Item 5.02
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
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Appointment of Principal Accounting Officer
On July 11, 2017, HCP, Inc., a Maryland corporation (HCP), announced that its Board of Directors (the Board)
appointed Shawn G. Johnston, 38, to serve as Senior Vice President and Chief Accounting Officer, effective August 15, 2017.
Mr. Johnston has served as Vice PresidentChief Accounting Officer of UDR, Inc. (UDR), a multifamily real estate
investment trust, since March 2016. He previously served as the Vice PresidentController of UDR from 2013 until 2016 when he became CAO, and served as Interim Principal Financial Officer from June 2016 through December 2016. From 2010 to 2013,
Mr. Johnston served as Chief Accounting Officer at American Residential Communities LLC, a residential real estate company. Prior to that, he was a Senior ManagerAudit Services for Ernst & Young LLP, specializing in real estate.
The material terms of Mr. Johnstons compensation following his commencement of employment with HCP are summarized as follows:
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Base Salary and Bonus
. Mr. Johnston will receive an annual base salary of $375,000, subject to annual review. He will also be eligible for an annual bonus with a target amount of $325,000. The actual amount
of the annual bonus will be determined by the Compensation Committee of the Board (the Compensation Committee), and will be pro-rated based on the period he is employed by HCP in 2017.
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One-Time Cash Bonus
. In connection with his hiring, Mr. Johnston will receive a one-time cash bonus of $400,000, $250,000 of which will be a make-whole bonus payment (the Make-Whole Payment) and
$150,000 of which will be an inducement bonus payment (together with the Make-Whole Payment, the One-Time Cash Bonus). If his employment with HCP is terminated for cause or he voluntarily terminates his employment with HCP within 24
months of his start date, he will be required to reimburse HCP a pro-rated amount of his One-Time Cash Bonus.
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One-Time Make-Whole Equity Award
. In connection with his hiring, Mr. Johnston will receive a grant of restricted stock units (RSUs) shortly after his commencement of employment with HCP with an
aggregate grant date fair value of approximately $500,000 (the Initial Equity Award). The Initial Equity Award will vest over three years, commencing with the first anniversary of the grant date, subject to Mr. Johnstons
continuing employment on each applicable vesting date.
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Long-Term Equity Award Target
. Mr. Johnston will be eligible for an annual equity award with a target aggregate grant date fair value of $300,000 (the Annual Equity Award). The Annual Equity
Award will be subject to approval by the Compensation Committee.
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Severance Terms
. Mr. Johnston will be eligible to participate in HCPs Executive Change in Control Severance Plan (CIC Plan). The material terms of the CIC Plan are described under the
heading Potential Payments upon a Termination or Change in ControlSeverance Plans in HCPs Definitive Proxy Statement on Schedule 14A, filed with the Securities and Exchange Commission (SEC) on March 16, 2017,
and are incorporated herein by reference.
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Other Benefits
. Mr. Johnston will be eligible to participate in the health, welfare and other benefits plans and arrangements as generally made available to HCPs other senior vice presidents. HCP will
also reimburse him for up to $150,000 of relocation expenses. If his employment with HCP is terminated for cause or he voluntarily terminates his employment with HCP within 24 months of his start date, he will be required to reimburse HCP for any
relocation reimbursement paid to him.
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There are no family relationships involving Mr. Johnston that would require
disclosure under Item 401(d) of Regulation S-K. There are no current or proposed transactions in which he or any member of his immediate family has, or will have, a direct or indirect material interest that would require disclosure under
Item 404(a) of Regulation S-K.
Departure of Principal Accounting Officer
Effective August 17, 2017, Scott Anderson, HCPs Executive Vice President and Chief Accounting Officer, will depart HCP. In
connection therewith, and subject to the execution of a general release of claims against HCP and compliance with certain confidentiality, non-solicitation and non-competition restrictive covenants, Mr. Anderson will receive severance benefits
pursuant to the Severance Plan, which includes approximately $1.6 million in cash severance to be paid over 24 months, and a partial year bonus
payment of approximately $230,000 that will be paid upon his departure. In addition, Mr. Andersons unvested RSUs awarded before May 6, 2016, will vest immediately upon his
departure, and RSUs awarded after May 6, 2016, will continue to vest according to their original vesting schedule for two years, and thereafter the remaining RSUs will be accelerated. Mr. Andersons vested stock options will remain
exercisable for 12 months following his departure.
The material terms of the Severance Plan are described under the heading
Potential Payments upon a Termination or Change in ControlSeverance Plans in HCPs Definitive Proxy Statement on Schedule 14A, filed with the SEC on March 16, 2017, and are incorporated herein by reference. The
description of the Severance Plan set forth under this Item 5.02 is qualified in its entirety by reference to the complete terms and conditions of the Severance Plan, a copy of which was previously filed as Exhibit 10.3 to HCPs Form 10-Q,
filed with the SEC on November 1, 2016, and is incorporated herein by reference.