UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14A-101)
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
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MEDICAL PROPERTIES TRUST, INC.
(Name of Registrant as Specified in Its Charter)
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MPT
April 26, 2021
Dear Fellow Stockholder:
2020 will be a year that we will all remember for the rest of our lives. The world was struck with a pandemic of historic proportions which created great hardship for families, communities and countries around the world. To all those who suffered a loss, our hearts go out to you and your families. I also want to thank the tens of thousands of frontline workers in all of the hundreds of Medical Properties Trust2016 Proxy StatementAt hospitals worldwide for literally putting their lives on the Very Heart of Healthcare
MPTLetter from Our ChairmanApril 29, 2016Dear Fellow Shareholder:I am honoredline to keep healthcare available to people all around the world. We are proud to have youplayed a positive role as onehospitals have been critical in getting the world past this crisis and demonstrating the irreplaceable value they serve in keeping the world safe.
For those of us at Medical Properties Trust, 2020 will also be remembered as a pivotal year that proved our shareholdersvalue proposition and thank youpositioned us to continue our outperformance. We outperformed our peers in almost every financial metric. But what makes me most proud is the fact that the business plan and the groundwork we put in place for the trust you have placedpast almost twenty years was absolutely validated and reinforced during the pandemic.
During 2020, we invested in usapproximately $3.6 billion international and domestic assets including entering South America for the first time with our Colombia transaction. We established new relationships with operators further improving our concentration metrics and diversifying our portfolio. We achieved strong earnings in 2020 and finished the year with a total return to stockholders of 9% which outperformed the SNL US REIT Equity Index by purchasing shares14% and a total return to stockholders of 566% since our initial public offering in 2005 which outperformed the SNL US REIT Equity Index by 364% for the same period.
As we continue to grow and evolve as a business, we also continue to advance our commitment to strong corporate and social responsibility. Ongoing environmental initiatives in 2020 included incorporating ESG performance metrics into our executive compensation program, setting high environmental standards in our company. acquisition due diligence, and investing in environmentally responsible design features for our development projects. Given our long-term focus and ownership in our properties, we are working actively to invest in whole communities through financial and volunteer support of health, social, educational and community organizations. And we remain focused on ensuring MPT is a dynamic and supportive workplace for employees that encourages both personal and professional growth.
We take your trust seriously.
entered 2021 in a very strong financial position, well poised to rapidly capitalize on value-generative opportunities that are aligned with our proven strategy. We also value your thoughtsbegan the year by acquiring a $1 billion portfolio of select behavioral health facilities in the UK, both rapidly expanding our geographic presence and ideas. In addition to seeking your input via your vote, we regularly seek your views, either by contacting you directly or by making it easy for you to reach me or any of my fellow directors individually. These conversations contributeour exposure to the continuous improvementincreasingly critical behavioral health hospital segment. Looking ahead, our focus remains on hospitals that have a unique position in their healthcare system, and that we describecan support to become even more integral to the communities in this Proxy Statement.
which they operate.
We are providing you this proxy and Proxy Statement to enable you to give us your input by voting. We hope that you will attend our 20162021 annual shareholders meeting of stockholders, to be held on May 19, 2016.26, 2021. Details of the business to be conducted at the meeting are set forth in the accompanying Proxy Statement. In the event that you are unable to attend, however, we urge you to vote by mail, phone, or Internet, as described in the following material.I want to call your attention especially to the compensation provisions highlighted in our Compensation Discussion and Analysis: our plans both align pay with shareholder returns and include provisions that tie executives’ pay to numeric performance hurdles. We believe our plans have produced conservative results with excellent internal and external pay parity. I hope you agree.As a company whose founders are still on the job, we rely on much more than compensation and solid governance to drive performance — our reputations drive us too.We work hard to keep your trust. We thank
Thank you for your investment and we encourage your input.Best Regards,
continued support of our company.
Edward K. Aldag, Jr.
Chairman, President and Chief Executive OfficerProxy Statement and Notice of 2016 Annual Meetingi
Proxy Statement and Notice of 2021 Annual Meeting i |
Notice of 2016 Annual Meeting of Shareholders
April 29, 2016Meeting InformationDate and Time:May 19, 201610:30 a.m. Central TimeLocation:The Summit Club1901 6th Avenue NorthBirmingham, AlabamaAgendaTo elect the seven director nominees described in the enclosed Proxy Statement;To ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending December 31, 2016;To hold an advisory vote to approve executive officer compensation; andTo transact any other business that properly comes before the meeting.
26, 2021
Attached you will find a notice of annual meeting and the Proxy Statement, thatwhich contain further information about thesethe items to be voted on at the annual meeting and the annual meeting itself, including the different methods you can use to vote your proxy. Also enclosed are your proxy card, our 20152020 Annual Report on Form 10-K, and our 20152020 Annual Report to Shareholders.stockholders. Only shareholdersstockholders of record at the close of business on March 21, 2016,29, 2021 are entitled to receive notice of, to attend, and to vote at the annual meeting and any adjournment thereof.
EVEN IF YOU PLAN TO ATTEND IN PERSON, YOU ARE REQUESTED TO SIGN, DATE, AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING POSTAGE-PAID ENVELOPE, OR VOTE YOUR PROXY BY TELEPHONE OR INTERNET, AT YOUR EARLIEST CONVENIENCE. This will not prevent you from voting your shares in person if you choose to attend the Annual Meeting.
annual meeting.
Any proxy may be revoked at any time prior to its exercise at the Annual Meeting.
annual meeting.
If any of your shares of common stock are held by a broker, bank or other nominee, please follow the instructions you receive from your broker, bank or other nominee to have your shares of common stock voted.
A list of the shareholdersstockholders entitled to vote at the annual meeting will be open to examination by any shareholder,stockholder, for any purpose germane to the annual meeting, during ordinary business hours, for a period of at least ten days prior to the annual meeting at the principal executive offices of the Company in Birmingham, Alabama.By Order of the Board of Directors,Emmett E. McLeanExecutive Vice President, Chief Operating Officer, Treasurer and Secretaryii Medical Properties Trust
Information About the MeetingWhat is the purpose of the meeting?At the meeting, our shareholders will vote on the following proposals:1. To elect the seven director nominees described in the enclosed Proxy Statement;2. To ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending December 31, 2016;3. To hold an advisory vote to approve executive officer compensation; and4. To transact any other business that properly comes before the meeting.In addition, our management will report on our performance at the meeting and respond to appropriate questions from shareholders.Who is entitled to vote?The record date for the meeting is March 21, 2016. Only shareholders of record at the close of business on March 21, 2016, are entitled to receive notice of the meeting and to vote at the meeting the shares of our common stock that they held of record on that date. Each outstanding share of common stock entitles its holder to one vote on each matter voted on at the meeting. At the close of business on March 21, 2016, there were 237,714,694 shares of common stock outstanding and entitled to vote.Am I entitled to vote if my shares are held in “street name”?If you are the beneficial owner of shares held in “street name” by a brokerage firm, bank, or other nominee, your nominee is required to vote the shares in accordance with your instructions. If you do not give instructions to your nominee, your nominee will be entitled to vote your shares on routine items, but will not be permitted to do so on non-routine items. Your nominee will have discretion to vote on Proposal 2 (ratification of auditors) without any instructions from you, but your nominee will not have the ability to vote your uninstructed shares on Proposal 1 (election of directors), or Proposal 3 (advisory vote to approve executive officer compensation) on a discretionary basis. Accordingly, if you hold your shares in “street name” and you do not instruct your nominee how to vote on these proposals, your nominee cannot vote these shares and will report them as “broker non-votes,” and no votes will be cast on your behalf.How many shares must be present to conduct business at the meeting?A quorum must be present at the meeting in order for any business to be conducted. The presence at the meeting, in person or by proxy, of the holders of a majority of the shares of common stock outstanding on the record date, or 118,857,348 shares, will constitute a quorum. Abstentions and broker non-votes will be included in the number of shares considered present at the meeting for the purpose of determining whether there is a quorum.Proxy Statement and Notice of 2016 Annual Meetingiii
Information About the MeetingWhat happens if a quorum is not present at the meeting?If a quorum is not present at the scheduled time of the meeting, the holders of a majority of the shares present in person or represented by proxy at the meeting may adjourn the meeting to another place, date, or time until a quorum is present. The place, date, and time of the adjourned meeting will be announced when the adjournment is taken, and no other notice will be given unless the adjournment is to a date more than 120 days after the original record date or if, after the adjournment, a new record date is fixed for the adjourned meeting.How do I vote my shares?Voting by telephone or Internet. If you are a beneficial owner of shares held in “street name,” meaning your shares are held in the name of a brokerage firm, bank, or other nominee, you may be eligible to provide voting instructions to your nominee by telephone or on the Internet. A large number of brokerage firms, banks, and other nominees participate in a program provided through Broadridge Financial Solutions that offers telephone and Internet voting options. If your shares are held in “street name” by a brokerage firm, bank, or other nominee that participates in the Broadridge program, you may provide voting instructions to your nominee by telephone or on the Internet by following the instructions set forth on the voting instruction form provided to you.Voting by mail. If you are a registered shareholder, meaning you hold your shares in your own name, you may vote by properly completing, signing, dating, and returning the accompanying proxy card. The enclosed postage-paid envelope requires no additional postage if it is mailed in the United States or Canada. If you are a beneficial owner of shares held in “street name,” you may provide voting instructions to the brokerage firm, bank, or other nominee that holds your shares by properly completing, signing, dating, and returning the voting instruction form provided to you by your nominee.Voting in person at the meeting. If you are a registered shareholder and attend the meeting, you may deliver your completed proxy card in person. In addition, we will make written ballots available to registered shareholders who wish to vote in person at the meeting. If you are a beneficial owner of shares held in “street name” and wish to vote at the meeting, you will need to obtain a proxy form from the brokerage firm, bank, or other nominee that holds your shares that authorizes you to vote those shares.Can I change my vote after I submit my proxy?Yes, you may revoke your proxy and change your vote at any time before the polls are closed at the meeting in any of the following ways: (1) by properly completing, signing, dating, and returning another proxy card with a later date; (2) if you are a registered shareholder, by voting in person at the meeting; (3) if you are a registered shareholder, by giving written notice of such revocation to our Secretary prior to or at the meeting; or (4) if you are a beneficial owner of shares held in “street name,” by following the instructions given by the brokerage firm, bank or other nominee that holds your shares. Your attendance at the meeting will not by itself revoke your proxy.iv Medical Properties Trust
Information About the MeetingWhat happens if I do not specify on my proxy how my shares are to be voted?If you are a registered shareholder and submit a properly executed proxy but do not indicate any voting instructions, the proxy holders will vote as the Board of Directors recommends on each proposal.Will any other business be conducted at the meeting?As of the date hereof, the Board of Directors knows of no business that will be presented at the meeting other than the proposals described in this Proxy Statement. However, if any other proposal properly comes before the shareholders for a vote at the meeting, the proxy holders will vote the shares represented by your proxy in accordance with their best judgment.How many votes are required for action to be taken on each proposal?The seven director nominees will be elected to serve on the Board of Directors if they each receive a majority of the votes cast in person or represented by proxy at the meeting. This means that a director nominee will be elected only if the votes cast “for” his or her election exceed the votes cast “against” his or her election. The Board of Directors has adopted a director resignation policy whereby any director who fails to receive the required majority vote in an uncontested election is required to promptly tender his or her resignation to the Board for its consideration. The Ethics, Nominating and Corporate Governance Committee will then recommend to the full Board, and the Board will decide, whether to accept or reject the resignation offer or take other action. The Board of Directors will act on the recommendation of the Ethics, Nominating and Corporate Governance Committee within 90 days following certification of the election results. If you vote to “abstain” with respect to the election of one or more director nominees, your shares will not be voted with respect to the person or persons indicated, although they will be counted for the purpose of determining whether there is a quorum at the meeting.The affirmative vote of the holders of a majority of the shares of common stock represented in person or by proxy at the annual meeting and entitled to vote on the proposal is required for approval of each of Proposals 2 and 3.How will abstentions and broker non-votes be treated?Abstentions and broker non-votes will not be counted as votes for or against any proposal, and will not be included in calculating the number of votes necessary for approval of the proposal. In all cases, abstentions and broker non-votes will be considered present for the purpose of determining the presence of a quorum.Proxy Statement and Notice of 2016 Annual Meeting v
Information About the MeetingHow will proxies be solicited?The costs of soliciting proxies from our shareholders will be borne by the Company. We will solicit proxies on behalf of the Board of Directors by mail, telephone, facsimile, or other electronic means or in person. Certain of our directors, officers and other employees, without additional compensation, may participate in the solicitation of proxies. We will supply copies of the proxy solicitation materials to brokerage firms, banks, and other nominees for the purpose of soliciting proxies from the beneficial owners of the shares of common stock held of record by such nominees. We will request that such brokerage firms, banks, and other nominees forward the proxy solicitation materials to the beneficial owners and reimburse them for their reasonable expenses. In addition, we anticipate using MacKenzie Partners, Inc., 105 Madison Avenue, New York, NY 10016 as a solicitor at an initial anticipated cost of $7,500.How can I obtain additional copies of the proxy materials?If you wish to request extra copies of our Form 10-K, Annual Report or Proxy Statement free of charge, please send your request to Medical Properties Trust, Inc., 1000 Urban Center Drive, Suite 501, Birmingham, Alabama 35242, or visit our website at www.medicalpropertiestrust.com.How does35242.
By Order of the Board of Directors, recommend that I
Emmett E. McLean
Executive Vice President, Chief Operating Officer,
and Secretary
ii Proxy Statement and Notice of 2021 Annual Meeting |
How to Vote
Your vote is important. You may vote your shares if you were a stockholder of record on the proposals?FOR the electionMarch 29, 2021. If you are a registered owner you may vote using any of the seven nominees tofollowing methods:
www.voteproxy.com
1-800-PROXIES
(1-800-776-9437)
Complete, sign, date and return your enclosed proxy card.
At the Board of Directors;FORAnnual Meeting
If you own your shares through a bank, broker or other nominee, you should follow the ratificationvoting instructions provided by your bank, broker or other nominee.
Proxy Statement and Notice of 2021 Annual Meeting iii |
Proxy Summary |
Performance Highlights
2020 was a year filled with unprecedented challenges brought on by the onset of the appointmentCOVID-19 pandemic. As a global leader in hospital real estate finance and the second largest non-governmental owner of PricewaterhouseCoopers LLPhospital beds in the United States, Medical Properties Trust (“MPT” or “Company”) played a critical role in supporting our community hospitals and hospital real estate properties. While faced with considerable challenges on a global scale, our Company continues to deliver market-leading financial performance and total stockholder returns (“TSR”) as our independent registered public accounting firm for the year ending December 31, 2016; andFOR approvala direct result of the compensationsteady execution of our executive officers as disclosed in this Proxy Statement.vi Medical Properties Trust
strategy and business plan since our IPO under the leadership of our management team.
TableSignificant Value Creation and Proven Execution of ContentsMPT Strategy01 Proposal 1: Election of Directors02 Director Nominees06 Governance Information Regarding Our Board of Directors11 Proposal 2: Ratification of Independent Registered Public Accounting Firm12 Independent Auditor13 Audit Committee Report14 Proposal 3: Advisory Vote to Approve Executive Compensation15 Compensation Discussion and Analysis28 Executive Compensation28 Other Aspects of Our Executive Compensation Program30 Compensation Committee Report31 Compensation of Executive Officers33 Summary Compensation Table34 Grants of Plan-Based Awards35 Outstanding Equity Awards
Stockholder Value Creation | Value-Added Transactions | Strong Earnings Growth** | ||||||||||||
OVER $6.9 Billion SINCE IPO* | $3.6 Billion ACQUISITIONS CLOSED IN 2020 | 15% | 49% | |||||||||||
More than $3.7 Billion in value created since the beginning of 2019 |
$8.1 Billion in Acquisitions closed and 103% total pro forma gross asset growth(1) since the beginning of 2019 |
Year-over-year growth in net income |
Year-over-year growth in Normalized Funds from Operations (“FFO”)(2) | |||||||||||
| ||||||||||||||
Continuous Tenant Diversification (based on total pro forma gross assets(1)) | Sustainable Future | |||||||||||||
15.5 Years
Weighted-Average Lease and Loan Maturity | ||||||||||||||
| ||||||||||||||
30.0% Total Pro Forma Gross Assets(1) | 8
Consecutive Years of Dividend Growth | 5.9%
Dividend Growth in 2020 |
* as of December 31, 20152020
** for the year ended December 31, 2020
Sustained Total Stockholder Return Outperformance
36 Option ExercisesRelative to Healthcare and Stock VestedBroader REIT Industries
Medical Properties Trust TSR
|
| 9% |
| 89% |
| 161% |
| 566% | ||||||||||||||||||||
One-Year | Three-Year | Five-Year | Since-IPO | |||||||||||||||||||||||||
SNL US REIT |
|
Outperformed by 15% |
|
Outperformed by 68% |
|
Outperformed by 131% |
|
Outperformed by 274% | ||||||||||||||||||||
SNL US REIT |
|
Outperformed by 14% |
|
Outperformed by 73% |
|
Outperformed by 124% |
|
Outperformed by 364% |
(1) | Refer to Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2020 for our definition of total pro forma gross assets and a discussion of non-GAAP financial measures and GAAP reconciliation |
(2) | Refer to Appendix A for our definition of FFO and normalized FFO and a reconciliation of net income to FFO and normalized FFO |
iv Proxy Statement and Notice of 2021 Annual Meeting |
Proxy Summary |
Executive Compensation Highlights
36 Potential Payments Upon Termination Pay-for-Performance
Our executive compensation program is designed to drive and reward performance over the long term and on an annual basis. The foundation of our program is to motivate and reward executives to execute on our business strategy tied to rigorous and industry-leading performance goals that ultimately result in significant value created for our stockholders. The effectiveness of our executive compensation program is illustrated by the achievement of record performance, far surpassing our peers by any standard since 2018, including:
◆ | 3-year TSR of 89% outperforming the healthcare and broader REIT industries by 68% and 73%, respectively |
◆ | Accretive acquisitions of over $8 billion |
◆ | Growth in net income of 49% and growth in normalized FFO(1) of 75% |
We believe that our executive compensation program represents a balanced, pay-for-performance approach with only 6% of CEO’s compensation guaranteed in the form of base salary and the majority of our equity awards (67% for our CEO) tied to the achievement of operational goals and subject to adjustment based on relative TSR performance.
Furthermore, while a significant number of REITs adjusted their annual compensation programs in light of the COVID-19 pandemic by permitting more discretion and/or Change in Controlresetting goals, MPT maintained its original program based on our industry-leading rigorous goals37, demonstrating our commitment to our pay-for-performance compensation model.
(1) | Refer to Appendix A for our definition of FFO and normalized FFO and a reconciliation of net income to FFO and normalized FFO |
Key Compensation Practices
In addition to our strong commitment to pay-for-performance, our compensation program and practices also include the following key features:
Alignment with our business plan, which is built on accretive growth and strong balance sheet management |
Majority of executive compensation tied to the achievement of rigorous and industry-leading performance goals |
Majority of equity compensation is performance-based |
No new employment agreements since 2003 with evergreen provisions, single-trigger change of control provisions or excise tax gross-up provisions |
Appropriate balance between short-term and long-term incentive measures |
Transparency with our stockholders on our compensation program, decisions and practices |
Meaningful stockholder engagement and response to feedback |
No resetting of goals or discretionary adjustments to our annual incentive program in response to the COVID-19 pandemic |
Anti-hedging and anti-pledging policies |
Robust clawback policy that allows our Board of Directors (the “Board”) to recover cash and equity incentive compensation in the event of a financial restatement |
Significant share ownership requirements including 6x base salary for the CEO and 4x base salary for other named executive officers (“NEO”) |
Engagement of an independent compensation consultant to advise the Compensation Committee of the Board on executive compensation matters |
Strong Stockholder Support for our Executive Compensation Program Our 2020 Say-on-Pay vote received over 95% support from our stockholders, which is consistent with our average Say-on-Pay vote results over the past five years as compared to approximately 90% in the overall REIT industry. Our historical Say-on-Pay vote results affirm our stockholders’ consistent support for our Company’s executive compensation program. Over the past three years we have engaged with stockholders representing over 60% of our shares outstanding and based on the feedback we received and our strong Say-on-Pay support in 2020, we maintained the core elements of our compensation program and made certain enhancements to reinforce our | MPW 95.0% All REITs 90.2% 5-Year Average SoP Support | MPW 95.4% All REITs 90.3% 2020 SoP Support | ||||
pay-for-performance alignment. We continue to monitor and review our compensation program, engage with our stockholders and make modifications as appropriate to maintain a best-in-class compensation program. |
Proxy Statement and Notice of 2021 Annual Meeting v |
Proxy Summary |
Corporate Governance Highlights
Board Composition
We have taken meaningful steps to refresh our Board and have sought to create an effective mix of Directors39 Share Ownershipexperience, skill and diversity. The majority of Certain Beneficialour Board is independent with 25% female representation. Our Board also has a 13% minority component, with one Latina female member who is a native of Costa Rica.
Gender | Tenure | Age | ||
Key Director Skills
Executive Leadership Experience | Industry Experience | Financial & Accounting Expertise | Investment Expertise | |||
5 directors out of 8 | 6 directors out of 8 | 5 directors out of 8 | 5 directors out of 8 |
40 Section 16(a) Beneficial Ownership Reporting ComplianceCorporate Governance Policies41 Certain Relationships
We are committed to strong corporate governance and Related Person Transactions42 Additional Information
our Board has adopted robust governance practices and policies including the following:
◆ | History of and commitment to Board diversity and refreshment |
◆ | Proxy access |
◆ | Majority voting for uncontested director elections |
◆ | Lead independent director |
◆ | Active and responsive stockholder engagement |
◆ | Stockholders’ ability to amend Bylaws |
◆ | Anti-hedging and anti-pledging policies |
◆ | Unclassified Board of Directors |
◆ | Opted out of the Maryland Unsolicited Takeover Act (“MUTA”) |
◆ | No stockholder rights plan (“poison pill”) |
◆ | Regular executive sessions of independent Board members |
◆ | Mandatory director retirement age |
◆ | Executives require prior authorization to purchase or sell our shares |
◆ | Clawback policy |
vi Proxy Statement and Notice of 2021 Annual Meeting |
Proxy Summary |
Corporate Responsibility Highlights
As a global leader among healthcare real estate companies, we are committed to strong corporate and social responsibility, and we strive to make a positive difference through our operations. Our approach to corporate responsibility includes the following principles:
Environmental Sustainability Our company-wide environmental policy confirms our commitment to sustainability, and we have implemented numerous environmental initiatives at our corporate headquarters and through our development projects. |
◆ | Our corporate headquarters was Energy Star rated for 2017 and 2018, and energy saving initiatives in 2020 saved over 200,000 kWh compared to 2019 |
◆ | Established an Environmental Sustainability and Governance (“ESG”) Committee in 2019 to further drive environmental performance improvements across all aspects of our business |
◆ | Incorporated ESG performance metrics into our executive compensation program to reinforce our commitment to corporate responsibility |
◆ | Invest in environmentally responsible design features for our development projects |
◆ | Actively engage with our tenants to encourage environmental improvements across our hospital portfolio, substantially increasing our tenant engagement in 2020 |
◆ | Committed to fighting climate change through various initiatives |
Our People We are committed to providing a dynamic and supportive workplace for our employees that encourages both personal and professional growth through significant training and continuing education opportunities. |
◆ | 41% of all MPT employees are female and 40% of all MPT employees report to a female manager or director |
◆ | Established Company-wide human rights, and health and safety policies |
◆ | Provide regular training for our employees including anti-harassment, cybersecurity and data security awareness |
◆ | Improved the diversity of our workforce |
Our Communities Given our long-term focus and ownership of our properties, we believe that it is of critical importance to improve the communities in which we operate by providing financial and volunteer support for private and public non-profit programs aimed at improving communities and public health. |
◆ | Established a Charity and Community Support Committee through which we support health, social, educational and community organizations |
◆ | Contributed to approximately 200 different organizations in 2020 while increasing the magnitude of our contributions by over 50%, recognizing our fortunate financial position and those in dire need during the pandemic |
For more information regarding our sustainability commitments, please go to the Corporate Responsibility section of this Proxy Statement on page 15 and Notice of 2016 Annual Meeting viiour website: https://medicalpropertiestrust.com/corporate-responsibility/.*
* Throughout this Proxy Statement, we include several references to our website or materials available on our website. The information available on, or otherwise accessible through, our website is not incorporated by reference into this Proxy Statement.
Proxy Statement and Notice of 2021 Annual Meeting vii |
Proposal 1: Election of Directors
viii Proxy Statement and Notice of 2021 Annual Meeting |
Our Bylaws provide for the election of all directors at each annual meeting of shareholders.stockholders. The Board, of Directors, at the recommendation of the Ethics, Nominating and Corporate Governance Committee, proposes that the seveneight nominees listed below, all of whom are currently serving on our Board, be elected to serve as directors until the 20172022 annual meeting of shareholdersstockholders or until his or her successor istheir successors are duly elected and qualified.qualify. The Board of Directors does not know of any reason why any nominee would not be able to serve as a director. However, if any nominee were to become unable to serve as a director, the Board of Directors may designate a substitute nominee, in which case the persons named as proxies will vote for such substitute nominee.nominee at the 2022 annual meeting of stockholders. Alternatively, the Board of Directors may reduce the number of directors to be elected at the Annual Meeting.Board of Directors’ RecommendationThe Board of Directors recommends that you voteFOR each of the seven nominees listed below for director.1 Medical Properties Trustannual meeting.
Proxy Statement and Notice of 2021 Annual Meeting 1 |
Proposal 1: Election of Directors |
Proposal 1: Election Of Directors
Director Nominees
Edward K. Aldag, Jr. Chief Executive Officer and President (since 2003) Chairman of the Board of Directors (since 2004) Age 57 Director since 2004 Committees: Investment | The Board believes that Mr. Aldag’s position as the founder of our Company and his extensive experience in the healthcare and REIT industries make him highly qualified to serve as Chairman of our Board. Mr. Aldag launched Medical Properties Trust, Inc. (NYSE: MPW) in 2003 as the nation’s only real estate investment trust (REIT) focusing exclusively on hospitals. Today, Medical Properties Trust is the established leader in the hospital REIT sector, with approximately 430 facilities across the United States, Western Europe, South America, and Australia. Under Mr. Aldag’s leadership, MPT’s assets have grown to approximately $20 billion and the Company has become the second largest U.S.-based owner of hospital beds, with more than 43,000 in its portfolio. Mr. Aldag serves on the board of Children’s of Alabama, one of the nation’s leading hospitals for children, and as a director and member of the investment committee of the Alabama Children’s Hospital Foundation. He also serves as a board member for Mitchell’s Place, benefitting children with autism; the Birmingham Education Foundation, dedicated to increasing the number of students in Birmingham City Schools that are on the path to college, career and life readiness; the American Sports Medicine Institute, which works to understand, prevent and treat sports-related injuries; and serves as a member of the executive committee of the Birmingham Business Alliance. He is a guest lecturer at both the University of Alabama and the University of Alabama at Birmingham (UAB) and part of the UAB President’s Campaign Leadership Cabinet for a $1 billion campaign. In November 2017, he was selected as a member of the national advisory board of governors for Nareit (the National Association of Real Estate Investment Trusts). Mr. Aldag was appointed as a board member of Infracore SA in May 2019 and as a board member of Générale-Beaulieu Immobilière SA in June 2020. A native of Eufaula, Alabama, Mr. Aldag is a graduate of the University of Alabama, where he majored in finance. | |||||||
G. Steven Dawson Age 63 Director since 2004 Committees: Audit (Chair) Investment | The Board believes that Mr. Dawson’s substantial experience as a board member and committee chairman at other public REITs, along with his strong skills in corporate finance, strategic planning and public company oversight, make him a valued advisor and highly qualified to serve as a member of our Board and as Chairman of our Audit Committee. Since 2003, Mr. Dawson has primarily been a private investor in real estate, energy and financial services companies in the U.S. and Canada, and has served on the boards of numerous public and private REITs and financial services companies. During portions of 2011 – 2013, he served as President, Chief Executive Officer and Trustee of a privately held U.S./Canadian firm that owned and operated manufactured housing assets located in the U.S. From July 1990 to September 2003, he served as Chief Financial Officer and Senior Vice President – Finance of Camden Property Trust (and its predecessors) (NYSE: CPT), a REIT specializing in apartment communities based in Houston, Texas. Mr. Dawson currently serves on the board of directors and as the nominating and corporate governance committee chairman as well as a member of the audit and compensation committees for Cohen & Co. (NYSE American: COHN), an investment firm specializing in credit-related fixed income investments in the U.S. and Europe. Mr. Dawson also serves on the board of directors and as audit committee chairman of American Campus Communities (NYSE: ACC), a developer, owner and manager of student housing communities in the U.S. Mr. Dawson holds a degree in business from Texas A&M University and is a member of the Real Estate Roundtable at the Mays Graduate School of Business at Texas A&M University. |
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Proposal 1: Election of Directors |
R. Steven Hamner Executive Vice President and Chief Financial Officer (since 2003) Age 64 Director since 2005 Committees: Investment | The Board believes that Mr. Hamner’s position as a co-founder of our Company and his extensive experience in the real estate and healthcare industries and in the corporate finance sector make him highly qualified to serve as a member of our Board. In August and September 2003, Mr. Hamner served as our Executive Vice President and Chief Accounting Officer. From October 2001 through March 2004, he was the Managing Director of Transaction Analysis LLC, a company that provided interim and project-oriented accounting and consulting services to commercial real estate owners and their advisors. From June 1998 to September 2001, he was Vice President and Chief Financial Officer of United Investors Realty Trust, a publicly traded REIT. For the ten years prior to becoming an officer of United Investors Realty Trust, he was employed by the accounting and consulting firm of Ernst & Young LLP and its predecessors. Mr. Hamner received a B.S. in Accounting from Louisiana State University. | |||||||
Caterina A. Mozingo Age 53 Director since 2020 | The Board believes that Ms. Mozingo’s experience as a public accountant and consultant to real estate and healthcare companies and her experience providing tax consulting services to for profit and not-for-profit companies including publicly traded and privately held entities make her highly qualified to serve as a member of our Board. Ms. Mozingo is a tax partner with Aldridge, Borden & Company, P.C., a CPA firm that she joined in 1995. Her experience at Aldridge, Borden & Company includes a broad range of tax consulting and compliance services for businesses, individuals, fiduciaries and tax-exempt entities. She began her career in public accounting with Coopers & Lybrand, LLP. Ms. Mozingo is a member of the American Institute of CPAs, and the Alabama Society of CPAs where she serves on the State Taxation Committee. She also serves on the board of directors of the University of Alabama Federal Tax Clinic where she is President Elect. Ms. Mozingo graduated summa cum laude from the University of Alabama in Commerce and Business Administration before earning a Master of Tax Accounting degree. |
Proxy Statement and Notice of 2021 Annual Meeting 3 |
Proposal 1: Election of Directors |
Elizabeth N. Pitman Age 57 Director since 2018 Committees: Ethics, Nominating and Corporate Governance | The Board believes that Ms. Pitman’s experience as a healthcare lawyer and her experience providing counsel to publicly traded and privately owned hospitals and healthcare systems make her highly qualified to serve as a member of our Board. Ms. Pitman has been an attorney with Waller, Landen, Dortch & Davis, LLP, a leading provider of legal services to the healthcare industry, since 2015. From July 2013 to December 2013, she worked as corporate counsel for Vitera Healthcare Solutions, LLC, and prior to that, from October 2008 to July 2013, she served as general counsel at Success EHS, Inc., both providers of electronic health records and revenue cycle management solutions. Ms. Pitman has provided counsel to companies, hospitals and healthcare systems, surgery centers, physician groups and healthcare information technology companies on a variety of matters, including healthcare regulatory, privacy, data and cyber security compliance, technology licensing, and mergers and acquisitions. Ms. Pitman earned a B.S. in Accounting from the University of Alabama and a Juris Doctorate from the University of Alabama School of Law. She also is certified in Healthcare Privacy Compliance (CHPC). | |||||||
D. Paul Sparks, Jr. Age 58 Director since 2014 Committees: Audit Compensation (Chair) Investment | The Board believes that Mr. Sparks’s substantial experience in executive positions and his ability to guide companies through periods of growth and development makes him a valued advisor and qualified to serve as Chairman of the Compensation Committee and as a member of our Board. Mr. Sparks retired in January 2016 after a 32-year career in the energy industry. Prior to his retirement, he was Senior Vice President of Resource Development for Energen Resources Corporation (NYSE: EGN), holding various positions with Energen since 1989, including Senior Vice President of Operations from 2006 until 2012. During his 27 years at Energen, Mr. Sparks helped Energen grow from a small regulated utility to a top 20 independent oil and gas exploration and production company in the U.S. Mr. Sparks was responsible for the forward-looking strategy and implementation of valuing and developing the assets of Energen Resources Corporation. Prior to joining Energen, Mr. Sparks worked with Amoco Corporation, a global chemical and oil company, in Texas and Louisiana. Mr. Sparks has been active in a number of organizations: he is the former chairman of the New Mexico Oil and Gas Association, past advisor to the Gas Research Institute, a board member of the Independent Petroleum Association of America and past officer of the Society of Petroleum Engineers. He has authored a number of peer-reviewed publications and holds a patent in oil and gas technology. Mr. Sparks is a 1984 graduate of Mississippi State University with a degree in Petroleum Engineering. He is also a Bagley College of Engineering Distinguished Fellow and a member of the College’s Advisory Board. |
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Proposal 1: Election of Directors |
Michael G. Stewart Age 65 Director since 2016 Lead Independent Director Committees: Compensation Ethics, Nominating and Corporate Governance | The Board believes that Mr. Stewart’s legal background and extensive knowledge of healthcare, legal and corporate governance and addressing various healthcare issues, make him a valued advisor and highly qualified to serve as a member of our Board. Mr. Stewart is presently a private investor. He served as Executive Vice President, General Counsel and Secretary of the Company from 2005 – 2010. Mr. Stewart formerly worked with law firms Berkowitz, Lefkovits, Isom & Kushner (now Baker Donelson) and Constangy, Brooks & Smith, having a law practice that encompassed corporate, healthcare, litigation, employment and labor. Mr. Stewart also served as Vice President and General Counsel of Complete Health Services, Inc. (later, United Healthcare of the South). Throughout his professional career, he has provided private consulting services to physician groups and other healthcare providers. Mr. Stewart is the author of four novels that have been published by G.P. Putnam’s Sons and Random House. He is a graduate of Auburn University with a B.S. degree in Business Administration with an emphasis in Information Systems and received his Juris Doctorate degree from the Cumberland School of Law at Samford University. | |||||||
C. Reynolds Thompson, III Age 58 Director since 2016 Committees: Audit Compensation Ethics, Nominating and Corporate Governance (Chair) | The Board believes that Mr. Thompson’s significant executive experience and deep understanding of all aspects of real estate investment trusts make him a valued advisor and well qualified to serve as a member of our Board. Mr. Thompson has served as Chairman and Chief Investment Officer of Select Strategies Realty of Cincinnati (“Select”), a privately held real estate investment company that specializes in the development, acquisition, management and leasing of retail and mixed-use real estate in Midwestern and Southeastern U.S. since 2014. Select has sponsored retail investments in excess of $250 million and has provided management and leasing services for over four million retail square feet. Founded in 2005, the firm has 10 offices along with its Cincinnati headquarters. The company manages and leases retail assets in nine states as well as office and multifamily assets in Ohio and Kentucky. Prior to joining Select, Mr. Thompson was President and Chief Financial Officer (1997 – 2013) of Colonial Properties Trust, a $4 billion publicly traded REIT with a portfolio of multifamily, office, retail and mixed-use assets. During a 16-year career with Colonial, he also served as CEO, COO and CIO. He has extensive public company management, operating and investment experience having raised $950 million in equity, $2.5 billion in debt and completed acquisitions totaling $3 billion. Prior to this, Mr. Thompson worked in acquisitions and due diligence for Carr America Realty Corporation, a then publicly traded REIT. Mr. Thompson began his career as a commercial lending officer at SunTrust Bank (now Truist Bank). Mr. Thompson is a member of the Board of Visitors of the Culverhouse College of Business at the University of Alabama. He previously served on the Board of Governors of the National Association of Real Estate Investment Trusts, and the board of directors of the Birmingham Business Alliance and United Way of Central Alabama. Mr. Thompson holds a B.S. degree with Special Attainments in Commerce from Washington and Lee University. |
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Proposal 1: Election of Directors |
Proposal 1: Election Of DirectorsR. Steven HamnerAge 59Mr. Hamner is one of our founders and has served as our Executive Vice President and Chief Financial Officer since September 2003 and as a member of our Board of Directors since February 2005.The Board believes that Mr. Hamner’s position as a co-founder of our Company and his extensive experience in the real estate and healthcare industries and in the corporate finance sector make him highly qualified to serve as a member of our Board of Directors.In August and September 2003, Mr. Hamner served as our Executive Vice President and Chief Accounting Officer. From October 2001 through March 2004, he was the Managing Director of Transaction Analysis LLC, a company that provided interim and project-oriented accounting and consulting services to commercial real estate owners and their advisors. From June 1998 to September 2001, he was Vice President and Chief Financial Officer of United Investors Realty Trust, a publicly traded REIT. For the ten years prior to becoming an officer of United Investors Realty Trust, he was employed by the accounting and consulting firm Ernst & Young LLP and its predecessors. Mr. Hamner received a B.S. in Accounting from Louisiana State University.Robert E. Holmes, Ph.D.Age 74Dr. Holmes has served as a member of our Board of Directors since April 2004.The Board believes that Dr. Holmes’ position as a well-respected leader in the business community and his deep understanding of the corporate and economic challenges faced by public companies today make him a valued advisor and highly qualified to serve as a member of our Board of Directors and as Chairman of our Ethics, Nominating and Corporate Governance Committee.Dr. Holmes, our Lead Independent Director, retired in 2009 as Professor of Management, Dean, and Wachovia Chair of Business Administration at the University of Alabama at Birmingham School of Business, positions he held since 1999. From 1995 to 1999, he was Dean of the Olin Graduate School of Business at Babson College in Wellesley, Massachusetts. Prior to that, he was Dean of the James Madison University College of Business in Harrisonburg, Virginia, for 12 years. He is the co-author of four management textbooks, numerous articles, papers, and cases, and has served as a board member or consultant to a variety of business firms and non-profit organizations. He is past president of the Southern Business Administration Association, is actively engaged in AACSB International — the Association to Advance Collegiate Schools of Business, and served on the boards of the Entrepreneurial Center, Tech Birmingham, the Alabama Council on Economic Education, and other organizations. Dr. Holmes received a bachelor’s degree from the University of Texas at Austin, an MBA from University of North Texas, and a Ph.D. with an emphasis on management strategy from the University of Arkansas.3 Medical Properties Trust
Proposal 1: Election Of DirectorsMPTSherry A. KellettAge 71Ms. Kellett has served as a member of our Board of Directors since February 2007.The Board believes that Ms. Kellett’s experience as a board member and audit committee member at other public companies, along with her extensive experience in corporate finance and the financial sector generally, make her a valued advisor and highly qualified to serve as a member of our Board of Directors.Ms. Kellett is a certified public accountant and served as Senior Executive Vice President and Corporate Controller of BB&T Corporation (NYSE:BBT), a financial holding company, from 1995 until her retirement in August 2003. Ms. Kellett served as Corporate Controller of Southern National Corporation, a bank holding company, from 1991 until 1995, when it merged with BB&T Corporation. Ms. Kellett previously held several positions at Arthur Andersen & Co. She is currently a member of the board of directors and chair of the audit committee of Highwoods Properties, Inc., a self-administered REIT based in Raleigh, North Carolina (NYSE:HIW). Ms. Kellett also serves on the board of directors, as chair of the audit committee and on the compensation committee and the compliance committee of MidCountry Financial Corp., a privately held financial institution based in Macon, Georgia. Ms. Kellett has also served on the boards of the North Carolina School of the Arts Foundation, Piedmont Kiwanis Club, Senior Services, Inc., The Winston-Salem Foundation, the Piedmont Club, and the North Carolina Center for Character Education, and she is a member of the North Carolina Zoological Park Council, a gubernatorial appointment.William G. McKenzie (Gil)Age 57Mr. McKenzie is one of our founders and has served as a director since our formation.The Board believes that Mr. McKenzie’s position as a co-founder of our Company and his extensive experience in the healthcare industry make him a valued advisor and highly qualified to serve as a member of our Board of Directors.From September 2003 to January 2012, Mr. McKenzie served as the Vice Chairman of our Board of Directors, and he served as the Executive Chairman of our Board of Directors in August and September 2003. From May 2003 to August 2003, he was an executive officer and director of our predecessor. From 1998 to the present, Mr. McKenzie has served as President, Chief Executive Officer, and Chairman of the Board of Gilliard Health Services, Inc., a privately held owner and operator of acute care hospitals that Mr. McKenzie currently owns and co-founded in 1981. From 1996 to 1998, he was Executive Vice President and Chief Operating Officer of the Mississippi Hospital Association’s for-profit subsidiary, Diversified Services, Inc. (DSI). During his brief tenure at DSI, Mr. McKenzie founded and managed The Health Insurance Exchange, a mutual company, health insurance company and HMO. From 1994 to 1996, Mr. McKenzie was Senior Vice President of Managed Care and Executive Vice President of Physician Solutions, Inc., a physician practice management subsidiary he founded for Vaughan HealthCare, a 501(c)(3) healthcare company in Alabama. From 1981 to 1994, Mr. McKenzie was Hospital Administrator and Chief Financial Officer and held other management positions with Gilliard Health Services, Inc. Mr. McKenzie received a Master of Science in Health Administration from the University of Colorado and a B.S. in Business Administration from Troy University. He has served in numerous leadership capacities with the Alabama Hospital Association and local civic organizations, including eight years of service on the Board of Directors for the Montgomery Academy.Proxy Statement and Notice of 2016 Annual Meeting 4
D. Paul Sparks, Jr.Age 53Mr. Sparks has served as a member of our Board of Directors since September 2014.The Board believes that Mr. Sparks’ substantial experience in executive positions and his ability to guide companies through periods of growth and development make him a valued advisor and qualified to serve as Chairman of the Compensation Committee and as a member of our Board of Directors.Mr. Sparks retired in January 2016 after a 32-year career in the energy industry. He was Senior Vice President Resource Development for Energen Resources Corporation (NYSE: EGN) and served in various capacities with Energen since 1989, including Senior Vice President of Operations from 2006 until 2012. Mr. Sparks worked with Amoco Corporation, a global chemical and oil company, in Texas and Louisiana prior to joining Energen. During the last 27 years, Mr. Sparks helped Energen grow from a small regulated utility to a top 20 U.S. independent oil and gas exploration and production company. His personnel responsibilities grew during the same period from managing 40 to over 350 people while Senior Vice President of Operations. In his pre-retirement role, he was responsible for the forward-looking strategy and implementation of valuing and developing the assets of Energen Resources Corporation. Mr. Sparks is active in a number of organizations: he is the current chairman of the New Mexico Oil and Gas Association, past advisor to the Gas Research Institute, a board member of the Independent Petroleum Association of America and past officer of the Society of Petroleum Engineers. He has authored a number of peer-reviewed publications and holds a patent in oil and gas technology. Mr. Sparks is a member of the Sunrise Rotary and the Downtown Exchange Club and past chairman of Mountain Brook Athletics. He is a 1984 graduate of Mississippi State University with a degree in Petroleum Engineering. He is also a Bagley College of Engineering Distinguished Fellow.5 Medical Properties Trust
Proposal 1: Election of Directors
Governance Information Regarding Our Board of Directors
Annual Election of Directors
Our Board members stand for election each year. They serve until the next annual meeting of stockholders or until their respective successors are elected and qualified,qualify, subject to their prior death, resignation, retirement, death, disqualification, or removal from office. We do not have a classified board and our charter bars us, absent the approval of our shareholders,stockholders, from adopting the Maryland Unsolicited Takeover Act, which, among other things, permits the board of directors of a Maryland corporation to classify itself without a shareholderstockholder vote.
We maintain a majority vote standard and director resignation policy for uncontested director elections.
Independent DirectorsThe
A majority of our Board and each of our Audit Committee, the Compensation Committee and the Ethics, Nominating and Corporate Governance Committee is comprised of directors who qualify as independent under the standards of the New York Stock Exchange (the “NYSE”) listing standards require that a majority of our directors qualify as independent as defined by the NYSE. The NYSE listing standards also require that. Each year, we affirmatively determine that each director deemed independent by the NYSE’s definitionunder NYSE standards has no material relationship with us (either directly or as a partner, shareholderstockholder or officer of an organization that has a relationship with us). The Board of Directors has determined that five directors — six of the director nominees—G. Steven Dawson, Robert E. Holmes, Ph.D., SherryCaterina A. Kellett, William G. McKenzie, andMozingo, Elizabeth N. Pitman, D. Paul Sparks, Jr. — , Michael G. Stewart and C. Reynolds Thompson, III—have no relationship with us that would interfere with such person’stheir ability to exercise independent judgment as a member of our Board, and that they otherwise qualify as “independent” under the NYSE’s listingNYSE standards.
Independent Board LeadershipThree
Two of Medical Properties Trust’s fourour founders still serve as members of the Board of Directors.Board. Studies regularly show that founder-led companies outperform their peers.peers[i]. We are therefore fortunate not to have to rely exclusively on governance mechanisms to ensure that our Board exercises robust, effective, and independent leadership.
We preserve the benefits that founder-led companies enjoyhave by maintaining our founder, Mr. Aldag, as Chairman and Chief Executive officer.Officer. That dynamic is of particular importance in a founder-led company like ours, though we regularly review this structure and its alternatives.
We supplement our Board’s independence with a Lead Independent Director, currently Mr. Stewart, to whom the Board has given substantial powers and authorities. Our Lead Independent Director presides at all meetings of the Board at which the Chairman is not present and at all executive sessions of the independent directors. He serves as principal liaison between the Chairman and the independent directors, advising the Chairman on the quality, quantity and timeliness of the information presented to the Board. He advises the Chairman on the agendas for Board meetings and calls meetings of the independent directors if deemed necessary or appropriate. The Lead Independent Director also oversees the annual self-evaluation of the Board. The Board can also, at its discretion, add tosupplement the Lead Independent Director’s responsibilities.
We believe there are risks in relying exclusively on independent board chairs or lead independent directors for board independence. We therefore value — value—and have — have—strong independent committee chairs on our Board. We also believe that our founder-led culture enables robust and honest interactions from all of our Board members, each of whom brings important and diverse skill sets to their jobs. Finally, the Board completes an annual board evaluationself-evaluation process that is discussedinstituted by the Ethics, Nominating and Corporate Governance Committeeour Lead Independent Director and presented to the full Board.
[i]See, Chris Zook, “Founder-Led“Founder-Led Companies Outperform the Rest—Here’s Why” in Harvard Business Review, March 24, 2016.Proxy Statement and Notice of 2016 Annual Meeting 6
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Proposal 1: Election of Directors |
Proposal 1: Election of Directors
Risk Oversight
Our Board of Directors plays a central role in overseeing and evaluating risk.risks pertinent to our Company. While it is management’s responsibility to identify and manage our risk exposure to risk on a day-to-day basis, the Board routinely discusses these risks with management and actively oversees our risk-management procedures and protocols. The Board regularly receives reports from senior management on areas of material risk to the Company, including operational, financial, legal, regulatory and strategic risks. In addition, each of the Audit Committee, the Compensation Committee and the Ethics, Nominating and Corporate Governance Committee each exercises oversight and provides guidance relating to the particular risks within the purview of each committee, as well as making periodic reports to the full Board. Our Board of Directors also oversees risk by means of the required approval by our Board of significant transactions and other decisions, including material acquisitions or dispositions of property, material capital markets transactions, significant capital expendituresimprovement projects and important employment-related decisions.
Board Committees and Meetings
Our Board of Directors and our Board’sits four standing committees hold regular meetings. In 2015,2020, the Board of Directors met five times; the Audit Committee met fourfive times; the Ethics, Nominating and Corporate Governance Committee met two times; the Compensation Committee met fivethree times; and the Investment Committee met atacted by written consent in one instance. In 2020, each of the Board of Directors. In 2015, all directorsincumbent director attended at least 75% of (i) the total number of meetings of the Board andheld during the committees onperiod for which he or she was a director and (ii) the total number of meetings of all committees of the Board on which the director served during the periods that he or she served.
The Board of Directors regularly meets in executive session without any non-independent directors present. Dr. HolmesMr. Stewart has been designated as the Lead Independent Director and in that capacity presides at these executive sessions. Dr. HolmesMr. Stewart may be contacted directly by shareholdersstockholders at rholmes@medicalpropertiestrust.com. Themstewart@mpt.net. Our directors of the Company are encouraged to attend our annual meeting of shareholdersstockholders absent cause. All directors of the Company holding their position at the time of the meeting attended our 20152020 annual meeting of shareholders.
stockholders.
Committees of the Board of Directors
The Board of Directors delegates certain of its functions to its standing committees.The
Audit CommitteeG. Steven Dawson ChairmanSherry A. KellettD. Paul Sparks, Jr.The Board of Directors has determined that each member of the Audit Committee is financially literate and satisfies the additional NYSE independence requirements for audit committee members, and that each member of the Audit Committee qualifies as an “audit committee financial expert” under current Securities and Exchange Commission (“SEC”) regulations. The Board of Directors has also determined that service by Ms. Kellett and Mr. Dawson on other public companies’ audit committees has not impaired their abilities to effectively serve on our Audit Committee.The Audit Committee oversees (i) our accounting and financial reporting processes, (ii) the integrity and audits of our financial statements, (iii) our compliance with legal and regulatory requirements, (iv) the qualifications and independence of our independent auditors, and (v) the performance of our internal and independent auditors. The specific functions and responsibilities of the Audit Committee are set forth in the Audit Committee Charter, a copy of which is posted on our website at www.medicalpropertiestrust.com. The information on our website is not part of this Proxy Statement. The report of the Audit Committee appears on page 13 of this Proxy Statement.7 Medical Properties Trust
G. Steven Dawson Chairman D. Paul Sparks, Jr. C. Reynolds Thompson, III | The Board has determined that each member of the Audit Committee is financially literate and satisfies the additional NYSE independence requirements for audit committee members, and that Mr. Dawson and Mr. Thompson each qualifies as an “audit committee financial expert” under current Securities and Exchange Commission (“SEC”) regulations. The Board has also determined that service by Mr. Dawson and Mr. Thompson on other public companies’ audit committees has not impaired their abilities to effectively serve on our Audit Committee. The Audit Committee oversees (i) our accounting and financial reporting processes, (ii) the integrity and audits of our financial statements, (iii) our compliance with legal and regulatory requirements, (iv) the qualifications and independence of our independent auditors, and (v) the performance of our internal and independent auditors. The specific functions and responsibilities of the Audit Committee are set forth in the Audit Committee Charter, a copy of which is posted on our website at www.medicalpropertiestrust.com. The report of the Audit Committee appears on page 13 of this Proxy Statement. |
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Proposal 1: Election of Directors |
Proposal 1: Election of DirectorsThe Compensation CommitteeD. Paul Sparks, Jr. ChairmanIn 2015, L. Glenn Orr, Jr. served as Chairman of the Compensation Committee. Mr. Orr retired on April 3, 2016, and was replaced by Mr. Sparks. Pursuant to the NYSE listing standards, in determining the independence of the directors serving on the Compensation Committee, our Board of Directors considered all factors specifically relevant to determining whether a director has a relationship to us which is material to that director’s ability to be independent from our management in connection with the duties of a Compensation Committee member, including, but not limited to, such director’s source of compensation and whether such director is affiliated with us, one of our subsidiaries, or an affiliate of one of our subsidiaries.Dr. Robert E. Holmes Sherry A. KellettThe principal functions of the Compensation Committee are to evaluate the performance of our executive officers, review and approve the compensation for our executive officers, and review, administer and make recommendations to the full Board of Directors regarding our incentive compensation plans and equity-based plans. The Compensation Committee also reviews and approves corporate goals and objectives relevant to the Chief Executive Officer’s compensation, evaluates the Chief Executive Officer’s performance in light of those goals and objectives, and establishes the Chief Executive Officer’s compensation levels. The Compensation Committee makes all compensation decisions with respect to the Chief Executive Officer and all other executive officers. The Chief Executive Officer is frequently asked to provide the Compensation Committee with the information it needs to perform these functions as well as to provide input and insights regarding each executive officer’s performance. The specific functions and responsibilities of the Compensation Committee are set forth in more detail in the Compensation Committee’s Charter, a copy of which is posted on our website at www.medicalpropertiestrust.com. The report of the Compensation Committee appears on page 30 of this Proxy Statement.In 2015, the Compensation Committee continued its engagement of FTI Consulting, Inc., or FTI Consulting, a nationally recognized compensation consultant specializing in the real estate industry. FTI Consulting assisted the Compensation Committee in determining the amount and form of executive compensation. The Compensation Committee also considered information presented by FTI Consulting when reviewing the appropriate types and levels for the Company’s non-employee director compensation program. Information concerning the nature and scope of FTI Consulting’s assignments and related disclosure is included in “Compensation Discussion and Analysis” beginning on page 15 of this Proxy Statement. The Compensation Committee has assessed the independence of FTI Consulting, as required under the NYSE listing rules. The Compensation Committee has also considered and assessed all relevant factors, including, but not limited to, those set forth in Rule 10C-1(b)(4)(i) through (vi) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that could give rise to a potential conflict of interest. Based on this review, we are not aware of any conflict of interest that has been raised by the work performed by FTI Consulting. To bring additional perspective to our continually evolving and improving compensation plans, in 2016 the Compensation Committee retained Semler Brossy Consulting Group LLC (“Semler Brossy”), a nationally known compensation consulting firm as its new independent advisor.Proxy Statement and Notice of 2016 Annual Meeting 8
D. Paul Sparks, Jr. Chairman Michael G. Stewart C. Reynolds Thompson, III | Pursuant to the NYSE listing standards, in determining the independence of the directors serving on the Compensation Committee, our Board considered all factors specifically relevant to determining whether a director has a relationship to us which is material to that director’s ability to be independent from our management in connection with the duties of a Compensation Committee member, including, but not limited to, such director’s source of compensation and whether such director is affiliated with us, one of our subsidiaries, or an affiliate of one of our subsidiaries. Based on these factors, the Board determined that all of the Compensation Committee members are independent. The principal functions of the Compensation Committee are to evaluate the performance of our executive officers, review and approve the compensation for our executive officers, and review, administer and make recommendations to the full Board regarding our incentive compensation plans and equity-based plans. The Compensation Committee also reviews and approves corporate goals and objectives relevant to the Chief Executive Officer’s compensation, evaluates the Chief Executive Officer’s performance in light of those goals and objectives, and approves the Chief Executive Officer’s compensation. The Compensation Committee makes all compensation decisions with respect to the Chief Executive Officer and all other executive officers. The Chief Executive Officer is frequently asked to provide the Compensation Committee with the information it needs to perform these functions as well as to provide input and insights regarding each executive officer’s performance other than his own. The specific functions and responsibilities of the Compensation Committee are set forth in more detail in the Compensation Committee’s Charter, a copy of which is posted on our website at www.medicalpropertiestrust.com. The report of the Compensation Committee appears on page 39 of this Proxy Statement. In 2020, the Compensation Committee engaged Gressle & McGinley, a nationally recognized compensation consultant. Gressle & McGinley assisted the Compensation Committee in determining the amount and form of executive compensation. The Compensation Committee also considered information presented by Gressle & McGinley when reviewing the appropriate types and levels of compensation for the Company’s non-employee director compensation program. Information concerning the nature and scope of Gressle & McGinley’s assignments and related disclosure is included in “Compensation Discussion and Analysis” beginning on page 23 of this Proxy Statement. The Compensation Committee has assessed the independence of Gressle & McGinley, as required under the NYSE listing rules. The Compensation Committee has also considered and assessed all relevant factors including, but not limited to, those set forth in Rule 10C-1(b)(4)(i) through (vi) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that could give rise to a potential conflict of interest. Based on this review, the Compensation Committee has determined that Gressle & McGinley is independent and that their work has not raised any conflicts of interest. |
8 Proxy Statement and Notice of 2021 Annual Meeting |
Proposal 1: Election of Directors |
Proposal 1: Election of DirectorsThe Ethics, Nominating and Corporate Governance CommitteeDr. Robert E. HolmesChairmanThe Ethics, Nominating and Corporate Governance Committee is responsible for, among other things, recommending the nomination of qualified individuals to become directors to the full Board of Directors; recommending the composition of the Board’s committees to the full Board of Directors; periodically reviewing the performance and effectiveness of the Board of Directors as a body; and periodically reviewing our corporate governance guidelines and policies. In 2015, Ms. Kellett served as a member of this committee. The specific functions and duties of the Committee are set forth in its charter, a copy of which is posted on our website at www.medicalpropertiestrust.com.William G. McKenzieD. Paul Sparks, Jr.The Ethics, Nominating and Corporate Governance Committee will consider all potential candidates for nomination for election as directors who are recommended by the Company’s shareholders, directors, officers, or employees. All director recommendations must be made during the time periods provided and must provide the information required by Article II, Section 2.03 of the Company’s Second Amended and Restated Bylaws. All director recommendations should be sent to the Ethics, Nominating and Corporate Governance Committee, c/o Secretary, Medical Properties Trust, Inc., 1000 Urban Center Drive, Suite 501, Birmingham, Alabama 35242. The Committee will screen all potential director candidates in the same manner, regardless of the source of their recommendation. The Committee’s review will typically be based on the written materials provided with respect to a potential director candidate. The Committee will evaluate and determine whether a potential candidate meets the Company’s minimum qualifications and requirements, whether the candidate has the specific qualities and skills for directors, and whether requesting additional information or an interview is appropriate. While the Committee considers different perspectives and skill sets when evaluating potential director candidates, the Committee has not established a formal policy regarding diversity in identifying candidates. The Committee nevertheless regularly reviews the composition of the Board as part of the annual self-evaluation process and seeks nominees who, taken as a whole, possess the experience and skills necessary for the effective functioning of the Board.The Board of Directors has adopted the following minimum qualifications and specific qualities and skills for the Company’s directors, which will serve as the basis upon which potential director candidates are evaluated by the Ethics, Nominating and Corporate Governance Committee: (i) directors should possess the highest personal and professional ethics, integrity, and values; (ii) directors should have, or demonstrate an ability and willingness to acquire in short order, a clear understanding of the fundamental aspects of the Company’s business; (iii) directors should be committed to representing the long-term interests of our shareholders; (iv) directors should be willing to devote sufficient time to carry out their duties and responsibilities effectively and should be committed to serving on the Board of Directors for an extended period of time; and (v) directors should not serve on more than three boards of public companies in addition to our Board of Directors. The Ethics, Nominating and Corporate Governance Committee also takes into consideration the diversity of its Board, including breadth of experience and the ability to bring new and different perspectives to the Board.The Ethics, Nominating and Corporate Governance Committee recommended the nomination of all seven of the incumbent directors for re-election to the Board of Directors. The entire Board of Directors approved such recommendation.9Medical Properties Trust
C. Reynolds Thompson, III Chairman Elizabeth N. Pitman Michael G. Stewart | The Ethics, Nominating and Corporate Governance Committee is responsible for, among other things, recommending the nomination of qualified individuals to become directors to the full Board; recommending the composition of the Board’s committees to the full Board; periodically reviewing the performance and effectiveness of the Board as a body; and periodically reviewing our corporate governance guidelines and policies. The specific functions and duties of the Committee are set forth in its charter, a copy of which is posted on our website at www.medicalpropertiestrust.com. The Ethics, Nominating and Corporate Governance Committee will consider all potential candidates for nomination for election as directors who are recommended by the Company’s stockholders, directors, officers, or employees. All director recommendations must be made during the time periods provided and must provide the information required by Article II, Section 2.03 of the Company’s Second Amended and Restated Bylaws. All director recommendations should be sent to the Ethics, Nominating and Corporate Governance Committee, c/o Secretary, Medical Properties Trust, Inc., 1000 Urban Center Drive, Suite 501, Birmingham, Alabama 35242. The Committee will screen all potential director candidates in the same manner, regardless of the source of their recommendation. The Committee’s review will typically be based on the written materials provided with respect to a potential director candidate. The Committee will evaluate and determine whether a potential candidate meets the Company’s minimum qualifications and requirements, whether the candidate has the specific qualities and skills for directors, and whether requesting additional information or an interview is appropriate. While the Committee considers different perspectives and skill sets when evaluating potential director candidates, the Committee has not established a formal policy regarding diversity in identifying candidates. The Committee nevertheless regularly reviews the composition of the Board as part of the annual self-evaluation process and seeks nominees who, taken as a whole, possess the experience and skills necessary for the effective functioning of the Board. The Board has adopted the following minimum qualifications and specific qualities and skills for the Company’s directors, which will serve as the basis upon which potential director candidates are evaluated by the Ethics, Nominating and Corporate Governance Committee: • directors should possess the highest personal and professional ethics, integrity, and values • directors should have, or demonstrate an ability and willingness to acquire in short order, a clear understanding of the fundamental aspects of the Company’s business • directors should be committed to representing the long-term interests of our stockholders • directors should be willing to devote sufficient time to carry out their duties and responsibilities effectively and should be committed to serving on the Board for an extended period of time • directors should not serve on more than three boards of public companies in addition to our Board The Ethics, Nominating and Corporate Governance Committee also takes into consideration the diversity of its Board, including breadth of experience and the ability to bring new and different perspectives to the Board. The Ethics, Nominating and Corporate Governance Committee recommended the nomination of all eight of the incumbent directors for re-election to the Board. The entire Board approved such recommendation. |
Proxy Statement and Notice of 2021 Annual Meeting 9 |
Proposal 1: Election of Directors |
Proposal 1: Election of DirectorsMPTThe Investment CommitteePrior to 2016, the Investment Committee was comprised of all of our current directors.Edward K. Aldag, Jr.ChairmanThe Investment Committee has the authority to, among other things, consider and take action with respect to all acquisitions, dispositions, developments, and leasing of healthcare facilities in which our aggregate investment will fall between $10 million and $50 million.G. Steven DawsonR. Steven HamnerWilliam G. McKenzie
Edward K. Aldag, Jr. Chairman G. Steven Dawson R. Steven Hamner D. Paul Sparks, Jr. | The Investment Committee has the authority to, among other things, consider and take action with respect to all acquisitions, dispositions, developments, and leasing of healthcare facilities in which our aggregate investment is between $20 million and $100 million. |
Governance, Ethics, and Stockholder Communications
Corporate Governance Guidelines.Guidelines. In furtherance of its goal of providing effective governance of the Company’s business and affairs for the long-term benefit of its shareholders,stockholders, the Board of Directors has adopted Corporate Governance Guidelines. The Corporate Governance Guidelines are posted on our website at www.medicalpropertiestrust.com.
Code of Ethics and Business Conduct. The Company has adopted a Code of Ethics and Business Conduct, as approved by the Board, of Directors, which applies to all directors, officers, employees, and agents of the Company and its subsidiaries. The Code of Ethics and Business Conduct is posted on our website at www.medicalpropertiestrust.com.
We audit compliance with our Code of Ethics and Business Conduct Policy with each officer, director, and employee with a questionnaire that is required to be completed annually. We intend to disclose on our website any amendment to, or waiver of, any provision of the Code of Ethics and Business Conduct applicable to our directors and executive officers that would otherwise be required to be disclosed under the rules of the SEC or the NYSE.
Proxy Access Bylaw Provisions. In 2017, we amended our Bylaws to provide for “proxy access” for our stockholders. The proxy access provision permits a stockholder (or a group of up to 20 stockholders) that has owned at least 3% of our outstanding common stock for at least three years to nominate, and include in our proxy materials, up to the greater of two directors or 20% of the directors then in office; provided that the stockholders and the nominees satisfy the requirements specified in our Bylaws.
Stockholder and Interested Party Communications with the Board. Stockholders and all interested parties may communicate with the Board of Directors or any individual director regarding any matter that is within the responsibilities of the Board of Directors.Board. Stockholders and interested parties should send their communications to the Board, of Directors, or an individual director, c/o Secretary, Medical Properties Trust, Inc., 1000 Urban Center Drive, Suite 501, Birmingham, Alabama 35242. The Secretary will review the correspondence and forward any communication to the Board, of Directors, or the individual director, if the Secretary determines that the communication deals with the functions of the Board of Directors or requires the attention of the Board of Directors or the individual director. The Secretary will maintain a log of all communications received from shareholders.
stockholders.
We will provide, free of charge, hard copies of our Annual Report to Stockholders, our Form 10-K, our quarterly reportsAnnual Report on Form 10-Q, current reports10-K, our Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to these reports as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. Also available, free of charge, are hard copies of our Corporate Governance Guidelines and our Code of Ethics and Business Conduct along with the charters of our Ethics, Nominating and Corporate Governance Committee, our Audit Committee, and our Compensation Committee, and our Code of Ethics and Business Conduct.Committee. All of these documents are also available on our website at www.medicalpropertiestrust.com.Proxy Statement and Notice of 2016 Annual Meeting 10
10 Proxy Statement and Notice of 2021 Annual Meeting |
Proposal 2:Ratification of Independent Registered Public Accounting Firm
The Audit Committee of our Board of Directors has appointed PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm to audit our financial statements for the year ending December 31, 2016.2021. PricewaterhouseCoopers LLP served as our independent registered public accounting firm during the year that ended December 31, 2015.Board of Directors’ RecommendationThe Board of Directors recommends that you vote FOR the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending December 31, 2016.11Medical Properties Trust2020.
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Proposal 2: Ratification of Independent Registered Public Accounting Firm |
Proposal 2: Ratification of Independent Registered Public Accounting Firm
Independent Auditor
The Audit Committee of the Board of Directors has selected PricewaterhouseCoopers LLP (“PwC”) as the independent auditor to perform the audit of our consolidated financial statements for the year ending December 31, 2016.2021. PwC, an independent registered public accounting firm, also performed the audit of our consolidated financial statements for 20152020 and 2014.2019. The Board of Directors has approved the appointment of PwC as the Company’s independent registered public accounting firm for 20162021 based on the recommendation of the Audit Committee.
Representatives of PwC are expected to be present atparticipate in the Annual Meeting. They will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions from our shareholders.
stockholders.
The Audit Committee is directly responsible for the appointment, compensation, and oversight of our independent auditor. In addition to retaining the independent auditor to audit our consolidated financial statements, the Audit Committee may retain the independent auditor to provide other auditing services. The Audit Committee understands the need for our independent auditor to maintain objectivity and independence in its audits of our financial statements.
To help ensure the independence of the independent auditor, the Audit Committee has adopted a policy for the pre-approval ofthat all audit and non-audit services to be performed by its independent auditor. Pursuant to this policy, all audit and non-audit services to be performed by the independent auditor must be approved in advance by the Audit Committee. The Audit Committee approved all audit and audit-related services provided to us by PwC during the 20152020 and 20142019 calendar years.
The table below sets forth the aggregate fees billed by PwC for audit and non-audit services:Fees20152014Audit Fees$965,827$770,000Audit-Related Fees——Tax Fees386,774325,402All Other Fees——Total$1,352,601$1,095,402
Fees | 2020 | 2019 | ||||||
Audit Fees | $ | 1,110,000 | $ | 1,232,000 | ||||
Audit-Related Fees | - | - | ||||||
Tax Fees | - | - | ||||||
All Other Fees | - | - | ||||||
Total | $ | 1,110,000 | $ | 1,232,000 |
In the above table, in accordance with the SEC’s definitions and rules, “audit fees” are fees for professional services for the audit of a company’s financial statements included in the annual report on Form 10-K, for the review of a company’s financial statements included in the quarterly reports on Form 10-Q, and for services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements; “audit-related fees” are fees for assurance and related services that are reasonably related to the performance of the audit or review of a company’s financial statements; “tax fees” are fees for tax compliance, tax advice, and tax planning; and “all other fees” are fees for any services not included in the first three categories.Proxy Statement and Notice of 2016 Annual Meeting 12
12 Proxy Statement and Notice of 2021 Annual Meeting |
Proposal 2: Ratification of Independent Registered Public Accounting Firm |
Proposal 2: Ratification of Independent Registered Public Accounting Firm
Audit Committee Report
The Audit Committee is composed of three independent directors and operates under a written charter adopted by the Board, of Directors, a copy of which is available on our website. The Board of Directors has determined that each committee member is independent within the meaning of the NYSE listing standards.
Management is responsible for the Company’s accounting and financial reporting processes, including its internal control over financial reporting, and for preparing the Company’s consolidated financial statements. PwC, the Company’s independent auditor, is responsible for performing an audit of our consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (“PCAOB”) and for expressing an opinion as to whether the Company’s consolidated financial statements are fairly presented in all material respects in conformity with generally accepted accounting principles in the United States of America (“GAAP”). In this context, the responsibility of the Audit Committee is to oversee the Company’s accounting and financial reporting processes and the audits of the Company’s consolidated financial statements.
In the performance of its oversight function, the Audit Committee reviewed and discussed with management and PwC the Company’s audited consolidated financial statements as of and for the year ended December 31, 2015.2020. Management and PwC represented to the Audit Committee that the Company’s audited consolidated financial statements as of and for the year ended December 31, 2015,2020, were prepared in accordance with GAAP. The Audit Committee also discussed with PwC the matters required to be discussed by the Statement of Auditing Standards No. 16,1301, as amended (“AS No. 16”1301”), as adopted by the PCAOB. AS No. 161301 sets forth requirements pertaining to the independent auditor’s communications with the Audit Committee regarding the conduct of the audit.
The Audit Committee received the written disclosures and the letter from PwC required by PCAOB Ethics and Independence Rule 3526, Communication with Audit Committees Concerning Independence (“Rule 3526”). Rule 3526 requires the independent auditor to provide written and oral communications prior to accepting an initial engagement conducted pursuant to the standards of the PCAOB and at least annually thereafter regarding all relationships between the auditor and the Company that, in the auditor’s professional judgment, may reasonably be thought to bear on independence, and to confirm that they are independent of the Company within the meaning of the securities acts administered by the SEC. The Audit Committee discussed with PwC any relationships that may impact their objectivity and independence and satisfied itself as to the firm’s independence.
The members of the Audit Committee are not professionally engaged in the practice of accounting or auditing and, as such, rely without independent verification on the information provided to them and on the representations made by management and PwC. Accordingly, the Audit Committee’s oversight does not provide an independent basis to determine that management has maintained appropriate accounting and financial reporting processes or appropriate internal controls and procedures designed to assure compliance with the accounting standards and applicable laws and regulations. Furthermore, the reviews and discussions of the Audit Committee referred to above do not assure that the audit of the Company’s financial statements has been carried out in accordance with generally accepted auditing standards, that the Company’s audited consolidated financial statements are presented in accordance with GAAP, or that PwC is, in fact, independent.
Based on the Audit Committee’s review and the discussions described above, and subject to the limitations on its role and responsibilities described above and in the Audit Committee Charter, the Audit Committee recommended to the Board of Directors that the audited financial statements as of and for the year ended December 31, 2015,2020, be included in the Company’s 2015 Annual Report on Form 10-K for the year ended December 31, 2020 for filing with the SEC.
The foregoing report is provided by the undersigned members of the Audit Committee of the Board of Directors.G. Steven Dawson (Chairman) Sherry A. Kellett D. Paul Sparks, Jr.13Medical Properties TrustCommittee.
G. Steven Dawson (Chairman) | D. Paul Sparks, Jr. | C. Reynolds Thompson, III |
Proxy Statement and Notice of 2021 Annual Meeting 13 |
Proposal 3:Advisory Vote to Approve Executive Compensation
The Company asks that you indicate your support for our named executive officers’ compensation policies and practices as described in the “CompensationCompensation Discussion and Analysis” or (“CD&A,&A”) and the accompanying tables and related disclosures beginning on the next page 23 of this Proxy Statement. This proposal, commonly known as a “say-on-pay”“Say-on-Pay” proposal, is required pursuant to Section 14A of the Exchange Act. While the say-on-paySay-on-Pay vote is advisory and therefore non-binding on the Company, the Board of Directors,or the Compensation Committee, it gives our shareholdersstockholders the opportunity to express their views on our named executive officers’ compensation. Our Board and Compensation Committee members take the views of our stockholders seriously and act upontake these views; please see the summary of these actions beginning on page 15.views into consideration when making executive compensation decisions. This vote is not intended to address any specific item of compensation but rather the overall compensation of our executive officers and the policies and practices described in this Proxy Statement. We conduct an annual, non-binding say-on-paySay-on-Pay vote consistent with the recommendation of a majority of our shareholdersstockholders expressed by vote at our 2011 Annual Meeting.
2017 annual meeting of stockholders.
The Board of Directorsand the Compensation Committee will review the voting results of this advisory say-on-paySay-on-Pay vote and take them into consideration when structuring future executive compensation arrangements. The affirmative vote of the holders of a majority of the shares of common stock represented in person or by proxy at the 2021 Annual Meeting of Stockholders and entitled to vote on the proposal will be required for approval.
As we describe in further detail in the CD&A, we believe that the experience, abilities and commitment of our executive officers are unique in the business of investing in hospital real estate, and are therefore critical to the long-term achievement of our investment goals. Accordingly, the primary objectives of our executive compensation program are to retain our key leaders, attract future leaders and align our executives’ long-term interest with the interests of our shareholders.stockholders. The Board of Directors encourages you to carefully review the information regarding our executive compensation program contained in this Proxy Statement.Board
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We are a global leading provider of Directors’ Recommendationreal estate capital to hospitals, and the second-largest non-governmentalThe Board owner of Directors recommends that you vote FORhospital beds in the following resolution:“Resolved, thatUnited States. We are unique among REITs due to our exclusive focus on investing in hospital real estate. Our hospitals and our tenant operators provided high quality care to millions of patients in the shareholders advise that they APPROVEUnited States and abroad in 2020. Domestically, this included more than 490,000 admissions, two million ER visits and 300,000 surgeries.
We are committed to making a positive difference in the communities in which we operate, and we run, and encourage our tenant operators to run, all aspects of operations with environmental and social sustainability in mind. |
Environmental Sustainability
We recognize the compensationimportance of the Company’s named executive officers, as disclosed pursuantenvironmental stewardship and we demonstrate our commitment to sustainability through initiatives at our corporate operations, development projects and to the compensation disclosure rulesextent possible our triple-net or absolute-net lease properties. Materially all of our leases are triple-net or absolute-net leases, which means our tenants have ultimate responsibility for deciding when and how to implement environmentally sustainable practices at the Securitieshospitals they operate. However, we communicate regularly with our tenants regarding sustainability matters and Exchange Commission, which disclosure includes the Compensation Discussion and Analysis, the compensation tables, and any related material.”Proxy Statement and Notice of 2016 Annual Meeting 14
Compensation Discussion and AnalysisExecutive SummaryWe Are ListeningFor the past three years we have made continuousTherefore, our environmental sustainability initiatives focus on environmental improvements to our executive compensation planscorporate operations, environmental risk management in our development projects, and other important governance practices. Manydialoging with our tenants to deliver environmental improvements across our hospital portfolio. To understand the operations of, these have been direct resultsand environmental improvements needed at, our facilities, we work closely with third-parties to conduct physical inspections of our meetingsfacilities. We recognize that our operations generate waste and other conversations withuse energy, which results in greenhouse gas emissions, and that these actions have an impact on the environment; therefore, we are striving to reduce our shareholders —impact.
Corporate Operations
Our commitment to environmental protection and sustainability is confirmed in our company-wide environmental policy which can be found on our website: https://medicalpropertiestrust.com/corporate-responsibility/. Additionally, the two years sincefollowing highlights reflect several environmental sustainability features at our 2014 annual shareholder meeting,corporate headquarters:
Energy Star Rated | Over 200,000 kWh in Energy Savings in 2020 | Increased Recycling Rates | ||
corporate headquarters building in 2017 and 2018 | compared to 2019, achieved through energy efficient lighting and other energy saving initiatives | through introducing recycling program across a number of waste streams |
In 2019, we contacted shareholders holding 67%established a formal Environmental, Social and 50%Governance (“ESG”) Committee responsible for driving further environmental performance improvements across all aspects of our shares and met with 44% and 42%, respectively of those shareholders. Many ofbusiness. To ensure that we hold management accountable when it comes to fulfilling our meetings in 2015 and 2016 included all three of our Compensation Committee members and none of our executive officers. We have also made additional improvements in reaction to evolving norms and best practices in compensation and governance.This CD&A describes how our compensation plan design resulted in significantly reduced compensation for our Named Executive Officers (NEOs) in 2015, a year in which our shareholders suffered negative total shareholder return; it describes the many changessustainability commitments, we have made to our compensation and governance plans in recent years; and very importantly, reviews the many components of success that we have achieved to position your company for continued outperformance.In 2015,incorporated ESG performance metrics into our executive compensation rewards provedprogram beginning in 2020.
Tenant Relationships
Key to be directly and substantially linkedour ability to deliver sector-leading growth are the deep, strategic relationships we establish with our shareholders’tenants. Materially all of our leases are triple-net or absolute-net leases, which means our tenants have ultimate responsibility for deciding when and how to implement environmentally sustainable practices at the hospitals they operate. Our strong relationships with our tenants, and the work we do to support them and to promote environmental awareness, have led to notable environmental improvements in operations across our portfolio.
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Corporate Responsibility |
We actively engage with over 80% of our tenants regarding the environmental sustainability of their properties and operations. Initiatives include a dedicated sustainability section in our regular tenant questionnaires, specifically designed to encourage ongoing environmental performance improvement, and ongoing engagement meetings, during which sustainability initiatives are routinely discussed.
We undertake due diligence on all new and existing tenants, and evaluate environmental risks associated with all real estate investment transactions. In the event that our due diligence uncovers environmental contamination, we work with our tenants to mitigate any issues through:
◆ | Prior owner or tenant remediation commitments in accordance with regulatory requirements |
◆ | Property submission into a voluntary compliance or clean-up program |
◆ | The use of environmental or other insurance policies as recommended by outside counsel and risk management firms |
◆ | The use of third-party firms that conduct physical inspections of our facilities to understand the operations and environmental improvements needed |
SPOTLIGHT ON TENANT SUSTAINABILITY EFFORTS The following tenants, together representing over 80% of our revenue, are making progress in reducing their carbon footprint. Through our ongoing discussions regarding sustainability efforts, we are pleased to report the following environmental improvements, provided to us by our tenants: |
Steward Health Care By investing in various building improvements throughout their hospital portfolio (ventilation, plumbing, lighting etc.), Steward has been able to achieve: ◆ Greater than 15% annual energy savings ◆ Reduced electricity demands by 52.5 gigawatt-hours, which equates to taking 8,459 cars off the road for one year and by 8.6 million therms of natural gas, which equates to the sequestration of carbon dioxide by more than 1.2 million trees ◆ Eliminated CO2 emissions by 87,140 metric tons per year, resulting in annual savings in excess of $550,000 per year ◆ Reduced air pollution resulting in fewer deaths, hospital visits, and lost days of work and school, resulting in annual savings of $447,000 In addition to the positive impact to the environment, these improvements have resulted in significant cost savings: ◆ $3.8 million in energy savings in 2020 ◆ Additional $1 million savings in community health benefits annually ◆ $14.1 million in accumulated savings to date – sufficient to purchase 28 MRI Imaging machines ◆ $315,000 in energy cost savings per month – equivalent to revenue from 4,623 inpatient days per month |
Prospect Medical Holdings Prospect Medical has completed the following environmental improvements: ◆ Full site interior and exterior LED lighting upgrades ◆ High-efficiency air handling unit replacements or upgrades ◆ Roof replacements at certain MPT hospitals, resulting in more energy-efficient facilities For projects completed in 2020, these environmental improvements resulted in a reduction of over 11,000 carbon metric tons, including lighting upgrades at eleven facilities that accounted for the reduction of 9,000 carbon metric tons, equating to 12.6 million kWh savings per year |
MEDIAN MEDIAN is in the process of developing and implementing a sustainability initiative, which they have named “Green MEDIAN”. Strategies of the initiative include: ◆ LED lighting conversions across the hospital portfolio, which are nearly complete after spending several years and millions of euros to make this energy saving update ◆ Implementing natural gas-powered block-type thermal power station at various facilities across their portfolio ◆ Implementing photovoltaic systems on roof tops at various facilities across their portfolio ◆ Purchasing electric transport vehicles (used for patient transport) and installing electric vehicle charging stations ◆ Development of key performance indicators for measuring reductions in energy use and greenhouse gas emissions |
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Corporate Responsibility |
SPOTLIGHT ON TENANT SUSTAINABILITY EFFORTS (continued) |
Ernest Health Ernest Health has implemented or plans to implement various environmentally efficient and sustainability initiatives at the ongoing development facility in Bakersfield, California and the recently constructed facility in Elgin, South Carolina including: ◆ High efficiency LED lighting with occupancy sensors ◆ HVAC equipment designed to utilize economizer cycles to reduce energy consumption Additionally, at the Bakersfield, California facility, Ernest has plans to implement the following: ◆ 10 electric vehicle charging stations ◆ Landscaping that requires low irrigation and a 72-hour back-up water storage that will be tied in with the landscape irrigation system so that when flushing the system, the unused water is utilized for landscape irrigation ◆ Building will be solar ready, which means the design considers the necessary electrical panel space in the building and a pathway from that panel to the roof Additionally, at the Elgin, South Carolina facility, Ernest has implemented the following to generate over $3.7 million of annual cost savings: ◆ Enhanced lighting controls, including occupancy sensors to reduce energy consumption ◆ Light color (high albedo) roofing materials that reflect sunlight instead of absorbing heat to reduce heat gain and lower cooling costs ◆ Enhanced roof and wall insulation that reduce heat gain and lower cooling costs ◆ Glazing provided with high solar heat gain coefficient (SHGC) and high insulation values reducing heat gain and lowering cooling costs ◆ Large windows to enhance daylighting and view for staff and patients ◆ Building finishes made of recycled content, wherever possible ◆ Switched to no wax floors to reduce floor maintenance costs and to cut down on floor buffing that affects indoor air quality |
LifePoint Health LifePoint has implemented a number of environmental sustainability initiatives: ◆ Expected annual energy savings of $613,000 at certain MPT hospitals from projects executed in 2020 as part of Phase One of LifePoint’s Energy Optimization Program The optimization program included LED lighting retrofits, retro-commissioning of HVAC systems and infrastructure upgrades Energy profiles for all of MPT’s LifePoint hospitals are reviewed monthly to assist in identifying opportunities to drive down energy consumption ◆ Further optimization strategies are being considered in 2021 for other of MPT’s LifePoint campuses ◆ An energy analytics tool is actively rolling out to further analyze hospital facilities. Personnel are being educated to identify local energy conservation opportunities ◆ A national waste removal and recycling vendor has been chosen to consolidate operations and find recycling opportunities in the markets. This program will help improve visibility to the waste sent offsite in order to implement local reduction strategies, where possible |
Prime Healthcare Services Prime Healthcare Services has been installing combustion-free, solid-oxide fuel cells to significantly lower energy usage including: ◆ Two fuel cell projects installed at MPT-owned California locations, expected to save more than $12 million over the length of the 20-year power purchase agreement ◆ Fuel cell projects expected to reduce carbon dioxide emissions over the life of the contracts by a total of 51 million pounds ◆ Other energy-saving projects include: The addition of variable frequency water chillers and hot water heaters at a number of hospitals and related economizing steps, resulting in annualized cost savings of over $398,000 The replacement of high-pressure sodium lighting in the parking lot at Providence Medical Center in Kansas City, Missouri, with new energy-efficient LED lighting, resulting in annualized cost savings of over $96,000 |
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Corporate Responsibility |
SPOTLIGHT ON TENANT SUSTAINABILITY EFFORTS (continued) |
Surgery Partners Surgery Partners incorporated the following sustainability features in the development of their Idaho Falls Community Hospital: ◆ Water saving flow restrictors on sinks, showers, and toilets that save 30%-60% more water compared to fixtures in most older hospitals ◆ All air handling units, except those serving the surgery suites, are variable volume air units which save approximately 35% of the horsepower required to operate older constant volume air units. Air units for the surgery suites are equipped with an unoccupied mode that reduces energy usage as well ◆ Chillers with a low electricity vs. capacity ratio of 0.55 KW/Ton ◆ Boilers with a minimum 85% efficiency ratio, compared to 70% efficiency for boilers at most older hospitals ◆ LED lighting throughout the facility that reduces the lighting load by at least 50% over incandescent lighting ◆ Installed electronic building automation systems to allow the mechanical, electrical, and plumbing equipment to operate effectively and efficiently without intervention from the engineering staff ◆ Many of the building components for floors, walls and ceilings utilize recycled material |
Circle Health Circle Health has communicated to us the following, which indicate the initiatives Circle Health may be implementing: ◆ Reporting of Carbon Reduction Commitment under the Streamlined Energy & Carbon Reporting (SECR) scheme ◆ Reporting under the Energy Savings Opportunity Scheme ◆ Group-wide energy reduction campaign, including: Smart selection of energy efficient replacement equipment within the capital process Remote connection and optimisation of hospital Building Management Systems (BMS) Synchronising BMS timeclocks with hours of work ◆ Voltage Optimisation and Power Factor Correction across sites to ensure electrical supply loading is efficient ◆ Reporting on energy consumption across the company ◆ Improve the efficiency of waste management processes through monitoring and reporting ◆ Ensure that new capital investment incorporates group environmental requirements as far as possible ◆ Leak-testing of refrigerant gas systems and reporting on gas use across the estate to enable reduction of refrigerant gas impact ◆ Inspection of all oil storage equipment across the estate ◆ Working towards making an electric vehicle point charging solution available to all sites |
Infracore Infracore signed a cantonal commitment with Swiss Medical Network (“SMN”), its tenant operator, to reach 20% increase in energy management efficiency (consumption and emissions) over the next 10 years. Additionally, Infracore has implemented various energy saving measures and commitments in all new buildings and construction projects, executed according to the state-of-the-art energy saving recommendations that included: ◆ Reduced energy use for space heating, cooling and water heating ◆ Reduced electricity use for lighting ◆ Sustainable solutions implemented such as solar panels ◆ Continuous heavy investments by SMN into the latest medical equipment in all hospitals of the group to optimize energy and water consumption |
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Corporate Responsibility |
Climate Change Risk
As part of our commitment to environmental sustainability, we also consider climate change related risks to our business. Extreme weather and changes in precipitation and temperature as a result of climate change, could cause physical damage to, or a change in demand for, our properties. To mitigate these risks, we will continue to collaborate with our tenants and other relevant stakeholders to ensure we are sustainably managing our business and to minimize our impact on the environment.
MPT is committed to identifying, mitigating, and managing the risks of climate change and the related risks to our business. We recognize that our assets are increasingly vulnerable to climate related forces including: rising sea levels, drought, earthquakes, and violent storms.
In an effort to address the increasing risk of climate change to our business, we do the following: ◆ Robust enterprise risk management and strategic planning ◆ Our governance structure provides the necessary opportunities for the Board and executive leadership to exercise their oversight responsibilities with respect to strategy and risk, including the impact of climate change on our business ◆ Our risk management team is responsible for managing operational risk for our business, while our executives are responsible for enterprise risk management ◆ Portfolio diversification: An inherent strategy for mitigating climate risk is the diversified footprint of our portfolio ◆ Work with our tenants to build in resiliency considerations into asset development projects during the planning and construction process. We invest additional funds for upgrades to our properties to help mitigate the effects of climate change in the long term ◆ Commit to providing our tenants with additional funds for capital projects to improve resiliency of our properties including roof replacements, placement of storm windows and elevation of generators ◆ Monitor the environmental performance of our tenants. Tenant environmental initiatives to reduce the contribution to global carbon emissions at the properties we own include, but are not limited to, supporting the development of new renewable energy supplies, designing and constructing environmentally friendly properties that use less water and energy to operate ◆ Pay attention to local risks and hazards including identifying zones likely to experience flooding and earthquakes ◆ Place insurance for our properties at our corporate level to ensure all of our assets are properly insured |
Proxy Statement and Notice of 2021 Annual Meeting 19 |
Corporate Responsibility |
Our Communities
We provide financial experience,and volunteer support for private and public non-profit programs aimed at improving the communities we operate in and public health. Our efforts are coordinated by our Charity and Community Support Committee.
We contributed to approximately 200 non-profit organizations in 2020 |
Through our charitable contributions, MPT has made a meaningful difference to our communities and the lives of many people around the world. One charity that holds a special place in our hearts is Children’s of Alabama:
CHARITY SPOTLIGHT: CHILDREN’S OF ALABAMA
About Children’s of Alabama
Since 1911, Children’s of Alabama has provided specialized medical care for ill and injured children. Ranked among the best pediatric medical centers in the nation by U.S. News & World Report, Children’s of Alabama provided care for youngsters from every county in Alabama, 42 other states and seven foreign countries last year, representing more than 677,000 outpatient visits and more than 15,000 inpatient admissions.
With more than 3.5 million square feet, it is one of the largest pediatric medical facilities in the United States. Children’s of Alabama offers inpatient and outpatient services across its Russell Campus on Birmingham’s historic Southside with significantly reduced compensation matching our shareholder returns. We believeadditional specialty services provided at Children’s South, Children’s on 3rd, and in Huntsville and Montgomery. Primary care is provided at more than a dozen medical offices in communities across central Alabama. Children’s of Alabama is the only medical center in Alabama dedicated solely to the care and treatment of children. It is a private, not-for-profit medical center that when our shareholders consider this linkage, alongserves as the primary site of the University of Alabama at Birmingham (UAB) pediatric medicine, surgery, psychiatry, research and residency programs.
MPT’s Involvement with Children’s of Alabama
Beginning in 2010 with a small contribution to Children’s of Alabama essential Pastoral Care program, MPT’s philanthropic engagement with the hospital has spurred multiple strategic investments across the hospital’s entire platform of care. Highlighted by significant gifts towards capital campaigns for transformative new facilities, the life-saving critical care transport program, and most prominently, the hospital’s pediatric cancer program, MPT is now the 5th largest donor in Children’s of Alabama’s 110-year history.
MPT’s unique perspectives on the challenges faced by hospitals every day have helped amplify the impact of its gifts on the hospital’s mission. While MPT’s long-time support of the hospital’s pediatric cancer center advances improved cancer outcomes, our latest gift to Children’s of Alabama is underwriting the ground-breaking effort to sequence the genome of pediatric patients with undiagnosed / rare diseases. MPT is providing funds to Children’s of Alabama, and hope for children and their families.
20 Proxy Statement and Notice of 2021 Annual Meeting |
Corporate Responsibility |
Human Capital Management
To support the tremendous growth of our Company, we have grown our team with the addition of nearly 30 new employees in 2020. Today, we are a team of approximately 120 professionals, and we are committed to providing a challenging and dynamic work environment and to supporting professional and personal growth and development needs. ◆ Our commitment to protecting the rights of our employees, and to keeping them safe, is confirmed in our Company-wide human rights policy and health and safety policy, which both can be found on our website: https://medicalpropertiestrust.com/corporate-responsibility/ ◆ All employees are also required to adhere to the highest ethical standards, including those confirmed in our Company-wide anti-bribery and corruption policy which can be found on our website: ◆ We are committed to a diverse and inclusive workforce, steadily increasing the diversity of our workforce with an added commitment to support female leaders and working parents | Competitive Employee Benefits Top-of-the-line insurance coverage including Health, 401(k) Plan with employer matching Stock awards Monthly Fitness Allowance for employees with gym memberships and/or training programs Reimbursement for concierge physician Employee Assistance Program at no cost to employee Open, collaborative workspaces Personnel development with manager to plan trainings and conferences, including off-site corporate retreats Additional paid time off day annually for charitable work |
◆ | We offer a competitive benefits package and equal employment opportunities designed to help recruit and retain high-quality, motivated employees, and to ensure their health and security |
◆ | We establish tailored professional development goals for every employee. We provide customized leadership training for employees who are moving into management roles, and we offer significant training and continuing education opportunities. We pay all expenses when employees attend continuing education courses in order to maintain their professional certifications. We also pay all expenses when employees attend seminars and workshops on topics related to their job responsibilities |
◆ | As part of our ongoing commitment to data privacy and security, we also conduct cybersecurity and security awareness training. This training is part of the employee onboarding process and is scheduled quarterly for our entire workforce |
◆ | We engage legal experts to provide training sessions on matters pertaining to (i) harassment in the workplace, (ii) Family and Medical Leave Act basics, (iii) legal issues in interviewing, (iv) promoting diversity in the workplace and (v) discrimination, disability and documentation |
◆ | As we have done periodically in the past, in 2021 we issued an anonymous, independent employee engagement survey covering 100% of employees, that covered topics such as Company culture, work environment, training and development and overall job satisfaction. The survey will be issued on an annual basis going forward. The results of the surveys will be presented to management and to the Board and will be used to assess potential human capital risks and identify opportunities for deeper employee engagement |
◆ | We are firmly committed to providing equal opportunity in all aspects of employment and absolutely forbid discrimination against any person or harassment, intimidation or hostility of any kind, including on the basis of race, religion, color, sex, sexual orientation, sexual or gender identity, age, disability, national origin, military or veteran status, or retaliation against any other characteristic or conduct that may be protected by applicable local, state or federal law. We provide regular training on anti-harassment policies |
Proxy Statement and Notice of 2021 Annual Meeting 21 |
Corporate Responsibility |
◆ | Our commitment to a diverse and inclusive workplace is demonstrated by the following: |
For more information regarding our sustainability commitments, please go to the Responsibility section of our website: https://medicalpropertiestrust.com/corporate-responsibility/
22 Proxy Statement and Notice of 2021 Annual Meeting |
Executive Summary
Our Unique Business Model
Medical Properties Trust is a multi-faceted global organization that acquires and develops healthcare facilities and leases the facilities to healthcare operating companies under long-term net leases. Our diversified geographic footprint spans nine countries and 33 states in the U.S. We are at the forefront of our industry as the global leader in hospital real estate finance, providing crucial financing to our hospital operators, unlocking significant value to fund critical growth in a vital industry. This sets us apart from most equity REITs, both in the healthcare and broader REIT sectors, and in order to successfully execute our strategy and effectively manage our complex operations, our executives require expertise both within the real estate industry and the medical industry. Furthermore, our global operations add a unique layer of complexity that requires specialized knowledge and understanding of distinct international markets to successfully execute transactions and operations around the world.
2020 Performance Highlights
Despite the unforeseen challenges presented in 2020 due to the COVID-19 pandemic, we continued other improvementsto outperform on key financial metrics, executed our strategic value-added growth initiatives and collected primarily all of the rent and interest owed to us, while also delivering market-leading returns:
Financial Performance
◆ | Sustained growth prior to and during the pandemic as a result of the successful execution of the MPT strategy and strong positioning of our portfolio over the past several years, including the following achievements: |
Closed Acquisitions
| Strong Earnings Growth
| Sustainable Future
| ||||
$3.6 Billion in 2020
| 15%
| 49%
| 15.5 Years
| |||
Adding up to over $8 Billion since the beginning of 2019 | Year-over-year growth in net income in 2020 | Year-over-year growth in Normalized FFO(1) in 2020 | Weighted-Average Lease and Loan Maturity |
◆ | 30% compound annual growth in total pro forma gross assets since IPO(2) |
◆ | Expanded our global reach, withthe seamless entry into the South American market for the first time, with our international assets now representing over 40% of our global portfolio |
◆ | Continued to improve tenant diversification with no single property representing more than 2.8% of our overall portfolio* |
* based on total pro forma gross assets (2)
(1) | Refer to Appendix A for our definition of FFO and normalized FFO and a reconciliation of net income to FFO and normalized FFO |
(2) | Refer to Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2020 for our definition of total pro forma gross assets and a discussion of non-GAAP financial measures and GAAP reconciliation |
Proxy Statement and Notice of 2021 Annual Meeting 23 |
Compensation Discussion and Analysis |
Total Stockholder Return Performance
◆ | Since our IPO we have generated over $6.9 billion in stockholder value creation, with nearly $4 billion in value created since January 1, 2019 alone |
◆ | Our TSR performance is market-leading, outperforming the broader REIT indices and above the 90th percentile of performance among Healthcare REITs on a weighted basis |
Cumulative 5-Year TSR Growth
(value of $100 invested in 2015)
◆ | We have provided consistent value creation on an absolute and relative basis to our stockholders as demonstrated below: |
1-Year TSR | 3-Year TSR | 5-Year TSR | Since-IPO TSR | |||||
Medical Properties Trust | 9% | 89% | 161% | 566% | ||||
SNL U.S. REIT Healthcare | (6%) | 21% | 30% | 292% | ||||
SNL U.S. REIT Equity | (5%) | 16% | 37% | 202% |
◆ | Steady dividend growth with 8 consecutive years of dividend increases that has continued in 2021 with an additional 3.7% increase in our first quarter dividend |
Dividend per Share Growth
3.8% CAGR
24 Proxy Statement and Notice of 2021 Annual Meeting |
Compensation Discussion and Analysis |
Stockholder Engagement
History of strong approval of Say-on-Pay votes.Over 95% of the shares present and entitled to vote at our 2020 Annual Meeting were cast in favor of the 2020 Say-on-Pay proposal. Average Say-on-Pay support over the past five years is approximately 95%, with over 92% support in each year, exceeding overall support in the REIT industry. Proactive engagement and transparency. Our history of Say-on-Pay results is indicative of our stockholders’ support and approval of our executive compensation program design. To affirm the positive support and feedback we received in 2020, we maintained the core elements of our compensation program but continued to make enhancements to further align our compensation program with the interests of our stockholders. | MPW 95.0% All REITs 90.2% 5-Year Average SoP Support | MPW 95.4% All REITs 90.3% 2020 SoP Support | ||||
We actively engage with our stockholders in person and telephonically, to ensure that they are fully informed about our executive compensation policies. In the past three years, we have held discussions regarding our compensation program with stockholders representing over 60% of our shares outstanding. |
| Review: Review results from the Annual Meeting to inform the framework of our annual compensation review process Analyze:Monitor market trends and review compensation policy based on governance trends and stockholder feedback (e.g., benchmarking levels and structural considerations) Engage:Engage with stockholders regarding the core structure and elements of our executive compensation Implement:Implement and adjust compensation program based on feedback from stockholders and current market and governance standards File:Publish annual proxy statement and prepare for Annual Meeting of stockholders |
What We Heard
Over the past several years, stockholder feedback on our executive compensation program has included the following key themes:
Transparency | Our stockholders have continuously emphasized the importance of pay transparency on compensation program design and related decisions. We have provided enhanced disclosure on each element of our compensation program and a clear rationale to support our decisions, particularly as it relates to our incentive compensation awards. We received positive feedback from our stockholders on our transparency, and we continue to emphasize its importance. | |
Pay-for-Performance | Our stockholders have indicated a strong preference for performance-based incentives that are tied to rigorous short-term and long-term performance goals. The overwhelming majority of our NEOs’ compensation is tied to formulaic incentives. | |
PayAlignment | It is important for our compensation program to be tied to our business strategy and aligned with stockholders’ interests. Our compensation program directly supports our strategic business plan that includes executing accretive acquisitions supported by strategic financing and strong balance sheet management that translates into significant value creation for our stockholders. |
In 2020, the feedback on our executive compensation program from our stockholder engagement efforts was positive and was reflected in the overwhelming support for our Say-on-Pay proposal. Based on this feedback, we kept the overall structure of the compensation program largely unchanged with the exception of minor enhancements to further strengthen alignment with our stockholders as further described below in our “Evolving compensation planprogram”.
Proxy Statement and Notice of 2021 Annual Meeting 25 |
Compensation Discussion and Analysis |
Evolving compensation program. For 2020, we made a number of enhancements but maintained the outstanding financial and operational successes we continue to create, they will vote FOR the advisory proposal regarding our executive compensation.Our Pay for Performance Plan is WorkingCEO Highlights Pay dropped 70% in 2015 . This reflects the tight alignmentoverall structure of our pay plansprogram given the strong levels of support we received from our stockholders:
2020 | › Increased the portion of equity that is subject to performance-based vesting based on operational performance metrics to two-thirds of the targeted value of the annual equity awards › Incorporated an absolute TSR modifier (in addition to the existing relative TSR modifier) to ensure that our executives would not be significantly rewarded during periods of low or no growth (payouts reduced up to 25% if TSR is below 3% per annum) › Refined our peer group identification methodology to include only REITs with a focus on strategic peers that better reflect the uniqueness of our business, growth initiatives and global operations › Diversified our Board with one additional female director who is also Latina and a native of Costa Rica (female directors now represent 25% of the Board and minority directors now represent 13% of the Board) › Incorporated ESG performance goals in the annual cash bonus program to reinforce our commitment to ESG initiatives | |||
2019 | › Restructured performance-based shares to balance both short-term and long-term total return goals and tying a significant portion of equity compensation to operational performance metrics that are key to driving long-term stockholder value › Reduced the discretionary portion of annual cash incentives from 35% to 20% › Established a formal ESG Committee › Implemented Company-wide environmental initiatives and actively engaged with our tenants and developers on ESG-related matters | |||
2018 & prior | › Established rigorous and objectively measured performance goals tied to the business goals and growth of the Company. Streamlined annual cash incentive measures and clarified rationale for metrics, including the benefit to stockholders › Adopted anti-hedging and anti-pledging policies for NEOs, directors and employees › Implemented a clawback policy that applies to both cash and equity compensation › Established executive stock ownership guidelines, including a minimum of 6x base salary for the CEO › Committed to eliminate multi-year evergreen, single-trigger change of control and excise tax gross-up provisions from future employment agreements (no such provisions have been included in Company contracts since 2003) |
26 Proxy Statement and Notice of 2021 Annual Meeting |
Compensation Discussion and Analysis |
Compensation Philosophy, Design and Process
Our executive compensation program is designed to shareholders’ returns (see page 19) No annual restricted stock awards for 2015 performanceattract and eliminated the annual stock award planretain high caliber executives capable of managing our unique business model with expertise in 2016 Reduced target total compensation opportunity for 2016 by approximately $2 million relative to 201577%real estate, healthcare, international and financing operations. The foundation of our CEO’s potential compensation in 2015program was tied directlydesigned to total shareholder return measures. Despitemotivate and reward executives to execute on our record setting financial and operational performance in 2015, market and other conditions resulted in REITs in general and healthcare REITs (including us) in particular suffering negative shareholder returns for the year. As it has been designed over many years, this resulted in substantially lower compensation to our executives:• CEO pay declined 70% in 2015.• In addition, in response to shareholder feedback and our shareholder returns, the Compensation Committee used its discretion to award no annual restricted stock in 2016 for 2015 performance — this alone totaled a reduction in direct compensation for the CEO of $2.75 million as compared to 2014 direct compensation.• We increased NEO base salaries in 2015 for the first time since 2012 to be in line with our peer group, but held them flat in 2016.• 90% of each NEO’s annual cash bonus isbusiness strategy tied to rigorous and objectively measuredindustry-leading performance hurdles. Please seegoals that ultimately result in significant value created for our stockholders. In the table on page 22 for a descriptionyears following, we have made several enhancements but maintained the core elements of the outstanding financial and operational performance during 2015.15 Medical Properties Trust
Compensation Discussion and Analysis MPTCompensation Improvements We Have Made in 2015 and 2016 in Response to Shareholder Feedback:Reduced the maximum multiple of base salary that the CEO is eligible to earn as annual cash incentive from 3.5 times to 2.0 times.Streamlined the number of objective annual cash incentive measures from four to three, and designed each to be objectively measureable. Preserved the rigor of the measures and improved the description of each measure’s rationale and benefit to shareholders.Eliminated the two-year carry forward provisions on the annual performance-based restricted stock awards granted in 2015 for 2014 performance.
our program. The Compensation Committee eliminated altogether the annual share grant componenteffectiveness of our executive compensation program that provided annual grantsis illustrated by the achievement of restricted stock that were perceived to be duplicative ofrecord performance far surpassing our peers by any standard, including the 3-year long-term incentive plan grants of restricted stock.The annual restricted stock awards have historically been granted in early January as compensation for the immediately prior year performance. The Compensation Committee awarded our executives no such awards in 2016 for 2015 performance resulting in a $2.75 million reduction in year-over-year pay for our CEO when measured in the year earned rather than the year paid (which differs from the Summary Compensation Table presentation of executive pay).Reduced the CEO’s target total compensation opportunity for 2016 by approximately $2 million relative to 2015 target total compensation through the restructuring of the long-term incentives going forward.Similar reductions were made for the other NEOs.Although we have discouraged our executives from pledging stock and our executives have not pledged any stock for at least the last five years, the Board of Directors has adopted a provision starting in 2016 that prohibits the pledging of our stock.Our Board of Directors appointed a new Compensation Committee Chairman in April 2016.In 2016, the Compensation Committee engaged a new independent compensation consultant to replace the former consultant who had served that role for more than five years.Compensation Improvements We Made and Steps We Took Prior to 2015:Established executive stock ownership guidelines, including a minimum of 6 times base salary for the CEO.Committed to maintain provisions in the compensation program that preclude post-retirement benefits, significant perquisites and executive retirement plans.Added a two year holding period for stock vesting as part of the Equity Incentive Plan.Refined the peer group identification methodologies to result in peer companies closer in size and operating characteristics to those of the Company.Reduced the discretionary portion of annual cash based incentive from 35% to 10%.Implemented a clawback policy.Increased the total shareholder return performance hurdle to 9.0% for earning of annual performance-based restricted stock awards.Committed to avoidance of future employment agreements with multi-year evergreen, single trigger change in control and excise tax gross-up provisions.There have been no such contractsfollowing achievements since the three NEOs founded the Company in 2003.Prohibited hedging activities by our NEOs.Proxy Statement and Notice of 2016 Annual Meeting 16
◆ | 3-year TSR of 89% outperforming the healthcare and broader REIT industries by 68% and 73%, respectively |
◆ | Accretive acquisitions of over $8 billion |
Compensation Discussion and Analysis2015 Financial and Operational Successes:While 2015 was disappointing when measured solely by temporary market conditions impacting our (and almost all other REITs’) stock prices — and our executive officers suffered for that along with our shareholders, our executives continued to execute the long-term strategic initiatives that have been long established. We believe 2015 total shareholder return results were a timing difference and we fully expect that our shareholders will benefit from the resulting successes over the foreseeable future; some of these successes in 2015 include:Record profits, cash flows and normalized funds from operations (FFO) in 2015.18.9% year-over-year increase in normalized FFO per share.51% growth in normalized FFO.41% growth in revenue in 2015, from $313 million to $442 million.5% increase in our annual cash dividend, now $0.88 a share.Maintaining an investment grade debt rating from Standard & Poors.Continued highly and immediately accretive asset growth of 51%, including completion of the highly attractive and accretive 32 hospitals, €700 million Median portfolio in Germany and the intensely competitive 7 hospital, $900 million Capella transaction among others.Since year-end 2015 reduced revolver balances by approximately $500 million and executed further deleveraging transactions that are expected to further reduce total debt by approximately $600 million when closed during the second quarter of 2016.Continued to improve tenant concentration metrics to the lowest in company history with no single facility representing more than 2% of total assets.Improved the dividend payout ratio to the lowest in company history and among the best in the healthcare REIT sector at below 70%.17 Medical Properties Trust
◆ | Net income growth of 49% and normalized FFO(1) growth of 75% |
Compensation Discussion and Analysis MPT2015 Chief Executive Officer Pay Mix — Total Direct CompensationPay mix is based on total direct compensation, which includes base salary, annual cash incentive, approved value of annual restricted stock awards (granted in 2016 based on 2015 performances which equaled $0) and the grant date fair value of the long-term restricted stock awards based upon the probable outcome of the performance-based vesting conditions as calculated by an independent appraiser.LTIP Plan (34%)Base Salary (23%)Performance-Based Compensation (77%)Annual Cash Incentive (43%)Proxy Statement and Notice of 2016 Annual Meeting 18
Compensation Discussion and AnalysisPay for Performance AlignmentSummary Compensation Table amounts reflect the accounting value of compensation, butAdditionally, we believe that more important than accounting is the actual value earned inour current executive compensation program represents a given year for each executive.We have demonstrated a strong correlation between shareholder returnsbalanced and executive compensation. Our executive’s compensation is highly variable and dependent on both relative and absolute TSR.strategically aligned pay-for-performanceIn 2015, our CEO was eligible to earn up to $4.73 million in performance-based equity, all of which was unearned based on the Company’s 1-year and 3-year TSR performance.We believe this strong correlation between earned compensation and shareholder value is essential in promoting long-term growth while having shoulder-to-shoulder alignment with shareholders’ interest.$1080%$9.35M$8.38M70.8% 3YR TSR (2011-2014)$860%$639.8% 3YR TSR (2010-2013)40%$4$2.76M20%$216.8% 3YR TSR (2012-2015)$-0%201320142015Base SalaryAnnual Cash IncentiveAnnual Time-Based Stock AwardAnnual Performance-Based Restricted Stock AwardLTIP PlanTotal Compensation ($ Millions)Three-Year Total Shareholder ReturnName and PositionEdward K. Aldag, Jr.Chairman, Chief Executive Officer and PresidentSteven HamnerExecutive Vice President and Chief Financial OfficerEmmett E. McLeanExecutive Vice President,Chief Operating Officer,Treasurer and SecretaryYear201520142013201520142013201520142013Salary($)950,000600,000600,000575,000400,000400,000525,000395,000395,000Annual Cash Incentive($)1,805,0001,857,0001,817,250805,000878,500860,250735,000867,519849,497Annual Time-Based Restricted Stock Award($)-1,375,0001,475,000-625,000675,000-440,000475,000Annual Performance-Based Restricted Stock Award($)-1,670,1221,425,732-768,497669,383-532,804446,250LTIP Plan($)-3,850,0003,057,456-2,100,0001,651,024-1,750,0001,406,433Total Earned Compensation($)2,755,0009,352,1228,375,4381,380,0004,771,9974,255,6571,260,0003,985,3233,572,180Salary represents amounts earned and paid in the year; while annual cash incentive represents amounts earned for that year although paid in the following year.Annual Time-Based Restricted Stock: Reflects the value approved program as demonstrated by the Compensation Committee after reviewing the respective years performance and is granted in following fiscal year. For example, the 2014 Time-Based Restricted Stock value reflects the value the Compensation Committee approved in December 2014 after reviewing annual performance and granted in January 2015.Annual Performance-Based Restricted Stock: Reflects the value of the stock earned for the Company’s 1-year TSR performance at the stock price on the date it was earned. 2015 value reflects $0 as no performance stock was earned.3-Year Long-Term Incentive Performance Plan: Reflects the value earned based on the 3-year TSR performance period ended at the end of the fiscal year. For example, 2014 amount includes the actual value earned under the 2012 LTIP Plan at the stock price on the date it was earned. 2015 value excludes all stock under the 2013 LTIP Plan as all stock was forfeited based on performance over the three-year performance period.19 Medical Properties Trustfollowing:
◆ | Approximately 70% of our CEO’s compensation is variable and at-risk, tied directly to the achievement of operational and financial performance, because we value the clarity of formulas that tie compensation to stockholder returns in the long-term |
◆ | The variable components of our compensation program specifically include rigorous performance goals meant to motivate management to execute our business plan tied to accretive growth, strategic financing and raising efficient capital. In our annual cash bonus program, our normalized FFO per share growth target represents a 15% increase over 2019 levels. In our long-term program, our EBITDA growth target represents an approximate 6% CAGR over our 2019 goals |
◆ | The majority of our equity awards (approximately two-thirds for all NEOs) are at-risk performance-based stock awards earned based on the achievement of operational goals and subject to adjustment based on both absolute and relative TSR, with the remainder granted in time-based stock awards that are subject to the same stock price fluctuations as our stockholders. This approach reflects our understanding that our investors value equity-based compensation to align our executives’ interests with those of our stockholders |
◆ | Less than 10% of our CEO’s compensation is guaranteed in the form of base salary, which plays a recruiting and retention role, because we can neither wait for the long-term to arrive before compensating our people nor incentivize a risky swing-for-the-fences strategy |
(1) | Refer to Appendix A for our definition of FFO and normalized FFO and a reconciliation of net income to FFO and normalized FFO |
Proxy Statement and Notice of 2021 Annual Meeting 27 |
Compensation Discussion and Analysis |
Our Executive Compensation Discussion and Analysis MPTCompensation Philosophy, Design and ProcessVirtually every company says it uses pay to drive and reward performance. We do as well. But doing this for a public company in a broad, ever-changing sector whose shares are held by individuals and institutions with diverse time horizons and risk tolerances, requires us to balance many considerations.We place significant value on tying compensation to shareholders’ long-term returns. However, because we can neither wait for the long-term to arrive before compensating our people, nor incentivize a swing-for-the-fences strategy, we value stable base salaries that also play recruiting and retention roles.We value the clarity of formulas that tie compensation to shareholder returns in the long term. However, because shareholder returns are affected by factors beyond management’s control, we also use pay elements tied to individual and business achievements. Through 2015, our annual cash and equity-based bonuses helped play this role. Starting in 2016, with the elimination of our annual equity plan, we will rely soley on our annual cash plan to play this role.We understand that our shareholders value the simplicity of a single form of equity-based pay. So, starting in 2016, with the elimination of our annual equity plan, we will rely solely on our long-term equity plan to align our executives’ interests with those of our shareholders.Finally, we balance an interest in compensating success only after a project is completed or a strategy is implemented with a need to deter over-focusing on shorter-term projects and strategies with shorter-term payouts.We implement this philosophy and these considerations with pay objectives that:Combine a mixture of short, medium, and long-term plans; some market-focused, some individually focused; some cash-based, some equity-based; to capture all the variables described above.Put 77% of NEOs’ total annual compensation in 2015 at-risk via stock price, corporate, or individual performance measurements.Use performance metrics to determine 90% of annual cash incentive awards. In 2015, the Compensation Committee awarded only one-half of the remaining 10%.Encourage our executives and directors to acquire and maintain significant equity ownership in our Company.Our CEO must acquire and hold Company equity valued at six-times base salary or more, our other NEOs (our CFO and COO) must hold four or more times base salary, and our non-employee directors must hold at least three-times their annual retainer. Our NEOs greatly exceed these requirements.Prohibit actions that would de-link compensation from our philosophy and goals:Our claw back policy avoids rewarding bad conduct.We do not issue or reprice options.We do not provide perquisites except for standard car, financial planning and insurance benefits.We have robust anti-hedging and pledging policies.We use rigorous, relevant, disclosed measurement goals that incentivize above-median performance without creating unacceptable risk.Rely on the expertise of independent outside compensation consultants.Task and empower our Compensation Committee to:Review and approve corporate goals and objectives relative to the compensation of the executive officers, evaluate the performance of the executive officers, and determine and approve appropriate compensation levels based on these objectives;Review and approve, on an annual basis, the corporate incentive goals and metrics relevant to the cash bonus pay and performance-based equity awards;Evaluate the competitiveness of each executive’s compensation package in relation to other possible compensation offers the executive may receive;Approve changes to executives’ total compensation package including base salary, cash bonus payout amounts and long-term equity incentive awards.Proxy Statement and Notice of 2016 Annual Meeting 20
Compensation Committee | Compensation Consultant | Management | ||||||
Provides independent oversight and final approval with respect to executive compensation matters | Provides guidance to the Compensation Committee on compensation matters including benchmarking for pay levels, pay practices and governance trends | Provides additional information as requested by the Compensation Committee | ||||||
Assesses corporate and individual performance as it relates to actual compensation for our NEOs | Assists with peer group selection and analysis | CEO provides input on individual performance for other NEOs and achievements relating to strategic non-financial business goals | ||||||
Administers our equity incentive programs, including reviewing and approving equity grants to our NEOs | Reviews and advises on recommendations, plan design and measures |
Compensation Discussion and AnalysisElements of PayBase PayHistorically the Compensation Committee reviews salaries triennially. Consistent with this, we increased NEO base salaries in 2012 and then not again until 2015. Base salaries were increased in 2015 to be more in line with our peer group. None of our NEOs received a base salary increase in 2016. Base salary on average does not account for more than 20% of NEO total target compensation.Our approach to base pay is to provide a fixed amount to promote recruitment and retention, reflect individual experience, performance, internal pay equity and peer-group comparisons.Annual Cash Bonus PlanIn 2015, all executive officers were eligible for an annual incentive cash bonus subject to achieving specified performance goals.We used the annual cash bonus plan to incentivize achievement of our annual strategic financial goals. Ninety percent of these goals’ performance criteria are linked to objective performance hurdles. The remaining 10% is linked to NEO’s individual performance.In 2015, we reduced the number of payout levels of the annual cash bonus from four to three, and from six in 2013: each annual cash bonus is now based on Threshold, Target and Maximum percentages of base salary. In addition, in 2015, we adjusted the base salaries and maximum bonus NEOs may receive under this plan to be more in line with our peer group which resulted in a reduction in our CEO’s maximum bonus percentage to 200% from 350%.21 Medical Properties Trust
Compensation Discussion and Analysis MPTWe spend considerable time designing the NEOs’ annual cash bonuses to align payment with the achievement of key Company strategic financial goals important to sustainable shareholder returns:Performance Metric Weighting Threshold Target Maximum 2015 ResultsNormalized FFO Per Share GrowthEncourages focus on profitability as measured by the most frequently used assessed REIT earnings measure; to mitigate against the risk of non-profitable or other low quality growth. 36% 8% 10% 15% 18.9% Beat maximum target by 90%We increased our assets by $800 million, or 28% in 2014, an extraordinary achievement that we thought unlikely again in 2015. Accordingly, when establishing a Target for 2015 normalized FFO per share increase, we believed 10% would be an aggressive target and would require, all other things equal, a difficult goal of approximately $600 million of average acquisitions - in other words, the $600 million would result in about a 10% normalized FFO per share increase only if such acquisitions were made very early in 2015. Primarily because we successfully competed for the $900 million Capella transaction that closed in late August, we exceeded the Target and achieved Maximum. It should be noted that the Capella opportunity was not even in our pipeline (we were not aware of it) until after our cash bonus metrics were established.Exposure by TenantEnsures focus on reducing the risk that long- and short-term results are overly dependent on any single tenant; also incentivizes management to continue to develop the hospital sale/leaseback market and identify additional acquisition opportunities. 18% 25% 24% 23% 17.6% Beat maximum target by 27%Based on our assets at year-end 2014 and signed but not closed acquisitions, our expected Exposure to One Tenant metric was 27%. In addition, we expected to add additional investments to this tenant relationship in 2015 (and we did). Accordingly, we established a high Target level of 24%, which required us to add at least $400 million of acquisitions not related to our largest tenant. Because we successfully identified Capella as a potential completely new relationship and we won a very competitive competition for Capella’s acquisition, we were able to reduce our Exposure to One Tenant to only 17.6%. To achieve this level of success, we would have had to establish a goal of adding nearly $2.0 billion of accretive assets in 2015.Additional AcquisitionsMotivates management to execute on our long-term strategic growth plan; for management to be rewarded for this target, the acquisitions must be profitable and accretive on a per share basis in order to also meet the FFO Growth and AFFO Payout Targets 36% $400 Million $600 Million $800 Million $1.6B Beat maximum target by 100%In 2014 we had grown our assets by 28%, and extremely challenging process that we believed was highly unlikely to repeat. Based on our pipeline of known opportunities in early 2015, and the difficulty we knew existed in achieving any level of double digit asset growth, we established a growth Target of 16%, equivalent to about $600 million in new assets in 2015. Once again, the unexpected and unknowable (in early 2015) Capella opportunity, which we successfully closed in the face of intense competition from other investors, drove our asset acquisitions to $1.6 billion, increasing our assets by a phenomenal 43%, even after the prior year’s growth of 28%.Qualitative Performance ReviewRepresents indicators of the executive’s success in fulfilling his or her responsibilities to the Company and in executing its strategic business plan. 10% N/A N/A N/A N/AEven though our executives led our company to outstanding levels of outperformance of financial and operational goals, the Committee members recommended, and our executives agreed, to reduce the Discretionary component to zero in light of our shareholders’ negative total return.2014 Bonus 2015 Bonus % ChangeEdward K. Aldag, Jr. $1,857,000 $1,805,000 -3%R. Steven Hamner $878,500 $805,000 -8%Emmett E. McLean $867,519 $735,000 -15%Proxy Statement and Notice of 2016 Annual Meeting 22
Compensation Discussion and AnalysisResults of Our 2015 Annual Cash-Bonus PlanIn 2015, our growth in revenue (79th percentile), normalized FFO/share (92nd percentile) and annual dividends declared (67th percentile) have all been well above median on both an annual and cumulative basis as compared to the constituents of the SNL US REIT Healthcare Index.[1]In addition, our management achieved another important goal: a reduction in our exposure to our largest tenant, from 19% in 2014 to 17.6% in 2015, which, on a 3-year basis adds up to a 22% decrease in exposure to a single tenant. Moreover, we achieved this important goal even though two of our tenants merged in 2015, temporarily driving our exposure to almost 27% before we reduced it to 17.6%.These achievements, and the others noted on the summary page of this CD&A warranted our paying out slightly less than the maximum award: approximately 95% of maximum.Growth in Revenue79th PercentileGrowth in Normalized FFO/share92nd PercentileAnnual Equity AwardsIn 2015 and prior years the Company had an annual equity award plan, in which the Compensation Committee would make annual grants of time-based and performance-based restricted stock with the amount of stock awarded based on a discretionary evaluation of prior year performance. As a result, the awards made in early 2015 were made based on an evaluation of 2014 performance, as discussed in last year’s CD&A. As required under SEC disclosure requirements, those grants are disclosed in this year’s Summary Compensation Table although they are intended to reflect 2014 performance.Based on shareholder feedback, the Compensation Committee decided to discontinue the Annual Equity Award program and determined only to award long-term performance-based and time-based equity with a focus on future performance and retention. In addition, as part of this restructuring and taking our recent shareholder returns and say on pay results into account, the Committee determined not to award any annual equity awards in 2016 for 2015 performance. This resulted in a substantial decrease in year over year pay for our NEOs when measured on a consistent basis, with these annual awards shown in the year earned rather than the year paid. We believe this substantially responds to shareholder feedback and our results for 2015, although these results are not reflected in the Summary Compensation Table due to lag in disclosure for the annual equity awards.Although our annual equity plan had important roles to play in our prior plans, we have, effective in 2016, simplified our equity award arrangements and eliminated this element. The following chart provides a comparison of the approved values of the 2014 and 2015 annual equity awards. This provides a graphic capturing of the strong alignment between our administration of our pay plans and our shareholders’ experience: the approved value of our CEO’s annual equity-based award dropped 100 percent with similar declines for the other NEOs.2014 Annual Equity Award 2015 Annual Equity Award Percent ChangeEdward K. Aldag, Jr. $2,750,000 - -100%R. Steven Hamner $1,250,000 - -100%Emmett E. McLean $880,000 - -100%[1] Adjusted to exclude companies that: (i) had an IPO in 2015; and (ii) declared bankruptcy. These companies include: (i) Care Capital Properties, Inc.; (ii) Global Healthcare REIT, Inc.; and (iii) Community Healthcare Trust, Inc.23 Medical Properties Trust
Compensation Discussion and AnalysisMPT2015 Three-Year, Long-Term Incentive Performance Plan (LTIP)Our 2015 three-year, long-term incentive performance plan, which is provided through performance-based restricted stock, is designed to align NEO interests with ongoing, sustainable, long-term performance. Performance is based on our total shareholder return (TSR) over a three-year period.Key features include:• Half of our LTIP plan uses rigorous absolute TSR hurdles. The other half uses relative TSR hurdles. Each is a rigorous measurement of shareholder value created over the three-year performance period.• Our stock must attain more than a 27% TSR over the three-year performance period in order for any shares to be earned under the absolute portion of the plan. Participants earn 50% of the total award (which is the target number of shares) with a 31% three-year TSR return. They earn the full award with a 35% three-year TSR.• Our stock must produce a TSR higher than the MSCI US REIT index over the three-year performance period in order for any shares to be earned under the relative portion of the plan. Participants earn 50% of the total award (which is the target number of shares) if our TSR is more than 3% above this index for the performance period. They earn the full award if our TSR is more than 6% above this index for the performance period. We believe that the relative award performance goals are exceptionally rigorous and, in fact, the most rigorous in our peer group.• Any shares earned under the LTIP plan at the end of three-year performance period are subject to two additional years of time-based vesting. Participants in the 2015 LTIP plan must be employed on December 31, 2019 to be eligible for full payout, subject to vesting upon certain qualifying terminations of employment.• The LTIP award made to our CEO in January 2013, which had 275,000 target number of shares, was forfeited as of December 31, 2015 because we did not meet the challenging minimum absolute or relative TSR thresholds.• The maximum number of shares subject to each LTIP award is determined at the date of grant on the basis of a fixed notional maximum value of each award.For 2015 Mr. Aldag was granted 252,525 notional LTIP Units (nLTIPUs) with a maximum grant date value of $3,520,199. Mr. Hamner was granted 144,300 nLTIPUs with a maximum grant date value of $2,011,542. And Mr. McLean was granted 108,225 nLTIPUs with a maximum grant date value of $1,508,657.For 2015 the measurement period for the LTIP plan is January 1, 2015, through December 31, 2017. The number of LTIP units earned if performance is above the minimum thresholds but below the maximum thresholds is determined based on linear interpolation between the percentages earned at the minimum and maximum thresholds.Proxy Statement and Notice of 2016 Annual Meeting 24
Compensation Discussion and AnalysisCompensation Review Process
Role of the Compensation Committee
Pursuant to its charter, the Compensation Committee is responsible for designing our executive compensation plans, establishing compensation levels, and measuring the performance of our NEOs. The Compensation Committee, which consists of three independent directors, is responsible for the review and approval of all aspects of our executive compensation program. Among other duties, the Compensation Committee is responsible for the following:•
Reviewing and approving, on an annual basis, the corporate incentive goals and objectives relevant to the annual cash bonus plan and performance-based equity awards;• shares
Evaluating the performance of our executive officers in light of these goals and objectives;• objectives
Evaluating the competitiveness of each executive officer’s total compensation package relative to what other publicly traded and private equity-backed real estate investors may offer; and• offer
Approving any changes to each of our executives’executive’s total compensation package, including, but not limited to, base salary, annual and long-term incentive award opportunities and payouts, and retention programs.
programs
In order to assist the Compensation Committee to design, establish and monitor our executive compensation plans, the Compensation Committee has engaged an independent executive compensation consultant, as described below.
Peer Group Data
We use peer group data to ensure that our compensation program remains both appropriate and competitive in relation to those companies with whom we most directly compete for talent and business opportunities, among other things. Constructing an appropriate peer group requires various considerations as no singular company or industry fully captures the scope of our operations. In particular, the complexities faced by our Company as a result of our global operations and the expertise required of our executives given our specialized assets presents a unique challenge in developing an appropriate peer group.
On an annual basis, we review our peer group to ensure the overall composite reflects an appropriate competitor set. Accordingly, we reviewed our peer group based on the following criteria:
◆ | Size: REITs within an appropriate size range relative to our Company (i.e., approximately 0.4x to 2.5x, which is consistent with Institutional Shareholder Service’s (“ISS”) size selection criteria) |
◆ | Global: Companies with a global presence that reflect the same complexities faced by our global operations and challenges associated with entering new geographic markets |
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Compensation Discussion and Analysis |
◆ | Healthcare Expertise: REITs that primarily invest in medical properties and/or healthcare assets whose executives require expertise in the healthcare/medical sector |
◆ | Specialized REITs: REITs with specialized assets that require executives to have knowledge of the underlying assets |
◆ | Net Lease REITs: REITs with a significant portion of properties leased on a triple-net basis |
The Company carefully selected the peer group to include the most similar competitors based on size and asset holdings to provide meaningful and appropriate comparisons of our compensation structure relative to our peers. This included reassessing the appropriateness of non-REIT healthcare companies in our peer group. As we continue to scale our operations and focus on non-organic portfolio growth through accretive acquisitions and developments, the inclusion of healthcare companies whose operations are not directly comparable nor as complex has become less appropriate for the purpose of assessing our compensation program. Accordingly, we removed healthcare companies from our 2020 peer group while emphasizing the inclusion of REITs with a similar focus on portfolio growth and development.
Based on the approved peer group for 2020, Medical Properties Trust approximates the 70th percentile based on total capitalization and includes the following companies (ranked by total capitalization):
Company(1) | Total Capitalization(2) | Industry | Size | Global | Healthcare Expertise | Specialized REIT | Net Lease REIT | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
SBA Communications Corporation (REIT) | $45,930 | Specialty REIT | ◆ | ◆ | ◆ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Alexandria Real Estate Equities, Inc. | $33,832 | Office REIT | ◆ | ◆ | ◆ | ◆ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Boston Properties, Inc. | $31,657 | Office REIT | ◆ | ◆ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ventas, Inc. | $31,021 | Health Care REIT | ◆ | ◆ | ◆ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Healthpeak Properties, Inc. | $23,495 | Health Care REIT | ◆ | ◆ | ◆ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Medical Properties Trust | $19,879 | Health Care REIT | ◆ | ◆ | ◆ | ◆ | ◆ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Iron Mountain Incorporated | $19,625 | Specialty REIT | ◆ | ◆ | ◆ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Vornado Realty Trust | $16,991 | Office REIT | ◆ | ◆ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gaming and Leisure Properties, Inc. | $15,683 | Casino REIT | ◆ | ◆ | ◆ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Omega Healthcare Investors, Inc. | $13,642 | Health Care REIT | ◆ | ◆ | ◆ | ◆ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
CyrusOne Inc. | $12,280 | Specialty REIT | ◆ | ◆ | ◆ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SL Green Realty Corp. | $11,159 | Office REIT | ◆ | ◆ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Kilroy Realty Corporation | $10,949 | Office REIT | ◆ | ◆ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Douglas Emmett, Inc. | $10,686 | Office REIT | ◆ | ◆ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Healthcare Trust of America, Inc. | $9,345 | Health Care REIT | ◆ | ◆ | ◆ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Hudson Pacific Properties, Inc. | $7,972 | Office REIT | ◆ | ◆ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
QTS Realty Trust, Inc. | $6,541 | Specialty REIT | ◆ | ◆ | ◆ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(1) | Based on the selection criteria above, United Healthcare Services, Inc., Encompass Health Corporation and EPR Properties were removed from the peer group and Boston Properties, Inc., SBA Communications Corporation (REIT), Hudson Pacific Properties, Inc. and QTS Realty Trust, Inc. were added to the peer group |
(2) | All financial data in $ millions per S&P Global Market Intelligence as of December 31, 2020 |
How We Use Peer Group Data
During 2020, the Compensation Committee utilized peer group compensation data to understand the Company’s pay levels and structure as compared to the market. Although the Compensation Committee does not adhere to a specific formula nor does it target a certain percentile of compensation, we believe it is important to understand the competitive landscape to effectively assess each NEO’s total compensation opportunity, pay mix and overall governance and market trends. We strive to ensure that our compensation program and opportunities remain equitable and competitive, while also considering factors such as size, scope of operations and our relative performance, as appropriate.
Proxy Statement and Notice of 2021 Annual Meeting 29 |
Compensation Discussion and Analysis |
Role of the Compensation Consultant
In 2015,2020, the Compensation Committee retained FTI Consulting, Inc.,Gressle & McGinley, LLC, a nationally recognized compensation consulting firm specializing in the real estate industry (the “Compensation Consultant” or “FTI Consulting”“Gressle & McGinley”). The Compensation Consultant was engaged by and reports directly to the Compensation Committee. Upon the request of the Compensation Committee, a representative of FTI Consulting attendsGressle & McGinley attended meetings of the Compensation Committee and communicatescommunicated with the Chairman of the Compensation Committee between meetings; however, the Compensation Committee makes all decisions regarding the compensation of our executive officers.
The Compensation Consultant provides various executive compensation services to the Compensation Committee pursuant to a written consulting agreement between the Compensation Committee and the Compensation Consultant.Committee. Generally, these services include, among others, (i) advising the Compensation Committee on the principal aspects of our executive compensation program and director compensation program and evolving industry practices; (ii) presenting information to assist the Compensation Committee in determining the appropriate peer group to be used to evaluate the competitiveness of our compensation program; (iii) providing market information and analysis regarding the competitiveness of our program design and our award values in relationship to our performance; and (iv) preparing recommendations based on the Company’s performance, current market trends and corporate governance matters. The Compensation Committee recognizes that it is essential to receive objective advice from its outside compensation consultant. The Compensation Committee has determined, based on a review of relevant factors, that FTI Consulting adviceGressle & McGinley is objectiveindependent and free from the influencethat their work has not raised any conflict of management.interests. The Compensation Committee also closely examines the safeguards and steps that FTI ConsultingGressle & McGinley takes to ensure that its executive compensation consulting services are objective.
Other than advising the Compensation Committee as described above, Gressle & McGinley did not provide any other services to the Company in 2020.
Role of the Chief Executive Officer
Although executive compensation determinations are ultimately made by the Compensation Committee, the CEO provides additional information to assist the Committee in evaluating and determining executive compensation and provides input on each executive officer’s performance, other than his own.
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Compensation Discussion and Analysis |
Compensation Program Features
The following chart provides an overview of the components of our 2020 executive compensation program, including the objective of each component and how it ties to our overall compensation philosophy, which can be summarized in the following key categories:
Retention | Provide Competitive Pay Opportunities | |||||
Motivate Execution of Business Strategy | Balance Short-Term and Long-Term Performance | |||||
Alignment with Stockholders | Drive Performance Through Rigorous Performance Goals |
Element | Description | Objective | Pay Philosophy Element | |||||||
Base Salary | Based on duties, experience and internal pay equity | Provides a fixed level of cash compensation to attract and retain talented executives | ||||||||
Annual Cash Bonus | 50% Normalized FFO per Share | Aligns our executives with near-term financial goals and strategic priorities, which for 2020 included FFO growth and managing leverage with a focus on lowering our financing costs in a low interest rate environment |
| |||||||
20% EBITDA/Interest Expense | ||||||||||
10% ESG Initiatives | For 2020 as we continue to emphasize the importance of ESG for both internal and external stakeholders, we have included the achievement of ESG initiatives in our annual cash bonus program as standalone assessment criteria | |||||||||
20% Qualitative Performance | Given that the majority of our compensation is based on pre-established metrics and goals, allows for a subjective assessment of performance on a more holistic basis and considers factors that may not be quantifiable | |||||||||
Time-Based Shares | Vests ratably over 3 years | Promotes retention and aligns executives with stockholders | ||||||||
Performance-Based Shares | 30% FFO per Share Growth | Reward executives for meaningful FFO per share growth in both the short- and long-term. Achievement of these goals require significant accretive growth on an annual and cumulative basis |
| |||||||
40% EBITDA | Ensures that executives are focused on profitability and stockholder value creation through sector-leading EBITDA growth in both the short-term and long-term periods | |||||||||
30% Acquisitions | Motivates our executives to execute our growth strategy that involves making accretive acquisitions to achieve portfolio growth that would not be achieved through a simpler organic growth model focused only on leasing spreads | |||||||||
Absolute and Relative TSR Modifier | Adjusts payouts to align with long-term stockholder returns on both an absolute and relative basis |
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Compensation Discussion and Analysis |
Elements of Pay
Base Pay
Base pay represents fixed cash compensation intended to attract and retain talent and is generally determined based on a review of individual experience, performance, internal pay equity considerations and peer group base pay levels. Although base pay levels are only adjusted periodically, the Compensation Committee reviews levels annually.
The following chart sets forth 2020 base salaries for our NEOs, which remained unchanged from 2019 amounts other than for our CFO whose base salary was increased in recognition of his significant contribution towards our considerable growth in the past several years and the fact that his base salary was below the median relative to our peer group.
Named Executive Officer | 2020 Base Salary ($) | ||||
Edward K. Aldag, Jr. | $1,000,000 | ||||
R. Steven Hamner | 675,000 | ||||
Emmett E. McLean | 550,000 |
For 2021, base salaries will remain flat for our NEOs.
Annual Cash Bonus Plan
Annual Cash Bonus Opportunities
During 2020, our NEOs were eligible to receive an annual cash incentive bonus subject to the achievement of specific pre-determined performance goals. Each NEO’s cash bonus is based on a threshold, target, and maximum amount that is expressed as a percentage of base salary. For 2020, cash bonus opportunities for our NEOs as a percent of base salary were as follows:
Named Executive Officer | Threshold | Target | Maximum | ||||||||||||
Edward K. Aldag, Jr. | 100% | 200% | 300% | ||||||||||||
R. Steven Hamner | 100% | 150% | 225% | ||||||||||||
Emmett E. McLean | 50% | 100% | 175% |
We make periodic adjustments to pay opportunities, which were last adjusted in 2018. While setting the plan for 2020, the Company evaluated its performance through the end of 2019, when MPT had nearly doubled in size in the prior two years and as a result, the Compensation Committee carefully examined our NEOs’ compensation relative to the peer group and based on our analysis, the balance of cash compensation in our pay mix was considerably lower than our peers accounting for less than 20% of total target compensation as compared to nearly 25% even at the lower end of our peer group. In an effort to bring more balance to our compensation pay mix with minimal increases to base salaries, the Compensation Committee increased cash bonus opportunities for the CEO and CFO to be more commensurate with our peer group. Even taking into account these changes, the cash portion of our compensation pay mix continues to be at the lower end relative to our peers. For 2021, annual cash bonus opportunities will remain unchanged.
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Compensation Discussion and Analysis |
Annual Cash Bonus Plan Metrics
The cash bonus plan metrics are reviewed annually by the Compensation Committee to ensure continued alignment with our strategic goals for the upcoming year. Our annual cash bonus plan was approved in early 2020 based on metrics and goals aligned with our projected growth prior to the onset of the pandemic based on our publicly disclosed guidance. These goals are critical to our long-term success and are designed to be challenging and rigorous to ensure that we remain focused on differentiated growth and our overall business strategy. As an example, our 2020 target normalized FFO growth goal represented a 15% increase over our 2019 results as compared to the projected 3.8% median growth among equity REITs.
Furthermore, while a significant number of REITs suspended guidance and modified their cash bonus plans for 2020, we maintained our formulaic plan as initially approved in early 2020 with no downward adjustments to performance goals or increase in discretion, affirming our dedication to strong pay-for-performance. Nevertheless, we ultimately outperformed on each measure, meeting or surpassing the stretch goals.
The 2020 cash bonus plan metrics are set forth in the following chart:
Performance Metric | Weighting | Threshold | Target | Maximum | 2020 Results | |||||||||||
Normalized FFO Per Share Encourages focus on profitability as measured by the most frequently used REIT earnings measurement on a per share basis; mitigates the risk of non-profitable acquisitions or other low-quality growth.
| 50%
| $1.44
| $1.50
| $1.56
|
| > $1.56*
|
| |||||||||
Target normalized FFO per share represents a 15% increase over 2019 amounts, which represents a challenging goal, considerably higher than projected median FFO growth of 3.8% among equity REITs. The Company was able to achieve maximum results through continued but prudent growth as well as maintaining close to 100% rent collections during 2020 despite COVID-19.
| ||||||||||||||||
EBITDA/Interest Expense Ratio Motivates management to maintain financial health and a low cost of capital
| 20%
| 3.5x
| 3.7x
| 3.9x
|
| 4.1x
|
| |||||||||
New financial measure for 2020 that replaced leverage to motivate management to maintain appropriate debt levels while also managing the cost of capital as the Company seeks to refinance certain higher interest unsecured debt. The 3.7x target ratio was established based on our historical strategies and debt levels as publicly disclosed during recent years. We met the maximum coverage ratio goal by growing earnings and maintaining a low cost of capital.
| ||||||||||||||||
Environmental, Social and Corporate Governance Encourages management to prioritize and execute on annual ESG initiatives
| 10%
| Compensation Committee’s Assessment
|
|
| Achieved
|
| ||||||||||
ESG accomplishments include (i) engaging with a majority of our tenants on sustainability efforts, (ii) implementing Company-wide policies on human rights, anti-corruption and climate change, (iii) supported approximately 200 charities, (iv) improved diversity in the boardroom, and (iv) 20% improvement in ISS ESG score.
| ||||||||||||||||
Qualitative Performance Review Represents indicators of the executive’s success in fulfilling his responsibilities to the Company and in executing its strategic business plan.
|
20% |
Compensation Committee’s Discretion |
|
|
See Below |
| ||||||||||
See below for additional detail on the Compensation Committee’s review of qualitative performance.
|
* As adjusted for normalized transactions
Proxy Statement and Notice of 2021 Annual Meeting 33 |
Compensation Discussion and Analysis |
How We Determined Qualitative Performance
The Compensation Committee takesassessed qualitative performance of the Company and of each NEO, which accounts for only 20% of the overall bonus. Our NEOs’ performance is most directly tied to the Company’s overall financial and operational accomplishments and accordingly, the Committee assessed the qualitative component based on the following factors into consideration:key considerations:
Continued TSR outperformance, outpacing the overall healthcare REIT industry by 15% over the 1-year period and 68% over the 3-year period |
Despite the challenges posed by the pandemic, continued to successfully execute on our strategic plan with $3.6 billion in closed transactions in 2020 |
Entered the South American market for the first time, further expanding our global footprint and affirming our management team’s ability to seamlessly navigate international markets with limited integration disruptions and a timely execution |
Consecutive years of market-leading operational and stock performance including double-digit growth in net income of 15% and growth in normalized FFO(1) of 49% in 2020 |
Exceeded our rigorous performance targets in all categories |
Seamlessly transitioned to work from home environment and prioritized employee safety during the pandemic |
Continued focus on tenant diversification with our largest tenant now only representing 22% of our portfolio(2) |
Collected almost 100% of contractual rents through COVID-19 |
Based on the above and the 2020 performance highlights previously discussed under “2020 Performance Highlights”, the Compensation Committee determined that the qualitative component of the 2020 cash bonus program was earned at the maximum, with overall cash bonus amounts as follows:
Named Executive Officer | 2020 Earned Bonus ($) | |
Edward K. Aldag, Jr. | 3,000,000 | |
R. Steven Hamner | 1,518,750 | |
Emmett E. McLean | 962,500 |
(1) | Refer to Appendix A for our definition of FFO and normalized FFO and a reconciliation of net income to FFO and normalized FFO |
(2) | Based on total pro forma gross assets; Refer to Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2020 for our definition of total pro forma gross assets and a discussion of non-GAAP financial measures and GAAP reconciliation |
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Compensation Discussion and Analysis |
2020 Annual Equity Awards
We use a balanced approach to equity compensation and grant a combination of both time-based shares and performance-based shares, with the majority of the awards (approximately 67%) vesting contingent on performance and 100% •at-risk. The time-based portion of the award is intended to promote retention, while also subjecting our executives to the same market fluctuations faced by our stockholders. In 2020, our NEOs were granted time-based shares that vest ratably over three years as follows:
Named Executive Officer | Annual Time-Based (#) | Grant Date Fair Value ($) | ||||||||
Edward K. Aldag, Jr. | 178,167 | 4,154,854 | ||||||||
R. Steven Hamner | 89,084 | 2,077,439 | ||||||||
Emmett E. McLean | 64,979 | 1,515,310 |
The performance-based shares are designed to incentivize performance in both the long-run and short-run. Awards are earned subject to the achievement of three-year goals, while also allowing a portion of the award to be earned subject to the achievement of one-year goals (maximum of 1/3 of the shares). The following chart provides the target number of performance-based shares granted to our NEOs in 2020.
Named Executive Officer | Total Number of (#) | Grant Date Fair Value ($) | ||||||||
Edward K. Aldag, Jr. | 345,854 | 8,577,179 | ||||||||
R. Steven Hamner | 172,927 | 4,288,590 | ||||||||
Emmett E. McLean | 129,958 | 3,222,958 |
The 2020 performance shares can be earned based on the following goals set by the Compensation Committee, which includes both long-term and annual goals to align with our strategic business plan and our commitment to sustained growth that will ultimately drive long-term value creation. The 2020 performance metrics were selected in accordance with our strategic business plan and we continued to use EBIDTA and acquisitions goals. FFO per share growth was added to the program based on the Compensation Committee’s assessment that this metric requires significant accretive growth on an annual and cumulative basis and is a key driver to long-term value creation.
FFO per Share Growth | EBITDA (in millions) ($) | Acquisitions (in millions) ($) | ||||||||||||||||||||||||||||
| 2020 | 2022 | 2020 | 2022 | 2020 | 2022 | ||||||||||||||||||||||||
Maximum (200%) | 6 | % | 18 | % | 885 | 1,000 | 1,000 | 3,000 | ||||||||||||||||||||||
Target (100%) | 4 | % | 12 | % | 850 | 940 | 750 | 2,250 | ||||||||||||||||||||||
Threshold (50%) | 2 | % | 6 | % | 815 | 880 | 500 | 1,500 |
(1) | For 2020, our actual performance exceeded the maximum goals, which represents only one-third of the total shares. The remaining two-thirds of the shares are eligible to be earned at the end of the three-year performance period |
Performance is measured over the three-year performance period and shares are earned based on the three-year performance goals listed above. To further strengthen alignment with our stockholders, any earned shares are subject to both an absolute and relative TSR modifier. One-half of the earned shares will be adjusted between 75% to 125% based on relative TSR performance between the 25th percentile to the 75th percentile and one-half of the earned shares will be adjusted between 75% to 125% based on absolute TSR performance between 0% and 6% per annum.
To track the milestone progress during the performance period and to incentivize the consistent execution of our strategy and business plan, up to one-third of the target award may be earned at the end of 2020 (and is only available to be earned in 2020). To ensure alignment with stockholder returns the awards are also subject to the absolute and relative TSR modifiers. The Compensation Committee directly hiredbelieves that using one-year and hasthree-year goals creates a balanced program that ensures that management remains focused in both the authorityshort-term and the long-term to terminate FTI Consulting engagement fordrive consistent market-leading growth.
Proxy Statement and Notice of 2021 Annual Meeting 35 |
Compensation Discussion and Analysis |
How We Determine Annual Equity Awards
Equity compensation is a critical component of our executive compensation related services.• The Compensation Committee solely determinedprogram that directly aligns our NEOs’ long-term interests with our stockholders and provides additional retention for our executives. Grants were approved in February 2020 based on the terms and conditions of FTI Consulting’s engagement for compensation related services, including the fees charged.25 Medical Properties Trust
Our consistent and significant performance achievements over both the short- and long-term periods |
○ | Growth in net income of 49% and growth in normalized FFO(1) of 75% over the last three years |
Compensation Discussion
○ | Consistent TSR outperformance, significantly exceeding the SNL U.S. REIT Equity and Healthcare Indices, generating more than four times the value over a 5-year period and |
○ | $8.1 billion in accretive acquisitions and 103% growth in total pro forma gross assets(2) since January 1, 2019, which has driven nearly $4 billion in stockholder value creation |
○ | 30% compound annual growth in total pro forma gross assets since IPO(2) |
○ | Eight consecutive years |
The Compensation Committee’s assessment of our NEOs’ overall compensation relative to our peer group in consideration of the fact that our size has nearly doubled in the past three years |
Based on this review, our Compensation Committee members and none of our executive officers. As a direct result of our meetings and conversations with our shareholders we have we have made improvementsthe following decisions related to our executive compensation plans and other important governance practices.Proxy Statement and Notice of 2016 Annual Meeting 26
The market value of the 2020 annual equity awards should generally remain consistent with aggregate value issued to each NEO in the prior year to maintain market competitive levels and in recognition of our continued market-leading performance. |
Consistent with our pay-for-performance philosophy that includes focusing on operational and financial performance that leads to sustainable and strategic growth and motivating management to execute on strategic value-added transactions, the pay mix of the equity awards was reallocated so that a larger portion vests contingent on achievement of rigorous performance goals (reflects 67% of the market value on the date of grant). |
Compensation Discussion and AnalysisPeer GroupsIn addition to its roles in aligning executives’ interests with achieving our strategic goals and providing returns to shareholders, we use compensation to promote important recruiting, promotion and retention goals. To help us further these goals we compare each element of our compensation to a carefully assembled peer group from whose members we compete for talent and business opportunities, among other things, but do not aim to meet a particular percentile of the peer group. In 2015, our compensation consultant recommended, and our Compensation Committee approved, a peer group comprising:• REITs that primarily invest in healthcare and/or medical property assets (Alexandria, Healthcare Realty Trust, Healthcare Trust of America, LTC, Omega and Sabra)• Specialty REITs that require management to have knowledge of tenant operations (CyrusOne, DuPont Fabros, EPR)• Hospital companies that are comparable to MPW in terms of knowledge and skills necessary for the executive team to effectively manage the Company and its facilities (HealthSouth, Lifepoint); and triple-net lease REITs that enter into long-term leases with operators (Hudson Pacific, National Retail)The 2015 peer group is composed of the same companies that were in our 2014 peer group, with the exception of the removal in 2015 of Chamber Street Properties due to its pending merger with Gramercy Property Trust and BioMed Realty Trust due to its recent acquisition by Blackstone Mortgage. The following table provides key information about the peer group market as of December 31, 2015.CompanyImplied Equity Market Cap(1)Total Enterprise Value(2)Total Assets(3)SectorProperties Outside of the U.S.Triple Net-Leased PropertiesAlexandria Real Estate Equities, Inc.$6,555.5$11,082.2$8,911.1Office/SpecialtyYesYesCyrusOne, Inc.2,717.23,861.62,195.6DiversifiedYesYesDuPont Fabros Technology, Inc.2,574.64,098.92,815.5SpecialtyNoYesEPR Properties3,555.25,879.04,217.3SpecialtyYesYesHealthcare Realty Trust, Inc.2,875.04,302.42,816.7Health CareNoNoHealthcare Trust of America, Inc.3,475.44,695.53,310.5Health CareNoYesHealthSouth Corp.3,136.45,479.64,606.1Specialty HospitalsNoNoHudson Pacific Properties, Inc.4,093.06,572.96,254.0OfficeNoYesLifepoint Hospitals, Inc.2,697.35,231.85,996.8HospitalsNoNoLTC Properties, Inc.1,619.82,178.81,275.4Health CareNoYesNational Retail Properties, Inc.5,647.48,184.35,460.0Free StandingNoYesOmega Healthcare Investors, Inc.6,866.510,432.18,019.0Health CareNoYesSabra Health Care REIT, Inc.1,318.62,852.22,486.2Health CareNoYesMedical Properties Trust, Inc.2,728.05,860.05,609.4Health CareYesYesPeer Group Median3,136.45,231.84,217.3[1] Includes outstanding common shares and OP units.[2] Represents the market capitalization of ongoing operations, including common capitalization at market value and all non-common equity, debt and mezzanine at book value, less cash and cash equivalents at book value as reported by SNL Financial LC.[3] Total assets as reported by SNL Financial are as of the most the recently available quarterly data.27 Medical Properties Trust
Although the value of the award remained unchanged year-over-year, due to our significant stock price appreciation, the number of time-based and performance-based shares granted in 2020 decreased by 30% on average for our NEOs as illustrated below: |
Named Executive Officer | 2020 Annual Time-Based Shares (#) | 2020 Target Performance-Based Shares Granted (#) | 2020 Total Shares Granted (#) |
| 2019 Total Shares Granted (#) | ||||||||||||||||||||
Edward K. Aldag, Jr. | 178,167 | 345,854 | 524,021 |
| 733,832 | ||||||||||||||||||||
R. Steven Hamner | 89,084 | 172,927 | 262,011 |
| 366,916 | ||||||||||||||||||||
Emmett E. McLean | 64,979 | 129,958 | 194,937 |
| 300,566 |
(1) | Refer to Appendix A for our definition of FFO and normalized FFO and a reconciliation of net income to FFO and normalized FFO |
(2) | Refer to Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2020 for our definition of total pro forma gross assets and a discussion of non-GAAP financial measures and GAAP reconciliation |
Executive CompensationOther Aspects of Our Executive Compensation Program
Other Benefits
We maintain a 401(k) Retirement Savingsretirement savings plan and annually match 100% of the first three percent (3%)3% of pay contributed, plus fifty percent (50%)50% of the next two percent (2%)2% of pay contributed, to such plan by any employee (subject to certain tax limitations). We offer medical, dental, and vision plans, and pay the coverage cost under these plans for all employees.the NEOs and their families. Each of our NEOs has an employment agreementsagreement with us pursuant to which certain other benefits are provided to them. The material terms of each such employment agreement are set forth inunder “Employment Agreements with Named Executive Officers” below.
36 Proxy Statement and Notice of 2021 Annual Meeting |
Compensation Discussion and Analysis |
Practices with Regard to Dates and PricingOther Aspects of Stock and Option GrantsTheOur Executive Compensation Committee determines the number of shares underlying grants of restricted stock awards and the executive officers who will receive such awards. All NEOs must receive prior authorization for any purchase or sale of our common stock.ProgramWe have never granted stock options to our executive officers, and we have not granted any options since those granted to our initial directors in 2004.
Equity Ownership Guidelines
We believe that equity ownership by our directors and officers can help align their interests with our shareholders’stockholders’ interests. To that end, we have adopted equity ownership guidelines applicable to our directors and to key executive officers. While there are no penalties for failure to meet the ownership levels discussed below, we will report ownership status to our Compensation Committee on an annual basis. Failure to meet the ownership levels or show sustained progress towards meeting them, may result in payment to the directors and the key executive officers of future compensation in the form of equity rather than cash.
With respect to our key executive officers and non-employee directors, the guidelines require ownership of shares of our common stock, including vested and unvested common stock, within five years of becoming an executive officer or from promotion tothree years after a new executive officer position,non-employee director initially joins the Board, with a value equal to the following multiple of his or her base salary:TitleMultiple of Base SalaryChairman, Chief Executive Officer and President6xExecutive Vice Presidents (including CFO and COO)4xOur ownership guidelines also require ownership by each non-employee director of shares of our common stock, including vested and unvested common stock, in an amount equal to at least three times thesalary (or annual fee paid to such director. Non-employee directors must comply withfor the ownership requirement within a period of three years after he or she initially joins the Board, and must come back into compliance within three years in the event that he or she should fall short of this ownership requirement at any time. All of our non-employee directors and NEOs met the equity ownership guidelines as of December 31, 2015.Proxy Statement and Notice of 2016 Annual Meeting 28
Title | Multiple of Base Salary / Annual Fee | Compliance with Guidelines | ||||||||
Chairman, Chief Executive Officer and President | 6x | Yes | ||||||||
Executive Vice Presidents (including CFO and COO) | 4x | Yes | ||||||||
Non-Employee Directors | 3x | Yes |
* | All of our non-employee directors and NEOs as of March 29, 2021 met the equity ownership guidelines, except for Ms. Mozingo, who has three years from her initial election to the Board to reach compliance. |
Executive Compensation
Clawback Policy
In February 2013, the Board adopted a clawback policy applicable to our executive officers. The policy allows for the recoupment of incentive awards (including awards made under our annual cash bonus plan and long-term incentive plans) in the event the Company is required to restate its financial statements due to the material noncompliance of the Company with financial reporting requirements under the securities laws, as a result of intentional misconduct, fraud or gross negligence.
Each executive officer who is directly responsible for the intentional misconduct, fraud or gross negligence shall reimburse the Company for incentive awards made to that executive officer after January 1, 2013, that would not have been made if the restated financial measures had been reported initially.
No Hedging or PledgingProhibited Transactions
The Company maintains an internal “Insider Trading Policy” that is applicable to our executive officers and directors. TheAmong other things, the policy prohibits any director or executive officeremployee of the Company (including directors or executive officers) from (i) engaging in short sales of the Company’s securities and from trading in puts, calls, options or other derivative securities based on the Company’s securities. The policy also prohibits directors and executive officers of the Company fromsecurities, (ii) engaging in certain forms of hedging or monetization transactions which(which allow the shareholdera stockholder to continue to own the covered securities, but without the full risks and rewards of ownership.Through 2015ownership) and (iii) pledging the policy also discouraged the holding of Company securities in a margin account or pledging Company securities as collateral for a loan. No NEO has pledged any shares under any circumstances in more than five years. However, beginning in 2016, the policy now prohibits the pledging of CompanyCompany’s securities as loan collateral.
Proxy Statement and Notice of 2021 Annual Meeting 37 |
Compensation Discussion and Analysis |
Other Practices with Regard to Equity Awards and Purchases and Sales of Shares
The Compensation Committee determines the number of shares underlying grants of restricted stock awards and the executive officers who will receive such awards. All NEOs must receive prior authorization for any purchase or sale of our common stock.
We have never granted stock options to our executive officers, and we have not granted any options since those granted to our initial directors in 2004.
Compensation Risk Assessment
During 2015,2020, the Compensation Committee reviewed the potential risks in the Company’s compensation program to ensure that compensation methods do not incentivize our executives to make decisions that, while creating apparent short-term financial and operating success, may in the longer term result in future losses and other value depreciation.
After reviewing the analysis, the Compensation Committee concluded that the Company’s compensation program doespolicies and practices do not encourage excessive risk taking nor create any risks that would be reasonably likely to have a materially adverse effect on the Company, and it believes that the following risk oversight and compensation design features assist in guarding against excessive risk taking:•
Review and approval of corporate objectives by the Compensation Committee to ensure that these goals are aligned with the Company’s annual operating and strategic plans, achieve the proper risk/reward balance, and do not encourage excessive risk taking.• taking
Base salaries consistent with each executive’s responsibilities so that they are not motivated to take excessive risks to achieve a reasonable level of financial security.• security
A significant portion of each executive’s compensation that is tied to the future stock performance of the Company.• Company
Stock compensation and vesting periods for stock awards thatdesigned to encourage executives to focus on sustained stock price appreciation.• appreciation
A mix between cash and equity compensation that is designed to encourage strategies and actions that are in the long-term best interests of the Company and its shareholders.29 Medical Properties Truststockholders
38 Proxy Statement and Notice of 2021 Annual Meeting |
Compensation Discussion and Analysis |
Executive CompensationMPT
Section 162(m) PolicyThe SEC requires that this report comment upon the Company’s policy with respect to
Section 162(m) of the U.S. Internal Revenue Code of 1986 as amended (the “Code”), whichas amended by the Tax Cuts and Jobs Act of 2017 (the “TCJA”), limits the deductibility on the Company’s tax return of compensation overto $1 million the deduction that publicly traded corporations may take for compensation paid to any“covered employees” of the NEOscorporation. Under a series of private letter rulings issued by the Internal Revenue Service (the “IRS”) prior to the enactment of the CompanyTCJA, compensation paid by an operating partnership to executive officers of a REIT that serves as its general partner was not subject to the limitation on deductibility under Section 162(m) to the extent such compensation was attributable to services rendered to the REIT’s operating partnership. In December 2020, the IRS issued final Treasury Regulations under Section 162(m) (the “Final Regulations”) that overturn the guidance in the private letter rulings and apply Section 162(m)’s $1 million deduction limit to a REIT’s distributive share of any compensation paid by the REIT’s operating partnership to certain current and former executive officers of the REIT. The guidance under the Final Regulations applies to all compensation deductible in tax years ending on or after December 20, 2020 other than the Chief Financial Officer unless, in general, the compensation is paid pursuant to a plan whichwritten binding contract in effect on December 20, 2019 that is performance-related, non-discretionary, and has been approved by the Company’s shareholders. The Company believes that, because it qualifies as a REITnot subsequently materially modified. This guidance under the Code and pays dividends sufficient to minimize federal income taxes,Final Regulations represents a significant change in IRS guidance regarding the paymentdeductibility of compensation that does not satisfy the requirements of Section 162(m) will generally not affect the Company’s net income. Tofor REITs and, to the extent that compensation paid to our executive officers does not qualify for a deduction under Section 162(m), a larger portion of shareholderstockholder distributions may be subject to U.S. federal income taxation as dividend income rather than return of capital. The Company does not
While we continue to assess the impact of Section 162(m) of the Code and the Final Regulations on our compensation arrangements, the Board and the Compensation Committee believe that stockholder interests are best served if they retain maximum flexibility to design executive compensation programs that meet stated business objectives. For that reason, while our Board and Compensation Committee have considered the potential effects of Section 162(m) will materially affectof the taxability of shareholder distributions, although no assurance can be given in this regard dueCode and the Final Regulations on the compensation paid to the variety of factors that affect the tax position of each shareholder. For these reasons,our named executive officers, the Compensation Committee’s compensation policy and practices are not directly guided by considerations relating to Section 162(m).
of the Code.
The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis beginning on page 1823 of this Proxy Statement. Based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.D. Paul Sparks, Jr. (Chairman) Robert E. Holmes, Ph.D. Sherry A. Kellett
D. Paul Sparks, Jr. (Chairman) | Michael G. Stewart | C. Reynolds Thompson, III |
Proxy Statement and Notice of 2021 Annual Meeting 39 |
Compensation Discussion and Analysis |
The amounts in the table below are a summary of the components of compensation our NEOs received in the last three years:
Name
| Year
| Salary ($)
| Bonus(1) ($)
| Stock Awards ($)
| Non-Equity Incentive Plan
| All Other Compensation
| Total ($) | ||||||||||||||||||||||||||||
Edward K. Aldag, Jr. |
2020
|
|
1,000,000
|
|
|
600,000
|
|
|
12,732,033
|
(3)
|
|
2,400,000
|
|
|
125,604
|
(4)
|
|
16,857,637
|
| ||||||||||||||||
Chairman, Chief Executive |
2019
|
|
1,000,000
|
|
|
450,000
|
|
|
13,904,809
|
|
|
1,800,000
|
|
|
98,627
|
|
|
17,253,436
|
| ||||||||||||||||
Officer and President |
2018
|
|
1,000,000
|
|
|
450,000
|
|
|
9,854,642
|
|
|
1,800,000
|
|
|
108,623
|
|
|
13,213,265
|
| ||||||||||||||||
R. Steven Hamner |
2020
|
|
675,000
|
|
|
303,750
|
|
|
6,366,029
|
(3)
|
|
1,215,000
|
|
|
61,643
|
(5)
|
|
8,621,422
|
| ||||||||||||||||
Director, Executive |
2019
|
|
600,000
|
|
|
210,000
|
|
|
6,952,405
|
|
|
840,000
|
|
|
61,247
|
|
|
8,663,652
|
| ||||||||||||||||
Vice President, Chief Financial Officer |
2018
|
|
600,000
|
|
|
210,000
|
|
|
4,927,321
|
|
|
840,000
|
|
|
70,359
|
|
|
6,647,680
|
| ||||||||||||||||
Emmett E. McLean |
2020
|
|
550,000
|
|
|
192,500
|
|
|
4,738,268
|
(3)
|
|
770,000
|
|
|
65,251
|
(6)
|
|
6,316,019
|
| ||||||||||||||||
Executive Vice President, |
2019
|
|
550,000
|
|
|
192,500
|
|
|
5,634,626
|
|
|
770,000
|
|
|
61,467
|
|
|
7,208,593
|
| ||||||||||||||||
Chief Operating Officer and Secretary |
2018
|
|
550,000
|
|
|
192,500
|
|
|
4,434,590
|
|
|
770,000
|
|
|
69,622
|
|
|
6,016,712
|
|
(1) | Reflects the cash bonus earned by our NEOs for the applicable year under the qualitative performance review metric in the annual cash bonus program. |
(2) | Reflects the cash bonus earned by our NEOs for the applicable year based on the achievement of formulaic corporate goals in the annual cash bonus program. |
(3) | Represents the aggregate grant date fair value of restricted stock awards, calculated in accordance with FASB ASC Topic 718. For awards subject to performance-based vesting conditions, the value reported reflects the fair value of the award at the grant date based upon the probable outcome of the performance conditions. The reported value for these performance awards was $8,577,179; $4,288,590; and $3,222,958 for Messrs. Aldag, Hamner, and McLean, respectively. The value of the award at the grant date, assuming that the highest level of performance conditions will be achieved, would be $21,442,948; $10,721,474; and $8,057,396 for Messrs. Aldag, Hamner, and McLean, respectively. See Item 7 of the Notes to Consolidated Financial Statements included in our 2020 Annual Report on Form 10-K for further information. |
(4) | Represents $11,400 in company 401(k) match, $12,419 health insurance, $12,000 automobile allowance, $37,517 for the cost of tax preparation and financial planning services, $3,312 for the cost of disability insurance, and $48,956 for the cost of life insurance, as contractually required under his employment agreement executed in connection with our initial equity offering. These amounts are inclusive of $36,621 to reimburse Mr. Aldag for his tax liabilities associated with such payments. |
(5) | Represents $11,400 in company 401(k) match, $12,419 health insurance, $9,000 automobile allowance, $6,300 for the cost of tax preparation and financial planning, and $22,524 for the cost of life insurance, as contractually required under his employment agreement executed in connection with our initial equity offering. These amounts are inclusive of $10,766 to reimburse Mr. Hamner for his tax liabilities associated with such payments. |
(6) | Represents $11,400 in company 401(k) match, $6,713 health insurance, $9,000 automobile allowance, $13,660 for the cost of tax preparation, and $24,478 for the cost of life insurance, as contractually required under his employment agreement executed in connection with our initial equity offering. These amounts are inclusive of $16,151 to reimburse Mr. McLean for his tax liabilities associated with such payments. |
40 Proxy Statement and Notice of 2021 Annual Meeting |
Compensation Discussion and Analysis |
The following table provides information about plan-based awards granted to our NEOs during 2020. For further detail regarding each of these awards, see “Compensation Discussion and NoticeAnalysis—Elements of 2016 Annual Meeting 30Pay.”
Name
| Grant Date
|
Estimated Future Payouts Under Non-Equity | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Number of or Units (#)
| Grant and Option Awards ($)
| |||||||||||||||||||||||||||||||
Threshold ($)
| Target ($)
| Maximum ($)
| Threshold (#)
| Target (#)
| Maximum (#)
| |||||||||||||||||||||||||||||||
Edward K. Aldag, Jr.
|
|
2/26/2020
|
|
|
800,000
|
|
|
1,600,000
|
|
|
2,400,000
|
| ||||||||||||||||||||||||
|
2/26/2020
|
|
|
178,167
|
(3)
|
|
4,154,854
|
| ||||||||||||||||||||||||||||
|
2/26/2020
|
|
|
129,695
|
(4)
|
|
345,854
|
(4)
|
|
864,635
|
(4)
|
|
8,577,179
|
| ||||||||||||||||||||||
R. Steven Hamner |
|
2/26/2020
|
|
|
540,000
|
|
|
810,000
|
|
|
1,215,000
|
| ||||||||||||||||||||||||
|
2/26/2020
|
|
|
89,084
|
(3)
|
|
2,077,439
|
| ||||||||||||||||||||||||||||
|
2/26/2020
|
|
|
64,848
|
(4)
|
|
172,927
|
(4)
|
|
432,318
|
(4)
|
|
4,288,590
|
| ||||||||||||||||||||||
Emmett E. McLean |
|
2/26/2020
|
|
|
220,000
|
|
|
440,000
|
|
|
770,000
|
| ||||||||||||||||||||||||
|
2/26/2020
|
|
|
64,979
|
(3)
|
|
1,515,310
|
| ||||||||||||||||||||||||||||
|
2/26/2020
|
|
|
48,734
|
(4)
|
|
129,958
|
(4)
|
|
324,895
|
(4)
|
|
3,222,958
|
|
(1) | Represents cash incentive compensation opportunity, which can be earned based upon the achievement of formulaic corporate goals in the annual cash bonus program. |
(2) | Represents awards of performance-based restricted stock. Dividends are not paid on performance-based awards until the award is earned. |
(3) | Represents the annual time-based restricted stock awards that will vest quarterly over a period of three years. The grant date fair value of the time-based restricted stock was $23.32 per share. Eligibility to receive dividends on the time-based stock awards starts on the date of grant. |
(4) | Represents 2020 FFO per share growth, EBITDA and Acquisitions awards which are earned based on the Company’s achievement of specific one-year and three-year goals from January 1, 2020 to December 31, 2022. The awards are also subject to an absolute and relative TSR modifier for the respective performance periods which can increase/decrease the number of shares earned by up to 25%. The grant date fair value of these awards is $24.80 per share. |
Proxy Statement and Notice of 2021 Annual Meeting 41 |
Compensation Discussion and Analysis |
Outstanding Equity Awards as of December 31, 2020
The table below shows the outstanding equity awards held by our NEOs as of December 31, 2020. Market values are based on a price of $21.79 per share, the closing price of our common stock on December 31, 2020.
Option Awards
|
Stock Awards
| |||||||||||||||||||||||
Name
| Number of
| Number of
| Equity
| Option
| Option
| Number of
| Market
| Equity
|
Equity
| |||||||||||||||
Edward K. Aldag, Jr.
|
–
|
–
|
–
|
–
|
–
|
490,848 (1)
|
|
10,695,578
|
|
|
1,468,601 (4)
|
|
|
32,000,816
|
| |||||||||
R. Steven Hamner
|
–
|
–
|
–
|
–
|
–
|
246,347 (2)
|
|
5,367,901
|
|
|
734,299 (5)
|
|
|
16,000,375
|
| |||||||||
Emmett E. McLean
|
–
|
–
|
–
|
–
|
–
|
186,281 (3)
|
|
4,059,063
|
|
|
622,351 (6)
|
|
|
13,561,028
|
|
(1) | 163,429 shares were vested on January 1, 2021. 109,770 shares vest in equal quarterly installments from April 1, 2021 through January 1, 2022. 217,649 shares vest in equal quarterly installments from April 1, 2021 through January 1, 2023. |
(2) | 82,639 shares were vested on January 1, 2021. 54,881 shares vest in equal quarterly installments from April 1, 2021 through January 1, 2022. 108,827 shares vest in equal quarterly installments from April 1, 2021 through January 1, 2023. |
(3) | 68,853 shares were vested on January 1, 2021. 49,391 shares vest in equal quarterly installments from April 1, 2021 through January 1, 2022. 68,037 shares vest in equal quarterly installments from April 1, 2021 through January 1, 2023. |
(4) | 587,087 shares were earned and vested on January 1, 2021. 339,421 shares of the 2017 Absolute TSR Award*, 311,525 shares of the 2019 Performance Award* and 230,568 shares of the 2020 Performance Award† remain unearned. |
(5) | 293,543 shares were earned and vested on January 1, 2021. 169,710 shares of the 2017 Absolute TSR Award*, 155,762 shares of the 2019 Performance Award** and 115,284 shares of the 2020 Performance Award† remain unearned. |
(6) | 242,786 shares were earned and vested on January 1, 2021. 152,739 shares of the 2017 Absolute TSR Award*, 140,188 shares of the 2019 Performance Award** and 86,638 shares of the 2020 Performance Award† remain unearned. |
* | 2017 Absolute TSR Award can be earned as follows: 30% of the award can be earned by achieving either a TSR of 27% or greater for the period January 1, 2017 through December 31, 2019 or a TSR of 36% or greater for the period January 1, 2017 through December 31, 2020. If TSR is 45% or greater for the period ending December 31, 2021, 100% of the award or the remaining unearned shares will be earned. Any earned shares will vest on January 1 immediately following the date on which the shares are earned. |
** | The 2019 Performance Award is based on the achievement of return on equity (“ROE”), EBITDA and Acquisitions goals over a three-year period with the ability to earn up to one-third of the award in 2019 based on one-year goals. Any earned shares are subject to a relative TSR modifier (based on one-year TSR for any shares earned based on one-year goals and three-year TSR for the majority of the award based on three-year goals) that can increase or decrease the award up to 25%. Up to 1/3 of the shares subject to the EBITDA award may be earned if EBITDA is $700 million for 2019 with 100% of shares earned if EBITDA is $800 million in the third year of the performance period. Up to 1/3 of the shares of the ROE award may be earned if ROE is 13% for 2019 with 100% of shares earned if ROE is 13% for the three-year performance period. Up to 1/3 of the shares of the Acquisitions award may be earned if Acquisitions is $750 million for 2019 with 100% of shares earned if Acquisitions is $2.25 billion for the three-year performance period. Any earned shares will vest on the January 1 immediately following the date on which the shares are earned. |
† | The 2020 Performance Award is based on the achievement of FFO per Share Growth, EBITDA and Acquisitions goals over a three-year period with the ability to earn up to one-third of the award in 2020 based on one-year goals. Any earned shares are subject to an absolute TSR and relative TSR modifier (based on one-year TSR for any shares earned based on one-year goals and three-year TSR for the majority of the award based on three-year goals) that can increase or decrease the award up to 25%. Up to 1/3 of the shares of the EBITDA award may be earned if EBITDA is $850 million for 2020 with 100% of shares earned if EBITDA is $940 million in the third year of the performance period. Up to 1/3 of the shares of the FFO per Share Growth award may be earned if FFO per Share Growth is 4% for 2020 with 100% of shares earned if per Share Growth is 12% for the three-year performance period. Up to 1/3 of the shares of the Acquisitions award may be earned if Acquisitions is $750 million for 2020 with 100% of shares earned if Acquisitions is $2.25 billion for the three-year performance period. Any earned shares will vest on the January 1 immediately following the date on which the shares are earned. |
42 Proxy Statement and Notice of 2021 Annual Meeting |
Compensation Discussion and Analysis |
Option Exercises and Stock Vested
The following table sets forth the aggregate number and value of shares of restricted common stock held by our NEOs that vested in 2020. The “Value Realized on Vesting” set forth below is the product of the fair market value of a share of common stock on the vesting date multiplied by the number of shares vesting. We have never issued stock options to our NEOs.
Option Awards
|
Stock Awards
| |||||||||
Name
| Number of Shares (#)
| Value Realized ($)
| Number of Shares (#)
|
Value Realized ($)
| ||||||
Edward K. Aldag, Jr.
|
–
|
–
|
1,241,464
|
|
25,411,460
|
| ||||
R. Steven Hamner
|
–
|
–
|
621,671
|
|
12,725,435
|
| ||||
Emmett E. McLean
|
–
|
–
|
546,495
|
|
11,215,534
|
|
Potential Payments Upon Termination or Change of Control
The following table shows potential payments and benefits that will be provided to our NEOs upon the occurrence of certain termination triggering events. The change-of-control provisions in the employment agreements are designed to align management’s interests with those of our stockholders. See the discussion below under “Employment Agreements with Named Executive CompensationCompensationOfficers” for information about payments upon termination or a change of Executive Officers
control. All equity interests included in the termination and change of control calculations represent previously granted restricted stock awards and are valued based on the closing price of our common stock on December 31, 2020, and an assumed termination of employment on December 31, 2020.
Name | Termination and ($) | Death ($) | Termination ($) | Termination for Cause; By Executive without Good Reason ($) | ||||||||||||||||
Edward K. Aldag, Jr. |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Cash Severance | 12,323,433 | (2) | 62,096 | 12,323,433 | (3) | – | ||||||||||||||
Equity-Award Acceleration (1) | 60,414,562 | 60,414,562 | 60,414,562 |
|
|
| ||||||||||||||
R. Steven Hamner |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Cash Severance | 6,713,081 | (2) | 37,257 | 5,775,581 | – | |||||||||||||||
Equity-Award Acceleration (1) | 30,227,241 | 30,227,241 | 30,227,241 |
|
|
| ||||||||||||||
Emmett E. McLean |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Cash Severance | 4,658,073 | (2) | 20,139 | 4,658,073 | – | |||||||||||||||
Equity-Award Acceleration (1) | 25,033,856 | 25,033,856 | 25,033,856 |
|
|
|
(1) | As of January 1, 2021, the amount that would accelerate upon a change of control (“CoC”) would be reduced to: $44,060,818 for Mr. Aldag, $22,030,235 for Mr. Hamner and $18,243,242 for Mr. McLean as a result of a significant number of shares that vested on January 1, 2021. |
(2) | Amounts exclude tax related payments including any tax gross-ups in connection with a CoC. While the precise amount of any tax-related payments is difficult to calculate and may be mitigated based on a number of considerations, the estimated tax gross-up payments are: $31,572,915 for Mr. Aldag, $14,504,613 for Mr. Hamner and $11,552,826 for Mr. McLean as of December 31, 2020. Due to the shares vested on January 1, 2021, the estimated excise tax gross-up payments upon a CoC on January 1, 2021 would be reduced to $24,189,004 for Mr. Aldag, $10,812,664 for Mr. Hamner and $8,499,258 for Mr. McLean. |
(3) | Amount excludes an estimated tax payment of $5,442,000. |
Proxy Statement and Notice of 2021 Annual Meeting 43 |
Compensation Discussion and Analysis |
Employment Agreements with Named Executive OfficersThree of our
Our three founders have employment agreements that were negotiated to market standards upon our initial equity offering in 2003.2004. Below we describe the terms of these agreements. Because certain market standards have evolved in recent years, and because only our founders have these agreements, we have committed that we will not enter into any new contracts that include a multi-year evergreen term, a single-trigger change inof control provisions, or exerciseexcise tax gross up provisions.
We have employment agreements with Edward K. Aldag, Jr., R. Steven Hamner and Emmett E. McLean. These employment agreements provided the following annual base salaries in 2015: Mr. Aldag, $950,000; Mr. Hamner, $575,000; and Mr. McLean, $525,000. For 2015, base salaries were adjusted to reflect more appropriate peer group levels; our NEOs only receive periodic increases at the discretion of the Compensation Committee. These agreements provide that each NEO agrees to devote substantially all of his business time to our operation. The employment agreement for each of the NEOs isprovides for aan initial three-year term, which is automatically extended at the end of each year within such term for an additional one year period,successive one-year periods, unless either party gives notice of non-renewal as provided in the agreement.The employment agreements provide that the NEOs are eligible to participate in our equity incentive plan. The employment agreements also provide that the NEOs are eligible to receive annual cash bonuses based on the bonus policy adopted by the Compensation Committee.These employment agreements permit us to terminate each executive’s employment with appropriate notice for “cause,” which includes (i) the conviction of the executive of, or the entry of a plea of guilty or nolo contendere by the executive to, a felony (exclusive of any felony relating to negligent operation of a motor vehicle and also exclusive of a conviction, plea of guilty or nolo contendere arising solely under a statutory provision imposing criminal liability upon the executive on a per se basis due to the Company offices held by the executive, so long as any act or omission of the executive with respect to such matter was not taken or omitted in contravention of any applicable policy or directive of the Board of Directors), (ii) a willful breach of his duty of loyalty which is materially detrimental to the Company, (iii) a willful failure to materially perform or materially adhere to explicitly stated duties that are consistent with the terms of his employment agreement, or the Company’s reasonable and customary guidelines of employment or reasonable and customary corporate governance guidelines or policies, including, without limitation, any business code of ethics adopted by the Board of Directors, or to follow the lawful directives of the Board of Directors (provided such directives are consistent with the terms of his employment agreement), which, in any such case, continues for thirty (30) days after written notice from the Board of Directors to the executive, or (iv) gross negligence or willful misconduct in the material performance of the executive’s duties.Each of the NEOs has the right under his employment agreement to resign for “good reason,” which includes (i) the employment agreement is not automatically renewed by the Company; (ii) the termination of certain incentive compensation programs; (iii) the termination or diminution of certain employee benefit plans, programs, or material fringe benefits; (iv) the relocation of our principal office outside of a 100 mile radius of Birmingham, Alabama (in the case of Mr. Aldag); or (v) our breach of the employment agreement that continues uncured for 30 days. In addition, in the case of Mr. Aldag, the following constitute good reason: (i) his removal from the Board of Directors without cause or his failure to be nominated or elected to the Board of Directors; or (ii) any material reduction in duties, responsibilities, or reporting requirements, or the assignment of any duties, responsibilities, or reporting requirements that are inconsistent with his positions with us.
The executive employment agreements provide for an annual physical at the Company’s expense, a monthly car allowance of $1,000 for Mr. Aldag and $750 for each of Messrs. Hamner and McLean. The NEOs are also reimbursed for the cost of tax preparation and financial planning services, up to $25,000 annually for Mr. Aldag and $10,000 annually for each of Messrs. Hamner and McLean. We also reimburse each executive for the income tax he incurs on the receipt of these tax preparation and financial planning services. In addition, the employment agreements provide for annual paid vacation of six weeks for Mr. Aldag and four weeks for Messrs. Hamner and McLean, and various other customary benefits. The employment agreements also31 Medical Properties Trust
Executive Compensation MPT
provide that Mr. Aldag will receive up to $20,000 per year in reimbursement for life insurance premiums, which amount is to increaseincreases annually based on the increase in CPIthe consumer price index (“CPI”) for such year, and that Messrs. Hamner and McLean will receive up to $10,000 per year in reimbursement for life insurance premiums, which amount is to increaseincreases annually based on the increase in the CPI for such year. We also reimburse each executive for the income tax he incurs on the receipt of these life insurance premium reimbursements. The NEOs are also reimbursed for the cost of their disability insurance premiums.
The employment agreements provide that the executive officers are eligible to receive the same benefits, including medical insurance coverage and retirement plan benefits in a 401(k) plan, to the same extent as other similarly situated employees, and such other benefits as are commensurate with their position. Participation in employee benefit plans is subject to the terms of said benefit plans as in effect from timetime-to-time.
The employment agreements with the NEOs provide for contractual severance benefits and accelerated vesting of equity grants in the event of a change of control, which we believe are common in the REIT industry, are designed to time.
reinforce and encourage the continued attention and dedication of our executive officers to their assigned duties without distraction or fear of job loss in the face of an actual or threatened change of control and to ensure that our management is motivated to negotiate the best merger consideration for our stockholders.
If the NEO’s employment ends for any reason, we will pay accrued salary, bonuses, and incentive payments already determined but not yet paid, and other existing obligations. If an NEO’s employment terminates as a result of his “permanent disability” (as defined in the employment agreements), we terminate an NEO’s employment without cause,for any reason other than for “cause” (as defined in the employment agreements), or if any of theman NEO terminates his employment for good reason,“good reason” (as defined in the employment agreements), we will be obligated to pay (i) a lump sum payment of severance equal to the sum of (x) the product of three and the sum of the salary in effect at the time of termination plus the average cash bonus (or the highest cash bonus, in the case of Mr. Aldag) paid to such executive during the preceding three years, grossed up for taxes in the case of Mr. Aldag, and (y) the incentive bonus prorated for the year in which the termination occurred; (ii) the cost of the executive’s continued participation in the company’sCompany’s benefit and welfare plans (other than the 401(k) plan) for a three-year period (a five-year period in the case of Mr. Aldag); following termination; and (iii) certain other benefits as providedcontinued reimbursement for life insurance premiums and the taxes payable on such amounts for three years following termination (or five years in the employment agreement.case of Mr. Aldag). Additionally, in the event of aupon such termination, by us for any reason other than cause or by the executive for good reason, all of the stock options, if any, and restricted stock granted toheld by the executive will become fully vested, and the executive will have whatever period remains under the term of stock options in which to exercise all vested stock options.
The employment agreements also provide that the NEOs and their spouses and dependents will be permitted to continue to participate in all employee benefit and welfare plans and programs of the Company other than the 401(k) plan until the earlier of age 65 or such time as the NEO obtains full-time employment with an entity not affiliated with the NEO that provides comparable benefits.
In the event of the death of any of our NEOs, in addition to the accrued salary, bonus, and incentive payments due to them, their stock options and restricted stock shall become fully vested, and their respective beneficiaries will have whatever period remains under theany outstanding stock options held by the NEO to exercise such stock options. In addition, their estates would be entitled to theirthe NEO’s prorated incentive bonuses.
bonus payable in a lump sum and the NEO’s spouse and each of his dependents shall be covered under the Company’s health insurance program until the earlier of age 65 or such time as the spouse or dependent obtains full-time
44 Proxy Statement and Notice of 2021 Annual Meeting |
Compensation Discussion and Analysis |
employment with an entity not affiliated with the NEO that provides comparable benefits. The Company shall pay for such coverage for three years (or five years in the case of Mr. Aldag) following the death of the NEO.
In the event that the employment of any of our NEOs ends as a result of a termination by us for cause or by the executivesNEO without good reason, then in addition to the accrued salary, bonuses and incentive payments due to them, the executives would be entitled to exercise theirany outstanding vested stock options held by the NEO, pursuant to the terms of the grant, but all other unvested stock options and restricted stock would be forfeited.
forfeited upon termination.
Upon a change of control, the NEOs will become fully vested in their stock options and restricted stock and will have whatever period remains under the stock options in which to exercise their stock options.equity awards. In addition, if the employment of any NEO is terminated by us for cause or by the executive without good reason in connection with a change of control, the executive will be entitled to receive an amount equal to the largest cash compensation paid to the executive for any twelve-month12-month period during his tenure multiplied by three. The contractual severance benefits and accelerated vesting of equity grants in the event of a change of control, which we believe are common in the REIT industry, are designed to reinforce and encourage the continued attention and dedication of our executive officers to their assigned duties without distraction or fear of job loss in the face of an actual or threatened change of control and to ensure that our management is motivated to negotiate the best merger consideration for our shareholders.
If payments become due as a result of a change inof control and the excise tax imposed by Code Section 4999 applies, the terms of the employment agreements require us to gross up the amount payable to the executive by the amount of this excise tax plus the amount of income and other taxes due as a result of the gross up payment.
For an 18-month period after termination of an executive’s employment for any reason other than (i) termination by us without cause or (ii) termination by the executive for good reason, each of the executives under these employment agreements has agreed not to compete with us by working with or investing in, subject to certain limited exceptions, any enterprise engaged in a business substantially similar to our business as it was conducted during the period of the executive’s employment with us.Proxy Statementus and not to solicit our employees.
Proxy Statement and Notice of 2021 Annual Meeting 45 |
In accordance with Item 402(u) of 2016 Annual Meeting32Regulation S-K,
Executive Compensation
For the purposes of reporting annual total compensation and the ratio of annual total compensation of the CEO to the median employee, both the CEO and the median employee’s annual total compensation were calculated consistent with the disclosure requirement under the Summary Compensation Table
Table.
The amountsCompany’s methodology in the table below are a summary of the components of compensationdetermining our NEOs received in the last three years:Year Salary Stock Awards Non Equity Incentive Plan Compensation(11) All Other Compensation Total CompensationEdward K. Aldag, Jr. 2015 $950,000 $3,609,491(10) $1,805,000 $81,767(1) $6,446,258Chairman, Chief ExecutiveOfficer and President 2014 $600,000 $4,021,349 $1,857,000 $79,123(4) $6,557,4722013 $600,000 $3,829,854 $1,817,250 $91,080(7) $6,338,184Emmett E. McLean 2015 $525,000 $1,312,544(10) $735,000 $33,652(2) $2,606,196Executive Vice President,Chief Operating Officer, 2014 $395,000 $1,482,478 $867,519 $42,441(5) $2,787,438Secretary and Treasurer2013 $395,000 $1,408,192 $849,497 $41,292(8) $2,693,981R. Steven Hamner 2015 $575,000 $1,810,249(10) $805,000 $69,052(3) $3,259,301Director, ExecutiveVice President, 2014 $400,000 $1,952,207 $878,500 $26,105(6) $3,256,812Chief Financial Officer2013 $400,000 $1,892,618 $860,250 $39,428(9) $3,192,296(1) Represents $10,600 in company 401(k) match, $12,000 automobile allowance, $10,522 for the cost of tax preparation and financial planning services, $3,312 for the cost of disability insurance, and $45,333 for the cost of life insurance. These additional benefits include $23,655 to reimburse Mr. Aldag for his tax liabilities associated with such payments.(2) Represents $10,600 in company 401(k) match, $9,000 automobile allowance, $1,665 for the cost of tax preparation, $4,479 for the cost of disability insurance, and $7,908 for the cost of life insurance. These additional benefits include $4,054 to reimburse Mr. McLean for his tax liabilities associated with such payments.(3) Represents $10,600 in company 401(k) match, $9,000 automobile allowance, $8,959 for the cost of tax preparation, and $40,493 for the cost of life insurance. These additional benefits include $18,470 to reimburse Mr. Hamner for his tax liabilities associated with such payments.(4) Represents $10,400 in company 401(k) match, $12,000 automobile allowance, $8,802 for the cost of tax preparation and financial planning services, $3,312 for the cost of disability insurance, and $44,609 for the cost of life insurance. These additional benefits include $22,620 to reimburse Mr. Aldag for his tax liabilities associated with such payments.(5) Represents $10,400 in company 401(k) match, $9,000 automobile allowance, $7,762 for the cost of tax preparation, $536 for the cost of disability insurance, and $14,743 for the cost of life insurance. These additional benefits include $9,531 to reimburse Mr. McLean for his tax liabilities associated with such payments.(6) Represents $10,400 in company 401(k) match, $9,000 automobile allowance, $5,816 for the cost of tax preparation, and $889 for the cost of life insurance. These additional benefits include $2,504 to reimburse Mr. Hamner for his tax liabilities associated with such payments.(7) Represents $10,200 in company 401(k) match, $12,000 automobile allowance, $15,172 for the cost of tax preparation and financial planning services, $3,312 for the cost of disability insurance, and $50,396 for the cost of life insurance. These additional benefits include $27,768 to reimburse Mr. Aldag for his tax liabilities associated with such payments.(8) Represents $10,200 in company 401(k) match, $9,000 automobile allowance, $7,285 for the cost of tax preparation, $65 for the cost of disability insurance, and $14,742 for the cost of life insurance. These additional benefits include $9,329 to reimburse Mr. McLean for his tax liabilities associated with such payments.(9) Represents $10,200 in company 401(k) match, $9,000 automobile allowance, and $20,228 for the cost of life insurance. These additional benefits include $7,555 to reimburse Mr. Hamner for his tax liabilities associated with such payments.(10) A portion of this stock award contains performance-based vesting conditions and the value reported reflects the value of the award at the grant date based upon the probable outcome of the performance conditions. The reported value for these performance awards was $2,226,546; $870,005; and $1,181,639 for Messers. Aldag, McLean, and Hamner, respectively. The value of the award at the grant date, assuming that the highest level of performance conditions will be achieved, would be $4,903,130; $1,951,196; and $2,640,152 for Messrs. Aldag, McLean, and Hamner, respectively. Assumptions used in the calculation of these amounts are included in Note 7 of the Notes to Consolidated Financial Statements included in our 2015 Annual Report on Form 10-K.(11) Reflects the annual cash bonus earned by our named executive officers for the applicable year, which are earned if specified corporate goals are reached.33 Medical Properties Trust
Executive CompensationMPTGrants of Plan-Based AwardsThe following table provides information about plan-based awards granted to our NEOs during 2015. For further detail regarding each of these awards, see “Compensation Discussion and Analysis — Elements of Pay.”Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) Estimated Future PayoutsThreshold Target Maximum Under Equity Incentive Plan Awards(2) Threshold Target Maximum All Other Stock Awards: Number of Shares of Stock or Grant Date Fair Value of Stock and OptionName Grant Date ($) ($) ($) (#) (#) (#) Units (#)(3) AwardsEdward K. Aldag, Jr. 1/2/2015 $950,000 $1,425,000 $1,900,000 — — — — —1/2/2015 — — — 33,069(4) 66,137(4) 99,206(4) 99,207 —1/2/2015 — — — 25,253(5) 50,505(5) 126,263(5) — —1/2/2015 — — — 31,566(6) 63,131(6) 126,262(6) — $3,609,491Emmett E. McLean 1/2/2015 $262,500 $525,000 $787,500 — — — — —1/2/2015 — — — 10,582(4) 21,164(4) 31,746(4) 31,746 —1/2/2015 — — — 10,823(5) 21,645(5) 54,113(5) — —1/2/2015 — — — 13,528(6) 27,056(6) 54,112(6) — $1,312,544R. Steven Hamner 1/2/2015 $287,500 $575,000 $862,500 — — — — —1/2/2015 — — — 15,031(4) 30,063(4) 45,094(4) 45,094 —1/2/2015 — — — 14,430(5) 28,860(5) 72,150(5) — —1/2/2015 — — — 18,038(6) 36,075(6) 72,150(6) — $1,810,249(1) Represents cash compensation which may be earned if specified corporate goals are reached.(2) Represents awards of performance-based restricted stock. Dividends are not paid on performance-based awards until the award is earned.(3) Represents awards of time-based restricted stock that will vest quarterly over a period of three years. The grant date fair value of the time-based restricted stock was calculated using a value of $13.94 per share, which was the average price of our common stock on January 2, 2015, the date on which these grants were made. Dividends are paid on the time-based stock awards starting on the date of grant.(4) Represents 2015 Annual Performance - Based Restricted Stock Awards which will be earned if the Company achieves a simple 9.0% annual TSR over a three-year period, with carry back and carry forward provisions through December 31, 2017. The grant date fair value of the performance-based awardsmedian employee is based upon $7.82 per share usingon 2020 base salaries (annualized for employees hired mid-year or who had a leave of absence during the Monte Carlo valuation method, as more fully described in Note 7 of the Notes to Consolidated Financial Statements included inyear) plus incentive bonus for all individuals, excluding our 2015 Annual Report on Form 10-K.(5) Represents 2015 Absolute TSR Awards which will be earned if the Company achieves specific cumulative TSR from January 1, 2015, to December 31, 2017. The grant date fair value of the performance-based awards is based upon $4.37 per share using the Monte Carlo valuation method, as more fully described in Note 7 of the Notes to Consolidated Financial Statements included in our 2015 Annual Report on Form 10-K.(6) Represents 2015 Relative TSR Awards which will be earned if the Company outperforms the MSCI U.S. REIT Index over the cumulative period from January 1, 2015 to December 31, 2017. The grant date fair value of the performance-based awards is based upon $7.12 per share using the Monte Carlo valuation method, as more fully described in Note 7 of the Notes to Consolidated Financial Statements included in our 2015 Annual Report on Form 10-K.Proxy Statement and Notice of 2016 Annual Meeting 34
Executive CompensationOutstanding Equity AwardsCEO, who were employed by us as of December 31, 2015
2020. In accordance with Item 402(u) and instructions thereto, we included all full-time, part-time, temporary and seasonal employees.
After applying the methodology described above, our median employee compensation using the Summary Compensation Table requirements was $167,462. Our CEO’s compensation in the Summary Compensation Table was $16,857,637. Therefore, our CEO to median employee pay ratio is approximately 101:1.
The table below shows the outstanding equity awards held by our NEOs as of December 31, 2015. Market values arepay ratio reported above is a reasonable estimate calculated in a manner consistent with SEC rules, based on a price of $11.51 per share, the closing price of our common stock on December 31, 2015.Option AwardsStock AwardsNumber of Securities Underlying Unexercised Options (#)Number of Securities Underlying Unexercised Options (#)Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned OptionsOption Exercise PriceOption ExpirationNumber of Shares or Units of Stock That Have Not VestedMarket Value of Shares or Units of Stock That Have Not VestedEquity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have NotEquity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have NotName Exercisable Unexercisable (#) ($) Date (#) ($) Vested (#)(4) Vested ($)Edward K. Aldag, Jr. — — — — — 398,992(1) 4,592,398 719,202 8,278,015Emmett E. McLean — — — — — 163,902(2) 1,886,512 292,524 3,366,951R. Steven Hamner — — — — — 205,276(3) 2,362,727 378,356 4,354,878(1) 9,580 shares vested on January 1, 2016. 49,481 shares vest in quarterly installments from January 1, 2016 through January 1, 2017. 74,406 shares vest in quarterly installments from January 1, 2016 through January 1, 2018. 82,191 shares were earned based on meeting certain performance metrics and vested on January 1, 2016. 183,334 shares were earned based on meeting certain performance metrics and vest annually from January 1, 2016 to January 1, 2017.(2) 3,016 shares vested on January 1, 2016. 15,936 shares vest in quarterly installments from January 1, 2016 through January 1, 2017. 23,808 shares vest in quarterly installments from January 1, 2016 through January 1, 2018. 37,808 shares were earned based on meeting certain performance metrics and vested on January 1, 2016. 83,334 shares were earned based on meeting certain performance metrics and vest annually from January 1, 2016 to January 1, 2017.(3) 4,428 shares vested on January 1, 2016. 22,645 shares vest in quarterly installments from January 1, 2016 through January 1, 2017. 33,820��shares vest in quarterly installments from January 1, 2016 through January 1, 2018. 44,383 shares were earned based on meeting certain performance metrics and vested on January 1, 2016. 100,000 shares were earned based on meeting certain performance metrics and vest annually from January 1, 2016 to January 1, 2017.(4) Represents various performance-based awards including the following:• 2013 Annual Performance-Based Restricted Awards — 38,298; 12,056; and 17,730 shares remain unearned for Messrs. Aldag, McLean and Hamner, respectively.• 2014 Annual Performance-Based Restricted Awards — 79,173; 25,497; and 36,232 shares remain unearned for Messrs. Aldag, McLean and Hamner, respectively.• 2014 Absolute TSR Awards — 125,000; 57,500; and 67,500 shares remain unearned for Messrs. Aldag, McLean and Hamner, respectively.• 2014 Relative TSR Awards — 125,000; 57,500; and 67,500 shares remain unearned for Messrs Aldag, McLean and Hamner, respectively.• 2015 Annual Performance-Based Restricted Awards — 99,206; 31,746; and 45,094 shares remain unearned for Messrs. Aldag, McLean and Hamner, respectively.• 2015 Absolute TSR Awards — 126,263; 54,113; and 72,150 shares remain unearned for Messrs. Aldag, McLean and Hamner, respectively.• 2015 Relative TSR Awards — 126,262; 54,112; and 72,150 shares remain unearned for Messrs Aldag, McLean and Hamner, respectively.The earn-out and vesting provisions, as applicable, of the 2015 Long-Term Incentive Awards, the 2015 Absolute TSR Awards,internal records and the 2015 Relative TSR Awards are fullymethodology described above. The SEC rules for identifying the median employee allow companies to adopt a variety of methodologies, to apply certain exclusions and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. Accordingly, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may use different methodologies, exclusions, estimates and assumptions in “Compensation Discussion and Analysis — Elements of Pay.”35 Medical Properties Trust
Executive CompensationMPTOption Exercises and Stock VestedThe following table sets forth the aggregate number and value of shares of restricted common stock held by our NEOs that vested in 2015. The “Value Realized Upon Vesting” set forth below is the product of the fair market value of a share of common stock on the vesting date multiplied by the number of shares vesting. We have never issued stock options to our NEOs.Option AwardsStock AwardsNameNumber of Shares Acquired on Exercise (#)Value Realized on Exercise ($)Number of Shares Acquired on Vesting (#)Value Realized on Vesting ($)Edward K. Aldag, Jr. — — 287,370 3,943,294Emmett E. McLean — — 115,680 1,594,041R. Steven Hamner — — 146,484 2,014,142Potential Payments Upon Termination or Change in ControlThe following table shows potential payments and benefits that will be provided to our NEOs upon the occurrence of certain termination triggering events. The change-in-control provisions in the employment agreements are designed to align management’s interests with those of our shareholders. See the discussion above under “Compensation of Executive Officers — Employment Agreements with Named Executive Officers” for information about payments upon termination or a change in control. All equity interests included in the termination and change in control calculations represent previously granted restricted stock awards and are valued based on the closing price of our common stock on December 31, 2015, and an assumed termination of employment on that date.NameTermination and Change in Control (1)DeathTermination Not for Cause; By Executive for Good Reason; Permanent DisabilityTermination for Cause; By Executive without Good ReasonEdward K. Aldag, Jr. $24,563,836 $12,930,413 $24,563,836 —Emmett E. McLean 9,388,479 5,289,463 9,388,479 —R. Steven Hamner 11,094,354 6,753,604 11,094,354 —(1) Amounts exclude any gross up for potential Excise Tax that may be due pursuant to Code Section 4999G.Proxy Statement and Notice of 2016 Annual Meeting36
Executive CompensationCompensation of DirectorsThe Compensation Committee has engaged FTI Consulting each year since 2007 to assist it in conducting a competitive review of our non-employee director compensation program. In late 2011, FTI Consulting conducted a survey of director compensation trends within the REIT industry, which survey included 108 publicly traded REIT filings. More specifically, FTI Consulting reviewed how the use of each component of total compensation (e.g., cash retainers and equity awards) compared to market practice, and how the total compensation for Board of Director and committee members compared to market practice. FTI Consulting’s report presented data comparing our director compensation to market levels, and the Compensation Committee took into consideration all of FTI Consulting’s findings and recommendations in determining the compensation structure for our non-employee directors for 2015.As compensation for serving on our Board of Directors during 2015, each non-employee director received a cash retainer of $95,000. In addition, the Lead Independent Director received $30,000; the Audit Committee chairman received $25,000; the Compensation Committee chairman received $20,000; and the Ethics, Nominating and Corporate Governance Committee chairman received $20,000. Each non-employee director has annually been awarded restricted stock including 7,234 shares, 7,246 shares, and 6,855 shares in 2013, 2014 and 2015, respectively. These awards vest over three years in equal quarterly amounts. We also reimburse our directors for reasonable expenses incurred in attending Board of Director and committee meetings. Our Compensation Committee may change the compensation of our non-employee directors at its discretion. Directors who are also officers or employees receive no additional compensation for their service as directors.The following table summarizes the compensation paid to our non-employee directors for their services during 2015. The grant date fair value of the restricted stock awards is based on $13.94 per share, the average price of our common stock on January 2, 2015, the date on which these grants were made.NameG. Steven DawsonRobert E. HolmesSherry A. KellettWilliam G. McKenzieL. Glenn Orr, Jr. (2)D. Paul Sparks, Jr.Fees earned or paid in cash$120,000145,00095,00095,000115,00095,000Stock Awards(1)$95,55995,55995,55995,55995,55995,559Option Awards——————Non-Equity Incentive Plan Compensation——————Change in Pension Value and Nonqualified Deferred Compensation Earnings——————Change in Pension Value and Nonqualified Deferred Compensation Earnings——————All Other Compensation——————Total240,559190,559190,559(1) Based on fair value at January 2, 2015 grant date of: $13.94(2) Mr. Orr retired from the Board on April 3, 2016.37 Medical Properties Trust
Executive CompensationThe following table shows outstanding equity awards for each of our non-employee directors at December 31, 2015.Unvested StockG. Steven Dawson 8,761Robert E. Holmes 8,761Sherry A. Kellett 8,761William G. McKenzie 8,761L. Glenn Orr, Jr. (1) 8,761D. Paul Sparks, Jr. 5,142
Compensation Committee Interlocks and Insider Participation
During 2015,2020, the following directors served on the Compensation Committee consisted of Dr. Holmes, Ms. KellettCommittee: Michael G. Stewart, C. Reynolds Thompson, III and Mr. OrrD. Paul Sparks, Jr. (chair)(1). No member of the Compensation Committee during 2015, or any prior year, was an officer or employee of our Company, or had any relationships requiring disclosure by us under applicable SEC regulations.regulations during 2020. Mr. Stewart served as our Executive Vice President, General Counsel and Secretary from 2005 to 2010. In addition, no executive officer served during 20152020 as a director or a member of the Compensation Committee of any entity that had an executive officer serving as a director or a member of the Compensation Committee of our Board of Directors.(1) Mr. Orr retired from the Board on April 3, 2016.Proxy Statement and Notice of 2016 Annual Meeting38Board.
46 Proxy Statement and Notice of 2021 Annual Meeting |
Other Information |
ExecutiveEquity Compensation Plan Information
The following table provides information as of December 31, 2020 regarding shares of common stock that may be issued under our equity compensation plans, consisting of the 2019 Equity Incentive Plan (the “2019 Plan”).
Plan category
| Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted (b) | Number of securities (c) | |||
Equity compensation plans approved by security holders | – | – | 8,372,581 | |||
Equity compensation plans not approved by security holders | – | – | – | |||
Total | – | – | 8,372,581 |
We have only issued restricted stock and not issued any options, warrants or rights under the 2019 Plan.
In 2020, the Compensation Committee engaged Gressle & McGinley to assist it in conducting a competitive review of our non-employee director compensation program. The Compensation Committee took into consideration Gressle & McGinley’s findings and recommendations in determining the compensation structure for our non-employee directors for 2020.
As compensation for serving on our Board during 2020, each non-employee director received a cash retainer of $112,500. In addition, the Lead Independent Director received a cash retainer of $45,000; the Audit Committee chairman received a cash retainer of $32,500; the Compensation Committee chairman received a cash retainer of $27,500; and the Ethics, Nominating and Corporate Governance Committee chairman received a cash retainer of $27,500. Each non-employee director was awarded restricted stock awards of 8,242 shares, 6,206 shares and 5,241 shares in 2018, 2019 and 2020, respectively. These awards vest over three years in equal quarterly amounts. We also reimburse our directors for reasonable expenses incurred in attending Board and committee meetings. Our Compensation Committee may change the compensation of our non-employee directors at its discretion. Directors who are also officers or employees receive no additional compensation for their service as directors.
In addition, pursuant to the Director Retirement Policy adopted by the Compensation Committee in February 2017, each non-employee director receives a single lump sum payment upon retirement equal to the director’s final annual retainer divided by 12 and multiplied by the director’s years of service on the Board.
Proxy Statement and Notice of 2021 Annual Meeting 47 |
Other Information |
The following Director Compensation Table summarizes the compensation paid to our non-employee directors for their services during 2020:
Name | Fees Earned or Paid in Cash ($) | Stock Awards(1) ($) | All Other Compensation ($) | Total ($) | ||||||||||||||||
G. Steven Dawson | 145,000 | 81,707 | – | 226,707 | ||||||||||||||||
Elizabeth N. Pitman | 112,500 | 81,707 | – | 194,207 | ||||||||||||||||
D. Paul Sparks, Jr. | 140,000 | 81,707 | – | 221,707 | ||||||||||||||||
Michael G. Stewart | 157,500 | 81,707 | – | 239,207 | ||||||||||||||||
C. Reynolds Thompson, III | 140,000 | 81,707 | – | 221,707 | ||||||||||||||||
Caterina A. Mozingo (2) | 86,250 | 81,707 | – | 167,957 |
(1) | Based on fair market value of our common stock on March 25, 2020 of $15.59 |
(2) | Ms. Mozingo joined the Board in February 2020 |
The following table shows outstanding equity awards held by each of our non-employee directors at December 31, 2020:
Unvested Stock (#) | |||||
G. Steven Dawson | 7,195 | ||||
Elizabeth N. Pitman | 7,195 | ||||
D. Paul Sparks, Jr. | 7,195 | ||||
Michael G. Stewart | 7,195 | ||||
C. Reynolds Thompson, III | 7,195 | ||||
Caterina A. Mozingo | 3,930 |
48 Proxy Statement and Notice of 2021 Annual Meeting |
Other Information |
Share Ownership of Certain Beneficial Owners
The following table provides information about the beneficial ownership of our common stock as of March 21, 2016, unless otherwise indicated,29, 2021, by (i) each director of the Company, (ii) each named executive officer,NEO of the Company who is not a director, (iii) all directors and executive officers as a group, and (iv) each person known to the Company to be the beneficial owner of more than 5% of the outstanding shares of common stock.Name
The SEC defines “beneficial ownership” of Beneficial Owner*Numbera security to mean the possession, directly or indirectly, of Shares Beneficially OwnedPercentage of Shares Outstanding(1)Edward K. Aldag, Jr. 1,503,738(2) **Emmett E. McLean 623,870(3) **R. Steven Hamner 910,202(4) **William G. McKenzie 135,871(5) **G. Steven Dawson 70,141(6) **Robert E. Holmes, Ph.D. 105,129(7) **Sherry A. Kellett 74,029(7) **D. Paul Sparks, Jr. 7,855(8) **All directors and executive officers as a group (8 persons) 3,430,835(9) 1.44%Other Shareholders:The Vanguard Group, Inc. 34,948,354(10) 14.68%100 Vanguard Blvd.Malvern, PA 19355BlackRock Inc. 26,882,420(11) 11.29%55 East 52nd StreetNew York, NY 10055Vanguard Specialized Funds 16,849,034(12) 7.08%100 Vanguard Blvd.Malvern, PA 19355* Unless otherwise indicated, the addressvoting power and/or investment power over such security. A stockholder is c/o Medical Properties Trust, Inc., 1000 Urban Center Drive, Suite 501, Birmingham, Alabama 35242.** Less than 1% of the outstanding shares of common stock.(1) Based on 238,031,836 shares of common stock outstandingalso deemed to be, as of March 21, 2016.Includes 292,142 vested operating partnership units (convertible into an equalany date, the beneficial owner of all securities that such stockholder has the right to acquire within 60 days after that date through (i) the exercise of any option, warrant or right, (ii) the conversion of a security, (iii) the power to revoke a trust, discretionary account or similar arrangement, or (iv) the automatic termination of a trust, discretionary account or similar arrangement. In computing the number of shares of common stock). Shares of common stock that are deemed to be beneficially owned by a shareholderperson and the percentage ownership of that person, shares of common stock subject to options or other rights (as set forth above) held by that person that are exercisable as of March 29, 2021 or will become exercisable within 60 days after March 21, 2016thereafter, are deemed outstanding; however, such shares are not deemed outstanding for purposes of computing such shareholder’sthe percentage ownership but are not deemed outstanding for the purpose of computing the percentage outstanding of any other shareholder. Exceptperson. Each person named in the table has sole voting and/or investment power with respect to all of the shares of common stock shown as beneficially owned by such person, except as otherwise indicatedset forth in the notes to this table, beneficial ownership includes sole voting and investment power.(2) Includes 197,391 shares of unvested restricted common stock, which the named officer has no right to sell or pledge.(3) Includes 75,579 shares of unvested restricted common stock, which the named officer has no right to sell or pledge.(4) Includes 124,581 shares of unvested restricted common stock, which the named officer has no right to sell or pledge.(5) Includes 6,985 shares of unvested restricted common stock, which the named director has no right to sell or pledge. Shares totaling 68,886 are held in an account with margin privileges.(6) Includes 6,985 shares of unvested restricted common stock, which the named director has no right to sell or pledge. Also includes 63,156 shares owned by Corriente Private Trust, an irrevocable Nevada Spendthrift Trust for which Mr. Dawson is the sole trustee and beneficiary.(7) Includes 6,985 shares of unvested restricted common stock, which the named director has no right to sell or pledge.(8) Includes 4,571 shares of unvested restricted common stock, which the named director has no right to sell or pledge.(9) See notes (1)-(8) above.(10) Share and beneficial ownership information was obtained from a Schedule 13G/A filed February 10, 2016 with the SEC. The Schedule 13G/A indicates that the reporting entity holds sole voting power with respect to 652,109 shares, sole dispositive power with respect to 34,455,585 shares, shared voting power with respect to 190,700 shares and shared dispositive power with respect to 492,769 shares. The Schedule 13G/A also indicates that Vanguard Fiduciary Trust Company and Vanguard Investments Australia Ltd, wholly-owned subsidiaries of The Vanguard Group, Inc., is the beneficial owner and directs the voting of 283,969 and 576,940 shares, respectively.(11) Share and beneficial ownership information was obtained from a Schedule 13G/A filed January 8, 2016 with the SEC. According to the Schedule 13G/A, BlackRock has sole voting power over 26,298,670 shares and sole dispositive power over 26,882,420 shares.The Schedule 13G/A states that various persons have the right to receive or the power to direct the receipt of dividends from or the proceeds from the sale of the Company’s common stock but that no one person’s interest in the Company’s common stock is more than five percent of the total outstanding common shares.(12) Share and beneficial ownership information was obtained from a Schedule 13G/A filed February 9, 2016 with the SEC. According to the Schedule 13G, Vanguard Specialized Funds has sole voting power over 16,849,034 shares but not dispositive power over the shares.39 Medical Properties Trusttable.
Name of Beneficial Owner* | Number of Shares Beneficially Owned | Percentage of Shares Outstanding(1) | ||||||||
Edward K. Aldag, Jr. | 2,997,608 | **(2) | ||||||||
R. Steven Hamner | 1,310,909 | **(3) | ||||||||
Emmett E. McLean | 1,302,284 | **(4) | ||||||||
G. Steven Dawson | 98,109 | **(5) | ||||||||
Caterina A. Mozingo | 11,169 | **(6) | ||||||||
Elizabeth N. Pitman | 31,150 | **(7) | ||||||||
D. Paul Sparks, Jr. | 51,247 | **(8) | ||||||||
Michael G. Stewart | 219,684 | **(8) | ||||||||
C. Reynolds Thompson, III | 31,826 | **(8) | ||||||||
All directors and executive officers as a group (9 persons) | 6,053,986 | 1.04%(9) | ||||||||
Other Stockholders: | ||||||||||
The Vanguard Group, Inc. 100 Vanguard Blvd. Malvern, Pennsylvania 19355 | 74,109,896 | 12.69%(10) | ||||||||
Cohen & Steers Inc. 280 Park Avenue New York, New York 10017 | 31,917,342 | 5.46%(11) | ||||||||
BlackRock Inc. 55 East 52nd Street New York, New York 10055 | 62,685,886 | 10.73%(12) | ||||||||
Wellington Management Group 280 Congress Street Boston, Massachusetts 02210 | 32,156,426 | 5.50%(13) |
* | Unless otherwise indicated, the address of each named person is c/o Medical Properties Trust, Inc., 1000 Urban Center Drive, Suite 501, Birmingham, Alabama 35242. |
** | Less than 1% of outstanding shares of common stock. |
Proxy Statement and Notice of 2021 Annual Meeting 49 |
Other Information |
(1) | Based on 584,138,119 shares of common stock outstanding as of March 29, 2021. Shares of common stock that are deemed to be beneficially owned by a stockholder within 60 days after March 29, 2021 are deemed outstanding for purposes of computing such stockholder’s percentage ownership but are not deemed outstanding for the purpose of computing the percentage outstanding of any other stockholder. Except as otherwise indicated in the notes to this table, beneficial ownership includes sole voting and investment power. |
(2) | Includes 530,167 shares of unvested restricted common stock, which the named officer has no right to sell or pledge. |
(3) | Includes 265,082 shares of unvested restricted common stock, which the named officer has no right to sell or pledge. |
(4) | Includes 179,445 shares of unvested restricted common stock, which the named officer has no right to sell or pledge. |
(5) | Includes 11,483 shares of unvested restricted common stock, which the named director has no right to sell or pledge, and includes 70,206 shares owned by Corriente Private Trust, an irrevocable Nevada Spendthrift Trust for which Mr. Dawson is the sole trustee and beneficiary. |
(6) | Includes 9,421 shares of unvested restricted common stock, which the named director has no right to sell or pledge. |
(7) | Includes 11,483 shares of unvested restricted common stock, which the named director has no right to sell or pledge, and 5,532.78 shares of common stock held by the director’s spouse. |
(8) | Includes 11,483 shares of unvested restricted common stock, which the named director has no right to sell or pledge. |
(9) | See notes (1) – (8) above. |
(10) | Share and beneficial ownership information was obtained from a Schedule 13G/A filed February 10, 2021 with the SEC. The Schedule 13G/A indicates that the reporting entity holds sole dispositive power with respect to 72,069,763 shares, shared voting power with respect to 1,623,048 shares and shared dispositive power with respect to 2,040,133 shares. |
(11) | Share and beneficial ownership information was obtained from a Schedule 13G/A filed February 16, 2021 with the SEC. The Schedule 13G/A indicates that the reporting entity holds sole voting power with respect to 21,418,288 shares and sole dispositive power with respect to 31,917,342 shares. |
(12) | Share and beneficial ownership information was obtained from a Schedule 13G/A filed January 27, 2021 with the SEC. According to the Schedule 13G/A, BlackRock has sole voting power over 59,638,901 shares and sole dipositive power over 62,685,886 shares. The Schedule 13G/A states that various persons have the right to receive or the power to direct the receipt of dividends from or the proceeds from the sale of the Company’s common stock but that no one person’s interest in the Company’s common stock is more than five percent of the total outstanding common shares. |
(13) | Share and beneficial ownership information was obtained from a Schedule 13G filed February 4, 2021 with the SEC. The Schedule 13G indicates that the reporting entity holds shared voting power with respect to 27,375,948 shares and shared dispositive power with respect to 32,156,426 shares. |
Executive Compensation MPTSection 16(a) Beneficial Ownership Reporting ComplianceSection 16(a) of the Exchange Act requires that our directors and executive officers and the beneficial owners of more than 10% of our equity securities, or, collectively, the reporting persons, file with the SEC and the NYSE initial reports of, and subsequent reports of changes in, their beneficial ownership of our equity securities. Based solely on a review of the reports furnished to us, we believe that all of the reporting persons timely filed all of the applicable SEC reports required for 2015, and an assumen termination of employment on that date.
Executive Officers
For information regarding Messrs. Aldag and Hamner, please see “Proposal 1 — 1—Election of Directors” above.
Emmett E. Age 65 Executive Vice President, Chief Operating Officer (since September 2003) and Secretary (since 2010) | Mr. McLean has served the Company in a number of positions, including Chief Financial Officer (August—September 2003) and Director (September 2003—April 2004). Prior to joining the Company, from 2000—2003, Mr. McLean was a private investor and, for part of that period, served as a consultant to a privately held company. From 1992 to 2000, Mr. McLean worked in the healthcare services industry with two different companies serving in senior positions, including Chief Financial Officer at one of the companies. Prior to 1992, Mr. McLean worked in the investment banking field with Dean Witter Reynolds (now Morgan Stanley) and Smith Barney (now Citigroup), and in the commercial banking field with Trust Company Bank (now Truist Bank). Mr. McLean received an MBA from the University of Virginia and a B.A. in Economics from The University of North Carolina at Chapel Hill. Mr. McLean is on the board of directors of the Alabama Symphony Orchestra, Ronald McDonald House Charities of Alabama, Smile-A-Mile, the Greater Alabama Council Boy Scouts of America, the Mike Slive Foundation, United Way of Central Alabama, the Rotary Club of Birmingham Foundation, UAB Athletics Foundation and the World Games 2022 Birmingham USA. |
50 Proxy Statement and Notice of 2021 Annual Meeting |
Certain Relationships and Related Person Transactions
of the meeting? | At the meeting, our stockholders will vote on the following proposals: 1. To elect the eight director nominees described in the enclosed Proxy Statement 2. To ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending December 31, 2021 3. To hold a non-binding, advisory vote to approve named executive officer compensation 4. To transact any other business that properly comes before the meeting In addition, our management will report on our performance at the meeting and respond to appropriate questions from stockholders. | |||
Who is entitled to | The record date for the meeting is March 29, 2021. Only stockholders of record at the close of business on March 29, 2021, are entitled to receive notice of the meeting and to vote at the meeting the shares of our common stock that they held of record on that date. Each outstanding share of common stock entitles its holder to one vote on each matter voted on at the meeting. At the close of business on March 29, 2021, there were 584,071,849 shares of common stock outstanding and entitled to vote. | |||
Am I entitled to vote if | If you are the beneficial owner of shares held in “street name” by a brokerage firm, bank, or other nominee, your nominee is required to vote the shares in accordance with your instructions. If you do not give instructions to your nominee, your nominee will be entitled to vote your shares on routine items, but will not be permitted to do so on non-routine items. Your nominee will have discretion to vote on Proposal 2 (ratification of auditors) without any instructions from you, but your nominee will not have the ability to vote your uninstructed shares on Proposal 1 (election of directors) or Proposal 3 (advisory vote to approve named executive officer compensation). Accordingly, if you hold your shares in “street name” and you do not instruct your nominee how to vote on these proposals, your nominee cannot vote these shares and will report them as “broker non-votes,” and no votes will be cast on your behalf. | |||
How many shares | A quorum must be present at the meeting in order for any business to be conducted. The presence at the meeting, in person or by proxy, of the holders of a majority of the shares of common stock outstanding on the record date, or 292,035,926 shares, will constitute a quorum. Abstentions and broker non-votes will be included in the number of shares considered present at the meeting for the purpose of determining whether there is a quorum. | |||
What happens if a | If a quorum is not present at the scheduled time of the meeting, the holders of a majority of the shares present in person or represented by proxy at the meeting may adjourn the meeting to another place, date, or time until a quorum is present. The place, date, and time of the adjourned meeting will be announced when the adjournment is taken, and no other notice will be given unless the adjournment is to a date more than 120 days after the original record date or if, after the adjournment, a new record date is fixed for the adjourned meeting. |
Proxy Statement and Notice of 2021 Annual Meeting 51 |
Information About the Meeting |
How do I vote my | Voting by telephone or Internet. If you are a registered holder, meaning you hold your shares in your name, you may follow the instructions on the enclosed voting instructions: By telephone 1-800-776-9437 or by internet www.voteproxy.com. If you are a beneficial owner of shares held in “street name,” meaning your shares are held in the name of a brokerage firm, bank, or other nominee, you may be eligible to provide voting instructions to your nominee by telephone or on the Internet. A large number of brokerage firms, banks, and other nominees participate in a program provided through Broadridge Financial Solutions that offers telephone and Internet voting options. If your shares are held in “street name” by a brokerage firm, bank, or other nominee that participates in the Broadridge program, you may provide voting instructions to your nominee by telephone or on the Internet by following the instructions set forth on the voting instruction form provided to you. Voting by mail. If you are a registered stockholder, you may vote by properly completing, signing, dating, and returning the accompanying proxy card. The enclosed postage-paid envelope requires no additional postage if it is mailed in the United States or Canada. If you are a beneficial owner of shares held in “street name,” you may provide voting instructions to the brokerage firm, bank, or other nominee that holds your shares by properly completing, signing, dating, and returning the voting instruction form provided to you by your nominee. Voting in person at the meeting. If you are a registered stockholder and attend the meeting, you may deliver your completed proxy card in person. In addition, we will make written ballots available to registered stockholders who wish to vote in person at the meeting. If you are a beneficial owner of shares held in “street name” and wish to vote at the meeting, you will need to obtain a proxy form from the brokerage firm, bank, or other nominee that holds your shares that authorizes you to vote those shares. | |||
Can I change my | Yes, you may revoke your proxy and change your vote at any time before the polls are closed at the meeting in any of the following ways: (1) by properly completing, signing, dating, and returning another proxy card with a later date; (2) if you are a registered stockholder, by voting in person at the meeting; (3) if you are a registered stockholder, by giving written notice of such revocation to our Secretary prior to or at the meeting; or (4) if you are a beneficial owner of shares held in “street name,” by following the instructions given by the brokerage firm, bank or other nominee that holds your shares. Your attendance at the meeting will not by itself revoke your proxy. | |||
What happens if I do | If you are a registered stockholder and submit a properly executed proxy but do not indicate any voting instructions, the proxy holders will vote as the Board recommends on each proposal. |
52 Proxy Statement and Notice of 2021 Annual Meeting |
Information About the Meeting |
Will any other | As of the date hereof, the Board knows of no business that will be presented at the meeting other than the proposals described in this Proxy Statement. However, if any other proposal properly comes before the stockholders for a vote at the meeting, the proxy holders will vote the shares represented by your proxy in accordance with their best judgment. | |||
How many votes are | The eight director nominees will be elected to serve on the Board if they each receive a majority of the votes cast in person or represented by proxy at the meeting. This means that a director nominee will be elected only if the votes cast “for” his or her election exceed the votes cast “against” his or her election. The Board has adopted a director resignation policy whereby any director who fails to receive the required majority vote in an uncontested election is required to promptly tender his or her resignation to the Board for its consideration. The Ethics, Nominating and Corporate Governance Committee will then recommend to the full Board, and the Board will decide, whether to accept or reject the resignation offer or take other action. The Board will act on the recommendation of the Ethics, Nominating and Corporate Governance Committee within 90 days following certification of the election results. If you vote to “abstain” with respect to the election of one or more director nominees, your shares will not be voted with respect to the person or persons indicated, although they will be counted for the purpose of determining whether there is a quorum at the meeting. The affirmative vote of the holders of a majority of the shares of common stock represented in person or by proxy at the annual meeting and entitled to vote on the proposal is required for approval of each of Proposals 2 and 3. | |||
How will abstentions | Abstentions and broker non-votes will not be counted as votes for or against any proposal, and will not be included in calculating the number of votes necessary for approval of the proposal. In all cases, abstentions and broker non-votes will be considered present for the purpose of determining the presence of a quorum. | |||
How will proxies | The costs of soliciting proxies from our stockholders will be borne by the Company. We will solicit proxies on behalf of the Board by mail, telephone, facsimile, or other electronic means or in person. Certain of our directors, officers and other employees, without additional compensation, may participate in the solicitation of proxies. We will supply copies of the proxy solicitation materials to brokerage firms, banks, and other nominees for the purpose of soliciting proxies from the beneficial owners of the shares of common stock held of record by such nominees. We will request that such brokerage firms, banks, and other nominees forward the proxy solicitation materials to the beneficial owners and reimburse them for their reasonable expenses. In addition, we anticipate using MacKenzie Partners, Inc., 105 Madison Avenue, New York, NY 10016 as a solicitor at an initial anticipated cost of $12,500. |
Proxy Statement and Notice of 2021 Annual Meeting 53 |
Information About the Meeting |
What is “householding” | We have adopted a procedure, approved by the SEC, called “householding.” Under this procedure, stockholders of record who have the same address might receive only one copy of this Notice of Annual Meeting and Proxy Statement and the 2020 Annual Report to Stockholders, unless we are notified that one or more of these stockholders wishes to continue receiving individual copies. To request individual copies of the annual report and proxy statement for each stockholder in your household, please contact Investor Relations, Medical Properties Trust Inc., 1000 Urban Center Drive, Suite 501, Birmingham, Alabama 35242 (telephone: 205-969-3755). We will deliver copies of the annual report and proxy statement promptly following your written or oral request. To ask that only one set of the documents be mailed to your household, please contact your broker. | |||
How can I obtain | If you wish to request extra copies of our Form 10-K, Annual Report or Proxy Statement free of charge, please send your request to Medical Properties Trust, Inc., 1000 Urban Center Drive, Suite 501, Birmingham, Alabama 35242, or visit our website at www.medicalpropertiestrust.com. |
54 Proxy Statement and Notice of 2021 Annual Meeting |
The Board of Directors has adopted a written related person transaction approval and disclosure policy for the review, approval or ratification of any related person transaction. ThisThe policy which was adopted by resolution of the full Board of Directors as reflected in our corporate records, provides that all related person transactions must be reviewed and approved by a majority of the disinterested directors on our Board of Directors in advance of us or any of our subsidiaries entering into the transaction; provided that, if we or any of our subsidiaries enter into a transaction without recognizing that such transaction constitutes a related party transaction, the approval requirement will be satisfied if such transaction is ratified by a majority of the disinterested directors serving on the Board of Directors promptly after we recognize that such transaction constituted a related person transaction. Disinterested directors are directors who do not have a personal financial interest in the transaction that is adverse to our financial interest or that of our shareholders.stockholders. The term “related person transaction” refers to a transaction required to be disclosed by us pursuant to Item 404 of Regulation S-K (or any successor provision) promulgated by the SEC. For purposes of determining whether such disclosure is required, a related person will not be deemed to have a direct or indirect material interest in any transaction that is deemed not to be material (or would be deemed not material if such related person was a director) for purposes of determining director independence pursuant to standards of director independence under the NYSE’s listing standards.On April 3, 2016, Mr. L. Glenn Orr, Jr., age 75, retired as a member of the Board. Mr. Orr had been a member of the Board and its various committees since February 2005, and the Company expresses its appreciation and thanks to Mr. Orr for his 11 years of service and for his many contributions. Mr. Orr had been serving on two standing committees of the Board, the Compensation Committee and the Investments Committee, and the Board has determined to fill Mr. Orr’s prior position on the Compensation Committee with director D. Paul Sparks, age 53, and not to replace Mr. Orr on the Investments Committee. In order to have continued access, following Mr. Orr’s retirement, to his knowledge and expertise regarding the Company and its businesses, customers and the communities it serves, the Company and Mr. Orr have entered into a consulting agreement pursuant to which Mr. Orr has agreed to provide consulting services to the Board and to the Company’s Chief Executive Officer for at least three years following his retirement for an aggregate fee of $630,000.41 Medical Properties Trust
Proxy Statement and Notice of 2021 Annual Meeting 55 |
Additional Information
Stockholder Proposals for Inclusion in Proxy Statement for 20172022 Annual Meeting of Stockholders
To be considered for inclusion in our proxy statement for the 20172022 annual meeting of shareholders,stockholders, a shareholderstockholder proposal submitted pursuant to Exchange Act Rule 14a-8 must be received by us no later than the close of business on December 30, 2016.27, 2021. Stockholder proposals must be sent to the Company c/o Secretary, Medical Properties Trust, Inc., 1000 Urban Center Drive, Suite 501, Birmingham, Alabama 35242. We will not be required to include in our proxy statement any shareholderstockholder proposal that does not meet all the requirements for such inclusion established by the SEC’s proxy rules and Maryland corporate law.
Other Stockholder Proposals
Our Second Amended and Restated Bylaws provide that a shareholderstockholder who desires to propose any business at an annual meeting of shareholders,stockholders, other than proposals submitted pursuant to Exchange Act Rule 14a-8, must give us written notice of such shareholder’sstockholder’s intent to bring such business before such meeting. Such notice is to be delivered to, or mailed postage prepaid, and received by our Secretary at Medical Properties Trust, Inc., 1000 Urban Center Drive, Suite 501, Birmingham, Alabama 35242 not earlier than December 30, 2016,27, 2021, nor later than January 29, 2017,26, 2022, unless our 20172022 annual meeting of shareholdersstockholders is scheduled to take place before April 19, 201726, 2022 or after July 18, 2017. Our Second Amended and Restated Bylaws state that such shareholder’s notice must be delivered to, or mailed and received at, our principal executive office not less than 90 days nor more than 120 days prior to the first anniversary of the date of the mailing of the notice for the preceding year’s annual meeting. However,25, 2022, in the event that the date of the annual meeting is more than 30 days before or more than 60 days after the anniversary date of the preceding year’s annual meeting,which case a timely notice by the shareholder to be timelystockholders must be so delivered not earlier than 120 days prior to such annual meeting date and not later than the later of 60 days prior to such annual meeting date and 10 days following the issuance of a press release announcing the meeting date. The shareholder’sstockholder’s written notice must set forth a brief description of the business desired to be brought before the meeting and certain other information as set forth in Section 1.02 of our Second Amended and Restated Bylaws. Stockholders may obtain a copy of our Second Amended and Restated Bylaws by writing to the Company c/o Secretary at the address shown above.Proxy Statement and Notice of 2016 Annual Meeting 42
Additonal Information
Stockholder Nominations of Directors
In order for an eligible stockholder or group of stockholders to nominate a director nominee for election at our Company’s 2022 annual meeting pursuant to the proxy access provision of our Second Amended and Restated Bylaws, notice of such nomination and other required information must be received by our Secretary at Medical Properties Trust, Inc., 1000 Urban Center Drive, Suite 501, Birmingham, Alabama 35242 not earlier than December 27, 2021, nor later than January 26, 2022, unless our 2022 annual meeting of stockholders is scheduled to take place before April 26, 2022 or after July 25, 2022, in which case a timely notice by stockholders must be delivered not earlier than 120 days prior to such annual meeting date and not later than the later of 60 days prior to such annual meeting date and 10 days following the issuance of a press release announcing the meeting date. In addition, our Second Amended and Restated Bylaws require the eligible stockholder or group of stockholders to update and supplement such information (or provide notice stating that there are no updates or supplements) as of specified dates.
In order to be eligible to utilize these proxy access provisions, a stockholder, or group of no more than 20 stockholders, must, among other requirements:
Have owned shares of common stock equal to at least 3% of the aggregate of the issued and outstanding shares of common stock of the Company continuously for at least the prior three (3) years; and
Represent that such shares were acquired in the ordinary course of business and not with the intent to change or influence control at the Company and that such stockholder or group does not presently have such intent.
Additionally, all director nominees submitted through these provisions must be independent and meet specified additional criteria set forth in Section 2.17 of our Second Amended and Restated Bylaws. Stockholders will not be entitled to utilize this proxy access right at an annual meeting if the Company receives notice through its traditional advanced notice by-law provisions described below that a stockholder intends to nominate a director at such meeting. The maximum number of director nominees that may be submitted pursuant to these provisions may not exceed 20% of the number of directors then in office. The foregoing proxy access right is subject to additional eligibility, procedural and disclosure requirements set forth in our Second Amended and Restated Bylaws.
56 Proxy Statement and Notice of 2021 Annual Meeting |
ADDITIONAL INFORMATION |
Our Second Amended and Restated Bylaws also provide that a shareholderstockholder who desires to nominate directors at a meeting of shareholdersstockholders but not submit such nomination for inclusion in our proxy statement must give us written notice of such proposed nomination. For our 20172022 annual meeting of shareholders,stockholders, such notice is to be delivered to, or mailed postage prepaid, and received by our Secretary at Medical Properties Trust, Inc., 1000 Urban Center Drive, Suite 501, Birmingham, Alabama 35242 not earlier than December 30, 2016,27, 2021, nor later than January 29, 2017,26, 2022, unless our 20172022 annual meeting of shareholdersstockholders is scheduled to take place before April 19, 201726, 2022 or after July 18, 2017. As25, 2022, in which case a timely notice by stockholders must be delivered not earlier than 120 days prior to such annual meeting date and 10 days following the issuance of a press release announcing the meeting date. The stockholder’s written notice must include the information set forth in Section 2.03 of our Second Amended and Restated Bylaws, the notice must set forth the following information:as to each person whom the shareholder proposes to nominate for election or re-election as a director:the name, age, business address, residence address and principal occupation or employment of such person;the class or series and number of shares of the Company’s capital stock which are beneficially owned by such person on the date of such shareholder’s notice and the date such shares were acquired and the investment intent of such acquisition;the consent of each nominee to serve as a director of the Company if so elected;any other information relating to such person that would have been required to be included in a proxy statement filed pursuant to the proxy rules of the SEC; andas to the shareholder giving notice and certain parties associated with such shareholder:a brief description of the nominations desired to be brought before the meeting and the reasons for making such nominations at the meeting;their names and addresses;a representation that each is a holder of record of shares of the Company entitled to vote at such meeting and that the shareholder intends to appear in person or by proxy at such meeting to make such nominations;a description of all arrangements or understandings among the shareholder and/or certain parties associated with the shareholder and each nominee and any other person (naming such person(s)) pursuant to which the nominations are to be made by the shareholder; andto the extent known by the shareholder giving the notice, the name and address of any other shareholder supporting the nominee for election or reelection as a director, and the class or series and number of shares of the Company’s capital stock beneficially owned by such other shareholder(s).
Bylaws.
By Order of the Board of Directors,
Emmett E. McLean
Executive Vice President, Chief Operating OfficerTreasurer
and Secretary
Birmingham, Alabama
April 29, 2016
MPTMedical Properties Trust
Proxy Statement and Notice of 2021 Annual Meeting 57 |
Appendix: Reconciliation of Non-GAAP Financial Measures - Funds From Operations and Normalized Funds From Operations
We consider non-GAAP financial measures to be useful supplemental measures of our operating performance. Described below are the non-GAAP financial measures used by management to evaluate our operating performance and that we consider most useful to investors, together with reconciliations of these measures to the most directly comparable GAAP measures.
Investors and analysts following the real estate industry utilize funds from operations, or FFO, as a supplemental performance measure. FFO, reflecting the assumption that real estate asset values rise or fall with market conditions, principally adjusts for the effects of GAAP depreciation and amortization of real estate assets, which assumes that the value of real estate diminishes predictably over time. We compute FFO in accordance with the definition provided by the National Association of Real Estate Investment Trusts, or Nareit, which represents net income (loss) (computed in accordance with GAAP), excluding gains (losses) on sales of real estate and impairment charges on real estate assets, plus real estate depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures.
In addition to presenting FFO in accordance with the Nareit definition, we also disclose normalized FFO, which adjusts FFO for items that relate to unanticipated or non-core events or activities or accounting changes that, if not noted, would make comparison to prior period results and market expectations less meaningful to investors and analysts.
We believe that the use of FFO, combined with the required GAAP presentations, improves the understanding of our operating results among investors and the use of normalized FFO makes comparisons of our operating results with prior periods and other companies more meaningful. While FFO and normalized FFO are relevant and widely used supplemental measures of operating and financial performance of REITs, they should not be viewed as a substitute measure of our operating performance since the measures do not reflect either depreciation and amortization costs or the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties, which can be significant economic costs that could materially impact our results of operations. FFO and normalized FFO should not be considered an alternative to net income (loss) (computed in accordance with GAAP) as indicators of our financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of our liquidity.
58 Proxy Statement and Notice of 2021 Annual Meeting |
APPENDIX |
The following table presents a reconciliation of net income attributable to MPT common stockholders to FFO and Normalized FFO for the years ended December 31, 2020, 2019, 2018, and 2017, (amounts in thousands except per share data):
For the Years Ended December 31, | ||||||||||||||||
2020 | 2019 | 2018 | 2017 | |||||||||||||
FFO Information | ||||||||||||||||
Net income attributable to MPT common stockholders | $ | 431,450 |
| $ | 374,684 |
| $ | 1,016,685 |
| $ | 289,793 |
| ||||
Participating securities’ share in earnings |
| (2,105) |
|
| (2,308) |
|
| (3,685) |
|
| (1,409) |
| ||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net income, less participating securities’ share in earnings | $ | 429,345 |
| $ | 372,376 |
| $ | 1,013,000 |
| $ | 288,384 |
| ||||
Depreciation and amortization |
| 306,493 |
|
| 183,921 |
|
| 143,720 |
|
| 127,559 |
| ||||
Loss (gain) on sale of real estate |
| 2,833 |
|
| (41,560) |
|
| (719,392) |
|
| (7,431) |
| ||||
Real estate impairment charges |
| 19,006 |
|
| 21,031 |
|
| 48,007 |
|
| - |
| ||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Funds from operations | $ | 757,677 |
| $ | 535,768 |
| $ | 485,335 |
| $ | 408,512 |
| ||||
Write-off of straight-line rent and other |
| 26,415 |
|
| 22,447 |
|
| 18,002 |
|
| 5,340 |
| ||||
Non-cash fair value adjustments |
| 9,642 |
|
| (6,908) |
|
| - |
|
| - |
| ||||
Income taxes - rate change/release of valuation allowance |
| 9,295 |
|
| - |
|
| (4,405) |
|
| - |
| ||||
Debt refinancing and unutilized financing costs |
| 28,180 |
|
| 6,106 |
|
| - |
|
| 32,574 |
| ||||
Acquisition and other transaction costs, net |
| - |
|
| - |
|
| 2,072 |
|
| 28,453 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Normalized funds from operations | $ | 831,209 |
| $ | 557,413 |
| $ | 501,004 |
| $ | 474,879 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Per diluted share data | ||||||||||||||||
Net income, less participating securities’ share in earnings | $ | 0.81 |
| $ | 0.87 |
| $ | 2.76 |
| $ | 0.82 |
| ||||
Depreciation and amortization |
| 0.57 |
|
| 0.43 |
|
| 0.39 |
|
| 0.37 |
| ||||
Loss (gain) on sale of real estate |
| 0.01 |
|
| (0.10) |
|
| (1.96) |
|
| (0.02) |
| ||||
Real estate impairment charges |
| 0.04 |
|
| 0.05 |
|
| 0.13 |
|
| - |
| ||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Funds from operations | $ | 1.43 |
| $ | 1.25 |
| $ | 1.32 |
| $ | 1.17 |
| ||||
Write-off of straight-line rent and other |
| 0.05 |
|
| 0.05 |
|
| 0.05 |
|
| 0.01 |
| ||||
Non-cash fair value adjustments |
| 0.02 |
|
| (0.01) |
|
| - |
|
| - |
| ||||
Income taxes - rate change/release of valuation allowance |
| 0.02 |
|
| - |
|
| (0.01) |
|
| - |
| ||||
Debt refinancing and unutilized financing costs |
| 0.05 |
|
| 0.01 |
|
| - |
|
| 0.09 |
| ||||
Acquisition and other transaction costs, net |
| - |
|
| - |
|
| 0.01 |
|
| 0.08 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Normalized funds from operations | $ | 1.57 |
| $ | 1.30 |
| $ | 1.37 |
| $ | 1.35 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
Proxy Statement and Notice of 2021 Annual Meeting 59 |
ANNUAL MEETING OF STOCKHOLDERS OF
MEDICAL PROPERTIES TRUST, INC.
May 19, 2016
21, 2020 GO GREEN e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.amstock.comwww.astfinancial.com to enjoy online access.
Important Notice Regarding Internet Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement, Annual Report and 20152019 Form 10-K are available at www.medicalpropertiestrust.com
Please sign, date and mail your proxy card in the envelope provided as soon as possible.
Please detach along perforated line and mail in the envelope provided.
00033333333030000000 1 051916
00033333333030300000 8 052120 THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” ALL NOMINEES AND “FOR” PROPOSALS 2 AND 3.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE
x 1. THISTo elect PROXYeight directors. IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY AND WILL BE VOTED IN ACCORDANCE WITH THE UNDERSIGNED'S INSTRUCTIONS SET FORTH HEREIN. UNLESS DIRECTION IS GIVEN TO THE CONTRARY, THIS PROXY WILL BE VOTED “FOR” ALL NOMINEES AND “FOR” EACH OF PROPOSAL 2 AND 3. 1. To elect eight directors FOR AGAINST ABSTAIN Edward K. Aldag, Jr. G. Steven Dawson R. Steven Hamner Caterina A. Mozingo Elizabeth N. Pitman C. Reynolds Thompson, III D. Paul Sparks, Jr. Michael G. Stewart 2. To ratify the appointment of PricewaterhouseCoopers LLP as independent registered public accounting firm for the fiscal year ending December 31, 2020. 3. Non-binding, advisory approval of the Company's executive compensation. With respect to any other item of business that properly comes before the annual meeting and at any adjournments or postponements thereof, the proxy holders are authorized to vote the undersigned's shares in their discretion. To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method.
1. To elect seven directors
FOR AGAINST ABSTAIN
Edward K. Aldag, Jr.
G. Steven Dawson
R. Steven Hamner
Robert E. Holmes, Ph.D.
Sherry A. Kellett
William G. McKenzie
D. Paul Sparks, Jr.
2. To ratify the appointment of PricewaterhouseCoopers LLP as independent registered public accounting firm for the fiscal year ending December 31, 2016.
3. Advisory approval of the Company’s executive compensation.
With respect to any other item of business that properly comes before the annual meeting and at any adjournments or postponements thereof, the proxy holders are authorized to vote the undersigned’s shares in their discretion.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY AND WILL BE VOTED IN ACCORDANCE WITH THE UNDERSIGNED’S INSTRUCTIONS SET FORTH HEREIN. UNLESS DIRECTION IS GIVEN TO THE CONTRARY, THIS PROXY WILL BE VOTED “FOR” ALL NOMINEES AND “FOR” EACH OF PROPOSAL 2 AND 3.
Signature of Stockholder Date: Signature of Stockholder Date:
Note: Pleasetitle as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnershipPlease sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.
0 PROXY
MEDICAL PROPERTIES TRUST, INC.
2016 2020 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 19, 2016
21, 2020 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The 20162019 Annual Meeting of Stockholders of Medical Properties Trust, Inc. (the “Annual Meeting”) will be held at The Summit Club, 1901 6th Avenue North,the Comany’s Headquarters located at 1000 Urban Center Drive, Suite 501, Birmingham, Alabama, on May 19, 2016,21, 2020, beginning at 10:30 a.m. Central Time. You can access directions to the Annual Meeting at www.medicalpropertiestrust.com. The undersigned hereby acknowledges receipt of the combined Notice of 20162020 Annual Meeting of Stockholders and Proxy Statement dated April 29, 2016,26, 2020, accompanying this proxy and to which reference is hereby made, for further information regarding the Annual Meeting and the matters to be considered and voted on by the stockholders at the Annual Meeting.
The undersigned hereby appoints Edward K. Aldag, Jr. and R. Steven Hamner, and each of them, attorneys and agents, with full power of substitution, to vote, as the undersigned’sundersigned's proxy, all the shares of common stock owned of record by the undersigned as of the record date and otherwise to act on behalf of the undersigned at the meeting and any adjournment thereof, in accordance with the instructions set forth herein and with discretionary authority with respect to any other business, not known or determined at the time of the solicitation of this proxy, that properly comes before such meeting or any adjournment thereof.
The undersigned hereby revokes any proxy heretofore given and directs said attorneys and agents to vote or act as indicated on the reverse side hereof.
1.1 (Continued and to be signed on the reverse side) 14475