| | | | | | | | | | Age 67 Director since: 2016 Welltower Committees: • Executive (Chair) | | MATTHEW G.EDUCATION:
MCQUEEN• BA – Anthropology, Stanford University
• MSc – International Relations, London School of Economics Age:46• MBA – Finance & Strategy, Harvard Business School
| | OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS: • Ally Financial Inc. (Risk Committee Chair) • Arbor Realty Trust • Comcast Corporation (Governance and Directors Nominating Committee Chair) | FORMER PUBLIC COMPANY DIRECTORSHIPS • Forest City Realty Trust, Inc. | | KEY SKILLS AND EXPERIENCE: Mr. McQueen Bacon has served as Welltower’s SeniorChair of the Board since October 2020. Mr. Bacon is a co-founder of RailField Realty Partners (a financial advisory and asset management firm) and has served as RailField’s managing partner since 2012. Prior to launching RailField, Mr. Bacon spent 19 years at Fannie Mae, most recently serving as Executive Vice President - General Counsel & Corporate Secretary sinceof the multifamily mortgage business from July 2016.2005 to March 2012. Among other qualifications, Mr. McQueen served as Welltower’s Senior Vice President - Legal from March 2015Bacon’s extensive experience in financial services, real estate investment, government affairs and housing make him a valuable asset to July 2016. From 2007 to 2015, Mr. McQueen served as of counsel and a partner in the Corporate and Securities group at the law firm of Sidley Austin LLP.Board. | | | | | |
| | | | | Notice of Annual Meeting of Shareholders and 2019 Proxy Statement |
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WELLTOWER•2022 Proxy Statement 21 Security Ownership of Directors and Management and Certain Beneficial OwnersBack to Contents | |
Security Ownership of Directors and Management and Certain Beneficial Owners
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the U.S. Securities Exchange Act of 1934, as amended, requires Welltower’s directors and executive officers, and persons who own beneficially more than 10% of the shares of common stock of Welltower, to file reports of ownership and changes of ownership with the SEC and the NYSE. Copies of all filed reports are required to be furnished to Welltower pursuant to Section 16(a). Based solely on the reports received by Welltower and on written representations from reporting persons, Welltower believes that the directors and executive officers complied with all applicable filing requirements during the fiscal year ended December 31, 2018.
Beneficial Ownership of More than 5%
Based upon filings made with the SEC in January and February 2019 (with respect to holdings as of December 31, 2018), the only shareholders known to Welltower to be the beneficial owners of more than 5% of Welltower’s common stock are as follows:
KAREN B. DESALVO, Independent Director | | | | | | | | | | Beneficial OwnerAge 56 Director since: 2018 Welltower Committees: • Investment • Nominating/ Corporate Governance | | Common StockEDUCATION:
Beneficially Owned• BA – Biology and Political Science, Suffolk University
• MD – Tulane University School of Medicine • MPH – Tulane University School of Public Health • MSc – Harvard T.H. Chan School of Public Health | | | Percent of FORMER PUBLIC COMPANY DIRECTORSHIPS
Outstanding • Humana Inc.
Common Stock(5)
| | The Vanguard Group, Inc.
100 Vanguard Blvd.
Malvern, PA 19355
| | | 47,959,065(1) | | | | 12.00% | | BlackRock, Inc.
55 East 52nd Street
New York, NY 10055
| | | 40,590,694(2) | | | | 10.16% | | Cohen & Steers, Inc.
280 Park Avenue
10th Floor
New York, NY 10017
| | | 25,701,263(3) | | | | 6.43% | | State Street Corporation
State Street Financial Center
One Lincoln Street
Boston, MA 02111
| | | 21,882,453(4) | | | | 5.48% | |
(1) | Includes 317,024 shares beneficially owned by Vanguard Fiduciary Trust Company,KEY SKILLS AND EXPERIENCE:
Dr. DeSalvo is a wholly-owned subsidiaryphysician executive who has served as the Chief Health Officer of The Vanguard Group, Inc.,Google since December 2019. She is on the Council of the National Academy of Medicine. From 2018-2019, she served as professor of medicine and 1,047,046 shares beneficially owned by Vanguard Investments Australia, Ltd., a wholly-owned subsidiarypopulation health at the University of The Vanguard Group, Inc. InTexas at Austin Dell Medical School and co-lead of the aggregate, The Vanguard Group, Inc., Vanguard Fiduciary Trust CompanyNational Alliance to Impact the Social Determinants of Health with former HHS Secretary Michael O. Leavitt. From 2014 to 2017, she served as Acting Assistant Secretary for Health at the U.S. Department of Health and Vanguard Investments Australia, Ltd. have sole voting power over 763,317 shares, shared voting power over 497,023 shares, sole dispositive power over 47,041,288 sharesHuman Services and shared dispositive power over 917,777 shares. In addition,as National Coordinator for Health Information Technology. From 2011 to 2014, she was Health Commissioner for the numberCity of shares reported as beneficially owned by The Vanguard Group, Inc. includesNew Orleans. Prior to that she was Vice Dean for Community Affairs and Health Policy at the 17,716,575 shares separately reported as beneficially owned by Vanguard Specialized Funds in its filing made withTulane University School of Medicine, where she practiced medicine and led the SEC. Vanguard Specialized Funds has sole voting power over 17,716,575 shares. |
(2) | Inmedical school’s community health programs. She was formerly on the aggregate, BlackRock, Inc.Medicare Payment Advisory Commission and its affiliates have sole voting power over 37,163,079 shares and sole dispositive power over 40,590,694 shares.
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(3) | Includes 25,071,420 shares beneficially owned by Cohen & Steers Capital Management, Inc., a wholly-owned subsidiary of Cohen & Steers, Inc., and 629,843 shares beneficially owned by Cohen & Steers UK Limited, an affiliate of Cohen & Steers, Inc. Cohen & Steers, Inc. has sole voting power over 16,211,201 shares and sole dispositive power over 25,701,263 shares; Cohen & Steers Capital Management, Inc. has sole voting power over 16,122,967 shares and sole dispositive power over 25,071,420 shares; Cohen & Steers UK Limited has sole voting power over 88,234 shares and sole dispositive power over 629,843 shares. The principal address for Cohen & Steers UK Limited is 50 Pall Mall, 7th Floor, London, United Kingdom SW1Y 5JH.
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(4) | In the aggregate, State Street Corporation and its affiliates have shared voting power over 19,804,312 shares and shared dispositive power over 21,877,680 shares.
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(5) | The percentages set forth in the table reflect percentage ownership as of March 5, 2019. The actual filings of these beneficial owners provide percentage ownership as of December 31, 2018.
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| | | | | 20 | | | Notice of Annual Meeting of Shareholders and 2019 Proxy Statement |
| | | | | | | Security OwnershipBoard of Directors of Humana.Among other qualifications, Dr. DeSalvo’s experience in medical and Managementpublic health leadership, health care technology, health care delivery and Certain Beneficial Ownershealth care policy make her an important addition to the Board. | | | | |
PHILIP L. HAWKINS, Independent Director | Age 66 Director since: 2020 Welltower Committees: • Compensation • Investment | | EDUCATION: • BA – Hamilton College • MBA – University of Chicago | | OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS: • Corporate Office Properties Trust (Investment Committee Chair) | FORMER PUBLIC COMPANY DIRECTORSHIPS • Prologis, Inc. • DCT Industrial Trust Inc. | | KEY SKILLS AND EXPERIENCE: Mr. Hawkins has served as a member of the Board of Trustees of Corporate Office Properties Trust (a real estate investment trust that invests in office buildings) since 2014. He also serves as a board member of the following private companies: Link Logistics Real Estate as the Executive Chairman since January 2020, Washington Prime Group Inc. as the Chairman since February 2022, and Pure Industrial since February 2022. He served as a member of the Board of Directors of Prologis, Inc. from August 2018 to January 2020. From October 2006 to August 2018, he served as Chief Executive Officer, President and a member of the Board of Directors of DCT Industrial Trust Inc. (an industrial REIT that owned, acquired, operated and developed logistics related properties) until it merged into Prologis. From 2002 to 2006, Mr. Hawkins served as President and Chief Operating Officer and a member of the Board of Directors of CarrAmerica Realty Corporation. Earlier in his career at CarrAmerica, he served as Chief Operating Officer for four years and Managing Director of Asset Management for two years. Before that, Mr. Hawkins held a series of senior executive positions in real estate investment, development, leasing and management with LaSalle Partners, Ltd. and served on LaSalle’s Board of Directors. Among other qualifications, Mr. Hawkins’ extensive experience in real estate investment, development and operations in both public and private markets make him an important addition to the Board. | | | | |
WELLTOWER•2022 Proxy Statement 22 DENNIS G. LOPEZ, Independent Director | Age 67 Director since: 2021 Welltower Committees: • Compensation • Investment | | EDUCATION: • BA – California State University, Long Beach • MBA – Finance and Accounting, University of California | | | FORMER PUBLIC COMPANY DIRECTORSHIPS • American Campus Communities, Inc. | | KEY SKILLS AND EXPERIENCE: Mr. Lopez has served as the Chief Executive Officer of QuadReal Property Group Ltd. (a global real estate investment, operating and development company) since June 2017. He was Chief Investment Officer of AXA Real Estate Investment Managers (a global real estate investment manager) from 2009 to 2017, and Chief Executive Officer of SUN Real Estate Group (a private equity firm with real estate activities in India and Russia) from 2007 to 2009. Mr. Lopez has had a career of over 30 years in investment banking and real estate investment management, including serving as Global Head of Real Estate at Cambridge Place Investment Management (a London-based hedge fund) for two years and a Managing Director/Head of European Real Estate at JP Morgan in London for seven years. Among other qualifications, Mr. Lopez’s extensive experience in financial investment and services, real estate investment, and international business and investment make him a valuable asset to the Board. | | | | |
ADE J. PATTON, Independent Director | Age 43 Director since: 2021 Welltower Committees: • Audit • Nominating/ Corporate Governance | | EDUCATION: • BA – Government, University of Virginia • MBA – Harvard Business School • JD – Harvard Law School | | KEY SKILLS AND EXPERIENCE: Mr. Patton has served as Executive Vice President and Chief Financial Officer of HBO/HBO Max/Global DTC at WarnerMedia, LLC since August 2020, and previously served as Chief Financial Officer of Turner Sports and Head of Planning and Development at WM News & Sports from April 2019 to August 2020. Before assuming that role, Mr. Patton served as Senior Vice President – Corporate Finance, M&A and GTO of Turner Broadcasting System, Inc. from February 2017 to April 2019, Senior Portfolio Manager at Millennium Management, LLC (an investment management firm) from January 2015 to February 2017, Senior Research Analyst at Citadel LLC (a multinational hedge fund and financial services company) from June 2009 to March 2014, and Research Analyst at Magnetar Capital LLC (a hedge fund) from June 2007 to June 2009. Among other qualifications, Mr. Patton’s extensive experience in financial and investment management and operations make him a valuable asset to the Board. | | | |
DIANA W. REID, Independent Director |
Age 66 Director since: 2020 Welltower Committees: • Audit • Executive • Nominating/ Corporate Governance (Chair) | | EDUCATION: • BS – California State University, Chico • MBA – University of Virginia Darden School of Business | | KEY SKILLS AND EXPERIENCE: Ms. Reid served as Executive Vice President of The PNC Financial Services Group, Inc. (a bank holding company) and the executive in its commercial real estate business from 2007 to 2019. She was Founding Partner of Beekman Advisors from 2003 to 2007, providing owners of privately-held real estate finance companies with strategic advice and sell-side representation. Earlier in her career, she held various roles in bond trading, capital markets, and financial institutions advisory for 19 years at the global investment bank now known as Credit Suisse. Among other qualifications, Ms. Reid’s extensive experience in real estate banking and capital markets make her an important addition to the Board. | | | |
WELLTOWER•2022 Proxy Statement 23 SERGIO D. RIVERA, Independent Director | Age 59 Director since: 2014 Welltower Committees: • Audit • Executive • Investment (Chair) | | EDUCATION: • BA – Finance and International Business, Florida International University • MBA – Florida International University | | | FORMER PUBLIC COMPANY DIRECTORSHIPS • ILG, Inc. • SeaWorld Entertainment, Inc. | | KEY SKILLS AND EXPERIENCE: Mr. Rivera served as Chief Executive Officer of SeaWorld Entertainment, Inc. (a leading theme park and entertainment company) from November 2019 to April 2020. He served as President of the Ocean Reef Club (a leading private residential club) from February 2019 to May 2019. Mr. Rivera also served as Chief Executive Officer and President of the Vacation Ownership segment of ILG, Inc. (a hospitality and leisure services company) from 2016 to September 2018. From 1998 to 2016, Mr. Rivera served in a variety of capacities with Starwood Hotels & Resorts Worldwide, Inc., including President of The Americas from 2012 to 2016, and Chief Executive Officer and President of Starwood Vacation Ownership, Inc., formerly a wholly-owned subsidiary of Starwood Hotels & Resorts Worldwide, Inc., from 2007 to 2016. Among other qualifications, Mr. Rivera’s extensive experience in real estate development and investment strategy, corporate finance and accounting, and operating matters relevant to management of complex global businesses with one of the leading hotel and leisure companies in the world provides valuable insight to the Board. | | | | |
JOHNESE M. SPISSO, Independent Director | Age 61 Director since: 2018 Welltower Committees: • Compensation • Nominating/ Corporate Governance | | EDUCATION: • BS – Health Science, Chapman College • MPA – University of San Francisco | | CURRENT PUBLIC COMPANY DIRECTORSHIPS: • Douglas Emmett, Inc. | | KEY SKILLS AND EXPERIENCE: Ms. Spisso has served as the President of UCLA Health (an academic medical center), Chief Executive Officer of the UCLA Hospital System and Associate Vice Chancellor of UCLA Health Sciences since 2016. Before assuming her positions at UCLA, she worked for 22 years at the University of Washington School of Medicine, including serving as Chief Health System Officer and Vice President, Medical Affairs for nine years. Among other qualifications, Ms. Spisso brings to the Board over 30 years of experience in large academic health system management and has demonstrated tremendous strategic and operational leadership during that time. | | | |
KATHRYN M. SULLIVAN, Independent Director | Age 66 Director since: 2019 Welltower Committees: • Audit (Chair) • Compensation • Executive | | EDUCATION: • BA – Accounting, University of Louisiana at Monroe • MBA – Louisiana State University | | CURRENT PUBLIC COMPANY DIRECTORSHIPS: • Hanger, Inc. | | KEY SKILLS AND EXPERIENCE: Ms. Sullivan served as Chief Executive Officer of UnitedHealthcare Employer and Individual, Local Markets (a diversified health care company), which is an operating division of UnitedHealth Group, from March 2015 to 2018. From 2008 to 2015, she served as Chief Executive Officer of UnitedHealthcare, Central Region. Among other qualifications, Ms. Sullivan’s experience in the health care industry, especially with respect to health plan payors, is extremely valuable to the Board. | | | |
WELLTOWER•2022 Proxy Statement 24 DIRECTOR COMPENSATION The table below summarizes the compensation paid in 2021 to Welltower’s non-employee directors. 2021 Director Compensation Table Name | | Fees Earned or Paid in Cash ($) | | Stock Awards(12) ($) | | Total ($) | | Kenneth J. Bacon | | | 355,500 | (2) | | 175,139 | | | 530,639 | | Karen B. DeSalvo | | | 99,000 | (3) | | 175,139 | | | 274,139 | | Jeffrey H. Donahue | | | 135,500 | (4) | | 175,139 | | | 310,639 | | Philip L. Hawkins | | | 100,000 | (5) | | 175,139 | | | 275,139 | | Dennis G. Lopez(1) | | | 56,896 | (6) | | 105,511 | | | 162,407 | | Sharon M. Oster(1) | | | 49,135 | (7) | | 160,066 | | | 209,201 | | Ade J. Patton(1) | | | 56,896 | (6) | | 105,511 | | | 162,407 | | Diana W. Reid | | | 115,470 | (8) | | 175,139 | | | 290,609 | | Sergio D. Rivera | | | 132,500 | (9) | | 175,139 | | | 307,639 | | Johnese M. Spisso | | | 102,000 | (10) | | 175,139 | | | 277,139 | | Kathryn M. Sullivan | | | 135,500 | (11) | | 175,139 | | | 310,369 | |
(1) | Ms. Oster decided to not stand for election as a member of the Board at the 2021 Annual Meeting held on May 26, 2021 and therefore retired from the Board on that date. Messrs. Lopez and Patton were nominated to stand for election to the Board on March 30, 2021 and were elected to serve at the 2021 Annual Meeting held on May 26, 2021. | (2) | Includes $250,000 additional fee for serving as Chair of the Board and $7,500 additional fee for serving on the Executive Committee. Also includes $3,000 for attending more than four Board meetings. | (3) | Includes $3,000 for attending more than four Board meetings and $1,000 for attending more than four Nominating/Corporate Governance Committee meetings. | (4) | Includes $25,000 additional fee for serving as Chair of the Compensation Committee and $7,500 additional fee for serving on the Executive Committee. Also, includes $3,000 for attending more than four Board meetings, $3,000 for attending more than four Compensation Committee meetings, and $2,000 for attending more than four Investment Committee meetings. | (5) | Includes $3,000 for attending more than four Board meetings and $2,000 for attending more than four Investment Committee meetings. | (6) | Each of Mr. Lopez and Mr. Patton earned fees following their election to the Board on May 26, 2021. Mr. Lopez deferred 100% of his fees for 2021 pursuant to the Welltower Inc. 2019 Nonqualified Deferred Compensation Plan. | (7) | Fees were paid for Ms. Oster’s services through her retirement on May 26, 2021. | (8) | Includes $11,978 additional fee for serving as Chair of the Nominating/Corporate Governance Committee and $4,492 additional fee for serving on the Executive Committee. Also, includes $3,000 for attending more than four Board meetings and $1,000 for attending more than four Nominating/Corporate Governance Committee meetings. | (9) | Includes $25,000 additional fee for serving as Chair of the Investment Committee and $7,500 additional fee for serving on the Executive Committee. Also includes $3,000 for attending more than four Board meetings and $2,000 for attending more than four Investment Committee meetings. | (10) | Includes $3,000 for attending more than four Board meetings, $3,000 for attending more than four Compensation Committee meetings and $1,000 for attending more than four Nominating/Corporate Governance Committee meetings. | (11) | Includes $30,000 additional fee for serving as Chair of the Audit Committee and $7,500 additional fee for serving on the Executive Committee. Also includes $3,000 for attending more than four Board meetings. | (12) | Amounts set forth in this column represent the grant date fair value calculated in accordance with FASB ASC Topic 718 for deferred stock units granted to the non-employee directors on February 12, 2021 based on the closing price of $67.51 (other than Mr. Lopez and Mr. Patton) and on May 26, 2021 based on the closing price of $74.99 (other than Ms. Oster). Ms. Oster did not receive a grant on May 26, 2021 in light of her retirement from the Board on such date, and each of Messrs. Lopez and Patton only received a prorated grant on May 26, 2021 upon their appointment to the Board. As of December 31, 2021, (a) each non-employee director (other than Mr. Lopez and Mr. Patton) held an aggregate of 2,572 deferred stock units that had not yet been converted into shares of common stock and (b) Mr. Lopez and Mr. Patton held an aggregate of 1,407 deferred stock units that had not yet been converted into shares of common stock. |
The form and amount of non-employee director compensation is determined by the Board upon the recommendation of the Compensation Committee. Generally, the Board’s policy is to pay its non-employee directors appropriate and competitive compensation to ensure Welltower’s ability to attract and retain highly-qualified directors in a manner consistent with recognized corporate governance best practices. Directors who are also employees do not receive additional compensation for their Board service. The Compensation Committee generally reviews non-employee director compensation on a semi-annual basis, most recently in November 2021, with its independent compensation consultant, which advises the Compensation Committee on the design and amount of compensation for non-employee directors. Any changes to the non-employee director compensation program are then recommended to the full Board for approval. No changes were recommended to the Board. WELLTOWER•2022 Proxy Statement 25 The compensation program for non-employee directors for the 2021 calendar year consisted of: Cash Compensation Type of fee | | Amount | Annual retainer for all directors | | $95,000 yearly | Additional Chair of the Board fee | | $250,000 yearly | Additional Committee Chair fees: | | | • Audit | | $30,000 yearly | • Compensation, Investment | | $25,000 yearly | • Nominating/Corporate Governance | | $20,000 yearly | Additional fee for non-employee members of the Executive Committee | | $7,500 yearly | Per meeting fee for each Board meeting in excess of four per year | | $1,500 | Per meeting fee for each committee meeting in excess of four per year | | $1,000 |
For 2022, non-employee directors may elect to receive their cash compensation in the form of shares of Welltower common stock. Equity Compensation In 2021, the non-employee directors each received grants of deferred stock units with a value of approximately $175,000 pursuant to the 2016 Long-Term Incentive Plan (or prorated awards for directors who commenced service during 2021). The initial grants, made on February 12, 2021, had a value of $160,000 in accordance with Welltower’s standard equity granting practice for non-employee directors. Directors continuing after the 2021 Annual Meeting received supplemental grants of $15,000 on May 26, 2021. The grants for the two directors who joined the Board during 2021 were based on the full $175,000 value, prorated for the portion of the year that they served. Generally subject to continued service, the deferred stock units granted in 2021 will be converted into shares of common stock on the first anniversary of the date of grant. Recipients of the deferred stock units also receive dividend equivalent rights entitling them to a cash payment from Welltower in an amount equal to any dividends paid on Welltower’s common stock as and when such common stock is issued. Deferred Compensation The non-employee directors are eligible to participate in the Welltower Inc. 2019 Nonqualified Deferred Compensation Plan. A non-employee director may elect to defer up to 100% of his or her cash compensation (including any fees payable for serving as the Chair of the Board or for service on a Board committee). Participants are 100% vested in these deferrals. For 2022, non-employee directors may also elect to defer the receipt of any compensation paid in shares of Welltower’s common stock until their retirement from the Board or in 3, 5 or 10 annual installments. DIRECTOR STOCK OWNERSHIP GUIDELINES |
Each non-employee director is required, within five years of joining the Board, to own shares of Welltower common stock with a fair market value of at least five times the annual cash retainer. Shares owned directly and indirectly, restricted shares and deferred stock units count towards these ownership requirements. Ownership Guidelines for Non-Employee Directors. The current stock ownership guidelines for the non-employee directors are as follows: | (1) | Based on closing price at 12/31/2021 of $85.77. | (2) | Director within five-year period from date of appointment. |
WELLTOWER•2022 Proxy Statement 26 Proposal 2 – Amendment to the Certificate of Incorporation of Welltower OP Inc. to Remove the Provision Requiring Welltower Inc. Shareholders to Approve Amendments to the Welltower OP Inc. Certificate of Incorporation and Other Extraordinary Transactions Involving Welltower OP Inc. Beneficial OwnershipPROPOSAL BACKGROUND
In March 2022, the Board of Directors of Welltower OP Inc. (formerly known as Welltower Inc.) (“Old Welltower”), our former parent company and Executive Officerswhich is now a subsidiary of Welltower Inc. (“Welltower” or “New Welltower”), approved the conversion of Old Welltower’s organizational structure into an Umbrella Partnership Real Estate Investment Trust (an “UPREIT”), anticipated to be completed in the second quarter of 2022 (the “Reorganization”). The Board of Directors believes an UPREIT structure, utilized by the majority of publicly-traded REITs, will provide Welltower with certain advantages described more fully below, including potentially increasing its competitiveness when seeking to acquire properties. The first steps in the Reorganization to an UPREIT have been taken, and as a result, Old Welltower is now a subsidiary of New Welltower. In order to complete the Reorganization, Old Welltower must convert to a Delaware limited liability company (the “LLC Conversion”). As a result of Article 8 of Old Welltower’s certificate of incorporation, described in more detail below, the LLC Conversion would require a unanimous vote of New Welltower’s shareholders, an outcome likely impossible to achieve given that the company has over 447 million shares outstanding held by more than 3,100 record and beneficial holders. The Board of Directors of Welltower therefore has approved an amendment (the “Amendment”) to Old Welltower’s certificate of incorporation that will delete Article 8 thereof, which will allow the Reorganization to be completed and for Welltower shareholders to realize the benefits of the UPREIT conversion. The deletion of Article 8 and the LLC Conversion do not change Welltower’s corporate governance framework or shareholder rights. The Board of Directors of New Welltower has determined the Amendment to be in the best interests of New Welltower and its shareholders, has authorized the approval of the Amendment by New Welltower in its capacity as sole shareholder of Old Welltower and has recommended that the shareholders of New Welltower approve the Amendment. The Reorganization will align Welltower’s corporate structure with other publicly-traded U.S. real estate investment trusts and improve Welltower’s ability to acquire properties in a tax-deferred manner. Having the UPREIT organizational structure would allow existing owners of appreciated properties to transfer such properties to an “operating partnership” (which owns substantially all of Welltower’s assets) in exchange for partnership interests therein. Such a transfer may, subject to meeting applicable tax requirements, be on a tax-deferred basis for the contributors. As such, completing the Reorganization may give Welltower a competitive advantage in the marketplace relative to other buyers. WELLTOWER•2022 Proxy Statement 27 TECHNICAL DESCRIPTION OF THE REORGANIZATION AND THE PROPOSAL The table below sets forth, asfirst step of March 5, 2019, unless otherwise specified, certain information with respectthe Reorganization was to the beneficial ownershipeffect a holding company reorganization of Welltower’s sharesOld Welltower. The holding company reorganization of common stockOld Welltower was effected by each director of Welltower, each Named Executive Officer, and the directors and executive officers offorming New Welltower as a group. Unless noted below,wholly–owned subsidiary of Old Welltower and forming WELL Merger Holdco Sub Inc., a Delaware corporation, as a wholly–owned subsidiary of New Welltower (“Merger Sub”). New Welltower’s certificate of incorporation was substantially identical to that of Old Welltower. Thereafter, on April 1, 2022, Merger Sub was merged with and into Old Welltower pursuant to Section 251(g) of the General Corporation Law of the State of Delaware (the “DGCL”), with Old Welltower continuing as the surviving corporation (the “Merger”). Upon the effective time of the Merger, each person hasissued and outstanding share of Old Welltower was converted into an issued and outstanding share of New Welltower and Old Welltower became a wholly–owned subsidiary of New Welltower. As a result, New Welltower replaced Old Welltower as the public holding company listed on the New York Stock Exchange. As required by Section 251(g) of the DGCL, the certificate of incorporation of Old Welltower was amended in connection with the Merger to add the “Pass-Through Vote Provision”. The Pass-Through Vote Provision requires the shareholders of New Welltower to approve any act or transaction by or involving Old Welltower, other than the election or removal of directors, that, if taken by Old Welltower immediately prior to the effective time of the Merger, would have required, for its adoption under the DGCL of Old Welltower’s certificate of incorporation or bylaws, the approval of the shareholders of Old Welltower, by the same vote as is required by the DGCL and/or by the certificate of incorporation or bylaws of Old Welltower in effect immediately prior to the effective time of the Merger. The Pass-Through Vote Provision thus requires that New Welltower’s shareholders approve matters affecting Old Welltower that require the approval of New Welltower as the sole shareholder of Old Welltower. Absent the Pass-Through Vote Provision, New Welltower as the sole shareholder of Old Welltower could vote on such matters without a vote of New Welltower shareholders. Following the Merger, New Welltower holds all of its assets (other than certain de minimis assets that may be held by New Welltower directly for certain administrative functions) through Old Welltower; however, Old Welltower continues to be organized as a Delaware corporation. To complete the Reorganization, upon receiving Board and shareholder consent, Old Welltower will convert to a Delaware limited liability company so as to function as the “operating partnership” in the UPREIT structure. Under the DGCL, a conversion of a Delaware corporation to a limited liability corporation requires the unanimous approval of all shareholders, voting and investmentnonvoting. Normally, New Welltower could approve the LLC Conversion in its capacity as sole shareholder of Old Welltower. However, due to the Pass-Through Vote Provision, all of the shareholders of New Welltower would also have to approve the LLC Conversion. New Welltower has over 447 million shares outstanding, held by more than 3,100 record and beneficial holders, making the unanimous shareholder approval requirement for the LLC Conversion time consuming, expensive, and likely impossible to achieve. Therefore, in order to provide the benefits of the UPREIT conversion to New Welltower shareholders, the Boards of Directors of Old Welltower and New Welltower have approved the Amendment, which would eliminate the Pass-Through Vote Provision from the certificate of incorporation of Old Welltower, so that New Welltower may approve the LLC Conversion without the necessity of any separate approval by the New Welltower shareholders. New Welltower is thus recommending that its shareholders approve the Amendment so that the LLC Conversion may be approved solely by New Welltower, thereby allowing the completion of the Reorganization. Pursuant to the Pass-Through Vote Provision and the DGCL, the Amendment requires the approval of holders of a majority of the voting power regarding Welltower’s shares. Also, unless noted below, the beneficial ownership of each person represents less than 1% of the outstanding shares of common stock of Welltower.New Welltower as of the record date. | | | | | | | | | Name of Beneficial Owner | | Shares Held of Record | | | Total Shares Beneficially Owned(3) | | Kenneth J. Bacon | | | 7,790 | | | | 7,790 | | Karen B. DeSalvo(1) | | | - | | | | - | | Thomas J. DeRosa | | | 243,091 | | | | 243,091 | | Jeffrey H. Donahue | | | 41,418 | | | | 41,518 | | John A. Goodey | | | 36,665 | | | | 36,665 | | Mercedes T. Kerr | | | 32,716 | | | | 32,716 | | Matthew G. McQueen | | | 11,622 | | | | 11,622 | | Geoffrey G. Meyers | | | 9,420 | | | | 9,420 | | Shankh Mitra | | | 38,273 | | | | 38,335 | (4) | Timothy J. Naughton | | | 17,084 | | | | 17,084 | | Sharon M. Oster | | | 37,131 | | | | 54,131 | (5) | Judith C. Pelham | | | 12,899 | | | | 12,899 | | Sergio D. Rivera | | | 10,748 | | | | 10,748 | | Johnese M. Spisso(1) | | | - | | | | - | | Kathryn M. Sullivan(2) | | | - | | | | - | | R. Scott Trumbull | | | 10,011 | | | | 71,084 | (6) | Gary Whitelaw | | | 7,963 | | | | 7,963 | | All directors and executive officers as a group (17 persons) | | | 516,831 | | | | 595,066 | (7) |
New Welltower, in its capacity as sole shareholder of Old Welltower, has already approved the Amendment. Conditioned on the Amendment becoming effective, the Board of Directors of Old Welltower and New Welltower, in its capacity as sole shareholder, have each executed written consents approving the LLC Conversion, with the Board consent becoming effective immediately after the effective time of the Amendment and the shareholder consent becoming effective immediately after the effective time of the Board consent. If this Proposal 2 is approved, the LLC Conversion will no longer require separate approval of New Welltower’s shareholders. If New Welltower’s shareholders approve this Proposal 2, Old Welltower’s certificate of incorporation will be amended to eliminate the Pass-Through Vote Provision and, after the effective times of the Board and shareholder consents referenced above, Old Welltower will be converted to a Delaware limited liability company under the new name “Welltower OP LLC”. WELLTOWER•2022 Proxy Statement 28 (1) | Dr. DeSalvo and Ms. Spisso were appointed to the Board on November 30, 2018.
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Upon completion of the Reorganization and going forward, all of Welltower’s assets (other than certain de minimis assets that may be held by New Welltower directly for certain administrative functions) and business activities will be owned by and conducted through Welltower OP LLC, as is typical of the UPREIT structure. The below structure chart summarizes the expected organization of Welltower once the overall Reorganization (including the Amendment and the LLC Conversion) is completed: (2) | Ms. Sullivan was appointed to the Board on February 7, 2019.
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(3) | Does not include unvested restricted stock units or deferred stock units granted to the executive officers or directors that are not scheduled to vest and be settled within 60 days of March 5, 2019. Total shares beneficially owned by each of Messrs. Bacon, Donahue, Meyers, Naughton, Rivera, Trumbull and Whitelaw and Ms. Oster and Pelham includes 363 shares issuable upon conversion of deferred stock units within 60 days of March 5, 2019.
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(4) | Mr. Mitra’s total shares beneficially owned include 62 shares owned by his children.
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(5) | Ms. Oster’s total shares beneficially owned include 17,000 shares owned by her spouse.
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(6) | Mr. Trumbull’s total shares beneficially owned include 61,083 shares held in trust for the benefit of his immediate family, as to which his spouse is the trustee. Mr. Trumbull disclaims beneficial ownership of these 61,083 shares.
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(7) | Total beneficial ownership represents 0.15% of the outstanding shares of common stock of Welltower as of March 5, 2019.
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Review, Approval or Ratification of Transactions with Related PersonsFORM OF THE AMENDMENT
The Board has adopted a written policy
Article 8 of the certificate of incorporation of Old Welltower currently provides as follows: “Any act or transaction by or involving the Corporation, other than the election or removal of directors of the Corporation, that, if taken by the Corporation immediately prior to the effective time of the merger of [Merger Sub] with and into the Corporation (the “Merger Effective Time”), would have required, for its adoption under the General Corporation Law of the State of Delaware or under the certificate of incorporation or bylaws of the Corporation immediately prior to Merger Effective Time, the approval of transactions betweenthe stockholders of the Corporation, shall, pursuant to Section 251(g)(7)(A) of the General Corporation Law of the State of Delaware, require, in addition to approval of the stockholders of the Corporation, the approval of the stockholders of Welltower and its directors, director nominees, executive officers, greater than 5% beneficial ownersInc., a Delaware corporation (or any successor by merger), by the same vote as would have been required by the General Corporation Law of Welltower’s common stock, and eachthe State of their respective immediate family members. The policy covers any transaction, arrangement Delaware and/or relationshipby the certificate of incorporation or seriesbylaws of similar transactions, arrangements or relationships (including any indebtedness or guarantee of indebtedness) in which (1) the aggregate amount involved sinceCorporation immediately prior to the beginning of Welltower’s last completed fiscal year is or is expected to exceed $100,000, (2) Welltower or any of its subsidiaries is a participant, and (3) any related person has or will have a direct or indirect interest.Merger Effective Time.” The policy provides that the Nominating/Corporate Governance Committee reviews transactions subject to the policy and determines whether or not to approve or ratify those transactions. In addition, the Nominating/Corporate Governance Committee has delegated authority to the Chairproposed amendment would delete Article 8 of the Nominating/Corporate Governance Committee topre-approve or ratify transactions under certain circumstances. In reviewing transactions subject tocertificate of incorporation of Old Welltower in its entirety, and replace it with the policy, the Nominating/Corporate Governance Committee or the Chair of theword “Repealed.” | | | | | Notice of Annual Meeting of Shareholders and 2019 Proxy Statement |
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| | | | | | | | | | | | | Security Ownership of Directors and Management and Certain Beneficial Owners |
Nominating/Corporate Governance Committee, as applicable, considers, among other factors it deems appropriate, whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related person’s interest in the transaction. The Nominating/Corporate Governance Committee has considered and adopted the following standingpre-approvals under the policy for transactions with related persons:
Employment as an executive officer of Welltower, if: (1) the related compensation is required to be reported in Welltower’s proxy statement under Item 402 of SEC RegulationS-K or (2) the executive officer is not an immediate family member of another executive officer or director of Welltower, the related compensation would be reported in Welltower’s proxy statement under Item 402 of SEC RegulationS-K if the executive officer was a “named executive officer” and the Compensation Committee approved (or recommended that the Board approve) such compensation.
Any compensation paid to a director if the compensation is required to be reported in Welltower’s proxy statement under Item 402 of SEC RegulationS-K;
Any transaction with another company at which a related person’s only relationship is as an employee (other than an executive officer), if the aggregate amount involved does not exceed the greater of $1 million or 2% of that company’s total annual revenues;
Any charitable contribution, grant or endowment by Welltower or The Welltower Charitable Foundation to a charitable organization, foundation or university at which a related person’s only relationship is as an employee (other than an executive officer) or a director, if the aggregate amount involved does not exceed the lesser of $1 million or 2% of the charitable organization’s total annual receipts;
| • | | Any transaction where the related person’s interest arises solely from the ownership of Welltower’s common stock and all holders of Welltower’s common stock received the same benefit on a
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “pro-rataFOR basis (e.g., dividends); and |
Any transaction with another publicly-traded company where the related person’s interest arises solely from beneficial ownership of more than 5% of Welltower’s common stock and ownership of anon-controlling interest in the other publicly-traded company.
There were no related person transactions identified for 2018.
| | | | | 22 | | | Notice of Annual Meeting of Shareholders and 2019 Proxy Statement |
| | | | | | | Proposal 2—Ratification” PROPOSAL 2. The affirmative vote of the Appointmentmajority of the Independent Registered Public Accounting Firm | | | | | | shares outstanding entitled to vote theron will be required for approval of this proposal. |
WELLTOWER•2022 Proxy Statement 29 Proposal 2—3 – Ratification of the Appointment of the Independent Registered Public Accounting Firm Audit FeesAUDIT FEES
The Audit Committee is directly responsible for the appointment, retention, compensation, evaluation and oversight of Welltower’s independent registered public accounting firm. The Audit Committee considers whether the independent registered public accounting firm is best positioned and qualified to provide the most effective and efficient service, based on factors such as the independent registered public accounting firm’s familiarity with Welltower’s business, personnel, culture, accounting systems or risk profile; the appropriateness of fees charged; and whether provision of the service by the independent registered public accounting firm would enhance Welltower’s ability to manage or control risk or improve audit quality. The Audit Committee obtains and reviews a report from the independent registered public accounting firm at least annually regarding:regarding (a) the independent registered public accounting firm’s internal quality-control procedures,procedures; (b) any material issues raised by the most recent internal quality-control review, or peer review, of the independent registered public accounting firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respectingregarding one or more independent audits carried out by the independent registered public accounting firm, and any steps taken to deal with any such issues,issues; and (c) all relationships between the independent registered public accounting firm and Welltower (in order to assess the independent registered public accounting firm’s independence). The Audit Committee evaluates the qualifications, performance and independence of the independent registered public accounting firm, including considering whether its quality controls are adequate and the provision of permittednon-audit services is compatible with maintaining its independence, and takingtakes into account the opinions of management and the internal auditors. The Audit Committee has selected Ernst & Young LLP (“EY”) to serve as Welltower’s independent registered public accounting firm for the year ending December 31, 2019.2022. EY has served as Welltower’s independent registered public accounting firm since Welltower’s inception in 1970. The Audit Committee periodically considers whether in order to assure continuing auditor independence, it should adopt a policy requiring the regular rotation of the independent registered public accounting firm.firm to ensure continuing auditor independence. The Audit Committee (and in particular the Chair of the Audit Committee) ensures the rotation of the lead (or coordinating) audit partner every five years as mandated by the Sarbanes-Oxley Act of 2002, as amended (“SOX”), and is directly involved in the selection of EY’s lead audit partner. Welltower’s current lead audit partner was appointed beginning with the 2018 audit. The Audit Committee and the Board believe that the continued retention of EY as Welltower’s independent registered public accounting firm is in the best interests of Welltower and its shareholders. Although the submission of this matter for approval by shareholders is not legally required, the Board believes that such submission follows sound business practice and is in the best interests of the shareholders. If this appointment is not ratified by the holders of a majority of the shares of voting securities present in persononline during the virtual Annual Meeting or by proxy at the Annual Meeting, the Audit Committee will consider the selection of another accounting firm. If such a selection were made, it may not become effective until 20202023 because of the difficulty and expense of making a substitution. Representatives of the firm of EY are expected to be present at the Annual Meeting and will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions. WELLTOWER•2022 Proxy Statement 30 Fees for professional services provided by EY in each of the last two fiscal years, in each of the following categories, are as follows: | | | Year ended December 31, | | | Year ended December 31, | | | 2018 | | | | | | 2017 | | | 2021 | | 2020 | | Audit Fees | | $ | 3,637,467 | | | | | $ | 2,832,759 | | | $ | 3,534,736 | | $ | 3,243,720 | | Audit-Related Fees | | | 143,842 | | | | | | 27,842 | | | | 145,800 | | | 232,656 | | Tax Fees: | | | | | | | | | | | | | | Tax Compliance | | | 1,076,277 | | | | | | — | | | | 1,841,545 | | | 2,136,229 | | Tax Planning and Tax Advice | | | 1,833,363 | | | | | | 491,456 | | | | 623,450 | | | 767,221 | | All Other Fees | | | — | | | | | | — | | | | — | | | — | | Totals | | $ | 6,690,949 | | | | | $ | 3,352,057 | | | $ | 6,145,531 | | $ | 6,379,826 | |
Audit fees include fees associated with the annual audit, the review of Welltower’s quarterly reports onForm 10-Q and services that generally only the independent registered public accounting firm can provide such as accounting consultations billed as audit services, comfort letters, consents and assistance with review of documents to be filed with or furnished to the SEC. | | | | | Notice of Annual Meeting of Shareholders and 2019 Proxy Statement |
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| | | | | | | | | | | | | Proposal 2—Ratification of the Appointment of the Independent Registered Public Accounting Firm |
Audit-related fees include fees associated with assurance and related services that are traditionally performed by an independent accountant, and include access to research databases and consultations concerning financial accounting and reporting standards not billed as audit services. Tax fees include fees for tax compliance and tax planning and tax advice services. Tax compliance involves the preparation of original and amended tax returns, claims for refund and tax payment-planning services and assistance with tax audits and appeals. Tax planning and tax advice encompass a diverse range of services, including advice related to acquisitions, and requests for rulings or technical advice from taxing authorities. The increase in tax fees in 2018 is primarily due to the transition of certain services from a third-party tax consultant to EY and the increase in tax reporting and tax planning requirements as a result of significant acquisition activity in 2018. None of the foregoing fees were paid for services, the sole business purpose of which was tax avoidance, or the tax treatment of which would not be supported by the Internal Revenue Code of 1986, as amended (the “Code”) and related regulations. THE BOARD OF DIRECTORS OF WELLTOWER UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP. The affirmative vote of a majority of the shares of voting securities present in person or by proxy at the Annual Meeting will be required for such ratification.
| | | | | THE BOARD OF DIRECTORS OF WELLTOWER UNANIMOUSLY RECOMMENDS THAT YOU VOTE “24 FOR| | | Notice” THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP. The affirmative vote of a majority of the shares present or by proxy and voting at the Annual Meeting will be required for approval of Shareholders and 2019 Proxy Statement |
this proposal.
| | | | | | | Proposal 2—Ratification of the Appointment of the Independent Registered Public Accounting Firm | | | | | | |
WELLTOWER•2022 Proxy Statement 31 Pre-Approval Policies and ProceduresPRE-APPROVAL POLICIES AND PROCEDURES
The Audit Committee has developed policies and procedures concerning itspre-approval of the performance of audit andnon-audit services for Welltower by EY and is responsible for the audit fee negotiations associated with the engagement of EY. At its quarterly meetings, the Audit Committeepre-approves particular audit andnon-audit services within the following categories of services that it desires the independent registered public accounting firm to undertake: audit services, audit-related services, tax compliance services, tax planning and tax advice services and other services. Prior to giving its approval, the Audit Committee reviews the written descriptions of these services provided by EY and the estimated fees for these services. All othernon-audit services must bepre-approved on an individual engagement basis. If there is any question as to whether a proposed service has beenpre-approved, management and the independent registered public accounting firm together must contact the Audit Committee to obtain clarification or, if necessary,pre-approval. All of the audit services, audit-related services, tax compliance services, tax planning and tax advice services and other services provided to Welltower by EY during the year ended December 31, 20182021 werepre-approved by the Audit Committee. Where specific Audit Committee approval ofnon-audit services is required, the Chair of the Audit Committee maypre-approve the engagement subject to a presentation to the full Audit Committee at its next regularly scheduled meeting.meeting. Audit Committee ReportAUDIT COMMITTEE REPORT
The Audit Committee oversees Welltower’s financial reporting process on behalf of the Board. Management has the primary responsibility for the financial statements and the reporting process, including the system of internal controls. In fulfilling its oversight responsibilities this past year, the Audit Committee reviewed and discussed the audited financial statements with management, including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements. Management, the internal auditors and the independent registered public accounting firm also made presentations to the Audit Committee throughout the year on specific topics of interest, including Welltower’s (i) 20182021 integrated audit plan; (ii) updates on completion of the audit plan; (iii) compliance with the internal controls required under Section 404 of SOX; (iv) critical accounting policies; (v) assessment of the impact of new accounting guidance;(vi) non-GAAP policies and procedures; (vii) disclosure committee charter; (viii) SEC comment letters;critical audit matters; and (ix) cybersecurity. The Audit Committee reviewed with the independent registered public accounting firm, which is responsible for expressing an opinion on the conformity of the audited financial statements with U.S. generally accepted accounting principles, its judgments as to the quality, not just the acceptability, of Welltower’s accounting principles and such other matters as are required to be communicated to the Audit Committee under U.S.the applicable standards (including Auditing Standard No. 1301, “Communications with Audit Committees”) of the Public Company Accounting Oversight Board.Board and the SEC. In addition, the Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding such firm’s communications with the Audit Committee concerning independence. The Audit Committee has also discussed with the independent registered public accounting firm such firm’s independence from management and Welltower and considered the compatibility ofnon-audit services with such firm’s independence. The Audit Committee discussed with Welltower’s independent registered public accounting firm the overall scope and plans for its audit. The Audit Committee met with such firm, with and without management present, to discuss the results of its examinations, its evaluations of Welltower’s internal controls, and the overall quality of Welltower’s financial reporting. The Audit Committee held sevenfour meetings during the year ended December 31, 2018.2021. Based on reviews and discussions referred to above, the Audit Committee recommended to the Board (and the Board has approved) that the audited financial statements be included in Welltower’s Annual Report on Form10-K for the year ended December 31, 20182021 for filing with the SEC. The Audit Committee and the Board have also recommended, subject to shareholder ratification, the selection of EY as Welltower’s independent registered public accounting firm for the year ending December 31, 2019.2022. Mr. Meyers,Hawkins, Mr. Patton, Ms. Reid, Mr. Rivera and Mr. TrumbullMs. Sullivan were each members of the Audit Committee in 20182021 and participated in the reviews and discussions described above. In August 2021, Mr. Patton joined the Audit Committee and Mr. Hawkins left the Audit Committee. Submitted by the Audit Committee R. Scott Trumbull, Chair
Geoffrey G. MeyersKathryn M. Sullivan (Chair)
Ade J. Patton Diana W. Reid Sergio D. Rivera WELLTOWER•2022 Proxy Statement 32 | | | | | Notice of Annual Meeting of Shareholders and 2019 Proxy Statement |
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Back to Contents | | | | | | | | | | | | | Proposal 3—Approval, on an Advisory Basis, of the Compensation of the Named Executive Officers |
Proposal 3—4 – Approval, on an Advisory Basis, of the Compensation of the Named Executive Officers In accordance with the requirements of Section 14A of the U.S. Securities Exchange Act,
We are asking Welltower’s shareholders have the opportunity to vote to approve, on an advisory,non-binding basis, the compensation of the Named Executive Officers as disclosed in this Proxy Statement in accordance with the SEC’s compensation disclosure rules.Statement. Welltower’s compensation programs are designed to link pay to performance and to reward the Named Executive Officers for the achievement ofachieving short-term and long-term strategic and operational goals and increasedincreasing shareholder returns. This compensation philosophy is central to Welltower’s ability to attract, retain and motivate individuals who can achieve superior financial results. Please refer to “Executive Compensation-Executive Summary” in this Proxy Statement for an overview of the compensation of the Named Executive Officers and Welltower’s key financial and strategic achievements in 2018 that drove compensation decisions. We also encourage shareholders to read the “Executive Compensation-CompensationCompensation Discussion and Analysis” inAnalysis section of this Proxy Statement, which describes the details of Welltower’s compensation programs, our key financial and strategic achievements in 2021, and the decisions made by the Compensation Committee with respect to 20182021 compensation. Shareholders are being asked to vote on the following advisory resolution: Resolved, that the compensation paid to Welltower’s Named Executive Officers as disclosed in this Proxy Statement in accordance with the SEC’s compensation disclosure rules, which disclosures include the disclosures under “Executive Compensation-CompensationCompensation- Compensation Discussion and Analysis,” the compensation tables and the narrative disclosures that accompany the compensation tables, is hereby approved. This vote is not intended to address any specific item of compensation, but rather the overall compensation of the Named Executive Officers and the policies and practices described in this Proxy Statement. This vote is advisory and therefore not binding on Welltower, the Board, or the Compensation Committee. The Board and the Compensation Committee value the opinions of Welltower’s shareholders, and to the extent there is any significant vote against the Named Executive Officers’ compensation, as disclosed in this Proxy Statement, Welltower will consider shareholders’ concerns, and the Compensation Committee will evaluate whether any actions are necessary to address those concerns. At Welltower’s 2017 Annual Meeting of Shareholders, its shareholders approved anon-binding, advisory proposal to hold annual advisory votes to approve Welltower’s named executive officer compensation. In consideration of the results of this advisory vote, the Board has adopted a policy providing for annual advisory votes on Welltower’s named executive officer compensation. Unless the Board modifies this policy, itsthe next advisory vote on Welltower’s named executive officer compensation following this vote will be held at its 2020the 2023 Annual Meeting of Shareholders. THE BOARD OF DIRECTORS OF WELLTOWER UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR”
| THE BOARD OF DIRECTORS OF WELLTOWER UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THIS PROXY STATEMENT PURSUANT TO THE COMPENSATION DISCLOSURE RULES OF THE SEC. The affirmative vote of the majority of the shares present or by proxy and voting at the Annual Meeting will be required for approval of this proposal. |
WELLTOWER•2022 Proxy Statement 33 Executive Compensation COMPENSATION OF THE NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THIS PROXY STATEMENT PURSUANT TO THE COMPENSATION DISCLOSURE RULES OF THE SEC. The affirmative vote of a majority of the shares of voting securities present in person or by proxy at the Annual Meeting will be required for approval of this proposal.DISCUSSION AND ANALYSIS WELLTOWER•2022 Proxy Statement34
EXECUTIVE OFFICERS | | | | SHANKH MITRA, Chief Executive Officer & Chief Investment Officer | | | Mr. Mitra has served as Welltower’s Chief Executive Compensation—CD&AOfficer since October 2020 and Welltower’s Chief Investment Officer since August 2018. Mr. Mitra’s biographical information appears under “Director Nominees” on page 21. | Age 41 | | | | | | JOHN F. BURKART(1), Executive Vice President - Chief Operating Officer | | | |
Executive Compensation
Compensation Discussion and Analysis
To assist shareholders in finding important information, this CD&A is organized as follows:
The Compensation Committee is responsible for Welltower’s executive compensation program and implementing its underlying philosophy and policies. An overview and analysis of Welltower’s executive compensation program, philosophy and policies is set forth below.
Welltower’s named executive officers for 2018 (the “Named Executive Officers” or “NEOs”) were:
| | | Named Executive Officers | | Title | Thomas J. DeRosa
| | Chief Executive Officer
| John A. Goodey
| | TIMOTHY G. MCHUGH, Executive Vice President - Chief Financial Officer | Mercedes T. Kerr
| | Mr. McHugh has served as Welltower’s Executive Vice President - Business– Chief Financial Officer since April 2020. Mr. McHugh’s previous roles at Welltower included Senior Vice President – Chief Financial Officer & RelationshipTreasurer from September 2019 to April 2020, Senior Vice President – Corporate Finance from August 2018 to August 2019, and Vice President – Finance and Investment from January 2016 to August 2018. He also served as Welltower’s Treasurer from March 2017 to August 2018. From 2010 to 2015, Mr. McHugh served as Senior Analyst – Real Estate Securities at RREEF Management, currently known as DWS Investments. | Shankh Mitra Age 37 | | Executive Vice President - Chief Investment Officer
| Matthew G. McQueen
| | Senior
| MATTHEW G. MCQUEEN, Executive Vice President - General Counsel & Corporate Secretary | | | Mr. McQueen has served as Welltower’s Executive Vice President – General Counsel & Corporate Secretary since November 2020. Mr. McQueen’s previous roles at Welltower included Senior Vice President – General Counsel & Corporate Secretary from July 2016 to November 2020, and Senior Vice President – Legal from March 2015 to July 2016. From 2007 to 2015, Mr. McQueen served as of counsel and a partner in the Corporate and Securities group at the law firm of Sidley Austin LLP. | Age 49 | | | | | | AYESHA MENON, Senior Vice President - Wellness Housing and Development | | | Ms. Menon has served as Welltower’s Senior Vice President – Wellness Housing and Development since May 2021. She previously served as Senior Vice President – Strategic Investments from May 2019 to May 2021. From April 2018 to April 2019, Ms. Menon served as Director of Real Estate Investment at Sidewalk Labs, an Alphabet Inc. company. Ms. Menon was a real estate investor at Wheelock Street Capital from 2008 to 2018. | Age 41 | | |
(1) | Mr. Burkart was elected as an executive officer effective July 19, 2021. |
WELLTOWER•2022 Proxy Statement 35 EXECUTIVE SUMMARY 2021 Business Performance Highlights 2021 was a pivotal year for Welltower, marked by a powerful recovery in our operational performance, the establishment of long-term exclusive partnerships, and the most active year of capital deployment in a decade — all while contending with continued challenges posed by the COVID-19 pandemic. See pages 4 through 6 for more information on our business performance. Named Executive Officers This CD&A discusses the compensation of the following individuals, who were Welltower’s “Named Executive Officers” (or “NEOs”) in 2021. Shankh Mitra | Chief Executive Officer & Chief Investment Officer | John F. Burkart | Executive Vice President – Chief Operating Officer | Timothy G. McHugh | Executive Vice President – Chief Financial Officer | Matthew G. McQueen | Executive Vice President – General Counsel & Corporate Secretary | Ayesha Menon | Senior Vice President – Wellness Housing and Development |
Biographical information about these individuals appears on page 35. Executive SummaryCompensation Principles
COMPENSATION PRINCIPLES
Welltower’s executive compensation program is designed to attract, motivate and retain top executive talent. Competing successfully in this dynamic sector requires highly-skilled,highly skilled, knowledgeable individuals who are committed to delivering outstanding shareholder returns while effectively building relationships across the industry. We compete for talent in the REIT industry and in areas beyond the REIT industry, such as with investment banks and private equity firms. The Compensation Committee continually reviews and refines Welltower’s compensation practices so that the compensation program is in line with the market, is responsive to shareholder concerns, of shareholders, and takes into accountconsiders best compensation practices. To that end, Welltower’s compensation program is based on three core principles: Align pay and performance, utilizing absolute and relative goals that measure performance both on an annual and multi-year basis.
Align management and shareholder interests by establishing rigorous goals that balance and measure value creation over both the short and long-term.
• | Align pay and performance, utilizing absolute and relative goals that measure performance on both an annual and multi-year basis. | • | Align management and shareholder interests by establishing rigorous goals that balance and measure value creation over both the short and long term. | • | Pay the majority of compensation in the form of equity that vests over an extended number of years. | | | | | Notice of Annual Meeting of Shareholders and 2019 Proxy Statement |
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| | | | | | | | | | | | | Executive Compensation—CD&A |
2018 PERFORMANCE
Welltower had a strong year in 2018 that validated the strength of its platform. Welltower’s strategy is based on acquiringCompensation Philosophy and developing a well-diversified, high quality portfolio located in stronghigh-barrier-to-entry and growing markets operated or managed bybest-in-class seniors housing operators, post-acute providers and health systems. Welltower significantly improved its portfolio, balance sheet and risk profile through strategic acquisitions and dispositions during 2018.
The Compensation Committee evaluates allpre-established qualitative and quantitative metrics and factors in making its compensation decisions. Among the important metrics and factors the Compensation Committee considered for 2018 were the management team’s success in the following areas:Objectives
| | | Portfolio
• Completed more than $4 billion in gross investments during the year, including $3.4 billion in acquisitions at a 7.3% yield and $290 million in development funding with a 7.6% yield.
• Entered into a first of its kind partnership with ProMedica Health System to drive delivery of services towards new, cost-effective sites of care.
• Significantly improved portfolio quality by generating over $1.8 billion of pro rata proceeds from dispositions ofnon-strategic assets.
• Increased percentage of revenues generated by private pay sources by 30 basis points to 94.5% in 2018.
Balance Sheet
• Successfully closed $1.9 billion of senior unsecured notes offerings across three tranches with an average maturity of 13.8 years and a blended yield to maturity of 4.3%.
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TOTAL SHAREHOLDER RENTURN Average Annual Return Since Inception 15.07%
| • Generated $795 million of gross proceeds from common stock
issuances at an average price of $67.51 per share.
| | | Growth
• Generated strong same store net operating income growth of 1.6%*, driven by industry-leading same store net operating income growth in the seniors housing operating portfolio.
Corporate
| | | • Reduced general and administrative expenses as a percentage of gross assets to 34 basis points from 37 basis points at the end of 2017.
• Paid cash dividends of $3.48 per share. The dividend paid in February 2019 represents Welltower’s 191st consecutive dividend.
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Sustainability
Named to the Dow Jones Sustainability World Index for the first time and the Dow Jones Sustainability North America Index for the third consecutive year.
Received listing in the RobecoSAM 2018 Sustainability Yearbook, which recognizes the top 15% of organizations in their industry for their environmental, social and governance leadership.
Was the first North American REIT to sign the UN Women’s Empowerment Principles and join the CEO Action for Diversity and Inclusion.
Designated as a GRESB Green Star for sustainability performance for fourth consecutive year.
| | | | | 28 | | | Notice of Annual Meeting of Shareholders and 2019 Proxy Statement |
| | | | | | | Executive Compensation—CD&A | | | | | | |
* Same store net operating income is anon-GAAP financial measure. For a reconciliation of this number to the most directly comparable GAAP numbers, please see Appendix A to this Proxy Statement.
| | | | | PRO RATA DISPOSITION PROCEEDS
($billions)
| | PRIVATE PAY
| | GENERAL & ADMINISTRATIVE EXPENSES AS A PERCENTAGE OF GROSS ASSETS
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| | COMPENSATION PHILOSOPHY AND OBJECTIVES |
The philosophy underlying Welltower’s executive compensation program is tothat we should provide competitive pay for achieving rigorous performance goals. The objective is to attract and retain the caliber of executive officers and other key employees necessary for Welltower to deliver sustained high performance to shareholders. The short and long-term metrics built into the compensation program are specifically designed to align management and shareholder interests directly. Outlined below are the principles underlying Welltower’s executive compensation program. Strongly align pay and performance, utilizing absolute and relative goals across annual and multi-yearperformance periods
| • | | Strongly align pay and performance, utilizing absolute and relative goals across annual and multi-year performance periods
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| ¡ | | Payouts vary based upon the degree to which performance measurestargets are achieved. |
• | ¡ | | Multiple performance measures are used to ensure a focus on overall Welltower performance. |
• | ¡ | | Variable reward payouts are designed to provide competitive compensation for achieving expected performance and enhanced compensation for making business decisions that lead to performance that exceeds expectations. | |
| • | | Attract and retain top management talent
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| ¡ | | The executive compensation program is structured to attract and retain individuals with the skills necessary to effectively manage a complex, growing international business.
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| ¡ | | The Compensation Committee considers the median compensation level of similarly-situated executives when setting target compensation levels, with above median payouts for superior performance.
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| ¡ | | Individual performance is a key element in the annual cash bonus program, which is designed to motivate executives to perform at the highest levels.
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| • | | Link compensation realized to the achievement of Welltower’s shortshort- and long-term financial and strategic goals |
• | ¡ | | A majority of each Named Executive Officer’s total direct compensation opportunity is in the form of annual and long-term incentive compensation. |
WELLTOWER•2022 Proxy Statement 36 • | Participation in performance-based programs is intended to drive long-term performance that exceeds peers. | • | Performance measures are selected based on a careful assessment of measures that will encourage profitable growth and increase shareholder value. |
• | ¡ | | Actual compensation may be above or below the targeted level, depending on achievement relative topre-established performance goals that reflect Welltower’s shortshort- and long-term business plans. | |
Align management and shareholder interests by engaging in long-term shareholder value creation | • | | Align management and shareholder interests by engaging in long-term shareholder value creation
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| ¡ | | Long-term incentives are granted in the form of equity awards that vest based on performance and continued employment over multiple years, which aligns management’s interests with those of Welltower’s shareholders. |
• | ¡ | | The current incentive programs include an annual cash bonus component and aan equity component with successive three-year forward-looking component emphasizingperformance periods to emphasize both shortshort- and long-term shareholder value creation. |
• | ¡ | | Stock ownership guidelines require that Board members and executives to maintain significant levels of stock ownership, further emphasizing the focus on long-term shareholder return and alignment with shareholder interests. |
| | | | | Notice of Annual Meeting of Shareholders and 2019 Proxy Statement |
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| | | | | | | | | | | | | Executive Compensation—CD&A |
Attract and retain top management talent • | | The executive compensation program is structured to attract and retain individuals with the skills necessary to effectively manage a complex, growing international business. | • | The Compensation Committee considers the market compensation levels when setting target compensation for the NEOs, with actual payout levels aligning with company performance. | • | POLICIES AND PROCEDURESAs a key element of our incentive program, individual performance metrics motivate executives to perform at the highest levels and determine actual payouts of annual cash bonuses. |
The Compensation Committee is responsible for determining the nature
Policies and amount of compensation for Welltower’s Chief Executive Officer and for reviewing and approving the compensation for Welltower’s other executive officers.Procedures Welltower’s compensation policies and programs are designed to implement the philosophy described above. The Compensation Committee
Welltower has employedadopted a number of measures in an effort to drive performance, and align executive and shareholder interests.interests, and implement the compensation philosophy described above. | | | What Welltower Does | | What Welltower Doesn’t Do |
| | Pays for performance.A significant portion of executive pay is not guaranteed, but rather isat-risk and tied to key financial and value-creation metrics that are disclosed to shareholders. Welltower’s performancePerformance awards are only earned by achievingif certain performance hurdles.hurdles are achieved. | | | | Guarantee salary increases, bonuses or equity grants. Welltower does not guarantee annual salary increases, bonuses or equity grants. We currently have no guaranteed commitments to grant any bonuses or equity-based awards.
| | | Balances shortshort- and long-term incentives.The incentive programs provide an appropriate balance of annual and longer-term incentives.
| | | | Provide excise tax gross-up payments. Welltower does not have any employment agreements that require excise tax gross-up payments and does not intend to enter into agreements that provide for such payments in the future. | | | Caps award payouts.Amounts or shares that can be earned under the annual incentive program and the long-term incentive program are capped. NoThere are no guaranteed minimum amounts or awards are provided. awards.
| | | | Reprice options; no cash buyout. Since the initial public offering in 1978, Welltower has not repriced or otherwise reduced the per-share exercise price of any outstanding stock options. Repricing of stock options without shareholder approval is not permitted under the 2016 Long-Term Incentive Plan. Welltower has also never bought out options or SARs with cash. | | | Maintains stock ownership guidelines.The CEO and other executive officers must own shares with a fair market value of six times base salary and three times base salary, respectively. Thenon-employee directors must own shares with a fair market value of five times the annual cash retainer. Provides enhanced change in control protections only after double-trigger. The CEO’s employment agreement includes “double trigger” severance provisions requiring both a change in control and a subsequent qualifying termination of employment.
Utilizes an independent compensation consulting firm. The Compensation Committee has engaged an independent compensation consulting firm that specializes in the real estate investment trust (“REIT”) industry.
Maintains a clawback policy. The clawback policy allows Welltower to require repayment of incentive compensation paid or awarded to officers based on financial results that were subsequently part of a financial restatement due to materialnon-compliance with financial reporting requirements if the misconduct of such officers contributed to suchnon-compliance or in the event that an officer materially violates a Welltower policy or takes any action or omission that results in material financial or reputational harm to Welltower.
Conducts a risk assessment. The Compensation Committee annually conducts a compensation risk assessment to determine whether the compensation policies and practices, or components thereof, create risks that are reasonably likely to have a material adverse effect on Welltower.
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| | Guarantee salary increases, bonuses or equity grants.Welltower does not guarantee annual salary increases or bonuses to anyone. It currently has no guaranteed commitments to grant any equity-based awards. Provide excise taxgross-up payments. Welltower does not have any employment agreements that include excise taxgross-up payments and does not intend to enter into agreements that provide for such payments in the future.
Reprice options. Since its initial public offering in 1978, Welltower has not repriced or otherwise reduced theper-share exercise price of any outstanding stock options. Repricing of stock options without shareholder approval is not permitted under the 2016 Long-Term Incentive Plan.
Pledging or hedging. Welltower’s directorsDirectors and executive officers are prohibited from entering into hedging or monetization transactions with respect to Welltower’s securities and from holding Welltower’s securities in margin accounts or otherwise pledging such securities as collateral for loans.
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WELLTOWER•2022 Proxy Statement 37 What Welltower Does | | What Welltower Doesn’t Do | | | Utilizes an independent compensation consulting firm. The Compensation Committee has engaged an independent compensation consulting firm that specializes in the REIT industry. | | | | Dividends or dividend equivalents on unearned performance shares.Performance share award agreements do not provide for the payment of dividends until the underlying shares are earned. |
| | | | | 30 |Maintains a clawback policy. The clawback policy allows Welltower to require repayment of incentive compensation paid or awarded to officers in certain cases if there is misconduct that contributes to a financial restatement or material financial or reputational harm to Welltower. | | | | NoticeNo automatic single-trigger vesting. Awards under Welltower’s various long-term incentive programs do not automatically accelerate in the event of Annual Meetingchange in control of ShareholdersWelltower. and 2019 Proxy Statement |
| | | | | | | Executive Compensation—CD&A | | Conducts a risk assessment. The Compensation Committee annually conducts a compensation risk assessment to determine whether our compensation policies and practices, or components thereof, create risks that are reasonably likely to have a material adverse effect on Welltower. | | | | | | | Responsible Share Recycling. The 2016 Long-Term Incentive Plan does not include liberal share recycling provisions that could otherwise dilute Welltower’s shareholders. | | | | |
WHO MAKES COMPENSATION DECISIONS | | | | | ROLE OF THE COMPENSATION CONSULTANT |
The Compensation Committee is responsible for determining the nature and amount of compensation for Welltower’s Chief Executive Officer and for reviewing and approving the compensation for Welltower’s other executive officers. More generally, the Compensation Committee is responsible for Welltower’s executive compensation program and implementing its underlying philosophy and policies. An independent compensation consultant and certain members of management assist in this work. ROLE OF THE COMPENSATION CONSULTANT The Compensation Committee has engaged FPL AssociatesFerguson Partners Consulting (“FPL”FPC”) as its independent compensation consultant to advise the Committee onprovide advice about compensation program design, the components of Welltower’s executive compensation programs, and the amounts Welltower should pay its executive officers. FPL
FPC performs no services for management unless requested by and on behalf of the Chair of the Compensation Committee. The consultant generally attends meetings of the Compensation Committee, and the Chair of the Compensation Committee frequently interacts with the consultant between meetings to define the nature of work to be conducted, review materials to be presented at meetings, and obtain the consultant’s opinion and perspective on proposals prepared by management. During 2018, FPL2021, FPC performed the following specific services: • | Consulted on COVID-19 compensation impact in the industry; | • | Re-evaluated the peer group; | • | Conducted a comprehensive review of Welltower’s compensation programs as compared to market data; | • | Performed a risk assessment of Welltower’s compensation programs; | • | Assisted with the development of key incentive performance metrics to align with the business; and | • | Kept the Compensation Committee apprised throughout the year on key legislative developments impacting compensation and emerging best practices. |
Re-evaluated the peer group;
Conducted a comprehensive review of executive compensation;
Performed a risk assessment of Welltower’s compensation programs; and
Kept the Compensation Committee apprised throughout the year on key legislative developments impacting compensation and emerging best practices.
As part of the process of assessing the effectiveness of Welltower’s compensation programs and assisting with implementation, the consultant also interacts with members of management. The consultant’s primary contact with management is the Senior Vice President - Human Capital. TheFPC’s independence of FPL was assessed by the Compensation Committee most recently in early 2019,2022, and no conflicts of interest were found.
WELLTOWER•2022 Proxy Statement 38 | | | | | INPUT OF EXECUTIVE OFFICERS ON COMPENSATION |
INPUT OF EXECUTIVE OFFICERS The Compensation Committee receives input from certain officers on a variety of issues related to compensation. Welltower’s Chief Executive Officer considers the performance of each other NEO and makes recommendations to the Compensation Committee regarding each other NEO’s individual performance score associated with the annual cash bonus program, and future increases to base salary and incentive compensation opportunities. The Compensation Committee takes these recommendations into consideration when determining earned incentive compensation and when setting compensation levels and opportunities
• | Welltower’s Chief Executive Officer considers the performance of the other NEOs and makes recommendations to the Compensation Committee regarding their respective individual performance scores for the annual cash bonus program, as well as future increases to base salary and incentive compensation opportunities. The Compensation Committee takes these recommendations into consideration when making its decisions. | • | Each year, management establishes an annual business plan for the Board’s review, which includes financial budgets and key financial and strategic objectives for Welltower. The Compensation Committee ensures those financial and strategic objectives are included in the annual plan. | • | Welltower’s Executive Vice President - Chief Financial Officer assists the Compensation Committee in assessing the financial impact of compensation decisions. | • | Welltower’s Executive Vice President - General Counsel & Corporate Secretary and Senior Vice President - Head of Human Capital assist the Compensation Committee with legal compliance for the coming year.Each year, management establishes an annual plan for the Board’s review, which includes financial budgets and key strategic objectives for Welltower. The Compensation Committee has designed the compensation programs, to encompass key financial and strategic objectives included in the annual plan.
Welltower’s Executive Vice President - Chief Financial Officer assists the Compensation Committee in assessing the financial impact of compensation decisions.
Welltower’s Senior Vice President - General Counsel & Corporate Secretary and Senior Vice President - Human Capital assist the Compensation Committee in administering the compensation programs, including Welltower’s 2016 Long-Term Incentive Plan as well as the three-year rolling long-term incentive programs, and ensuring that all relevant documentation and disclosures are completed.
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| | | | | | | | | | | | | Executive Compensation—CD&A |
SHAREHOLDER OUTREACH INITIATIVES | | | | | SHAREHOLDER OUTREACH INITIATIVES |
| | | At the 2018 Annual Meeting, approximately 93% of shareholder votes were cast in favor of approval of the compensation paid to the NEOs (commonly referred to as the“Say-on-Pay” proposal). This represents a similar voting result to the 2017Say-on-Pay proposal (approximately 96%
At the 2021 Annual Meeting, approximately 93% of shareholder votes were cast in favor of approval of the compensation paid to the NEOs (commonly referred to as the “Say-on-Pay” proposal). This was similar to the 2020 Say-on-Pay voting results (approximately 94% in favor). The Compensation Committee and management were pleased with these results and continue to engage with shareholders as part of their continuing efforts to refine and enhance the executive compensation program. In 2018, members of senior management conducted over 300 meetings with investors and analysts to discuss a number of topics, including, but not limited to, financial results, Welltower strategy, objectives and performance, compensation metrics, corporate governance initiatives and industry trends. During 2018, Welltower adopted proxy access in light of input received from its shareholders. In December 2018, Welltower hosted its 2018 Investor Day at which over 300 shareholders, investors, analysts, and other stakeholders attended in person or participated online. At the 2018 Investor Day, the Chief Executive Officer and other members of senior management discussed, among other things, Welltower’s performance in 2018 and provided a financial review and outlook for 2019.
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The Compensation Committee considered the opinions provided during shareholder and investor meetings during the past few years and feedback it received from proxy advisory firms in its assessment of the 20182021 compensation program. InvestorsFor example, based on discussions with shareholders and investors, we enhanced the ESG measures in our 2021 annual incentive program as a separate goal rather than as part of an evaluation of individual performance. Recent Say-on-Pay votes indicate that investors have been pleased with Welltower’s continuing efforts to enhancesustain the connection between pay and performance andperformance. Accordingly, the Compensation Committee did not make any specificother changes to Welltower’s 20182021 executive compensation program as a result of the 20182021 Say-on-Pay vote or these outreach efforts. WELLTOWER•2022 Proxy Statement 39 | | | | | 32 | | | Notice of Annual Meeting of Shareholders and 2019 Proxy Statement |
COMPENSATION PEER GROUP | | | | | COMPENSATION PEER GROUP |
As part of its annual review,Every year the Compensation Committee conducts a comprehensive evaluation of theWelltower’s executive compensation programs relative to a relevant peer group of comparable REITs. TheWhen evaluating the peers, the Compensation Committee examines companies similar in size, business model, geographic footprint, regulatory environment, competitive dynamics, and/or other considerations. This competitive review is one of the compensationchief elements the Compensation Committee takes into accountconsiders in making compensation decisions. AlongWhile Welltower is a publicly-traded REIT and it generally selects other companies of this nature to compose the peer group, it is important to acknowledge that it does not only compete for talent with Welltower’s performance,peers in the REIT industry. Welltower competes for talent beyond just the REIT industry, including investment banks and private equity firms, and the Compensation Committee also considers the experience, tenure and past performance of each of the executive officers.compensation practices in these other industries.
Across the equity-based public REIT industry, Welltower was the 5theleventh largest REIT measured by enterprise value and the 7th largest REIT measured by market capitalization as of December 31, 2018, and Welltower is included2021. The other companies in the S&P 500 Index. As illustrated below, the peer group was selected because its members are similar in size to Welltower and share a similar business model, geographic footprint, regulatory environment and/or competitive dynamics. The peer group represents the industries with which Welltower currently competes for executive talent, and also includes itsour principal business competitors. The Compensation Committee periodically considers the composition of the peer group and revised the peer group in late 2018, after establishing 2018 compensation levels, to remove General Growth Properties, Inc. following its acquisition by Brookfield Property Partners L.P. | | | | | | | Market Capitalization vs. Peer | | Industry | | Market
Capitalization
| | American Tower Corp.
| | Specialty
| | | $69.7 billion
| | Simon Property Group Inc.
| | Regional Mall
| | | $52.0 billion
| | Prologis, Inc.
| | Industrial
| | | $37.0 billion
| | Public Storage
| | Self-Storage
| | | $35.3 billion
| | Equinix
| | Specialty
| | | $28.3 billion
| | Welltower Inc.
| | Health Care
| | | $26.1 billion
| | Equity Residential
| | Multi-Family
| | | $24.3 billion
| | AvalonBay Communities, Inc.
| | Multi-Family
| | | $24.1 billion
| | Ventas, Inc.
| | Health Care
| | | $21.0 billion
| | Boston Properties, Inc.
| | Office
| | | $17.4 billion
| | HCP, Inc.
| | Health Care
| | | $13.3 billion
| | Vornado Realty Trust
| | Diversified
| | | $11.8 billion
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Source: | S&P Global, data as of December 31, 2018.
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Enterprise Value vs. Peer Group
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Peer | Industry | Market Capitalization | American Tower Corp. (AMT) | Specialty | $ | 133.2 | Prologis, Inc. (PLD) | Industrial | $ | 124.5 | Equinix (EQIX) | Specialty | $ | 76.2 | Public Storage (PSA) | Self-Storage | $ | 65.7 | Simon Property Group, Inc. (SPG) | Regional Mall | $ | 52.5 | Digital Realty Trust (DLR) | Specialty | $ | 51.4 | Welltower Inc. (WELL) | Health Care | $ | 37.3 | AvalonBay Communities, Inc. (AVB) | Multi-Family | $ | 35.3 | Equity Residential (EQR) | Multi-Family | $ | 33.9 | Ventas, Inc. (VTR) | Health Care | $ | 20.4 | Healthpeak Properties, Inc. (PEAK) | Health Care | $ | 19.5 | Boston Properties Inc. (BXP) | Office | $ | 18.0 | Vornado Realty Trust (VNO) | Diversified | $ | 8.0 |
Source: | S&P Global, data as of December 31, 2018.
Source: Bloomberg, data as of December 31, 2021. |
The Compensation Committee believes that market data plays an important role in the design and implementation of optimalits compensation programs. FPL and theThe Compensation Committee considerconsiders multiple factors and types of internal and external data in making both individual and plan-level compensation decisions. The benchmarking data provides an important important—but not dispositive—reference point when evaluating whether pay levels are appropriate, however, it is a single point of reference and one of several factors utilized when ultimately making pay decisions.appropriate. Although the Compensation Committee does not precisely benchmark to a specific market percentile, the market median typically is typically an initial focus and point of reference. Findings from the most recent peer group review indicated that Mr. DeRosa’s 2018Mitra’s 2021 total target remunerationcompensation (sum of base salary, target cash bonus and target equity awards) ranked at approximately the 6033thrd percentile among the CEOs in the peer group.group, which was up from the 20th percentile last year. This increase is due to the Compensation Committee’s recognition of Mr. Mitra’s effectiveness as a leader through gradual increases in his compensation since he became CEO in 2020. The Compensation Committee will continue to evaluate his compensation and, to the extent he continues to perform at a high level, it expects to provide future pay increases to better align his pay with that of his peers. The Compensation Committee has continued to evaluate the compensation of Mr. Mitra since his promotion to CEO. The goal is to maintain his compensation at a competitive level with his peers with substantially similar roles and responsibilities. The Compensation Committee will continue to evaluate and adjust target compensation and corresponding incentive opportunity levels over time to make sureensure Welltower’s compensation programs are competitive and consistent with itsour compensation philosophy. WELLTOWER•2022 Proxy Statement 40 Back to Contents | | | | | Notice of Annual Meeting of Shareholders and 2019 Proxy Statement |
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COMPENSATION ELEMENTS AND RESULTS | | 33 |
| | | | | | | | | | | | | Executive Compensation—CD&A |
| | | | | COMPENSATION ELEMENTS AND RESULTS |
The Compensation Committee has adopted a compensation program that meets Welltower’s goals of aligning executive and shareholder interests and incentivizing Welltower’s executives. The allocationbalance of the elements ofin the compensation program—base salary, annual cash incentivesboth fixed and long-term equity incentives—variable and short and long term—helps Welltower to retain, motivate, and reward the NEOs and other executives, and, at the same time, emphasizeswith an emphasis on performance-based compensation. The charts below illustrate the NEO’s base salary, annual cash incentives (at target) and long-term equity incentives (at target) as a percent ofNEOs’ total target direct compensation for 2018.2021. A total of 72%93.5% of Welltower’s CEO’s compensation is performance-basedat risk and, on average, 66%85.3% of the total target compensation of Welltower’s other NEO’s total target compensationNEOs is performance-based.at risk. (1) | | |
CEO
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AverageThe charts include the Black-Scholes value of Other NEOs the performance-based stock option award received by Messrs. Mitra, Burkart, McHugh and McQueen and Ms. Menon on December 13, 2021. The likelihood of meeting this goal was improbable as of December 31, 2021, and, therefore, we have not recognized any related expense during 2021 and there is no value included for these options in the Summary Compensation Table. |
The Compensation Committee has continued to evaluate the compensation of Mr. DeRosa during his tenure as CEO. His target compensation started as the lowest among the CEOs in the peer group. Since that time, Mr. DeRosa has proven to be a very effective leader and the Compensation Committee has rewarded him for his accomplishments by gradually increasing his base salary and overall target remuneration over time.The goal is to maintain his compensation at a competitive level with his peers with substantially-similar roles and responsibilities. This goal is being accomplished while remaining committed to “best practices” with respect to Mr. DeRosa’s employment agreement, which includes:
Base Salary No automatic renewal features
No cash severance payable upon expiration of the employment agreement
No guaranteed salary or bonus payments
Double-trigger required for severance and acceleration of equity awards in connection with a change in control
Base Salary
Base salaries are established at levels that will attract and retain talented executives. To that end, base salaries are generally targeted to approximate the market median, but may deviate from this competitive position based on the scope of the individual’s role in the organization, the individual’s experience in the current position, and individual performance. Base salaries are reviewed annually and may be adjusted to better match market competitive levels and/orlevels. Salaries for Messrs. Mitra and McQueen and for Ms. Menon were increased in 2021 to recognize an individual’sindividual performance and continued growth and development.development in their roles. Mr. Mitra’s 2021 base salary was at the 50th percentile of the peers. Base salaries for the NEOs were as follows:are shown below. | Executive | | 2017 Annual Salary | | | 2018 Annual Salary | | | % Increase | | | 2020 Annual Salary ($) | | 2021 Annual Salary ($) | | | % Increase | | | Thomas J. DeRosa | | $ | 1,000,000 | | | $ | 1,100,000 | (1) | | | 10 | % | | | John A. Goodey | | | 600,000 | (2) | | | 600,000 | (3) | | | 0 | % | | | Mercedes T. Kerr | | | 484,500 | | | | 484,500 | | | | 0 | % | | | Shankh Mitra | | | 425,000 | | | | 700,000 | (4) | | | 65 | % | | | 900,000 | | | | 1,000,000 | | | | 11.1 | % | | John F. Burkart | | | | — | | | | 600,000 | (1) | | | 0 | % | Timothy G. McHugh | | | | 600,000 | | | | 600,000 | | | | 0 | % | Matthew G. McQueen | | | 370,000 | | | | 450,000 | (5) | | | 22 | % | | | 480,000 | | | | 550,000 | | | | 14.6 | % | Ayesha Menon | | | | 425,000 | | | | 550,000 | | | | 29.4 | % |
(1) | | | | | 34 | | | Notice of Annual Meeting of Shareholders and 2019 Proxy Statement |
| | | | | | | Executive Compensation—CD&A | | | | | | Mr. Burkart was hired on July 19, 2021. His salary was prorated for the time he served during the year. Such prorated amount equaled $273,076. |
| (1) | On January 1, 2018, Mr. DeRosa’s base salary was increased from $1,000,000 to $1,100,000 in recognition of his individual performance and in connection with Welltower’s ongoing efforts to more closely align his remuneration with his peers with substantially-similar roles and responsibilities.
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| (2) | On October 3, 2017, Mr. Goodey was appointed to serve as Executive Vice President - Chief Financial Officer. In connection with this promotion, Mr. Goodey’s salary was increased from $363,895 to $600,000. Mr. Goodey received a blended base salary in the amount of $454,457 in 2017, which was converted from GBP to USD as of October 3, 2017 at a rate of 1.3278.
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| (3) | Mr. Goodey’s base salary was paid (a) in GBP from January 1, 2018 to October 31, 2018 in the amount of $476,650, which was converted from GBP to USD as of December 31, 2018 at a rate of 1.2760 and (b) in USD from November 1, 2018 to December 31, 2018 in the amount of $100,000. Mr. Goodey received a blended base salary in the amount of $576,650 in 2018.
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| (4) | On August 7, 2018, Mr. Mitra was appointed to serve as Executive Vice President - Chief Investment Officer. In connection with this promotion and the accompanying significant increase in responsibilities, Mr. Mitra’s base salary was increased from $425,000 to $700,000, which was made effective as of January 1, 2018.
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| (5) | On January 1, 2018, Mr. McQueen’s base salary was increased from $370,000 to $385,000, in recognition of his individual performance and, on August 1, 2018, Mr. McQueen’s base salary was increased from $385,000 to $450,000, in connection with Welltower’s efforts to more closely align his remuneration with his peers with substantially-similar roles and responsibilities. Mr. McQueen received a blended base salary in the amount of $412,083 in 2018.
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Annual Incentives Annual incentives reward the executives for achieving certainprescribed performance objectives tied to Welltower’s annual business plan, as well as achieving individual performance objectives. Under this program, a range of earningsearning opportunities is established for each executive at the beginning of the performance period, expressed as percentages of base salary and corresponding to three levels of performance (threshold, target and high) on four different performance metrics or categories. In each case, threshold performance will lead to a 50% payout, target performance will lead to a 100% payout, and high performance will lead to a 200% payout. WELLTOWER•2022 Proxy Statement 41 The rigorous corporate performance measures and weightings setadopted by the Compensation Committee for 20182021 under the annual incentive program are described below. For 2018, Normalized Funds From Operations (FFO) Per Diluted Share Weighting 2021 Goal Threshold$2.61 Target $2.76 High$2.91 Actual $3.21 Mitra Burkart McHugh McQueen Menon Why Welltower chose this measure: FFO is a common non-GAAP measure of earnings performance for REITs because it provides insight into the earnings generated from the real estate platform. In addition, it is the measure most commonly used by analysts to assess the performance of REITs. FFO means net income attributable to common stockholders, computed in accordance with U.S. GAAP, excluding gains (or losses) from the sale of real estate and impairments of depreciable assets, plus real estate depreciation and amortization, and after adjustments for unconsolidated entities and non-controlling interests. Normalized FFO attributable to common stockholders for 2021 represents FFO adjusted for net gains (or losses) on derivatives and financial instruments, losses on extinguishment of debt, provision for loan losses, non-recurring income tax benefits, certain other expenses or income, and normalizing items relating to unconsolidated/non-controlling measures. See Appendix A for a discussion and reconciliation of non-GAAP measures. If Welltower achieves a high level of Normalized FFO per diluted share as a result of inappropriate amounts of leverage, the Compensation Committee eliminated two performance metrics includedmay determine that bonuses should not be paid for this goal. In 2021, the Compensation Committee set target normalized FFO of $2.76 per diluted share to align with Welltower’s annual business plan. The 2021 goal contemplated a significant diminution in profitability as compared to 2020 levels for our seniors housing portfolio, coupled with further challenges elsewhere in the 2017 annual incentive program, portfolio, all resulting from the impact of the COVID-19 pandemic. Adjusted Fixed Charge Coverage and Cash NOI of 2016 Operating Acquisitions vs. Underwritten Projections, in lightWeighting 2021 Goal High 3.65X Target3.40X Threshold3.15XActual3.60X Why Welltower chose this measure: Adjusted Fixed Charge Coverage emphasizes the strength of Welltower’s balance sheet and our ability to service interest and fixed charges. Adjusted fixed charge coverage is a ratio of fixed charges to Adjusted EBITDA (earnings before interest expense, income taxes, depreciation and amortization). Adjusted EBITDA excludes unconsolidated entities and includes adjustments for stock-based compensation expense, provision for loan losses, gains/losses on extinguishment of debt, gains/losses/impairments on properties, gains/losses on derivatives and financial instruments, other expenses, additional other income, and other impairment charges. Fixed charges include total interest and secured debt principal amortization. See Appendix A for a discussion and reconciliation of non-GAAP measures. The Compensation Committee set target at 3.40x based on the end of year 2020 spot adjusted fixed charge coverage. WELLTOWER•2022 Proxy Statement 42 General and Administrative Expense ControlsWeighting 2021 Goal Threshold$140.0M Target$137.5M High$135.0M Actual$126.7M Mitra Burkart McHugh Mc Queen Menon Why Welltower chose this measure: Welltower believes it is appropriate to maintain corporate overhead spending objectives. This measure is included in the annual incentive program to emphasize the importance of driving value for shareholders in the most efficient ways and at the lowest expense, as well as the importance of adhering to the budgeted G&A amount and allowing Welltower to grow in an appropriate fashion. The Compensation Committee set target at $137.5 million, showing our commitment to driving effectiveness and cost savings through the performance period. The Compensation Committee set target at $137.5 million reflecting the expansion of our investments team to capitalize on new growth opportunities and the continued enhancement of our industry-leading data analytics platform. ESG Measures Weighting 2021 Goal The NEOs are evaluated on three ESG goals.Why Welltower chose this measure: ESG, especially the “S,” has been a focal point for Welltower for many years. Beginning in 2021, to formalize this focus, the annual incentive program introduced goals to (1) measure our progress to reduce greenhouse gas (“GHG”) emissions, energy and water use by 10% from 2018 to 2025, (2) provide more training and development opportunities for our workforce to grow and engage in the business, and (3) ensure our employees understand our code of business conduct and anti-corruption policies that are core to how we operate our business. For 2022, we plan to expand our ESG measures for the annual incentive program to include more of our key corporate initiatives to ensure that Welltower is a great place to work and a good corporate citizen in the communities in which we operate.The Compensation Committee established the environmental goal based on Welltower’s commitment to continued progress to protect the environment with our 2025 vision for reductions in our GHG emissions and energy and water usage. Our social goal of increasing opportunities for development in 2021 was achieved through our heightened focus on attracting and retaining talent and encouraging our employees to learn and grow. From a governance perspective, we built upon the firm foundation of our employee handbook and policies to ensure all of our employees understand how we operate our business with the highest level of integrity, both internally and externally. WELLTOWER•2022 Proxy Statement 43
Individual Performance Weighting Mitra McHugh Burkart McQueen Menon 2021 Goal Each of the NEOs is evaluated against individual strategic goals. Why Welltower chose this measure: Welltower tailors individual goals to the roles and responsibilities of each NEO, including, among other things, the implementation and execution of targeted investment strategies, communication with investors, effective capital raising, promotion in the capital markets and participation in succession planning for management. Individual goals allow the Compensation Committee to evalute the performance of each executive and the business segments or functions each executive leads. An important component of this metric is whether an executive achieves business results in a manner that is consistent with corporate strategic plans and objectives. The Compensation Committee established individual goals based on Welltower’s key strategic objectives and strategies for 2018.2021 (and, as applicable, objectives for particular business segments or functions), as well as personal initiatives for 2021 that the Compensation Committee deemed important for each executive. Our NEOs’ individual achievements were attained at a “high"level. See a summary of these achievements for each NEO below. 2021 Individual Performance MR. MITRA | | | Normalized Funds from Operations (FFO) Per Share
| 2018 Goal
Weighting
| | Why Welltower chose this measure: FFO is a commonnon-GAAP measure of earnings performance for REITs because it provides insight into the earnings generated from the real estate platform. FFO means net income attributable to common stockholders, computed in accordance with U.S. GAAP, excluding gains (or losses) from sales of real estate and impairments of depreciable assets, plus real estate depreciation and amortization, and after adjustments for unconsolidated entities andnon-controlling interests. Normalized FFO for 2018 represents FFO adjusted for net gains (or losses) on derivatives and financial instruments and extinguishments of debt, incremental stock-based compensation, certain other expenses or income and normalizing items relating tounconsolidated/non-controlling interests. This measure is included in the compensation program because it is the measure most commonly used by analysts to assess the performance of REITs. If Welltower achieves a level of normalized FFO per share as a result of inappropriate amounts of leverage, the Compensation Committee may determine that bonuses should not be paid for this goal.
How the Compensation Committee set the 2018 goal: In Welltower’s 2018 initial public guidance, it projected normalized FFO in a range of $3.95 to $4.05 per diluted share. Target performance was set at $4.00 or the midpoint of the initial guidance range. The range of $0.10 around target results in a threshold of $3.90 and a high of $4.10. The high score was set at $0.05 above the high end of initial public guidance.Performance Ranking: High performance would only be achieved if Welltower significantly exceeded the high end of such guidance.
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• | | Further developed leadership team with industry expertise to utilize a data-driven approach to drive platform efficiencies, capital allocation decisions, process improvements and technological innovation | • | Led the implementation of the strategic plan to ensure Welltower is positioned to drive sustainable shareholder value | Notice•
| Entered into a definitive agreement to execute a series of Annual Meetingmutually beneficial transactions resulting in the substantial exit of Shareholders and 2019 Proxy Statement | | | 35 |
| | | | | | Welltower’s operating relationship with Genesis | • | | | | | | Executive Compensation—CD&A |
| | Attained highest stock multiple among health care REIT peers | Same Store NOI Growth
| 2018 Goal
Weighting
• | | Why Welltower chose this measure: Net operating income (“NOI”) is used to evaluate the operating performance of Welltower’s properties. NOI means total revenues, including tenant reimbursements, less property operating expenses, which represent costs associated with managing, maintaining and servicing tenants for Welltower’sGrew seniors housing operating portfolio spot occupancy by 510 bps since pandemic trough levels
| • | Maintained position as industry sector leader in attracting and outpatient medical properties. Same store NOI (“SSNOI”) is usedaccessing capital | • | Expanded and diversified investor base with emphasis on long-term shareholders, including global pension funds, sovereign wealth funds, and ESG-focused funds | • | Created and implemented a leadership development plan and a mechanism to evaluate key talent’s readiness to assume critical roles | • | Maintained gender parity across the operating performance of Welltower’s properties using a consistent population which controls for changes in the composition of the portfolio. For purposes of SSNOI, same store is generally defined as those revenue-generating properties in the portfolio for the relevant year-over-year reporting periods. Land parcels, loans,sub-leases and any major capital restructurings as well as any properties acquired, developed/redeveloped, transitioned, (excepttriple-net properties to seniors housing operating properties with the same operator) sold or classified as held for sale during those periods are excluded from the same store amounts.SSNOI represents NOI for same store properties adjusted for elimination ofnon-cash NOI, adjustments to translate Canadian properties at a USD/CAD rate of 1.25 and U.K. properties at a GBP/USD rate of 1.35, adjustments to reflect consistent ownership percentages, and other adjustments as disclosed in Welltower’s quarterly financial supplements.
How the Compensation Committee set the 2018 goal: In Welltower’s 2018 initial public guidance, it projected blended SSNOI growthorganization, resulting in a rangesplit of 1.0% to 2.0%. The Compensation Committee set target performance49% women/51% men at 1.5%, the midpoint of the initial guidance. Threshold was set at 0.5% less than the lowyear end of the range and high was set at 0.5% over the high end of the range.
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| | | • | Supported workforce diversity through mechanisms that advance minority group interests and communication within the organization through the Diversity Council and Employee Network Groups (ENGs) | 36 |• | | Notice of Annual Meeting of Shareholders and 2019 Proxy Statement |
| | | | | | | Executive Compensation—CD&A | | | | | | |
| | | General and Administrative Expense Controls
| 2018 Goal
Weighting
| | Why Welltower chose this measure: Welltower believes it is appropriateProvided leadership to maintain corporate overhead spending objectives. This measure is included in the program to emphasize the importance of driving value for shareholders in the most efficient ways and at the lowest expense. 2018 included investments in technology and human capital that will drive effectiveness and growth for Welltower in the future.
How the Compensation Committee set the 2018 goal: For this measure, the Compensation Committee set target at $128 million, which was $2 million below initial public guidance, showing commitment to driving effectiveness and cost savings through the performance period. Threshold was set at $5 million above target and high was set at $4 million below target.
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| (1) | Welltower reported general and administrative expenses of $126.4 million in its Annual Report on Form 10-K for the year ended December 31, 2018 and used general and administrative expenses of $122.8 million for purposes of considering annual incentives. The difference between these amounts is related to an incremental long-term incentive compensation expense recognized in the first quarter of 2018.
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| | | Individual Performance
| 2018 Goal
Each of the NEOs is evaluated against a set of
individual strategic goals.
Weighting
| | Why Welltower chose this measure: Welltower tailors individual goals to the roles and responsibilities of each NEO, including, among other things, the implementation and execution of targeted investment strategies, communication with investors, effective capital raising and promotion in the capital markets and participation in succession planning for management. Individual goals allow the Compensation Committee to evaluate the performance of each executive and the business segments or functions that an executive leads. An important component of this metric is whether the executive achieves business results in a manner that is consistent with corporate strategic plans and objectives.
How the Compensation Committee set the 2018 goals: The Compensation Committee established individual goals based on Welltower’s key strategic objectives for 2018 (and, as applicable, objectives for business segments or functions for which the executive is primarily responsible), as well as personal initiatives for 2018 for each executive that the Compensation Committee deemed were important.
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| | | | | Notice of Annual Meeting of Shareholders and 2019 Proxy Statement |
| | 37 |
| | | | | | | | | | | | | Executive Compensation—CD&A |
2018 Individual Performance
| Mr. DeRosa
• Actively championed with investors, health care leaders, partners, prospective partners and other key influencers Welltower’s strategy of providing real estate settings that promote wellness for an aging population and partnering with health systems to lower health care costs and improve outcomes.
• Delivered strong financial results and extraordinary accretive investment growth in a challenging operating environment by completing more than $4 billion in gross investments, $290 million in developments and $1.8 billion in dispositions and delivering an annual total shareholder return of 15.3%.
• Oversaw significant capital-raising efforts, including the issuance of $1.9 billion of senior unsecured notes and $795 million in equity.
• Positionedestablish Welltower as a thought leader and agent of change for the aging population, in health care delivery and the aging population by:
• serving as a Governor of the World Economic Forum;
• speaking at major conferences with leaders of other S&P 500 companies, academic institutions and institutional investors;
• changing Welltower’s NYSE ticker symbol to “WELL” and utilizing the NYSE bell-ringing event to highlight Welltower’s strategy and to donate $250,000 to organizations delivering and improving wellness and access to care for seniors;
• launchingThe Welltower Report, which focuses on trends and insights within the dynamic health care real estate industry; and
• issuingThe Development of the National Assisted Living Quality of Care Framework for Assisted Living Care, which was commissioned by Welltower and led by Johns Hopkins University School of Medicine.
• Oversaw the acquisition of Quality Care Properties Inc. (“QCP”) and the partnership with ProMedica Health System (“ProMedica”) in the joint venture acquisition of QCP’s real estate assets relating to HCR ManorCare, Inc.’s (“ManorCare”) business. This acquisition created the largest health-system owned post-acute provider network and private pay seniors housing operator in the United States.
• Created a framework for working with academic andnot-for-profit health care institutions, which resulted in opportunities for growth in Welltower’s strategic real estate footprint.
• Substantially completed Welltower’s multi-year and multi-billion dollar portfolio repositioning plan, which puts Welltower on the path to earnings and cash flow growth.
• Continued to diversify Welltower’s shareholder base, including,ESG – notably the Qatar Investment Authority’s investment of $300 million.
• Championed diversity at all levels of the organization, including at the Board level where he recruited two national health care executives, Dr. DeSalvo and Ms. Spisso. 55% of Welltower’s independent directors are now women or individuals from minority groups, which positioned Welltower as one of the top ranking S&P 500 companies with respect to board diversity. Additionally in 2018, 45% of Welltower’s new hires for revenue-generating roles were women. Welltower was also recognized as one of the top 15 companies in Ohio for diversity and inclusion by the National Diversity Council of Ohio.
• Directed Welltower’s issuing of its Human Rights Statement.
• Signed the UN Women’s Empowerment Principles and joined the CEO Action for Diversity and Inclusion.
• Recognized for leadership in sustainability including the prestigious Dow Jones Sustainability World Index and Dow Jones Sustainability North America Index. Notably, Welltower is one of only two U.S. -based REITs, and the only healthcare REIT, to be included in the Dow Jones Sustainability World Index.
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WELLTOWER•2022 Proxy Statement 44 MR. BURKART | Performance Ranking: Above Target |
• | Evaluated the seniors housing operating business and developed short- and mid-term strategy to maximize the seniors housing operating portfolio value | Mr. Goodey
•Led | Evaluated the outpatient medical business and identified opportunities to improve cash flows from wholly-owned properties and overall platform | • | Evaluated Asset Management and Portfolio Management functions at Welltower and created a plan to formalize and improve both functions to maximize platform value | • | Evaluated Welltower’s Corporate Finance team, which was responsible for executing $1.9 billiondata platform, information flow, and road map, refined certain aspects of the plan, and drafted the longer-term vision | • | Created a senior unsecured notes offeringsapartments and raising $795 million in equity,multi-family data analytics platform to analyze similar site, rent prediction and played an important role in delivering a calendar year annual total shareholder return of 15.3%.• Refinanced Welltower’s $3.0 billion credit facility with a consortium of 31 regional, national and international banks.
• Provided strategic leadership to Welltower’s accounting and tax functions, including initiating enhancements in talent, technology and core processes.
• Oversaw restructuring of Welltower’s purchasing and accounts payable models and processes.
• Supported and oversaw UK and Canadian business operations and assisted in transitioning leadership of international team.
• Partnered with CEO and Executive Vice President - Chief Investment Officer to diversify shareholder base.
• Managed adjusted corporate general and administrative expenses to approximately $123 million in 2018, which maintains significant reductions from the prior two years. rent premiums |
| | | | | 38 |MR. MCHUGH | | Notice of Annual Meeting of Shareholders and 2019 Proxy Statement |
| | | | | | | Executive Compensation—CD&A | | | | | | |
| Ms. Kerr
• Partnered with CEO, Executive Vice President - Chief Investment Officer and other senior leaders to identify, build, manage and reposition relationships with health systems, seniors housing operators, real estate developers and financial institutions to optimize operating performance and grow Welltower’s high-quality health care property portfolio, which resulted in more than $4 billion in gross investments and $290 million in developments.
• Led the optimization of the outpatient medical business, including the strategic hire of Keith Konkoli as Senior Vice
President- Real Estate Services, positioning the platform for growth.
• Represented Welltower’s interest by serving on the Boards of Sunrise Senior Living and Silverado.
• Represented Welltower on the Executive Committee of the American Seniors Housing Association, the Board of Directors of NIC, the Board of Counselors of the University of Southern California’s Davis School of Gerontology and the Board of the California Assisted Living Association (CALA). Performance Ranking: High |
• | Reduced Welltower’s debt cost of capital as Moody’s Investors Services and S&P Global Ratings revised their ratings outlook for Welltower to Stable from Negative and affirmed Welltower’s issuer credit ratings as Baa1 and BBB+, respectively, while concurrently increasing balance sheet flexibility by completing asset sales and efficiently raising public equity | Mr. Mitra
•Actively championed with investors, health care leaders, partners, prospective partners and other key influencers Welltower’s strategy of providing real estate settings that promote wellness for an aging population and partnering with health systems to lower health care costs and improve outcomes. | Raised $2.8 billion gross equity proceeds via the ATM program | •Delivered strong financial results and extraordinary accretive investment growth in a challenging operating environment by completing more than $4 | Closed on $5.7 billion in pro rata gross investments $290 million in developments and $1.8$1.4 billion in pro rata dispositions and delivering an annual total shareholder returnloan payoffs during 2021 | • | Raised $1.75 billion in debt proceeds via three separate unsecured debt offerings with a weighted average duration of 15.3%.9.5 years and a weighted average coupon of 2.57% | •Oversaw significant capital-raising efforts, including | Worked with leaders in Human Capital and Legal to revamp the issuance of $1.9 billion of senior unsecured notesWelltower Charitable Foundation and $795 million in equity.• Oversaw the acquisition of QCPlaunch corporate initiatives such as WELL-Matched and the partnership with ProMedica in the joint venture acquisition of QCP’s real estate assets relating to the business of ManorCare. This acquisition created the largest health-system owned post-acute provider networkGive-WELL
| • | Continued environmental efficiency upgrades (such as green building certifications and private paygreen leases) and increased sustainability data coverage within our seniors housing operator in the United States.• Led the repositioning of Welltower’s portfolio.
• Partnered with CEOoperating and the Executive Vice President - Chief Financial Officeroutpatient medical portfolios to further diversify shareholder base, including, notably, the Qatar Investment Authority’s investment of $300 million.
• Led the data sciencereport accurate energy and predictive analytics efforts to optimize the capital allocation process.
• Transitioned seamlessly into the Executive Vice President - Chief Investment Officer role. water usage |
MR. MCQUEEN | Performance Ranking: Above Target |
• | Protected infrastructure by reducing exposure to risk: particularly with respect to enterprise risk, litigation, and compliance with regulatory and SEC requirements | Mr. McQueen
•Led | Continued to enhance ESG disclosure and reporting and support of Welltower’s leadership on ESG matters | • | Served as a key resource for the Board, including with respect to governance matters, the CEO transition and new board member onboarding | • | Continued to lead Welltower’s legal, compliance, risk management, and internal audit teams which provided oversight on legal matters, compliance practices and risk management.• Partnered with leaders across the organization to balance legal risks and business opportunities to optimize Welltower’s financial performance, drive consistency and protect its infrastructure.
• Led negotiations related to the acquisitionassumed leadership of QCP and the partnership with ProMedica in the joint venture acquisition of QCP’s real estate assets relating to the business of ManorCare. This acquisition created the largest health-system owned post-acute provider network and private pay seniors housing operator in the United States.
Welltower's human capital team | • | Provided leadership in support of contractual relationships, proactively enforced and leveraged Welltower’s rights and expectations, and ensured adequate protections are included in new relationships | • | Creatively reviewed and led efforts to advance workimplement Welltower’s proposed UPREIT structure to improve ability to acquire properties in corporate governance, board procedures and financial reporting.a tax-deferred manner | •Provided guidance on the recruitment of two new board members, Dr. DeSalvo and Ms. Spisso, increasing Board diversity.• Supported Welltower’s portfolio repositioning plan.
•
| Partnered with the Executive Vice President - Chief Investment Officer and Executive Vice President - Chief Financial Officer to diversifyand the shareholder base and assistCorporate Finance team in significant capital raising efforts.efforts | • | Worked with the Chief Financial Officer and Human Capital to restructure the Welltower Charitable Foundation and launch new corporate initiatives related thereto | • | In collaboration with management, oversaw negotiation and documentation implementation, and helped drive successful execution of $5.7 billion in pro rata gross investments and $1.4 billion in pro rata dispositions and loan payoffs, including transactions resulting in the substantial exit of Welltower’s operating relationship with Genesis |
WELLTOWER•2022 Proxy Statement 45 MS. MENON | Performance Ranking: Above Target |
• | | Sourced new and grew existing partnerships with key developers, including pipeline partnership agreements or letters of intent with eight groups | • | Made strides in building Welltower’s brand for Wellness Housing across strategically relevant players in the market (e.g., brokers, bankers, market makers) to improve deal flow, access, knowledge and execution | Notice of Annual Meeting of Shareholders•
| Identified an opportunity to create a new research and 2019 Proxy Statement | | | 39 |
| | | | | | data function to produce consistent, reliable market and submarket research and economic forecasts | • | Collaborated with other senior leadership to continually improve investment and asset management capabilities by recruiting talent, implementing new processes, mentoring, and adopting new technology tools | • | | | | | Executive Compensation—CDSupported advancement of diversity and inclusion through active participation and engagement on Welltower’s Diversity Council, including leading ENG Spotlight Q&A session on behalf of CORE, the South Asian ENG, and the Young Professionals ENG |
Annual Incentive Payments The table below illustrates each executive’s total annual incentive earnings opportunity taking into consideration both corporate and individual performance, under the annual incentive program, and the actual bonuses for 20182021 corporate and individual performance that were approved at the Compensation Committee’s February 7, 201915, 2022 meeting. ForThe high performance on both corporate measures and individual performance results, please refer to pages 38-39.NEO achievements resulted in the payouts below. | | | | | | | | | | | | | | | | | | | | | | | 2018 Annual Incentive Opportunity (as a % of Base Salary) | | | 2018 Bonus Earned | | | | | Threshold | | | | Target | | | | High | | | | % of Target | | | | Amount | | Thomas J. DeRosa | | | 100 | % | | | 200 | % | | | 400 | % | | | 160 | % | | $ | 3,520,000 | | John A. Goodey | | | 75 | % | | | 150 | % | | | 300 | % | | | 131 | % | | | 1,175,063 | | Mercedes T. Kerr | | | 75 | % | | | 150 | % | | | 300 | % | | | 114 | % | | | 828,495 | | Shankh Mitra | | | 87.5 | % | | | 175 | % | | | 350 | % | | | 159 | % | | | 1,944,688 | | Matthew G. McQueen | | | 37.5 | % | | | 75 | % | | | 150 | % | | | 155 | % | | | 479,046 | | | | | | | |
| 2021 Annual Incentive Opportunity (as a % of Base Salary) | | 2021 Annual Incentive Bonus Earned | | | Threshold | | Target | | High | | % Payout (as a % of Base Salary) | | Amount ($) | | Shankh Mitra | 100% | | 200% | | 400% | | 392% | | 3,920,000 | | John F. Burkart(1) | 62.5% | | 125% | | 250% | | 233% | | 634,438 | | Timothy G. McHugh | 75% | | 150% | | 300% | | 294% | | 1,764,000 | | Matthew G. McQueen | 50% | | 100% | | 200% | | 190% | | 1,045,000 | | Ayesha Menon | 50% | | 100% | | 200% | | 186% | | 1,023,000 | |
LONG-TERM EQUITY INCENTIVE COMPENSATION
(1) | Mr. Burkart joined Welltower during 2021 and received a pro rata portion of his 2021 annual incentive bonus. |
All 2018 equity awards were granted in the form of restricted stock or restricted stock units (“RSUs”) and performance stock units (“PSUs”). Welltower has not awarded stock options since 2012.Long-Term Equity Incentive Compensation
2018-2020 LONG-TERM INCENTIVE PROGRAM
2021-2023 Long-Term Incentive Program The NEOs received long-term equity incentive awards under the 2018-20202021-2023 Long-Term Incentive Program (“2018-20202021-2023 LTIP”) in the form of performance stock units (“PSUs”) (70%) and a choice of restricted stock units (“RSUs”) or stock options (30%). AwardsAll awards are subject to continued service with Welltower, and the PSUs are subject to the achievement of performance metrics and vesting criteria established by the Compensation Committee at the beginning of the performance period. A total of Performance Stock Units The Compensation Committee set two metrics for the PSUs: 75% of the 2018-2020 LTIP award was granted inperformance grant (52.5% of the form of performance-based PSUs, with 56.25% of this granttotal grant) is subject to Welltower’s relative total shareholder return (“TSR”) ranking for the3-year forward-looking performance period ending December 31, 2020(“2023 (“TSR-Based LTIP”) (with 37.5%and the remaining 25% (17.5% of the award measured against the NAREIT Health Care Index (the “NAREIT Index”) and 18.75% of the award measured against the Morgan Stanley (MSCI) US REIT Index (the “MSCI REIT Index”)). The Compensation Committee selected a relative TSR performance metric as the basis for Welltower’s performance-based LTIP awards because it allows shareholders to evaluate Welltower’s performance in comparison to its peers, as selected by two independent, widely-used REIT indexes. It also mitigates the impact of broad market trends that are not reflective of Welltower’s actual performance. The remaining 18.75% of the 2018-2020 LTIP performance-based PSU awardtotal grant) is subject to Welltower’s performance against the (Net Debt + Preferred)/Adjusted EBITDA metric. Thismeasure. The Compensation Committee selected a relative TSR performance metric because it allows shareholders to evaluate Welltower’s performance in comparison to its peers—the companies that constitute two independent, widely-used REIT indexes: • | 37.5% (26.25% of the total grant) will be measured against the Nareit Health Care Index (the “Nareit Index”), and | • | 37.5% (26.25% of the total grant) will be measured against the Morgan Stanley (MSCI) US REIT Index (the “MSCI REIT Index”). |
A relative metric also mitigates the impact of broad market trends that do not reflect Welltower’s actual performance. WELLTOWER•2022 Proxy Statement 46 The Compensation Committee set the target performance goal for the 2021-2023 TSR-Based LTIP at the TSR of the relevant index, the threshold performance goal at 4% minus the TSR of the relevant index, and the high performance goal at 4% above the TSR of the relevant index. The (Net Debt + Preferred)/Adjusted EBITDA measure is included in the program to emphasize the importance of Welltower’s balance sheet and leverage strategy.strategy and to create an incentive to keep Welltower’s long-term indebtedness at a reasonable range of leverage. The Compensation Committee believes it is important that Welltower does not compromise the strength of its balance sheet to grow other areas of the business. For this measure, the Compensation Committee set the target in line with Welltower’s strategic goal. goals. For each metric, reaching the threshold, target or high achievement levels would result in a payout of 50%, 100% or 150%, respectively, of the target award opportunity. Payout amounts between levels will be interpolated, and there will be no payout for metrics with outcomes below the threshold achievement levels. Restricted Stock Units or Stock Options The remaining 25%30% of the 2018-20202021-2023 LTIP award was granted in the form of a time-based RSUsaward that vestvests and, if applicable, becomes exercisable over four years beginning on January 15, 2019.2022. The NEOs were offered the opportunity to elect to receive their time-based awards in either RSUs or nonqualified stock options. The table below shows the NEOs’ respective elections. Because the ultimate value of the RSUs and stock options is tied to Welltower’s stock price, the Compensation Committee believes that the retentive LTIPoffering these time-based awards in the form of time-based RSUs that vest over time independent of TSRperformance promotes the retention of Welltower’s talented management team, while still incentivizing a focus on long-term results because the ultimate value of the RSUs is tied to Welltower’s stock price.results. | | Election of RSUs and Nonqualified Stock Options | | Name | | RSUs | | | Nonqualified Stock Options | | Shankh Mitra | | | 33% | | | | 67% | | John F. Burkart(1) | | | 100% | | | | 0% | | Timothy G. McHugh | | | 67% | | | | 33% | | Matthew G. McQueen | | | 50% | | | | 50% | | Ayesha Menon | | | 50% | | | | 50% | |
(1) | | | | | 40 | | | Notice of Annual Meeting of Shareholders and 2019 Proxy Statement |
| | | | | | | Executive Compensation—CD&A | | | | | | Mr. Burkart did not participate in the election since he joined Welltower after the grant date. |
2018-2020WELLTOWER•2022 Proxy Statement 47
2021-2023 LTIP AWARD OPPORTUNITIESAward Opportunities The Compensation Committee, in consultation with FPL,FPC, approved the target 2018-20202021-2023 LTIP opportunities for the NEOs in February 2018, as set forth in the table below. Thebelow in February 2021. These award opportunities were approved byreflect the Compensation Committee based on itsCommittee’s assessment of compensation data for peers with substantially-similarsubstantially similar roles and responsibilities provided by FPL,FPC, each NEO’s relative duties and responsibilities, and his or hereach NEO’s impact on Welltower’s results. The CEO’s LTIP opportunity increased in 2021 to the 24th percentile of peers since he was in the role for the entire year after being promoted in October 2020. The table below reflectsshows the grant date target valuesvalue of the 2018-2020 LTIP awards, approved byand the Compensation Committee. The amounts reflected in the 20182021 Grants of Plan Based Awards differ from the amounts below with respect to retentive LTIP awards due to rounding to the nearest whole share, and with respect to theTSR-Based LTIP awards, due to calculatingtable shows the grant date fair value based on a Monte Carlo valuation model in accordance with FASB ASC Topic 718. | Name | |
| TSR vs
NAREIT Index |
| |
| TSR vs MSCI Index | | |
| Net Debt & Preferred/EBITDA Ratio | | | | Retentive LTIP | | |
| Total Opportunity | | | TSR vs Nareit Index ($) | | TSR vs MSCI Index ($) | | Net Debt & Preferred/ EBITDA Ratio ($) | | Time-Based RSU ($) | | Time-Based Options ($) | | Total Opportunity ($) | Thomas J. DeRosa | | $ | 3,075,000 | | | $ | 1,537,500 | | | $ | 1,537,500 | | | $ | 2,050,000 | | | $ | 8,200,000 | | | John A. Goodey | | | 646,875 | | | | 323,438 | | | | 323,437 | | | | 431,250 | | | | 1,725,000 | | | Mercedes T. Kerr | | | 665,625 | | | | 332,813 | | | | 332,812 | | | | 443,750 | | | | 1,775,000 | | | Shankh Mitra | | | 562,500 | | | | 281,250 | | | | 281,250 | | | | 375,000 | | | | 1,500,000 | | | 1,968,768 | | 1,968,769 | | 1,312,502 | | 749,953 | | 1,500,088 | | 7,500,080 | John F. Burkart | | | 237,114 | | 237,120 | | 158,137 | | 271,020 | | — | | 903,391 | Timothy G. McHugh | | | 787,559 | | 787,544 | | 525,001 | | 603,052 | | 297,002 | | 3,000,158 | Matthew G. McQueen | | | 225,000 | | | | 112,500 | | | | 112,500 | | | | 150,000 | | | | 600,000 | | | 262,520 | | 262,535 | | 175,045 | | 150,058 | | 150,001 | | 1,000,159 | Ayesha Menon | | | 262,520 | | 262,535 | | 175,045 | | 150,058 | | 150,001 | | 1,000,159 |
With respect
NEOs who earn PSUs or RSUs also receive dividend equivalent rights entitling them to the performance-baseda cash payment from Welltower in an amount equal to any dividends paid on Welltower’s common stock as and when such shares vest. Status of Outstanding - LTIP awards, reaching the threshold, target, or high achievement levels would result in a payout of 50%, 100% or 200%, respectively, of the target award opportunity for CEO and 50%, 100% or 150% for the other NEOs. Payout amounts between levels are interpolated. No value is paid for metrics with outcomes below the threshold achievement levels.Award Programs STATUS OF LTIP AWARD PROGRAMS
The graphic below summarizes the performance periods and outcome, or projected outcome, of Welltower’sTSR-based LTIP awards granted in 2015,from 2016 2017, and 2018. TSR-BASED LTIP AWARD STATUS THROUGH DECEMBER 31, 2018
to 2021.
| (1) | The performance period for these awards remains open and the payout percentage for these awards has not been determined. Welltower makes no prediction as to the future performance of Welltower’s stock. |
The performance periods for the 2015-2017 LTIP, 2016-2018 LTIP, and 2017-2018 transition LTIP awards have been completed.
| | | | | Notice of Annual Meeting of Shareholders and 2019 Proxy Statement |
| | 41 |
| | | | | | | | | | | | | Executive Compensation—CD&A |
WELLTOWER2017-2018 Long-Term Incentive Program•2022 Proxy Statement |48Transition Plan 2019-2021 LTIP In connection with
This forward-looking program covered the transition of Mr. Goodey, Ms. Kerr, Mr. Mitra and Mr. McQueen to executive officers (and the corresponding transition from equity compensation based on completedthree-year performance to equity compensation based on future performance), the Compensation Committee implemented a transition long-term incentive plan for these executives. Thistwo-year forward looking program covers thetwo-year period ended December 31, 2018.2021. The Compensation Committee established goals in early 20172019 for the three measures described below (with the percentage weightings indicated) based on Welltower’s internal projections for the two years ended December 31, 2018.projections. The components of thetwo-year three-year program were consistent with Welltower’s long-term strategic objectives. Based on the performance compared to these goals and the weightings of each goal, the payout of the 2019-2021 LTIP was at 100% (target). | | | Total Shareholder Return vs. NAREIT Health Care Index
| | | Goal
Weighting 50%
| | Why Welltower chose this measure: Total shareholder return relative to the companies included in the NAREIT Health Care Index, which includes Welltower’s primary competitors, allows for a meaningful comparison of Welltower’s performance relative to other companies in its industry. Welltower has used this index or similar indices since 2002 to measure its performance.
How the Compensation Committee set the goal: Since 2002, Welltower has set target performance at the average annual total shareholder return of the relative index. Likewise, since 2002, threshold performance has been set at 4.0% below the relative index and high performance set at 4.0% above the index return. Performance between these levels is interpolated.
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| | | Total Shareholder Return vs. Morgan Stanley (MSCI) US REIT Index
| | | Goal
Weighting 30%
| | Why Welltower chose this measure: Total shareholder return relative to all REITs included in the MSCI US REIT Index measures performance relative to other real estate sectors that compete for investment capital. This allows Welltower to reward executives for performance beyond market driven results. Welltower has used this index or similar indices since 2002 to measure its performance.
How the Compensation Committee set the goal: Since 2002, Welltower has set target performance at the average annual total shareholder return of the relative index. Likewise, since 2002, threshold performance has been set at 4.0% below the relative index and high performance set at 4.0% above the index return. Performance between these levels is interpolated.
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| | | Absolute Total Shareholder Return
| | | Goal
Weighting 20%
| | Why Welltower chose this measure: This metric was created in response to shareholder concerns that if a company outperforms its peers in a negative total return market, executives should not receive maximum payouts. Total shareholder return is a direct measure of the value created for investors. Welltower includes an absolute return measure to reflect the fact that shareholders expect positive returns through all market cycles. This metric allows for some control in compensation if Welltower outperforms its peers in a down market.
How the Compensation Committee set the goal: For this measure, the Compensation Committee, consistent with feedback from shareholders, believes it is appropriate for executives not to be compensated unless Welltower’s compounded annual total shareholder return is 4.0%. In addition, target performance was set at 8.0% and high performance was set at 12.0%. Performance between these levels is interpolated.
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| | | | | 42 | | | Notice of Annual Meeting of Shareholders and 2019 Proxy Statement |
| | | | | | | Executive Compensation—CD&A | | | | | | |
2017-2018Total Shareholder Return vs. Nareit Health Care Index Weighting 2021 Goal Threshold-4.0% Target Same Total Return as Index High 4.0% Actual 6.7% Why Welltower chose this measure: Total shareholder return relative to the companies included in the Nareit Health Care Index, which includes Welltower’s primary competitors, allows for a meaningful comparison of Welltower’s performance relative to other companies in its industry. We have used this index or similar indices since 2002 to measure Welltower’s performance. We have also used the same threshold, target, and high-performance goals since 2002. Performance between these levels is interpolated.
Total Shareholder Return vs. Morgan Stanley (MSCI) US REIT Index Weighting 2021 Goal Threshold-4.0% Target Same Total Return as Index High 4.0% Actual(-5.7%) Why Welltower chose this measure: Total shareholder return relative to all REITs included in the MSCI US REIT Index measures performance relative to other real estate sectors that compete with us for investment capital. This allows Welltower to reward executives for performance beyond market-driven results. We have used this index or similar indices since 2002 to measure Welltower’s performance. We have also used the same threshold, target, and high-performance goals since 2002. Performance between these levels is interpolated. WELLTOWER•2022 Proxy Statement 49
Ratio of Net Debt Plus Preferred Stock to Adjusted Annualized EBITDA Weighting 2021 Goal Threshold6.7X Target6.2X High 5.7X Actual6.95X Why Welltower chose this measure: This measure is included in the program to emphasize the importance of Welltower’s balance sheet and leverage strategy and to create an incentive to keep Welltower’s long-term indebtedness at the lower end of a reasonable range of leverage. The Compensation Committee believes it is important that Welltower does not compromise the strength of its balance sheet to grow other areas of the business. Net Debt to Adjusted EBITDA is the ratio of the following: the sum of Welltower’s secured debt and unsecured debt, less cash and cash equivalents and restricted cash, and the total of Welltower’s preferred stock relative to Adjusted EBITDA. See Appendix A for a discussion and reconciliation of non-GAAP measures. For this measure, the Compensation Committee set the target in line with Welltower’s strategic goal. 2019-2021 Long-Term Incentive Program Payouts Grants detailed below are not included in the 2018 portion of the “Summary Compensation Table” because the grant-date fair value was included in the Summary Compensation Table for the proxy statement filed in 2018 reporting 2017 compensation.
The table below outlines the long-term incentive earnings opportunities for this programthe 2019-2021 performance period and the payouts that were actually approved based on Welltower’s performance over thetwo-year performance period, at the Compensation Committee’s February 7, 201915, 2022 meeting. These amounts are not included in the 2020 or 2021 portion of the “Summary Compensation Table” because the grant date fair value was included in the Summary Compensation Table reporting compensation awarded in 2019. | | | | | | | | | | | | | | | | | | | | | | | | | 2019-2021 Long-Term Incentive Program Opportunities and Payouts | | | | 2017-2018 Long-Term Incentive Program Opportunities(1) (in shares) | | | | | | | Threshold (#) | | Target (#) | | High (#) | | Value of Earned Award ($)(1) | | Restricted Shares (#) | | DER Accrual Payout ($)(2) | | | | Threshold (#) | | Target (#) | | High (#) | | Value of Earned Award | | Restricted Shares | | DER Accrual Payout | | John A. Goodey | | | | 1,983 | | | | | 3,964 | | | | | 5,947 | | | | $ | 443,192 | (2) | | | | 5,752 | | | | $ | 20,014 | (3) | | Mercedes T. Kerr | | | | 5,862 | | | | | 11,723 | | | | | 17,585 | | | | | 1,310,775 | (2) | | | | 17,012 | | | | | 59,207 | (3) | | Shankh Mitra | | | | 1,983 | | | | | 3,964 | | | | | 5,947 | | | | | 443,192 | (2) | | | | 5,752 | | | | | 20,014 | (3) | 13,189 | | 26,376 | | 52,752 | | 2,065,035 | | 25,444 | | 219,327 | | Timothy G. McHugh | | 8,795 | | 17,586 | | 35,172 | | 1,376,798 | | 16,964 | | 111,917 | | Matthew G. McQueen | | | | 1,487 | | | | | 2,973 | | | | | 4,460 | | | | | 332,317 | (2) | | | | 4,313 | | | | | 15,012 | (3) | 3,519 | | 7,035 | | 14,070 | | 550,752 | | 6,786 | | 58,495 | | Ayesha Menon | | 2,443 | | 4,883 | | 9,766 | | 353,371 | | 4,354 | | 29,955 | |
(1) | Mr. DeRosa was not a participant in the transitional 2017-2018 Long-Term Incentive Program.
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(2) | Value reported is based on a per share closing price of $77.05$81.16 on February 7, 2019,15, 2022, the date of committee certification ofthe Compensation Committee certified the earned award.One-half of the The shares issued in settlement of the award vested as of the date of committee certification, February 7, 2019, and the remainingone-half will vest on December 31, 2019. immediately. |
(3)(2) | Represents accrued dividend equivalent right (“DER”) payments for the shares earned under the 2017-2018 Long-Term Incentive Program that were paid on February 14, 2019. actually earned. |
2016-2018 Long-Term Incentive Program
This three-year forward lookingWELLTOWER•2022 Proxy Statement 50
Special Performance Option Award Historically, the Compensation Committee has not provided special awards; however, in 2019, it began evaluating the appropriateness of a differentiated program coversfocused on longer-term performance and more rigorous shareholder value creation than what is available under the three-year period that ended December 31, 2018.annual LTIP program. The Compensation Committee established goalsconsidered that Welltower’s competition for talent comes not just from other public REITs, but also from investment banks and private equity firms that offer similar incentive structures. In early 2020 and after careful deliberation, the Compensation Committee decided to implement the special awards, agreed upon the program design, and set to implement the program shortly after the regularly scheduled February 2020 Compensation Committee meeting. However, during the same time, the COVID-19 pandemic started to affect all aspects of life in early 2016the U.S. As a result, the Compensation Committee postponed the implementation of the program given the economic environment resulting in stock price volatility, which had the potential to provide our executives a much larger award opportunity than intended given the much lower stock price. Later in 2020, Shankh Mitra was appointed as Welltower’s CEO, and we continued to focus on property acquisitions and occupancy and COVID-19 testing, cases, and vaccine rates at our properties. During this time, the Compensation Committee considered the special awards again, but it concluded that it did not want to establish a program until the start of a meaningful recovery in our stock price. As the pandemic continued into 2021, Welltower continued to successfully navigate the crisis and position itself for future success. During Mr. Mitra’s first year as CEO, Welltower’s 49.2% total return outperformed the five measures described below (withMSCI US REIT Index, S&P 500, and Nareit Health Care Index by 17.0%, 18.0%, and 26.4%, respectively. Given this strong performance and share price recovery, in mid-2021, the percentage weightings indicated) based onCompensation Committee revisited the implementation of the special awards. It decided to grant performance-based stock options in December 2021. The intent of the performance-based stock option awards was to acknowledge Welltower’s internal projectionssignificant outperformance of industry peers during 2021 and to provide further incentive to Welltower’s executives and key employees to achieve strong future and sustained financial performance. On December 13, 2021, a select group of employees, including all of our Named Executive Officers, received these awards that will only vest if Welltower achieves a 10.5% compound annual growth rate for the three yearsNormalized FFO over a three-year performance period beginning January 1, 2022 and ending December 31, 2018. The components2024. As discussed above in the section entitled “Annual Incentives,” Welltower uses FFO as a performance goal because it is the measure most commonly used by analysts to assess the performance of REITs since it measures funds generated from a REIT’s ongoing operations. Normalized FFO excludes from FFO certain items that, due to their infrequent or unpredictable nature, may create some difficulty in comparing FFO for the current period to similar prior periods. If the Normalized FFO goal is achieved, the awards vest 50% on February 1, 2025, 25% on December 13, 2025, and 25% on December 13, 2026, generally subject to the recipient’s continued employment with Welltower through those dates. Due to the rigor of the three-year program are consistent with Welltower’s long-term strategic objectives. | | | Total Shareholder Return vs. NAREIT Health Care Index
| | | Goal
Weighting 35%
| | Why Welltower chose this measure: Total shareholder return relative to the companies included in the NAREIT Health Care Index, which includes Welltower’s primary competitors, allows for a meaningful comparison of Welltower’s performance relative to other companies in its industry. Welltower has used this index or similar indices since 2002 to measure its performance.
How the Compensation Committee set the goal: Since 2002, Welltower has set target performance at the average annual total shareholder return of the relative index. Likewise, since 2002, threshold performance goal and the uncertainty of future business conditions, upon the grant of these awards, the likelihood of achievement was improbable and thus no value has been set at 4.0% below the relative index and high performance set at 4.0% above the index return. Performance between these levels is interpolated.
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| | | | | Notice of Annual Meeting of Shareholders and 2019 Proxy Statement |
| | 43 |
| | | | | | | | | | | | | Executive Compensation—CD&A |
| | | Total Shareholder Return vs. Morgan Stanley (MSCI) US REIT Index
| | | Goal
Weighting 15%
| | Why Welltower chose this measure: Total shareholder return relative to all REITs included in the MSCI US REIT Index measures performance relative to other real estate sectors that compete for investment capital. This allows Welltower to reward executives for performance beyond market driven results. Welltower has used this index or similar indices since 2002 to measure its performance.
How the Compensation Committee set the goal: Since 2002, Welltower has set target performance at the average annual total shareholder return of the relative index. Likewise, since 2002, threshold performance has been set at 4.0% below the relative index and high performance set at 4.0% above the index return. Performance between these levels is interpolated.
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| | | Absolute Total Shareholder Return
| | | Goal
Weighting 15%
| | Why Welltower chose this measure: This metric was created in response to shareholder concerns that if a company outperforms its peers in a negative total return market, executives should not receive maximum payouts. Total shareholder return is a direct measure of the value created for investors. Welltower includes an absolute return measure to reflect the fact that shareholders expect positive returns through all market cycles. This metric allows for some control in compensation if Welltower outperforms its peers in a down market.
How the Compensation Committee set the goal: For this measure, the Compensation Committee, consistent with feedback from shareholders, believes it is appropriate for executives not to be compensated unless Welltower’s compounded annual total shareholder return is 5.0%, which is the same level used in the 2013, 2014 and 2015 long-term incentive plans. In addition, target performance was set at 8.0%, high performance was set at 11.0% and extraordinary performance was set at 14.0%. Performance between these levels is interpolated.
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| | | Adjusted Fixed Charge Coverage
| | | Goal
Weighting 20%
| | Why Welltower chose this measure: This measure is included in the program to emphasize the importance of Welltower’s balance sheet and leverage strategy. The Compensation Committee believes it is important that Welltower does not sacrifice its balance sheet to grow in other areas of the business. Adjusted fixed charge coverage is a ratio of fixed charges to Adjusted EBITDA. EBITDA stands for earnings (net income per income statement) before interest expense, income taxes, depreciation and amortization. Adjusted EBITDA excludes unconsolidated entities and includes adjustments for stock-based compensation expense, provision for loan losses, gains/losses on extinguishment of debt, transaction costs, gains/losses/impairments on properties, gains/losses on derivatives and financial instruments, other expenses, and additional other income. Fixed charges include total interest (excluding capitalized interest and non-cash interest expenses), secured debt principal amortization and preferred dividends.
How the Compensation Committee set the goal: For this measure, the Compensation Committee set target in line with Welltower’s long-term strategic goal. Threshold is 2.5x, high is 3.5x and extraordinary is 4.0x.
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| | | | | 44 | | | Notice of Annual Meeting of Shareholders and 2019 Proxy Statement |
| | | | | | | Executive Compensation—CD&A | | | | | | |
| | | Private Pay
| | | Goal
Weighting 15%
| | Why Welltower chose this measure: Welltower measures the percentage of the portfolio’s revenue that is derived fromnon-government payment sources. This includes lease payments from residential seniors housing and lease payments from medical office tenants. Private payment sources mitigate risk associated with government reimbursement, and thus is a relevant metric to indicate the quality of Welltower’s cash flow.
How the Compensation Committee set the goal: For this measure, the Compensation Committee set target in line with Welltower’s long-term strategic goal. Threshold is 90%, target is 91.5%, high is 93% and extraordinary is 94.5%.
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2016-2018 Long-Term Incentive Program Payouts
Grants detailed below are not included in the 2018 portion of the “Summary Compensation Table” because the grant-date fair value was included in the Summary Compensation Table for the proxy statement filed in 2017 reporting 2016 compensation. The table below outlines the long-term incentive earnings opportunities for this program and the payouts that were actually approved at the Compensation Committee’s February 7, 2019 meeting.Table.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2016-2018 Long-Term Incentive Program Opportunities(1) (in shares) | | | | | | | | | Threshold (#) | | Target (#) | | High (#) | | Extraordinary (#) | | Value of Earned Award | | Restricted Shares | | DER Accrual Payout | Thomas J. DeRosa | | | | 38,446 | | | | | 76,892 | | | | | 144,173 | | | | | 192,230 | | | | $ | 8,349,909 | (2) | | | | 108,370 | | | | $ | 1,127,048(3) | | Mercedes T. Kerr | | | | 17,437 | | | | | 34,874 | | | | | 43,593 | | | | | 52,311 | | | | | 2,793,910 | (2) | | | | 36,261 | | | | | 377,114(3) | |
WELLTOWER•2022 Proxy Statement 51 (1) | Mr. Goodey, Mr. Mitra and Mr. McQueen were not participants in the 2016-2018 Long-Term Incentive Program.
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(2)Back to Contents | Value reported is based on a per share closing price of $77.05 on February 7, 2019, the date of committee certification of the earned award.One-third of the shares issued in settlement of the award vested as of the date of committee certification, February 7, 2019,one-third will vest on December 31, 2019 andone-third was settled in restricted shares that will vest on December 31, 2020.
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(3) | Represents accrued DER payments for shares earned under the 2016-2018 Long-Term Incentive Program that were paid on February 14, 2019.
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Benefits and Perquisites The following summarizes various benefits and perquisites received by the NEOs. NEOs are eligible to participate in the same benefit programs as all other Welltower employees, including health and dental insurance, group life insurance, shortshort- and long-term disability coverage, partial reimbursement of health club/gym membership fees, participation in Welltower’stax-qualified retirement plan and trust (the “401(k) Plan”) and the Employee Stock Purchase Program (the “ESPP”). In addition, Mr. DeRosa received certain perquisites in 2018 including the following: Automobile allowance-monthly allowance to cover expenses incurred with the lease of an automobile.
Medical insurance premiums-includes medical insurance premiums to provideIn 2021, Mr. DeRosa and his family with coverage consistent with his individual health insurance coverage prior to the time that he became the CEO.
Travelexpenses-Mr. DeRosa occasionally uses the corporate aircraft for personal matters in order to increase his productivity and maximize his time. In addition, Mr. DeRosa’s spouse is invited by Welltower to certain business events and occasionally accompanies Mr. DeRosa.
In 2018, Welltower paid medical insurance premiums on behalf of Mr. Goodey, Ms. Kerr received relocation expenses in connection with her transfer to California and Mr. GoodeyMitra received relocation expenses in connection with his transferrelocation from New Jersey to Texas. In addition to paying for Mr. Mitra’s and his family’s relocation, Welltower also covered the United States.closing costs associated with the sale of Mr. Mitra’s then-existing home and the purchase of his new home.
The Compensation Committee reviews Welltower’s policies with respect to perquisites on a regular basis. See note 3 to the “Summary Compensation Table” for additional information regarding perquisites, including the dollar values of the perquisites provided by Welltower in 2018. | | | | | Notice of Annual Meeting of Shareholders and 2019 Proxy Statement |
OTHER COMPENSATION INFORMATION | | 45 |
| | | | | | | | | | | | | Executive Compensation—CD&A |
Pledging and Hedging Welltower’s directors, and executive officers and its other employees are prohibited from entering into hedging or monetization transactions with respect to Welltower’s securities and from holding Welltower’s securities in margin accounts or otherwise pledging such securities as collateral for loans.
Clawback Policy If Welltower is required to prepare a financial restatement due to Welltower’s materialnon-compliance with any financial reporting requirement and the misconduct of an executive officer or certain other covered officerofficers (each, a “Covered Officer”) contributedcontributes (either directly or indirectly) to theWelltower’s non-compliance that resulted with or error regarding any financial reporting requirement and results in thean obligation to restate Welltower’s financial statements, then the Compensation Committee may require the Covered Officer to repay to Welltower that part of the incentive compensation received by or awarded to such Covered Officer during or after the three-year period preceding the date on which Welltower is required to preparecovered by the financial restatement that the Compensation Committee determines was in excess of the amount that such Covered Officer would have received or will receive had such incentive compensation been calculated or awarded based on the financial results reported in the restated financial statement. In addition, if an action or omission by a Covered Officer (1) constitutes a material violation of Welltower’s Code of Business Conduct & Ethics or other Welltower policy or (2) results in material financial or reputational harm to Welltower, then the Compensation Committee may require the Covered Officer to repay to Welltower incentive compensation received by or awarded to such Covered Officer. The amount and form of the compensation to be recouped is determined by the Compensation Committee in its sole discretion.
Ownership Guidelines Each executive officer is required to own shares of Welltower’s common stock with a fair market value of at least three times his or her annual base salary (six times for the CEO). Eachnon-employee director is required to own shares of Welltower’s common stock with a fair market value of at least five times his or her annual cash retainer. Executive officers have five years from theirthe date of hirein which they are subject to the guidelines to achieve the required ownership level andnon-employee directors havelevel. No NEO has been in his or her role for five years from their date of appointmentother than Mr. McQueen (who satisfies the ownership guidelines). Each other NEO is on track to achievesatisfy the requiredrelevant ownership level.guideline before his or her deadline. WELLTOWER•2022 Proxy Statement 52 Tax Deductibility of Executive Compensation The Compensation Committee has considered the anticipated tax treatment to Welltower regarding the compensation and benefits paid to the NEOs under Section 162(m) of the Code. In general, Section 162(m) places a limit of $1,000,000 on the amount of compensation that may be deducted annually by Welltower with respect to certain “covered employees,” which generally includes all of its current NEOs. Welltower had structured its compensation programs for 2016 and 2017 such that Welltower’s equity-based long-term incentive program awards, were intended to qualify as “performance-based” compensation for purposes of satisfying the conditions of an exemption to this limit on deductibility previously available under Section 162(m). For taxable years beginning after December 31, 2017, the exemption from Section 162(m)’s deduction limit for certain “performance-based” compensation has been repealed for all but certain grandfathered compensation arrangements that were in effect as of November 2, 2017. In addition, theThe rules and regulations promulgated under Section 162(m) are complicated and subject to change and thus, there can be no assurance that any compensation awarded or paid prior to November 2, 2017 that was intended to satisfy the “performance- based compensation” definition will be fully tax deductible. The Compensation Committee believes in the importance of providing competitive compensation packages in order to attract and retain capable employees, including “covered employees,” has sought to maintain flexibility in compensating its employees, including its executives, and asis committed to maintaining a strong link between Welltower’s performance and the pay of its employees, especially its executives. As a result, Welltower has not adopted a policy requiring that all compensation be deductible under the Code, including compensation intended to qualify as “performance-based” compensation and take advantageSection 162(m) of the exemption from Section 162(m)’s deduction limits.Code. Because Welltower operates in such a manner that it will qualify as a REIT under the Code, and therefore is not subject to federal income taxes to the extent Welltower distributes at least 90% of its REIT taxable income, the loss of this deduction wouldsubstantially greater limits on deductibility imposed under Section 162(m) in 2018 and later years has not behad, and is expected in the future not to have, material adverse consequences for Welltower.Welltower’s after-tax financial performance. If in the future restrictions on deductibility under Section 162(m) becomes an issue for the Company, the Compensation Committee will consider various alternatives to preserve the deductibility of compensation payments to executive officers and benefits to the extent reasonably practical and to the extent consistent with its other compensation objectives, but the Compensation Committee reserves the right to pay compensation not exempt from these limits where it considers such compensation appropriate. | | | | | 46 | | | Notice of Annual Meeting of Shareholders and 2019 Proxy Statement |
| | | | | | | Executive Compensation—CD&A | | | | | | |
Compensation Committee ReportCOMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based on such review and discussions, the Compensation Committee recommended to the Board, and the Board has approved, the inclusion of the Compensation Discussion and Analysis in Welltower’s Annual Report on Form10-K for the year ending December 31, 20182021, and this Proxy Statement. Submitted by the Compensation Committee Sharon
Jeffrey H. Donahue, Chair Philip L. Hawkins Dennis G. Lopez Johnese M. Oster, ChairSpisso Kathryn M. Sullivan Kenneth J. Bacon
Timothy J. Naughton
Judith C. Pelham
| | | | | Notice of Annual Meeting of Shareholders and 2019 Proxy Statement |
| | 47 |
| | | | | | | | | | | | | Executive Compensation |
WELLTOWER•2022 Proxy Statement 53 SummaryExecutive Compensation TableTables
SUMMARY COMPENSATION TABLE The table below presents the total compensation of the NEOs for each indicated year. | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | | | Year | | |
| Salary
($) |
| |
| Stock Awards
($)(2) |
| |
| Non-Equity
Incentive Plan Compensation ($) |
| |
| All Other
Compensation ($)(3) |
| |
| Total
Compensation ($) |
| Thomas J. DeRosa | | | 2018 | | | | 1,100,000 | | | | 8,200,007 | | | | 3,520,000 | | | | 64,446 | | | | 12,884,453 | | Chief Executive Officer | | | 2017 | | | | 985,801 | | | | 7,250,000 | | | | 2,197,563 | | | | 84,700 | | | | 10,518,064 | | | | | 2016 | | | | 950,000 | | | | 10,215,363 | | | | 1,829,950 | | | | 739,041 | | | | 13,734,354 | | John A. Goodey | | | 2018 | | | | 576,650 | | | | 1,725,014 | | | | 1,175,063 | | | | 134,705 | | | | 3,611,432 | | Executive Vice President - Chief Financial Officer(1) | | | 2017 | | | | 454,457 | | | | 2,179,099 | | | | 433,429 | | | | 34,518 | | | | 3,101,503 | | Mercedes T. Kerr | | | 2018 | | | | 484,500 | | | | 1,775,037 | | | | 828,495 | | | | 46,221 | | | | 3,134,253 | | Executive Vice President - Business & Relationship Management | | | 2017 | | | | 484,500 | | | | 2,662,500 | | | | 652,985 | | | | 346,180 | | | | 4,146,165 | | | | | 2016 | | | | 391,232 | | | | 2,564,126 | | | | 920,321 | | | | 14,958 | | | | 3,890,637 | | Shankh Mitra | | | 2018 | | | | 700,000 | | | | 2,276,423 | | | | 1,944,688 | | | | 13,750 | | | | 4,934,861 | | Executive Vice President - Chief Investment Officer(1) | | | 2017 | | | | 425,000 | | | | 1,436,011 | | | | 392,891 | | | | 359,598 | | | | 2,613,500 | | Matthew G. McQueen | | | 2018 | | | | 412,083 | | | | 800,045 | | | | 479,046 | | | | 13,750 | | | | 1,704,924 | | Senior Vice President - General Counsel & Corporate Secretary(1) | | | 2017 | | | | 370,000 | | | | 667,160 | | | | 236,356 | | | | 13,250 | | | | 1,286,766 | |
Name and Principal Position | | Year | | Salary ($) | | Stock Awards ($)(2) | | Option Awards ($)(3) | | Non-Equity Incentive Plan Compensation ($) | | All Other Compensation ($)(4) | | Total Compensation ($) | Shankh Mitra | | 2021 | | 1,000,039 | | 5,999,991 | | 1,500,088 | | 3,920,000 | | 333,592 | | 12,753,710 | Chief Executive Officer & Chief Investment Officer | | 2020 | | 767,516 | | 6,528,380 | | | | 1,852,490 | | 409,048 | | 9,557,434 | | 2019 | | 700,000 | | 3,000,065 | | | | 1,802,792 | | 225,286 | | 5,728,143 | John F. Burkart(1) | | 2021 | | 273,076 | | 903,391 | | — | | 634,438 | | — | | 1,810,905 | Executive Vice President - Chief Operating Officer | | | | | | | | | | | | | | | Timothy G. McHugh | | 2021 | | 600,000 | | 2,703,156 | | 297,002 | | 1,764,000 | | 14,250 | | 5,378,408 | Executive Vice President - Chief Financial Officer | | 2020 | | 600,000 | | 2,625,544 | | | | 1,086,750 | | 14,250 | | 4,326,544 | | 2019 | | 400,000 | | 2,075,049 | | | | 932,500 | | 80,721 | | 3,488,270 | Matthew G. McQueen | | 2021 | | 550,021 | | 850,158 | | 150,001 | | 1,045,000 | | 14,250 | | 2,609,430 | Executive Vice President - General Counsel & Corporate Secretary | | 2020 | | 480,000 | | 840,320 | | | | 557,100 | | 14,250 | | 1,891,670 | | 2019 | | 463,500 | | 800,028 | | | | 655,853 | | 26,038 | | 1,945,419 | Ayesha Menon(1) | | 2021 | | 550,021 | | 850,158 | | 150,001 | | 1,023,000 | | 14,250 | | 2,587,430 | Senior Vice President, Wellness Housing & Development | | 2020 | | 425,000 | | 630,135 | | | | 493,266 | | 3,542 | | 1,551,943 |
(1) | No compensation information is provided for the years in which Mr. Goodey, Mr. MitraBurkart and Mr. McQueenMs. Menon were not Named Executive Officers. |
(2) | Amounts set forth in this column represent the grant-dategrant date fair value calculated in accordance with FASB ASC Topic 718. 718 for the performance-based and time-based stock awards. |
The amounts for 2018 include the following:
For the Named Executive Officers:
the performance-based and time-based awards under the 2018-2020 Long-Term Incentive Program (see below and pages 40-41 for additional information regarding this program).
For Mr. Mitra and Mr. McQueen:
the value of restricted stock unit awards ($750,018 for Mr. Mitra and $200,038 for Mr. McQueen) granted in early 2018 for 2017 performance. For more information regarding these awards, see page 50 of Welltower’s Definitive Proxy Statement on Schedule 14A filed with the SEC on March 23, 2018.
The amounts for 2017 include the following:
For the Named Executive Officers:
the awards under the 2017-2019 Long-Term Incentive Program (see below and page 41 for additional information regarding this program).
For Mr. Goodey, Ms. Kerr, Mr. Mitra and Mr. McQueen:
the awards under the 2017-2018 transition plan (see below and pages 42-43 for additional information regarding this program).
For Mr. Goodey, Mr. Mitra and Mr. McQueen:
the value of restricted stock awards ($579,094 for Mr. Goodey, $836,011 for Mr. Mitra and $217,160 for Mr. McQueen) granted in early 2017 for 2016 performance.
For Mr. Goodey:
the value of restricted stock awards ($1,000,005) granted on October 3, 2017 in connection with his promotion to Executive Vice President - Chief Financial Officer.
The amounts for 2016 represent the following:
For Mr. DeRosa and Ms. Kerr:
the value of restricted stock awards granted in early 2016 for 2015 performance; and
the awards under the 2016-2018 Long-Term Incentive Program (see below and pages 43-45 for additional information regarding this program).
For the 2016-2018 program, the values are based upon the probable outcome of the performance conditions as of the grant date for the awards, which were $5,700,000 for Mr. DeRosa and $1,775,000 and for Ms. Kerr. The maximum value of the awards under the 2016-2018 program (determined on the grant date) (assuming that the highest level of performance is achieved) are $14,250,000 for Mr. DeRosa and $2,662,500 for Ms. Kerr.
For the 2017-2019 program, the values are based upon the probable outcome of the performance conditions as of the grant date for the awards, which were $7,250,000 for Mr. DeRosa, $300,000 for Mr. Goodey, $1,775,000 for Ms. Kerr, $300,000 for Mr. Mitra and $225,000 for Mr. McQueen. The maximum value of the awards under the 2017-2019 program (determined on the grant date) (assuming that the highest level of performance is achieved) are $14,500,000 for Mr. DeRosa, $450,000 for Mr. Goodey, $2,662,500 for Ms. Kerr, $450,000 for Mr. Mitra and $337,500 for Mr. McQueen.
For the 2017-2018 transition plan, the values are based upon the probable outcome of the performance conditions as of the grant date for the awards, which were $300,000 for Mr. Goodey, $887,500 for Ms. Kerr, $300,000 for Mr. Mitra and $225,000 for Mr. McQueen. The maximum value of the awards under the 2017-2018 transition plan (determined on the grant date) (assuming that the highest level of performance is achieved) are $450,000 for Mr. Goodey, $1,331,250 for Ms. Kerr, $450,000 for Mr. Mitra and $337,500 for Mr. McQueen.
For the 2018-2020 program, the values for the performance-based awards are based upon the probable outcome of the performance conditions as of the grant date for the awards, which were $6,150,000 for Mr. DeRosa, $1,293,750 for Mr. Goodey, $1,331,250 for Ms. Kerr, $1,125,000 for Mr. Mitra and $450,000 for Mr. McQueen. The maximum value of the performance-based awards under the 2018-2020 program (determined on the grant date) (assuming that the highest level of performance is achieved) are $11,683,130 for Mr. DeRosa, $2,133,479 for Mr. Goodey, $2,195,325 for Ms. Kerr, $1,985,589 for Mr. Mitra and $742,202 for Mr. McQueen. The values of the time-based awards are based upon the share prices on the respective dates of grant and are $2,050,007 for Mr. DeRosa, $431,264 for Mr. Goodey, $443,787 for Ms. Kerr, $401,405 for Mr. Mitra and $150,007 for Mr. McQueen.
| | 2019–2021 LTIP | | 2020–2022 LTIP | | 2021–2023 LTIP | | | | | Performance-Based | | | | Performance-Based | | | | Performance-Based | Grant Date Fair Value for Stock Awards Name | | Time- Based ($) | | Target ($) | | Maximum ($) | | Time- Based ($) | | Target ($) | | Maximum ($) | | Time- Based ($) | | Target ($) | | Maximum ($) | Shankh Mitra | | 750,065 | | 2,250,000 | | 4,086,697 | | 1,705,739 | | 4,822,641 | | 9,645,283 | | 749,953 | | 5,250,038 | | 7,875,057 | John F. Burkart | | n/a | | n/a | | n/a | | n/a | | n/a | | n/a | | 271,020 | | 632,371 | | 948,557 | Timothy G. McHugh | | 500,069 | | 1,500,000 | | 3,133,342 | | 696,607 | | 1,928,937 | | 3,857,873 | | 603,052 | | 2,100,104 | | 3,150,156 | Matthew G. McQueen | | 200,028 | | 600,000 | | 1,090,003 | | 222,943 | | 617,377 | | 1,234,753 | | 150,058 | | 700,100 | | 1,050,150 | Ayesha Menon | | n/a | | n/a | | n/a | | 167,207 | | 462,928 | | 925,856 | | 150,058 | | 700,100 | | 1,050,150 |
| | For valuation assumptions, refer to note 15 to the consolidated financial statements in our annual report on Form 10-K for the fiscal year ended December 31, 2021. For the performance stock units granted under the 2021-2023 Long-Term Incentive Program, also refer to the relevant section of the Compensation Discussion and Analysis at pages 46-48. | (3) | Amounts set forth in this column represent the grant date fair value of stock options under the 2021-2023 Long-Term Incentive Program calculated in accordance with FASB ASC Topic 718 (see below and pages 45-47 for additional information regarding this program). For the February option grants with an exercise price of $67.17, the key inputs into the Black-Scholes option valuation model were the following: (1) grant date value of the underlying shares of $67.17, (2) expected duration of 6.25 years, (3) dividend rate of 4.2%, (4) risk-free interest rate of 0.81% and (5) share price volatility of 36.0%. For additional information regarding valuation assumptions, refer to note 15 to the consolidated financial statement in our annual report on Form 10-K for the year ended December 31, 2021. | 48 | | | NoticeIn addition to the stock option awards under the 2021-2023 Long-Term Incentive Program granted on February 16, 2021, Messrs. Mitra, McHugh, Burkart and McQueen and Ms. Menon received performance-based stock option awards on December 13, 2021. Vesting for the performance-based stock options will begin on the third anniversary of Annual Meetingthe grant date if the performance goal of Shareholdersa 10.5% compound annual growth rate for Normalized Funds From Operations (“FFO”) (starting from 2021 full year Normalized FFO, adjusted for HHS funding received) is met by that date. The likelihood of meeting this goal was improbable as of December 31, 2021, and, 2019 Proxy Statement |
| | | | | | | Executivetherefore, we have not recognized any related expense during 2021 and there is no value included for these options in the Summary Compensation | | | | | | Table. For the December performance-based option grants with an exercise price of $83.44, the key inputs into the Black-Scholes option valuation model were the following: (1) grant date value of the underlying shares of $83.44, (2) expected duration of 6.91 years, (3) dividend rate of 2.92%, (4) risk-free interest rate of 1.36% and (5) share price volatility of 32.8%. If the performance goal is met, the award will vest 50% on February 1, 2025, 25% on December 13, 2025 and 25% on December 13, 2026. If the performance condition is met, the grant date fair values of these awards are $5 million (Mr. Mitra), $1.25 million (Mr. Burkart), $2.5 million (Mr. McHugh), $0.8 million (Mr. McQueen), and $0.5 million (Ms. Menon), respectively. |
For grants of restricted stock units to the Named Executive Officers, the values are based on the share prices on the respective dates of grant (or, if the date of grant was not a trading day, the last trading day prior to the date of grant).WELLTOWER•2022 Proxy Statement 54
(4) | “All Other Compensation” includes the following: |
| | | | | | | | | | | | | | | | | | | | | | | | | Name | |
| Welltower
Contribution to 401(k) Plan ($) |
| |
| Relocation
Expenses ($) |
| |
| Travel
Expenses ($)(d) |
| |
| Automobile
Allowance ($)(e) |
| |
| Medical
Insurance Premiums ($)(e) |
| |
| Total
($) |
| Thomas J. DeRosa | | | 13,750 | | | | - | | | | 16,026 | | | | 16,130 | | | | 18,540 | | | | 64,446 | | John A. Goodey | | | 26,335 | (a) | | | 105,197 | (b) | | | - | | | | - | | | | 3,173 | | | | 134,705 | | Mercedes T. Kerr | | | 13,750 | | | | 32,471 | (c) | | | - | | | | - | | | | - | | | | 46,221 | | Shankh Mitra | | | 13,750 | | | | - | | | | - | | | | - | | | | - | | | | 13,750 | | Matthew G. McQueen | | | 13,750 | | | | - | | | | - | | | | - | | | | - | | | | 13,750 | |
Name | | Welltower Contribution to 401(k) Plan ($) | | Relocation Expenses ($)(a) | | Total ($) | Shankh Mitra | | 14,250 | | 319,342 | | 333,592 | John F. Burkart | | — | | — | | — | Timothy G. McHugh | | 14,250 | | — | | 14,250 | Matthew G. McQueen | | 14,250 | | — | | 14,250 | Ayesha Menon | | 14,250 | | — | | 14,250 |
| (a) | RepresentsMr. Mitra’s relocation was prompted because Texas gives us access to a larger labor market and an increasing number of business opportunities. In connection with Mr. Mitra’s relocation from New Jersey to Texas in 2021 at Welltower’s contributionsrequest, we agreed to pay the self-invested pension plan available to employees located in the United Kingdom in the amount of $23,835 and Welltower’s contributions to Mr. Goodey’s 401(k) plan account in the amount of $2,500.
|
| (b) | Represents relocation expenses for Mr. Goodey in the amount of $73,502 andan associated tax gross up of $31,695.
|
| (c) | Represents relocation expenses for Ms. Kerr in the amount of $32,471.
|
| (d) | This amount represents the aggregate incremental cost to Welltower for (i) Mr. DeRosa’s personal use of the corporate aircraft and (ii) the cost of certain spousal travel expenses paid by Welltower for Mr. DeRosa.
|
| (e) | See “Compensation Discussion and Analysis—Benefits and Perquisites” for additional information regarding (i) the automobile allowance paid by Welltowercosts on behalf of Mr. DeRosa;Mitra and (ii)his family (i.e., air travel, ground travel, relocation of personal goods, car rentals, hotels and meals), as well as the medical insurance premiums paid by Welltower on behalfclosing costs for both the sale of Mr. DeRosahis home in New Jersey and Mr. Goodey.
|
| | | | | Noticethe purchase of Annual Meetinghis home in Texas. The amount reported above represents $74,484 of Shareholdersrelocation costs (which included ground travel costs of $15,173 and 2019 Proxy Statement |
| | 49 |
| | | | | | | | | | | | | Executive Compensationcosts to move household items of $59,311) and $244,858 of closing costs. None of the relocation payments were grossed up for income taxes. |
2018 Grants of Plan-Based Awards Table2021 GRANTS OF PLAN-BASED AWARDS TABLE
The table below provides information regarding grants of awards to the NEOs under Welltower’s long-term incentive plans. | | | | | | Estimated Future Payments UnderNon-Equity Incentive Plan Awards(1) | | | Estimated Future Payments Under Equity Incentive Plan Awards | | | | | | | | | | Estimated Future Payments Under Non-Equity Incentive Plan Awards(1) | | Estimated Future Payments Under Equity Incentive Plan Awards | | | | Name | | Grant Date | | Threshold ($) | | | Target ($) | | | Maximum ($) | | | Threshold (#) | | | Target (#) | | | High (#) | | | Stock Awards: Number of Shares of Stock or Units (#) | | | Grant Date Fair Value of Stock and Option Awards ($)(7) | | | Grant Date | | | Threshold ($) | | Target ($) | | Maximum ($) | | Threshold (#) | | Target (#) | | High (#) | | Stock Awards: Number of Shares of Stock or Units (#) | | Option Awards: Number of Shares of Stock Underlying Options (#) | | Exercise or Base Price of Option Awards ($/Sh) | | Grant Date Fair Value of Stock and Option Awards ($)(8) | Thomas J. DeRosa | | | — | | | | 1,100,000 | | | | 2,200,000 | | | | 4,400,000 | | | | | | | | | | | | | | | | 2/15/2018 | (2) | | | | | | | | | 52,942 | | | | 105,883 | | | | 211,766 | | | | | | 6,150,000 | | | | | | 2/15/2018 | (3) | | | | | | | | | | | | | | | 37,158 | | | | 2,050,007 | | | John A. Goodey | | | — | | | | 450,000 | | | | 900,000 | | | | 1,800,000 | | | | | | | | | | | | | | | | 2/15/2018 | (2) | | | | | | | | | 12,891 | | | | 25,780 | | | | 38,671 | | | | | | 1,293,750 | | | | | | 2/15/2018 | (3) | | | | | | | | | | | | | | | 7,817 | | | | 431,264 | | | Mercedes T. Kerr | | | — | | | | 363,375 | | | | 726,750 | | | | 1,453,500 | | | | | | | | | | | | | | | | 2/15/2018 | (2) | | | | | | | | | 13,265 | | | | 26,527 | | | | 39,792 | | | | | | 1,331,250 | | | | | | 2/15/2018 | (3) | | | | | | | | | | | | | | | 8,044 | | | | 443,787 | | | Shankh Mitra | | | — | | | | 612,500 | | | | 1,225,000 | | | | 2,450,000 | | | | | | | | | | | | | — | | 1,000,000 | | 2,000,000 | | 4,000,000 | | | | | | 8/9/2018 | (2) | | | | | | | | | 5,232 | | | | 10,463 | | | | 15,695 | | | | | | 525,000 | | | 2/16/2021 | (2) | | 41,042 | | 82,084 | | 123,126 | | 5,250,038 | | | | 2/15/2018 | (2) | | | | | | | | | 5,980 | | | | 11,957 | | | | 17,937 | | | | | | 600,000 | | | 2/16/2021 | (3) | | 11,165 | | 749,953 | | | | 8/9/2018 | (4) | | | | | | | | | | | | | | | 3,173 | | | | 201,359 | | | 2/16/2021 | (4) | | 102,465 | | 67.17 | | 1,500,088 | | | | 2/8/2018 | (5) | | | | | | | | | | | | | | | 13,719 | | | | 750,018 | | | 12/13/2021 | (7) | | 246,184 | | 83.44 | | — | John F. Burkart | | | — | | 170,548 | | 341,096 | | 682,192 | | | | | 7/19/2021 | (5) | | 3,391 | | 6,781 | | 10,172 | | 632,371 | | | | 2/15/2018 | (3) | | | | | | | | | | | | | | | 3,626 | | | | 200,046 | | | 7/19/2021 | (6) | | 3,210 | | — | | 271,020 | | | | 12/13/2021 | (7) | | 61,546 | | 83.44 | | — | Timothy G. McHugh | | | — | | 450,000 | | 900,000 | | 1,800,000 | | | | | 2/16/2021 | (2) | | 16,418 | | 32,835 | | 49,253 | | 2,100,104 | | | | 2/16/2021 | (3) | | 8,978 | | 603,052 | | | | 2/16/2021 | (4) | | 20,287 | | 67.17 | | 297,002 | | | | 12/13/2021 | (7) | | 123,092 | | 83.44 | | — | Matthew G. McQueen | | | — | | 275,000 | | 550,000 | | 1,100,000 | | | | | — | | | | 168,750 | | | | 337,500 | | | | 675,000 | | | | | | | | | | | | | 2/16/2021 | (2) | | 5,473 | | 10,946 | | 16,419 | | 700,100 | | | | 2/15/2018 | (2) | | | | | | | | | 4,485 | | | | 8,968 | | | | 13,453 | | | | | | 450,000 | | | 2/16/2021 | (3) | | 2,234 | | 150,058 | | | | 2/8/2018 | (6) | | | | | | | | | | | | | | | 3,659 | | | | 200,038 | | | 2/16/2021 | (4) | | 10,246 | | 67.17 | | 150,001 | | | | 2/15/2018 | (3) | | | | | | | | | | | | | | | 2,719 | | | | 150,007 | | | 12/13/2021 | (7) | | 39,389 | | 83.44 | | — |
WELLTOWER•2022 Proxy Statement 55 | | | | | Estimated Future Payments Under Non-Equity Incentive Plan Awards(1) | | Estimated Future Payments Under Equity Incentive Plan Awards | | | | | | | | | Name | | Grant Date | | | Threshold ($) | | Target ($) | | Maximum ($) | | Threshold (#) | | Target (#) | | High (#) | | Stock Awards: Number of Shares of Stock or Units (#) | | Option Awards: Number of Shares of Stock Underlying Options (#) | | Exercise or Base Price of Option Awards ($/Sh) | | Grant Date Fair Value of Stock and Option Awards ($)(8) | Ayesha Menon | | — | | | 275,000 | | 550,000 | | 1,100,000 | | | | | | | | | | | | | | | | 2/16/2021 | (2) | | | | | | | | 5,473 | | 10,946 | | 16,419 | | | | | | | | 700,100 | | 2/16/2021 | (3) | | | | | | | | | | | | | | 2,234 | | | | | | 150,058 | | 2/16/2021 | (4) | | | | | | | | | | | | | | | | 10,246 | | 67.17 | | 150,001 | | 12/13/2021 | (7) | | | | | | | | | | | | | | | | 24,618 | | 83.44 | | — |
(1) | Represents annual incentive program earnings opportunity for 2018.2021. The actual amount earned by each of the NEOs under the annual incentive program in 20182021 was paid in 20192022 and is shown in theNon-Equity Incentive Plan Compensation column of the Summary Compensation Table. |
(2) | Represents long-term incentive earnings opportunity for performance under the 2018-20202021-2023 Long-Term Incentive Program. The performance measures under this program will be evaluated in early 20212024 after the close of the performance period on December 31, 2020.2023. Any performance award earned will be settled in shares following such evaluation (subject to earlier evaluation and vesting in connection with a change in corporate control or a qualified termination of employment). See pages 40-4145-47 for additional information regarding the 2018-2020 program. 2021-2023 Long-Term Incentive Program. |
(3) | Represents time-based restricted stock units granted under the 2018-20202021-2023 Long-Term Incentive PlanProgram on February 15, 2018.16, 2021. The units vest in four equal installments on January 15, 2019, 2020, 20212022, 2023, 2024 and 2022.2025. The grant date fair value is based on a per share grant price of $55.17,$67.17, the closing price of Welltower’s common stock on February 16, 2021. See pages 45-47 for additional information regarding the 2021-2023 Long-Term Incentive Program. | (4) | Represents time-based stock options granted under the 2021-2023 Long-Term Incentive Program on February 16, 2021 with an exercise price of $67.17, the closing price of Welltower’s common stock on the date of grant. The stock options vest and become exercisable in four equal installments on January 15, 2018,2022, 2023, 2024 and 2025. The grant date fair value is based on the Black-Scholes value of $14.64 on the date of the grant. See pages 45-47 for additional information regarding the 2021-2023 Long-Term Incentive Program. |
(4)(5) | Represents long-term incentive earnings opportunity for performance under the 2021-2023 Long-Term Incentive Program. This award was granted on July 19, 2021, the date on which Mr. Burkart joined Welltower as Executive Vice President – Chief Operating Officer. The performance measures under this program will be evaluated in early 2024 after the close of the performance period on December 31, 2023. Any performance award earned will be settled in shares following such evaluation (subject to earlier evaluation and vesting in connection with a change in corporate control or a qualified termination of employment). See pages 45-47 for additional information regarding the 2021-2023 Long-Term Incentive Program. | (6) | Represents time-based restricted stock units granted under the 2018-20202021-2023 Long-Term Incentive Plan on August 9, 2018.July 19, 2021, the date on which Mr. Burkart joined Welltower as Executive Vice President – Chief Operating Officer. The sharesunits vest in four equal installments on January 15, 2019, 2020, 20212022, 2023, 2024 and 2022.2025. The grant date fair value is based on a per share grant price of $63.46,$84.43, the closing price of Welltower’s common stock on August 9, 2018, the dateJuly 19, 2021. | (7) | Represents performance-based stock options granted December 13, 2021. See footnote 3 of the grant.Summary Compensation Table and pages 50-51 for additional information regarding the special stock option grants. |
(5)(8) | Restricted stock granted on February 8, 2018 for performance in 2017. The shares vest in three equal installments on January 15, 2019, 2020 and 2021. The grant date fair value is based on a per share grant price of $54.67, the closing price of Welltower’s common stock on February 8, 2018, the date of the grant.
|
(6) | Restricted stock granted on February 8, 2018 for performance in 2017. The shares vest in four equal installments on January 15, 2019, 2020, 2021 and 2022. The grant date fair value is based on a per share grant price of $54.67, the closing price of Welltower’s common stock on February 8, 2018, the date of the grant.
|
(7) | Amounts set forth in this column represent the grant-dategrant date fair value calculated in accordance with FASB ASC Topic 718. For the assumptions and methodologies used to value the awards reported in this column, see notenotes 2 and 3 to the Summary Compensation Table. |
| | | | | 50 | | | Notice of Annual Meeting of Shareholders and 2019 Proxy Statement |
| | | | | | | Executive Compensation | | | | | | |
WELLTOWEREmployment Agreements•2022 Proxy Statement 56 Welltower has employment agreements with each of Mr. DeRosa and Mr. Goodey. Welltower does not have employment agreements with Ms. Kerr, Mr. Mitra or Mr. McQueen. Welltower’s policy is not to enter into any employment agreements in the future with any employee other than the Chief Executive Officer. Accordingly, when the most recent term of Ms. Kerr’s employment agreement ended on January 31, 2019, the agreement expired according to its terms. The expiration of the agreement has had no effect or impact on Ms. Kerr’s service as Welltower’s Executive Vice President - Business & Relationship Management.
For a description of the provisions of the agreements regarding compensation and benefits payable upon termination or a change in corporate control, see “Potential Payments Upon Termination or Change in Corporate Control” on pages 54-57.
THOMAS J. DEROSA’S EMPLOYMENT AGREEMENT
In anticipation of the expiration of his original employment agreement and in recognition of his exemplary performance, on January 3, 2017, Welltower entered into a new employment agreement with Mr. DeRosa, which became effective on April 13, 2017, after the expiration of his prior employment agreement.
Pursuant to his amended and restated employment agreement, Mr. DeRosa will continue to serve as the Chief Executive Officer of Welltower until April 13, 2020. His initial annual base salary was set at $1,000,000, which is reviewed and adjusted each year by the Compensation Committee, together with an initial target bonus opportunity under Welltower’s annual cash bonus program equal to 175% of his annual base salary and long-term stock awards under terms and conditions determined by the Compensation Committee. The agreement also provides for Welltower to reimburse Mr. DeRosa for the reasonable costs of an annual medical exam and provide him with an automobile allowance.
JOHN A. GOODEY’S LETTER AGREEMENT & TRANSFER AGREEMENT
Welltower has entered into a letter agreement with Mr. Goodey, effective November 1, 2018, which provides, in part, that Mr. Goodey is anemployee-at-will. The agreement provides for a base salary of $600,000, which is reviewed and adjusted each year by the Compensation Committee. Mr. Goodey is also eligible to receive discretionary annual bonuses and equity awards under Welltower’s long-term incentive plans. Mr. Goodey has also entered into a separate letter agreement with Welltower, dated August 17, 2018, which provides for payment or reimbursement of certain living and relocation expenses incurred in connection with Mr. Goodey’s transfer to the United States.
| | | | | Notice of Annual Meeting of Shareholders and 2019 Proxy Statement |
| | 51 |
2021 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE 2018 Outstanding Equity Awards at FiscalYear-End Table
The table below provides information regarding outstanding equity-based awards granted to the NEOs under Welltower’s long-term incentive plans that were outstanding as of December 31, 2018.2021. | | | | | | Stock Awards | | | Stock Awards | | | Name | |
| Grant
Date |
| |
| # of Shares or Units of Stock
That Have Not Vested |
| |
| Market Value of Shares or
Units of Stock That Have Not Vested ($) |
| |
| Equity Incentive Plan Awards:
# of Unearned Shares, Units or Other Rights That Have Not Yet Vested |
| |
| Equity Incentive Plan Awards:
Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Yet Vested ($) |
| | Grant Date | | # of Shares or Units of Stock That Have Not Vested | | Market Value of Shares or Units of Stock That Have Not Vested ($) | | | Equity Incentive Plan Awards: # of Unearned Shares, Units or Other Rights That Have Not Yet Vested | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Yet Vested ($) | | | # of Shares of Stock Underlying Unexercised Options exercisable (#) | | # of Shares of Stock Underlying Unexercised Options unexercisable(8) (#) | | Option Exercise Price ($/Sh) | | Option Expiration Date | Thomas J. DeRosa | | | 2/15/18 | | | | 37,158 | | | | 2,579,137 | (1) | | | | | | | | | 5/6/16 | | | | 51,261 | | | | 3,558,026 | (2) | | | | | | | | | 2/12/16 | | | | 20,750 | | | | 1,440,258 | (3) | | | | | | | | | 8/6/15 | | | | 10,925 | | | | 758,304 | (4) | | | | | | | | | 4/13/17 | | | | | | | 188,150 | | | | 13,059,491(14) | | | | | | 2/15/18 | | | | | | | | 211,766 | | | | 14,698,678(15) | | | John A. Goodey | | | 2/15/18 | | | | 7,817 | | | | 542,578 | (1) | | | | | | | | | 10/3/17 | | | | 10,801 | | | | 749,697 | (5) | | | | | | | | | 8/1/17 | | | | 1,982 | | | | 137,571 | (6) | | | | | | | | | 2/9/17 | | | | 6,642 | | | | 461,021 | (7) | | | | | | | | | 2/12/16 | | | | 6,608 | | | | 458,661 | (8) | | | | | | | | | 2/5/15 | | | | 1,716 | | | | 119,108 | (9) | | | | | | | | | 8/1/17 | | | | | | | 6,322 | | | | 438,810(14) | | | | | | 2/15/18 | | | | | | | 38,671 | | | | 2,684,154(15) | | | Mercedes T. Kerr | | | 2/15/18 | | | | 8,044 | | | | 558,334 | (1) | | | | | | | | | 8/1/17 | | | | 5,861 | | | | 406,812 | (6) | | | | | | | | | 2/24/17 | | | | 23,249 | | | | 1,613,713 | (2) | | | | | | | | | 2/12/16 | | | | 7,252 | | | | 503,361 | (8) | | | | | | | | | 2/5/15 | | | | 1,354 | | | | 93,981 | (9) | | | | | | | | | 4/13/17 | | | | | | | 38,189 | | | | 2,650,698(14) | | | | | | 2/15/18 | | | | | | | | 39,792 | | | | 2,761,963(15) | | | Shankh Mitra | | | 2/16/21 | | 11,165 | | 957,622 | (1) | | | | | 8/9/18 | | | | 3,173 | | | | 220,238 | (1) | | | | | | 12/4/20 | | 3,651 | | 313,146 | (2) | | | | | | 2/15/18 | | | | 3,626 | | | | 251,681 | (1) | | | | | | 2/14/20 | | 11,699 | | 1,003,423 | (2) | | | | | | 2/8/18 | | | | 13,719 | | | | 952,236 | (10) | | | | | | 2/14/19 | | 4,841 | | 415,213 | (3) | | | | | | 8/1/17 | | | | 1,982 | | | | 137,571 | (6) | | | | | | 8/9/18 | | 793 | | 68,016 | (4) | | | | | | 2/9/17 | | | | 9,588 | | | | 665,503 | (7) | | | | | | 2/15/18 | | 907 | | 77,793 | (4) | | | | | | 2/12/16 | | | | 2,298 | | | | 159,504 | (8) | | | | | | 2/14/20 | | 39,115 | | 3,354,894 | (5) | | | | | | 1/4/16 | | | | 3,656 | | | | 253,763 | (11) | | | | | | 12/4/20 | | 20,125 | | 1,726,121 | (5) | | | | | | 8/1/17 | | | | | | | 6,322 | | | | 438,810(14) | | | 2/16/21 | | 82,084 | | 7,040,345 | (6) | | | | | | 2/15/18 | | | | | | | 17,937 | | | | 1,245,007(15) | | | 2/16/21 | | | | | | 8/9/18 | | | | | | | | 15,695 | | | | 1,089,390(15) | | | 2/16/21 | | 102,465 | | 67.17 | | 2/16/2031 | | | | 12/13/21 | | 246,184 | | 83.44 | | 12/13/2031 | John F. Burkart | | | 7/19/21 | | 3,210 | | 275,322 | (7) | | | | | 7/19/21 | | 6,781 | | 572,520 | (7) | | | | | | 12/31/21 | | 61,546 | | 83.44 | | 12/13/2031 | Timothy G. McHugh | | | 2/16/21 | | 8,978 | | 770,043 | (1) | | | | | 2/14/20 | | 5,850 | | 501,755 | (2) | | | | | | 9/4/19 | | 2,501 | | 214,511 | (3) | | | | | | 2/14/19 | | 727 | | 62,355 | (3) | | | | | | 2/15/18 | | 510 | | 43,743 | (4) | | | | | | 2/8/18 | | 686 | | 58,838 | (4) | | | | | | 2/14/20 | | 19,559 | | 1,677,575 | (5) | | | | | | 2/16/21 | | 32,835 | | 2,816,258 | (6) | | | | | | 2/16/21 | | 20,287 | | 67.17 | | 2/16/2031 | | | | 12/13/21 | | 123,092 | | 83.44 | | 12/13/2031 | Matthew G. McQueen | | | 2/16/21 | | 2,234 | | 191,610 | (1) | | | | | 2/15/18 | | | | 2,719 | | | | 188,726 | (1) | | | | | | 2/14/20 | | 1,872 | | 160,561 | (2) | | | | | | 2/8/18 | | | | 3,659 | | | | 253,971 | (12) | | | | | | 2/14/19 | | 1,291 | | 110,729 | (3) | | | | | | 8/1/17 | | | | 1,486 | | | | 103,143 | (6) | | | | | | 2/15/18 | | 680 | | 58,324 | (4) | | | | | | 2/9/17 | | | | 2,490 | | | | 172,831 | (7) | | | | | | 2/8/18 | | 915 | | 78,480 | (4) | | | | | | 2/12/16 | | | | 1,466 | | | | 101,755 | (8) | | | | | | 2/14/20 | | 6,260 | | 536,920 | (5) | | | | | | 3/2/15 | | | | 404 | | | | 28,042 | (13) | | | | | | 2/16/21 | | 10,946 | | 938,838 | (6) | | | | | | 8/1/17 | | | | | | | 4,742 | | | | 329,142(14) | | | 2/16/21 | | | | | | 2/15/18 | | | | | | | 13,453 | | | | 933,773(15) | | | 2/16/21 | | 10,246 | | 67.17 | | 2/16/2031 | | | | 12/13/21 | | 39,389 | | 83.44 | | 12/13/2031 |
WELLTOWER•2022 Proxy Statement 57 | | | | Stock Awards | | | | | | | | | | Name | | Grant Date | | # of Shares or Units of Stock That Have Not Vested | | Market Value of Shares or Units of Stock That Have Not Vested ($) | | | Equity Incentive Plan Awards: # of Unearned Shares, Units or Other Rights That Have Not Yet Vested | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Yet Vested ($) | | | # of Shares of Stock Underlying Unexercised Options exercisable (#) | | # of Shares of Stock Underlying Unexercised Options unexercisable(8) (#) | | Option Exercise Price ($/Sh) | | Option Expiration Date | Ayesha Menon | | 2/16/21 | | 2,234 | | 191,610 | (1) | | | | | | | | | | | | | | | 2/14/20 | | 1,404 | | 120,421 | (2) | | | | | | | | | | | | | | | | 5/13/19 | | 966 | | 82,854 | (3) | | | | | | | | | | | | | | | | 5/6/19 | | 3,948 | | 338,620 | (3) | | | | | | | | | | | | | | | | 2/14/20 | | | | | | | 4,694 | | 402,604 | (5) | | | | | | | | | | | 2/16/21 | | | | | | | 10,946 | | 938,838 | (6) | | | | | | | | | | | 2/16/21 | | | | | | | | | | | | | | | | | | | | | 2/16/21 | | | | | | | | | | | | 10,246 | | | | 67.17 | | 2/16/2031 | | | 12/13/21 | | | | | | | | | | | | 24,618 | | | | 83.44 | | 12/13/2031 |
(1) | Based on a share price of $69.41, the closing price of Weltower’s common stock on December 31, 2018. On each of January 15, 2019, 2020, 2021 and 2022,one-fourth of the time-based restricted stock units granted under the 2018-2020 Long-Term Incentive Program will vest. |
(2) | Based on a share price of $69.41,$85.77, the closing price of Welltower’s common stock on December 31, 2018. These shares2021. On each of January 15, 2022, 2023, 2024 and 2025, one-fourth of the time-based restricted stock vest on December 31, 2019 and 2020. units granted under the 2021-2023 Long-Term Incentive Program will vest. |
(3)(2) | Based on a share price of $69.41,$85.77, the closing price of Welltower’s common stock on December 31, 2018. These shares2021. On each of January 15, 2022, 2023, and 2024, one-third of the time-based restricted stock vested on January 15, 2019. units granted under the 2020-2022 Long-Term Incentive Program will vest. |
(4)(3) | Based on a share price of $69.41,$85.77, the closing price of Welltower’s common stock on December 31, 2018. These shares2021. On each of January 15, 2022, and 2023, one-half of the remaining unvested time-based restricted stock vest on December 31, 2019. units granted under the 2019-2021 Long-Term Incentive Program will vest. |
(5)(4) | Based on a share price of $69.41,$85.77, the closing price of Welltower’s common stock on December 31, 2018.2021. These shares of restricted stock vest in three equal installmentsvested on October 3, 2019, 2020 and 2021. January 15, 2022. |
(6)(5) | Based on a share price of $69.41,$85.77, the closing price of Welltower’s common stock on December 31, 2018. These shares of restricted stock vest on December 31, 2019. |
(7) | Based on a share price of $69.41, the closing price of Welltower’s common stock on December 31, 2018. These shares of restricted stock vest in three equal installments on January 15, 2019, 2020 and 2021.
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(8) | Based on a share price of $69.41, the closing price of Weltower’s common stock on December 31, 2018. These shares of restricted stock vest in two equal installments on January 15, 2019 and 2020.
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(9) | Based on a share price of $69.41, the closing price of Welltower’s common stock on December 31, 2018. These shares of restricted stock vested on January 15, 2019.
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| | | | | | | Executive Compensation | | | | | | |
(10) | Based on a share price of $69.41, the closing price of Welltower’s common stock on December 31, 2018. On each of January 15, 2019, 2020 and 2021,one-third of the shares of restricted stock vest.
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(11) | Based on a share price of $69.41, the closing price of Welltower’s common stock on December 31, 2018. These shares of restricted stock vested on January 4, 2019.
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(12) | Based on a share price of $69.41, the closing price of Welltower’s common stock on December 31, 2018. On each of January 15, 2019, 2020, 2021 and 2022one-fourth of the shares of restricted stock vest.
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(13) | Based on a share price of $69.41, the closing price of Welltower’s common stock on December 31, 2018. These shares of restricted stock vested on March 2, 2019.
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(14) | Based on a share price of $69.41, the closing price of Welltower’s common stock on December 31, 2018. The number and market or payout value of the performance-based awards under the 2017-20192020-2022 Long-Term Incentive Program isare based on highthreshold performance because corporate performance in the second year of the three-year performance period exceeded target performance.was below threshold. See page 4147 for additional information regarding the 2017-20192020-2022 program.
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(15)(6) | Based on a share price of $69.41,$85.77, the closing price of Welltower’s common stock on December 31, 2018.2021. The number and market or payout value of the performance-based awards under the 2018-20202021-2023 Long-Term Incentive Program isare based on highthreshold performance because corporate performance in the first year of the three-year performance period exceeded target performance.was below threshold. See pages 40-4145-47 for additional information regarding the 2018-20202021-2023 program. | (7) | Based on a share price of $84.43, the closing price of Welltower’s common stock on July 19, 2021, Mr. Burkart’s hire date. The number and market or payout value of the performance based awards under the 2021-2023 Long-Term Incentive Program are based on threshold performance because corporate performance in the first year of the three-year performance period was below threshold. See pages 45-47 for additional information regarding the 2021-2023 program. | (8) | Represents time-based stock options granted under the 2021-2023 Long-Term Incentive Program on February 16, 2021. The stock options vest and become exerciable in four equal installments on January 15, 2022, 2023, 2024 and 2025. |
WELLTOWER•2022 Proxy Statement 58 2018 Option Exercises and Stock Vested Table2021 OPTION EXERCISES AND STOCK VESTED TABLE
The table below provides information regarding the dollar amounts realized pursuant to the vesting or exercise of equity-based awards during 20182021 for the NEOs. | | | Option Awards | | | Stock Awards | | | Option Awards | | Stock Awards | Name | |
| # of Shares
Acquired on Exercise |
| |
| Value Realized
Upon Exercise ($) |
| |
| # of Shares
Acquired on Vesting |
| |
| Value Realized
on Vesting ($) |
| | # of Shares Acquired on Exercise | | Value Realized Upon Exercise ($) | | # of Shares Acquired on Vesting | | Value Realized on Vesting ($) | Thomas J. DeRosa | | | — | | | | — | | | | 43,583 | | | | 4,711,577 | | | John A. Goodey | | | — | | | | — | | | | 6,064 | | | | 679,915 | | | Mercedes T. Kerr | | | 4,342 | | | | 94,745 | | | | 4,591 | | | | 444,942 | | | Shankh Mitra | | | — | | | | — | | | | 8,631 | | | | 600,075 | | | — | | — | | 39,297 | | 2,590,218 | John F. Burkart | | | — | | — | | — | | — | Timothy G. McHugh | | | — | | — | | 8,391 | | 545,786 | Matthew G. McQueen | | | — | | | | — | | | | 1,230 | | | | 113,969 | | | — | | — | | 13,492 | | 893,340 | Ayesha Menon | | | — | | — | | 2,267 | | 145,655 |
2018 Nonqualified Deferred Compensation TablePOTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CORPORATE CONTROL
In connection
Employment Agreements Welltower does not have employment agreements with Mr. DeRosa’s appointment asBurkart, Mr. McHugh, Mr. McQueen or Ms. Menon. Welltower’s policy is not to enter into any employment agreements in the future with any employee other than the Chief Executive Officer. Employment Agreement with Shankh Mitra On May 19, 2021, Welltower entered into an employment agreement with Shankh Mitra, its Chief Executive Officer in 2014, he was granted 15,618 performance-based restricted stock units pursuant to a performance-based restricted stock unit grant agreement. In 2015, the Compensation Committee determined that Mr. DeRosa had met the performance vesting criteria for these performance-based restricted stock units because he and Welltower satisfied certain performance conditions during theone-year performance period ending April 12, 2015.One-third of the performance-based restricted stock units vested on May 6, 2015;one-third vested on April 13, 2016; andone-third vested on April 13, 2017. Under the terms of the grant agreement, settlement of the award was automatically deferred until the earliest of Mr. DeRosa’s “separation from service” (as defined under Section 409A of the Code), his death or a change in control of Welltower. The performance-based restricted stock units will be paid in shares of common stock on aone-for-one basis. The table below sets forth the aggregate value, as of December 31, 2018, of the performance-based restricted stock units that were vested and deferred as of December 31, 2018.(the “Employment Agreement”). | | | | | | | | | | | | | | | | | | | | | Name | |
| Executive
Contributions
in Last FY
|
| |
| Registrant
Contributions
in Last FY
|
| |
| Aggregate
Earnings in
Last FY
|
| |
| Aggregate
Withdrawals/
Distributions
|
| |
| Aggregate
Balance at
Last FY
|
| Thomas J. DeRosa
| | | —
| (1)
| | | —
| | | $
| 139,955.52
| (2)
| | | —
| | | $
| 1,065,166(3)
| |
(1) | All contributions were vested as of April 13, 2017. There were no contributions in the fiscal year ended December 31, 2018. Settlement of these units is mandatorily deferred pursuant to the terms of the award.
|
(2) | Consists of: (a) $18,117 of accrued dividends on 5,206 units that vested on May 6, 2015; (b) $17,654 of accrued dividends on 5,073 units that vested on April 13, 2016 (5,206 units less 133 units withheld upon vesting to satisfy tax obligation); (c) $17,633 of accrued dividends on 5,067 units that vested on April 13, 2017 (5,206 units less 139 units withheld upon vesting to satisfy tax withholding obligations) from the vesting date to December 31, 2017; and (d) a $86,551 increase in the value of the units (calculated by subtracting the value of the units at December 31, 2017 ($63.77 per share) from the value of the units at December 31, 2018 ($69.41)).
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(3) | Based on a share price of $69.41, the closing price of Welltower’s common stock on December 31, 2018.
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| | | | | | | | | | | | | Executive Compensation |
Potential Payments Upon TerminationIf Mr. Mitra’s employment is terminated by Welltower without “cause” or Change in Corporate Control
THOMAS J. DEROSA
Severance Payments and Benefits. Under his employment agreement with Welltower, if Mr. DeRosa terminates his employmenthe resigns for “good reason” (as(each as defined in his employment agreement) or is terminated without “cause” (as defined in his employment agreement)the Employment Agreement), he would receive a series of semi-monthlywill receive: (i) severance payments for 24 months. Each semi-monthly severance payment would be an amount equal toone-twenty-fourth of the sum of two times (a) his then-current annual base salary and (b) his target annual cash bonus opportunity, payable over a period of twenty-four months, (ii) a pro-rated annual bonus for the year of termination based on Welltower’s actual performance, (iii) continued COBRA coverage for so long as such coverage is elected at the timesame after-tax cost to him as if he were an active employee, (iv) full vesting of termination.all of his outstanding time-based stock awards, and (v) treatment of all of his outstanding performance stock awards in accordance with the terms and conditions under which the awards were granted, except that Mr. Mitra’s outstanding stock options will remain exercisable for a period of no less than 18 months following his termination of employment.
If Mr. DeRosa terminates hisMitra’s employment is (i) terminated by Welltower without cause or he resigns for “good reason”good reason upon or is terminated without “cause” during thewithin 24 months following a “change in corporate control” (as defined in Welltower’s 2016 Long-Term Incentive Plan) or (ii) terminated by Welltower without cause within three months of a change in corporate control or at any time prior to the occurrence of a change in corporate control at the request or direction of any person or group who obtains control of Welltower as a result of the occurrence of a change in corporate control, he will also be entitled to severance benefits. However, in such a case, (a) all of his employmentoutstanding performance stock awards will become vested based upon a determination of Welltower’s actual achievement of performance goals immediately prior to the occurrence of the change of corporate control (unless otherwise provided in the applicable award agreement) and during(b) the term of his employment agreement, he would receiveseverance payments will be paid in a lump sum severance paymentin an amount equal to the present value of a series of monthly severance payments for 36 months. Each monthly severance payment would be an amount equal toone-twelfth (1/12) of the sum of three times (1) his then-current annual base salary and (2) the average of the annual bonuses paid to Mr. DeRosahim for the last three fiscal years ending prioryears. Any severance payments or benefits only become payable if Mr. Mitra provides an effective release of claims in favor of Welltower and its affiliates and complies with a number of restrictive covenants, including a non-competition covenant, that are intended to protect the change in corporate control. If Mr. DeRosa terminates his employment for “good reason” or is terminated without “cause” (whether or not following a change in corporate control), he also would be entitled to continued coverage underbusiness of Welltower during any group health plan maintained by Welltower in which he participated at the time of his termination for the period during which he elected to receive continuation coverage under Section 4980B of the Code at anafter-tax cost to him comparable to the cost he would have incurred for the same coverage had he remained employed during such period. Mr. DeRosa also would be entitled to receive accrued but unpaid base salary and paid time off, any bonuses earned but unpaid, any nonforfeitable benefits under Welltower’s deferred compensation, incentive or other benefit plans, and any prorated portion of the annual bonus that he would have earned for the year in which the termination occurs (if he had remained employed for the entire year). If determined that payments by Welltower to Mr. DeRosa in connection with a change in corporate control would constitute “parachute payments” within the meaning of Section 280G of the Code, the amount of such payments would be the greater, on anafter-tax basis, of either the fullis receiving severance payments or a lesser amount which would result in no portionbenefits.
WELLTOWER•2022 Proxy Statement 59 Summary of such payments being subject to the excise tax imposed under Section 4999 of the Code.Potential Payments for Named Executive Officers In the event of Mr. DeRosa’s death or disability, he would be entitled to receive accrued but unpaid base salary and paid time off, any bonuses earned but unpaid, any nonforfeitable benefits under Welltower’s deferred compensation, incentive or other benefit plans, and any prorated portion of the annual bonus that he would have earned for the year in which the termination occurs (if he had remained employed for the entire year).
Shankh Mitra Vesting of Incentive Awards. Mr. DeRosa’s restricted stock and restricted stock unit awards with time-based vesting granted under Welltower’s incentive plans, except for the time-based awards granted under the 2018-2020 Long-Term Incentive Program the (the “2018-2020 LTIP”), would become fully vested in the event that Mr. DeRosa terminates his employment for “good reason,” is terminated without “cause” (whether or not following a change in corporate control), upon the expiration of the term of his employment agreement if such expiration is as a result ofnon-renewal of such agreement by Welltower or upon his death, disability or retirement.Awards The performance awards granted to Mr. DeRosaMitra under, the 2016-2018 Long-Term Incentive Program (the “2016-2018 LTIP”),2019-2021 LTIP, the 2017-2019 Long-Term Incentive Program (the “2017-2019 LTIP”)2020-2022 LTIP, and the 2018-20202021-2023 LTIP (collectively, the “LTIPs”) will be deemed earned as of the date of a change in corporate control based on the Compensation Committee’s evaluation of corporate performance relative to the performance targets as of the day prior to the change in corporate control andcontrol. In such a case, Mr. DeRosaMitra would receive a pro rata portion of the performance awards based on the number of full or partial months from the beginning of the performance period through the change in corporate control. In the event thatIf Mr. DeRosaMitra terminates his employment for “good reason,” is terminated without “cause,” upon Welltower’snon-renewal ofreason” or his employment agreement or upon his death, disability or retirement, the Compensation Committee will determine corporate performance relative to the performance targets as of the end of the calendar quarter immediately preceding the termination and Mr. DeRosa would receive a pro rata portion of the performance awards based on the number of days or months that he was employed by Welltower during the performance period. In the event of such a termination after the end of the performance period, any shares granted to Mr. DeRosa under these programs would become vested. In the event of a change in corporate control, the time restrictions applicable to the time-based awards granted to Mr. DeRosa under the 2018-2020 LTIP will lapse and such award will fully vest if (1) either the successor company does not assume, convert, continue or otherwise replace such other awards on proportionate and equitable terms or (2) Mr.DeRosa is terminated without cause within 12 months following the change in corporate control. In the event that Mr. DeRosa terminates his employment for “good reason,” is terminated without “cause” (not within 12 months following a change in corporate control), upon Welltower’snon-renewal of his employment agreement or upon his death, disability or retirement, the unvested portion of the time-based awards granted to Mr. DeRosa under the 2018-2020 LTIP will automatically terminate, be forfeited and be null and void.
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Settlement of the deferred performance-based restricted stock units will occur upon the earliest of Mr. DeRosa’s “separation from service” (as defined by Section 409A of the Code), a change in control of Welltower or his death.
Restrictive Covenants. Mr. DeRosa’s employment agreement includes confidentiality,non-competition,non-solicitation andnon-disparagement restrictive covenants.
Mr. DeRosa’s rights to receive payments or benefits under the 2016-2018 LTIP, the 2017-2019 LTIP and the 2018-2020 LTIP are subject to the execution of a release of claims in favor of Welltower upon the termination of his employment. Mr. DeRosa is also subject to confidentiality,non-competition,non-solicitation andnon-disparagement restrictive covenants under these programs.
JOHN A. GOODEY
Vesting of Incentive Awards. Mr. Goodey’s restricted stock and restricted stock unit awards with time-based vesting granted under Welltower’s incentive plans, except for the time-based awards granted under the 2018-2020 LTIP, would become fully vested in the event Mr. Goodey is terminated without cause within 12 months following a change in corporate control or upon his death, disability or retirement.
The performance awards granted to Mr. Goodey under the 2017-2019 LTIP, the 2017-2018 transition plan and the 2018-2020 LTIP will be deemed earned as of the date of a change in corporate control based on the Compensation Committee’s evaluation of corporate performance relative to the performance targets as of the day prior to the change in corporate control and Mr. Goodey would receive a pro rata portion of the performance awards based on the number of months from the beginning of the performance period through the change in corporate control. In the event that Mr. Goodey terminates his employment for “good reason,” is terminated without “cause” or upon his death, disability or retirement, the Compensation Committee will determine corporate performance relative to the performance targets as of the end of the calendar quarter immediately preceding the termination andtermination. In such a case, Mr. GoodeyMitra would receive a pro rata portion of the performance awards based on the number of days orcomplete months that he was employed by Welltower during the performance period. In the event of such a termination after the end of the performance period, any shares granted to Mr. Goodey under these programs would become vested.
In the event of a change in corporate control, the time restrictions applicable to the time-based awards granted to Mr. Goodey under the 2018-2020 LTIP will lapse and such award will fully vest if (1) either the successor company does not assume, convert, continue or otherwise replace such other awards on proportionate and equitable terms or (2) Mr.Goodey is terminated without cause within 12 months following the change in corporate control. In the event that Mr. Goodey terminates his employment for “good reason,” is terminated without “cause” (not within 12 months following a change in corporate control), or upon his death, disability or retirement, the unvested portion of the time-based awards granted to Mr. Goodey under the 2018-2020 LTIP will automatically terminate, be forfeited and become null and void.
Restrictive Covenants. Mr. Goodey’s rights to receive payments or benefits under the 2017-2019 LTIP, the 2017-2018 transition plan and the 2018-2020 LTIP are subject to the execution of a release of claims in favor of Welltower upon the termination of his employment. Mr. Goodey is also subject to confidentiality,non-competition,non-solicitation andnon-competition restrictive covenants under these programs.
Transfer Agreement. Pursuant to his transfer agreement, dated August 17, 2018, if Mr. Goodey voluntarily terminates his employment on or prior to October 22, 2020, he must repay Welltower either (1) 100% of expenses incurred or reimbursedearned by Welltower associated with his relocation, if such termination occurs within 12 months after October 22, 2019, or (2) 50% of expenses incurred or reimbursed by Welltower associated with his relocation, if such termination occurs within13-24 months after October 22, 2019.
MERCEDES T. KERR
Severance Payments and Benefits.Under her employment agreement, which expired as of January 31, 2019, had Ms. Kerr terminated her employment on December 31, 2018 for “good reason” (as defined in her employment agreement) or been terminated without “cause” (as defined in her employment agreement), she would have been entitled to a series of semi-monthly severance payments for 12 months. Each monthly severance payment would have been an amount equal toone-twenty fourth of the sum of her annual base salary and the average of annual cash bonuses paid to Ms. Kerr for the last three fiscal years ending prior to the date of termination. Ms. Kerr also would have been entitled to continued coverage under any group health plan maintained by Welltower in which she participated at the time of her termination for a period of six months, or until, if earlier, the date she obtained comparable coverage from a new employer. Ms. Kerr also would have been entitled to receive accrued but unpaid base salary and paid time off, any bonuses earned but unpaid, any nonforfeitable benefits under Welltower’s deferred compensation, incentive or other benefit plans, and any prorated portion of the annual bonus that she would have earned for the year in which the termination occurred.
If, prior to the expiration of the term of her employment agreement, Ms. Kerr had terminated her employment for “good reason” or were terminated without “cause” during the 24 months following a “change in corporate control” (as defined in her employment agreement),
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she would have received a lump sum severance payment equal to the present value of a series of monthly severance payments for 24 months. Each monthly severance payment would be an amount equal toone-twelfth of the sum of her annual base salary and the average of annual bonuses paid to Ms. Kerr for the last three fiscal years ending prior to the change in corporate control. Ms. Kerr also would have been entitled to continued coverage under any group health plan maintained by Welltower in which Ms. Kerr participated at the time of her termination for the remainder of the term of her employment agreement or until, if earlier, the date she obtained comparable coverage from a new employer or otherwise became ineligible to such continued coverage under COBRA. Ms. Kerr also would have been entitled to receive accrued but unpaid base salary and paid time off, any bonuses earned but unpaid, any nonforfeitable benefits under Welltower’s deferred compensation, incentive or other benefit plans, and any prorated portion of the target annual bonus that she would have earned for the year in which the termination occurred. If it were determined that any payments or distributions by Welltower to Ms. Kerr in connection with a change in corporate control would constitute “parachute payments” within the meaning of Section 280G of the Code, the amount of such payments would be the greater, on anafter-tax basis, of either the full payments or a lesser amount which would result in no portion of such payments being subject to the excise tax imposed under Section 4999 of the Code. If, prior to the expiration of the term of her employment agreement, Ms. Kerr voluntarily terminated her employment, were terminated for “cause” or was terminated as a result of the expiration of the term of her employment agreement, she would be entitled to accrued but unpaid base salary and paid time off, any bonuses earned but unpaid and any nonforfeitable benefits under Welltower’s deferred compensation, incentive or other benefit plans.
Under the terms of her prior employment agreement, upon Ms. Kerr’s death or disability, she would have been entitled to accrued but unpaid base salary and paid time off, any bonuses earned but unpaid, any nonforfeitable benefits under Welltower’s deferred compensation, incentive or other benefit plans and any prorated portion of the annual bonus that she would have earned for the year in which the termination occurs.
Vesting of Incentive Awards. Ms. Kerr’s restricted stock and restricted stock unit awards with time-based vesting granted under Welltower’s incentive plans, except for the time-based awards granted under the 2018-2020 LTIP, would become fully vested in the event that Ms. Kerr terminates her employment for “good reason,” is terminated without “cause” (whether or not following a change in corporate control) (per the terms of her now expired employment agreement), is terminated without cause within 12 months following a change in control or upon her death, disability or retirement.
The performance awards granted to Ms. Kerr under the 2016-2018 LTIP, the 2017-2019 LTIP, the 2017-2018 transition plan and the 2018-2020 LTIP will be deemed earned as of the date of a change in corporate control based on the Compensation Committee’s evaluation of corporate performance relative to the performance targets as of the day prior to the change in corporate control and Ms. Kerr would receive a pro rata portion of the performance awards based on the number of months from the beginning of the performance period through the change in corporate control. In the event that Ms. Kerr terminates her employment for “good reason,” is terminated without “cause” or upon her death, disability or retirement, the Compensation Committee will determine corporate performance relative to the performance targets as of the end of the calendar quarter immediately preceding the termination and Ms. Kerr would receive a pro rata portion of the performance awards based on the number of days or months that she was employed by Welltower during the performance period. In the event of such a termination after the end of the performance period, any shares granted to Ms. Kerr under these programs would become vested.
In the event of a change in corporate control, the time restrictions applicable to the time-based awards granted to Ms. Kerr under the 2018-2020 LTIP will lapse and such award will fully vest if (1) either the successor company does not assume, convert, continue or otherwise replace such other awards on proportionate and equitable terms or (2) Ms. Kerr is terminated without cause within 12 months following the change in corporate control. In the event that Ms. Kerr terminates her employment for “good reason,” is terminated without “cause” (not within 12 months following a change in corporate control) or upon her death, disability or retirement, the unvested portion of the time-based awards granted to Ms. Kerr under the 2018-2020 LTIP will automatically terminate, be forfeited and become null and void.
Restrictive Covenants. Ms. Kerr’s rights to receive payments or benefits under the 2016-2018 LTIP, the 2017-2019 LTIP, the 2017-2018 transition plan and the 2018-2020 LTIP are subject to the execution of a release of claims in favor of Welltower upon the termination of her employment. Ms. Kerr is also subject to confidentiality,non-competition,non-solicitation andnon-disparagement restrictive covenants under these programs.
SHANKH MITRA
Vesting of Incentive Awards. Mr. Mitra’s restricted stock and restricted stock units awards with time-based vesting granted under Welltower’s incentive plans, except for the time-based awards granted under the 2018-2020 LTIP, would become fully vested in the event Mr. Mitra is terminated without cause within 12 months following a change in corporate control or upon his death, disability or retirement.
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The performance awards granted to Mr. Mitra under the 2017-2019 LTIP, the 2017-2018 transition plan and the 2018-2020 LTIP will be deemed earned as of the date of a change in corporate control based on the Compensation Committee’s evaluation of corporate performance relative to the performance targets as of the day prior to the change in corporate control and Mr. Mitra would receive a pro rata portion of the performance awards based on the number of months from the beginning of the performance period through the change in corporate control. In the event that Mr. Mitra terminates his employment for “good reason,” is terminated without “cause” or upon his death, disability or retirement, the Compensation Committee will determine corporate performance relative to the performance targets as of the end of the calendar quarter immediately preceding the termination and Mr. Mitra would receive a pro rata portion of the performance awards based on the number of days or months that he was employed by Welltower during the performance period. In the event of such a termination after the end of the performance period, any shares granted to Mr. Mitra under these programs would become vested.
In the event of a change in corporate control, the time restrictions applicable to the time-based awards granted to Mr. Mitra under the 2018-2020 LTIPLTIPs will lapse and such awardall outstanding time-based awards will fully vest if (1) either the successor company does not assume, convert, continue or otherwise replace such other awards on proportionate and equitable terms or (2) Mr. Mitra is terminated without cause within 12 months following the change in corporate control. In the event thatIf Mr. Mitra terminates his employment for “good reason,” his employment is terminated without “cause” (not within 12 months following a change in corporate control) or upon his death, disability or retirement, the unvested portion of the time-based awards granted to Mr. Mitra under the 2018-2020 LTIP will automatically terminate, be forfeited, and become null and void.
Restrictive Covenants.Covenants Mr. Mitra’s rights to receive payments or benefits under the 2017-2019 LTIP, the 2017-2018 transition plan and 2018-2020 LTIPLTIPs are subject to the execution of a release of claims in favor of Welltower upon the termination of his employment. Mr. Mitra is also subject to confidentiality,non-competition,non-solicitation andnon-disparagement restrictive covenants under these programs. MATTHEW G. MCQUEEN
Other Named Executive Officers (Messrs. Burkart, McHugh, and McQueen, and Ms. Menon) Vesting of Incentive Awards. Mr. McQueen’s restricted stock and restricted stock unit awards with time-based vesting granted under Welltower’s incentive plans, except for the time-based awards granted under the 2018-2020 LTIP, would become fully vested in the event Mr. McQueen is terminated without cause within 12 months following a change in corporate control or upon his death, disability or retirement.Awards The performance awards granted to Mr. McQueenthe executive under the 2017-2019 LTIP, the 2017-2018 transition plan and the 2018-2020 LTIPLTIPs in which he or she is a participant will be deemed earned as of the date of a change in corporate control based on the Compensation Committee’s evaluation of corporate performance relative to the performance targets as of the day prior to the change in corporate control and Mr. McQueencontrol. In such case, the executive would receive a pro rata portion of the performance awards based on the number of full or partial months from the beginning of the performance period through the change in corporate control. InIf the event that Mr. McQueenexecutive terminates his or her employment for “good reason,” or his or her employment is terminated without “cause” or upon his or her death, disability or retirement, the Compensation Committee will determine corporate performance relative to the performance targets as of the end of the calendar quarter immediately preceding the termination and Mr. McQueentermination. In such case, the executive would receive a pro rata portion of the performance awards based on the number of days orcomplete months that he or she was employed by Welltower during the performance period. In the event of such a termination after the end of the performance period, any shares granted to Mr. McQueenearned by the executive under these programs would become vested. In the event of a change in corporate control, the time restrictions applicable to the time-based awards granted to Mr. McQueenthe executive under each of the 2018-2020 LTIPLTIPs in which he or she is a participant will lapse and such awardall outstanding time-based awards will fully vest if (1) either the successor company does not assume, convert, continue or otherwise replace such other awards on proportionate and equitable terms or (2) Mr. McQueenthe executive is terminated without cause within 12 months following the change in corporate control. InIf the event that Mr. McQueenexecutive terminates his or her employment for “good reason,” his or her employment is terminated without “cause” (not within 12 months following a change in corporate control), or upon his death, disability or retirement, the unvested portion of the time-based awards granted to Mr. McQueen under the 2018-2020 LTIPexecutive will automatically terminate, be forfeited, and become null and void.
Restrictive Covenants. Mr. McQueen’sCovenants The executive’s rights to receive payments or benefits under the 2017-2019 LTIP, the 2017-2018 transition plan and the 2018-2020 LTIPLTIPs in which he or she is a participant are subject to the execution of a release of claims in favor of Welltower upon the termination of his or her employment. Mr. McQueenThe executive is also subject to confidentiality,non-competition,non-solicitation andnon-disparagement restrictive covenants under these programs. WELLTOWER•2022 Proxy Statement 60 | | | | | Notice of Annual Meeting of Shareholders and 2019 Proxy Statement |
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Quantification of Benefits The table below reflects estimates of the amounts of compensation that would be paid to the NEOs in the event of their termination. The amounts assume that such termination was effectivethey were terminated as of December 31, 2018.2021. The actual amounts to be paid to a NEO can only be determined at the time of such executive’s separation from Welltower. | | | | | | | | | | | | | | | | | Name/Type of Termination(1) | | Cash Severance ($)(2) | | | Continued Benefits ($)(3) | | | Accelerated Vesting of Unvested Equity Compensation ($)(4) | | | Total ($) | | Thomas J. DeRosa | | | | | | | | | | | | | | | | | For Cause or Resignation without Good Reason | | | — | | | | — | | | | — | | | | — | | Death or Disability | | | — | | | | — | | | | 13,281,814 | | | | 13,281,814 | | Involuntary Termination without Cause or Resignation for Good Reason | | | 9,520,000 | | | | 24,484 | | | | 13,281,814 | | | | 22,826,298 | | Involuntary Termination without Cause or Resignation following a Change in Corporate Control | | | 10,976,480 | | | | 24,484 | | | | 23,177,176 | | | | 34,178,141 | | Non-Renewal of the Employment Agreement by Welltower | | | — | | | | — | | | | 13,281,814 | | | | 13,281,814 | | John A. Goodey | | | | | | | | | | | | | | | | | For Cause or Resignation without Good Reason | | | — | | | | — | | | | — | | | | — | | Death or Disability | | | — | | | | — | | | | 2,734,951 | | | | 2,734,951 | | Involuntary Termination without Cause or Resignation for Good Reason | | | 1,033,429 | | | | 9,793 | | | | 2,734,951 | | | | 3,778,173 | | Involuntary Termination without Cause or Resignation following a Change in Corporate Control | | | 2,066,858 | | | | 9,793 | | | | 4,570,455 | | | | 6,647,106 | | Mercedes T. Kerr | | | | | | | | | | | | | | | | | For Cause or Resignation without Good Reason | | | — | | | | — | | | | — | | | | — | | Death or Disability | | | — | | | | — | | | | 3,774,978 | | | | 3,774,978 | | Involuntary Termination without Cause or Resignation for Good Reason | | | 1,932,764 | | | | 9,696 | | | | 3,774,978 | | | | 5,717,437 | | Involuntary Termination without Cause or Resignation following a Change in Corporate Control | | | 2,879,907 | | | | 1,616 | | | | 6,842,749 | | | | 9,724,272 | | Non-Renewal of the Employment Agreement by Welltower | | | — | | | | — | | | | 3,774,978 | | | | 3,774,978 | | Shankh Mitra | | | | | | | | | | | | | | | | | For Cause or Resignation without Good Reason | | | — | | | | — | | | | — | | | | — | | Death or Disability | | | — | | | | — | | | | 1,693,731 | | | | 1,693,731 | | Involuntary Termination without Cause or Resignation for Good Reason | | | 921,446 | | | | 9,793 | | | | 1,693,731 | | | | 2,624,970 | | Involuntary Termination without Cause or Resignation following a Change in Corporate Control | | | 1,842,891 | | | | 9,793 | | | | 3,303,098 | | | | 5,155,782 | | Matthew G. McQueen | | | | | | | | | | | | | | | | | For Cause or Resignation without Good Reason | | | — | | | | — | | | | — | | | | — | | Death or Disability | | | — | | | | — | | | | 568,764 | | | | 568,764 | | Involuntary Termination without Cause or Resignation for Good Reason | | | 611,596 | | | | 8,267 | | | | 568,764 | | | | 1,188,627 | | Involuntary Termination without Cause or Resignation following a Change in Corporate Control | | | 1,223,192 | | | | 8,267 | | | | 1,378,719 | | | | 2,610,178 | |
Name/Type of Termination | | Cash Severance ($)(1) | | Continued Benefits ($)(2) | | Accelerated Vesting of Unvested Equity Compensation ($)(3) | | 280G Cutback(4) | | Total ($) | Shankh Mitra | | | | | | | | | | | For Cause or Resignation without Good Reason | | — | | — | | — | | — | | — | Death or Disability | | 3,920,000 | | — | | 11,207,565 | | — | | 15,127,565 | Involuntary Termination without Cause or Resignation for Good Reason | | 9,920,000 | | 34,940 | | 11,207,565 | | — | | 21,162,505 | Involuntary Termination without Cause or Resignation following a Change in Corporate Control | | 12,567,141 | | 34,940 | | 13,707,522 | | — | | 26,309,603 | John F. Burkart | | | | | | | | | | | For Cause or Resignation without Good Reason | | — | | — | | — | | — | | — | Death or Disability | | — | | — | | 261,341 | | — | | 261,341 | Involuntary Termination without Cause or Resignation for Good Reason | | 1,350,000 | | 21,134 | | 261,341 | | — | | 1,632,475 | Involuntary Termination without Cause or Resignation following a Change in Corporate Control | | 3,987,923 | | 22,215 | | 563,761 | | — | | 4,573,899 | Timothy G. McHugh | | | | | | | | | | | For Cause or Resignation without Good Reason | | — | | — | | — | | — | | — | Death or Disability | | — | | — | | 4,972,173 | | — | | 4,972,173 | Involuntary Termination without Cause or Resignation for Good Reason | | 1,500,000 | | 20,502 | | 4,972,173 | | — | | 6,492,675 | Involuntary Termination without Cause or Resignation following a Change in Corporate Control | | 3,720,222 | | 30,753 | | 5,927,247 | | — | | 9,678,222 | Matthew G. McQueen | | | | | | | | | | | For Cause or Resignation without Good Reason | | — | | — | | — | | — | | — | Death or Disability | | — | | — | | 1,778,699 | | — | | 1,778,699 | Involuntary Termination without Cause or Resignation for Good Reason | | 1,100,000 | | 21,134 | | 1,778,699 | | — | | 2,899,833 | Involuntary Termination without Cause or Resignation following a Change in Corporate Control | | 2,603,940 | | 31,702 | | 2,164,232 | | (44,986) | | 4,754,888 | Ayesha Menon | | | | | | | | | | | For Cause or Resignation without Good Reason | | — | | — | | — | | — | | — | Death or Disability | | — | | — | | 1,376,266 | | — | | 1,376,266 | Involuntary Termination without Cause or Resignation for Good Reason | | 1,100,000 | | 2,162 | | 1,376,266 | | — | | 2,478,428 | Involuntary Termination without Cause or Resignation following a Change in Corporate Control | | 2,479,061 | | 3,243 | | 2,065,745 | | — | | 4,548,049 |
(1) | Mr. DeRosa’s employment agreement does not expire until April 13, 2020. For purposes of this table, Welltower assumed that Mr. DeRosa’s employment was terminated as of December 31, 2018. Ms. Kerr’s employment agreement was in effect as of December 31, 2018, and the amounts in this table assume a termination as of such date. Welltower is no longer party to an employment agreement with Ms. Kerr and her employment may be terminated at any time by Welltower. Welltower does and did not have employment agreements with Mr. Mitra and Mr. McQueen, and Mr. Goodey’s employment may be terminated at any time by Mr. Goodey or Welltower.
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| Under the employment agreement for Mr. DeRosa,Mitra, he would be entitled to: (a) on a qualifying change of control termination, a lump sum severance payment equal to the present value of a series of 36 monthly severance payments, calculated using a discount rate equal to the90-day treasury rate; or (b) on a termination without cause or for good reason, a series of 24 semi-monthly severance payments. The monthly payment used to calculate the lump sum is equal to 1/12 of the sum of his base salary plus the average of annual bonuses paid for the last three fiscal years and each semi-monthly payment is 1/24 of the sum of his base salary plus the target annual cash bonus opportunity. Under her employment agreement as in effect on December 31, 2018, Ms. Kerr would have been entitled to: (a) on a qualifying change of control termination, a lump sum severance payment equal to the present value of a series of 24 monthly severance payments, calculated using a discount rate equal to the90-day treasury rate; or (b) on a termination without cause or for good reason, a series of 12 semi-monthly severance payments. The monthly payment used to calculate the lump sum is equal to 1/12 of the sum of her base salary plus the average of annual bonuses paid for the last three fiscal years and each semi-monthly payment is 1/24 of the sum of her annual base salary and the average of annual cash bonuses paid for the last three fiscal years. For both executives, thisThis amount also includes the value of theirhis actual 20182021 annual bonus as eachMr. Mitra would be entitled to a pro rata annual bonus for the year of termination in the case of a termination without cause, a resignation for good reason, or a termination due to death or disability, and (b) the target amount of their 2018his 2021 annual bonus as eachMr. Mitra he would be entitled to a pro rata amount of theirhis target bonus for the year of termination in the case of a qualifying change of control termination. |
| Welltower does not have an employment agreement with Mr. Mitra orMcHugh, Mr. McQueen, and Mr. Goodey’s employment agreement does not provide cash severance benefits.Burkart or Ms. Menon. For Mr. Goodey,McHugh, Mr. MitraMcQueen, Mr. Burkart and Mr. McQueen,Ms. Menon, the amounts in this column represent a reasonable estimate based on (a) a lump sum severance payment, on a qualifying change of control termination, equal to the present value of a series of 24 monthly severance payments calculated using a discount rate equal to the90-day treasury rate or (b) a series of 12 semi-monthly severance payments, on a termination without cause or for good reason. For each of Mr. Goodey, Mr. Mitra and Mr. McQueen, the monthly payment used to calculate the lump sum is equal to 1/12 of the sum of his or her base salary plus the average of annual bonuses paid for the last three fiscal years and eachcalculated using a discount rate equal to the 90-day treasury rate or |
WELLTOWER•2022 Proxy Statement 61 | (b) a series of 12 semi-monthly payment isseverance payments equal to 1/24 of the sum of his base salary plus the target annual cash bonus opportunity. The three-year average of annual bonuses paidbonus for the last three years.severance calculation is based on Mr. Burkart’s 2021 annualized bonus. |
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| The amounts for reflected in the table above for an Involuntary Termination without Cause or Resignation following a Change in Corporate Control represent the discounted present value of the monthly payments assuming a 2.45% annual discount rate (thethe 90-day treasury rate as of December 31, 2018,2021, the assumed date of termination) (except for Mr. DeRosa and Ms. Kerr’s cash severance upon an Involuntary Termination without Cause or Resignation for Good Reason). The amounts payable upon an involuntary termination or resignation for good reason following a change in control have also been reduced for each executive other than Mr. Goodey, as each such executive would have been subject to a cutback under either (a) the “bestafter-tax” provisions of their employment agreements as in effect on December 31, 2018 for Mr. De Rosa and Ms. Kerr, or (2) under Welltower’s anticipated severance practices for the other executives. termination. |
| Under the employment agreement for Mr. DeRosa,Mitra, he would be entitled to continued coverage at Welltower’s expense under any group health plan in which he participated at the time of involuntary termination without cause or voluntary termination by him for good reason (whether or not in connection with a change in control). for the period during which he elects to receive continuation coverage under Section 4980B of the Code at anafter-tax cost comparable to the cost that Mr. DeRosaMitra would have incurred for the same coverage had he remained employed during such period. The monthly cost of such benefits is estimated using the current monthly costs. | | For purposes of the calculations, we have assumed that Mr. DeRosaMitra will elect to receive continuation coverage for 18 months. |
| Under her employment agreement as in effect on December 31, 2018, Ms. Kerr would have been entitled to: (a) up to six months of continued coverage on an involuntary termination without cause or resignation for good reason and (b) coverage through the January 31, 2019 expiration of her employment agreement upon a qualifying change of control termination. Welltower does and did not have an employment agreement with Mr. McHugh, Mr. Mitra or Mr. McQueen, and Mr. Goodey’s employment agreement does not provide for continued benefits.McQueen. For each of Mr. Goodey,McHugh, Mr. Mitra and Mr. McQueen, the amounts in this column represent a reasonable estimate based on continued coverage at Welltower’s expense under any group health plan in which he participated at the time of involuntary termination without cause or voluntary termination by him for good reason (whether or notfor twelve months (eighteen months when in connection with a change inof control) for six months at anafter-tax cost comparable to the cost that he would have incurred for the same coverage had he remained employed during such period.. The monthly cost of such benefits is estimated using the current monthly costs.
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(4)(3) | Accelerated Vesting of Unvested Equity Compensation
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| Under the employment agreement for Mr. DeRosa and the employment agreement with Ms. Kerr that was in effect as of December 31, 2018, upon involuntary termination without cause or voluntary termination for good reason by Mr. DeRosa or Ms. Kerr, all unvested time-based restricted stock would become fully vested, except for the time-based awards granted under the 2018-2020 LTIP. The numbers in this column represent the full value of unvested restricted stock and restricted stock unit awards as of December 31, 2018 (the assumed termination date) where vesting would be accelerated upon termination under these scenarios. Mr. Goodey, Mr. Mitra and Mr. McQueen’s restricted stock and restricted stock unit awards with time-based vesting granted under Welltower’s incentive plans, except for the time-based awards granted under the 2018-2020 LTIP, would become vested in the event they were terminated without cause within 12 months following a change in corporate control or upon their retirement. Each executive’s time-based restricted stock and restricted stock unit awards would become vested in the case of death or disability, except for the time-based awards granted under the 2018-2020 LTIP.
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| For performance awards granted under the 2016-20182019-2021 LTIP, in the event that Mr. DeRosa or Ms. Kerrthe executive terminates his or her employment for good reason, is terminated without cause, uponthe non-renewal of his or her employment agreement by Welltower or upon his or her death, disability or retirement, the Compensation Committee will determine corporate performance relative to the performance targets as of the end of the calendar quarter immediately preceding the termination and such executive would receive a pro rata portion of the performance awards based on the number of complete months that he or she was an employee of Welltower during the performance period. As of December 31, 2018,2021, the performance period had been completed, so if such a termination occurred on December 31, 20182021 and the Compensation Committee determined that an award was earned, Mr. DeRosa and Ms. Kerrthe executive would receive all100% of the earned award. In the event of a change in corporate control, the Compensation Committee will evaluate corporate performance relative to the performance targets as of the day prior to the change in corporate control to determine any award earned by each executive at the time of the change in corporate control. The calculations included in this table for the performance awards are based on targetactual achievement of the performance metrics during the completed portion of the performance period. Note that these amounts are different thanfrom Welltower’s compensation expense for granting these awards and no portion of the awards will be deemed earned until after the Compensation Committee makes such a determination (either after completion of the performance period or in connection with an executive’s termination or a change in corporate control). |
| For performance awards granted under the 2017-2018 transition plan,2020-2022 LTIP, in the event that Mr. Goodey, Ms. Kerr, Mr. Mitra or Mr. McQueenthe executive terminates his or her employment for good reason, is terminated without cause, upon thenon-renewal of her employment agreement by Welltower (only with respect to Ms. Kerr) or upon his or her death, disability or retirement, the Compensation Committee will determine corporate performance relative to the performance targets as of the end of the calendar quarter immediately preceding the termination and such executive would receive a pro rata portion of the performance awards based on the number of complete months that he or she was an employee of Welltower during the performance period. As of December 31, 2018,2021, two-thirds of the performance period had been completed, so if such a termination occurred on December 31, 20182021 and the Compensation Committee determined that an award was earned, the executivesexecutive would receive alltwo-thirds of the earned award.prorated award earned. In the event of a change in corporate control, the Compensation Committee will evaluate corporate performance relative to the performance targets as of the day prior to the change in corporate control to determine any award earned by each executive at the time of the change in corporate control. The calculations included in this table for the performance awards are based on targetactual achievement of the performance metrics during the completed portion of the performance period. Note that these amounts are different thanfrom Welltower’s compensation expense for granting these awards and no portion of the awards will be deemed earned until after the Compensation Committee makes such a determination (either after completion of the performance period or in connection with an executive’s termination or a change in corporate control). |
| For performance awards granted under the 2017-20192021-2023 LTIP, in the event the executive terminates his or her employment for good reason, is terminated without cause, upon thenon-renewal of his or her employment agreement by Welltower (only with respect to Mr. DeRosa and Ms. Kerr) or upon his or her death, disability or retirement, the Compensation Committee will determine corporate performance relative to the performance targets as of the end of the calendar quarter immediately preceding the termination and such executive would receive a pro rata portion of the performance awards based on the number of dayscomplete months that he or she was an employee of Welltower during the performance period. As of December 31, 2018,two-thirds2021, one-third of the performance period had been completed, so if such a termination occurred on December 31, 20182021 and the Compensation Committee determined that an award was earned, the executive would receivetwo-thirds one-third of the earned award.prorated award earned. In the event of a change in corporate control, the Compensation Committee will evaluate corporate performance relative to the performance targets as of the day prior to the change in corporate control to determine any award earned by each executive at the time of the change in corporate control. The calculations included in this table for the performance awards are based on targetactual achievement of the performance metrics during the completed portion of the performance period. Note that these amounts are different thanfrom Welltower’s compensation expense for granting these awards and no portion of the awards will be deemed earned until after the Compensation Committee makes such a determination (either after completion of the performance period or in connection with an executive’s termination or a change in corporate control). |
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| | | | | | | | | | | | | Executive Compensation |
| For performancetime-based awards granted under the 2018-2020 LTIP,annual LTIPs, in the event the executive terminates his or her employment for good reason, is terminated without cause, upon thenon-renewal of his or her employment agreement by Welltower (only with respect to Mr. DeRosa and Mr. Kerr) or upon his or her death, disability or retirement, the Compensation Committee will determine corporate performance relative to the performance targets as of the end of the calendar quarter immediately preceding the termination and such executive would receive a pro rataunvested portion of the performancetime-based awards based on the number of days that he or she was an employee of Welltower during the performance period. As of December 31, 2018,one-third of the performance period had been completed, so if such a termination occurred on December 31, 2018 and the Compensation Committee determined that an award was earned,granted to the executive would receiveone-third of the earned award. In the event of a change in corporate control, the Compensation Committee will evaluate corporate performance relative to the performance targets as of the day prior to the change in corporate control to determine any award earned by each executive at the time of the change in corporate control. The calculations included in this table for the performance awards are based on target achievement of the performance metrics during the completed portion of the performance period. Note that these amounts are different than Welltower’s compensation expense for granting these awardsautomatically terminate, be forfeited and no portion of the awards will be deemed earned until after the Compensation Committee makes such a determination (either after completion of the performance period or in connection with an executive’s termination or a change in corporate control). null and void. |
| For time-based awards granted under the 2018-2020 LTIP,annual LTIPs, in the event the executive terminates his or her employment for good reason, is terminated without cause upon thenon-renewal of his or her employment agreement by Welltower (only with respect to Mr. DeRosa and Ms. Kerr) or upon his or her death, disability or retirement, the unvested portion of the time-based awards granted to the executive under the 2018-2020 LTIPLTIPs will automatically terminate, be forfeited and be null and void. Under Mr. Mitra’s employment agreement, notwithstanding any language to the contrary in the long-term incentive plan, and any other plans, or the applicable award agreement, all time-based awards fully vest in the event of his resignation for good reason or termination without cause. In the event of a change in corporate control, the time restrictions applicable to the time-based awards granted to the executive under the 2018-2020 LTIPLTIPs would lapse and such award would fully vest if (a) either the successor company does not assume, convert, continue or otherwise replace such other awards on proportionate and equitable terms or (b) the executive is terminated without cause within 12 months following the change in corporate control. In addition, under his employment agreement, Mr. Mitra is entitled to full vesting of his time-based awards granted under the LTIPs if his employment is terminated without cause or he resigns for good reason within 24 months following the change in corporate control. |
| For the 2021 Special Stock Options, in the event the executive terminates his or her employment for good reason, is terminated without cause, or upon his or her death, disability or retirement, any unvested stock options will automatically terminate, be forfeited and be null and void. In the event of a change in corporate control, any stock options outstanding as of the date of the change in corporate control, shall immediately vest and become fully exercisable if (a) either the successor company does not assume, convert, continue or otherwise replace such other awards on proportionate and equitable terms (b) the executive is terminated without cause within 12 months following the change in corporate control. | | The assumed share price upon each termination scenario is $69.41,$85.77, which was the closing price of Welltower’s common stock as of December 31, 2021. The assumed per share value of the stock options is (a) $85.77, the closing price as of December 31, 2018. |
| | 2021, less (b) the exercise price per share of such stock option. | (4) | | 60 | | | NoticeRepresents the amount by which any amounts payable upon an involuntary termination or resignation for good reason following a change in control would be reduced for each executive subject to a cutback under either (a) the “best after-tax” provisions of Annual Meeting of Shareholders and 2019 Proxy Statement |
| | | | | | | Executive Compensation | | | | | | their employment agreements as in effect on December 31, 2021 for Mr. Mitra, or (b) under Welltower’s anticipated severance practices for the other executives. |
WELLTOWER•2022 Proxy Statement 62 Risk Management and CompensationRISK MANAGEMENT AND COMPENSATION
As described above in “Executive Compensation—the Compensation Discussion and Analysis,” Welltower’s compensation programs are designed, among other things, to encourage long-term shareholder value creation rather than to maximize short-term shareholder value maximization.value. Performance is evaluated based on quantitative and qualitative factors and there is a review of not only “what” is achieved, but also “how” it is achieved. Consistent with this long-term focus, theour compensation policies and practices for the NEOs and other employees do not encourage excessive risk-taking and are not likely to have a material adverse effect on Welltower. In fact, many elements of the executive compensation program serve to mitigate excessive risk-taking. • | | Balanced pay mix. AWe provide a balanced mix of base salary, annual cash incentives and long-term equity compensation is provided.compensation. Incentives tied to annual performance are balanced with incentives tied to multi-year performance, as measured by total shareholder return on an absolute basis and relative to two indices in the long-term incentive programs.indices. In this way, the executive officers are motivated to consider the impact of decisions over the short, intermediate and long terms. |
• | | Balanced performance measurements.The performance measures used in the annual and long-term incentive programs were chosen to provide appropriate safeguards against maximization of a single performance goal at the expense of the overall health of Welltower’s business. The incentive programs are not completely quantitative. Various individual and qualitative objectives are incorporated, and the Compensation Committee has the discretion to adjust earned bonuses based on the “quality” of the results as well as individual performance and behaviors. |
• | | Incentive payments are capped.The annual and long-term incentive programs do not have unlimited upside potential. |
• | | Long-term incentive grants.Restricted shares and restricted stock units, which are well-aligned with shareholders because they have both upside potential and downside risk, make up 100% of the total value of the long-term incentive compensation program. |
• | | Clawback policy. As discussed in “Executive Compensation—Compensation Discussion and Analysis—Clawback Policy,” the Covered OfficersOur executives are subject to a clawback policy, which allows Welltowerus to recover incentive compensation received by a or awarded to Covered Officerexecutives in the event that (1) Welltower is required to prepare a financial restatement due to Welltower’s materialnon-compliance with any financial reporting requirement and theof certain events, including acts of misconduct of such Covered Officer contributed (either directly or indirectly) to thenon-compliance that resulted in the obligation to restate Welltower’s financial statements or (2) an action or omission by such Covered Officer (a) constitutes a material violation of Welltower’s Code of Business Conduct & Ethics or other Welltower policy or (b) results in material financial or reputational harm to Welltower. our executives. |
• | | Stock ownership requirements. As discussed in “Executive Compensation—Compensation Discussion and Analysis—Ownership Guidelines” theThe executive officers are subject to stock ownership guidelines based on a multiple of base salary. These stock ownership guidelines alignsalary, which aligns the interests of management with the interests of long-term shareholder interests. shareholders. |
To confirm the effectiveness of its approach to compensation, from time to time Welltower reviews the potential risks associated with the structure and design of its various compensation plans and programs for all employees. In conducting this assessment, Welltower inventories its material plans and programs, with particular emphasis on incentive compensation plans. Our most recent review indicated that Welltower’s compensation plans are responsible and do not encourage undue risk-taking. WELLTOWER•2022 Proxy Statement 63 Security Ownership of Directors and Management and Certain Beneficial Owners BENEFICIAL OWNERSHIP OF MORE THAN 5% Based upon filings made with the SEC in January and February 2022 (with respect to holdings as of December 31, 2021), the only shareholders known to Welltower to be the beneficial owners of more than 5% of Welltower’s common stock are as follows: Beneficial Owner | | Common Stock Beneficially Owned | | | Percent of Outstanding Common Stock(5) | The Vanguard Group, Inc. 100 Vanguard Blvd. Malvern, PA 19355 | | 68,821,686 | (1) | | 16% | BlackRock, Inc. 55 East 52nd Street New York, NY 10055 | | 47,651,136 | (2) | | 11% | Cohen & Steers, Inc. 280 Park Avenue 10th Floor New York, NY 10017 | | 34,743,873 | (3) | | 8% | State Street Corporation State Street Financial Center One Lincoln Street Boston, MA 02111 | | 27,631,929 | (4) | | 6% |
(1) | | In the aggregate, The Vanguard Group, Inc., Vanguard Fiduciary Trust Company and Vanguard Investments Australia, Ltd. shared voting power over 1,110,794 shares, sole dispositive power over 66,645,222 shares, and shared dispositive power over 2,176,464 shares. | (2) | In the aggregate, BlackRock, Inc. and its affiliates have sole voting power over 41,344,668 shares and sole dispositive power over 47,651,136 shares. | Notice of Annual Meeting of Shareholders(3)
| Includes 34,121,563 shares beneficially owned by Cohen & Steers Capital management, Inc., 573,370 shares beneficially owned by Cohen & Steers UK Limited, 33,055 shares beneficially owned by Cohen & Steers Asia Ltd., and 2019 Proxy Statement | | | 61 |
| | | | | | 15,885 shares beneficially owned by Cohen & Steers Ireland Ltd. Cohen & Steers, Inc. holds a 100% interest in each such entity. Cohen & Steers, Inc. has sole voting power over 23,693,674 shares and sole dispositive power over 34,743,873 shares; Cohen & Steers Capital management, Inc. has sole voting power over 23,570,015 shares and sole dispositive power over 34,121,563 shares; Cohen & Steers UK Limited has sole voting power over 74,719 shares and sole dispositive power over 573,370 shares; Cohen & Steers Asia Limited has sole voting power over 33,055 shares and sole dispositive power over 33,055 shares; Cohen & Steers Ireland Limited has sole voting power over 15,885 shares and sole dispositive power over 15,885 shares. The principal address for Cohen & Steers UK Limited is 50 Pall Mall, 7th Floor, London, United Kingdom, SW1Y 5JH. The principal address for Cohen & Steers Asia Limited is 1201-02 Champion Tower, Three Garden Road, Central, Hong Kong. The principal address for Cohen & Steers Ireland Limited is 77 Sir John Rogerson’s Quay, Block C, Grand Canal Docklands, Dublin 2, D02 VK60. | (4) | In the aggregate, State Street Corporation and its affiliates have shared voting power over 22,489,810 shares and shared dispositive power over 27,618,866 shares. | (5) | | | | | Executive CompensationThe percentages set forth in the table reflect percentage ownership as of February 28, 2022. The actual filings of these beneficial owners provide percentage ownership as of December 31, 2021. |
WELLTOWER•2022 Proxy Statement 64 BENEFICIAL OWNERSHIP OF DIRECTORS, DIRECTOR NOMINEES AND EXECUTIVE OFFICERS The table below sets forth, as of February 28, 2022, unless otherwise specified, certain information with respect to the beneficial ownership of Welltower’s shares of common stock by each director and director nominee of Welltower, each Named Executive Officer, and the directors and executive officers of Welltower as a group. Unless noted below, each person has sole voting and investment power regarding Welltower’s shares. Also, unless noted below, the beneficial ownership of each person represents less than 1% of the outstanding shares of common stock of Welltower. Name of Beneficial Owner | | Shares Held of Record | | Total Shares Beneficially Owned(1) | | Kenneth J. Bacon | | 14,329 | | 14,329 | | John F. Burkart | | 2,971 | | 2,971 | | Karen B. DeSalvo | | 6,733 | | 6,733 | | Jeffrey H. Donahue | | 48,320 | | 48,420 | | Philip L. Hawkins | | 7,034 | | 7,034 | | Dennis G. Lopez | | 1,407 | | 1,407 | | Timothy G. McHugh | | 42,769 | | 42,795 | (2) | Matthew G. McQueen | | 35,420 | | 35,420 | | Ayesha Menon | | 14,218 | | 14,218 | | Shankh Mitra | | 99,858 | | 99,920 | (3) | Ade J. Patton | | 1,407 | | 1,407 | | Diana W. Reid | | 3,939 | | 3,939 | | Sergio D. Rivera | | 17,287 | | 17,287 | | Johnese M. Spisso | | 6,733 | | 6,733 | | Kathryn M. Sullivan | | 6,550 | | 6,550 | | All directors and executive officers as a group (16 persons) | | 320,138 | | 320,326 | (4) |
(1) | Does not include unvested restricted stock units or deferred stock units granted to the executive officers or directors that are not scheduled to vest and be settled within 60 days of February 28, 2022. | (2) | Mr. McHugh’s total shares beneficially owned include 26 shares owned by his child. | (3) | Mr. Mitra’s total shares beneficially owned include 62 shares owned by his children. | (4) | Total beneficial ownership represents .002% of the outstanding shares of common stock of Welltower as of February 28, 2022. |
WELLTOWER•2022 Proxy Statement 65 REVIEW, APPROVAL OR RATIFICATION OF TRANSACTIONS WITH RELATED PERSONS The Board has adopted a written policy for approval of transactions between Welltower and its directors, director nominees, executive officers, greater than 5% beneficial owners of Welltower’s common stock, and each of their respective immediate family members. The policy covers any transaction, arrangement or relationship or series of similar transactions, arrangements or relationships (including any indebtedness or guarantee of indebtedness) in which (1) the aggregate amount involved since the beginning of Welltower’s last completed fiscal year is or is expected to exceed $100,000, (2) Welltower or any of its subsidiaries is a participant, and (3) any related person has or will have a direct or indirect interest. The policy provides that the Nominating/Corporate Governance Committee reviews transactions subject to the policy and determines whether to approve those transactions. In addition, the Nominating/Corporate Governance Committee has delegated authority to the Chair of the Nominating/Corporate Governance Committee to pre-approve transactions under certain circumstances. In reviewing transactions subject to the policy, the Nominating/Corporate Governance Committee or the Chair of the Nominating/Corporate Governance Committee, as applicable, considers, among other factors deemed appropriate, whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related person’s interest in the transaction. The Nominating/Corporate Governance Committee has considered and adopted the following standing pre-approvals under the policy for transactions with related persons: • | Employment as an executive officer of Welltower, if: (1) the related compensation is required to be reported in Welltower’s proxy statement or (2) the executive officer is not an immediate family member of another executive officer or director of Welltower, the related compensation would be reported in Welltower’s proxy statement if the executive officer was a “named executive officer,” and the Compensation Committee approved (or recommended that the Board approve) such compensation; | • | Any compensation paid to a director if the compensation is required to be reported in Welltower’s proxy statement; | • | Any transaction with another company with which a related person’s only relationship is as an employee (other than an executive officer), if the aggregate amount involved does not exceed the greater of $1 million or 2% of that company’s total annual revenues; | • | Any charitable contribution, grant or endowment by Welltower or the Welltower Charitable Foundation to a charitable organization, foundation or university with which a related person’s only relationship is as an employee (other than an executive officer) or a director, if the aggregate amount involved does not exceed the lesser of $1 million or 2% of the charitable organization’s total annual receipts; | • | Any transaction where the related person’s interest arises solely from the ownership of Welltower’s common stock and all holders of Welltower’s common stock received the same benefit on a pro rata basis (e.g., dividends); and | • | Any transaction with another publicly-traded company where the related person’s interest arises solely from beneficial ownership of more than 5% of Welltower’s common stock and ownership of a non-controlling interest in the other publicly-traded company. |
There were no related person transactions identified for 2021. WELLTOWER•2022 Proxy Statement 66 General Information Annual Meeting of Shareholders of Welltower Inc. Monday, May [●], 2022 10:00 a.m. Eastern Time www.virtualshareholdermeeting.com/WELL2022 Where are Welltower’s principal executive offices located and what is Welltower’s main telephone number? Welltower’s principal executive offices are located at 4500 Dorr Street, Toledo, Ohio 43615. Welltower’s telephone number is (419) 247-2800. Notice of Internet Availability of Proxy Materials Welltower is sending a Notice of Internet Availability of Proxy Materials (the “Notice”) to shareholders. The Notice contains instructions on how to access Welltower’s proxy materials and how to vote online or by telephone. If you would like to receive a paper copy of the proxy materials, please follow the instructions in the Notice. By making these proxy materials available to shareholders primarily via the Internet, Welltower reduces the printing and delivery costs and the environmental impact of its Annual Meeting. The approximate date on which these materials will be first made available or sent to shareholders is April [●], 2022. Why am I receiving these materials? The Board of Directors of Welltower has made these materials available to you or has delivered printed copies to you by mail in connection with the solicitation of proxies on its behalf to be used in voting at the Annual Meeting of Shareholders. What is included in these materials? These materials include this proxy statement for the Annual Meeting and Welltower’s Annual Report for the year ended December 31, 2021. If you received printed copies by mail, these materials also include the proxy card for the Annual Meeting. A copy of Welltower’s Annual Report on Form 10-K for the year ended December 31, 2021, including the financial statements and the schedules thereto, as filed with the SEC, is available on Welltower’s website at www.welltower.com or may be obtained without charge by sending a request in writing to Welltower’s Executive Vice President - General Counsel & Corporate Secretary at the address shown above. What proposals will be voted on at the Annual Meeting and how does the Board recommend I vote? The following proposals will be voted on at the Annual Meeting: Proposal | | Board’s Recommendation | Elect ten director nominees | | FOR each nominee | Amend the Certificate of Incorporation of Welltower OP Inc. to remove the provision requiring Welltower Inc. shareholders to approve amendments to the Welltower OP Inc. Certificate of Incorporation and other extraordinary transactions involving Welltower OP Inc. | | FOR | Ratify the appointment of Ernst & Young LLP as Welltower’s independent registered public accounting firm for the year ending December 31, 2022 | | FOR | Approve, on an advisory basis, the compensation of our named executive officers | | FOR |
WELLTOWER•2022 Proxy Statement 67 Who may vote at the Annual Meeting? Shareholders of record at the close of business on April 4, 2022, are entitled to notice of, and to vote at, the Annual Meeting and any adjournments thereof. As of April 4, 2022, Welltower had outstanding [●] shares of common stock. The common stock constitutes the only class of voting securities of Welltower entitled to vote at the Annual Meeting. Each share of common stock is entitled to one vote on all matters to come before the Annual Meeting. What is the vote required to approve each of the proposals discussed in this Proxy Statement? The chart below summarizes the voting requirements for the proposals at the Annual Meeting: Proposals | | Required approval | 1. | | The election of director nominees | | Majority of votes cast | 2. | | The amendment of the Certificate of Incorporation of Welltower OP Inc. to remove the provision requiring Welltower Inc. shareholders to approve amendments to the Welltower OP Inc. Certificate of Incorporation and other extraordinary transactions involving Welltower OP Inc. | | Majority of shares outstanding entitled to vote thereon | 3. | | The ratification of the appointment of Welltower’s independent registered public accounting firm for the year ending December 31, 2022 | | Majority of shares present and entitled to vote | 4. | | The approval, on an advisory basis, of the compensation of our named executive officers | | Majority of shares present and entitled to vote |
If I am a shareholder of record, how can I vote in advance of the virtual Annual Meeting? A shareholder of record can vote in one of three ways before the Annual Meeting: Via the Internet: You may vote by proxy via the Internet by following the instructions provided in the Notice or on your proxy card. By telephone: You may vote by proxy by calling the telephone number provided in the Notice or on your proxy card. By mail: If you receive printed copies of the proxy materials by mail, you may vote by proxy by marking, signing, dating and returning your proxy card in the envelope provided. All shares that have been properly voted by proxy and not revoked will be voted at the Annual Meeting in accordance with the instructions contained in the proxy. Shares represented by proxy cards that are signed and returned without any voting instructions will be voted consistent with the Board’s recommendations. What constitutes a quorum at the Annual Meeting? The presence at the Annual Meeting, in person or by proxy, of the holders of a majority of the total number of shares of voting securities outstanding on the Record Date shall constitute a quorum for the transaction of business by such holders at the Annual Meeting. WELLTOWER•2022 Proxy Statement 68 If I am a shareholder of record, how can I participate in and vote during the virtual Annual Meeting? You are entitled to participate in the Annual Meeting if you were a shareholder as of the close of business on April 4, 2022, or hold a valid proxy for the meeting. If you are a registered holder, you can attend and participate in the virtual Annual Meeting, including to vote, ask questions and to view the list of registered shareholders as of the Record Date, by accessing the Annual Meeting website at www.virtualshareholdermeeting.com/WELL2022. You will need the 16-digit control number found on your Notice, proxy card or voting instruction form. To submit questions in advance of the Annual Meeting, visit www.proxyvote.com before 11:59 p.m. Eastern Time on May 22, 2022, and enter your 16-digit control number. If you are a beneficial holder (meaning you hold your shares in “street name” through a bank, broker, or other intermediary) and your voting instruction form or Notice indicates that you may vote those shares through the http://www.proxyvote.com website, then you may access and participate in the Annual Meeting, vote your shares electronically, and submit questions using the 16-digit control number indicated on that instruction form or Notice. The meeting webcast will begin promptly at 10:00 a.m. Eastern Time. Online check-in will begin approximately 30 minutes before then. We encourage you to allow ample time for check-in procedures. We have provided a toll-free technical support “help line” for any shareholder who is having challenges logging into or participating in the Annual Meeting. If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call the technical support line number that will be posted on the Annual Meeting login page. We will also post a recording of the meeting on our investor relations website, which will be available for replay following the meeting for 365 days. Once I have submitted my proxy, is it possible for me to change or revoke my proxy? Any shareholder giving a proxy has the right to revoke it any time before it is voted by: (1) submitting a written revocation with the Executive Vice President - General Counsel & Corporate Secretary; (2) submitting a duly executed proxy bearing a later date; or (3) attending and voting online at the virtual Annual Meeting. Attendance at the virtual Annual Meeting will not in and of itself revoke a proxy. A written revocation will not be effective until it has been received by the Executive Vice President - General Counsel & Corporate Secretary. Who is paying for the cost of this proxy solicitation? Welltower is paying the costs of the solicitation of proxies. Proxies may be solicited by directors and officers of Welltower by mail, in writing, by telephone, electronically, by personal interview, or by other means of communication. Welltower will reimburse directors and officers for their reasonable out-of-pocket expenses in connection with such solicitation. Welltower will request brokers and nominees who hold shares in their names to furnish these proxy materials to the persons for whom they hold shares and will reimburse such brokers and nominees for their reasonable out-of-pocket expenses in connection therewith. Welltower has hired Morrow Sodali, LLC to solicit proxies for a fee not to exceed $15,000, plus expenses and other customary charges. How will votes be tabulated at the Annual Meeting? All votes will be tabulated by the inspector of election appointed for the Annual Meeting, who will separately tabulate affirmative and negative votes, abstentions and broker non-votes. Representatives of Broadridge Financial Solutions, Inc. will tabulate the votes and act as inspector of election. Matthew McQueen, Executive Vice President - General Counsel & Corporate Secretary, and Timothy McHugh, Executive Vice President - Chief Financial Officer, have been appointed to serve as alternate inspectors of election in the event Broadridge is unable to serve. How are abstentions and broker non-votes treated? Abstentions will be counted as present or represented for purposes of determining the presence or absence of a quorum for the Annual Meeting. In the election of the director nominees (Proposal 1), you may vote “for,” “against” or “abstain” with respect to each of the nominees. The abstention or broker non-vote (as described below) will not impact the election of directors. In tabulating the voting results for the election of directors, only “for” and “against” WELLTOWER•2022 Proxy Statement 69 votes are counted. For the amendment to the Certificate of Incorporation of Welltower OP Inc. to remove the provision requiring Welltower Inc. shareholders to approve amendments to the Welltower OP Inc. Certificate of Incorporation and other extraordinary transactions involving Welltower OP Inc. (Proposal 2), the ratification of the appointment of EY as independent registered public accounting firm for the year ending December 31, 2022 (Proposal 3), and the advisory vote to approve the compensation of our Named Executive Officers (Proposal 4), you may vote “for,” “against” or “abstain.” If you elect to abstain, the abstention will have the same effect as an “against” vote. If you are a street name shareowner and you do not provide your bank, broker or other nominee with voting instructions, your shares cannot be voted with respect to Proposals 1, 2, and 4. A “broker non-vote” occurs when a broker or other nominee holding shares for a beneficial owner does not vote on a proposal that is considered “non-routine” under NYSE rules because the broker does not have discretionary voting power for such proposal and has not received instructions from the beneficial owner. Broker non-votes will be counted as present or represented for purposes of determining the presence or absence of a quorum for the Annual Meeting, but will not be counted for purposes of determining the number of shares present and entitled to vote with respect to any “non-routine” proposal for which the broker lacks discretionary authority. A broker has discretionary voting authority under NYSE rules to vote on “routine” proposals. Proposals 1, 2, and 4 are “non-routine” proposals, and Proposal 3 is a “routine” proposal. Please return your proxy card so your vote can be counted for all matters. Broker non-votes will be counted as present for purposes of determining whether we have a quorum for the Annual Meeting, but will not be counted for purposes of determining the number of shares present and entitled to vote with respect to Proposals 1 and 4. Because Proposal 2 requires the affirmative vote of a majority of the shares outstanding entitled to vote thereon, a broker non-vote will have the same effect as an “against” vote. Are shareholders entitled to exercise appraisal rights in connection with any matter identified in this proxy statement to be acted upon at the Annual Meeting? Shareholders will not have rights of appraisal or similar dissenters’ rights with respect to any of the matters identified in this proxy statement to be acted upon at the Annual Meeting. I share an address with another shareholder, and we received only one paper copy of the proxy materials. How may I obtain an additional copy of the proxy materials? Welltower has adopted an SEC-approved procedure called “householding.” Under this procedure, Welltower or a bank or broker, if applicable, delivers a single copy of the Notice and, if applicable, this Proxy Statement and the Annual Report to multiple shareholders who share the same address unless Welltower receives contrary instructions from any shareholder at that address. This procedure is designed to reduce printing and mailing costs and the environmental impact of the Annual Meeting. Shareholders residing at the same address who wish to receive separate copies of the Notice and, if applicable, this Proxy Statement and the Annual Report in the future, and shareholders who are receiving multiple copies of these materials now and wish to receive just one set of materials in the future, should notify Welltower or, if applicable, their bank or broker. You can also request and Welltower will promptly deliver a separate copy of the Notice by contacting Welltower’s Executive Vice President - General Counsel & Corporate Secretary at the address or phone number shown above. These materials are also available on the Internet at www.welltower.com/proxy. What is the deadline to submit shareholder proposals or nominate a director for the 2023 Annual Meeting of Shareholders? Any shareholder proposals intended for inclusion in Welltower’s proxy materials for the 2023 Annual Meeting of Shareholders must be submitted to Executive Vice President - General Counsel & Corporate Secretary, in writing no later than December 9, 2022. Such proposals also must comply with SEC regulations under Rule 14a-8 regarding the inclusion of shareholder proposals in company-sponsored proxy materials. In addition, under Welltower’s By-Laws, in order for a shareholder to present a proposal for consideration at the 2023 Annual Meeting of Shareholders other than by means of inclusion in Welltower’s proxy materials for such meeting, or to propose a person for appointment as a director, the shareholder must provide a written notice to the Executive Vice President - General Counsel & WELLTOWER•2022 Proxy Statement 70 Corporate Secretary between January 23, 2023, and February 22, 2023. If a shareholder does not meet this deadline, the officer presiding at the meeting may declare that the proposal will be disregarded because it was not properly brought before the meeting and the individuals named in the proxies solicited by the Board for the meeting may use their discretionary voting authority to vote “against” the proposal. Welltower’s By-Laws permit a shareholder, or a group of up to 20 shareholders, owning at least 3% of Welltower’s outstanding shares of capital stock for at least three continuous years to nominate and include in Welltower’s proxy materials director nominees up to the greater of two individuals or 20% of the Board, provided that the shareholder(s) and the nominee(s) satisfy the procedural and eligibility requirements specified in the By-Laws. Notice of director nominations submitted under these proxy access By-Law provisions for consideration at the 2023 Annual Meeting of Shareholders must be delivered to the Executive Vice President - General Counsel & Corporate Secretary between November 9, 2022, and December 9, 2022. In addition to satisfying the deadlines in the advance notice provisions of our bylaws, a shareholder who intends to solicit proxies in support of nominees submitted under these advance notice provisions must provide the notice required under Rule 14a-19 to the Executive Vice President - General Counsel & Corporate Secretary no later than March 24, 2023. Pay RatioPAY RATIO
In this section, Welltower iswe are providing a comparison of the annual total compensation of Welltower’s median compensated employee to the annual total compensation of Mr. DeRosa, theour Chief Executive Officer, pursuant to the requirements of Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of RegulationS-K. The SEC’s rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation 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. As a result, the pay ratio reported by other companies may not be comparable to the pay ratio reported below, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. The pay ratio reported below is a reasonable estimate calculated in a manner consistent with SEC rules based on the methodology described below. To identify Welltower’s median compensated employee, as well as to determine the annual total compensation of Welltower’s median employee and the Chief Executive Officer, Welltowerwe took the following steps: Welltower considered all employees employed as of December 31, 2018. This population consisted of full-time and part-time employees located in the United States, the United Kingdom, Canada and Luxembourg.
• | We considered all employees employed as of December 31, 2021. This population consisted of full-time and part-time employees located in the United States, the United Kingdom, Canada and Luxembourg. | • | To identify the median employee from Welltower’s employee population, we generated a list of all employees and calculated the amount of base salary determined as of December 31, 2021, wages, overtime and cash bonus amounts earned for performance in fiscal 2021 and the aggregate grant date fair value of equity awards granted in fiscal 2021. We used a GBP/ USD rate of 1.35358 for employees in the United Kingdom, a CAD/USD rate of 0.79016 for employees in Canada and a EUR/USD rate of 1.37651 for employees in Luxembourg, each of which reflected the applicable exchange rate on December 31, 2021. | • | Once we identified the median employee, we calculated all elements of such employee’s compensation for 2021 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of $100,206. | • | With respect to the annual total compensation for the Chief Executive Officer, we used the amount reported in the “Total Compensation” column of the Summary Compensation Table for 2021, $12,753,710. |
To identify the median employee from Welltower’s employee population, Welltower generated a list of all employees and calculated the amount of base salary determined as of December 31, 2018, wages, overtime and cash bonus amounts earned for performance in fiscal 2018 and the aggregate grant date fair value of equity awards granted in fiscal 2018. Welltower used a GBP/USD rate of 1.2760 for employees in the United Kingdom, a CAD/USD rate of 0.7329 for employees in Canada and a EUR/USD rate of 1.1455 for employees in Luxembourg, each of which reflected the applicable exchange rate on December 31, 2018.
Once Welltower identified the median employee, Welltower calculated all elements of such employee’s compensation for 2018 in accordance with the requirements of Item 402(c)(2)(x) of RegulationS-K, resulting in annual total compensation of $91,803.
With respect to the annual total compensation of the Chief Executive Officer, Welltower used the amount reported in the “Total Compensation” column of the Summary Compensation Table for 2018, $12,884,453.
Based on this information, for 20182021 the ratio of the annual total compensation of Mr. DeRosaMitra to the annual total compensation of Welltower’s median employee was 140127 to 1. WELLTOWER•2022 Proxy Statement 71 | | | | | 62 | | | Notice of Annual Meeting of Shareholders and 2019 Proxy Statement |
Equity Compensation Plan InformationEQUITY COMPENSATION PLAN INFORMATION
The following table sets forth certain information, as of December 31, 2018,2021, concerning shares of common stock authorized for issuance under all of Welltower’s equity compensation plans: | | |
| (a)
Number of Securities to be Issued Upon Exercise of Outstanding Options and Rights |
| |
| (b)
Weighted Average Exercise Price of Outstanding Options and Rights |
| |
| (c)
Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) |
| | (a) Number of Securities to be Issued Upon Exercise of Outstanding Options and Rights | | (b) Weighted Average Exercise Price of Outstanding Options and Rights | | (c) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) | Equity compensation plans approved by shareholders | | | 629,100 | (1) | | $ | 51.63 | (2) | | | 12,069,575 | (3) | | 1,756,949(1) | | $ | 79.01(2) | | 7,768,204(3) | | | | | | | | | | | | Equity compensation plans not approved by shareholders | | | None | | | | N/A | | | | None | | | None | | | N/A | | None | Totals | | | 629,100 | | | $ | 51.63 | | | | 12,069,575 | (3) | | 1,756,949 | | $ | 79.01 | | 7,768,204(3) | | | | | | | | | | | |
(1) | This number reflects the options, restricted stock units and deferred stock units granted under the 2005 Long-Term Incentive Plan and the 2016 Long-Term Incentive Plan. See the footnotes to the “2018“2021 Outstanding Equity Awards at FiscalYear-End Table”, “2018 Nonqualified Deferred Compensation Table” and “2018“2021 Director Compensation Table” for additional information regarding the options, restricted stock units and deferred stock units. |
(2) | This price does not include restricted stock units or deferred stock units granted under the 2005 Long-Term Incentive Plan or the 2016 Long-Term Incentive Plan. |
(3) | This number reflects the sum of (a) 10,000,000 shares of common stock reserved for future issuance under the 2016 Long-Term Incentive Plan, as reduced by awards issued under the 2016 Long-Term Incentive Plan, and as increased by shares granted under the 2005 Long-Term Incentive Plan or the 2016 Long-Term Incentive Plan that were forfeited, cancelled, surrendered or terminated unexercised and are now available for future issuance under the 2016 Long-Term Incentive Plan, and (b) 1,000,000 shares of common stock reserved for issuance under the Employee Stock Purchase Plan, as reduced by shares issued under such plan. |
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| | | | | | | | | | | | | Other Matters |
Other MattersOTHER MATTERS
Management is not aware of any matters to be presented for action at the Annual Meeting other than the matters set forth above. If any other matters do properly come before the meeting or any adjournment thereof, it is intended that the personsindividuals named in the proxy will vote in accordance with their judgment on such matters. BY ORDER OF THE BOARD OF DIRECTORS
Matthew G. McQueen SeniorExecutive Vice President - General Counsel
& Corporate Secretary | | | | | 64 | | | Notice of Annual Meeting of Shareholders and 2019 Proxy Statement |
| | | | | | | AppendixA—Non-GAAP Financial Measures | | | | | | |
WELLTOWER•2022 Proxy Statement 72 AppendixA— A - Non-GAAP Financial Measures Non-GAAP Financial Measures
Welltower believesWe believe that revenues, net income and net income attributable to common shareholdersstockholders (“NICS”), as defined by U.S. GAAP,generally accepted accounting principles (“U.S. GAAP”), are the most appropriate earnings measurements. However, Welltower considers funds from operationswe consider Net Operating Income (“NOI”), In-Place NOI, Funds From Operations attributable to common stockholders (“FFO”), net operating income (“NOI”), same store NOI (“SSNOI”),Normalized FFO, EBITDA and Adjusted EBITDA to be useful supplemental measures of itsour operating performance. Excluding EBITDA and Adjusted EBITDA these supplemental measures are disclosed on a Welltowerour pro rata ownership basis.
Pro rata amounts are derived by reducing consolidated amounts for minority partners’ noncontrolling ownership interests and adding Welltower’sour minority ownership share of unconsolidated amounts. Welltower doesWe do not control unconsolidated investments. While Welltower considerswe consider pro rata disclosures useful, they may not accurately depict the legal and economic implications of Welltower’sour joint venture arrangements and should be used with caution. We define NOI as total revenues, including tenant reimbursements, less property operating expenses. Property operating expenses represent costs associated with managing, maintaining and servicing tenants for our properties. These expenses include, but are not limited to, property-related payroll and benefits, property management fees paid to operators, marketing, housekeeping, food service, maintenance, utilities, property taxes and insurance. General and administrative expenses represent costs unrelated to property operations and transaction costs. These expenses include, but are not limited to, payroll and benefits, professional services, office expenses and depreciation of corporate fixed assets. In-Place NOI represents NOI excluding interest income, other income and non-IPNOI and adjusted for timing of current quarter portfolio changes such as acquisitions, development conversions, segment transitions, dispositions and investments held for sale. Historical cost accounting for real estate assets in accordance with U.S. GAAP implicitly assumes that the value of real estate assets diminishes predictably over time as evidenced by the provision for depreciation. However, since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered presentations of operating results for real estate companies that use historical cost accounting to be insufficient. In response, the National Association of Real Estate Investment Trusts (“NAREIT”Nareit”) created FFO as a supplemental measure of operating performance for REITs that excludes historical cost depreciation from net income. FFO attributable to common stockholders, as defined by NAREIT,Nareit, means net income attributable to common stockholders, computed in accordance with U.S. GAAP, excluding gains (or losses) from sales of real estate and impairments of depreciable assets, plus real estate depreciation and amortization, and after adjustments for unconsolidated entities and noncontrolling interests. Normalized FFO attributable to common stockholders represents FFO attributable to common stockholders adjusted for certain items detailed in the reconciliations including adjustments fornon-recurring or infrequent revenues/expenses that areand described in Welltower’sour earnings press releases for the relevant period ends. Welltower believesperiods. We believe that normalizedNormalized FFO attributable to common stockholders is a useful supplemental measure of operating performance because investors and equity analysts may use this measure to compare theour operating performance of the company between periods or as compared to other REITs or other companies on a consistent basis without having to account for differences caused by unanticipated and/or incalculable items. Welltower defines NOI as total revenues, including tenant reimbursements, less property operating expenses. Property operating expenses represent costs associated with managing, maintaining and servicing tenants for Welltower’s seniors housing operating and outpatient medical properties. These expenses include, but are not limited to, property-related payroll and benefits, property management fees paid to operators, marketing, housekeeping, food service, maintenance, utilities, property taxes and insurance. General and administrative expenses represent costs unrelated to property operations. These expenses include, but are not limited to, payroll and benefits, professional services, office expenses and depreciation of corporate fixed assets. SSNOI is used to evaluate the operating performance of Welltower’s properties using a consistent population which controls for changes in the composition of its portfolio. As used herein, same store is generally defined as those revenue-generating properties in the portfolio for the relevant year-over-year reporting periods. Land parcels, loans andsub-leases, as well as any properties acquired, developed/redeveloped (including major refurbishments where 20% or more of units are simultaneously taken out of commission for 30 days or more), sold or classified as held for sale during that period are excluded from the same store amounts. Properties undergoing operator transitions and/or segment transitions (excepttriple-net to seniors housing operating with the same operator) are also excluded from the same store amounts. Normalizers include adjustments that in management’s opinion are appropriate in considering SSNOI, a supplemental,non-GAAP performance measure. None of these adjustments, which may increase or decrease SSNOI, are reflected in Welltower’s financial statements prepared in accordance with U.S. GAAP. Significant normalizers (defined as any that individually exceeds 0.50% of SSNOI growth per property type) are separately disclosed and explained in Welltower’s respective supplements. Welltower believes NOI and SSNOI provide investors relevant and useful information because they
We measure the operating performance of its properties at the property level on an unleveraged basis. Welltower use NOI and SSNOI to make decisions about resource allocations and to assess the property level performance of its properties. Welltower measures itsour credit strength both in terms of leverage ratios and coverage ratios. Welltower expectsThe leverage ratios indicate how much of our balance sheet capitalization is related to long-term debt, net of cash and cash equivalents and restricted cash. We expect to maintain capitalization ratios and coverage ratios sufficient to maintain a capital structure consistent with our current profile. The coverage ratios are based on EBITDA which stands forand Adjusted EBITDA. EBITDA is defined as earnings (net income)income per income statement) before interest expense, income taxes, depreciation and amortization. Covenants in Welltower’s senior unsecured notes and primary credit facility contain financial ratios based on a definition of EBITDA that is specific to those agreements. Failure to satisfy these covenants could result in an event of default that could have a material adverse impact on Welltower’s cost and availability of capital, which could in turn have a material adverse impact on Welltower’s consolidated results of operations, liquidity and/or financial condition. Due to the materiality of these debt agreements and the financial covenants, Welltower has defined Adjusted EBITDA to excludeis defined as EBITDA excluding unconsolidated entities and to includeincluding adjustments for stock-based compensation expense, provision for loan losses, gains/losses on extinguishment of debt, gains/losses/impairments on properties, gains/losses on derivatives and financial instruments, other expenses, and additional other
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| | | | | | | | | | | | | AppendixA—Non-GAAP Financial Measures |
income. Welltower believes that EBITDA and Adjusted EBITDA, along with net income and cash flow provided from operating activities, are an important supplementalother impairment charges. We primarily use these measures because they provides additional information to assess and evaluate the performance ofdetermine our operations. Welltower use Adjusted EBITDA to measure its adjusted fixed charge coverage ratio, which represents EBITDA and Adjusted EBITDA divided by fixed charges. Fixed charges include total interest (excluding capitalized interest andnon-cash interest expenses), secured debt principal amortizationamortization. Our leverage ratios include net debt to Adjusted EBITDA and net debt to Adjusted EBITDA plus preferred stock and dividends. Net debt is defined as total long-term debt, excluding operating lease liabilities, less cash and cash equivalents and restricted cash.
Welltower’s
Our supplemental reporting measures and similarly entitled financial measures are widely used by investors, equity and debt analysts and rating agencies in the valuation, comparison, rating and investment recommendations of companies. Welltower’sOur management uses these financial measures to facilitate internal and external comparisons to its historical operating results and in making operating decisions. Additionally, these measures are utilized by the Board of Directors WELLTOWER•2022 Proxy Statement 73 to evaluate management. None of Welltower’sthe supplemental reporting measures represent net income or cash flow provided from operating activities as determined in accordance with U.S. GAAP and should not be considered as alternative measures of profitability or liquidity. Finally, the supplemental reporting measures, as defined by us, may not be comparable to similarly entitled items reported by other REITsreal estate investment trusts or other companies. Multi-period amounts may not equal the sum of the individual quarterly amounts due to rounding. Please see the tables below for reconciliations of supplemental reporting measures referenced in this document.
FFO Reconciliation | | | | | (In thousands, except per share) | | Year Ended
December 31, 2018
| | Net income (loss) attributable to common stockholders | | | $ 758,250 | | | | Depreciation and amortization | | | 950,459 | | | | Losses/impairments (gains) on real estate dispositions, net | | | (299,996 | ) | | | Noncontrolling interests(1) | | | (69,193 | ) | | | Unconsolidated entities(2) | | | 52,663 | | | | | | | | | NAREIT FFO attributable to common stockholders
| | | $ 1,392,183 | | | | Loss (gain) on derivatives and financial instruments, net | | | (4,016 | ) | | | Loss (gain) on extinguishments of debt, net | | | 16,097 | | | | Incremental stock-based compensation expense | | | 3,552 | | | | Other expenses | | | 112,898 | | | | Additional other income | | | (14,832 | ) | | | Normalizing items attributable to noncontrolling interests and unconsolidated entities, net | | | 4,595 | | | | | | | | | Normalized FFO attributable to common stockholders
| | | $ 1,510,477 | | | | Average diluted common shares outstanding
| | | 375,250 | | | | | | | Normalized FFO per diluted share
| | | $ 4.03 | | | | | | |
(in thousands, except per share information) | Year Ended December 31, 2021 | Net income (loss) attributable to common stockholders | | $ | 336,138 | Depreciation and amortization | | | 1,037,566 | Impairments and losses (gains) on real estate dispositions, net | | | (184,268) | Noncontrolling interests(1) | | | (54,190) | Unconsolidated entities(2) | | | 85,476 | NAREIT FFO attributable to common stockholders | | | 1,220,722 | Normalizing items: | | | | Loss (gain) on derivatives and financial instruments, net | | | (7,333) | Loss (gain) on extinguishment of debt, net | | | 49,874 | Provision for loan losses | | | 7,270 | Nonrecurring income tax benefits | | | (6,298) | Other impairment | | | 49,241 | Other expenses | | | 41,739 | Leasehold interest adjustment | | | 760 | Casualty losses, net of recoveries | | | 5,786 | Normalizing items attributable to noncontrolling interests and unconsolidated entities, net | | | 6,777 | Normalized FFO attributable to common stockholders | | $ | 1,368,538 | Average diluted common shares outstanding | | | 426,841 | Per diluted share data attributable to common stockholders: | | | | Net income (loss) | | $ | 0.78 | Nareit FFO | | $ | 2.86 | Normalized FFO | | $ | 3.21 |
(1) | Represents noncontrolling interests’ share of net FFO adjustments. | |
(2) | Represents Welltower’s share of net FFO adjustments from unconsolidated entities. |
WELLTOWER•2022 Proxy Statement 74 FFO Outlook ReconciliationLeverage and EBITDA Reconciliations
| | | | | | | | | | | | | (in millions, except per share data) | | Initial Outlook Year Ended December 31, 2018 | | | Low | | | | | | High | | | | | Net income attributable to common stockholders | | $ | 892 | | | $ | | | | | 930 | | | | | | Impairments and losses (gains) on real estate dispositions, net(1,2) | | | (338 | ) | | | | | | | (338 | ) | | | | | Depreciation and amortization(1) | | | 927 | | | | | | | | 927 | | | | | | | | | | | | | | | | | | | | | | | NAREIT and Normalized FFO attributable to common stockholders | | $ | 1,481 | | | $ | | | | | 1,519 | | | | | | | | | | Per share data attributable to common stockholders: | | | | | | | | | | | | | | | | | Net income | | $ | 2.38 | | | $ | | | | | 2.48 | | | | | | NAREIT and Normalized FFO | | | 3.95 | | | | | | | | 4.05 | | | | | |
(dollars in thousands) | | Three Months Ended December 31, 2020 | | Three Months Ended December 31, 2021 | Net income (loss) | | $ | 155,278 | | $ | 66,194 | Interest expense | | | 121,173 | | | 121,848 | Income tax expense (benefit) | | | 290 | | | 2,051 | Depreciation and amortization | | | 242,733 | | | 284,501 | EBITDA | | | 519,474 | | | 474,594 | Loss (income) from unconsolidated entities | | | (258) | | | 12,174 | Stock-based compensation(1) | | | 7,380 | | | 2,944 | Loss (gain) on extinguishment of debt, net | | | 13,796 | | | (1,090) | Loss (gain) on real estate dispositions, net | | | (185,464) | | | (11,673) | Impairment of assets | | | 9,317 | | | 2,357 | Provision for loan losses, net | | | 83,085 | | | (39) | Loss (gain) on derivatives and financial instruments, net | | | 569 | | | (830) | Other expenses(1) | | | 27,583 | | | 15,483 | Leasehold interest adjustment(2) | | | | | | 1,400 | Casualty losses, net of recoveries(3) | | | | | | 4,788 | Total adjustments | | | (43,992) | | | 25,514 | Adjusted EBITDA | | $ | 475,482 | | $ | 500,108 | Interest Coverage Ratios | | | | | | | Interest expense | | $ | 121,173 | | $ | 121,848 | Capitalized interest | | | 4,238 | | | 5,325 | Non-cash interest expense | | | (1,739) | | | (5,082) | Total interest | | $ | 123,672 | | $ | 122,091 | EBITDA | | $ | 519,474 | | $ | 474,594 | Interest coverage ratio | | | 4.20x | | | 3.89x | Adjusted EBITDA | | $ | 475,482 | | $ | 500,108 | Adjusted Interest coverage ratio | | | 3.84x | | | 4.10x | Fixed Charge Coverage Ratios | | | | | | | Total interest | | $ | 123,672 | | $ | 122,091 | Secured debt principal amortization | | | 16,122 | | | 16,877 | Total fixed charges | | $ | 139,794 | | $ | 138,968 | EBITDA | | $ | 519,474 | | $ | 474,594 | Fixed charge coverage ratio | | | 3.72x | | | 3.42x | Adjusted EBITDA | | $ | 475,482 | | $ | 500,108 | Adjusted Fixed charge coverage ratio | | | 3.40x | | | 3.60x | Net Debt to EBITDA Ratios | | | | | | | Total debt(4) | | | | | $ | 14,242,637 | Less: cash and cash equivalents and restricted cash | | | | | | (346,755) | Net debt | | | | | $ | 13,895,882 | EBITDA Annualized | | | | | $ | 1,898,376 | Net debt to EBITDA ratio | | | | | | 7.32x | Adjusted EBITDA Annualized | | | | | $ | 2,000,432 | Net debt to Adjusted EBITDA ratio | | | | | | 6.95x |
WELLTOWER•2022 Proxy Statement 75 Notes: (1) | Amounts presentedCertain severance-related costs are included in stock-based compensation and excluded from other expenses.
| (2) | For the three months ended December 31, 2021, represents $14,774,000 of revenues and $16,174,000 of property operating expenses associated with a leasehold portfolio interest relating to 26 properties assumed by a wholly-owned affiliate in conjunction with the Holiday Retirement transaction. Subsequent to the initial transaction, we purchased eight of the leased properties and one of the properties was sold by the landlord and removed from the lease. No rent will be paid in excess of net cash flow relating to the leasehold properties and therefore, the net impact has been excluded from Adjusted EBITDA. | (3) | Represents casualty losses net of noncontrolling interests’ share and Welltower’s share of unconsolidated entities. | |
(2) | Includes estimated gains on projected dispositions.
| |
| | any insurance recoveries. | (4) | | 66 | | | NoticeIncludes unamortized premiums/discounts, other fair value adjustments and financing lease liabilities of Annual Meeting$111,683,000. Excludes operating lease liabilities of Shareholders and 2019 Proxy Statement |
| | | | | | | AppendixA—Non-GAAP Financial Measures | | | | | | $434,261,000 related to ASC 842 adoption. |
SSNOI ReconciliationWELLTOWER•2022 Proxy Statement 76
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (in thousands) | | Three Months Ended | | March 31, | | June 30, | | September 30, | | December 31, | | | 2018 | | | | 2017 | | | | 2018 | | | | 2017 | | | | 2018 | | | | 2017 | | | | 2018 | | | | 2017 | | | | | | | | | | Net income (loss) | | $ | 453,555 | | | $ | 337,610 | | | $ | 167,273 | | | $ | 203,441 | | | $ | 84,226 | | | $ | 89,299 | | | $ | 124,696 | | | $ | (89,743 | ) | Loss (gain) on real estate dispositions, net | | | (338,184 | ) | | | (244,092 | ) | | | (10,755 | ) | | | (42,155 | ) | | | (24,723 | ) | | | (1,622 | ) | | | (41,913 | ) | | | (56,381 | ) | Loss (income) from unconsolidated entities | | | 2,429 | | | | 23,106 | | | | (1,249 | ) | | | 3,978 | | | | (344 | ) | | | (3,408 | ) | | | (195 | ) | | | 59,449 | | Income tax expense (benefit) | | | 1,588 | | | | 2,245 | | | | 3,841 | | | | (8,448 | ) | | | 1,741 | | | | 669 | | | | 1,504 | | | | 25,663 | | Other expenses | | | 3,712 | | | | 11,675 | | | | 10,058 | | | | 6,339 | | | | 88,626 | | | | 99,595 | | | | 10,502 | | | | 60,167 | | Impairment of assets | | | 28,185 | | | | 11,031 | | | | 4,632 | | | | 13,631 | | | | 6,740 | | | | — | | | | 76,022 | | | | 99,821 | | Provision for loan losses | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 62,966 | | Loss (gain) on extinguislm1ent of debt, net | | | 11,707 | | | | 31,356 | | | | 299 | | | | 5,515 | | | | 4,038 | | | | — | | | | 53 | | | | 371 | | Loss (gain) on derivatives and financial instruments, net | | | (7,173 | ) | | | 1,224 | | | | (7,460 | ) | | | 736 | | | | 8,991 | | | | 324 | | | | 1,626 | | | | — | | General and administrative expenses | | | 33,705 | | | | 31,101 | | | | 32,831 | | | | 32,632 | | | | 28,746 | | | | 29,913 | | | | 31,101 | | | | 28,365 | | Depreciation and amortization | | | 228,201 | | | | 228,276 | | | | 236,275 | | | | 224,847 | | | | 243,149 | | | | 230,138 | | | | 242,834 | | | | 238,458 | | Interest expense | | | 122,775 | | | | 118,597 | | | | 121,416 | | | | 116,231 | | | | 138,032 | | | | 122,578 | | | | 144,369 | | | | 127,217 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Consolidated NOI | | | 540,500 | | | | 552,129 | | | | 557,161 | | | | 556,747 | | | | 579,222 | | | | 567,486 | | | | 590,599 | | | | 556,353 | | NOI attributable to unconsolidated investments | | | 21,620 | | | | 21,279 | | | | 21,725 | | | | 21,873 | | | | 22,247 | | | | 22,431 | | | | 21,933 | | | | 21,539 | | NOI attributable to noncontrolling interests | | | (31,283 | ) | | | (27,542 | ) | | | (30,962 | ) | | | (29,359 | ) | | | (37,212 | ) | | | (30,538 | ) | | | (40,341 | ) | | | (29,760 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Pro rata NOI | | | 530,837 | | | | 545,866 | | | | 547,924 | | | | 549,261 | | | | 564,257 | | | | 559,379 | | | | 572,191 | | | | 548,132 | | Non-cash NOI attributable to same store properties | | | (11,220 | ) | | | (9,985 | ) | | | (7,131 | ) | | | (8,059 | ) | | | (8,578 | ) | | | (10,761 | ) | | | (12,019 | ) | | | (9,384 | ) | | | | | | | | | | NOI attributable tonon-same store properties | | | (55,795 | ) | | | (84,139 | ) | | | (98,281 | ) | | | (107,931 | ) | | | (109,610 | ) | | | (119,574 | ) | | | (121,255 | ) | | | (114,345 | ) | | | | | | | | | | Currency and ownership(1) | | | (823 | ) | | | 4,002 | | | | 1,105 | | | | 5,945 | | | | 3,255 | | | | 1,839 | | | | 4,270 | | | | 1,184 | | | | | | | | | | | Other adjustments(2) | | | 425 | | | | (536 | ) | | | (724 | ) | | | (2,516 | ) | | | (593 | ) | | | 10,892 | | | | (158 | ) | | | 10,293 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Same store NOI (SSNOI) | | $ | 463,424 | | | $ | 455,208 | | | $ | 442,893 | | | $ | 436,700 | | | $ | 448,731 | | | $ | 441,775 | | | $ | 443,029 | | | $ | 435,880 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total SSNOI quarterly growth | | | 1.8 | % | | | | | | | 1.4 | % | | | | | | | 1.6 | % | | | | | | | 1.6 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total SSNOI annual growth | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1.6 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) | Includes adjustments to reflect consistent property ownership percentages and foreign currency exchange rates for properties in the U.K. and Canada.
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(2)Back to Contents | Includes other adjustments as described in the respective Supplements.
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Back to Contents | | | | | Notice of Annual Meeting of Shareholders and 2019 Proxy Statement |
| | 67 |
PRELIMINARY PROXY SUBJECT TO COMPLETION
| | | | | | | | | | | | | AppendixA—Non-GAAP Financial Measures |
Adjusted EBITDA Reconciliation
| | | | | (dollars in thousands) | |
| Three Months Ended
December 31, 2018 |
| | | Net income | | $ | 124,696 | | | | Interest expense | | | 144,369 | | | | Income tax expense (benefit) | | | 1,504 | | | | Depreciation and amortization | | | 242,834 | | | | EBITDA | | | 513,403 | | | | Loss (income) from unconsolidated entities | | | (195) | | | | Stock-based compensation | | | 4,847 | | | | Loss (gain) on extinguishment of debt, net | | | 53 | | | | Loss/impairment (gain) on properties, net | | | 34,109 | | | | Loss (gain) on derivatives and financial instruments, net | | | 1,626 | | | | Other expenses | | | 10,502 | | | | Additional other income | | | (4,027) | | | | Adjusted EBITDA | | $ | 560,318 | | | | Adjusted Fixed Charge Coverage Ratio
| | | | | | | Interest expense | | $ | 144,369 | | | | Capitalized interest | | | 1,548 | | | | Non-cash interest expense | | | (3,307) | | | | Total interest | | | 142,610 | | | | Secured debt principal amortization | | | 13,994 | | | | Preferred dividends | | | 11,676 | | | | Total fixed charges | | $ | 168,280 | | | | Adjusted EBITDA | | $ | 560,318 | | | | Adjusted fixed charge coverage ratio | | | 3.33x | | | | | | | | |
Back to Contents | | | | | 68 | | | Notice of Annual Meeting of Shareholders and 2019 Proxy Statement |
PRELIMINARY PROXY SUBJECT TO COMPLETION
WELLTOWER INC.
4500 DORR STREET
TOLEDO, OHIO 43615
VOTE BY INTERNET -www.proxyvote.com or scan the QR Barcode above
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form.
VOTE BY PHONE -1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Welltower Inc., c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
If you have not voted via the Internet or by telephone, detach and return the bottom portion in the enclosed envelope.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to help reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
E62347-P18700 KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | WELLTOWER INC. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | The Board of Directors recommends you vote FOR the following: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1. Election of Directors
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Nominees:
| | | | For | | Against | | Abstain | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1a. Kenneth J. Bacon
| | ☐ | | ☐ | | ☐ | | | | | | For | | Against | | Abstain | | | | | | | | | | | | | | | | | | | 1b. Thomas J. DeRosa
| | ☐ | | ☐ | | ☐ | | | | 1j. R. Scott Trumbull
| | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | | | | | | 1c. Karen B. DeSalvo
| | ☐ | | ☐ | | ☐ | | | | 1k. Gary Whitelaw
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| | | | | | | 1d. Jeffrey H. Donahue
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| | | | The Board of Directors recommends you vote FOR the following proposals: | | | | | | | | | | | | | 1e. Timothy J. Naughton
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| | | | 2. The ratification of the appointment of Ernst & Young LLP as independent registered public accounting firm for the fiscal year 2019.
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| | | | | | | 1f. Sharon M. Oster
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| | | | | | | | | | | | | | | | | | | | | | | | | | | 1g. Sergio D. Rivera
| | ☐ | | ☐ | | ☐ | | | | 3. The approval, on an advisory basis, of the compensation of our named executive officers as disclosed in the 2019 Proxy Statement.
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| | ☐ | | ☐ | | | | | | | 1h. Johnese M. Spisso
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| | | | | | | | | | | | | | | | | | | | | | | | | 1i. Kathryn M. Sullivan
| | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | NOTE:The proxies named on the reverse side of this proxy card are authorized to vote in their discretion upon any other business as may properly come before the meeting or any adjournment or postponement thereof. | | | | | | | | | | | | | | | | | | | | Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Signature [PLEASE SIGN WITHIN BOX] Date | | | | | | | | Signature (Joint Owners) Date | | | | | | | | |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The 2019 Notice of Annual Meeting of Shareholders and Proxy Statement and 2018 Annual Report
are available at www.proxyvote.com.
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E62348-P18700
WELLTOWER INC.
Annual Meeting of Shareholders
May 2, 2019 10:00 A.M.
This proxy is solicited by the Board of Directors
The undersigned hereby appoint(s) Matthew G. McQueen and John A. Goodey, or either of them, as proxies, each with the power to appoint his substitute, and hereby authorize(s) them, or either of them, to represent and to vote, as designated on the reverse side of this ballot, all of the shares of common stock of WELLTOWER INC. that the undersigned is/are entitled to vote at the Annual Meeting of Shareholders to be held at 10:00 A.M. Eastern Time on Thursday, May 2, 2019, at the offices of Gibson, Dunn & Crutcher, 200 Park Avenue, 46th Floor, New York, NY 10166, and any adjournment or postponement thereof.
This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors’ recommendations. This proxy will be voted in the discretion of the proxies on any other business that may properly come before the meeting or any adjournment or postponement thereof.
Continued and to be marked, dated and signed on reverse side
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