Item 5.02(e).
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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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Adoption of Redesigned 2017 Long-Term Incentive Compensation
Program under 2012 Incentive Plan
On January 18, 2017, the Executive Compensation Committee (the
“Committee”) of the Board of Directors (the “Board”) of Ventas, Inc.
(the “Company”) approved a 2017 long-term incentive compensation program
for the Company’s named executive officers (the “2017 LTIP”) and related
forms of award agreement, all pursuant to the Company’s existing,
shareholder-approved 2012 Incentive Plan (the “Plan”).
Unlike in prior years, when long-term incentive compensation awards were
granted following and based on the satisfaction of specified performance
goals (i.e., “retrospective”), performance-based awards made pursuant to
the 2017 LTIP generally will be earned at a higher or lower level based
on future performance (i.e., “prospective”). Under the 2017 LTIP, the
aggregate target award value for each named executive officer is
allocated such that 60% of the value is performance-based, in the form
of performance-based restricted stock units (“pRSUs”), and 40% of the
value is in the form of time-based restricted stock units (“RSUs”). The
Company has eliminated qualitative or discretionary goals from the 2017
LTIP, which previously comprised 50% of the award opportunity.
The time-based RSUs vest ratably on each of the first three
anniversaries of the grant date, generally subject to the continued
employment of the named executive officer, and no portion of such award
is vested on the date of grant. Certain of our named executive officers
are also receiving one-time transition grants of time-based RSUs as a
transition between our prior long-term equity incentive program and our
new 2017 long-term equity incentive program. These transition awards are
intended to partially mitigate the impact of a reduction in the realized
pay for our named executive officers in 2018 and 2019 resulting from the
transition from a backward-looking long-term equity incentive plan to a
forward-looking plan because the new forward-looking pRSU awards do not
pay out, if at all, until 2020. The Committee does not view these awards
as a continuing feature of the long-term incentive plan and there is no
intent to replicate these awards in future years.
The performance-based component of each named executive officer’s award
package under the 2017 LTIP will be earned, if at all, subject to the
Company’s level of achievement of three performance metrics during the
three-year performance period beginning on January 1, 2017 and ending on
December 31, 2019: (1) the Company’s total stockholder return relative
to the MSCI REIT Index, comprising 25% of the overall award opportunity
under the 2017 LTIP; (2) the Company’s total stockholder return relative
to the FTSE NAREIT Equity Health Care Index, comprising 17.5% of the
overall award opportunity under the 2017 LTIP; and (3) the three-year
average of the ratio of the Company’s net debt to EBITDA, comprising
17.5% of the overall award opportunity under the 2017 LTIP.
The time- and performance-based awards granted to the named executive
officers under the 2017 LTIP are subject to “double-trigger” vesting
upon the consummation of a change in control of the Company (i.e., a
qualifying termination of employment occurs within (i) six months before
the public announcement of a transaction which results in a change in
control of the Company, or (ii) 24 months following a change in control
of the Company).
Approval of 2017 LTIP Grants to Named Executive Officers
On January 18, 2017, the Committee approved the awards under the 2017
LTIP for each named executive officer. The range of pRSU payouts is 0% -
220% of target for Ms. Cafaro and 0% - 180% for the other Named
Executive Officers. Ms. Cafaro received pRSUs with a target award
opportunity of 434% of her base salary with threshold and maximum award
opportunities of 33% of target and 220% of target, respectively. Each
Named Executive Officer other than Ms. Cafaro received pRSUs with target
award opportunities ranging from 200% - 250% of their base salaries,
with threshold and maximum award opportunities of 40% of target and 180%
of target, respectively.
The grant date value of the time-based RSU component was equal to 289%
of Ms. Cafaro’s base salary and ranged from 144% to 170% of each other
Named Executive Officer’s base salary. For transition awards, Ms. Cafaro
received a one-time RSU grant equal to approximately 51% of the value of
her regular target annual long-term equity incentive award under 2017
LTIP. Messrs. Probst, Cobb and Riney received one-time RSU grants
ranging from 57% to 59% of the value of each individual’s regular target
annual long-term equity incentive award under the 2017 LTIP. The
Committee does not view these transition awards as a continuing feature
of the long-term incentive plan.
All awards granted pursuant to the 2017 LTIP are subject to the terms
and conditions set forth in the Plan and in the applicable award
agreements.
Approval of Revised Metrics in 2017 Short-Term Cash Incentive
Program
On January 18, 2017, the Committee approved the use of a new Liquidity
Coverage Ratio for the 2017 short-term cash incentive program, weighted
at 15% of the overall award opportunity. The existing Normalized Funds
From Operations per Share, Fixed Charge Coverage and Individual
Performance metrics, weighted at 40%, 10% and 35%, respectively, remain
in use for 2017.