under a forbearance agreement prior to the pandemic), and the Company maintainedmaintain its $0.67 per share quarterly dividend throughout 2020.2021. In addition, despite a challenging year for acquisitions, we acquired 32 new facilities for a total investment of $604 million in 2021, invested $58.6 million in new mortgages and made $140 million of investments in Omega’s capital expenditure programs. We also completed significant strategic asset repositions and transitioning objectives in 2021, which included selling 48 facilities subject to operating leases for approximately $318.5 million in net proceeds, recognizing a net gain on sale of approximately $161.6 million. In addition, in a difficult climate, we further enhanced our balance sheet in 2021 by closing on a new $1.45 billion unsecured credit facility with improved terms, as well as extending the maturity of our debt obligations by issuing $700 million in Senior Notes due in 2033 at 3.25%, the lowest yield in the Company’s history. We believe that, ourwhile we experienced mixed operating results in 2020, including strong quarterly AFFO, FAD and rent collections,2021, these actions display the strength of our conservative balance sheet and operating model against the backdrop of an unprecedentedanother year significantly impacted by the COVID-19 pandemic. During the year, we also took advantage of strong capital markets to issue both debt and equity to enhance our balance sheet and fund new investments. On October 9, 2020, we issued $700 million aggregate principal amount of 3.375% Senior Notes due 2031 and used the net proceeds from the notes offering to refinance existing debt. We also issued over $150 million of equity in 2020, allowing us to reduce leverage and further enhance our strong balance sheet.
As healthcare delivery continues to evolve, we continuously evaluate our assets, operators and markets to position our portfolio for long-term success. With broadening vaccine distribution and national caseloads showing encouraging signs of declining, weWe are hopeful that the impact of the pandemic on our operators is improving, yet we remain vigilant in our approach. Our strategy includes applying our proprietary data analytics platform to enhance investment underwriting and asset management, as well as selling or transitioning assets, or portfolios of assets that do not meet our portfolio criteria. In 2020, using our proprietary data analytics platform, we completed substantially all of our strategic asset repositions and transitioning objectives, which included selling 43 facilities subject to operating leases for approximately $181 million in net proceeds, recognizing a gain on sale of approximately $19 million. In addition, despite a challenging year for acquisitions, we acquired eleven new facilities for a total investment of $104 million in 2020, invested $43 million in new mortgages and made $111 million of investments in Omega’s capital expenditure programs.
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TSR Performance Results for One-, Three-, Five- and Ten-Year Periods ended 20202021
While the total shareholder return (“TSR”) across REITs was impacted by the COVID-19 pandemic, Omega outperformedunderperformed the FTSE Nareit Equity Health Care Index (the “Index”) by approximately 1,460 basis points on a compounded, annualized basis over a three-year period ended 2020.2021, reflecting the disproportionate impact of the pandemic on the senior and long term care sectors. The charts below illustrate our TSR performance over a variety of short-term and long-term time-periods.
Our three-year TSR Annualized Performanceperformance directly impacted executive pay and resulted in no earning or vesting of performance-based awards for Multi-Year Periodsthe period ended December 31, 20202021. Notably, prior to the pandemic, our TSR performance had consistently exceeded the Index, including on a compounded, annualized basis for the one-, three-, five- and ten-year periods ended 2019, with Omega outperforming the Index by 1,077 basis points for the three-year period ended 2019.
Annual Cash Incentive Payouts 20162017 – 20202021
Long-Term Incentive Compensation
Performance goals incorporated into our annual performance-based equity awards drive a significant portion of what our named executive officers actually earn over time by directly linking both TSR and TSR relative to an index (which we call “Relative TSR”) to the amounts earned over the three-year performance periods.periods, with 60% of the named executive officers’ target long-term compensation linked to objective TSR and Relative TSR metrics. As a result, in periods when our TSR and Relative TSR have superior performance, our named executive officers will earn more than their target level of compensation and in periods when our TSR and Relative TSR under-perform,underperform, our named executive officers will earn less than their target level of compensation.
To make even more of our named executive officer’s long-term compensation performance-based, the Committee increased the percentage of the named executive officers’ target long-term compensation that is linked to objective performance to 60% for 2016, up from 50% in 2015. For the 2018, 2019 and 2020 awards, the Committee continued to maintain this increased percentage. Further, after a disappointing year of stock price performance in 2017, the Committee substantially increased the level of TSR required to achieve the performance goals for 2018 for performance-based awards granted in 2018. See “Our Compensation Decisions and Results for 20202021 — Long-Term Equity Incentives for Three-Year Period commencing January 1, 20202021 — Relative TSR Units and TSR Units.”
Long-Term Incentive Compensation Earned in 20202021
Our Relative TSR for the three-year performance period ended December 31, 20202021 of approximately 1,460-648 basis points in excessunderperformed the threshold performance hurdle of the Index (which delivered a return of 3.65% over the period) significantly exceeded the high performance level of +300-300 basis points. Therefore, the Relative TSR-based equity incentives for that period were earned at the high level of performance.
Ourpoints, and our TSR for the three-year performance period ended December 31, 20202021 of 18.3% exceeded1.84% also underperformed the high levelthreshold performance hurdle of performance of 18%8%. Therefore, neither the Relative TSR-based nor the TSR-based equity incentives for that period were also earned, atand no performance-based equity awards for the high levelthree-year period ended December 31, 2021 were earned or vested, reflecting strong alignment of pay and performance.
Our Relative TSR and TSR for these purposes are based on November and December average closing stock prices before the beginning and at the end of the three-year performance period. As a result, the numbers are different than shown in the “3-Year Total Return” bar chart under “TSR Annualized Performance for Multi-Year Periods ended December 31, 20202021.”
Omega as Compared to 2021 Peer Group
(as of December 31, 2021)
Compensation Setting Process
The Committee uses data and information provided by FPL,FPC, including comparisons of Omega’s executive compensation programs to those of Omega’s peer group, to assist the Committee in undertaking a comprehensive annual review to establish base salaries and the terms and conditions of annual cash bonus opportunities, and long-term incentive awards of our executive officers. In addition, our Chief Executive Officer provides the Committee information regarding management’s performance as well as other factors the Chief Executive Officer believes should impact the compensation of our named executive officers. The Committee also requests and receives recommendations from our Chief Executive Officer regarding the compensation for each of the named executive officers and the business and performance targets for long-term incentive awards and annual cash bonuses for each named executive officer.
Market data provided by FPLFPC is an important tool for analysis and decision-making. The Committee considers the recommendations of FPLFPC and our Chief Executive Officer in applying its own independent judgment in determining the compensation of our named executive officers. In reaching compensation decisions, the Committee also considers the decision-making responsibilities of each position and the experience, work performance, team-building, and talent development skills of each named executive officer, as well as the Company’s overall performance and the achievement of our strategic objectives and budgets during the prior year. The ultimate determination of the compensation that will be paid to our named executive officers and the elements that comprise that compensation are made solely by the Committee.
Components of Our Executive Compensation Program
Our named executive officers’ compensation currently has three primary components, which are discussed in more detail below:
•
annual base salary,
•
annual cash incentive awards, and
•
annual long-term equity incentive awards.
Variable pay constitutes the majority of our executives’ compensation, which allows the Committee to reward superior performance and penalize under-performance, while the long-term equity incentive portions of our compensation programs serve to align the interests of our named executive officers with the interests of
three-year period (the “Time-based Award”). For awards granted in 2016 and later, theThe Performance-based Award was 60% (expressed as a dollar amount at the target performance level) of the equity award and the Time-based Award was 40%.
Of the Performance-based Awards granted in January 2020:2021:
•
45% of the value (at the target level) is earned based on the Company’s TSR over the three-year performance period (“TSR-based Awards”); and
•
the other 55% of the value (at the target level) is earned based on the Company’s Relative TSR over the three-year performance period (“Relative TSR-based Awards”).
Form of Long-Term Equity Incentive Awards
Each of our named executive officers is given the option to elect to receive TSR-based and Relative TSR-based Awards were granted in the form of the performance-based restricted stock units (“PRSUs”) before 2015. From 2015 through 2018, TSR-based awards were granted in the form ofor “Profits Interest Units” (defined below), which are potentially convertible into our common stock. Since 2019, each of our named executive officers has been given the option to elect to receive these awards in the form of PRSUs or Profits Interest Units. Prior to 2019, the Time-based Awards were granted in the form of restricted stock, units (“RSUs”), and since 2019, each of our named executive officers has been given the option to elect to receive the Time-based Awards in the form of RSUsrestricted stock units (“RSUs”) or Profits Interest Units.
The Profits Interest Units have the substantially same value from an accounting perspective and have substantially similar terms and conditions as the PRSUs or RSUs that they replace. “Profits Interest Units” are limited partnership units structured as profits interests of Omega OP. Pursuant to Omega OP’s partnership agreement, Profits Interest Units are convertible into OP Units, at the election of the holder or Omega OP, on a one-to-one basis, subject to conditions on minimum allocation to the capital accounts of the holders of Profits Interest Units 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 shares of Omega common stock on a one-for-one basis, and further subject to adjustment as set forth in the partnership agreement. Profits Interest Units can provide tax advantages to the named executive officers as compared to RSUs or PRSUs. Many REITs that have similar structures as Omega grant limited partnership interests in an operating partnership similar to Profits Interest Units.
Additional details of the 20202021 annual equity award grants for our named executive officers are discussed under the heading “Our Compensation Decisions and Results for 20202021 — Long-Term Equity Incentives for Three-Year Period commencing January 1, 20202021.”
were increased by 3% over 2019 (except for Gail Makode, whose initial annual base salary was agreed to when she was hired in late 2019 and2021 remained the same as 2020 other than for 2020)Ms. Makode, whose salary was increased by 5% over 2020, and are set forth below:
| Name | | 2020 Base Salary | | | 2021
Base Salary | |
| C. Taylor Pickett | | | $ | 823,800 | | | | | $ | 823,800 | | |
| Daniel J. Booth | | | $ | 532,700 | | | | | $ | 532,700 | | |
Steven J. Insoft | | | $ | 521,800 | | | | | $ | 521,800 | | |
| Robert O. Stephenson | | | $ | 510,800 | | | | | $ | 510,800 | | |
| Gail D. Makode | | | $ | 400,000 | | | | | $ | 420,000 | | |
2020(1)
Mr. Insoft’s employment terminated effective January 1, 2022.
2021 Annual Cash Incentive Opportunities
In 2020,For 2021, the Committee increasedretained the prior annual cash bonus opportunities for 2020 as a percentage of annual base salary for each of the top five executive officers other than Mr. Pickett to 125% of base salary at the high level of achievement to provide more parity with the CEO’s bonus opportunities. The Committee established the following annual cash bonus opportunities for 2020 for our named executive officers:officers, which were as follows:
| | | Annual Incentive
(% of Base Salary) | | | Annual Incentive
(% of Base Salary) | |
| Name | | Threshold | | Target | | High | | | Threshold | | Target | | High | |
| C. Taylor Pickett | | | | 100% | | | | | 125% | | | | | 200% | | | | | | 100% | | | | | 125% | | | | | 200% | | |
| Daniel J. Booth | | | | 50% | | | | | 75% | | | | | 125% | | | | | | 50% | | | | | 75% | | | | | 125% | | |
Steven J. Insoft | | | | 50% | | | | | 75% | | | | | 125% | | | | | | 50% | | | | | 75% | | | | | 125% | | |
| Robert O. Stephenson | | | | 50% | | | | | 75% | | | | | 125% | | | | | | 50% | | | | | 75% | | | | | 125% | | |
| Gail D. Makode | | | | 50% | | | | | 75% | | | | | 125% | | | | | | 50% | | | | | 75% | | | | | 125% | | |
2020(1)
Mr. Insoft’s employment terminated effective January 1, 2022.
2021 Annual Cash Incentive Performance Goals and Results
| | Annual Cash Incentive Performance Goal #1: FAD per Share | |
| | Weighting | | Threshold | | Target | | High | | 2020 Results | | Weighting | | Threshold | | Target | | High | | 2021 Results | |
| | 30% | | | $ | 2.89 | | | | $ | 2.94 | | | | $ | 2.99 | | | | $ | 3.06 | | | 30% | | | $ | 3.01 | | | | $ | 3.06 | | | | $ | 3.11 | | | | $ | 3.14 | | |
Why is this metric important? FAD per share is important as it provides an enhanced measure of the operating performance of Omega’s core portfolio.
How is this metric calculated? FAD is a non-GAAP financial measure and is calculated as Adjusted FFO less non-cash interest expense and non-cash revenue, such as straight-line rent. Adjusted FFO is calculated as Nareit FFO excluding the impact of non-cash stock-based compensation and certain revenue and expense items, where Nareit FFO is calculated in accordance with the definition and interpretive guidelines issued by the National Association of Real Estate Investment Trusts (“Nareit”), and consequently, Nareit FFO is defined as net income (computed in accordance with GAAP), adjusted for the effects of asset dispositions and certain non-cash items, primarily depreciation and amortization and impairments on real estate assets, and after adjustments for unconsolidated partnerships and joint ventures. See “Use of Non-GAAP Financial Measures” below.
How is this metric calculated? Tenant quality is a non-GAAP measuredmeasure calculated as the percentage of actual cash collected (within 30 days of the contractual due date) in relation to the Board approved 20202021 budgeted operator cash lease and mortgage interest cash revenue. See “Use of Non-GAAP Financial Measures” below.
Performance: In 2020,2021, Omega achieved 99.9%96.8% tenant quality, resulting in an achievement atwhich did not meet the highthreshold hurdle level.
| | Annual Cash Incentive Performance Goal #3: Leverage | |
| | Weighting | | | Threshold | | | Target | | | High | | | 20202021 Results | |
| | 10% | | | | | 5.2x | | | | | | 5.0x | | | | | | 4.8x | | | | | | 5.0x4.6x | | | | | | 5.3x | | |
Why is this metric important? Leverage is important as it helps to measure our balance sheet and solvency risk and hence our ability to maintain our credit ratings and access the capital markets at favorable rates.
How is this metric calculated? Leverage is a non-GAAP financial measure which equals net funded debt/adjusted pro forma annualized EBITDA. See “Use of Non-GAAP Financial Measures” below.
Performance: In 2020,2021, Omega achieved 5.0x leverage of 5.3x, resulting in an achievement athigher leverage than the targetthreshold hurdle level.
| | Annual Cash Incentive Performance Goal #4: Committee’s Assessment of Individual Performance | |
| | Weighting | | | | | | | | | | | | | |
| | 30% | | | | | | | | | | | | | |
Why is this metric important? It allows the Committee to consider other financial and non-financial factors and to recognize and appropriately reward each officer’s particular contributions to the success of Omega. The Committee has also determined that for 2021,2022, a substantial portion of the subjective component of the cash bonus for each NEO will be based on achievement of ESG targets.
Performance: The percentages earned under the individual performance metric and material factors considered include the following:
C. Taylor Pickett — 81% of maximum
•
Reacted quickly and effectivelyContinued to manage COVID-19 challenges to the business and providedeffectively, provide support to operators
•
Sourced and closed onimprove balance sheet through capital markets transactions and opportunistic acquisitions and dispositions as well as capital markets transactions in a challenging environment
•
Knowledgeable about industry developments,Continued to evolve ESG, diversity and uses industry data effectivelyinclusion efforts and develop tools to measure and communicate progress
•
Provides excellentExpanded thought leadership via data analytics effort and staff and leadership development
•
ContinuesContinued to improve talent and leadership development in the organizationinvestigate industry disrupters to incorporate into strategic planning effort
Daniel J. Booth — 85%82% of maximum
•
Effectively managed a significant number of troubled situations and proactively identified risks in the investment portfolio
•
Sourced and successfully closed a number of transactions
•
Expanded operator reporting and outreach to address the impacts of COVID-19
Steven J. Insoft — 79% of maximum
•
Managed the Maplewood relationship and the development of various properties including Inspir at Carnegie Hill
•
Evaluated new opportunities with Maplewood and in senior housing
•
Performs well as an integral member of theContinued to evolve ESG, diversity and inclusion efforts internally and with regard to operator programs
•
Effectively supported leadership development and investment in thought leadership opportunities
•
Continued to leverage data management teamanalytics to track COVID-19 related trends and industry impacts to inform Omega stakeholders and operators
Robert O. Stephenson — 87%85% of maximum
•
Managed capital markets activity effectively to support corporate needs during the COVID-19 pandemic
•
ContinuedAccelerated ESG tracking and communications to improve corporate back officethe market, and accounting functiondiversity and inclusion programs with internal staff
•
Continued to enhance investor relations functioninvest effectively in staff development and communications with investorstraining in the finance and rating agenciesIT functions
Gail D. Makode — 90%85% of maximum
•
Developed internal legal support function, including transaction and disclosure support
•
EnhancedContinued to enhance governance, Board and risk management processes
•
Effectively managedExpanded diversity and enhanced compensation processinclusion initiatives in hiring, training and programsvendor management
•
Further developed governance-related thought leadership
Accordingly, the Committee approved the following cash bonuses relating to 20202021 performance:
| FAD per share (30%) | |
| Executive | | | Threshold | | | Target | | | High | | | | Actual | |
| | | | $2.89 | | | $2.94 | | | $2.99 | | | | $3.06 | |
| C. Taylor Pickett | | | | $ | 247,140 | | | | | $ | 308,925 | | | | | $ | 494,280 | | | | | | $ | 494,280 | | |
| Daniel J. Booth | | | | $ | 79,905 | | | | | $ | 119,858 | | | | | $ | 199,763 | | | | | | $ | 199,763 | | |
| Steven J. Insoft | | | | $ | 78,270 | | | | | $ | 117,405 | | | | | $ | 195,675 | | | | | | $ | 195,675 | | |
| Robert O. Stephenson | | | | $ | 76,620 | | | | | $ | 114,930 | | | | | $ | 191,550 | | | | | | $ | 191,550 | | |
| Gail D. Makode | | | | $ | 60,000 | | | | | $ | 90,000 | | | | | $ | 150,000 | | | | | | $ | 150,000 | | |
| Tenant Quality (30%) | |
| Executive | | | Threshold | | | Target | | | High | | | | Actual | |
| | | | 98% | | | 98.5% | | | 99% | | | | 99.9% | |
| C. Taylor Pickett | | | | $ | 247,140 | | | | | $ | 308,925 | | | | | $ | 494,280 | | | | | | $ | 494,280 | | |
| Daniel J. Booth | | | | $ | 79,905 | | | | | $ | 119,858 | | | | | $ | 199,763 | | | | | | $ | 199,763 | | |
| Steven J. Insoft | | | | $ | 78,270 | | | | | $ | 117,405 | | | | | $ | 195,675 | | | | | | $ | 195,675 | | |
| Robert O. Stephenson | | | | $ | 76,620 | | | | | $ | 114,930 | | | | | $ | 191,550 | | | | | | $ | 191,550 | | |
| Gail D. Makode | | | | $ | 60,000 | | | | | $ | 90,000 | | | | | $ | 150,000 | | | | | | $ | 150,000 | | |
| Leverage (10%) | |
| Executive | | | Threshold | | | Target | | | High | | | | Actual | |
| | | | 5.3x | | | 5.0x | | | 4.8x | | | | 5.0x | |
| C. Taylor Pickett | | | | $ | 82,380 | | | | | $ | 102,975 | | | | | $ | 164,760 | | | | | | $ | 102,975 | | |
| Daniel J. Booth | | | | $ | 26,635 | | | | | $ | 39,953 | | | | | $ | 66,588 | | | | | | $ | 39,951 | | |
| Steven J. Insoft | | | | $ | 26,090 | | | | | $ | 39,135 | | | | | $ | 65,225 | | | | | | $ | 39,135 | | |
| Robert O. Stephenson | | | | $ | 25,540 | | | | | $ | 38,310 | | | | | $ | 63,850 | | | | | | $ | 38,310 | | |
| Gail D. Makode | | | | $ | 20,000 | | | | | $ | 30,000 | | | | | $ | 50,000 | | | | | | $ | 30,000 | | |
| Subjective (30%) | |
| Executive | | | Threshold | | | Target | | | High | | | | Actual | |
| C. Taylor Pickett | | | | $ | 247,140 | | | | | $ | 308,925 | | | | | $ | 494,280 | | | | | | $ | 398,465 | | |
| Daniel J. Booth | | | | $ | 79,905 | | | | | $ | 119,858 | | | | | $ | 199,763 | | | | | | $ | 170,523 | | |
| Steven J. Insoft | | | | $ | 78,270 | | | | | $ | 117,405 | | | | | $ | 195,675 | | | | | | $ | 154,515 | | |
| Robert O. Stephenson | | | | $ | 76,620 | | | | | $ | 114,930 | | | | | $ | 191,550 | | | | | | $ | 166,590 | | |
| Gail D. Makode | | | | $ | 60,000 | | | | | $ | 90,000 | | | | | $ | 150,000 | | | | | | $ | 135,000 | | |
| | | FAD per share (30%) | | |
| | | | | | Threshold | | | Target | | | High | | | | Actual | | |
| | | Executive | | | $3.01 | | | $3.06 | | | $3.11 | | | | $3.14 | | |
| | | C. Taylor Pickett | | | | $ | 247,140 | | | | | $ | 308,925 | | | | | $ | 494,280 | | | | | | $ | 494,280 | | | |
| | | Daniel J. Booth | | | | $ | 79,905 | | | | | $ | 119,858 | | | | | $ | 199,763 | | | | | | $ | 199,763 | | | |
| | | Steven J. Insoft(1) | | | | $ | 78,270 | | | | | $ | 117,405 | | | | | $ | 195,675 | | | | | | $ | 0 | | | |
| | | Robert O. Stephenson | | | | $ | 76,620 | | | | | $ | 114,930 | | | | | $ | 191,550 | | | | | | $ | 191,550 | | | |
| | | Gail D. Makode | | | | $ | 63,000 | | | | | $ | 94,500 | | | | | $ | 157,500 | | | | | | $ | 157,500 | | | |
| | | Tenant Quality (30%) | | |
| | | | | | Threshold | | | Target | | | High | | | | Actual | | |
| | | Executive | | | 98% | | | 98.5% | | | 99% | | | | 96.8% | | |
| | | C. Taylor Pickett | | | | $ | 247,140 | | | | | $ | 308,925 | | | | | $ | 494,280 | | | | | | $ | 0 | | | |
| | | Daniel J. Booth | | | | $ | 79,905 | | | | | $ | 119,858 | | | | | $ | 199,763 | | | | | | $ | 0 | | | |
| | | Steven J. Insoft(1) | | | | $ | 78,270 | | | | | $ | 117,405 | | | | | $ | 195,675 | | | | | | $ | 0 | | | |
| | | Robert O. Stephenson | | | | $ | 76,620 | | | | | $ | 114,930 | | | | | $ | 191,550 | | | | | | $ | 0 | | | |
| | | Gail D. Makode | | | | $ | 63,000 | | | | | $ | 94,500 | | | | | $ | 157,500 | | | | | | $ | 0 | | | |
| | | Leverage (10%) | | |
| | | | | | Threshold | | | Target | | | High | | | | Actual | | |
| | | Executive | | | 5.0x | | | 4.8x | | | 4.6x | | | | 5.3x | | |
| | | C. Taylor Pickett | | | | $ | 82,380 | | | | | $ | 102,975 | | | | | $ | 164,760 | | | | | | $ | 0 | | | |
| | | Daniel J. Booth | | | | $ | 26,635 | | | | | $ | 39,953 | | | | | $ | 66,588 | | | | | | $ | 0 | | | |
| | | Steven J. Insoft(1) | | | | $ | 26,090 | | | | | $ | 39,135 | | | | | $ | 65,225 | | | | | | $ | 0 | | | |
| | | Robert O. Stephenson | | | | $ | 25,540 | | | | | $ | 38,310 | | | | | $ | 63,850 | | | | | | $ | 0 | | | |
| | | Gail D. Makode | | | | $ | 21,000 | | | | | $ | 31,500 | | | | | $ | 52,500 | | | | | | $ | 0 | | | |
| | | Subjective (30%) | | |
| | | Executive | | | Threshold | | | Target | | | High | | | | Actual | | |
| | | C. Taylor Pickett | | | | $ | 247,140 | | | | | $ | 308,925 | | | | | $ | 494,280 | | | | | | $ | 400,000 | | | |
| | | Subjective (30%) | | |
| | | Executive | | | Threshold | | | Target | | | High | | | | Actual | | |
| | | Daniel J. Booth | | | | $ | 79,905 | | | | | $ | 119,858 | | | | | $ | 199,763 | | | | | | $ | 163,807 | | | |
| | | Steven J. Insoft(1) | | | | $ | 78,270 | | | | | $ | 117,405 | | | | | $ | 195,675 | | | | | | $ | 0 | | | |
| | | Robert O. Stephenson | | | | $ | 76,620 | | | | | $ | 114,930 | | | | | $ | 191,550 | | | | | | $ | 162,820 | | | |
| | | Gail D. Makode | | | | $ | 63,000 | | | | | $ | 94,500 | | | | | $ | 157,500 | | | | | | $ | 133,875 | | | |
(1)
Mr. Insoft’s employment terminated effective January 1, 2022, and he was accordingly not awarded an Annual Cash Bonus for 2021.
Use of Non-GAAP Financial Measures
Nareit FFO, Adjusted FFO, FAD, Tenant Quality and Leverage are non-GAAP financial measures. The Company believesWe believe that these measures are important supplemental measures of itsour operating performance. The Company calculatesWe calculate and reportsreport Nareit FFO in accordance with the definition and interpretive guidelines issued by Nareit, and consequently, FFO is defined as net income (computed in accordance with GAAP), adjusted for the effects of asset dispositions and certain non-cash items, primarily depreciation and amortization and impairments on real estate assets, and after adjustments for unconsolidated partnerships and joint ventures.ventures and changes in the fair value of warrants. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect funds from operations on the same basis. Depreciation adjustments are made because the historical cost accounting convention used for real estate assets requires depreciation (except on land), such accounting presentation implies that the value of real estate assets diminishes predictably over time, while real estate values instead have historically risen or fallen with market conditions. Nareit FFO described herein is not necessarily comparable to FFO of other real estate investment trusts, or REITs, that do not use the same definition or implementation guidelines or interpret the standards differently from the Company.
Adjusted FFO is calculated as Nareit FFO excluding the impact of non-cash stock-based compensation and certain revenue and expense items identified above.(e.g., acquisition, merger and transaction related costs, write-off of straight-line accounts receivable, recoveries and provisions for current expected credit losses (excluding certain cash recoveries on impaired loans), severance, etc.). FAD is calculated as Adjusted FFO less non-cash interest expense and non-cash revenue, such as straight-line rent. The Company believes these measures provide an enhanced measure of the operating performance of the Company’s core portfolio as a REIT. The Company’s computation of Adjusted FFO and FAD are not comparable to the Nareit definition of FFO or to similar measures reported by other REITs, but the Company believes that they are appropriate measures for this Company.
Leverage is a non-GAAP financial measure which refers to ratio of funded debt to adjusted pro forma annualized EBITDA. Funded debt is defined as gross balance sheet debt less balance sheet cash. EBITDA is defined as earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA eliminates items such as acquisition costs and stock-based compensation expense and adds back certain non-cash expenses, if any, to EBITDA. Adjusted pro forma EBITDA adds to adjusted EBITDA the incremental EBITDA from (i) new investments and divestitures made during the 4th quarter assuming an October 1st purchase or sale date and (ii) inception to date funding of construction in progress multiplied by the estimated contractual quarterly yield assuming an October 1st in-service date. EBITDA, adjusted EBITDA, adjusted pro forma EBITDA and related ratios are non-GAAP financial measures. Annualized EBITDA, adjusted annualized EBITDA, and adjusted pro forma EBITDA assume the current quarter results multiplied by four, and are not projections of future performance.
Tenant quality is a non-GAAP measure calculated as the percentage of actual cash collected (within 30 days of the due date) in relation to the Board approved 20202021 budgeted operator cash lease and mortgage revenue.
These non-GAAP measures are not measures of financial performance under GAAP and should not be considered as measures of liquidity, alternatives to net income or indicators of any other performance measure determined in accordance with GAAP. Investors and potential investors in the Company’s securities should not rely on these non-GAAP measures as substitutes for any GAAP measure, including net income. A reconciliation of FFO, Adjusted FFO and FAD to the most comparable GAAP measure is fully set forth in the Company’s earnings release included as Exhibit 99.1 to the Form 8-K furnished on February 4, 2021.2, 2022.
and our TSR for the three-year performance period ended December 31, 20202021 of 18.3%1.84% also significantly exceededunderperformed the highthreshold performance hurdle of 18%8%. Therefore, bothneither the Relative TSR-based andnor the TSR-based equity incentives for that period were earned, at the high levelreflecting strong alignment of pay and performance.
In addition, while our Relative TSR and TSR is tracking abovebelow the high performance level for the three-year period ending December 31, 2021 and between target and highthreshold performance levels for the three-year period ending December 31, 2022 the TSR for those periods is tracking below the threshold and target performance levels for the three-year period ending December 31, 2021 and below the threshold performance level for the TSR-based equity incentives for the three-year period ending December 31, 2022.2023. There can be no assurance that these measures will track at a similar level for the full performance period, particularly given the uncertainty as to the Company’s and the Index’s performance in light of the COVID-19 pandemic. The required high level for the three-year performance periods ending in 20212022 and 20222023 is (i) 300 basis points in excess of the Index for the Relative TSR-based equity incentives, and (ii) 12% for the TSR-based equity incentives, is 12% for the three-year performance periods ending in 2021 and in 2022.incentives.
Our Compensation Decisions for 20212022
Consideration of Market Data
For 2021,2022, the Committee revised the peer group composition from the prior year to replace EPR Properties and LexingtonDuke Realty TrustCorporation with Physicians Realty and Sabra Health Care,STORE Capital Corporation, reflecting their size comparability and focus on the healthcare industry,comparability, as peers, and otherwise adopted the peer group that had been in place in 2020.
2021.
In addition, in awarding 2022 compensation, the Committee considered the overall decrease in projected total executive compensation for 2022 as a result of the elimination of the Chief Corporate Development Officer position as of January 1, 2022.
awards and payment of any earned cash bonus if the employee retires after the end of the performance year but before the date of payment. These retirement benefits are subject to the employee’s compliance with any applicable non-competition and non-solicitation obligations and the intellectual property agreement to which the employee is subject, as well as being subject to the Company’s clawback policy discussed 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. We make an annual matching contribution of 100% of the amount that the employee contributes to the plan up to the first 6% of each employee’s annual compensation up to $290,000 (for 2021, indexed by the IRS for later years). We also provide competitive benefit packages to all full-time employees that include health and welfare benefits, such as medical, dental, disability insurance and life insurance benefits.
The Company maintains a deferred stock plan that allows officers to elect to defer receipt of common stock otherwise issuable upon vesting of RSUs and PRSUs. The Company also maintains a non-qualified deferred cash compensation plan that allows officers to elect to defer receipt of all or a portion of annual cash bonuses or annual base salary. We maintain a recordkeeping account for each officer who elects to defer under the plan that will be adjusted with the rate of return applicable to the plan investments. However, the plan is unfunded, and the assets of the plan therefore constitute the general assets of the Company.
Tax Deductibility of Executive Compensation
Before January 1, 2018, Section 162(m) of the Internal Revenue Code disallowed a federal income tax deduction for compensation over $1 million to any of the named executive officers (other than the Chief Financial Officer) unless the compensation was performance-based and the performance goals were approved by our stockholders. Effective January 1, 2018, Section 162(m) was amended to disallow a federal income tax deduction for compensation over $1 million to any of the named executive officer, regardless of whether the compensation is performance-based. Under a transition rule, Section 162(m) as in effect before the amendment continues to apply to compensation payable pursuant to a binding written contract in effect on November 2, 2017 that is not materially modified. In addition, because our named executive officers are employed by a
and compensation design features guard against excessive risk-taking:
•
The Company adheres to effective processes for developing strategic and annual operating plans and approval of portfolio and capital investments, including through an Investment Committee of the Board of Directors chaired by an independent director;
•
The Company has strong internal financial controls;
•
Base salaries are consistent with each named executive officer’s responsibilities so that they are not motivated to take excessive risks to achieve a reasonable level of financial security;
•
The determination of incentive awards is based on a review of a variety of performance indicators as well as, in the case of the annual cash bonus, a meaningful subjective assessment of personal performance, thus diversifying the risk associated with any single indicator of performance;
•
The design of our long-term compensation program rewards named executive officers for driving sustainable growth for stockholders over three-year performance periods;
•
The vesting periods for equity compensation awards encourage named executive officers to focus on stock price appreciation and maintaining dividends; 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
EXECUTIVE COMPENSATION TABLES AND RELATED INFORMATION
The following tables provide information relating to the compensation of our “named executive officers” for the last three fiscal years. Our named executive officers for 20202021 are our Chief Executive Officer, our Chief Financial Officer and the three other most highly compensated executive officers.
Summary Compensation Table
| | Name and Principal Position
(A) | | Year
(B) | | Salary
($)
(C) | | Bonus
($)(1)
(D) | | Stock
Awards
($)(2)
(E) | | Option
Awards
($)
(F) | | Non-Equity
Incentive Plan
Compensation
($)(3)
(G) | | All Other
Compensation
($)(4)
(I) | | Total
($)
(J) | | | Salary | | | Bonus
($)(1)
(D) | | Stock
Awards
($)(2)
(E) | | Option
Awards
($)
(F) | | Non-Equity
Incentive Plan
Compensation
($)(3)
(G) | | All Other
Compensation
($)(4)
(I) | | Total
($)
(J) | |
| | C. Taylor Pickett
Chief Executive Officer | | | | | 2020 | | | | | 823,800 | | | | | 398,465 | | | | | 8,117,974 | | | | | — | | | | | 1,091,535 | | | | | 21,464 | | | | | 10,453,238 | | | |
| | | | 2019 | | | | | 799,800 | | | | | 432,012 | | | | | 5,190,748 | | | | | — | | | | | 847,988 | | | | | 16,800 | | | | | 7,287,348 | | | |
| | | | 2018 | | | | | 780,300 | | | | | 468,154 | | | | | 4,681,523 | | | | | — | | | | | 635,846 | | | | | 16,500 | | | | | 6,582,323 | | | |
| | Daniel J. Booth
Chief Operating Officer | | | | | 2020 | | | | | 532,700 | | | | | 170,523 | | | | | 3,760,457 | | | | | — | | | | | 439,477 | | | | | 21,464 | | | | | 4,924,621 | | | |
| | | | 2019 | | | | | 517,200 | | | | | 124,239 | | | | | 2,559,999 | | | | | — | | | | | 289,761 | | | | | 16,800 | | | | | 3,507,999 | | | |
| | | | 2018 | | | | | 504,600 | | | | | 154,633 | | | | | 2,497,546 | | | | | — | | | | | 225,367 | | | | | 16,500 | | | | | 3,398,646 | | | |
| | Steven J. Insoft
Chief Corporate Development Officer | | | | | 2020 | | | | | 521,800 | | | | | 154,515 | | | | | 3,411,241 | | | | | — | | | | | 430,485 | | | | | 21,464 | | | | | 4,539,505 | | | |
| | | | 2019 | | | | | 506,600 | | | | | 121,177 | | | | | 2,399,999 | | | | | — | | | | | 283,823 | | | | | 16,800 | | | | | 3,328,399 | | | |
| | | | 2018 | | | | | 494,200 | | | | | 140,277 | | | | | 2,341,560 | | | | | — | | | | | 220,723 | | | | | 16,500 | | | | | 3,213,260 | | | |
| | Robert O. Stephenson
Chief Financial Officer | | | | | 2020 | | | | | 510,800 | | | | | 166,590 | | | | | 3,449,803 | | | | | — | | | | | 421,410 | | | | | 21,464 | | | | | 4,570,067 | | | |
| | | | 2019 | | | | | 495,900 | | | | | 119,172 | | | | | 2,240,252 | | | | | — | | | | | 277,828 | | | | | 16,800 | | | | | 3,149,952 | | | |
| | | | 2018 | | | | | 483,800 | | | | | 149,922 | | | | | 2,185,530 | | | | | — | | | | | 216,078 | | | | | 16,500 | | | | | 3,051,830 | | | |
| | Gail D. Makode
Chief Legal Officer | | | | | 2020 | | | | | 400,000 | | | | | 135,000 | | | | | 1,500,016 | | | | | — | | | | | 330,000 | | | | | 17,100 | | | | | 2,382,116 | | | |
| | | | 2019 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | |
| | | | 2018 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | |
Name and Principal Position
(A) | | | Year
(B) | | ($)
(C) | | | Bonus
($)(1)
(D) | | Stock
Awards
($)(2)
(E) | | Option
Awards
($)
(F) | | Non-Equity
Incentive Plan
Compensation
($)(3)
(G) | | All Other
Compensation
($)(4)
(I) | | Total
($)
(J) | |
C. Taylor Pickett
Chief Executive Officer | | | | | | 2021 | | | | | 823,800 | | |
| | | | 2020 | | | | | 823,800 | | | | | 398,465 | | | | | 8,117,974 | | | | | — | | | | | 1,091,535 | | | | | 21,464 | | | | | 10,453,238 | | |
| | | | 2019 | | | | | 799,800 | | | | | 432,012 | | | | | 5,190,748 | | | | | — | | | | | 847,988 | | | | | 16,800 | | | | | 7,287,348 | | |
Daniel J. Booth
Chief Operating Officer | | | | | | 2021 | | | | | 532,700 | | | | | 163,807 | | | | | 4,004,506 | | | | | — | | | | | 199,763 | | | | | 21,864 | | | | | 4,922,640 | | |
| | | | 2020 | | | | | 532,700 | | | | | 170,523 | | | | | 3,760,457 | | | | | — | | | | | 439,477 | | | | | 21,464 | | | | | 4,924,621 | | |
| | | | 2019 | | | | | 517,200 | | | | | 124,239 | | | | | 2,559,999 | | | | | — | | | | | 289,761 | | | | | 16,800 | | | | | 3,507,999 | | |
Steven J. Insoft
Former Chief Corporate Development Officer (5) | | | | | | 2021 | | | | | 521,800 | | | | | — | | | | | 3,568,343 | | | | | — | | | | | — | | | | | 21,864 | | | | | 4,112,007 | | |
| | | | 2020 | | | | | 521,800 | | | | | 154,515 | | | | | 3,411,241 | | | | | — | | | | | 430,485 | | | | | 21,464 | | | | | 4,539,505 | | |
| | | | 2019 | | | | | 506,600 | | | | | 121,177 | | | | | 2,399,999 | | | | | — | | | | | 283,823 | | | | | 16,800 | | | | | 3,328,399 | | |
Robert O. Stephenson
Chief Financial Officer | | | | | | 2021 | | | | | 510,800 | | | | | 162,820 | | | | | 3,675,828 | | | | | — | | | | | 191,550 | | | | | 21,864 | | | | | 4,562,862 | | |
| | | | 2020 | | | | | 510,800 | | | | | 166,590 | | | | | 3,449,803 | | | | | — | | | | | 421,410 | | | | | 21,464 | | | | | 4,570,067 | | |
| | | | 2019 | | | | | 495,900 | | | | | 119,172 | | | | | 2,240,252 | | | | | — | | | | | 277,828 | | | | | 16,800 | | | | | 3,149,952 | | |
Gail D. Makode
Chief Legal Officer | | | | | | 2021 | | | | | 420,000 | | | | | 133,875 | | | | | 1,600,021 | | | | | — | | | | | 157,500 | | | | | 17,400 | | | | | 2,328,796 | | |
| | | | 2020 | | | | | 400,000 | | | | | 135,000 | | | | | 1,500,016 | | | | | — | | | | | 330,000 | | | | | 17,100 | | | | | 2,382,116 | | |
| | | | 2019 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | |
(1)
Bonuses are reported for the year earned, whether or not paid before year end. Reflects the subjective component of annual cash bonus program payments. See “Compensation Discussion and Analysis — Our Compensation Decisions and Results for 20202021 — 20202021 Annual Cash Incentive Opportunities.”
(2)
Represents the fair value for accounting purposes as of the date of grant (excluding the effect of estimated forfeitures). In the case of PRSUs and performance-based Profits Interest Units, the fair value of as of the grant date is based on the probable outcome of the performance conditions determined as of the date of grant computed in accordance with FASB ASC Topic 718, excluding the effect of estimated forfeitures. However, while the fair value of the PRSUs and performance-based Profits Interest Units as of the grant date includes the value of the awards that could be earned at the high level of performance, performance-based awards are not earned and paid out at the high level unless the high level of performance is in fact achieved. Equity compensation awards are granted by the Compensation Committee to the named executive officers under the Company’s equity compensation plan, and the amount of PRSU and performance-based ProfitProfits Interest Units awards are assessed by the Compensation Committee for comparability relative to the Company’s peer group of companies, based on the assumption that the awards are earned at the target level of performance. See Note 1719 — “Stock-Based Compensation” in the Omega Annual Report on Form 10-K for the year ended December 31, 20202021 for a detailed description of the assumptions that were used in determining the dollar amounts recognized for financial statement reporting purposes of equity awards.
(3)
Bonuses are reported for the year earned, whether or not paid before year end. Represents the objective performance components (FAD per share, tenant quality and leverage for 2021 and 2020; adjusted FFO per share, FAD per share and tenant quality for 2019 and 2018)2019) of annual cash incentive program payments, described for 20202021 under “Compensation Discussion and Analysis — Our Compensation Decisions and Results for 20202021 — 20202021 Annual Cash Incentive Opportunities.”
(4)
“All Other Compensation” reflects 401(k) matching contributions and accrued dividend equivalents. The RSU awards accrue dividend equivalents from January 1 of the year of grant. The amount of the cash payments from such January 1 until the date of grant is included in “All Other Compensation.” In accordance with SEC rules, dividend equivalents associated with PRSUs and PIUs are generally not included in “All Other Compensation” because those amounts were factored into the grant date fair values.
(5)
Mr. Insoft’s employment terminated effective as of January 1, 2022, and he was accordingly not awarded an Annual Cash Bonus for 2021.
each executive officer, based on the level of performance over the performance period. The actual number of units that will be earned depends on the level of Relative TSR over the three-year performance period ending December 31, 20222023 (unless a change in control occurs before that date). Vesting occurs in four equal quarterly installments in 2023,2024, subject to continued employment on the vesting date, except in the case of a Qualifying Termination or Retirement (subject to the officer’s compliance with certain restrictive covenants) or a change in control. If the Qualifying Termination, Retirement or change in control occurs during 2023,2024, the previously earned units immediately vest. If the Qualifying Termination or Retirement occurs during the performance period and is not in connection with a change in control, the number of units earned will be determined at the end of the performance period and vesting will be prorated based on days elapsed through the date of the Qualifying Termination.Termination or Retirement. If the change in control occurs during the performance period, the performance period will end on the date of the change in control. In such case, if the executive officer is employed on the date of the change in control or has a Qualifying Termination or Retirement within 60 days before the 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 units will be earned and vested on the date of the change in control. Dividend equivalents accrue on PRSUs that subsequently are earned. Accrued dividend equivalents are only payable if and to the extent the PRSUs are earned. Each unvested and unearned Profits Interest Unit entitles the holder to receive distributions equal to (i) 10% of the regular periodic distributions per OP Unit paid by Omega OP to OP Unit holders and a corresponding percentage allocation of Net Income and Net Loss attributable to the regular periodic distributions per OP Unit and (ii) 0% of the special distributions and other distributions not made in the ordinary course per OP Unit paid by Omega OP to OP Unit holders and a corresponding 0% allocation of Net Income and Net Loss attributable to the special distributions and other distributions per OP Unit not made in the ordinary course. Each earned Profits Interest Unit entitles the holder to receive a distribution (and a corresponding allocation of Net Income and Net Loss per earned Profits Interest Unit) equal to the excess of: (i) the amount of distributions from Omega OP that would have been paid per Profits Interest Unit if the Profits Interest Unit had been an OP Unit on January 1, 20202021 over (ii) the Interim Distribution per Profits Interest Unit. In addition, each earned Profits Interest Unit entitles the holder to receive distributions and allocations of Net Income and Net Loss that accrues following the date that the Profits Interest Units become an earned Profits Interest Unit pursuant to the partnership agreement of Omega OP determined without regard to the adjustments described above. See “Compensation Discussion and Analysis — Components of Our Executive Compensation Program — Long-Term Equity Incentives for Three-Year Period commencing January 1, 2020 — Relative TSR Units and TSR Units2021.”
(5)
Represents either PRSUs or Profits Interest Units based on the officer’s election. Reflects the range of value that may be earned by each executive officer, based on the level of performance over the performance period. The actual number of units that will be earned depends on the level of TSR over the three-year performance period ending December 31, 20222023 (unless a change in control occurs before that date). See Footnote 4 above for a description of other terms.
(6)
Mr. Insoft’s employment terminated effective as of January 1, 2022, and he was paid cash severance amounts pursuant to his Employment Agreement (and subject to the terms thereof). In addition, he vested or is eligible to vest in certain of his outstanding equity awards, in certain cases on a prorated basis, pursuant and subject to the terms of such awards and his Employment Agreement.
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, 2020.2021. Since the information is set forth as of December 31, 2020,2021, it does not include equity awards that vested or forfeited as of December 31, 20202021 or awards granted in 2021.2022. There are no options outstanding.
| Name | | | | Number of
Units of
Stock That
Have Not
Vested
(#) | | Market Value
of Units
of Stock
That Have
Not Vested
($)(1) | | Equity Incentive
Plan Awards:
Number of
Unearned
Units That
Have Not Vested
(#) | | Equity Incentive
Plan Awards:
Market or Payout
Value of Unearned
Units That
Have Not Vested
($)(1) | | | | | Number of
Units of
Stock That
Have Not
Vested
(#) | | Market Value
of Units
of Stock
That Have
Not Vested
($)(1) | | Equity
Incentive
Plan Awards:
Number of
Unearned
Units That
Have Not Vested
(#) | | Equity Incentive
Plan Awards:
Market or Payout
Value of Unearned
Units That
Have Not Vested
($)(1) | |
| C. Taylor Pickett | | 2018-2020 Profits Interest Units(2) | | | | 234,892 | | | | | 10,216,158 | | | | | — | | | | | — | | | | 2020-2022 Time-based Units(2) | | | | 38,611 | | | | | 1,142,499 | | | | | — | | | | | — | | |
| | | 2018-2020 Relative PRSUs(3) | | | | 103,311 | | | | | 4,575,644 | | | | | — | | | | | — | | | |
| | | 2019-2021 Time-based Units(4) | | | | 39,673 | | | | | 1,440,923 | | | | | — | | | | | — | | | |
| | | 2019-2021 TSR-based Units(5) | | | | — | | | | | — | | | | | 158,184 | | | | | 6,504,052 | | | | 2020-2022 TSR-based Units(3) | | | | — | | | | | — | | | | | 213,606 | | | | | 7,351,037 | | |
| | | 2019-2021 Relative TSR-based Units(6) | | | | — | | | | | — | | | | | 96,769 | | | | | 3,978,851 | | | | 2020-2022 Relative TSR-based Units(4) | | | | — | | | | | — | | | | | 166,007 | | | | | 5,712,965 | | |
| | | 2020-2022 Time-based Units(7) | | | | 38,611 | | | | | 1,402,352 | | | | | — | | | | | — | | | | 2021-2023 Time-based Units(5) | | | | 47,786 | | | | | 1,413,988 | | | | | — | | | | | — | | |
| | | 2020-2022 TSR-based Units(8) | | | | — | | | | | — | | | | | 213,606 | | | | | 8,273,388 | | | | 2021-2023 TSR-based Units(6) | | | | — | | | | | — | | | | | 177,624 | | | | | 5,684,323 | | |
| | | 2020-2022 Relative TSR-based Units(9) | | | | — | | | | | — | | | | | 166,007 | | | | | 6,429,783 | | | | 2021-2023 Relative TSR-based Units(7) | | | | — | | | | | — | | | | | 190,617 | | | | | 6,100,125 | | |
| Daniel J. Booth | | 2018-2020 Profits Interest Units(2) | | | | 125,314 | | | | | 5,450,282 | | | | | — | | | | | — | | | | 2020-2022 Time-based Units(2) | | | | 17,759 | | | | | 525,489 | | | | | — | | | | | — | | |
| | | 2018-2020 Relative PRSUs(3) | | | | 55,115 | | | | | 2,441,043 | | | | | — | | | | | — | | | | 2020-2022 TSR-based Units(3) | | | | — | | | | | — | | | | | 98,949 | | | | | 3,405,231 | | |
| | | 2019-2021 Time-based Units(4) | | | | 19,422 | | | | | 705,407 | | | | | — | | | | | — | | | | 2020-2022 Relative TSR-based Units(4) | | | | — | | | | | — | | | | | 76,898 | | | | | 2,646,368 | | |
| | | 2019-2021 TSR-based Units(5) | | | | — | | | | | — | | | | | 81,413 | | | | | 3,347,458 | | | | 2021-2023 Time-based Units(5) | | | | 22,051 | | | | | 652,489 | | | | | — | | | | | — | | |
| | | 2019-2021 Relative TSR-based Units(6) | | | | — | | | | | — | | | | | 48,551 | | | | | 2,022,149 | | | | 2021-2023 TSR-based Units(6) | | | | — | | | | | — | | | | | 82,374 | | | | | 2,636,133 | | |
| | | 2020-2022 Time-based Units(7) | | | | 17,759 | | | | | 645,007 | | | | | — | | | | | — | | | | 2021-2023 Relative TSR-based Units(7) | | | | — | | | | | — | | | | | 88,399 | | | | | 2,828,945 | | |
| | | 2020-2022 TSR-based Units(8) | | | | — | | | | | — | | | | | 98,949 | | | | | 3,832,493 | | | |
| | | 2020-2022 Relative TSR-based Units(9) | | | | — | | | | | — | | | | | 76,898 | | | | | 2,978,413 | | | |
Steven J. Insoft(8) | | | 2020-2022 Time-based Units(2) | | | | 16,225 | | | | | 480,098 | | | | | — | | | | | — | | |
| Name | | | | Number of
Units of
Stock That
Have Not
Vested
(#) | | Market Value
of Units
of Stock
That Have
Not Vested
($)(1) | | Equity Incentive
Plan Awards:
Number of
Unearned
Units That
Have Not Vested
(#) | | Equity Incentive
Plan Awards:
Market or Payout
Value of Unearned
Units That
Have Not Vested
($)(1) | | | | | Number of
Units of
Stock That
Have Not
Vested
(#) | | Market Value
of Units
of Stock
That Have
Not Vested
($)(1) | | Equity
Incentive
Plan Awards:
Number of
Unearned
Units That
Have Not Vested
(#) | | Equity Incentive
Plan Awards:
Market or Payout
Value of Unearned
Units That
Have Not Vested
($)(1) | |
| Steven J. Insoft | | 2018-2020 Profits Interest Units(2) | | | | 117,487 | | | | | 5,109,862 | | | | | — | | | | | — | | | |
| | | 2018-2020 Relative PRSUs(3) | | | | 51,674 | | | | | 2,288,641 | | | | | — | | | | | — | | | |
| | | 2019-2021 Time-based Units (4) | | | | 18,343 | | | | | 666,218 | | | | | — | | | | | — | | | |
| | | 2019-2021 TSR-based Units(5) | | | | — | | | | | — | | | | | 73,139 | | | | | 3,007,256 | | | | 2020-2022 TSR-based Units(3) | | | | — | | | | | — | | | | | 89,759 | | | | | 3,088,966 | | |
| | | 2019-2021 Relative TSR-based Units(6) | | | | — | | | | | — | | | | | 44,742 | | | | | 1,839,657 | | | | 2020-2022 Relative TSR-based Units(4) | | | | — | | | | | — | | | | | 69,757 | | | | | 2,400,617 | | |
| | | 2020-2022 Time-based Units(7) | | | | 16,225 | | | | | 589,292 | | | | | — | | | | | — | | | | 2021-2023 Time-based Units(5) | | | | 19,748 | | | | | 584,343 | | | | | — | | | | | — | | |
| | | 2020-2022 TSR-based Units(8) | | | | — | | | | | — | | | | | 89,759 | | | | | 3,476,546 | | | | 2021-2023 TSR-based Units(6) | | | | — | | | | | — | | | | | 73,401 | | | | | 2,348,979 | | |
| | | 2020-2022 Relative TSR-based Units(9) | | | | — | | | | | — | | | | | 69,757 | | | | | 2,701,828 | | | | 2021-2023 Relative TSR-based Units(7) | | | | — | | | | | — | | | | | 78,770 | | | | | 2,520,798 | | |
| Robert O. Stephenson | | 2018-2020 Profits Interest Units(2) | | | | 109,657 | | | | | 4,769,312 | | | | | — | | | | | — | | | | 2020-2022 Time-based Units(2) | | | | 16,408 | | | | | 485,513 | | | | | — | | | | | — | | |
| | | 2018-2020 Relative PRSUs(3) | | | | 48,230 | | | | | 2,136,107 | | | | | — | | | | | — | | | | 2020-2022 TSR-based Units(3) | | | | — | | | | | — | | | | | 90,774 | | | | | 3,123,896 | | |
| | | 2019-2021 Time-based Units (4) | | | | 17,122 | | | | | 621,871 | | | | | — | | | | | — | | | | 2020-2022 Relative TSR-based Units(4) | | | | — | | | | | — | | | | | 70,546 | | | | | 2,427,770 | | |
| | | 2019-2021 TSR-based Units(5) | | | | — | | | | | — | | | | | 68,270 | | | | | 2,807,058 | | | | 2021-2023 Time-based Units(5) | | | | 20,342 | | | | | 601,920 | | | | | — | | | | | — | | |
| | | 2019-2021 Relative TSR-based Units(6) | | | | — | | | | | — | | | | | 41,765 | | | | | 1,717,252 | | | | 2021-2023 TSR-based Units(6) | | | | — | | | | | — | | | | | 75,612 | | | | | 2,419,735 | | |
| | | 2020-2022 Time-based Units(7) | | | | 16,408 | | | | | 595,939 | | | | | — | | | | | — | | | | 2021-2023 Relative TSR-based Units(7) | | | | — | | | | | — | | | | | 81,144 | | | | | 2,596,770 | | |
| | | 2020-2022 TSR-based Units(8) | | | | — | | | | | — | | | | | 90,774 | | | | | 3,515,859 | | | |
| | | 2020-2022 Relative TSR-based Units(9) | | | | — | | | | | — | | | | | 70,546 | | | | | 2,732,388 | | | |
| Gail D. Makode | | 2018-2020 Profits Interest Units(2) | | | | — | | | | | — | | | | | — | | | | | — | | | | 2020-2022 Time-based Units(2) | | | | 7,134 | | | | | 211,095 | | | | | — | | | | | — | | |
| | | 2018-2020 Relative PRSUs(3) | | | | — | | | | | — | | | | | — | | | | | — | | | | 2020-2022 TSR-based Units(3) | | | | — | | | | | — | | | | | 39,471 | | | | | 1,358,355 | | |
| | | 2019-2021 Time-based Units(4) | | | | — | | | | | — | | | | | — | | | | | — | | | | 2020-2022 Relative TSR-based Units(4) | | | | — | | | | | — | | | | | 30,674 | | | | | 1,055,615 | | |
| | | 2019-2021 TSR-based Units(5) | | | | — | | | | | — | | | | | — | | | | | — | | | | 2021-2023 Time-based Units(5) | | | | 8,855 | | | | | 262,019 | | | | | — | | | | | — | | |
| | | 2019-2021 Relative TSR-based Units(6) | | | | — | | | | | — | | | | | — | | | | | — | | | | 2021-2023 TSR-based Units(6) | | | | — | | | | | — | | | | | 32,912 | | | | | 1,053,250 | | |
| | | 2020-2022 Time-based Units(7) | | | | 7,134 | | | | | 259,107 | | | | | — | | | | | — | | | | 2021-2023 Relative TSR-based Units(7) | | | | — | | | | | — | | | | | 35,320 | | | | | 1,130,311 | | |
| | | 2020-2022 TSR-based Units(8) | | | | — | | | | | — | | | | | 39,471 | | | | | 1,528,791 | | | |
| | | 2020-2022 Relative TSR-based Units(9) | | | | — | | | | | — | | | | | 30,674 | | | | | 1,188,065 | | | |
(1)
Based on the closing price of our common stock as of December 31, 20202021 of $36.32$29.59 per share. Includes value of dividend equivalent rights accrued with respect to PRSUs and distributions accrued with respect to Profits Interest Units.
(2)
Represents Profits Interest Units earned (but not vested at December 31, 2020) based on TSR performance for the three-year performance period ended December 31, 2020. The number of Profits Interest Units earned for the performance period is based on the level of TSR achieved over the applicable performance period. The earned Profits Interest Units vest quarterly in 2021, subject to the executive officer’s continued employment on the vesting date, except in the case of a Qualifying Termination or a change in control in which case the units will vest immediately.
(3)
Represents PRSUs earned (but not vested at December 31, 2020) based on Relative TSR performance for the three-year performance period ended December 31, 2020. The earned PRSUs vest quarterly in 2021, subject to the executive officer’s continued employment on the vesting date, except in the case of a Qualifying Termination or a change in control in which case the units will vest immediately.
(4)
Represents either RSUs or Profits Interest Units, based on the officers’ election, granted in January 2019. Each Time-based award vests on December 31, 2021 and will be subject to the executive officer’s continued employment on the vesting date, except in the case of a Qualifying Termination. Dividend equivalents or distributions accrue on the Time-based awards and will be paid currently on unvested and vested units.
(5)
Represents either PRSUs or Profits Interest Units, based on the officer’s election, for the three-year performance period ending December 31, 2021. These awards are shown at the high performance level in the table above but were tracking between the threshold and target performance levels as of December 31, 2020. The number of units that will be earned for the performance period will depend on the level of TSR achieved over the applicable performance period. The earned units vest quarterly in 2022, subject to the executive 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 or change in control occurs during 2022, the previously earned units immediately vest. If the Qualifying Termination occurs during the performance period and is not in connection with a change in control, the number of units earned will be determined at the end of the performance period and vesting will be prorated based on days elapsed through the date of the Qualifying Termination. If the change in control occurs during the performance period, the performance period will
end on the date of the change in control. In such case, if the executive 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 as of the date of the change in control, all, a portion or none of the units will be earned and vested on the date of the change in control.
(6)
Represents PRSUs for the three-year performance period ending December 31, 2021. These awards are shown at the high performance level in the table above and were tracking above the high performance level levels as of December 31, 2020. The number of PRSUs that will be earned for the performance period will depend on the level of Relative TSR achieved over the applicable performance period. The earned PRSUs vest in four quarterly installments in 2022, subject to the executive 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 or change in control occurs during 2022, the previously earned PRSUs immediately vest. If the Qualifying Termination occurs during the performance period and is not in connection with a change in control, the number of units earned will be determined at the end of the performance period and vesting will be prorated based on days elapsed through the date of the Qualifying Termination. If the change in control occurs during the performance period, the performance period will end on the date of the change in control. In such case, if the executive 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 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.
(7)
Represents either RSUs or Profits Interest Units, based on the officer’s election, granted as of January 2020. Each Time-based Award vests on December 31, 2022 and will be subject to the executive officer’s continued employment on the vesting date, except in the case of a Qualifying Termination (subject to the officer’s compliance with certain restrictive covenants). Dividend equivalents or distributions accrue on the Time-based Awards and will be paid currently on unvested and vested units.
(8)(3)
Represents either PRSUs or Profits Interest Units, based on the officer’s election, for the three-year performance period ending December 31, 2022. These awards are shown at the high performance level in the table above but were tracking below the threshold performance level as of December 31, 2020.2021. The number of units that will be earned for the performance period will depend on the level of TSR achieved over the applicable performance period. The earned units vest quarterly in 2023, subject to the executive officer’s continued employment on the vesting date, except in the case of a Qualifying Termination (subject to the officer’s compliance with certain restrictive covenants) or a change in control. If the Qualifying Termination or change in control occurs during 2023, the previously earned units immediately vest. If the Qualifying Termination occurs during the performance period and is not in connection with a change in control, the number of units earned will be determined at the end of the performance period and vesting will be prorated based on days elapsed through the date of the Qualifying Termination. If the change in control occurs during the performance period, the performance period will end on the date of a change in control. In such case, if the executive 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 as of the date of the change in control, all, a portion or none of the units will be earned and vested on the date of the change in control.
(9)(4)
Represents either PRSUs or Profits Interest Units, based on the officer’s election, for the three-year performance period ending December 31, 2022. These awards are shown at the high performance level in the table above but were tracking betweenbelow the target and highthreshold performance levelslevel as of December 31, 2020.2021. The number of units that will be earned for the performance period will depend on the level of Relative TSR achieved over the applicable performance period. The earned units vest in four quarterly installments in 2023, subject to the executive 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 or change in control occurs during 2023, the previously earned units immediately vest. If the Qualifying Termination occurs during the performance period and is not in connection with a change in control, the number of units earned will be determined at the end of the performance period and vesting will be prorated based on days elapsed through the date of the Qualifying Termination. If the change in control occurs during the performance period, the performance period will end on the date of a change in control. In such case, if the executive 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 Relative TSR as of the date of the change in control, all, a portion or none of the units will be earned and vested on the date of the change in control.
(5)
Represents either RSUs or Profits Interest Units, based on the officer’s election, granted as of January 2021. Each Time-based Award vests on December 31, 2023 and will be subject to the executive officer’s continued employment on the vesting date, except in the case of a Qualifying Termination (subject to the officer’s compliance with certain restrictive covenants). Dividend equivalents or distributions accrue on the Time-based Awards and will be paid currently on unvested and vested units.
(6)
Represents either PRSUs or Profits Interest Units, based on the officer’s election, for the three-year performance period ending December 31, 2023. These awards are shown at the high performance level in the table above but were tracking below the threshold performance level as of December 31, 2021. The number of units that will be earned for the performance period will depend on the level of TSR achieved over the applicable performance period. The earned units vest quarterly in 2024, subject to the executive officer’s continued employment on the vesting date, except in the case of a Qualifying Termination or Retirement (subject to the officer’s compliance with certain restrictive covenants) or a change in control. If the Qualifying Termination, Retirement or change in control occurs during 2024, the previously earned units immediately vest. If the Qualifying Termination or Retirement occurs during the performance period and is not in connection with a change in control, the number of units earned will be determined at the end of the performance period and vesting will be prorated based on days elapsed through the date of the Qualifying Termination or Retirement. If the change in control occurs during the performance period, the performance period will end on the date of a change in control. In such case, if the executive officer is employed on the date of the change in control or has a Qualifying Termination or Retirement within 60 days before the 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 units will be earned and vested on the date of the change in control.
(7)
Represents either PRSUs or Profits Interest Units, based on the officer’s election, for the three-year performance period ending December 31, 2023. These awards are shown at the high performance level in the table above but were tracking below the threshold performance level as of December 31, 2021. The number of units that will be earned for the performance period will depend on the level of Relative TSR achieved over the applicable performance period. The earned units vest in four quarterly installments in 2024, subject to the executive officer’s continued employment on the vesting date, except in the case of a Qualifying Termination, Retirement or a change in control. If the Qualifying Termination, Retirement or change in control occurs during 2024, the previously earned units immediately vest. If the Qualifying Termination or Retirement occurs during the performance period and is not in connection with a change in control, the number of units earned will be determined at the end of the performance period and vesting will be prorated based on days elapsed through the date of the Qualifying Termination or Retirement. If the change in control occurs during the performance period, the performance period will end on the date of a change in control. In such case, if the executive officer is employed on the date of the change in control or has a Qualifying Termination or Retirement within 60 days before the 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 units will be earned and vested on the date of the change in control.
(8)
Mr. Insoft’s employment terminated effective January 1, 2022, and he vested in certain of his outstanding equity awards, in certain cases on a prorated basis, pursuant and subject to the terms of such awards and his Employment Agreement.
Stock Awards Vested for 20202021
The following table sets forth information regarding the vesting of stock awards for our named executive officers in 2020.2021. The awards that vested in 20202021 consist of Time-based RSUs that vested on December 31, 20202021 and Relative TSR-based Units and TSR-based Units for the 2017 – 20192018 — 2020 performance period that vested quarterly during 2020.2021.
| Name | | | Option Awards | | Stock Awards | | |
| | Option Awards | | Stock Awards | |
| Name | | | Number of
Shares Acquired
on Exercise
(#) | | Value Realized
on Exercise
($) | | Number of
Shares Acquired
on Vesting
(#)(1) | | Value Realized
on Vesting
($)(2) | | | Number of
Shares Acquired
on Exercise
(#) | | Value Realized
on Exercise
($) | | Number of
Shares Acquired
on Vesting
(#)(1) | | Value Realized
on Vesting
($)(2) | |
| | | | — | | | | | — | | | | | 272,227(3) | | | | | 8,596,797 | | | | �� | | — | | | | | — | | | | | 377,876(3) | | | | | 12,374,365 | | |
| Daniel J. Booth | | | | — | | | | | — | | | | | 145,196 | | | | | 4,585,253 | | | | | | — | | | | | — | | | | | 199,851 | | | | | 6,550,058 | | |
Steven J. Insoft | | | | — | | | | | — | | | | | 136,122 | | | | | 4,298,699 | | | | | | — | | | | | — | | | | | 187,504 | | | | | 6,144,963 | | |
| Robert O. Stephenson | | | | — | | | | | — | | | | | 127,048 | | | | | 4,012,152 | | | | | | — | | | | | — | | | | | 175,009 | | | | | 5,735,466 | | |
| Gail D. Makode | | | | — | | | | | — | | | | | — | | | | | — | | | | | | — | | | | | — | | | | | — | | | | | — | | |
(1)
Includes awards vested in 2020,2021, whether or not the underlying shares were issued before year end.
(2)
The value realized was based on the closing price of our stock as of the date the applicable award vested. For Profits Interest Units, reflects the value of an equal number of shares of common stock.
(3)
Includes 93,502103,311 shares deferred under our Deferred Stock Plan.
(4)
Mr. Insoft’s employment terminated effective as of January 1, 2022, and he vested in certain of his outstanding equity awards, in certain cases on a prorated basis, pursuant and subject to the terms of such awards and his Employment Agreement.
(4)
Reflects deferred cash compensation of $1,721,420$1,990,000 and deferred stock awards valued at $2,864,195$3,421,405 in respect of vested Performance-based Awards that vested in 2020,2021, based on the closing price of Omega common stock as of the applicable vesting date. The deferred cash compensation is included in the 20202021 compensation reported in the Summary Compensation Table above. The grant date fair value of the deferred stock awards was reported in the Summary Compensation Table as compensation in the year the award was granted.
(5)
Mr. Insoft’s employment terminated effective January 1, 2022.
(6)
Reflects deferred cash compensation included in the 20202021 compensation reported in the Summary Compensation Table above.
Employment Agreements
We entered into employment agreements with each of our executive officers that, as amended, expire December 31, 2023.2024. Omega’s general practice is to amend the employment agreement with its executive officers each year to extend their respective terms by one year.
Each employment agreement specifies the executive officer’s title and his current base salary, which may not be decreased during the term of the employment agreement. For a discussion of current base salaries, see “20212022 Annual Base Salaries.” Each employment agreement provides that the executive officer will be eligible to earn an annual bonus of specified percentages of annual base salary for threshold, target and high performance, respectively. For a discussion of actual bonus arrangements for 20202021 and 2021,2022, see “Compensation Discussion and Analysis — Our Compensation Decisions and Results for 20202021 and — Compensation Decisions for 20212022.”
If during the term of the employment agreement we terminate the executive officer’s employment without “cause” or if such executive officer resigns for “good reason,” we will pay such executive officer (a) severance equal to a specified multiple of the sum of his or her then current annual base salary plus such executive officer’s average annual bonus over the last three completed fiscal years.years and (b) 100% of the applicable monthly COBRA premium under the Company’s group health plan for the coverage elected by the executive and his or her spouse and eligible dependents, for the lesser of 18 months or until such coverage terminates. The multiples used to calculate the severance amount are as follows:
| Name | | | Multiple | |
| C Taylor Pickett | | | 3 times | |
| Daniel J. Booth | | | 2 times | |
Steven J. Insoft | | | 2 times | |
| Robert O. Stephenson | | | 2 times | |
| Gail D. Makode | | | 1.5 times | |
employees. However, if the executive officer remains employed by us through the date the term of the employment agreement expires, the noncompetition and non-solicitation provisions also expire on that date.
Potential Payments Upon Termination or Change in 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, 2020.2021. For equity awards, the amounts in the table below reflect the fair market value of the equity, and dividend equivalents in the case of PRSUs and distributions in the case of performance-based Profits Interest Units, that would be issuable as a result of the acceleration of the vesting of equity awards in connection with the events identified, based on the $36.32$29.59 per share closing price of Omega common stock at December 31, 2020.2021.
The occurrence of a change of control does not increase severance benefits or bonus payments that would otherwise be payable. However, for Time-based Units, vesting is accelerated 100% upon a Qualifying Termination that occurs after, or within 60 days before, a change in control. In addition, for Performance-based Units, vesting is accelerated upon a change in control but only as to those units actually earned based on performance through the date of the change in control. For a description of the vesting of Time-based and Performance-based Units, see “Compensation Discussion and Analysis — Components of Our Executive Compensation Program — Long-Term Equity Incentive Program.”
The term “Qualifying Termination” refers to death, disability, termination without “cause,” or resignation for “good reason.” For a description of circumstances constituting “cause” and “good reason” and related information, see the discussion under the heading “Employment Agreements.” In 2019, the Company adopted a retirement policy covering named executive officers effective for awards granted in 2020 or later. See “Compensation Discussion and Analysis — Other Matters — Retirement Policy.” None of our named executive officers would have been eligible for retirement benefits under such policy at December 31, 2021.
Potential Payments: Triggering Event as of December 31, 2021
| Name | | | Involuntary
Without
Cause or
Voluntary
for Good
Reason
($) | | | Death
($) | | | Disability
($) | | | Change in
Control
Without
Termination
($) | | | Involuntary
Without
Cause or
Voluntary for
Good Reason
Upon a
Change in
Control
($) | |
| C. Taylor Pickett: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Severance | | | | | 6,135,680 | | | | | | — | | | | | | — | | | | | | — | | | | | | 6,135,680 | | |
| Bonus | | | | | — | | | | | | 894,280 | | | | | | — | | | | | | — | | | | | | — | | |
| Accelerated Vesting of Equity Awards: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2020 Time-Based Units(1) | | | | | 761,666 | | | | | | 761,666 | | | | | | 761,666 | | | | | | — | | | | | | 1,142,499 | | |
2020-2022 Relative TSR-based
Units(2) | | | | | 3,808,643 | | | | | | 3,808,643 | | | | | | 3,808,643 | | | | | | 5,712,965 | | | | | | 5,712,965 | | |
2020-2022 TSR-based Units(2) | | | | | 4,900,691 | | | | | | 4,900,691 | | | | | | 4,900,691 | | | | | | 7,351,037 | | | | | | 7,351,037 | | |
2021 Time-Based Units(1) | | | | | 471,329 | | | | | | 471,329 | | | | | | 471,329 | | | | | | — | | | | | | 1,413,988 | | |
2021-2023 Relative TSR-based
Units(3) | | | | | 2,033,375 | | | | | | 2,033,375 | | | | | | 2,033,375 | | | | | | 6,100,125 | | | | | | 6,100,125 | | |
2021-2023 TSR-based Units(3) | | | | | 1,894,774 | | | | | | 1,894,774 | | | | | | 1,894,774 | | | | | | 5,684,323 | | | | | | 5,684,323 | | |
COBRA Premium(4) | | | | | 56,330 | | | | | | — | | | | | | — | | | | | | — | | | | | | 56,330 | | |
| Total Value: | | | | | 20,062,488 | | | | | | 14,764,758 | | | | | | 13,870,478 | | | | | | 24,848,450 | | | | | | 33,596,947 | | |
Chief Executive Officer Pay Ratio Disclosure
We are required by SEC rules to disclose the ratio of the total 20202021 compensation of our CEO, C. Taylor Pickett, to the total compensation for 20202021 of our median employee. We selected our median employee based on our December 31, 20202021 employee base and excluded approximately 24 employees of our subsidiary Connected Living Technology, LLC, which was formed in connection with our acquisition of substantially all of the assets of Connected Living, Inc. in November 2020.base. We identified our median employee based on compensation reported on Form W-2 for our 20202021 employees other than the CEO. We annualized the compensation reported on Form W-2 for six5 employees who joined the Company during the year. Mr. Pickett’s total compensation for 20202021 as reported in the Summary Compensation table above was $10,454,128$10,374,954 and the median employee’s total compensation for 20202021 calculated on the same basis was $206,360.$203,435. The ratio of Mr. Pickett’s total compensation to the total compensation of the median employee for 20202021 is 50.751 to 1.
Compensation of Directors
Our compensation for non-employee directors consists of the following components:
•
annual cash retainer of $50,000$75,000 payable in quarterly installments of $12,500$18,750 on or about August 15, November 15, February 15 and May 15; provided, however, that each director may elect each year to receive the retainer in common stock (or at the director’s option, a number of Profits Interest Units or deferred restricted stock units with equivalent value) to be included in the annual equity grant described below;
•
annual grant as of the date of the annual meeting of a number of shares of restricted common stock determined by dividing $150,000 by the fair market value per share of common stock on the date of grant (or at the director’s option, a number of Profits Interest Units with equivalent value)value or deferred restricted stock units), vesting based on the director’s continuing service until the date of the next succeeding annual meeting of stockholders (subject to 100% acceleration upon death, disability, change in control or any other event that in the discretion of the Compensation Committee is deemed to be an appropriate basis for acceleration);
•
Board Chair: $120,000 annual payment, of which 50% will be added to, and treated as part of, the annual equity grant;
•
Additional annual cash payments for committee service:
| | Committee | | Chair | | Member | | Committee | | Chair | | Member | |
| | Audit Committee | | | $ | 20,000 | | | | $ | 7,500 | | | Audit Committee | | | $ | 25,000 | | | | $ | 12,500 | | |
| | Compensation Committee | | | $ | 16,500 | | | | $ | 7,500 | | | Compensation Committee | | | $ | 20,000 | | | | $ | 9,000 | | |
| | Nominating and Corporate Governance Committee | | | $ | 15,000 | | | | $ | 4,500 | | | Nominating and Corporate Governance Committee | | | $ | 20,000 | | | | $ | 7,500 | | |
| | Investment Committee | | | $ | 15,000 | | | | $ | 4,500 | | | Investment Committee | | | $ | 20,000 | | | | $ | 7,500 | | |
•
$1,500 per meeting for attendance at each meeting of the Board of Directors or committee of the Board of Directors in excess of the following number of meetings during the year of a director’s term:
| | Board/Committee | | | Number of
Meetings | |
| | Board of Directors | | | | | 1110 | | |
| | Audit Committee | | | | | 6 | | |
| | Compensation Committee | | | | | 46 | | |
| | Nominating and Corporate Governance Committee | | | | | 45 | | |
| | Investment Committee | | | | | 45 | | |
Based on the recommendation of our Compensation Committee and a review of peer director compensation plans, on July 22, 2021, our Board of Directors approved revisions to our director compensation, effective as of the 2021 Annual Meeting, which are reflected in the program description above. These revisions included an (1) increase in the cash retainer portion of non-employee director compensation by $25,000 annually (so that in total it would equal $75,000 annually), (2) an increase in the Committee chair retainers to $25,000 for the Audit Committee Chair retainer and to $20,000 for each of the Compensation, Investment Committee and Nominating and Corporate Governance Committee Chair retainers, (3) an increase in the Committee member retainers to $12,500 annually for Audit Committee members, $9,000 annually for Compensation Committee members, and $7,500 annually for Investment Committee and Nominating and Corporate Governance Committee members, and (4) an increase in the number of threshold meetings required before excess meeting fees are paid to 10 meetings for the Board, six meetings for each of the Audit Committee and Compensation Committee, and five meetings for each of the Nominating and Corporate Governance Committee and Investment Committees.
The table below sets forth the compensation paid to our non-employee directors for 2020:2021:
20202021 Non-Employee Director Compensation
| Name | | Fees earned
or paid in cash
($)(1) | | Stock Awards
($)(1)(2) | | Option
Awards
($) | | Total
($) | | | Fees earned
or paid in cash
($)(1) | | Stock Awards
($)(1)(2) | | Option
Awards
($) | | Total
($) | |
| Kapila K. Anand | | | | 86,500 | | | | | 150,000 | | | | | — | | | | | 236,500 | | | | | | 28,000 | | | | | 270,000 | | | | | — | | | | | 298,000 | | |
| Kevin J. Jacobs | | | | 9,647 | | | | | 95,222 | | | | | — | | | | | 104,869 | | | | | | 25,049 | | | | | 244,951 | | | | | — | | | | | 270,000 | | |
| Craig R. Callen | | | | 121,000 | | | | | 260,010 | | | | | — | | | | | 381,010 | | | | | | 10,540 | | | | | 392,460 | | | | | — | | | | | 403,000 | | |
| Barbara B. Hill | | | | 12,000 | | | | | 200,005 | | | | | — | | | | | 212,005 | | | | | | 3,071 | | | | | 241,429 | | | | | — | | | | | 244,500 | | |
| Edward Lowenthal | | | | 80,000 | | | | | 150,012 | | | | | — | | | | | 230,012 | | | | | | 105,011 | | | | | 149,989 | | | | | — | | | | | 255,000 | | |
| Stephen D. Plavin | | | | 81,500 | | | | | 150,000 | | | | | — | | | | | 231,500 | | | | | | 106,511 | | | | | 149,989 | | | | | — | | | | | 256,500 | | |
Lisa C. Egbuonu-Davis(3) | | | | | 31,253 | | | | | 126,572 | | | | | — | | | | | 157,825 | | |
| Burke W. Whitman | | | | 60,500 | | | | | 150,000 | | | | | — | | | | | 210,500 | | | | | | 87,017 | | | | | 149,983 | | | | | — | | | | | 237,000 | | |
(1)
Ms. Anand, Mr. Callen, and Ms. Hill and Mr. Jacobs elected to receive their $50,000$75,000 annual retainers included in their annual equity grant oneffective the date of the 20202021 Annual Meeting. Also, effective the date of the 2021 Annual Meeting, Ms. Anand elected to defer her equity grant and Mr. Plavin elected to defer his cash compensation. For directors electing to receive their annual retainer in cash, “Fees earned or paid in cash” includes the quarterly installments earned in 2020.2021. Stock awards are not granted for fractional shares, and any residual value is paid in cash.
(2)
Represents the fair value dollar amount on the grant date of the equity grants set forth in the table below.
| Name | | | Grant Date | | | Shares/Units
Awarded(1) | | | Grant Date
Fair Value
($) | |
| Kapila K. Anand | | | | | 6/11/2020 | | | | | | 4,597 | | | | | | 150,000 | | |
| Kevin J. Jacobs | | | | | 10/22/2020 | | | | | | 3,173 | | | | | | 95,222 | | |
| Craig R. Callen | | | | | 6/11/2020 | | | | | | 8,025 | | | | | | 260,010 | | |
| Barbara B. Hill | | | | | 6/11/2020 | | | | | | 6,173 | | | | | | 200,005 | | |
| Edward Lowenthal | | | | | 6/11/2020 | | | | | | 4,630 | | | | | | 150,012 | | |
| Stephen D. Plavin | | | | | 6/11/2020 | | | | | | 4,597 | | | | | | 150,000 | | |
| Burke W. Whitman | | | | | 6/11/2020 | | | | | | 4,597 | | | | | | 150,000 | | |
(3)
Dr. Lisa C. Egbuonu-Davis was appointed to the Board of Directors effective July 30, 2021.
| Name | | | Grant Date | | | Shares/Units
Awarded(1) | | | Grant Date
Fair Value
($) | |
| Kapila K. Anand | | | | | 6/3/2021 | | | | | | 6,108 | | | | | | 232,000 | | |
| Kapila K. Anand | | | | | 7/21/2021 | | | | | | 1,014 | | | | | | 38,000 | | |
| Kevin J. Jacobs | | | | | 6/3/2021 | | | | | | 5,581 | | | | | | 211,966 | | |
| Kevin J. Jacobs | | | | | 7/21/2021 | | | | | | 881 | | | | | | 32,985 | | |
| Craig R. Callen | | | | | 6/3/2021 | | | | | | 9,301 | | | | | | 351,485 | | |
| Craig R. Callen | | | | | 7/21/2021 | | | | | | 1,100 | | | | | | 40,975 | | |
| Barbara B. Hill | | | | | 6/3/2021 | | | | | | 5,609 | | | | | | 211,964 | | |
| Barbara B. Hill | | | | | 7/21/2021 | | | | | | 791 | | | | | | 29,465 | | |
| Edward Lowenthal | | | | | 6/3/2021 | | | | | | 3,969 | | | | | | 149,989 | | |
| Stephen D. Plavin | | | | | 6/3/2021 | | | | | | 3,969 | | | | | | 149,989 | | |
| Lisa C. Egbuonu-Davis | | | | | 7/29/2021 | | | | | | 3,387 | | | | | | 126,572 | | |
| Burke W. Whitman | | | | | 6/3/2021 | | | | | | 3,949 | | | | | | 149,983 | | |
STOCKHOLDER PROPOSALS AND NOMINATIONS
December 24, 202120, 2022 is the date by which proposals of stockholders intended to be presented at the 20222023 Annual Meeting of Stockholders must be received by us for inclusion in our proxy statement and form of proxy relating to that meeting pursuant to Rule 14a-8 of the Exchange Act. Upon receipt of any such proposal, the Company will determine whether or not to include such proposal in the proxy statement and proxy in accordance with regulations governing the solicitation of proxies.
If a stockholder wishes to present a proposal at our annual meeting (outside of Rule 14a-8) or to nominate one or more directors without seeking access to our proxy materials, the stockholder must give timely advance written notice to us prior to the deadline for such meeting determined in accordance with our Bylaws, which were attached as Exhibit 3.1 to our Form 8-K filed with the SEC on June 9, 2017.January 27, 2022. In general, our Bylaws provide such notice should be addressed to our Secretary and be received at our principal executive office no fewer than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s Annual Meeting, except in certain circumstances. For purposes of our 20222023 Annual Meeting of Stockholders, such notice must be received not later than March 5, 20222023 nor earlier than February 3, 2022.2023. If a stockholder fails to comply with the foregoing notice provisions, proxy holders will not be allowed to use their discretionary voting authority on such matter should the stockholder proposal come before the 20222023 Annual Meeting.
Additionally, pursuant to the proxy access provisions of our Bylaws, a holder (or a group of not more than 20 holders) of at least 3% of our outstanding common stock continuously for at least three years is entitled to nominate and include in our proxy materials director nominees constituting up to the greater of two individuals or 20% of our Board of Directors, provided that the nominating holder(s) and the nominee(s) satisfy the requirements specified in our Bylaws, including by providing our Secretary with advance notice of the nomination not less than 120 days nor more than 150 days prior to the anniversary date of the date the Company commenced mailing of this year’s proxy materials for the Annual Meeting.
In addition to satisfying the foregoing requirements under our Bylaws, to comply with the universal proxy rules adopted by the SEC (once effective), stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than April 4, 2023.
In each case, whether seeking access to our proxy materials or not, our Bylaws set out specific requirements that such stockholders and written notices must satisfy. Any stockholder filing a written notice of nomination for director (whether pursuant to our proxy access Bylaw provision or not) must describe various matters regarding the nominee and the stockholder and the underlying beneficial owner, if any, including, among other things, such information as name, address, occupation, shares, rights to acquire shares and other derivative securities or short interest held, and any relevant understandings or arrangements between the stockholder and beneficial owner, if any. Any stockholder filing a notice to bring other business before a stockholder meeting must include in such notice the same type of information as well as, among other things, the text of the proposal or business and the text of the proposal or business and the reasons therefor, and other specified matters.
EXPENSES OF SOLICITATION
The total cost of this solicitation will be borne by us. In addition to use of the mail, proxies may be solicited by our directors, officers and regular employees of our Company personally and by telephone or facsimile. We may reimburse persons holding shares in their own names or in the names of the nominees for expenses such persons incur in obtaining instructions from beneficial owners of such shares.
DELINQUENT SECTION 16(a)16(A) REPORTS
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, 2020,2021, except as follows. Due to an administrative oversight, thenine Form 4 filings to report the following nine transactions were not filed on a timely basis: (i) the restricted stock units, profits interest unitsvesting of equity awards of Messrs. Pickett, Stephenson, Booth and OP units grantedInsoft as of March 31, 2020 to each of Messrs. Pickett, Booth, Insoft, Ritz and Stephenson,2021; (ii) the deferred stock units grantedshares of Common Stock sold by Mr. Insoft as of March 31, 2020 to Mr. Pickett, andJune 21, 2021; (iii) the issuanceshares of common stockCommon Stock purchased by Mr. Ballew pursuant to Messrs. Booth, Insoft, Ritz and Stephensonthe Company’s Employee Stock Purchase Plan as of March 31, 2020.July 1, 2021 and October 1, 2021; and (iv) the conversion of equity awards of Mr. Callen and Ms. Hill as of June 3, 2021.
HOUSEHOLDING
The SEC has adopted rules that permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy materials, with respect to two or more stockholders sharing the same address by delivering a single copy of the proxy materials to the stockholders at that address. This procedure, referred to as “householding,” reduces the volume of duplicate information stockholders receive and reduces mailing and printing costs. Some brokers household proxy materials by delivering a single set to multiple stockholders sharing an address, unless contrary instructions have been received from the affected stockholders.
Once you have received notice from your broker or us that they or we will be householding proxy materials to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive multiple copies of proxy materials, or if you are receiving multiple copies of the proxy materials and wish to receive only one copy, please notify your broker if your shares are held in a brokerage account, or notify us if you hold registered shares. You can notify us by sending a written request to Omega Healthcare Investors, Inc., 303 International Circle, Suite 200, Hunt Valley, MD 21030, or by calling our Investor Relations Department at 866-99-OMEGA.
OTHER MATTERS
The Board of Directors knows of no other business that may be validly presented at the Annual Meeting, but if other matters do properly come before the Annual Meeting, it is intended that the persons named in the proxy will vote on said matters in accordance with their best judgment.
C. Taylor Pickett
Chief Executive Officer
April 23, 2021
19, 2022
Hunt Valley, Maryland
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111234567812345678123456781234567812345678123456781234567812345678NAMETHE COMPANY NAME INC. - COMMON 123,456,789,012.12345THE COMPANY NAME INC. - CLASS A 123,456,789,012.12345THE COMPANY NAME INC. - CLASS B 123,456,789,012.12345THE COMPANY NAME INC. - CLASS C 123,456,789,012.12345THE COMPANY NAME INC. - CLASS D 123,456,789,012.12345THE COMPANY NAME INC. - CLASS E 123,456,789,012.12345THE COMPANY NAME INC. - CLASS F 123,456,789,012.12345THE COMPANY NAME INC. - 401 K 123,456,789,012.12345→x02 0000000000JOB #1 OF 21 OF 2 PAGESHARESCUSIP #SEQUENCE #THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.KEEP THIS PORTION FOR YOUR RECORDSDETACH AND RETURN THIS PORTION ONLYTO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) DateCONTROL #SHARESTo withhold authority to vote for anyindividual nominee(s), mark “For AllExcept” and write the number(s) of thenominee(s) on the line below.0 0 00 0 00 0 00000508051_1 R1.0.0.177For Withhold For AllAll All ExceptThe Board of Directors recommends you vote FORthe following:1. Election of DirectorsNominees01) Kapila K. Anand 02) Craig R. Callen 03) Barbara B. Hill 04) Kevin J. Jacobs 05) Edward Lowenthal06) C. Taylor Pickett 07) Stephen D. Plavin 08) Burke W. WhitmanOMEGA HEALTHCARE INVESTORS, INC.303 INTERNATIONAL CIRCLE, SUITE 200HUNT VALLEY, MD 21030Investor Address Line 1Investor Address Line 2Investor Address Line 3Investor Address Line 4Investor Address Line 5John Sample1234 ANYWHERE STREETANY CITY, ON A1A 1A1VOTE BY INTERNET - www.proxyvote.comUse the Internet to transmit your voting instructions and for electronic delivery ofinformation. Vote by 11:59 P.M. ET on 06/02/2021. Have your proxy card in hand whenyou access the web site and follow the instructions to obtain your records and to createan electronic voting instructionvotinginstruction form.During The Meeting - Go to www.virtualshareholdermeeting.com/OHI2021YouOHI2022You may attend the meeting via the Internet and vote during the meeting. Have theinformation thatthe informationthat is printed in the box marked by the arrow available and follow theinstructions.VOTEthe instructions.VOTE BY PHONE - 1-800-690-6903Use any touch-tone telephone to transmit your voting instructions. Vote byinstructions up until 11:59 P.M. ETon 06/02/2021.ET onJune 2, 2022. Have your proxy card in hand when you call and then follow theinstructions.VOTEthe instructions.VOTE BY MAILMark, sign and date your proxy card and return it in the postage-paid envelope we haveprovidedwehave provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way,Edgewood,NY 11717.The Board of Directors recommends you vote11717TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:KEEP THIS PORTION FOR proposals 2 and 3. For Against Abstain2.YOUR RECORDSTHIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLYD69964-P676251b. Craig R. CallenNominees:1a. Kapila K. Anand1e. Kevin J. Jacobs1c. Dr. Lisa C. Egbuonu-Davis1d. Barbara B. Hill1h. Burke W. Whitman1f. C. Taylor Pickett1g. Stephen D. Plavin2. Ratification of Independent Auditors Ernst & Young LLP forLLPfor fiscal year 2021.3.2022.3. Approval, on an Advisory Basis, of Executive Compensation.NOTE:ExecutiveCompensation.NOTE: Such other business as may properly come before the meetingthemeeting or any adjournment thereof.Pleasethereof.1. Election of DirectorsFor Against AbstainFor Against AbstainPlease sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor,administrator, or other fiduciary,please give full title as such. Joint owners should each sign personally.signpersonally. All holders must sign. If a corporation orpartnership,or partnership, please sign in full corporate orcorporateor partnership name by authorized officer.officer.OMEGA HEALTHCARE INVESTORS, INC.The Board of Directors recommends you vote FORthe following:
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