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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No.    )

Filed by the Registrant ý
Filed by a Party other than the Registrant o

Check the appropriate box:

o

 

Preliminary Proxy Statement

o

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

ý

 

Definitive Proxy Statement

o

 

Definitive Additional Materials

o

 

Soliciting Material Pursuant to §240.14a-12

 

VENTAS, INC.
(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

ý

 

No fee required.

o

 

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

 

(1)

 

Title of each class of securities to which transaction applies:

 

 

(2)

 

Aggregate number of securities to which transaction applies:

 

 

(3)

 

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

 

(4)

 

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Total fee paid:

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Fee paid previously with preliminary materials.

o

 

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

 

(1)

 

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Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.


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VENTAS, INC.

NOTICE OF 2012 ANNUAL MEETING OF
STOCKHOLDERS
AND
PROXY STATEMENT

GRAPHIC

   


Table of Contents


TABLE OF CONTENTS

 
  Page

CHAIRMAN'S LETTER

   

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

   

PROXY STATEMENT

   

OVERVIEW OF 2011 PERFORMANCE AND 2012 ANNUAL MEETING

  1

2011 Performance

  1

2011 Executive Compensation

  2

2012 Annual Meeting of Stockholders

  3

Proposals Requiring Your Vote

  4

INFORMATION ABOUT THE ANNUAL MEETING AND VOTING

  6

Information about this Proxy Statement

  6

Information about Voting

  7

Quorum Requirement

  8

Votes Necessary for Action to Be Taken

  9

CORPORATE GOVERNANCE

  10

Our Guidelines on Governance

  10

Governance Information

  10

Our Board Leadership Structure

  10

Our Board's Role in Risk Oversight

  11

Attendance at Meetings

  12

Executive Sessions of Independent Directors

  12

Communications with Directors

  12

Director Nominations and Criteria for Board Membership

  12

Director Independence

  14

Code of Ethics and Business Conduct

  15

Board and Committee Membership

  15

Audit and Compliance Committee

  16

Executive Committee

  17

Executive Compensation Committee

  17

Investment Committee

  19

Nominating and Corporate Governance Committee

  19

Non-Employee Director Compensation

  20

Cash Compensation

  21

Equity-Based Compensation

  21

Non-Employee Director Compensation Review Practices

  22

2011 Non-Employee Director Compensation Table

  23

Minimum Share Ownership Guidelines for Non-Employee Directors

  24

EXECUTIVE OFFICERS

  25

SECURITIES OWNERSHIP

  26

Directors, Director-Nominees and Executive Officers

  26

Director and Executive Officer 10b5-1 Plans

  27

Principal Stockholders

  28

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

  29

TRANSACTIONS WITH RELATED PERSONS

  29

EXECUTIVE COMPENSATION

  31

Compensation Committee Report

  31

Compensation Discussion and Analysis

  31

Executive Summary

  31

Objectives of Our Compensation Program

  34

Compensation Consultant and Benchmarking

  35

Elements of Our Compensation Program

  36

Table of Contents

 
  Page

Other 2011 Compensation Decisions

  46

Compensation of Our Named Executive Officers for 2011, 2010 and 2009 Performance

  47

Severance Benefits

  48

Tax Considerations

  49

Minimum Share Ownership Guidelines for Executive Officers

  49

Adjustment or Recovery of Awards

  49

Amendments to Employment and Change of Control Severance Agreements

  50

Compensation Tables

  51

2011 Summary Compensation Table

  51

2011 Grants of Plan-Based Awards Table

  52

2011 Outstanding Equity Awards at Fiscal Year-End Table

  53

2011 Options Exercised and Stock Vested Table

  54

Employment and Change of Control Severance Agreements with Named Executive Officers

  55

Potential Payments upon Termination or Change of Control

  62

EQUITY COMPENSATION PLAN INFORMATION

  66

PROPOSALS REQUIRING YOUR VOTE

  67

Proposal 1: Election of Directors

  67

Proposal 2: Ratification of the Selection of Ernst & Young as Our Independent Registered Public Accounting Firm for Fiscal Year 2012

  74

Audit and Non-Audit Fees

  75

Audit Committee Report

  75

Policy on Pre-Approval of Audit and Permissible Non-Audit Services

  76

Proposal 3: Advisory Vote on Our Executive Compensation

  77

Proposal 4: Adoption of the Ventas, Inc. 2012 Incentive Plan

  79

Plan Administration and Eligibility

  79

Shares Available for Issuance

  80

Awards under the Incentive Plan

  81

Change in Control

  83

Amendments and Termination

  83

Federal Income Tax Considerations

  83

New Plan Benefits

  86

Approval of the Incentive Plan

  87

REQUIREMENTS FOR SUBMISSION OF STOCKHOLDER PROPOSALS, DIRECTOR NOMINATIONS AND OTHER BUSINESS

  87

ADDITIONAL INFORMATION

  88

ANNEX A: VENTAS, INC. 2012 INCENTIVE PLAN

  A-1

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LOGO

353 North Clark Street
Suite 3300
Chicago, Illinois 60654
(877) 483-6827

April 2, 2012

Dear Stockholder:

              I am pleased to invite you to attend Ventas, Inc.'s 2012 Annual Meeting of Stockholders. This year's meeting will be held at 8:00 a.m. local time (Central) on Thursday, May 17, 2012, at 353 North Clark Street in Chicago, Illinois.

              Please refer to the accompanying Notice of Annual Meeting of Stockholders and Proxy Statement for detailed information on each of the proposals to be considered and acted upon at the meeting.

              Your vote is very important – if you do not vote your shares, you will not have a say in the matters to be voted on at the meeting. To ensure your vote is recorded promptly, I urge you to vote your shares as soon as possible by telephone, over the Internet or, if you have requested paper copies of our proxy materials by mail, by signing, dating and returning the proxy card in the envelope provided, even if you plan to attend the meeting in person.

              The Board of Directors appreciates your interest in Ventas, Inc.

Sincerely,

SIGNATURE

Debra A. Cafaro
Chairman of the Board and Chief Executive Officer


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LOGO

353 North Clark Street
Suite 3300
Chicago, Illinois 60654
(877) 483-6827


NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

              The 2012 Annual Meeting of Stockholders of Ventas, Inc. will be held at 8:00 a.m. local time (Central) on Thursday, May 17, 2012, at 353 North Clark Street, Mesirow Financial Auditorium, Chicago, Illinois 60654. We are holding the Annual Meeting to consider and vote on the following matters:

      1.
      The election of eleven directors nominated by our Board of Directors and named in the Proxy Statement to hold office until the next annual meeting of stockholders or until their respective successors have been duly elected and qualified;

      2.
      The ratification of the selection of Ernst & Young LLP as our independent registered public accounting firm for fiscal year 2012;

      3.
      An advisory vote to approve our executive compensation;

      4.
      The adoption of the Ventas, Inc. 2012 Incentive Plan; and

      5.
      Such other business as may properly come before the meeting or any adjournments thereof.

              The Proxy Statement, which follows this Notice, fully describes these matters. We have not received notice of any other proposals to be presented at the Annual Meeting.

              You may vote at the Annual Meeting and any postponements or adjournments thereof if you were a stockholder of record as of the close of business on March 20, 2012, the record date for the meeting. For ten days prior to the Annual Meeting, a list of shareholders entitled to vote will be available for inspection at our principal executive offices located at 353 North Clark Street, Suite 3300, Chicago, Illinois 60654.

              We ask that you vote your shares promptly by telephone, over the Internet or, if you have requested paper copies of our proxy materials by mail, by signing, dating and returning the proxy card in the envelope provided. This will not prevent you from voting your shares in person if you choose to attend the Annual Meeting.

By Order of the Board of Directors,

SIGNATURE

Kristen M. Benson
Vice President, Associate General Counsel
    and Corporate Secretary

Chicago, Illinois
April 2, 2012

 


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GRAPHIC

PROXY STATEMENT


OVERVIEW OF 2011 PERFORMANCE AND 2012 ANNUAL MEETING

We prepared the following overview to assist you in reviewing our 2011 performance and the matters to be voted upon at the 2012 Annual Meeting of Stockholders. For further information, please review our Annual Report on Form 10-K for the year ended December 31, 2011 and the other information in this Proxy Statement.

2011 Performance

       In 2011, we delivered our ninth consecutive year of growth in normalized Funds From Operations ("FFO"), which increased 71% to $777.0 million. Our normalized FFO per diluted share rose 17% to $3.37, while we also built a stronger capital base containing 46% more outstanding shares. Our total shareholder return ("TSR") exceeded the returns of the S&P 500® index and MSCI US REIT (RMZ) index for the one, three, five and ten years ended December 31, 2011. TSR was strong at 9.8% for 2011 and 721.3%, 67.3% and 91.2% for the ten, five and three years ended December 31, 2011, respectively. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures—Funds From Operations and Normalized Funds From Operations" on page 74 of our Annual Report on Form 10-K for the year ended December 31, 2011 for a reconciliation of normalized FFO to net income attributable to common stockholders computed in accordance with U.S. generally accepted accounting principles.

    2011 Operational Highlights
>$11 billion
Acquisitions
closed in 2011

1,378
Properties in
highly diversified
portfolio
 

       We completed more than $11 billion in acquisitions that expanded our portfolio to 1,378 properties as of December 31, 2011 and provided additional diversification by asset class, tenant/operator/manager, geographic location, revenue source and business model, including through the following:

Acquisition of publicly traded Nationwide Health Properties, Inc. ("NHP") and its 643 seniors housing and healthcare properties

Acquisition of 117 private pay seniors housing communities located in affluent coastal markets from Atria Senior Living Group, Inc. (together with its affiliates, "ASLG")

Investment of approximately $329.5 million in medical office buildings ("MOBs") and seniors housing communities

Execution of a definitive agreement to acquire Cogdell Spencer Inc. ("Cogdell") and its 72 high quality MOBs, which would expand our MOB business to over 21 million square feet

 


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Consistent Superior Compound Annual TSR


GRAPHIC

 

8%
Compound annual
growth rate in cash
dividend since 2004

  

23.4%
Compound annual TSR
for ten years ended
December 31, 2011

     

 

$2 billion   2011 Financial Highlights

Borrowing
capacity under
new revolving
credit facility

 

29%
Debt to Total
Capitalization at
December 31,
2011

        

         We improved our attractive cost of capital and strengthened our liquidity and balance sheet, including through the following:  
    

Ratings upgrades from each of Fitch Ratings, Moody's Investors Service and Standard & Poor's Ratings Services

Issuance of an aggregate of 130.3 million shares of our common stock at a weighted average price of $55.50, which is 97% of the 2011 high closing price of our common stock ($57.19)

Entrance into a new $2.0 billion unsecured revolving credit facility due 2015 with attractive pricing, as of December 31, 2011, of LIBOR plus 110 basis points

Entrance into a new $500 million unsecured term loan facility with a weighted average maturity of 4.5 years and attractive pricing, as of December 31, 2011, of LIBOR plus 125 basis points

Issuance and sale of $700.0 million aggregate principal amount of 4.750% senior notes due 2021

2011 Executive Compensation

Elements of Executive Compensation

       The principal components of our executive compensation are base salary, annual cash incentive compensation and long-term incentive compensation. We emphasize variable pay and long-term incentive compensation to achieve greater alignment with stockholders, focus decision makers on long-term value and encourage prudent evaluation of risks. See page 36 for a discussion of the elements of our compensation program.

 

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2011 Compensation Practices at a Glance

DO maintain a Compensation Committee comprised solely of independent directors

DO continue the Compensation Committee's engagement of an outside independent compensation consultant

DO link a substantial portion of total direct compensation to goals established by the Compensation Committee to measure executive officer performance and contributions to stockholder value

DO require significant share ownership for our executive officers and directors to further align interests with our stockholders

DO NOT provide executive officers with excessive perquisites

DO NOT enter into new agreements that provide tax gross-up payments on severance benefits or single trigger change of control benefits

DO NOT permit executive officers and directors to engage in derivative and other hedging transactions in our securities

 

2011 Chief Executive Officer
Total Direct Compensation (Target %)


GRAPHIC

2011 Named Executive Officers
(other than Chief Executive Officer)
Average Total Direct Compensation (Target %)


GRAPHIC

       Our 2011 compensation decisions supported our general executive compensation philosophy of promoting a performance- and achievement-oriented environment that provides the opportunity for our executive officers to earn market-competitive levels of compensation. In this regard, our Named Executive Officers' 2011 compensation reflected our exceptional financial and operational performance during the year. See page 31 for a discussion of the compensation earned by our Named Executive Officers for their 2011 performance and the factors considered by our Compensation Committee and the independent members of our Board of Directors in determining this compensation.

2012 Annual Meeting of Stockholders

Attending the Annual Meeting

Who:    Stockholders of record on March 20, 2012
When:    Thursday, May 17, 2012, 8:00 a.m. local time (Central)
Where:    353 North Clark Street, Mesirow Financial Auditorium, Chicago, Illinois 60654

Voting at the Annual Meeting

Vote by Telephone:  Call (800) 690-6903, 24 hours a day, seven days a week through May 16, 2012
Vote on the Internet:  Visit www.proxyvote.com, 24 hours a day, seven days a week through May 16, 2012
Vote by Mail:  Request, complete and return a copy of the proxy card in the postage-paid envelope provided
Vote in Person:  Request, complete and deposit a copy of the proxy card or complete a ballot at the Annual Meeting

 

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Proposals Requiring Your Vote

Proposal 1 – Election of Directors (see page 67)

       The following table provides summary information about our eleven director-nominees, each of whom currently serves on our Board of Directors. Thomas C. Theobald, a current director, will retire and will not stand for reelection at the Annual Meeting in accordance with the age limit contained in our Guidelines on Governance. In addition, Robert D. Paulson, a current director, has advised our Nominating Committee that he will retire and will not stand for reelection at the Annual Meeting. Directors are elected annually by a majority of votes cast in uncontested elections. The Board recommends that you vote "FOR" each of the named director-nominees.

 
  Name
   
  Age
   
  Served
since

   
  Independence
Status

   
  Committees
   
  Areas of Expertise
   

 

 

Debra A. Cafaro
Chairman and CEO of Ventas

        54         1999       Employed by Ventas       Executive
Investment
      Real Estate Industry, Corporate Finance, Capital Markets, Strategic Planning    

 

 

Douglas Crocker II*
Chairman and Chief Investment Officer of Pearlmark Multifamily Partners, L.L.C.

        72         1998       Independent       Executive
Investment (Chair)
Nominating
      Real Estate Industry, Corporate Finance, Mergers and Acquisitions, Strategic Planning, Executive Compensation    

 

 

Ronald G. Geary
President of Ellis Park Race Course, Inc.

        64         1998       Independent       Investment
Nominating
      Healthcare Industry, Corporate Finance, Government Relations, International Operations, Strategic Planning    

 

 

Jay M. Gellert
President and CEO of Health Net, Inc.

        58         2001       Independent       Compensation (Chair)       Healthcare Industry, Government Relations, Executive Compensation, Mergers and Acquisitions, Strategic Planning    

 

 

Richard I. Gilchrist
Senior Advisor to The Irvine Company

        66         2011       Independent       Compensation       Real Estate Industry, Strategic Planning    

 

 

Matthew J. Lustig
Managing Principal and CEO of
Lazard Real Estate Partners LLC

        51         2011       Affiliated with Atria Senior Living, Inc., which does business with Ventas             Real Estate Industry, Corporate Finance, Capital Structure, Mergers and Acquisitions, Strategic Transactions    

 

 

Douglas M. Pasquale
Former Chairman, President and CEO of NHP

        57         2011       Former employee of Ventas             Healthcare Industry, Real Estate Industry, Mergers & Acquisitions, Strategic Planning    

 

 

Robert D. Reed
Senior Vice President and Chief Financial Officer of Sutter Health

        59         2008       Independent       Audit (Chair)       Healthcare Industry, Corporate Finance, Capital Intensive Operations, Strategic Planning    

 

 

Sheli Z. Rosenberg
Of Counsel of Skadden, Arps, Slate, Meagher & Flom LLP

        70         2001       Independent       Audit
Executive
Nominating (Chair)
      Real Estate Industry, Corporate Finance, Strategic Planning, Executive Compensation    

 

 

Glenn J. Rufrano
President and CEO of
Cushman & Wakefield, Inc.

        62         2010       Independent       Audit       Real Estate Industry, Strategic Planning, International Operations, Corporate Finance    

 

 

James D. Shelton
Chairman of Legacy Hospital Partners, Inc. and Chairman of Omnicare, Inc.

        58         2008       Independent       Compensation
Investment
      Healthcare Industry, Capital Intensive Operations, Strategic Planning, Government Relations    
*
Presiding Director

 

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Proposal 2 – Ratification of the Selection of Ernst & Young LLP
as Our Independent Registered Public Accounting Firm for Fiscal Year 2012 (see page 74)

       Ernst & Young audited our financial statements for the year ended December 31, 2011 and has been our independent registered public accounting firm since May 1998. The Board recommends that you vote "FOR" the ratification of the selection of Ernst & Young LLP as our independent registered public accounting firm for fiscal year 2012.

Proposal 3 – Advisory Vote to Approve Our Executive Compensation (see page 77)

       At our 2011 Annual Meeting of Stockholders, holders of approximately 96% of shares represented at the meeting voted to approve, on an advisory basis, our executive compensation. Our stockholders' strong support for our executive compensation at our 2011 Annual Meeting of Stockholders was a factor considered by the Compensation Committee in 2011 in continuing the structure of our executive compensation program without significant changes. The Board recommends that you vote "FOR" the approval, on an advisory basis, of our executive compensation.

Proposal 4 – Adoption of the Ventas, Inc. 2012 Incentive Plan (see page 79)

       We have not requested the approval of a new equity incentive plan or an increase in the number of shares available for issuance under our existing incentive plans since 2006. To enable us to continue to attract, retain and motivate talented employees and to attract and retain individuals of the highest quality to serve as non-employee directors, as well as to continue our alignment of director and executive officer interests with long-term stockholder interests, we are asking our stockholders to approve the adoption of the Ventas, Inc. 2012 Incentive Plan, which will replace the existing Ventas, Inc. 2006 Incentive Plan and Ventas, Inc. 2006 Stock Plan for Directors. The Board recommends that you vote "FOR" the adoption of the Ventas, Inc. 2012 Incentive Plan.

 

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INFORMATION ABOUT THE ANNUAL MEETING AND VOTING


Information about this Proxy Statement

Solicitation of Proxies

              This Proxy Statement is being furnished in connection with the solicitation of proxies by or on behalf of the Board of Directors (the "Board") of Ventas, Inc. ("Ventas," "we" or "us") for use at our Annual Meeting of Stockholders (the "Annual Meeting") to be held at 8:00 a.m. local time (Central) on Thursday, May 17, 2012 at 353 North Clark Street, Mesirow Financial Auditorium, Chicago, Illinois 60654, and at any adjournments thereof. This Proxy Statement includes information that we are required to provide to you under the rules of the Securities and Exchange Commission ("SEC") and the New York Stock Exchange ("NYSE") and that is designed to assist you in voting your shares.

Notice of Electronic Availability of Proxy Statement and Annual Report

              We are making this Proxy Statement and the materials accompanying it available to our stockholders electronically via the Internet, as permitted by the SEC's rules. We will mail to stockholders a Notice of Internet Availability containing instructions on how to access our proxy materials and how to vote online. Starting on or about April 2, 2012, we will also mail this Proxy Statement and the materials accompanying it to stockholders who have requested paper copies. If you would like to receive a printed copy of our proxy materials by mail, you should follow the instructions for requesting those materials included in the Notice described above.


IMPORTANT NOTICE REGARDING INTERNET AVAILABILITY OF PROXY MATERIALS
FOR THE ANNUAL MEETING TO BE HELD ON MAY 17, 2012:

This Proxy Statement, our 2011 Annual Report and our 2011 Form 10-K are available at
www.proxyvote.com.

Householding

              We have adopted a procedure, approved by the SEC, which permits us to deliver a single set of proxy materials (other than proxy cards, which will remain separate) to stockholders who have the same address and consent in writing to this delivery method or to stockholders who have the same address and last name, unless we are notified that one or more of these stockholders wishes to continue receiving individual copies. This procedure, known as "householding," is designed to eliminate duplicate mailings and conserve natural resources and will reduce our printing costs and postage fees.

              If you share an address with another stockholder and currently receive multiple copies of our proxy materials, but wish to receive only a single copy of such documents for your household, please contact Broadridge Financial Solutions, Inc. at (800) 542-1061 or in writing at Householding Department, 51 Mercedes Way, Edgewood, NY 11717. Similarly, if you currently participate in householding and wish to receive a separate copy of our proxy materials, please contact Broadridge as indicated above. Upon receipt of your request, we will promptly deliver the requested materials to you.


Cost of Proxy Solicitation

              We will bear the cost of soliciting proxies by the Board. In addition to mail, proxies may be solicited in person or by telephone or electronic communication by our directors, officers and

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employees, none of whom will receive additional compensation for these services. We have engaged Georgeson Inc. to distribute and solicit proxies. We will pay Georgeson Inc. a fee of $9,500, plus reimbursement of reasonable out-of-pocket expenses, for these services. We will also reimburse brokers and other nominees for their reasonable out-of-pocket expenses incurred in connection with distributing forms of proxies and proxy materials to the beneficial owners of our common stock.


Information about Voting

Who Can Vote

              Only stockholders of record at the close of business on March 20, 2012 are entitled to vote at the Annual Meeting. As of that date, 289,026,857 shares of our common stock, par value $0.25 per share, were outstanding. Each share of our common stock entitles the owner to one vote on each matter properly brought before the Annual Meeting. However, certain shares designated as "Excess Shares" (which are generally any shares owned in excess of 9.0% of the outstanding common stock) or as "Special Excess Shares" pursuant to our Amended and Restated Certificate of Incorporation, as amended ("Charter"), may not be voted by the record owner thereof, but will instead be voted in accordance with Article IX of our Charter.

              A list of all stockholders entitled to vote at the Annual Meeting will be available for inspection by any stockholder for any purpose reasonably related to the Annual Meeting during ordinary business hours for a period of ten days prior to the meeting at our principal executive offices located at 353 North Clark Street, Suite 3300, Chicago, Illinois 60654.

How to Vote

              You may vote your shares in one of several ways, depending on how you own your shares. If you own shares registered in your name (a "stockholder of record"), you may vote in one of the following ways:

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              If you own shares registered in the name of a bank, broker or other holder of record (a "beneficial owner"), you should follow the instructions provided by your broker or nominee in order for your shares to be voted. If you are a beneficial owner and you plan to vote your shares in person at the Annual Meeting, you should contact your broker or nominee to obtain a legal proxy or broker's proxy card and bring it to the Annual Meeting in order to vote.

              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 therein. Shares represented by proxy cards that are signed and returned but do not contain any voting instructions will be voted as the Board recommends, which is:

              Proposal 1 – FOR the election of all nominees for director named in this Proxy Statement;

              Proposal 2 – FOR the ratification of the selection of Ernst & Young LLP as our independent registered public accounting firm for fiscal year 2012;

              Proposal 3 – FOR the approval, on an advisory basis, of our executive compensation;

              Proposal 4 – FOR the adoption of the Ventas, Inc. 2012 Incentive Plan; and

              In the discretion of the proxy holders, on such other business as may properly come before the Annual Meeting.

Revocation of Proxies

              Stockholders of record may revoke a proxy at any time before it is voted at the Annual Meeting by:

              A stockholder of record may also attend the Annual Meeting and vote in person, in which event any prior proxy given by the stockholder will be revoked automatically. Attendance at the Annual Meeting by itself will not constitute revocation of a proxy. Beneficial owners should follow the instructions provided by their broker or nominee to revoke a proxy, if applicable. No dissenters' or appraisal rights are available with respect to the proposals presently being submitted to the stockholders for their consideration at the Annual Meeting.


Quorum Requirement

              The holders of a majority of the shares of our common stock outstanding as of the record date must be present, in person or represented by proxy, to constitute a quorum to transact business at the Annual Meeting. Abstentions and broker non-votes are counted for purposes of establishing a quorum.

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A broker non-vote occurs when a beneficial owner does not provide voting instructions to the broker or nominee with respect to a proposal on which the broker or nominee does not have discretionary authority to vote.

              If you are a beneficial owner, your broker or nominee has discretionary authority, under current NYSE rules, to vote your shares on the ratification of the selection of Ernst & Young LLP as our independent registered public accounting firm for fiscal year 2012 (Proposal 2), even if you do not provide voting instructions. However, your broker or nominee does not have discretionary authority to vote on the election of directors (Proposal 1), the advisory vote to approve our executive compensation (Proposal 3), or the adoption of the Ventas, Inc. 2012 Incentive Plan (Proposal 4) without instructions from you, in which case your shares will not be voted on these matters.


Votes Necessary for Action to Be Taken

Election of Directors (Proposal 1)

              Under our Fourth Amended and Restated By-Laws, as amended ("By-Laws"), directors must be elected by a majority of votes cast in uncontested elections. This means that the number of votes cast "for" a director-nominee must exceed the number of votes cast "against" that nominee. Abstentions and broker non-votes are not counted as votes "for" or "against" a director-nominee and, therefore, will have no effect. Under our Director Resignation Policy, in an uncontested election, any incumbent director-nominee who does not receive a majority of votes cast "for" his or her election must tender his or her resignation promptly following the certification of the election results. Following consideration, our Nominating and Corporate Governance Committee (the "Nominating Committee") will then make a recommendation to the Board as to whether it should accept or reject such resignation. Thereafter, the Board must decide whether to accept or reject such resignation and to publicly disclose its decision. In contested elections, the required vote is a plurality of votes cast.


Ratification of the Selection of Ernst & Young LLP as Our Independent Registered Public Accounting Firm for Fiscal Year 2012 (Proposal 2)

              Under our By-Laws, the affirmative vote of a majority of the shares present in person or represented by proxy at the Annual Meeting is required to ratify the selection of Ernst & Young LLP as our independent registered public accounting firm for 2012. Abstentions will have the same effect as votes against such proposal, and broker non-votes will have no effect.


Advisory Vote to Approve Our Executive Compensation (Proposal 3)

              The affirmative vote of a majority of the shares present in person or represented by proxy at the Annual Meeting is required to approve, on an advisory basis, our executive compensation. Abstentions will have the same effect as votes against such proposal, and broker non-votes will have no effect.


Adoption of the Ventas, Inc. 2012 Incentive Plan (Proposal 4)

              The affirmative vote of a majority of the shares present in person or represented by proxy at the Annual Meeting is required to approve the adoption of the Ventas, Inc. 2012 Incentive Plan, provided that the number of votes cast represents more than 50% of the shares entitled to vote thereon. Abstentions will have the same effect as votes against such proposal, and broker non-votes will have no effect unless they represent, in the aggregate, 50% or more of the shares entitled to vote on the proposal.

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              The affirmative vote of a majority of the shares present in person or represented by proxy at the Annual Meeting will be necessary to approve any other proposal that may properly come before the Annual Meeting. Accordingly, abstentions will have the same effect as votes against any such proposal, and broker non-votes will have no effect.


CORPORATE GOVERNANCE


Our Guidelines on Governance

              Our Guidelines on Governance reflect the fundamental corporate governance principles by which our Board and its committees operate. These guidelines set forth general practices the Board follows with respect to Board structure and function, Board and committee organization and composition, and Board conduct. These guidelines are reviewed at least annually by the Nominating Committee and updated periodically in response to changing regulatory requirements, evolving corporate governance practices, input from our stockholders and otherwise as circumstances warrant.

              Our Guidelines on Governance are available in the Corporate Governance section of our website at www.ventasreit.com/investor-relations/corporate-governance. In addition, we will provide a copy of our Guidelines on Governance, without charge, upon request to our Corporate Secretary at Ventas, Inc., 353 North Clark Street, Suite 3300, Chicago, Illinois 60654. The information on our website is not a part of this Proxy Statement.


Governance Information

              In general, our Board provides guidance and oversight with respect to our financial and operating performance, strategic plans, key corporate policies and decisions and enterprise risk management. Among other matters, our Board considers and approves significant acquisitions, dispositions and other transactions, advises and counsels senior management on key financial and business objectives, and monitors our progress with respect to these matters. Members of the Board are kept informed about matters affecting our business by various reports and materials provided to them on a regular basis by senior management, including presentations made at Board and committee meetings by our Chief Executive Officer, President, Chief Financial Officer and other members of senior management.


Our Board Leadership Structure

              Our Board recognizes that one of its key responsibilities is to evaluate and determine its optimal leadership structure so as to provide effective oversight of management. The Board understands that there is no single, generally accepted approach to providing Board leadership and that different structures may be appropriate for companies of varying sizes and performance characteristics and with different histories and culture. Consistent with this understanding, our Board (led by the Nominating Committee) considers its leadership structure as part of its annual self-evaluation process, taking into account our existing operations and the current governance environment, to determine the optimal leadership structure for us and for our stockholders.

              Pursuant to our By-Laws and Guidelines on Governance, the Board has discretion in evaluating its leadership structure to determine whether to separate or combine the roles of our Chief Executive Officer and Chairman of the Board. Debra A. Cafaro has served as both our Chief Executive Officer and Chairman of the Board since 2003, and the Board continues to believe that her combined role is the optimal structure for us and our stockholders because it enables decisive leadership, ensures

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clear accountability and enhances our ability to consistently communicate our message and strategy to all of our stakeholders. Moreover, Ms. Cafaro possesses detailed and in-depth knowledge of the issues, opportunities and challenges facing us and our business and, therefore, is best positioned to develop agendas that focus the Board's time and attention on the most critical matters.

              As required by our Guidelines on Governance, the independent members of our Board, after considering the recommendation of the Nominating Committee, annually select one independent director to serve as Presiding Director, whose specific responsibilities include, among other things, chairing the executive sessions and all other meetings of the independent directors. The Presiding Director also acts as the principal liaison between the Chairman and the independent directors, collaborating with the Chairman to set Board meeting agendas and schedules and to approve materials provided to directors, and has such additional duties as may be assigned from time to time by the independent directors or the Board. While the Presiding Director is elected on an annual basis, the Board generally expects that he or she will serve for more than one year, and Douglas Crocker II has been our Presiding Director since 2003. At this time, our Board believes that our current leadership structure – under which our Chief Executive Officer also serves as Chairman of the Board and a Presiding Director assumes specific responsibilities on behalf of the independent directors – is effective, provides the appropriate balance between the authority of those who oversee our company and those who manage it on a day-to-day basis and achieves the optimal governance model for us and for our stockholders.


Our Board's Role in Risk Oversight

              While management has responsibility for identifying and managing our exposure to risk on a daily basis, our Board plays an active and primary role in overseeing the processes we establish to assess, monitor and mitigate that exposure. The Board, directly and indirectly through its committees, routinely discusses with management the significant risks facing our company and reviews the guidelines, policies and procedures we have in place to address those risks, such as our approval process for investments. Directors regularly receive materials and information, including in-depth and in-person presentations from third-party experts, with respect to specific areas of risk, and the Board engages in comprehensive analyses and dialogue regarding those risks – a practice we have followed since 2008. This process enables the Board to focus on the strategic, financial, operational, legal, regulatory and other risks that are most significant to us and our business, and ensures that the risks we face are well understood, mitigated to the extent reasonable and consistent with the Board's view of our risk profile and risk tolerance.

              In addition to the risk oversight function administered directly by the Board, each of the Audit and Compliance, Executive Compensation, Nominating and Investment Committees exercises oversight related to the risks associated with the particular responsibilities of that committee. In accordance with NYSE requirements, the Audit and Compliance Committee (the "Audit Committee") reviews financial, accounting and internal control risks and the mechanisms through which we assess and manage risk. In addition, the Audit Committee has certain responsibilities with respect to our compliance programs, such as our Code of Ethics and Business Conduct and Whistleblower Policy and Procedures. Similarly, the Executive Compensation Committee (the "Compensation Committee") considers whether the structure of our compensation programs, as they relate to both executive officers and employees generally, encourages excessive risk-taking, and the Nominating Committee focuses on risks related to succession planning. The Investment Committee has responsibility for certain transaction-related risks, including the review of transactions in excess of established dollar thresholds or that involve investments in non-core assets. The chairs of these committees report on such matters to the full Board. We believe that this division of responsibilities is the most effective approach for identifying and addressing the risks facing us and that our Board leadership structure appropriately supports the Board's role in risk oversight.

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Attendance at Meetings

              Our Board held a total of twelve meetings during 2011. Each director attended at least 75% of the total meetings of the Board and the committees on which he or she served that were held during the time he or she was a director in 2011. See "—Board and Committee Membership" below.

              We encourage, but do not require, directors to attend our annual meetings of stockholders. All but two directors who were nominated for reelection at our 2011 Annual Meeting of Stockholders attended that meeting.


Executive Sessions of Independent Directors

              Our independent directors meet in executive session, outside the presence of management, at each regularly scheduled quarterly Board meeting and at other times as necessary or desirable. The Presiding Director chairs all regularly scheduled executive sessions and all other meetings of the independent directors.

              Members of our Audit, Compensation and Nominating Committees also meet in executive session, outside the presence of management, at each regularly scheduled committee meeting and at other times as necessary or desirable.


Communications with Directors

              Stockholders and other parties interested in communicating directly with our Board or any director on Board-related issues may do so by writing to Board of Directors, c/o Corporate Secretary, Ventas, Inc., 353 North Clark Street, Suite 3300, Chicago, Illinois 60654, or by submitting an e-mail to bod@ventasreit.com. Communications addressed to the Board are screened by our Corporate Secretary for appropriateness before distributing to the Board, or to any individual director or directors, as applicable.

              Additionally, stockholders and other parties interested in communicating directly with the Presiding Director of the Board or with the independent directors as a group may do so by writing to Presiding Director, Ventas, Inc., 353 North Clark Street, Suite 3300, Chicago, Illinois 60654, or by sending an e-mail to independentbod@ventasreit.com.


Director Nominations and Criteria for Board Membership

              Our Guidelines on Governance set forth, among other things, the process by which the Nominating Committee identifies and evaluates nominees for Board membership. Under this process, the Nominating Committee annually considers and recommends to the Board a slate of directors for election at the next annual meeting of stockholders. In selecting this slate, the Nominating Committee considers: incumbent directors who have indicated a willingness to continue to serve on our Board; candidates, if any, nominated by our stockholders; and other potential candidates identified by the Nominating Committee. Additionally, if at any time during the year a seat on the Board becomes vacant or a new seat is created, the Nominating Committee considers and recommends to the Board a candidate for appointment to fill the vacant or newly created seat.

              The Nominating Committee regularly reviews the size and composition of the Board in light of our changing requirements and seeks nominees who, taken together as a group, possess the skills and expertise appropriate for an effective Board. In evaluating potential director candidates, the Nominating Committee considers, among other factors, the experience, qualifications and attributes listed below and any additional characteristics that it believes one or more directors should possess,

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based on an assessment of the perceived needs of our Board at that time. The Nominating Committee considers different perspectives, skill sets, education, ages, genders, ethnic origins and business experience in its annual nomination process, although it has not established a formal policy regarding diversity in identifying potential director candidates. No single factor or group of factors is necessarily dispositive of whether a candidate will be recommended by the Nominating Committee. The Nominating Committee considers and applies these same standards in evaluating individuals recommended for nomination to our Board by our stockholders in accordance with the procedures described in this Proxy Statement under "Requirements for Submission of Stockholder Proposals, Director Nominations and Other Business."

              In general, the Nominating Committee seeks to include on our Board a complementary mix of individuals with diverse backgrounds, knowledge and viewpoints reflecting the broad set of challenges that the Board confronts without representing any particular interest group or constituency. Accordingly, our Guidelines on Governance provide that, in general, nominees for membership on the Board should:

In addition, our directors are expected to be active participants in governing our enterprise, and the Nominating Committee looks for certain characteristics common to all Board members, including integrity, independence, leadership ability, constructive and collegial personal attributes, candor and the ability and willingness to evaluate, challenge and stimulate.

              The Board's satisfaction of these criteria is implemented and assessed through ongoing consideration of directors and nominees by the Nominating Committee and the Board, as well as the Board's annual self-evaluation process. Based upon these activities, the Nominating Committee and the Board believe that the director-nominees named in this Proxy Statement satisfy these criteria.

              Matthew J. Lustig was appointed to our Board in May 2011 pursuant to the terms of a Director Appointment Letter we entered into in connection with our acquisition of substantially all of the real estate assets of ASLG. The Director Appointment Letter provided certain affiliates of Lazard Real Estate Partners LLC ("LREP") the right to designate one individual for nomination to our Board for so long as they collectively beneficially owned 3% or more of the outstanding shares of our common stock. Although our obligations under the Director Appointment Letter have terminated, the LREP affiliates continue to own a significant number of shares of our common stock and the Nominating Committee and the Board believe that Mr. Lustig's continued service as a director is beneficial to us and our stockholders. Douglas M. Pasquale, Richard I. Gilchrist and Robert D. Paulson are former NHP directors and were appointed to our Board in July 2011 in connection with our acquisition of NHP.

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              We have from time to time retained search firms and other third parties to assist us in identifying potential candidates based on specific criteria that we provided to them, including the qualifications described above. We may retain search firms and other third parties on similar or other terms in the future.


Director Independence

              Our Guidelines on Governance require that at least a majority of the Board be comprised of directors who meet the criteria for independence under the rules and regulations of the NYSE. For a director to be considered independent under the NYSE's listing standards, the Board must affirmatively determine that the director has no direct or indirect material relationship with us. The Board has evaluated the independence of each non-management director on a case-by-case basis. The Board considered any matters that could affect the ability of the non-management director to exercise independent judgment in carrying out his or her responsibilities as a director, including all transactions and relationships between such director, his or her family members and organizations with which the director or his or her family members have an affiliation, on the one hand, and us, our subsidiaries and our management, on the other hand. Any such matters were evaluated from the standpoint of both the director and the persons or organizations with which the director has an affiliation, and each director abstained from the vote pertaining to the determination of his or her independence.

              Based on its review, the Board affirmatively determined that each of the following directors has no direct or indirect material relationship with us and therefore qualifies as independent under the NYSE's standards: Douglas Crocker II, Ronald G. Geary, Jay M. Gellert, Richard I. Gilchrist, Robert D. Paulson, Robert D. Reed, Sheli Z. Rosenberg, Glenn J. Rufrano, James D. Shelton and Thomas C. Theobald. Ms. Cafaro is not considered independent under the NYSE listing standards due to her employment as our Chairman and Chief Executive Officer. Mr. Lustig is not considered independent under the NYSE listing standards as a result of his affiliation with LREP and his service as Chairman of Atria Senior Living, Inc. ("Atria"), an entity that manages, as of December 31, 2011, 118 of our seniors housing properties. Mr. Pasquale is not considered independent under the NYSE listing standards because of his employment as Senior Advisor to our Chief Executive Officer from July 1, 2011 through December 31, 2011.

              In evaluating the independence of Mr. Gilchrist, Mr. Reed and Mr. Rufrano, the Board considered the following:

The Board does not believe these relationships will affect the ability of Mr. Gilchrist, Mr. Reed or Mr. Rufrano to exercise independent judgment in carrying out their responsibilities as directors of Ventas. See "Transactions with Related Persons."

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Code of Ethics and Business Conduct

              All of our directors and employees, including our Chief Executive Officer, our Chief Financial Officer and our Chief Accounting Officer and Controller, as well as all of the directors and officers of our subsidiaries, are required to comply with our Code of Ethics and Business Conduct to ensure that our business is conducted in accordance with consistent legal and ethical standards. Our Code of Ethics and Business Conduct covers all major areas of professional conduct, including employment practices, conflicts of interest, unfair or unethical use of corporate opportunities, protection of confidential information and other company assets, compliance with applicable laws and regulations, and proper and timely reporting of financial results.

              Our Code of Ethics and Business Conduct is available in the Corporate Governance section of our website at www.ventasreit.com/investor-relations/corporate-governance. In addition, we will provide a copy of our Code of Ethics and Business Conduct, without charge, upon request to our Corporate Secretary at Ventas, Inc., 353 North Clark Street, Suite 3300, Chicago, Illinois 60654. Waivers from, and amendments to, our Code of Ethics and Business Conduct that apply to our Chief Executive Officer, Chief Financial Officer or persons performing similar functions will be timely posted on our website at www.ventasreit.com. The information on our website is not a part of this Proxy Statement.


Board and Committee Membership

              Our Board has five standing committees that perform certain functions for the Board: the Audit Committee; the Compensation Committee; the Executive Committee; the Investment Committee; and the Nominating Committee.

              The table below provides current membership and 2011 meeting information for each of our Board committees:

 
  Name
   
  Audit
Committee

   
  Compensation
Committee

   
  Executive
Committee

   
  Investment
Committee

   
  Nominating
Committee

   

 

 

Debra A. Cafaro

                      M       M            

 

 

Douglas Crocker II*

                      M       C       M    

 

 

Ronald G. Geary

                              M       M    

 

 

Jay M. Gellert

              C                            

 

 

Richard I. Gilchrist

              M                            

 

 

Matthew J. Lustig

                                           

 

 

Douglas M. Pasquale

                                           

 

 

Robert D. Paulson

                      M                    

 

 

Robert D. Reed

      C                                    

 

 

Sheli Z. Rosenberg

      M               M               C    

 

 

Glenn J. Rufrano

      M                                    

 

 

James D. Shelton

              M               M            

 

 

Thomas C. Theobald

              M       C                    

 

 

    Total Meetings in 2011

      5       8       0       4       5    

* Presiding Director
C = Committee chair
M = Committee member

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              Each of the Audit, Compensation and Nominating Committees operates pursuant to a written charter. These charters are available in the Corporate Governance section of our website at www.ventasreit.com/investor-relations/corporate-governance. In addition, we will provide copies of the Audit, Compensation and Nominating Committee charters, without charge, upon request to our Corporate Secretary at Ventas, Inc., 353 North Clark Street, Suite 3300, Chicago, Illinois, 60654. Information on our website is not a part of this Proxy Statement.


Audit and Compliance Committee

              The Audit Committee assists the Board in fulfilling its responsibilities relating to our accounting and reporting practices, including oversight of the quality and integrity of our financial statements, our compliance with legal and regulatory requirements, the independent registered public accounting firm's qualifications and independence, and the performance of our internal audit function and independent registered public accounting firm. Among other things, the Audit Committee:

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              The Audit Committee maintains free and open communication with the Board, our independent registered public accounting firm, our internal auditors and our financial and accounting management. The Audit Committee meets separately in executive session, outside the presence of management, with each of the independent registered public accounting firm and the internal auditors at each regularly scheduled meeting and at other times as necessary or desirable.

              The Board has determined that each member of the Audit Committee is independent and satisfies the independence standards of the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") and related rules and regulations of the SEC and the NYSE listing standards, including the additional independence requirements for audit committee members. The Board has also determined that each member of the Audit Committee is financially literate and qualifies as an "audit committee financial expert" for purposes of the SEC's rules.


Executive Committee

              The Board has delegated to the Executive Committee the power to direct the management of our business and affairs in emergency situations during the intervals between meetings of the Board, except for matters specifically reserved for the Board and its other committees. The Executive Committee exercises its delegated authority only under extraordinary circumstances and has not held a meeting since 2002.


Executive Compensation Committee

              The Compensation Committee has primary responsibility for the design, review, approval and administration of all aspects of our executive compensation program. The Compensation Committee makes all compensation decisions for, and reviews the performance of, each of our executive officers other than our Chief Executive Officer. The Compensation Committee also reviews the performance of, and makes compensation recommendations for, our Chief Executive Officer. Final decisions

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regarding compensation for our Chief Executive Officer are made by the independent members of the Board, taking into consideration the Compensation Committee's recommendations.

              The Compensation Committee meets throughout the year to review our compensation philosophy and its continued alignment with our business goals and to consider and approve the executive compensation program for the coming year. The Compensation Committee, with the assistance of a nationally recognized independent compensation consultant, discusses changes, if any, to the program structure, assesses the appropriate peer comparators, sets base salaries, determines annual and long-term incentive award levels and establishes the applicable performance goals for annual and long-term incentive awards for our executive officers.

              Our executive officers provide support to the Compensation Committee by coordinating meeting logistics, preparing and disseminating relevant financial and non-financial company information and relevant data concerning our peer comparators as a supplement to the comparative market data prepared by the compensation consultant, and making recommendations with respect to goals and related performance metrics. Our Chief Executive Officer attends meetings at the Compensation Committee's request and recommends to the Compensation Committee compensation changes affecting the other executive officers. However, our Chief Executive Officer does not play any role in setting her own compensation. In addition, at the Compensation Committee's request, our General Counsel, Corporate Secretary or Senior Vice President, Human Resources will attend meetings to act as secretary and record the minutes of the meetings. At a minimum at each regularly scheduled meeting, the Compensation Committee meets in executive session without management present.

              The Compensation Committee meets during the first quarter of each year, typically in January, to review the achievement of performance goals for executives, to determine annual and long-term incentive awards for the prior year and to approve equity award grants to our executive officers and, based on management's recommendation, other employees. Our executive officers provide support to the Compensation Committee in this process, and the Chief Executive Officer makes award recommendations with respect to the other executive officers.

              The Board has determined that each member of the Compensation Committee is independent and satisfies the NYSE listing standards. The Board has also determined that each member of the Compensation Committee meets the additional requirements for compensation committee members under Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), and Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act").

              Under its charter, the Compensation Committee has authority to retain compensation consultants, outside counsel and other advisors that the Compensation Committee deems appropriate, in its sole discretion, to assist it in discharging its duties and to approve the terms of retention and fees to be paid to those consultants and advisors. The compensation consultant reports to the Compensation Committee and receives no fees from us that are unrelated to its role as advisor to our Board and its committees. Although the compensation consultant periodically interacts with company employees to gather and review information related to our executive compensation program, this work is done at the direction of the Compensation Committee. Pursuant to our Compensation Consultant Independence Policy, any compensation consultant retained by the Compensation Committee must be independent, as determined annually by the Compensation Committee in its reasonable business judgment, considering all relevant facts and circumstances.

              Pearl Meyer & Partners ("PM&P") has served as the Compensation Committee's independent consultant since 2006. In 2011, the Compensation Committee retained PM&P to advise it and the

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independent members of the Board, as applicable, on matters related to our executive compensation levels and program design for 2012. The Compensation Committee reviews the scope of work provided by PM&P on an annual basis and, in connection with PM&P's engagement in 2011, determined that PM&P met the independence criteria under our Compensation Consultant Independence Policy and applicable SEC guidelines. Also in 2011, the Nominating Committee retained PM&P to advise it and the Board on matters related to non-employee director compensation levels and program design for 2012. PM&P and its affiliates did not perform any other consulting services for us during the year ended December 31, 2011.

              The Compensation Committee annually considers whether our compensation policies and practices for all employees, including our executive officers, create risks that are reasonably likely to have a material adverse effect on our company. As part of this risk assessment in 2012, management reviewed our existing compensation plans and programs, including our severance and change-in-control arrangements, in the context of our business risk environment. In its review, the Compensation Committee noted several design features of our compensation programs that reduce the likelihood of excessive risk-taking, including, without limitation: a balanced mix of cash and equity compensation and annual and long-term incentives; multiple performance measures with payouts capped and subject to the Compensation Committee's or the Board's overall assessment of performance; equity compensation weighted more heavily towards restricted stock than stock options to provide greater incentive to create and preserve long-term stockholder value; and minimum stock ownership guidelines that align with long-term stockholder interests. Based on its evaluation, the Compensation Committee determined, in its reasonable business judgment, that our compensation practices and policies for all employees do not encourage excessive risk-taking and instead promote behaviors that support long-term sustainability and stockholder value creation.

              During the year ended December 31, 2011, Messrs. Gellert, Gilchrist, Shelton and Theobald served on the Compensation Committee. No member of the Compensation Committee is, or has been, employed by us or our subsidiaries or is an employee of any entity for which any of our executive officers serves on the board of directors.


Investment Committee

              The function of the Investment Committee is to review and approve certain investments in, and acquisitions or development of, seniors housing and healthcare properties, as well as divestitures of properties, in accordance with our Amended and Restated Investment and Divestiture Approval Policy.


Nominating and Corporate Governance Committee

              The Nominating Committee is responsible for matters of corporate governance and matters relating to the practices, policies and procedures of the Board, such as: identifying individuals qualified to become members of the Board; selecting, or recommending to the Board for selection, director-nominees; overseeing evaluation of the Board and Board committees; developing and recommending to the Board a set of corporate governance guidelines and the corporate code of ethics; and generally advising the Board on corporate governance and related matters. Under the terms of its charter, the Nominating Committee also:

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              The Nominating Committee has the authority to form subcommittees of independent directors and delegate its authority, to the extent not otherwise inconsistent with its obligations and responsibilities.

              The Board has determined that each member of the Nominating Committee is independent and satisfies the NYSE listing standards.


Non-Employee Director Compensation

              Our Board believes that the compensation paid to our non-employee directors should be competitive with comparable companies and should enable us to attract and retain individuals of the highest quality to serve as our directors. In addition, the Board believes that a significant portion of that compensation should align director interests with the long-term interests of our stockholders. Accordingly, non-employee directors receive a combination of cash and equity-based compensation for their services. Each of these components is described below. We also reimburse each non-employee director for travel and other expenses associated with attending Board and committee meetings, director education programs and other Board-related activities.

              Ms. Cafaro, our only employee director, does not receive compensation for her service as a director. Mr. Pasquale, who served as Senior Advisor to our Chief Executive Officer from July 1, 2011 through December 31, 2011, did not receive compensation for his service as a director during 2011.

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Cash Compensation

              The cash compensation paid to, or earned by, our non-employee directors in 2011 was comprised of the following three components:

              Pursuant to our Nonemployee Directors' Deferred Stock Compensation Plan (the "Director Deferred Compensation Plan"), non-employee directors may elect to defer receipt of all or a portion of their retainer and meeting fees. Deferred fees are credited to each participating director in the form of stock units, based on the fair market value of our common stock on the deferral date. At the prior election of the participating director, dividend equivalents on the stock units are paid either in additional units or cash. After a participating director ceases to serve on the Board, or at such later time as he or she has previously designated, the director's stock unit account is settled in whole shares of our common stock on a one-for-one basis and distributed either in one lump sum or in installments over a period of not more than ten years, at the director's prior election. Fractional stock units are paid out in cash.


Equity-Based Compensation

              The equity-based compensation paid to our non-employee directors in 2011 consisted of stock options and shares of restricted stock or restricted stock units, at the director's prior election, granted pursuant to our 2006 Stock Plan for Directors as follows:

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              Stock options granted to our non-employee directors generally vest in two equal annual installments, beginning on the date of grant, and are subject to a ten-year term. The stock option exercise price is the closing price of our common stock on the date of grant. Shares of restricted stock and restricted stock units granted to our non-employee directors generally vest in two equal annual installments, beginning on the first anniversary of the date of grant.


Non-Employee Director Compensation Review Practices

              The Nominating Committee is responsible for annually reviewing the amount and types of compensation to be paid to our non-employee directors, and any changes to our non-employee director compensation program must be recommended by the Nominating Committee for approval by the Board. As part of its annual review, the Nominating Committee may consider information contained in surveys compiled by the National Association of Corporate Directors or the National Association of Real Estate Investment Trusts ("NAREIT") and may retain an independent compensation consultant to advise it on appropriate director compensation levels. In 2011, the Nominating Committee retained PM&P to advise on matters related to non-employee director compensation levels and program design for 2012.

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2011 Non-Employee Director Compensation Table

              The following table sets forth the compensation awarded or paid to, or earned by, our non-employee directors during 2011:

 
  Name
   
  Fees
Earned
or Paid
in Cash
($)(1)

   
  Stock
Awards
($)(2)

   
  Option
Awards
($)(3)

   
  Non-Equity
Incentive Plan
Compensation
($)

   
  Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($)

   
  All Other
Compensation
($)

   
  Total
($)

   

 

 

D. Crocker II

      $ 125,500       $ 53,800       $ 46,200                               $ 225,500    

 

 

R. Geary

        110,000         53,800         46,200                                 210,000    

 

 

J. Gellert

        104,500         53,800         46,200                                 204,500    

 

 

R. Gilchrist(4)

        42,000         28,185         22,226                                 92,411    

 

 

M. Lustig(5)

        42,000         35,531         28,304                                 105,835    

 

 

R. Paulson(4)

        42,000         28,185         22,226                                 92,411    

 

 

R. Reed

        102,000         53,800         46,200                                 202,000    

 

 

S. Rosenberg

        118,000         53,800         46,200                                 218,000    

 

 

G. Rufrano

        89,500         53,800         46,200                                 189,500    

 

 

J. Shelton

        104,000         53,800         46,200                                 204,000    

 

 

T. Theobald

        99,500         53,800         46,200                                 199,500    
(1)
The amounts shown in this column reflect quarterly retainer and meeting fees described above under "—Cash Compensation." Mr. Crocker received an additional $25,000 retainer in 2011 for his service as the Presiding Director. Of the amounts shown in this column, the following directors elected to defer all or a portion of their retainer and meeting fees pursuant to the Director Deferred Compensation Plan described above and were credited with the following stock units: Mr. Crocker, $125,500 or 2,385 units; Mr. Gellert, $104,500 or 1,987 units; Mr. Lustig, $42,000 or 813 units; Mr. Rufrano, $89,500 or 1,707 units; and Mr. Shelton, $52,000 or 988 units.

(2)
The amounts shown in this column represent the full grant date fair value of shares of restricted stock or restricted stock units granted to each non-employee director, excluding stock units credited in lieu of retainer and meeting fees, calculated pursuant to Financial Accounting Standards Board ("FASB") guidance regarding fair value provisions for share-based awards. See Note 12 of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2011 for a discussion of the relevant assumptions used in calculating grant date fair value. Directors are generally entitled to dividends paid on vested and unvested shares of restricted stock and dividend equivalents on vested and unvested restricted stock units.

As of December 31, 2011, the aggregate number of unvested shares of restricted stock and restricted stock units held by each non-employee director was as follows:

  Mr. Crocker   1,683 shares
  Mr. Geary   1,683 shares
  Mr. Gellert   1,683 shares
  Mr. Gilchrist   2,524 shares
  Mr. Lustig   2,656 shares
  Mr. Paulson   2,524 shares
  Mr. Reed   1,683 shares
  Ms. Rosenberg   1,683 shares
  Mr. Rufrano   2,406 shares
  Mr. Shelton   1,683 shares
  Mr. Theobald   1,683 shares

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(3)
The amounts shown in this column represent the full grant date fair value of stock options granted to each non-employee director, calculated pursuant to FASB guidance regarding fair value provisions for share-based awards. See Note 12 of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2011 for a discussion of the relevant assumptions used in calculating grant date fair value.

As of December 31, 2011, the aggregate number of shares underlying unexercised (vested and unvested) stock options held by each non-employee director was as follows:

  Mr. Crocker   40,000 shares
  Mr. Geary   15,000 shares
  Mr. Gellert   45,000 shares
  Mr. Gilchrist   2,520 shares
  Mr. Lustig   3,191 shares
  Mr. Paulson   2,520 shares
  Mr. Reed   15,000 shares
  Ms. Rosenberg   40,000 shares
  Mr. Rufrano   7,849 shares
  Mr. Shelton   15,000 shares
  Mr. Theobald   25,000 shares
(4)
Messrs. Gilchrist and Paulson were appointed to our Board, effective July 1, 2011. Upon their initial appointment, they were each granted 2,524 shares of restricted stock and 2,520 stock options in accordance with our non-employee director compensation program.

(5)
Mr. Lustig was appointed to our Board, effective May 13, 2011. Upon his initial appointment, he was granted 2,656 shares of restricted stock and 3,191 stock options in accordance with our non-employee director compensation program.


Minimum Share Ownership Guidelines for Non-Employee Directors

              In 2011, we amended our minimum share ownership guidelines to require each non-employee director to maintain a minimum number of shares of our common stock with a value not less than five times the current annual cash retainer (currently $75,000) paid to such director for service on our Board (excluding, among other things, any additional retainer paid for committee membership or chairmanship or service as the Presiding Director). Each non-employee director has five years from the date that he or she first becomes subject to the guidelines to satisfy the minimum share ownership levels, and until such time, that director must retain 100% of the common stock or stock units granted to him or her as compensation minus any shares forfeited by the director under our share withholding program to pay taxes on the vesting of shares. Compliance with the guidelines is reviewed on July 1 of each year. Taking into account any permitted transition period, all of our non-employee directors are currently in compliance with these guidelines.

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EXECUTIVE OFFICERS

              Set forth below is certain biographical information concerning each of our executive officers. Ages shown for all executive officers are as of the date of the Annual Meeting.

 
  Name, Age and Position
   
  Business Experience
   

 

 

Debra A. Cafaro, 54
Chairman and
Chief Executive Officer

      Ms. Cafaro's biographical information is set forth in this Proxy Statement under "Proposals Requiring Your Vote – Proposal 1: Election of Directors."    

 

 

Raymond J. Lewis, 47
President

      Mr. Lewis was named President of Ventas in November 2010. He previously served as our Executive Vice President and Chief Investment Officer from January 2006 to November 2010 and as our Senior Vice President and Chief Investment Officer from 2002 to 2006. Prior to joining us in 2002, he was managing director of business development for GE Capital Healthcare Financial Services, a division of General Electric Capital Corporation ("GECC"), which is a subsidiary of General Electric Corporation, where he led a team focused on mergers and portfolio acquisitions of healthcare assets. Before that, Mr. Lewis was Executive Vice President of Healthcare Finance for Heller Financial, Inc. (which was acquired by GECC in 2001), where he had primary responsibility for healthcare lending. Mr. Lewis is Chairman Emeritus of the National Investment Center for the Seniors Housing & Care Industry (NIC). He is also currently a member of the Executive Board of the American Seniors Housing Association where he serves as Secretary and Treasurer on the Executive Committee.    

 

 

Todd W. Lillibridge, 56
Executive Vice President, Medical Property Operations and President and Chief Executive Officer, Lillibridge Healthcare Services, Inc.

      Mr. Lillibridge joined us as Executive Vice President, Medical Property Operations in July 2010. Mr. Lillibridge also serves as President and Chief Executive Officer of our subsidiary, Lillibridge Healthcare Services, Inc. ("Lillibridge"), where he is responsible for the strategic focus, vision and overall leadership of our medical office building operations. Prior to joining Lillibridge's predecessor in 1982, and subsequently establishing Lillibridge & Company, Mr. Lillibridge was employed by Baird & Warner, Inc., of Chicago, Illinois, serving in the real estate finance group and the development division. He is a member of the Economic Club of Chicago, the World Presidents' Organization of Chicago and the Board of Directors of the Joffrey Ballet.    

 

 

T. Richard Riney, 54
Executive Vice President, Chief Administrative Officer and General Counsel

      Mr. Riney has been our Executive Vice President and General Counsel since 1998, was named our Chief Administrative Officer in February 2007 and also served as our Corporate Secretary from 1998 to 2012. From 1996 to 1998, he served as Transactions Counsel for our predecessor, Vencor, Inc. Prior to that, Mr. Riney practiced law with the law firm of Hirn, Reed & Harper, where his areas of concentration were real estate and corporate finance. He is admitted to the Bar in Kentucky and is a member of NAREIT.    

 

 

Richard A. Schweinhart, 62
Executive Vice President and Chief Financial Officer

      Mr. Schweinhart has been our Executive Vice President and Chief Financial Officer since January 2006. He joined us in 2002 as our Senior Vice President and Chief Financial Officer, after briefly serving as a full-time consultant to Ventas. From 1998 to 2002, he served as Senior Vice President and Chief Financial Officer for Kindred Healthcare, Inc. (NYSE: KND), where he was responsible for all financial aspects of the company, including accounting, finance, purchasing, insurance, tax, reimbursement and internal control. Prior to that, Mr. Schweinhart was Senior Vice President of Finance for HCA, Chief Financial Officer at Galen Health Care, Inc. (a spin-off of Humana Inc. ("Humana")) prior to its acquisition by HCA and Senior Vice President of Finance at Humana. He is a Certified Public Accountant.    

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SECURITIES OWNERSHIP


Directors, Director-Nominees and Executive Officers

              The following table shows, as of March 20, 2012, the number of shares of our common stock beneficially owned by each of our directors and director-nominees, each of our Named Executive Officers (defined in this Proxy Statement under "Executive Compensation—Compensation Discussion and Analysis"), and all of our directors, director-nominees and executive officers as a group:

 
  Name of Beneficial Owner
   
  Shares of Common Stock
Beneficially Owned(1)(2)

   
  Percent of
Class(1)

   

 

 

D. Cafaro

        1,771,767 (3)(4)       *    

 

 

D. Crocker II

        119,401 (3)(5)       *    

 

 

R. Geary

        35,664 (3)(5)       *    

 

 

J. Gellert

        107,611 (3)(5)       *    

 

 

R. Gilchrist

        14,747 (3)       *    

 

 

R. Lewis

        273,134 (3)       *    

 

 

T. Lillibridge

        113,103 (3)       *    

 

 

M. Lustig

        3,710,725 (3)(5)(6)       1.3    

 

 

D. Pasquale

        222,469 (3)(7)       *    

 

 

R. Paulson

        34,089 (3)(8)       *    

 

 

R. Reed

        27,413 (3)(5)       *    

 

 

T.R. Riney

        432,762 (3)(9)       *    

 

 

S. Rosenberg

        111,196 (3)(5)       *    

 

 

G. Rufrano

        18,097 (3)(5)       *    

 

 

R. Schweinhart

        439,246 (3)(10)       *    

 

 

J. Shelton

        26,687 (3)(5)       *    

 

 

T. Theobald

        49,477 (3)(5)(11)       *    

 

 

    All directors, director-nominees and executive officers as a group (17 persons)

        7,507,588         2.6 %  
*
Less than 1%

(1)
For purposes of this Proxy Statement, shares beneficially owned, as determined in accordance with applicable rules of the SEC, includes shares over which a person has or shares voting power or investment power (whether or not vested). Each named person is deemed to be the beneficial owner of shares of our common stock that may be acquired within 60 days of March 20, 2012 through the exercise of options, warrants or rights, if any, and such shares are deemed to be outstanding for the purpose of computing the percentage of the class beneficially owned by such person; however, any such shares are not deemed to be outstanding for the purpose of computing the percentage of the class beneficially owned by any other person. Subject to the preceding sentence, percentages are based on 289,026,857 shares of our common stock outstanding on March 20, 2012.

(2)
Except as set forth in these footnotes, the named persons have sole voting and investment power over the shares of our common stock beneficially owned by them. The number of shares shown does not include the interests of certain persons in shares held by family members in their own right.

(3)
Includes the following number of shares of common stock that the respective directors, director-nominees and Named Executive Officers have or will have the right to acquire pursuant to stock options exercisable as of or within 60 days after

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(4)
Includes 5,000 shares held in trust for the benefit of Ms. Cafaro's immediate family, as to which Ms. Cafaro's spouse is the trustee. Ms. Cafaro disclaims beneficial ownership of these 5,000 shares.

(5)
Includes the following number of restricted stock units held by the respective directors: Mr. Crocker, 4,713; Mr. Gellert, 10,141; Mr. Lustig, 1,028; Mr. Pasquale, 16,938; Mr. Shelton, 1,028; and Mr. Theobald, 10,141. Also includes the following number of stock units credited to the respective directors' stock unit accounts pursuant to the Director Deferred Compensation Plan: Mr. Crocker, 21,517; Mr. Geary, 2,098; Mr. Gellert, 15,071; Mr. Lustig, 1,164; Mr. Reed, 2,485; Ms. Rosenberg, 4,134; Mr. Rufrano, 2,932; Mr. Shelton, 1,759; and Mr. Theobald, 7,836.

(6)
In his capacity as Chief Executive Officer and Managing Principal of LREP and a Managing Director of Lazard Alternative Investments LLC, an affiliate of LREP, Mr. Lustig may be deemed to be the beneficial owner of 3.7 million shares of our common stock that are owned by LREP and its affiliates. Mr. Lustig disclaims beneficial ownership of these 3.7 million shares, except to the extent of his pecuniary interest therein, if any.

(7)
Includes 4,326 shares held in Mr. Pasquale's IRA.

(8)
Includes 8,012 shares held in trust for the benefit of Mr. Paulson's wife and children, as to which Mr. Paulson is the trustee. Mr. Paulson disclaims beneficial ownership of these 8,012 shares.

(9)
Includes 1,300 shares held in Mr. Riney's IRA.

(10)
Includes 805 shares held in Mr. Schweinhart's IRA and 800 shares held in Mr. Schweinhart's spouse's IRA. Mr. Schweinhart disclaims beneficial ownership of these 800 shares. Mr. Schweinhart has shared voting and investment power over 10,078 shares of common stock.

(11)
Includes 3,000 shares held in trust for the benefit of Mr. Theobald's son, as to which Mr. Theobald is the trustee, and 1,000 shares held in a custody account for Mr. Theobald's daughter. Mr. Theobald disclaims beneficial ownership of these 4,000 shares.


Director and Executive Officer 10b5-1 Plans

              From time to time, certain of our directors and executive officers may adopt non-discretionary, written trading plans that comply with Rule 10b5-1 under the Exchange Act. 10b5-1 plans permit our directors and executive officers to monetize their equity-based compensation in an automatic and non-discretionary manner over time and are generally adopted for estate, tax and financial planning purposes. Each of Ms. Cafaro, Mr. Pasquale and Mr. Riney currently has in effect such a plan.

              Ms. Cafaro's 10b5-1 plan currently covers the sale of up to 210,000 shares of our common stock either owned by her or expected to be acquired by her through the exercise of stock options previously granted to her as a portion of her long-term compensation, subject to certain conditions (including an average minimum sale price of $67 per share), and is expected to be in effect until June 2012. In addition, a trust of which Ms. Cafaro's spouse is the trustee has adopted a 10b5-1 plan covering the sale of 30,000 shares of our common stock expected to be acquired by the trust through the exercise of stock options previously granted to, and gifted by, Ms. Cafaro, subject to certain conditions (including an average minimum sale price of $67 per share), which is expected to be in effect until June 2012. At March 20, 2012, Ms. Cafaro beneficially owned approximately 1.9 million shares of common stock (including all unexercised stock options).

              Mr. Pasquale's 10b5-1 plan currently covers the sale of up to 44,200 shares of our common stock owned by him, subject to certain conditions (including an average minimum sale price exceeding $60 per share), and is expected to be in effect until December 2012. At March 20, 2012, Mr. Pasquale

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beneficially owned approximately 0.2 million shares of common stock (including all unexercised stock options).

              Mr. Riney's 10b5-1 plan covers the sale of 146,704 shares of our common stock expected to be acquired by him through the exercise of stock options previously granted to him as a portion of his long-term compensation, subject to certain conditions (including an average minimum sale price exceeding $51 per share), and is expected to be in effect until January 2013. At March 20, 2012, Mr. Riney beneficially owned approximately 0.5 million shares of common stock (including all unexercised stock options).

              See "—Directors, Director-Nominees and Executive Officers" above for information regarding the number of shares of our common stock beneficially owned by each of our directors and executive officers.


Principal Stockholders

              The following table shows, as of March 20, 2012, the number of shares of our common stock beneficially owned by each person known by us to be the beneficial owner of more than 5% of our outstanding common stock:

 
  Name and Address of Beneficial Owner
   
  Common Stock
Beneficially Owned

   
  Percent of
Class(1)

   

 

 

BlackRock, Inc.
40 East 52nd Street
New York, NY10022

        20,544,041 (2)       7.1 %  

 

 

FMR LLC
82 Devonshire Street
Boston, MA 02109

        19,290,908 (3)       6.7 %  

 

 

Invesco Ltd.
1555 Peachtree Street NE
Atlanta, GA 30309

        15,600,003 (4)       5.4 %  

 

 

The Vanguard Group, Inc.
100 Vanguard Boulevard
Malvern, PA 19355

        26,495,950 (5)       9.2 %  

 

 

Vanguard Specialized Funds—Vanguard REIT Index Fund
100 Vanguard Boulevard
Malvern, PA 19355

        15,158,784 (6)       5.2 %  
(1)
Percentages are based on 289,026,857 shares of our common stock outstanding on March 20, 2012.

(2)
Based solely on information contained in a Schedule 13G/A filed by BlackRock, Inc., for itself and for certain of its affiliates (collectively, "BlackRock"), on February 10, 2012. BlackRock reported that, as of December 30, 2011, it had sole voting and dispositive power over 20,544,041 shares of our common stock. BlackRock, Inc. is a parent holding company.

(3)
Based solely on information contained in a Schedule 13G/A filed jointly by FMR LLC, for itself and on behalf of its subsidiaries, Edward C. Johnson 3d and Fidelity Management & Research Company (collectively, "FMR") on February 14, 2012. FMR reported that, as of December 31, 2011, it had sole voting power over 3,726,498 shares of our common stock and sole dispositive power over 19,290,908 shares of our common stock. Each of Fidelity Management & Research Company, Strategic Advisers, Inc. and Pyramis Global Advisors, LLC is an investment adviser registered under Section 203 of the Investment Advisers Act and a wholly owned subsidiary of FMR LLC. Pyramis Global Advisors Trust Company, a bank, is also a wholly owned subsidiary of FMR LLC. Mr. Johnson, Chairman of FMR LLC, and members of his family collectively own, directly or through trusts, (a) shares of FMR LLC representing 49% of the voting power of FMR LLC and (b) shares of FIL Limited, a qualified institution that provides investment advisory and management services, representing more than 25% and less than 50% of the voting power of FIL Limited. FMR reported that it prepared the Schedule 13G/A

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(4)
Based solely on information contained in a Schedule 13G filed jointly by Invesco Ltd., for itself and behalf of its subsidiaries, Invesco Advisers Inc., Invesco Investment Advisers, LLC, Invesco PowerShares Capital Management, Invesco Asset Management (Japan) Limited, Invesco National Trust Company, Stein Roe Investment Counsel, Inc. and Invesco PowerShares Capital Management Ireland Limited (collectively, "Invesco") on February 14, 2012. Invesco reported that, as of December 31, 2011, it had sole voting power over 5,731,903 shares of our common stock, sole dispositive power over 15,557,469 shares of our common stock, shared voting power over 60,883 shares of our common stock and shared dispositive power over 42,534 shares of our common stock. Each of the Invesco subsidiaries is an investment adviser registered under Section 203 of the Investment Advisers Act.

(5)
Based solely on information contained in a Schedule 13G/A filed by The Vanguard Group, Inc. ("Vanguard") on February 10, 2012. Vanguard reported that, as of December 31, 2011, it had sole voting power over 383,227 shares of our common stock, sole dispositive power over 26,112,723 shares of our common stock and shared dispositive power over 383,227 shares of our common stock. Vanguard is an investment advisor registered under Section 203 of the Investment Advisors Act. Vanguard Fiduciary Trust Company ("VFTC"), a wholly-owned subsidiary of Vanguard, is the beneficial owner of 383,227 shares of our common stock as a result of its serving as investment manager of collective trust accounts. VFTC directs the voting of these shares.

(6)
Based solely on information contained in a Schedule 13G/A filed by Vanguard Specialized Funds—Vanguard REIT Index Fund ("Vanguard REIT Fund") on January 26, 2012. Vanguard REIT Fund reported that, as of December 31, 2011, it had sole voting power over 15,158,784 shares of our common stock.


SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

              Section 16(a) of the Exchange Act requires our directors, officers (as defined in Rule 16a-1 under the Exchange Act) and persons who own more than 10% of our outstanding common stock to file reports of beneficial ownership and changes in such ownership with the SEC. Based solely on our records and on written representations from certain reporting persons that no Form 5 was required for such persons, we believe that during 2011 all of our directors, officers and persons who owned more than 10% of our common stock complied with all applicable Section 16(a) filing requirements.


TRANSACTIONS WITH RELATED PERSONS

              Our Board has an unwritten policy requiring that any transaction between us and any of our officers, directors or their affiliates be approved by the disinterested members of the Board and be on terms no less favorable to us than those available from unaffiliated parties. In addition, our Audit Committee charter provides that any such transaction and all other conflicts of interest or similar matters involving any of our officers or directors must also be reviewed by the Audit Committee. Pursuant to our Code of Ethics and Business Conduct, officers and directors must disclose in writing to our General Counsel, who will review the matter with the Presiding Director, any existing or proposed transaction in which he or she has a personal interest, or in which there is or might appear to be a conflict of interest by reason of his or her connection to another business organization, and must refrain from voting on any such transaction.

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Transactions with Atria and ASLG

              On May 12, 2011, we acquired substantially all of the real estate assets and working capital of ASLG from private equity funds managed by LREP or its affiliates for a total purchase price of approximately $3.4 billion, which we funded in part through the issuance of 24.9 million shares of our common stock. Prior to the closing, ASLG spun off its management operations to a newly formed entity, Atria, that continues to operate the acquired assets under long-term management agreements with us. Mr. Lustig, Chief Executive Officer and Managing Principal of LREP and Atria Chairman, has served as a member of our Board since May 2011. In 2011, we paid Atria $20.2 million in management fees. The Board approved the terms of the management agreements in connection with its approval of the ASLG transaction, and we believe that the terms of the management agreements are no less favorable to us than those available from an unaffiliated party.

Transactions with Cushman

              From time to time, we may engage Cushman to act as a leasing agent or broker with respect to certain of our properties. Mr. Rufrano is President and Chief Executive Officer of Cushman and has served as a member of our Board of Directors since June 2010. We believe any fees we pay to Cushman in connection with the provision of these services are customary, represent market rates and are no less favorable to us than the terms available from an unaffiliated party. Total fees we paid to Cushman during 2011 were de minimis.

Transactions with Irvine

              From July 2011 to February 2012, our wholly owned subsidiary, Nationwide Health Properties, LLC, as successor to NHP, leased office space from Irvine. Mr. Gilchrist, Senior Advisor to Irvine and former President of Irvine's Investment Properties Group, has served as a member of our Board since July 2011. In 2011, we paid $280,000 in rent to Irvine. We believe the rent we paid to Irvine in 2011 was customary, represented market rates and was no less favorable to us than the terms available from an unaffiliated party.

Transactions with Mr. Pasquale

              In connection with our acquisition of NHP, we entered into an agreement (the "Pasquale Employment Agreement") with Mr. Pasquale pursuant to which he served as Senior Advisor to our Chief Executive Officer from July 1, 2011 through December 31, 2011. Pursuant to the Pasquale Employment Agreement, Mr. Pasquale has received approximately $5.8 million, certain benefits to which he was entitled under his prior employment agreement with NHP, and 97,642 shares of our common stock in settlement of his 2009, 2010 and 2011 NHP performance share awards. Mr. Pasquale is also entitled to receive substantially the same severance benefits that he would have received if he had resigned for "Good Reason" under his prior employment agreement with NHP. Future benefits under the Pasquale Employment Agreement are expected to include an additional $6.0 million, vesting of certain equity awards, payment of previously deferred compensation, and continued medical and life insurance coverage and payment of certain dividend equivalent rights through December 31, 2014.

              Mr. Pasquale has agreed to certain noncompetition and nonsolicitation restrictive covenants until June 30, 2012, provided that, on or after January 1, 2012, he has the option to terminate the noncompetition restrictive covenant by making a lump-sum cash payment of $8.0 million to us.

              The disinterested members of the Board approved the terms of the Pasquale Employment Agreement in connection with its approval of the NHP acquisition, and we believe that its terms are no less favorable to us than those available from an unaffiliated party.

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Transactions with Sutter Health

              In December 2011, we entered into a joint venture with Pacific Medical Buildings LLC to develop a new MOB to be located on the Sutter Medical Center – Castro Valley campus. Our 82.8% interest in the building will be subject to a ground lease from Sutter Health, and the MOB, when completed, is expected to be 100% leased by Sutter Health pursuant to long-term triple net leases. Mr. Reed, Senior Vice President and Chief Financial Officer of Sutter Health, has served as a member of our Board since March 2008. We believe the terms of the leases with Sutter Health are no less favorable to us than those available from an unaffiliated party.


EXECUTIVE COMPENSATION


Compensation Committee Report

              The Compensation Committee has reviewed and discussed with management the following Compensation Discussion and Analysis and, based on such review and discussion, has recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.


Compensation Discussion and Analysis

              This Compensation Discussion and Analysis (or "CD&A") describes our 2011 compensation program for our principal executive officer (Ms. Cafaro), our principal financial officer (Mr. Schweinhart) and our three other executive officers (Messrs. Lewis, Lillibridge and Riney) (collectively, our "Named Executive Officers"). In particular, this CD&A explains the overall objectives of our executive compensation program, how each element of our executive compensation program attempts to satisfy those objectives, the policies underlying our 2011 compensation program and the compensation awarded to our Named Executive Officers for 2011. This discussion contains forward-looking statements that are based on our current plans, considerations, expectations and determinations regarding future compensation programs. Future compensation programs that we adopt may differ materially from currently planned programs.


Executive Summary

              Through our executive compensation program, we strive to attract, retain and motivate talented executives and link the compensation realized by our executive officers to the achievement of financial and strategic corporate goals and individual goals. Our executive compensation program emphasizes variable pay, and a significant portion of total direct compensation is in the form of equity awards that vest over time. Our approach to performance – based compensation provides balanced incentives for our executive officers that align their interests with our stockholders and discourage excessive risk-taking.

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              2011 was a transformational year for Ventas. We successfully integrated over $11 billion of acquisitions while improving our attractive cost of capital and strengthening our liquidity and balance sheet. The Board's 2011 compensation decisions supported our general executive compensation philosophy and reflected our exceptional financial and operational performance during the year. In particular:

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              In recognition of our Named Executive Officers' contributions to the achievements described above and the additional factors described below under "Elements of Our Compensation Program":

Following a review of individual performance and compensation data from a group of peer comparators, four of our Named Executive Officers received an increase in base salary for 2011 to more closely align with market competitive levels and, in certain cases, to recognize future advancement potential or past contributions to our success.

              In March 2011, we continued our commitment to responsible compensation and corporate governance practices by amending Ms. Cafaro's employment agreement and Mr. Riney's change-in-control severance agreement to eliminate the change of control "modified single trigger" from both agreements and to eliminate certain tax gross-up payments from Ms. Cafaro's agreement. In addition, we:

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              We believe that our executive compensation program is appropriately structured to achieve our objectives of attracting and retaining talented executives and rewarding superior performance. At our 2011 Annual Meeting of Stockholders, holders of approximately 96% of shares represented at the meeting voted to approve, on an advisory basis, our executive compensation. In light of the strong shareholder support for our executive compensation program, we did not make significant changes in 2011 to the structure of our executive compensation program. Our Board values continuing and constructive feedback from our stockholders on executive compensation and will continue to consider the views of our stockholders, including the results of our annual shareholder advisory vote on executive compensation, when making future executive compensation decisions.


Objectives of Our Compensation Program

              We recognize that effective compensation strategies are critical to recruiting and retaining key employees who contribute to our long-term success and thereby build value for our stockholders. Accordingly, our compensation program is designed to achieve the following primary objectives:

We align the interests of our executives and stockholders by establishing and maintaining a performance- and achievement-oriented environment that provides executives with the opportunity to earn market-competitive levels of cash and equity compensation.

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Compensation Consultant and Benchmarking

              The Compensation Committee retained PM&P as its compensation consultant to advise it and the independent members of our Board on matters related to our Named Executive Officers' compensation and compensation program design for 2011. At the time of engagement, the Compensation Committee affirmatively determined that PM&P met the criteria for an independent consultant pursuant to our Compensation Consultant Independence Policy and in accordance with SEC guidelines for such services.

              In 2011, PM&P provided the Compensation Committee and the independent members of our Board with comparative market data on compensation practices and programs based on an analysis of peer comparators and provided guidance on best practices. Using this market data, PM&P advised the Compensation Committee and the independent members of our Board and made recommendations with respect to setting salary levels and establishing incentive award levels. For 2011, PM&P compared our executive compensation structure and levels to executive compensation at a comparative group of 21 companies. Our comparative group consisted of (i) REITs similar to us in terms of operations and FFO and generally falling within a range of 50% to 200% of our enterprise value and market capitalization and (ii) selected healthcare operators that operate the types of properties we own.

              The comparative group identified below (the "Comparable Companies") was approved by the Compensation Committee at its August 18, 2010 meeting as the appropriate benchmark for 2011 comparative purposes and is consistent with the comparative group approved by the Compensation Committee in 2009 and used for 2010 comparative purposes. These companies reported compensation data for executive positions with responsibilities similar in breadth and scope to those of our executive officers, and we believe these companies generally competed with us for executive talent and stockholder investment in 2011:

AMB Property Corporation*   HCP, Inc.   ProLogis

AvalonBay Communities, Inc.

 

Health Care REIT Inc.

 

Public Storage, Inc.

Boston Properties, Inc.

 

Host Hotels & Resorts, Inc.

 

Regency Centers Corp.

Community Health Systems, Inc.

 

Kimco Realty Corporation

 

SL Green Realty Corp.

Duke Realty Corp.

 

Kindred Healthcare, Inc.

 

The Macerich Company

Equity Residential Properties Trust

 

Liberty Property Trust

 

Vornado Realty Trust

Federal Realty Investment Trust

 

Nationwide Health Properties, Inc.**

 

Weingarten Realty Investors

*
Merged with ProLogis in June 2011.
**
Acquired by Ventas in July 2011.

              The Compensation Committee annually reviews the Comparable Companies to ensure that the companies included remain comparable to us in terms of size and operations. The Compensation Committee may change the composition of the group from time to time as appropriate.

              In determining 2011 compensation targets for our Named Executive Officers, the Compensation Committee, in consultation with PM&P, considered the competitive positioning of our executive compensation levels relative to market data for the following components of pay: base salary; total annual compensation (base salary plus annual incentives); long-term incentives (annualized expected value of long-term incentives); and total direct compensation (base salary plus annual incentives plus annualized expected value of long-term incentives). We generally targeted the 50th percentile of the Comparable Companies for base salary and the 65th percentile of the Comparable

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Companies for total annual compensation, long-term incentives and total direct compensation. The Compensation Committee established these targets based on our larger size and superior historical performance relative to the Comparable Companies. Our 2011 compensation program was designed to deliver compensation levels above or below these targets if executive officer performance was well above or below established goals. We believe this methodology is appropriate for our operating style and reflects the need to attract, retain and stretch top executive talent.

              In addition to evaluating the compensation data described above, the Compensation Committee considers the unique roles held by some of our Named Executive Officers in determining appropriate compensation levels. Specifically, certain of our Named Executive Officers perform duties that are traditionally assigned to multiple senior officers at competitive companies. For example, Mr. Riney, in his capacity as our Executive Vice President, Chief Administrative Officer and General Counsel, is not only responsible for all legal matters, but plays a critical role in our asset management and acquisition strategies. Our uncommon division of responsibilities fosters a cohesive and streamlined management team, which enables us to operate with a smaller staff of senior executives than is typically found at companies of our size. Therefore, the Compensation Committee considers available compensation data for executives at the Comparable Companies, but also recognizes the need for adjustments in certain cases to set appropriate compensation targets for each Named Executive Officer.


Elements of Our Compensation Program

              For 2011, the compensation provided to our Named Executive Officers consisted of the same elements generally available to our non-executive officers, including base salary, annual cash incentive compensation, long-term incentive compensation, and other perquisites and benefits, each of which is described in more detail below. The structure of our executive compensation program has been in place for several years, and our stockholders' strong support for our executive compensation at our 2011 Annual Meeting of Stockholders was a factor considered by the Compensation Committee in continuing this structure without significant changes.

              Our executive compensation philosophy promotes a compensation mix that emphasizes variable pay and long-term value. Accordingly, our compensation structure is designed to grant a significant portion of total direct compensation in the form of equity awards that vest over time. Our emphasis on variable compensation creates greater alignment with the interests of our stockholders, ensures that risk is managed by decision makers in a manner that focuses on the creation of long-term value rather than only short-term results, and diminishes the probability of excessive risk-taking. We believe that our executive compensation program is well balanced between cash and equity-based compensation and between fixed and performance-based compensation to support our compensation philosophy.

              The following charts illustrate each Named Executive Officer's target base salary, annual cash incentive compensation and long-term incentive compensation as a percentage of total direct compensation for 2011.

GRAPHIC

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              The base salary payable to each Named Executive Officer provides a fixed component of compensation that reflects the executive's position and responsibilities. Base salary is generally targeted to approximate the competitive market median of the Comparable Companies, but may deviate from this target based on an individual's sustained performance, contribution, experience, expertise and specific roles within our company as compared to the benchmark data. Base salary is reviewed annually and may be adjusted to better match competitive market levels or to recognize an executive's professional growth and development or increased responsibility. The Compensation Committee also considers the success of the executive officer in developing and executing our strategic plans, exercising leadership and creating stockholder value, but does not assign any specific weights to these factors.

              In connection with its review of 2011 base salaries for our Named Executive Officers, the Compensation Committee analyzed and evaluated base salary information from a compensation study of the Comparable Companies prepared by PM&P. Although the Compensation Committee periodically considers data from REIT industry and other compensation surveys, the Compensation Committee places primary emphasis on publicly available data from the Comparable Companies' proxy statements, which is more detailed by individual executive officer position than the data typically provided in compensation surveys.

              For 2011, the Compensation Committee and, in the case of the Chief Executive Officer, the independent members of our Board approved the following increases in base salary for the Named Executive Officers:

 
   
   
  Base Salary
   
  Year-Over-Year
% Growth

   
 
   
   
  2011
   
  2010
   
   

 

 

D. Cafaro

      $ 915,000       $ 725,000         26.2 %  

 

 

R. Schweinhart

        407,000         395,000         3.0 %  

 

 

R. Lewis

        498,000         470,000         6.0 %  

 

 

T. Lillibridge

        375,000         375,000            

 

 

T.R. Riney

        381,000         370,000         3.0 %  

With these increases, the 2011 base salary for each Named Executive Officer generally approximated the market median for the Comparable Companies. Mr. Lewis received a higher base salary increase than Messrs. Schweinhart and Riney to reflect his new role as President and his leadership development and future advancement potential. Ms. Cafaro received a higher base salary increase in connection with a rebalancing of her target mix of pay elements to better align with competitive market practice. See "Other 2011 Compensation Decisions – Rebalancing of Chief Executive Officer Compensation and Special Equity Incentive Award" below.

              We provide our Named Executive Officers with the opportunity to earn cash incentive awards for achievement of corporate and individual goals on an annual basis. Prior to the beginning of each performance year, an earnings opportunity range, expressed as multiples of base salary and corresponding to three levels of performance (threshold, target and maximum), is established for each executive officer. In the first quarter of the year following the performance year, annual cash incentive awards are then determined and paid based on each executive officer's performance with respect to the corporate and individual goals.

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              The Compensation Committee and, in the case of the Chief Executive Officer, the independent members of our Board approved the following annual cash incentive award opportunities for performance in fiscal 2011:

2011 Annual Cash Incentive Opportunity
(as a multiple of base salary)

GRAPHIC

At the target opportunities shown in the above table, the 2011 annual cash incentive award for each Named Executive Officer would result in total annual compensation levels that generally approximate the 65th percentile of the Comparable Companies. The Compensation Committee believes that the Chief Executive Officer should have the greatest alignment with our shareholders, and, therefore, Ms. Cafaro's annual cash incentive compensation is more sensitive to our performance than the annual cash incentive compensation of our other Named Executive Officers.

              We believe that the annual cash incentive award goals set by the Compensation Committee are stretch goals, such that significant performance is expected in order to pay out at target levels. Consistent with prior years, the 2011 goals were challenging, but achievable. In December 2010, the Compensation Committee and, in the case of the Chief Executive Officer, the independent members of our Board determined the performance measures and their weightings for the 2011 annual cash incentive award opportunities for our Named Executive Officers. The performance measures and the weightings for Ms. Cafaro and Messrs Schweinhart, Lewis and Riney were:

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For the computation of normalized FFO per share, we use the NAREIT definition of FFO, with adjustments to exclude items (which may be recurring in nature) such as: (i) gains and losses on the sales of real property assets; (ii) merger-related costs and expenses, including amortization of intangibles and transition and integration expenses, and deal costs and expenses, including expenses and recoveries relating to our lawsuit against HCP; (iii) the impact of any expenses related to asset impairment and valuation allowances, the write-off of unamortized deferred financing fees, or additional costs, expenses, discounts, make-whole payments, penalties or premiums incurred as a result of early retirement or payment of our debt; (iv) the non-cash effect of income tax benefits or expenses; (v) the impact of future unannounced acquisitions or divestitures (including pursuant to tenant options to purchase) and capital transactions; (vi) the financial impact of contingent consideration; and (vii) charitable donations made to the Ventas Charitable Foundation. NAREIT defines FFO as net income (computed in accordance with GAAP), excluding gains or losses from sales of real estate property and impairment write-downs of depreciable real estate, plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO on the same basis.

Due to Mr. Lillibridge's responsibility for the strategic focus, vision and overall leadership of our MOB operations, 70% of his 2011 annual cash incentive award was based on the 2011 financial performance of our MOB operations segment. Of the remaining portion of his 2011 annual cash incentive award, 15% was based on the one-year relative TSR and company performance goals described above, and 15% was based on his individual performance as described above.

              In January 2012, the Compensation Committee and, in the case of the Chief Executive Officer, the independent members of our Board determined that each of the Named Executive Officers had achieved a high level of performance between the target and maximum levels overall under the annual cash incentive plan for 2011, with several specific accomplishments, including:

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              Accordingly, as set forth below, the annual cash incentive awards granted to the Named Executive Officers for 2011 performance were between their respective target and maximum levels.

2011 Annual Cash Incentive Awards
(as a multiple of base salary)

GRAPHIC

The actual award amounts for the Named Executive Officers are set forth in the "Non-Equity Incentive Plan Compensation" column of the 2011 Summary Compensation Table below.

              As explained above, the Compensation Committee believes that a substantial portion of each Named Executive Officer's compensation should be in the form of long-term incentive compensation. Long-term incentive awards are based on certain criteria as determined by the Compensation Committee, including the achievement of pre-established corporate and individual goals for the performance year. Prior to the beginning of each performance year, an earnings opportunity range, expressed as multiples of base salary and corresponding to three levels of performance (threshold, target and maximum), is established for each executive officer. The Compensation Committee annually reviews the long-term incentive compensation performance criteria in the context of market pay and performance when setting the earnings opportunity range and when determining the actual award earned for each executive officer. Long-term incentive awards are then determined and granted in the first quarter of the year following the performance year.

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              The Compensation Committee and, in the case of the Chief Executive Officer, the independent members of our Board approved the following long-term incentive award opportunities for performance in fiscal 2011:

2011 Long-Term Incentive Opportunity
(as a multiple of base salary)

GRAPHIC

At the target opportunities shown in the above table, the 2011 long-term incentive award for each Named Executive Officer would result in total direct compensation levels that generally approximate the 65th percentile of the Comparable Companies. Similar to our philosophy regarding the annual cash incentive opportunities, the Compensation Committee believes that our Chief Executive Officer should have the greatest alignment with our shareholders, and, therefore, Ms. Cafaro's long-term incentive compensation is more sensitive to performance than the long-term incentive compensation of our other Named Executive Officers.

              For 2011, the value of the long-term incentive awards was based on the following factors, in each case at the discretion of the Compensation Committee:

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While there was no specific weighting or target level attributed to any of these factors, the Compensation Committee carefully analyzed these factors in determining the 2011 long-term incentive awards for our Named Executive Officers.

              In January 2012, the Compensation Committee and, in the case of the Chief Executive Officer, the independent members of our Board determined that each of our Named Executive Officers had performed well against the performance objectives under the long-term incentive plan for 2011 based on the accomplishments described above under "—Annual Cash Incentive Compensation" and several other key long-term value creating achievements, including:

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              Accordingly, as set forth below, the long-term incentive awards granted to the Named Executive Officers for 2011 performance equaled 100% of their respective maximum levels.

2011 Long-Term Incentive Awards
(as a multiple of base salary)

GRAPHIC

              For 2011, long-term incentive compensation consisted of equity awards in the form of stock options and shares of restricted stock granted pursuant to our 2006 Incentive Plan. The Compensation Committee recognizes that while the annual cash incentive plan rewards management actions that impact short- and mid-term performance, the interests of our stockholders are also served by giving key employees the opportunity to participate in the long-term appreciation of our common stock through grants of stock options and restricted stock awards. Equity awards encourage management to create stockholder value over the long term because the value of the equity awards is directly attributable to changes in the price of our common stock over time. In addition, equity awards are an effective tool for management retention because full vesting of the awards generally requires continued employment for multiple years.

              For 2011, the Compensation Committee determined that 70% of the value of the long-term incentive awards should be granted in the form of shares of restricted stock and 30% should be granted in the form of stock options. The Compensation Committee believes that restricted stock provides a stronger incentive to create and preserve long-term stockholder value and, therefore, has weighted the long-term incentive awards more heavily toward restricted stock. Furthermore, restricted stock is the most prevalent form of long-term incentive compensation among the Comparable Companies. The actual award amounts earned by the Named Executive Officers for 2011 will be reflected in next year's Summary Compensation Table as restricted stock and stock option awards granted in 2012.

              Shares of restricted stock and stock options are granted to our Named Executive Officers, other than the Chief Executive Officer, on the date that the Compensation Committee meets to review annual performance and determine the value of the long-term incentive awards. Shares of restricted

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stock and stock options are granted to our Chief Executive Officer on the date that the independent members of our Board meet to review and approve the Compensation Committee's recommendations with respect to the value of the Chief Executive Officer's long-term incentive award. Typically, these meetings of the independent members of our Board and the Compensation Committee are held on the same day. The long-term incentive awards granted to our executive officers generally vest in three equal annual installments, beginning on the date of grant. Stock options are generally subject to a ten-year term, and the stock option exercise price is the closing price of our common stock on the date of grant.

              The Named Executive Officers are generally eligible to participate in the same benefit programs that we offer to other employees, including:

We believe these benefits are competitive with overall market practices. In addition, we may provide certain perquisites and other personal benefits to enable us to attract and retain superior employees for key positions. For 2011, the only perquisites and benefits provided to our Named Executive Officers that were not otherwise available to all employees consisted of: supplemental disability and life insurance coverage for Ms. Cafaro; provision of a parking space (with no incremental cost to us) for Ms. Cafaro and Mr. Lewis; and reimbursement for the cost of parking and membership in certain professional and social organizations for Mr. Lillibridge. The Compensation Committee periodically reviews the perquisites and other personal benefits provided to each Named Executive Officer and has determined that they are consistent with current market practice. Except for the eligibility to participate in our 401(k) plan and our contributions to the 401(k) plan, as described above, we do not provide our Named Executive Officers with any retirement benefits.


Other 2011 Compensation Decisions

              In the second half of 2011, the Compensation Committee reviewed the Comparable Companies and approved several changes for 2012 comparative purposes. Due to our significant growth in 2010 and 2011, primarily as a result of the Lillibridge, ASLG and NHP transactions, our relative positioning in the Comparable Companies had risen to the 74th percentile with respect to enterprise value and the 77th percentile with respect to equity market capitalization. To position us closer to the median of our peer group for 2012 comparative purposes, the Compensation Committee, after consultation with PM&P, removed Duke Realty Corp., Federal Realty Investment Trust, Liberty Property Trust, Regency Centers Corp., Weingarten Realty Investors, and Kindred Healthcare, Inc. due to their smaller size, AMB Property Corporation, which merged with ProLogis in June 2011, and Nationwide Health Properties, Inc., which was acquired by us in July 2011. In addition, at the recommendation of PM&P, the Compensation Committee added Simon Property Group, Inc., General Growth Properties, Inc. and Brookfield Office Properties, Inc. because they met the applicable selection criteria (50% to 200%) in terms of enterprise value and market capitalization.

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              In March 2011, the independent members of our Board reviewed Ms. Cafaro's compensation and determined to rebalance her target mix of pay elements to better align with competitive market practice. In connection with this review, the independent members of our Board determined that a higher base salary was appropriate to reflect our significant growth and Ms. Cafaro's strong leadership, contributions to our superior performance and continuing value to our company. Accordingly, the independent members of our Board approved a 2011 base salary for Ms. Cafaro of $915,000, effective as of January 1, 2011, and approved a concurrent rebalancing of Ms. Cafaro's target direct compensation by adjusting downward Ms. Cafaro's target annual cash incentive award from 1.75x to 1.60x and Ms. Cafaro's target long-term incentive award from 4.5x to 3.2x.

              In connection with the rebalancing of Ms. Cafaro's compensation, the independent members of our Board approved an amendment to the terms of Ms. Cafaro's employment agreement to eliminate certain provisions to reflect compensation practices more favorable to us and our stockholders. In particular, the amendment eliminated (1) a provision that provided for payment of severance benefits if Ms. Cafaro were to terminate employment with us without Good Reason (as defined under "—Employment and Change of Control Severance Agreement with Named Executive Officers—Employment Agreement: Cafaro" below) within the 30-day period commencing one year after a change of control (a so-called "modified single trigger") and (2) certain tax gross-up payments with respect to severance and certain other benefits in connection with a change of control. The material provisions of Ms. Cafaro's employment agreement are summarized under "—Employment and Change of Control Severance Agreement with Named Executive Officers—Employment Agreement: Cafaro" below.

              To support Ms. Cafaro's continued retention, in recognition of her superior performance and contributions to our success, and in consideration for the elimination of the change of control "modified single trigger" and change of control tax gross-up payments from her employment agreement, concurrent with the actions described above, the independent members of our Board granted Ms. Cafaro a special equity incentive award in the form of 152,934 shares of restricted stock having an aggregate fair market value of $8,000,000 on the date of grant. These shares vest in five equal annual installments beginning on the first anniversary of the date of grant. The shares are subject to accelerated vesting in the event of death, disability, termination of employment by us without Cause or termination of employment by Ms. Cafaro with Good Reason (as such terms are defined under "—Employment and Change of Control Severance Agreement with Named Executive Officers—Employment Agreement: Cafaro" below), but are not subject to accelerated vesting solely upon a change of control.

              Other than Ms. Cafaro's rebalanced compensation, each Named Executive Officer's target annual cash incentive and target long-term incentive opportunities in 2011 were consistent with such Named Executive Officer's target opportunities in 2010.


Compensation of Our Named Executive Officers for 2011, 2010 and 2009 Performance

              In order to provide stockholders with a more complete picture of our Named Executive Officers' compensation, we are providing additional information not required by the SEC. The table below shows each Named Executive Officer's total direct compensation for services performed in 2011, 2010 and 2009 (with the exception of Mr. Lillibridge, who joined us in July 2010 and was not a Named Executive Officer for 2009). In contrast to the Summary Compensation Table, which discloses the grant date fair value of equity awards granted in a given year, the table below discloses the grant date fair value of equity awards granted in the first quarter of the subsequent year for performance during a

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given year (e.g., equity awards granted in January 2012 for 2011 performance). This table supplements, and does not replace, the Summary Compensation Table.

 
   
   
   
   
   
   
   
   
  Long-Term Incentive Award
   
   
 
   
   
  Performance
Year

   
   
   
  Annual Cash
Incentive Award

   
  Restricted Stock
  Stock Options
  Total Direct
Compensation(2)

   
 
  Name
   
   
  Salary
   
   
  # of Shares
   
  Value(1)
   
  # of Shares
   
  Value(1)
   
   

 

 

D. Cafaro(3)

        2011       $ 915,000       $ 3,019,500         82,808       $ 4,611,600         182,560       $ 1,976,400       $ 10,522,500    

 

            2010         725,000         2,186,328         85,437         4,567,500         171,906         1,957,500         9,436,328    

 

            2009         652,000         2,013,865         87,572         3,902,220         171,350         1,672,380         8,240,465    

 

 

R. Schweinhart

        2011         407,000         782,051         15,347         854,700         33,835         366,300         2,410,051    

 

            2010         395,000         743,094         15,504         829,500         31,195         355,500         2,323,094    

 

            2009         375,000         693,656         14,727         656,250         28,816         281,250         2,006,156    

 

 

R. Lewis

        2011         498,000         1,064,475         30,985         1,725,570         68,310         739,530         4,027,575    

 

            2010         470,000         947,344         30,440         1,617,675         61,245         693,280         3,728,299    

 

            2009         407,000         854,700         25,055         1,116,452         49,024         478,479         2,856,631    

 

 

T. Lillibridge(4)

        2011         375,000         599,574         11,312         630,000         24,939         270,000         1,874,574    

 

            2010         187,500         264,658         3,957         211,726         7,962         90,740         754,624    

 

 

T.R. Riney

        2011         381,000         760,095         14,367         800,100         31,673         342,900         2,284,095    

 

            2010         370,000         696,063         14,523         777,000         29,220         333,000         2,176,063    

 

            2009         348,000         682,080         15,580         694,260         30,485         297,540         2,021,880    
(1)
Amounts shown represent the full grant date fair value, calculated pursuant to FASB guidance relating to fair value provisions for share-based payments, of the restricted stock and stock option portions of each Named Executive Officer's long-term incentive award.

(2)
Total direct compensation consists of base salary, plus annual cash incentive awards and long-term incentive awards, and therefore excludes amounts shown in the "All Other Compensation" column of the 2011 Summary Compensation Table.

(3)
Ms. Cafaro's total direct compensation for 2011 excludes the $8 million special equity incentive award granted to her in March 2011 because this award was not related solely to 2011 performance. The special equity incentive award was granted to support her continued retention, in recognition of her superior performance and contributions to our success, and in consideration for the elimination of the change of control "modified single trigger" and change of control tax gross-up payments from her prior employment agreement. See "Other 2011 Compensation Decisions—Rebalancing of Chief Executive Officer Compensation and Special Equity Incentive Award" above.

(4)
Mr. Lillibridge's total direct compensation for 2010 excludes the $5.3 million special equity incentive awards that were granted to him in connection with the closing of our Lillibridge acquisition and the negotiation and execution of his employment agreement in July 2010 because these awards were not related solely to 2010 performance.


Severance Benefits

              Under existing employment or change of control severance agreements, our Named Executive Officers are entitled to receive severance benefits upon certain qualifying terminations of employment (subject to any required payment delay pursuant to Section 409A of the Code). Generally, the severance arrangements support executive retention and continuity of management and provide replacement income if an executive is terminated involuntarily other than for cause.

              As previously discussed, we amended Ms. Cafaro's employment agreement in 2011 to eliminate certain tax gross-up payments with respect to severance and certain other benefits in connection with a change of control (see "Other 2011 Compensation Decisions—Rebalancing of Chief Executive Officer Compensation and Special Equity Incentive Award" above), and the employment agreement we entered into with Mr. Lillibridge in July 2010 does not provide tax gross-up payments with respect to severance benefits. Legacy arrangements with Messrs. Schweinhart, Lewis and Riney, which have been in existence and have not been amended (other than certain amendments to comply with Section 409A of the Code and as described below) for several years, provide certain tax gross-up payments with respect to payments made in connection with a change of control. However, no tax gross-up would

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have been payable to any of our Named Executive Officers under the scenarios and assumptions presented under "—Potential Payments Upon Termination or Change of Control" in this Proxy Statement. At the time we entered into each such arrangement, the Compensation Committee considered the potential severance benefits, including any potential tax gross-up, to be necessary to attract and retain top executives and, based on the market compensation analysis of the Compensation Committee's independent compensation consultant, to be consistent with then current competitive market practices.


Tax Considerations

              Section 162(m) of the Code places a limit of $1 million on the amount of compensation that we may deduct in any year with respect to each of our Named Executive Officers other than the Chief Financial Officer, unless the compensation is performance-based compensation and meets certain other requirements, as described in Section 162(m) and the related regulations. We generally consider qualification for deductibility under Section 162(m) for compensation paid to our Named Executive Officers, including stock options granted under our 2006 Incentive Plan. The Compensation Committee believes, however, that our executive compensation program should be flexible, maximize our ability to recruit, retain and reward high-performing executives and promote varying corporate goals. Accordingly, the Compensation Committee may approve compensation that exceeds the $1 million limit or does not otherwise meet the requirements of Section 162(m), but that is deemed to be in our best interests and the best interests of our stockholders.


Minimum Share Ownership Guidelines for Executive Officers

              Our minimum share ownership guidelines require each executive officer to maintain a minimum equity investment in our company based upon a multiple (five times, in the case of the Chief Executive Officer, and three times, in the case of all other executive officers) of his or her then current base salary. Each executive officer must achieve the minimum equity investment within five years from the date he or she first becomes subject to the guidelines and, until such time, must retain at least 60% of our common stock granted to the executive officer or purchased by the executive officer through the exercise of stock options. The independent members of our Board annually review each executive officer's compliance with the guidelines as of July 1. Taking into account any permitted transition period, all of our executive officers are currently in compliance with the minimum share ownership guidelines. Except as described above, our minimum share ownership guidelines and our 2006 Incentive Plan do not require a minimum holding period for stock options, restricted stock or other equity grants.


Adjustment or Recovery of Awards

              Under Section 304 of the Sarbanes-Oxley Act, if we are required to restate our financial results due to material noncompliance with any financial reporting requirement as a result of misconduct, our Chief Executive Officer and Chief Financial Officer must reimburse us for (i) any bonus or other incentive-based or equity-based compensation received during the twelve months following the public issuance of the non-compliant document and (ii) any profits realized from the sale of our securities during those twelve months. Following the SEC's adoption of final rules regarding executive compensation recoupment policies pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, we will consider and adopt a separate executive compensation recoupment policy in accordance with the final rules.

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Amendments to Employment and Change of Control Severance Agreements

              As discussed above under "Other 2011 Compensation Decisions—Rebalancing of Chief Executive Officer Compensation and Special Equity Incentive Award," in March 2011, we amended the terms of Ms. Cafaro's employment agreement to eliminate the change of control "modified single trigger" and certain tax gross-up payments with respect to severance and certain other benefits in connection with a change of control. The material provisions of Ms. Cafaro's employment agreement are summarized under "—Employment and Change of Control Severance Agreement with Named Executive Officers—Employment Agreement: Cafaro" below.

              Also in March 2011, we amended the terms of Mr. Riney's change-in-control severance agreement to eliminate a provision that provided for payment of severance benefits if Mr. Riney were to terminate employment with us without Good Reason (as defined under "—Employment and Change of Control Severance Agreement with Named Executive Officers—Employment Agreement and Change of Control Severance Agreement: Riney" below) within the 30-day period commencing 30 days after a change of control or within the 30-day period commencing one year after a change of control. The material provisions of Mr. Riney's change-in-control severance agreement are summarized under "—Employment and Change of Control Severance Agreement with Named Executive Officers—Employment Agreement and Change of Control Severance Agreement: Riney" below.

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Compensation Tables

2011 Summary Compensation Table

              The following table sets forth the compensation awarded or paid to, or earned by, each of the Named Executive Officers during 2011, 2010 and 2009 (for supplemental information regarding the total direct compensation earned by the Named Executive Officers for 2011 performance, see "Compensation Discussion and Analysis" above):

 
  Name and Principal Position
   
  Year
   
  Salary
($)

   
  Bonus
($)(1)

   
  Stock Awards
($)(2)

   
  Option Awards
($)(3)

   
  Non-Equity
Incentive Plan
Compensation
($)(4)

   
  Change in
Pension
Value and
Non-
Qualified
Deferred
Compensation
Earnings ($)

   
  All Other
Compensation
($)(5)

   
  Total
($)

   
    D. Cafaro         2011       $ 915,000       $       $ 12,567,500       $ 1,957,500       $ 3,019,500               $ 39,331       $ 18,498,831    
        Chairman of the Board and         2010         725,000                 3,902,220         1,672,380         2,186,328                 55,178         8,541,106    
        Chief Executive Officer         2009         652,000                 2,482,830         1,064,070         2,013,865                 38,660         6,251,425    
    R. Schweinhart         2011         407,000                 829,500         355,500         782,051                 7,391         2,381,442    
        Executive Vice President and         2010         395,000                 656,250         281,250         743,094                 17,579         2,093,173    
        Chief Financial Officer         2009         375,000                 570,540         244,519         693,656                 10,524         1,894,239    
    R. Lewis         2011         498,000                 1,617,675         693,280         1,064,475                 7,391         3,880,821    
        President         2010         470,000                 1,116,452         478,479         947,344                 26,678         3,038,953    
              2009         407,000                 747,460         320,340         854,700                 8,627         2,338,127    
    T. Lillibridge(6)         2011         375,000                 211,726         90,740         599,574                 30,549         1,307,589    
        Executive Vice President, Medical
    Property Operations and President
    and Chief Executive Officer,
    Lillibridge Healthcare Services, Inc.
        2010         187,500         264,658         5,335,000                                 765         5,787,923    
    T.R. Riney         2011         381,000                 777,000         333,000         760,095                 7,391         2,258,486    
        Executive Vice President,         2010         370,000                 694,260         297,540         696,063                 27,236         2,085,099    
        Chief Administrative Officer and
    General Counsel
        2009         348,000                 529,200         226,800         682,080                 9,262         1,795,342    
(1)
The amount shown in this column represents Mr. Lillibridge's annual cash incentive award for 2010, which was predetermined in connection with the negotiation and execution of his employment agreement, prorated to reflect the portion of 2010 for which he was employed by us. Annual cash incentive awards earned by our Named Executive Officers (other than Mr. Lillibridge for 2010) for performance in fiscal 2011, 2010 and 2009 are included in the column entitled "Non-Equity Incentive Plan Compensation." See footnote (4).

(2)
The amounts shown in this column reflect the full grant date fair value of the restricted stock granted to our Named Executive Officers in fiscal 2011, 2010 and 2009, calculated pursuant to FASB guidance relating to fair value provisions for share-based payments. The amount shown for Ms. Cafaro in 2011 includes the $8 million special equity incentive award granted to her in March 2011 to support her continued retention, in recognition of her superior performance and contributions to our success, and in consideration for the elimination of the change of control "modified single trigger" and change of control tax gross-up payments from her prior employment agreement. See Note 12 of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2011 for a discussion of the relevant assumptions used in calculating grant date fair value. For further information on these awards, see the 2011 Grants of Plan-Based Awards Table and 2011 Outstanding Equity Awards at Fiscal Year-End Table included in this Proxy Statement.

(3)
The amounts shown in this column reflect the full grant date fair value of the stock options granted to our Named Executive Officers in fiscal 2011, 2010 and 2009, calculated pursuant to FASB guidance regarding fair value provisions for share-based payments. See Note 12 of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2011 for a discussion of the relevant assumptions used in calculating grant date fair value. For further information on these awards, see the 2011 Grants of Plan-Based Awards Table and 2011 Outstanding Equity Awards at Fiscal Year-End Table included in this Proxy Statement.

(4)
The amounts shown in this column reflect annual cash incentive awards earned by our Named Executive Officers (other than Mr. Lillibridge for 2010) for performance in fiscal 2011, 2010 and 2009. Mr. Lillibridge's annual cash incentive award for 2010 was predetermined in connection with the negotiation and execution of his employment agreement in July 2010 and is included in the column entitled "Bonus."

(5)
The amounts shown in this column for 2011 include: supplemental disability insurance premiums (in the amount of $28,795) and supplemental life insurance premiums paid on behalf of Ms. Cafaro; group term life insurance premiums paid on behalf of our Named Executive Officers; reimbursement for the payment of taxes relating to such group term life insurance for Ms. Cafaro; our contributions to the Named Executive Officers' 401(k) plan accounts; provision of a parking space for Ms. Cafaro and Mr. Lewis (for which there was no incremental cost to us); and reimbursement for the cost of parking and membership in certain professional and social organizations for Mr. Lillibridge.

(6)
Mr. Lillibridge joined us effective July 1, 2010 as Executive Vice President, Medical Property Operations and was not a Named Executive Officer for 2009; therefore, only information for 2011 and for the period from July 1, 2010 through December 31, 2010 is provided. Pursuant to his employment agreement, on July 1, 2010, Mr. Lillibridge received two special equity incentive awards in the form of 55,561 shares of restricted stock each, having an aggregate fair market value of $5,335,000 on the date of grant, to encourage his long-term retention. The awards vest over five years following the date of grant.

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2011 Grants of Plan-Based Awards Table

              The following table provides additional information relating to grants of plan-based awards made to our Named Executive Officers during 2011:








   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
  All
Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#)(1)

   
   
   
   
   
   
 






   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
  All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)(2)

   
   
   
  Grant Date
Fair Value
of Stock
and
Option
Awards
($)(4)

   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
  Exercise
or Base
Price of
Option
Awards
($/Sh)(3)

   
   
   
   
   
  Estimated Possible Payouts Under
Non-Equity Incentive Plan Awards

   
  Estimated Future Payouts Under
Equity Incentive Plan Awards

   
   
   
   
 
  Name
   
  Grant
Date

   
  Threshold
($)

   
  Target
($)

   
  Maximum
($)

   
  Threshold
($)

   
  Target
($)

   
  Maximum
($)

   
   
   
   
   
    D. Cafaro         (5)     $ 732,000       $ 1,464,000       $ 3,294,000       $       $       $                       $       $    
              (6)                               1,464,000         2,928,000         6,588,000                                    
              1/24/2011 (7)                                                       85,437                         4,567,500    
              1/24/2011 (7)                                                               171,906         53.46         1,957,500    
              3/22/2011 (8)                                                       152,934                         8,000,000    
    R. Schweinhart         (5)       284,900         569,800         854,700                                                            
              (6)                               407,000         814,000         1,221,000                                    
              1/20/2011 (7)                                                       15,504                         829,500    
              1/20/2011 (7)                                                               31,195         53.50         355,500    
    R. Lewis         (5)       373,500         747,000         1,120,500                                                            
              (6)                               821,700         1,643,400         2,465,100                                    
              1/20/2011 (7)                                                       25,366                         1,357,125    
              1/20/2011 (7)                                                               51,037         53.50         581,625    
              3/16/2011 (7)                                                       5,074                         260,550    
              3/16/2011 (7)                                                               10,208         53.50         111,655    
    T. Lillibridge         (5)       262,500         525,000         787,500                                                            
              (6)                               300,000         600,000         900,000                                    
              1/20/2011 (7)                                                       3,957                         211,726    
              1/20/2011 (7)                                                               7,962         53.50         90,740    
    T.R. Riney         (5)       266,700         533,400         800,100                                                            
              (6)                               381,000         762,000         1,143,000                                    
              1/20/2011 (7)                                                       14,523                         777,000    
              1/20/2011 (7)                                                               29,220         53.50         333,000    
(1)
The amounts shown reflect shares of restricted stock granted to our Named Executive Officers. These shares vest in three equal annual installments beginning on the date of grant, except for (a) the shares granted to Ms. Cafaro on March 22, 2011, which vest in five equal annual installments beginning on the first anniversary of the date of grant and (b) the shares granted to Mr. Lewis on March 16, 2011, which vest in three equal installments on each of March 16, 2011, January 20, 2012 and January 20, 2013.

(2)
The stock options vest in three equal annual installments beginning on the date of grant, except for the stock options granted to Mr. Lewis on March 16, 2011, which vest in three equal installments on each of March 16, 2011, January 20, 2012 and January 20, 2013.

(3)
The stock option exercise price equals the closing price of our common stock on the date of grant, except that the closing price of our common stock on March 16, 2011 was $51.35.

(4)
The amounts shown reflect the full grant date fair value of the awards calculated pursuant to FASB guidance regarding fair value provisions for share-based payments. See Note 12 of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2011 for a discussion of the relevant assumptions used in calculating grant date fair value.

(5)
The amounts shown represent the threshold, target and maximum annual cash incentive award opportunities of each of our Named Executive Officers for performance in fiscal 2011. The earnings opportunities were approved by the Compensation Committee and, in the case of the Chief Executive Officer, by the independent members of our Board. The actual amount of each Named Executive Officer's award is based on the achievement of certain corporate and individual performance goals as discussed in the Compensation Discussion and Analysis. The annual cash incentive awards earned by our Named Executive Officers for performance in fiscal 2011 were granted between the target and maximum levels in January 2012 and paid during the first quarter of 2012. The amounts of the earned awards are shown in the "Non-Equity Incentive Plan Compensation" column of the 2011 Summary Compensation Table.

(6)
The amounts shown represent the threshold, target and maximum long-term incentive award opportunities of each of our Named Executive Officers for performance in fiscal 2011. The earnings opportunities were approved by the Compensation Committee and, in the case of the Chief Executive Officer, by the independent members of our Board. The actual amount of each Named Executive Officer's award is based on the achievement of certain corporate and individual performance goals as discussed in the Compensation Discussion and Analysis. The long-term incentive awards earned by our Named Executive Officers for performance in fiscal 2011 were granted at the maximum levels in January 2012 in the form of restricted stock (70%) and stock options (30%). The amounts of the earned awards will be reported as restricted stock and stock option grants made during 2012 and are not included in the 2011 Grants of Plan-Based Awards Table above; however, the amounts of these awards are shown in the table under "Compensation Discussion and Analysis—Compensation of Our Named Executive Officers for 2011, 2010 and 2009 Performance" in this Proxy Statement.

(7)
The amounts shown reflect the long-term incentive awards granted as restricted stock and stock options (rounded down to the nearest whole share) to our Named Executive Officers in January 2011 and, in the case of Mr. Lewis, March 2011 for performance in fiscal 2010. Under Mr. Lillibridge's employment agreement, Mr. Lillibridge's long-term incentive award for 2010 was predetermined to have a value of $600,000, prorated to reflect the portion of 2010 for which he was employed by us.

(8)
The amount shown reflects a special equity incentive award granted to Ms. Cafaro in March 2011 to support her continued retention, in recognition of her superior performance and contributions to our success, and in consideration for the elimination of the change of control "modified single trigger" and change of control tax gross-up payments from her prior employment agreement. See "Compensation Discussion and Analysis—Chief Executive Officer Special Equity Incentive Award."

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2011 Outstanding Equity Awards at Fiscal Year-End Table

              The following table sets forth information regarding equity-based awards granted to our Named Executive Officers that were outstanding at December 31, 2011:

 
   
   
  Option Awards
  

  Stock Awards
  

   
 
  Name
   
  Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable

   
  Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
(1)

   
  Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)

   
  Option
Exercise
Price
($)

   
  Option
Expiration
Date

   
  Number of
Shares or
Units That
Have Not
Vested
(#)(2)

   
  Market
Value of
Shares or
Units That
Have Not
Vested
($)(3)

   
  Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
(#)

   
  Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
($)

   

 

 

D. Cafaro

        89,246                       $ 43.26         1/17/2017               $               $    

 

            428,560                         41.54         1/22/2018                                    

 

            143,301                         28.96         1/21/2019                                    

 

            114,234         57,116                 44.56         1/20/2020                                    

 

            57,302         114,604                 53.46         1/24/2021                                    

 

                                                    239,082         13,180,591                    

 

                                                                    82,808 (4)       4,611,600 (4)  

 

                            182,560 (4)       55.69 (4)       1/18/2022 (4)                               1,976,400 (4)  

 

 

R. Schweinhart

        41,604                         25.19         1/18/2015                                    

 

            50,276                         30.83         1/27/2016                                    

 

            32,713                         43.26         1/17/2017                                    

 

            82,140                         41.54         1/22/2018                                    

 

            39,823                         28.96         1/21/2019                                    

 

            19,211         9,605                 44.56