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

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VENTAS, INC.

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111 South Wacker Drive
Suite 4800
Chicago, Illinois 60606
(877) 483-6827

 

March 19, 2010

 

Dear Stockholder:

 

I am pleased to invite you to attend Ventas, Inc.’s 2010 Annual Meeting of Stockholders. This year’s meeting will be held on Friday, April 30, 2010, at 9:00 a.m. (Eastern Time) at 10350 Ormsby Park Place, Room LL050, Louisville, Kentucky 40223.

 

The accompanying Notice of Annual Meeting of Stockholders and Proxy Statement describe the items to be considered and acted upon at the meeting.

 

Your vote is very important. Whether or not you plan to attend the meeting in person, I urge you to 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.

 

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

 

Sincerely,

 

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

 

111 South Wacker Drive
Suite 4800
Chicago, Illinois 60606
(877) 483-6827

 

 

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

 

The 2010 Annual Meeting of Stockholders of Ventas, Inc. will be held on Friday, April 30, 2010, at 9:00 a.m. (Eastern Time) at 10350 Ormsby Park Place, Room LL050, Louisville, Kentucky 40223, to consider and vote on:

 

 

Our Board of Directors has fixed the close of business on March 8, 2010 as the record date for determination of stockholders entitled to notice of, and to vote at, the Annual Meeting or any adjournments thereof. Please see the accompanying Proxy Statement for more information.

 

Whether or not you plan to attend the meeting in person, we request 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,

 

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

 

Louisville, Kentucky

March 19, 2010

PROXY STATEMENT

FOR 2010 ANNUAL MEETING OF STOCKHOLDERS

 

 

TABLE OF CONTENTS

 

 

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 on Friday, April 30, 2010 at 9:00 a.m. (Eastern Time) at 10350 Ormsby Park Place, Room LL050, Louisville, Kentucky 40223, 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.

 

Our principal executive offices are located at 111 South Wacker Drive, Suite 4800, Chicago, Illinois 60606.

 

Notice of Electronic Availability of Proxy Statement and Annual Report

 

As permitted by the SEC’s rules, we are making this Proxy Statement and the materials accompanying it available to our stockholders electronically via the Internet. On or about March 19, 2010, we will mail to our stockholders of record as of the close of business on March 8, 2010, a Notice containing instructions on how to access this Proxy Statement and the materials accompanying it and vote online, and we will begin mailing these proxy materials to stockholders who previously 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.

 

IMPORTANT NOTICE REGARDING INTERNET AVAILABILITY OF PROXY MATERIALS
FOR THE ANNUAL MEETING TO BE HELD ON APRIL 30, 2010:

 

This Proxy Statement and our 2009 Annual Report (consisting of the 2009 Chairman’s Letter to Investors and
2009 Form 10-K) are available at www.proxyvote.com.

 

Householding

 

The SEC’s rules permit us to deliver a single Notice or set of proxy materials to one address shared by two or more of our stockholders who have the same last name or who have consented in writing to this delivery method. This practice, known as “householding,” is designed to eliminate duplicate mailings and conserve natural resources and can result in significant cost savings for us. If you share an address and have the same last name as another stockholder, but prefer to receive separate copies of the Notice or proxy materials, please contact Broadridge Financial Solutions, Inc. at (800) 542-1061 or in writing at Householding Department, 51 Mercedes Way, Edgewood, NY 11717. Upon receipt of your request, we will promptly deliver the requested materials to you. Similarly, if you share an address with another stockholder and wish to receive a single copy of future Notices or proxy materials for your household, please contact Broadridge at the phone number or address listed above.

 

Cost of Proxy Solicitation

 

We will bear the cost of soliciting proxies by the Board. In addition to the solicitation of proxies by mail, solicitation may be made personally or by telephone or electronic communication by our directors, officers and employees, none of whom will receive additional compensation for these services, and by Georgeson Inc., a proxy solicitation firm we have engaged to aid in the solicitation of proxies. We will pay Georgeson Inc. a fee of $9,000 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.

 

Who Can Vote

 

Only stockholders of record at the close of business on March 8, 2010 are entitled to vote at the Annual Meeting or any adjournments thereof. On that date, 156,724,215 shares of our common stock, par value $0.25 per share (“Common Stock”), were outstanding. Each share of Common Stock entitles the owner to one vote. 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, may not be voted by the record owner thereof, but will instead be voted in accordance with Article IX of our Amended and Restated Certificate of Incorporation, as amended.

 

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 and at our corporate office located at 10350 Ormsby Park Place, Suite 300, Louisville, Kentucky 40223.

 

How to Vote

 

You may vote your shares in one of several ways, depending on how you own your shares. Stockholders of record (i.e., you own shares registered in your name) may vote in one of the following ways:

 

 

Stockholders who hold shares in “street name” (i.e., you own shares registered in the name of a bank, broker or other holder of record) should follow the instructions provided by their broker or nominee in order for their shares to be voted. If your shares are not registered in your name 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 follows:

 

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

 

Proposal 3—AGAINST the stockholder proposal regarding majority voting for directors; 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. Stockholders who hold shares in “street name” 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.

 

A majority of the shares of Common Stock outstanding as of the record date must be present in person or 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. A broker non-vote occurs when a broker or nominee does not vote on some matter with respect to shares held in “street name” because the broker or nominee does not have discretionary voting power for that particular proposal and has not received voting instructions from the beneficial owner. Under current NYSE rules, a broker or nominee that has not received voting instructions from the beneficial owner has discretion to vote on the ratification of the selection of Ernst & Young LLP as our independent registered public accounting firm for fiscal year 2010 (Proposal 2), but no other proposal.

 

 

The affirmative vote of a majority of the shares of Common Stock present in person or by proxy and entitled to vote 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, whereas broker non-votes will have no effect.

 

Our Board currently consists of eight directors. Following the recommendation of the Nominating and Corporate Governance Committee (the “Nominating and Governance Committee”), our Board has nominated each individual presently serving as a director for election at the Annual Meeting. Each director elected at the Annual Meeting will hold office until the next succeeding annual meeting of stockholders and his or her successor is duly elected and qualified, or until his or her earlier death, resignation or removal. We do not have a staggered Board.

 

Each nominee listed below has consented to be named in this Proxy Statement and has agreed to serve as a director if elected. We anticipate that, if elected, the named nominees will be able to serve. However, if any nominee at the time of election is unable or unwilling to accept election or is unavailable to serve for any reason, the persons named as proxies will have authority, according to their judgment, to vote or refrain from voting for such alternate nominee as may be designated by the Board.

 

Set forth below is certain biographical information concerning the nominees proposed for election as directors, all of whom presently comprise our Board. This information is based upon statements made or confirmed to us by or on behalf of these nominees, except to the extent certain information appears in our records. Ages shown for all nominees are as of March 8, 2010.

 

 

 

We have adopted Guidelines on Governance, which reflect the fundamental corporate governance principles by which our Board and its committees operate. These guidelines set forth general practices the Board will follow with respect to Board structure and function, Board and committee organization and composition, and Board conduct.

 

A copy of our Guidelines on Governance is available on our Web site at www.ventasreit.com under the “For Investors” tab at the top of the page and then under the “Corporate Governance” link. In addition, we will provide a copy of the Guidelines on Governance, without charge, upon request to Ventas, Inc., 10350 Ormsby Park Place, Suite 300, Louisville, Kentucky 40223, Attention: Corporate Secretary.

 

The Board provides guidance and oversight with respect to our overall performance, strategic plans, key corporate policies and decisions and enterprise risk management. Among other things, it approves significant acquisitions, dispositions and other transactions, advises management on key financial and business objectives and monitors our progress with respect to these matters. Members of the Board are kept informed of our business by various reports and materials provided to them on a regular basis by management, including presentations made at Board and committee meetings by our Chief Executive Officer, Chief Financial Officer, Chief Investment Officer, General Counsel and other officers.

 

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. On February 19, 2010, the Board evaluated each non-management director’s independence on a case-by-case basis. The Board considered any matters that could affect the ability of each non-employee director to exercise independent judgment in carrying out his or her responsibilities as a director, including all transactions and relationships between, on one hand, each such director, the director’s family members and organizations with which the director or the director’s family members have an affiliation and, on the other hand, us, our subsidiaries and our management. Any such matters were evaluated both from the standpoint of the director and from that of persons or organizations with which the director has an affiliation. Based on that review, the Board has affirmatively determined that each of our current non-management directors and nominees—Messrs. Crocker, Geary, Gellert, Reed, Shelton and Theobald and Ms. Rosenberg—has no material relationship with us and qualifies as independent under the NYSE’s standards. Ms. Cafaro, as our Chairman, President and Chief Executive Officer, is not independent under the rules and regulations of the NYSE. Each director abstained from the vote pertaining to the determination of his or her independence.

 

In evaluating Mr. Geary’s independence, the Board considered our relationship with ResCare pursuant to the Master Lease Agreement described under “Transactions with Related Persons—Transactions with ResCare” and has determined that such relationship is not material to Mr. Geary, ResCare or us from a financial perspective or otherwise. In 2009, the total annual payments made to us under the Master Lease Agreement constituted less than one-tenth of one percent (0.1%) of the annual gross consolidated revenues of ResCare, and approximately one-tenth of one percent (0.1%) of our annual gross consolidated revenues. Further, the Board believes that the terms of the Master Lease Agreement represent market rates. The Board does not believe this relationship will affect Mr. Geary’s ability to exercise independent judgment in carrying out his responsibilities as a director of Ventas.

Board Leadership and Risk Oversight

 

The 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, the Board (led by the Nominating and Governance Committee) considers our Board leadership structure as part of its annual self-evaluation process, taking into account our current operating and governance environment, to ensure that it remains the optimal structure for us and for our stockholders.

 

Pursuant to our bylaws and Guidelines on Governance, the Board has discretion to determine whether it is best for us at any given point in time for the roles of the Chief Executive Officer and the Chairman of the Board to be separate or combined. Ms. Cafaro has served as 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 because it enables decisive leadership, ensures clear accountability and enhances our ability to communicate our message and strategy on a consistent basis 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 ensure the Board’s time and attention are focused on the most critical matters.

 

As required by our Guidelines on Governance, the independent members of the Board, after considering the recommendation of the Nominating and Governance 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, it is generally expected that he or she will serve for more than one year, and Mr. Crocker has been our Presiding Director since 2003. The Board believes that this approach — a leadership structure under which our Chief Executive Officer serves as Chairman of the Board and a Presiding Director assumes specified responsibilities on behalf of the independent directors — is currently 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.

 

While it is management’s responsibility to identify and manage on a daily basis our exposure to risk, the Board plays an active and primary role in overseeing the processes established to assess, monitor and mitigate that exposure. The Board routinely discusses with management the major risks facing our company and reviews the guidelines, policies and procedures we have in place to control those risks, such as our approval process for investments. For example, on a regular basis since 2008, directors receive materials and information, including in-depth and in-person presentations from third-party experts, with respect to a specific topic of risk, and the Board engages in a comprehensive analysis and dialogue regarding that risk. This process enables the Board to focus on the most significant strategic, financial, operational, legal, regulatory and other risks applicable to our business, and ensures that the risks we undertake are well understood, mitigated to the extent reasonable and consistent with our risk profile and the Board’s tolerance for risk. In addition to the risk oversight function administered by the Board, each of the Audit Committee, the Compensation Committee and the Nominating and Governance Committee exercises some oversight related to risks associated with the particular responsibilities of that committee. More specifically, the Audit Committee, in accordance with NYSE requirements, reviews financial and accounting risks and the mechanisms through which our risk assessment and management is handled, while the Compensation Committee considers whether the structure of our compensation programs encourages excessive risk-taking and the Nominating and Governance Committee focuses on risks related to succession planning. The chairs of these committees then report on such matters to the full Board. We believe that this division of responsibilities is the most effective

approach for addressing the risks facing us and that our Board leadership structure appropriately supports the Board’s role in risk oversight.

 

Attendance at Meetings

 

The Board held a total of seven meetings during 2009. Pursuant to our Guidelines on Governance, our independent directors meet in executive session, outside the presence of management, at a minimum, at each regularly scheduled quarterly Board meeting. The Presiding Director chairs all regularly scheduled executive sessions and all other meetings of the independent directors.

 

Each director attended at least 75% of the total meetings of the Board and the committees on which he or she served during 2009. See “— Board Committees” below.

 

We encourage, but do not require, all directors to attend our annual meetings of stockholders. Seven of the eight directors who were nominated for re-election to the Board in 2009 attended our 2009 Annual Meeting of Stockholders.

 

Communications with the Board

 

Stockholders and other parties interested in communicating directly with the Board may do so by writing to Board of Directors, Ventas, Inc., c/o Corporate Secretary, 10350 Ormsby Park Place, Suite 300, Louisville, Kentucky 40223, or by submitting an e-mail to the Board at bod@ventasreit.com. Communications addressed to the Board are screened by our Corporate Secretary for appropriateness before either forwarding to or notifying the members of the Board of receipt of a communication. Additionally, stockholders and other parties interested in communicating directly with the Presiding Director of the Board or with the non-management directors as a group may do so by writing to Presiding Director, Ventas, Inc., 10350 Ormsby Park Place, Suite 300, Louisville, Kentucky 40223, or by submitting an e-mail to the non-management members of the Board at independentbod@ventasreit.com.

 

Our Guidelines on Governance set forth, among other things, the process by which the Nominating and Governance Committee identifies and evaluates nominees for Board membership. Under this process, the Nominating and Governance 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 and Governance Committee considers (i) incumbent directors who have indicated a willingness to continue to serve on the Board, (ii) candidates, if any, nominated by our stockholders, and (iii) other individuals as determined by the Nominating and Governance Committee. Additionally, if at any time during the year a seat on the Board becomes vacant or a new seat is created, the Nominating and Governance Committee considers and recommends a candidate to the Board for appointment to fill the seat.

 

In evaluating potential director candidates, the Nominating and Governance 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, based on an assessment of the perceived needs of the Board at that time. The Nominating and Governance Committee regularly reviews the 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 effective functioning of the Board. While different perspectives, skill sets, education, ages, genders, ethnic origins and business experience are factors considered in its annual nomination process, the Nominating and Governance Committee has not established a policy regarding diversity in identifying potential director candidates. Moreover, no single factor or group of factors is necessarily dispositive of whether a candidate will be recommended by the Nominating and Governance Committee. The Nominating and Governance Committee will consider and apply these same standards in evaluating individuals recommended for nomination by our stockholders in accordance with the procedures described under “Stockholder Proposals for the 2011 Annual Meeting of Stockholders.”

In general, the Nominating and Governance Committee seeks to include on the Board a complimentary 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 nominees for membership on the Board should:

 

 

In addition, our directors are expected to be active participants in governing our enterprise, and the Nominating and Governance 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.

 

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 listed above. We may retain search firms and other third parties on similar or other terms in the future.

 

The Board currently has five standing committees that perform certain functions for the Board:

 

1.  Audit and Compliance Committee (the “Audit Committee”);

 

2.  Executive Compensation Committee (the “Compensation Committee”);

 

3.  Executive Committee;

 

4.  Investment Committee; and

 

5.  Nominating and Governance Committee.

 

The following table provides current membership and 2009 meeting information for each of these committees:

 

 

C = Chairperson

Each of the Audit, Compensation and Nominating and Governance Committees operates pursuant to a written charter. Copies of these charters are available on our Web site at www.ventasreit.com under the “For Investors” tab at the top of the page and then under the “Corporate Governance” link. In addition, we will provide copies of the Audit, Compensation and Nominating and Governance Committee charters, without charge, upon request to Ventas, Inc., 10350 Ormsby Park Place, Suite 300, Louisville, Kentucky 40223, Attention: Corporate Secretary.

 

Audit Committee

 

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 SEC and the listing standards adopted by the NYSE, 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” under the rules of the SEC.

 

The Audit Committee assists the Board in fulfilling its responsibility 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:

 

 

 

The Audit Committee maintains free and open communication with the Board, our independent registered public accounting firm, our internal auditors and our financial management.

 

Compensation Committee

 

The Board has determined that each member of the Compensation Committee is independent and satisfies the listing standards adopted by the NYSE. 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”).

 

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 the Chief Executive Officer. The Compensation Committee also reviews the performance of, and makes compensation recommendations for, the Chief Executive Officer. However, final decisions regarding compensation for the Chief Executive Officer are made by the non-management members of the Board, taking into consideration the Compensation Committee’s recommendations.

 

The Compensation Committee meets regularly throughout the year to review the compensation philosophy and ensure 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 company and individual performance goals for annual and long-term incentive awards. Our executive officers provide support to the Compensation Committee throughout this process by coordinating meeting logistics, preparing and disseminating relevant financial and non-financial company information and relevant market intelligence concerning our peer comparators as a supplement to the comparative market data prepared by the compensation consultant and making recommendations with respect to company goals and related performance metrics. At the Compensation Committee’s request, the Chief Executive Officer attends meetings and recommends to the Compensation Committee any compensation changes affecting the other executive officers. The Chief Executive Officer does not play any role in setting her own compensation. In addition, at the Compensation Committee’s request, our General Counsel generally attends meetings to act as secretary and record the minutes of the meetings. At

each regularly scheduled meeting, however, 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 corporate and individual performance goals for executives and to determine annual and long-term incentive awards for the prior year. Our executive officers provide similar support to the Compensation Committee in this process, and the Chief Executive Officer makes award recommendations with respect to the other executive officers.

 

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 other fees from us outside its role as advisor to the Board and the Compensation Committee. 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 by the Compensation Committee in its reasonable business judgment, considering all relevant facts and circumstances.

 

The Compensation Committee retained Pearl Meyer & Partners (“PM&P”) as its independent consultant to advise it and the non-management members of the Board, as applicable, on matters related to our executive compensation levels and program design for 2009. The Compensation Committee reviews the scope of work provided by PM&P on an annual basis and has determined that PM&P meets the independence criteria under our Compensation Consultant Independence Policy and applicable SEC guidelines. PM&P and its affiliates did not perform any other non-executive compensation consulting services for us during the year ended December 31, 2009.

 

The Compensation Committee has considered whether our compensation policies and practices for all employees, including executive officers, create risks that are reasonably likely to have a material adverse effect on our company. In its review, the Compensation Committee noted several design features of our compensation programs that reduce the likelihood of excessive risk-taking, including: a balanced mix of cash and equity and annual and long-term incentives; multiple performance measures with payouts subject to overall assessment of performance; and heavier equity weighting towards restricted stock than stock options to provide greater incentive to create and preserve long-term stockholder value. Based on its evaluation, the Compensation Committee has determined, in its reasonable business judgment, that our compensation practices and policies for all employees do not encourage excessive risk and instead promote behaviors that support long-term sustainability and value creation.

 

Executive Committee

 

The Board of Directors 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 reserved for the Board and other committees of the Board).

 

Investment Committee

 

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

 

Nominating and Governance Committee

 

The Board has determined that each member of the Nominating and Governance Committee is independent and satisfies the listing standards adopted by the NYSE. The Nominating and Governance Committee (i) identifies individuals qualified to become members of the Board, (ii) selects, or recommends to

the Board for selection, director-nominees, (iii) oversees the Board and Board committees, (iv) develops and recommends to the Board a set of corporate governance guidelines and the corporate code of ethics, and (v) generally advises the Board on corporate governance and related matters. Other specific authority and responsibilities of the Nominating and Governance Committee include:

 

 

The Nominating and Governance 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.

 

 

We have adopted a Code of Ethics and Business Conduct that applies to all of our directors and employees, including our Chief Executive Officer and all senior financial officers, such as our Chief Financial Officer and our Chief Accounting Officer and Controller, as required by the Sarbanes-Oxley Act, as well as all of the directors and officers of our subsidiaries.

 

A copy of the Code of Ethics and Business Conduct is available on our Web site at www.ventasreit.com under the “For Investors” tab at the top of the page and then under the “Corporate Governance” link. In addition, we will provide a copy of the Code of Ethics and Business Conduct, without charge, upon request to Ventas, Inc., 10350 Ormsby Park Place, Suite 300, Louisville, Kentucky 40223, Attention: Corporate Secretary. Waivers from, and amendments to, the 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 Web site at www.ventasreit.com.

 

The following table sets forth the compensation awarded or paid to, or earned by, our non-employee directors during 2009:

 

 

 

Mr. Crocker		33,962 shares
Mr. Geary		12,228 shares
Mr. Gellert		10,272 shares
Mr. Reed		4,059 shares
Ms. Rosenberg		10,272 shares
Mr. Shelton		4,059 shares
Mr. Theobald		10,272 shares

 

 

Mr. Crocker		30,000 shares
Mr. Geary		20,000 shares
Mr. Gellert		50,000 shares
Mr. Reed		5,000 shares
Ms. Rosenberg		30,000 shares
Mr. Shelton		5,000 shares
Mr. Theobald		40,000 shares

 

Our Chief Executive Officer, as a Ventas employee, does not receive compensation for her service as a director. The Board believes that the level of non-employee director compensation 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.

 

Cash Compensation

 

The cash compensation paid to, or earned by, our non-employee directors is comprised of two components: (1) a quarterly retainer and (2) Board and committee meeting fees.

 

Quarterly Retainer

 

Each non-employee director receives a $12,500 retainer for each calendar quarter in which he or she serves as a director. The Presiding Director receives an additional $6,250 retainer for each calendar quarter served.

 

Board and Committee Meeting Fees

 

Each non-employee director receives $1,500 for each Board meeting and $1,000 for each committee meeting he or she attends (including telephonic meetings, unless the meeting is ten minutes or less).

 

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 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 consists of stock options and shares of restricted stock or restricted stock units, at the director’s prior election.

 

Stock Options

 

On January 1 of each year, each non-employee director who is serving on such date receives a grant of options to purchase 5,000 shares of Common Stock, having an exercise price equal to the fair market value on the date of grant, pursuant to the 2006 Stock Plan for Directors. Effective May 2009, upon initial election or appointment to the Board, each non-employee director receives a grant of options to purchase a number of shares of Common Stock equal to a pro rata portion of the option grant made to the existing directors on January 1 of that year (determined by reference to the number of days remaining in the calendar year), having an exercise price equal to the fair market value on the date of grant, pursuant to the 2006 Stock Plan for Directors. 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.

 

Restricted Stock/Restricted Stock Units

 

On January 1 of each year, each non-employee director who is serving on such date receives a grant of shares of restricted stock or restricted stock units, at his or her prior election, having an aggregate value equal to $100,000 minus the value of the same-day grant of options to purchase 5,000 shares of Common Stock described above, pursuant to the 2006 Stock Plan for Directors. Upon initial election or appointment to

the Board, each non-employee director receives a grant of 2,000 shares of restricted stock or restricted stock units, at his or her prior election, plus, effective May 2009, a number of shares of restricted stock having an aggregate value equal to a pro rata portion of $100,000 minus the value of the same-day grant of options described above (in each case, determined by reference to the number of days remaining in the calendar year) pursuant to the 2006 Stock Plan for Directors. 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.

 

Reimbursement of Expenses

 

We 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.

 

Non-Employee Director Compensation Review Practices

 

The Nominating and Governance Committee is responsible for annually reviewing the amount and types of compensation to be paid to our non-employee directors. During this process, the Nominating and Governance Committee reviews and evaluates information contained in surveys compiled by NAREIT and the National Association of Corporate Directors and may, as necessary, retain a nationally recognized independent compensation consultant to advise it on appropriate director compensation levels. Any changes to our non-employee director compensation program must be recommended by the Nominating and Governance Committee for approval by the Board. In 2009, the Nominating and Governance Committee recommended, and the Board approved, certain changes to the equity-based compensation paid to our non-employee directors upon initial election or appointment to the Board described above, based on its annual review and in keeping with our philosophy for non-employee director compensation.

 

Our minimum share ownership guidelines require each non-employee director to maintain a minimum number of shares of Common Stock equal to the number of shares granted by us to the non-employee director as compensation during the 36-calendar month period immediately preceding the test date, minus any shares forfeited by the director to pay taxes on the vesting of those shares under our share withholding program. Each non-employee director’s compliance with the guidelines is reviewed on July 1 of each year. Each non-employee director has three years from the date that he or she first becomes subject to the guidelines to satisfy the minimum share ownership levels. All of our non-employee directors are currently in compliance with these guidelines, subject to transition rules.

 

Set forth below is certain biographical information concerning each of our current executive officers. Ages shown for all executive officers are as of March 8, 2010.

 

 

SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS,
DIRECTORS AND EXECUTIVE OFFICERS

 

The following table shows as of March 8, 2010 the amount of Common Stock beneficially owned by each of our directors and nominees, each of our Named Executive Officers (defined below) and all of our directors and executive officers, as a group:

 

 

 

The following table shows as of March 8, 2010 the amount of Common Stock beneficially owned by each person known by us to be the beneficial owner of more than 5% of our outstanding Common Stock:

 

 

 

 

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

 

Section 16(a) of the Exchange Act requires our directors, officers 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 a review of the copies of those reports furnished to us and on written representations from certain reporting persons that no Form 5 was required for any such persons, we believe that during 2009 all of our directors, officers and persons who own more than 10% of our Common Stock complied with all applicable Section 16(a) filing requirements.

 

TRANSACTIONS WITH RELATED PERSONS

 

Our Board has adopted 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 conflict of interest or similar matters involving any of our officers or directors must also be reviewed by the Audit Committee. Pursuant to our Conflicts of Interest Policy, 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.

 

Transactions with ResCare

 

In 1998, we acquired eight personal care facilities and related facilities for approximately $7.1 million from Tangram Rehabilitation Services, Inc. (“Tangram”), a wholly owned subsidiary of ResCare, of which Mr. Geary is Chairman and also served as President and Chief Executive Officer until June 2006. The purchase price for the Tangram facilities was determined by an appraisal conducted by Graham & Associates, Inc., San Marcos, Texas, a certified General Real Estate Appraiser for the State of Texas. We lease these facilities to Tangram pursuant to a Master Lease Agreement, which is guaranteed by ResCare. During 2009, Tangram paid us approximately $980,871 in base rent payments, which constituted approximately one-tenth of one percent (0.1%) or less of both our and ResCare’s annual gross consolidated revenues for the year. We believe that the terms of the Master Lease Agreement represent market rates.

 

 

EXECUTIVE COMPENSATION MATTERS

 

The following discussion and analysis provides information regarding the compensation program in place for our principal executive officer, our principal financial officer and our two other executive officers (the “Named Executive Officers”) for 2009. This Compensation Discussion and Analysis sets forth the overall objectives of our executive compensation program, each element of our executive compensation program, and the policies underlying our 2009 compensation program and payouts for the Named Executive Officers. 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.

 

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:

 

 

By establishing and maintaining a performance- and achievement-oriented environment that provides the opportunity to earn market-competitive levels of compensation, which includes both cash and equity, the interests of our executives and stockholders are aligned.

 

Compensation Consultant and Benchmarking

 

The Compensation Committee retained PM&P as its independent compensation consultant to advise it and the non-management members of the Board, as applicable, on matters related to the Named Executive Officers’ compensation and compensation program design for 2009. The Compensation Committee has determined that PM&P meets the criteria for an independent consultant pursuant to our Compensation Consultant Independence Policy and in accordance with SEC guidelines for such services.

 

In 2009, PM&P provided the Compensation Committee and the non-management members of the Board, as applicable, 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 non-management members of the Board, as applicable, and made recommendations with respect to setting salary levels and establishing performance goals and incentive award levels. For 2009, PM&P compared our executive compensation structure and levels to executive compensation at a comparative group of 19 companies. Our comparative group consisted of REITs similar to us in terms of operations, funds from operations and generally falling within a range of 50% to 200% of our enterprise value and market capitalization and selected healthcare operators that operate properties of the type owned by us.

 

The reference group set forth below (the “Comparable Companies”) was approved by the Compensation Committee at its August 13, 2008 meeting as the appropriate benchmark for 2009 comparative purposes. These companies report compensation data for executive positions with responsibilities similar in breadth and scope to those of our executives, and these companies generally compete with us for executive talent and stockholder investment:

 

 

The Compensation Committee annually reviews this group to ensure that the companies included remain comparable to us in terms of size and operations and, therefore, may change the composition of the group from time to time as appropriate. In selecting the 2009 Comparable Companies, the Compensation Committee, after consultation with PM&P and in consideration of the increase in our size and the scope of our operations, excluded the following three companies that were previously included in the 2008 comparative group due to their change in size: Brandywine Realty Trust; Healthcare Realty Trust Inc.; and Mack-Cali Realty Corp. At the recommendation of PM&P, the Compensation Committee added The Macerich Company to the 2009 Comparable Companies because it met the applicable selection criteria in terms of enterprise value and market capitalization.

 

In determining 2009 compensation for our Named Executive Officers, the Compensation Committee, in consultation with PM&P, considered the competitive positioning of our executive compensation levels relative to the market data provided 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 target the 50th percentile of the Comparable Companies for base salary and the 65th percentile of the Comparable Companies for total annual compensation, long-term incentives and total direct compensation. However, the program is designed to deliver compensation levels above or below these targets based on performance well above or below established goals. We believe these targets reflect our operating style and the resulting 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 that each of our Named Executive Officers holds in benchmarking compensation by position. Specifically, each of our Named Executive Officers performs duties that are traditionally assigned to multiple senior officers in competitive companies. For example, our Executive Vice President, Chief Administrative Officer, General Counsel and Corporate Secretary is not only responsible for legal matters, but plays a critical role in our asset management and acquisition strategies. Similarly, our Executive Vice President and Chief Investment Officer serves as the head of acquisitions, but is also responsible for our marketing and investor relations activities and overseeing our asset management function. Our unusual division of responsibilities has created a cohesive and extremely streamlined management system, which enables us to operate with a smaller staff of senior executives than would be expected of a company undertaking the growth we have experienced historically. Therefore, while the Compensation Committee takes into account available compensation data for executives at the Comparable Companies, it recognizes that important adjustments must be considered in setting benchmarks for each Named Executive Officer.

 

Elements of Our Compensation Program

 

For 2009, 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 and long-term incentive compensation, as well as other perquisites and benefits, each of which is described in more detail below. Our compensation philosophy targets a mix that emphasizes variable pay, in addition to long-term value, and our compensation structure is designed so that a significant portion of total direct compensation for a given year will be in the form of equity, which vests over time. This structure, which has been in place for several years, creates greater alignment with stockholders and ensures that risk is managed by decision-makers in a manner that focuses on the creation of long-term value and diminishes the probability of excessive risk taking. We believe that the mix of cash and equity-based compensation, as well as the relationship of fixed to performance-based compensation, is well balanced to achieve the compensation philosophy previously discussed.

 

The following chart illustrates target levels of these compensation elements as a percentage of total direct compensation for 2009:

 

 

Base Salary

 

The base salary payable to each Named Executive Officer is intended to provide a fixed component of compensation reflecting the executive’s position and responsibilities. Our base salaries are generally targeted to approximate the competitive market median of the Comparable Companies, but may deviate from this target based on the individual’s sustained performance, contribution, experience, expertise and specific roles within our company as compared to benchmark. Base salary is reviewed on an annual basis and may be adjusted to better match competitive market levels and/or to recognize an executive’s growth and development in his or her position and increasing levels of 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. The Compensation Committee does not assign any specific weights to these factors.

 

In connection with its review of 2009 base salaries for the Named Executive Officers, the Compensation Committee analyzed and evaluated base salary information from the compensation study compiled by PM&P using proxy statements of the Comparable Companies to confirm appropriate compensation levels. Although the Compensation Committee periodically considers data from REIT industry

and other compensation surveys, the Compensation Committee places primary emphasis on the Comparable Companies data, as the proxy statements for those companies contain more detailed information by individual executive than what is typically provided in compensation surveys.

 

For 2009, the Compensation Committee and the non-management members of the Board, in the case of the Chief Executive Officer, approved the following increases in base salary for the Named Executive Officers:

 

 

With these increases, the 2009 base salary for each Named Executive Officer approximates the market median based on information from the PM&P compensation study. Mr. Lewis received a higher base salary increase than the other Named Executive Officers to reflect his leadership development and active management of our senior living operations.

 

Annual Cash Incentive Compensation

 

We provide our Named Executive Officers with the opportunity to earn annual cash incentive awards, which are intended to compensate executives for achieving our annual corporate financial and non-financial goals and their individual goals. At the beginning of each year, a range of earnings opportunity, expressed as multiples of base salary and corresponding to three levels of performance (threshold, target and maximum), is established for each executive. Annual cash incentive awards are then determined and paid in the first quarter of the year following the performance year.

 

The table below illustrates the earnings opportunities of each of the Named Executive Officers under our annual cash incentive plan for performance in fiscal 2009 that were approved by the Compensation Committee and by the non-management members of the Board, in the case of the Chief Executive Officer, in January 2009:

 

 

At these target levels, the 2009 total annual compensation for each Named Executive Officer approximates the 65th percentile based on information from the PM&P compensation study. The Compensation Committee believes the Chief Executive Officer should have the greatest alignment with our shareholders, and, therefore, her compensation structure was designed to reflect a higher sensitivity to our performance than the compensation structure of the other Named Executive Officers.

 

At the end of 2008 and in January 2009, due to the external economic environment, the Compensation Committee adopted a revised company performance measure under the annual cash incentive plan for 2009 that was more consistent with our strategic plan at that time. This measure was based upon specified financial and non-financial criteria described below and was determined to account for 40% of the value of the 2009 annual cash incentive award, thereby replacing the normalized Funds from Operations (“FFO”) per share, investment volume and pro forma fixed charge coverage measures under the 2008 annual cash incentive plan.

The specific performance measures and their weightings under the annual cash incentive plan for 2009 for each Named Executive Officer, as set by the Compensation Committee and the non-management members of the Board, in the case of the Chief Executive Officer, were as follows:

 

 

We believe that the goals set by the Compensation Committee are stretch goals, such that significant performance is expected in order to pay out at target levels. However, as in past years, these goals are challenging, but achievable.

 

In January 2010, the Compensation Committee 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 2009, with several specific accomplishments, including:

 

 

 

Accordingly, the annual cash incentive awards granted to the Named Executive Officers for 2009 performance were between their respective target and maximum levels. The annual cash incentive awards granted to Ms. Cafaro and Mr. Schweinhart equaled 88% of their respective maximum levels, and the annual cash incentive awards granted to the other Named Executive Officers equaled 93% of their respective maximum levels. The actual award amounts ranged from 1.85x to 3.09x base salary and are set forth in the “Non-Equity Incentive Plan Compensation” column of the 2009 Summary Compensation Table below.

 

Long-Term Incentive Compensation

 

As described 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 a number of criteria as determined by the Compensation Committee, including the achievement of pre-established corporate and individual goals for the performance year. At the beginning of each year, a range of earnings opportunity, expressed as multiples of base salary and corresponding to three levels of performance (threshold, target and maximum), is established for each executive. Long-term incentive opportunity is generally targeted at the 65th percentile of the Comparable Companies. However, the Compensation Committee reviews the performance metrics and required performance levels in the context of market pay and performance data each year when setting the range of earnings opportunity and when determining the actual awards earned. Long-term incentive awards are then determined and granted in the first quarter of the year following the performance year.

 

The table below illustrates the earnings opportunities of each of the Named Executive Officers under our long-term incentive plan for performance in fiscal 2009 that were approved by the Compensation

Committee and by the non-management members of the Board, in the case of the Chief Executive Officer, in January 2009:

 

 

At these target levels, the 2009 long-term incentives for each Named Executive Officer result in total direct compensation levels that approximate the 65th percentile or slightly lower based on information from the PM&P compensation study. Similar to the philosophy regarding the annual cash incentive opportunity, the Compensation Committee believes the Chief Executive Officer should have the greatest alignment with our shareholders, and, therefore, her compensation structure was designed to reflect higher sensitivity to performance than the other Named Executive Officers.

 

For 2009, the value of the long-term incentive award was based primarily on whether management acted with due caution to protect and enhance our stockholders’ best interests in recognition of the then current market conditions in acquisitions, liquidity, finance, capital markets and similar matters. In addition, the Compensation Committee considered the accomplishment of a series of corporate objectives, including total shareholder return (absolute and relative to our peers), strong credit characteristics, balance sheet and liquidity management and capital markets execution, infrastructure investments, effective management of our triple-net leased properties and our senior living operating portfolio, tenant/operator diversification, continued development of our medical office building business, the outcome in our litigation with HCP, Inc. (“HCP”), business ethics and reputation and individual performance, and other appropriate factors, in each case at the discretion of the Compensation Committee. 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 2009 long-term incentive awards for the Named Executive Officers.

 

In January 2010, the Compensation Committee determined that each of the Named Executive Officers had performed well against the performance objectives under the long-term incentive plan for 2009 based on the accomplishments described above and several other key value creating achievements, including:

 

 

 

Accordingly, the long-term incentive awards granted to the Named Executive Officers for 2009 performance were between their respective target and maximum levels. The long-term incentive awards granted to Ms. Cafaro and Messrs. Lewis and Riney equaled 95% of their respective maximum levels. The long-term incentive award granted to Mr. Schweinhart equaled 83% of his maximum level. The actual award amounts ranged from 2.50x to 8.55x base salary as follows: Ms. Cafaro - $5,574,600; Mr. Schweinhart—$937,500; Mr. Lewis—$1,594,931; and Mr. Riney—$991,800. These amounts will be reflected in next year’s Summary Compensation Table as restricted stock and option awards granted in 2010.

 

For 2009, long-term incentive compensation consisted of equity awards in the form of stock options and shares of restricted stock made pursuant to our 2006 Incentive Plan. The Compensation Committee recognizes that while the annual cash incentive plan provides rewards for management actions that impact short- and mid-term performance results, the interests of stockholders are also served by giving key employees the opportunity to participate in the appreciation of our Common Stock through grants of stock options and restricted stock awards. The use of equity awards encourages management to create stockholder value over the long term because the full benefit of the compensation package cannot be realized unless an appreciation in price of the Common Stock occurs over time. In addition, equity awards are an effective tool for management retention because vesting occurs over a number of years.

 

For 2009, the Compensation Committee determined that 70% of the value of the long-term incentive award should be granted in the form of shares of restricted stock and 30% should be granted as stock options. The long-term incentive equity mix is weighted more heavily toward restricted stock because we believe that restricted stock provides a stronger incentive to create and preserve long-term stockholder value. Furthermore, restricted stock is the most prevalent form of long-term incentive compensation among the Comparable Companies. Equity grants for the Named Executive Officers, other than the Chief Executive Officer, are made on the date that the Compensation Committee meets to review annual performance and determine the long-term incentive awards. For the Chief Executive Officer, equity grants are made on the date that the non-management members of the Board meet to review and approve the recommendations of the Compensation Committee, which typically has been the same date on which equity grants for the other Named Executive Officers are made. In general, shares of restricted stock and stock options granted to executives vest in three equal annual installments, beginning on the date of grant, and stock options 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.

 

Benefits and Perquisites

 

The Named Executive Officers generally participate in the same benefit programs as our other employees, including:

 

 

These benefits are designed to be competitive with overall market practices. In addition, we may provide certain perquisites and other personal benefits to better enable us to attract and retain superior employees for key positions. For 2009, the only perquisites and benefits that were not otherwise available to all employees consisted of supplemental disability insurance coverage for Ms. Cafaro. The Compensation Committee periodically reviews the level of perquisites and other personal benefits provided to each Named Executive Officer and has determined that they are in line with current market practice.

Compensation of Our Named Executive Officers for 2009 and 2008 Performance

 

In order to provide stockholders with a more complete picture of our Named Executive Officers’ compensation, we are providing additional compensation information not required by the SEC. The table below shows each Named Executive Officer’s total compensation for services performed in 2009 and 2008. In contrast to the Summary Compensation Table, which discloses the grant date fair value of equity awards made in the year shown, this table discloses the grant date fair value of equity awards made in January of the subsequent year with respect to each Named Executive Officer’s performance for the year shown (e.g., equity awards granted in 2010 for 2009 performance).

 

 

 

		2009				2008
Ms. Cafaro		$	5,574,600			$	3,546,900
Mr. Schweinhart			937,500				815,063
Mr. Lewis			1,594,931				1,067,800
Mr. Riney			991,800				756,000

 

Per the 2009 and 2008 compensation plans established by the Compensation Committee and, in the case of Ms. Cafaro, approved by the non-management members of the Board, 70% of the value of the long-term incentive awards was paid in restricted stock and 30% of the long-term incentive awards was paid in stock options. The shares of restricted stock and stock options vest in three equal annual installments beginning on the date of grant.

 

 

 

Severance Benefits

 

Each of our Named Executive Officers is entitled to receive severance benefits upon certain qualifying terminations of employment (subject to any required delayed payment pursuant to Section 409A of the Code), based either on the provisions of the executive’s employment agreement and/or a change of control severance agreement. These severance arrangements are intended to retain executives and generally to provide replacement income if their employment is terminated involuntarily other than for cause and, in the case of severance benefits payable in connection with a change of control, to provide for continuity of management during such process. Under these agreements, which have been in existence for several years and were not modified in 2009, we have also elected to provide certain tax gross-up payments to the Named Executive Officers with respect to payments made in connection with a change of control. The Compensation Committee considers the potential severance payments, including the gross-ups, to be necessary to attract and retain top

executives. However, as noted under “Potential Payments Upon Termination or Change of Control” in this Proxy Statement, no tax gross-up payments would become due to the Named Executive Officers under the scenarios and assumptions presented therein.

 

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 requirements, as described in Section 162(m) and the related regulations. We have intended that certain compensation paid to the Named Executive Officers qualify for deductibility under Section 162(m), including certain compensation related to options granted pursuant to our long-term incentive plan. The Compensation Committee believes, however, that it is important to preserve flexibility and maximize the effectiveness of our executive compensation programs in a manner designed to recruit, retain and reward high-performing executives or promote varying corporate goals. Accordingly, the Compensation Committee may approve compensation that exceeds the $1 million limit and does not 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 Senior Executive Officers

 

Our minimum share ownership guidelines for our senior executive officers require each of those officers 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 senior executive officer’s compliance with the guidelines is reviewed on July 1 of each year and the results are provided to and reviewed by the non-management members of the Board. The guidelines require that senior executive officers achieve the minimum equity investment within five years from the date he or she first becomes subject to the guidelines. Until the minimum equity investment is met, such officer must retain at least 60% of the Common Stock granted to the officer and/or purchased by the officer through the exercise of stock options. All of our senior executive officers are currently in compliance with the minimum stock ownership guidelines.

 

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-complying document and (ii) any profits realized from the sale of our securities during those twelve months.

 

Amendments to Employment and Change of Control Severance Agreements

 

On March 19, 2007, we amended the terms of our employment agreements with Messrs. Schweinhart, Lewis and Riney and Mr. Riney’s change-in-control severance agreement to limit the amount of severance payable to each executive upon termination of his employment by us other than for Cause or by him for Good Reason (as those terms are defined in the applicable agreement) to a maximum of $3 million (as adjusted annually to reflect increases in the Consumer Price Index (“CPI”)), as well as to address compliance with the deferred compensation requirements of Section 409A of the Code. Messrs. Schweinhart, Lewis and Riney agreed to these amendments at the request of the Compensation Committee, which determined that such limits were appropriate in light of the current market and governance environment for executive compensation. In exchange, the amendments clarified that, upon any such termination, each executive would be entitled to receive a lump sum payment equal to the amount of awards previously granted to him under our deferred cash incentive program but not yet paid. As of December 31, 2009, all amounts granted under the deferred cash incentive program had been paid and the program was no longer in effect. All other terms of the agreements, including the vesting of equity awards, remained unchanged. The material provisions of the employment

agreements and Mr. Riney’s change-in-control severance agreement, in each case as amended, are summarized under “Employment and Change in Control Severance Agreements with Named Executive Officers” below.

 

In December 2008, we amended the terms of our employment agreements with Ms. Cafaro and Messrs. Schweinhart, Lewis and Riney and Mr. Riney’s change-in-control severance agreement to further address compliance with the deferred compensation requirements of Section 409A of the Code. All other terms of the agreements remained unchanged.

 

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

 

COMPENSATION COMMITTEE

 

Jay M. Gellert, Chair
James D. Shelton
Thomas C. Theobald

 

During the year ended December 31, 2009, Messrs. Crocker, Gellert, Shelton and Theobald served on the Compensation Committee. No member of the Compensation Committee is, or has been, an employee of Ventas or its subsidiaries or is an employee of any entity for which any of our executive officers serves on the board of directors.

 

2009 Summary Compensation Table

 

The following table sets forth the compensation awarded or paid to, or earned by, each of the Named Executive Officers during 2007, 2008 and 2009 (for more information regarding the annual cash and long-term incentive awards granted to the Named Executive Officers for 2009 performance, see “Compensation Discussion and Analysis” above):

 

 

 

2009 Grants of Plan-Based Awards Table

 

The following table provides additional information relating to grants of plan-based awards made to the Named Executive Officers during 2009: