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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

(Rule 14a-101)

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

 

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

Check the appropriate box:

 

 

Preliminary Proxy Statement

 

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

 

Definitive Proxy Statement

 

Definitive Additional Materials

 

Soliciting Material Pursuant to §240.14a-12

Brookdale Senior Living 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):

 

 

No fee required.

 

 

Fee paid previously with preliminary materials.

 

 

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11

 

 

 


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LOGO

 

 

2022

Notice of Annual Meeting

of Stockholders & Proxy Statement


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LOGO

May 2, 2022

Dear Fellow Stockholders:

On behalf of the Board of Directors, I am pleased to invite all of our stockholders to the 2022 Annual Meeting of Stockholders of Brookdale Senior Living Inc. (the “2022 Annual Meeting” or the “Annual Meeting”). The meeting will be held on Tuesday, June 21, 2022 at 10:00 a.m. Central time at our principal executive offices located at 111 Westwood Place, Brentwood, Tennessee. A notice of the 2022 Annual Meeting and a proxy statement containing information about the matters to be acted upon are included with this letter.

Brookdale seized the opportunity to begin a strong recovery from the COVID-19 pandemic, beginning early in 2021. Despite multiple new COVID-19 variants emerging during the year, Brookdale ended 2021 with ten months of sequential occupancy growth while maintaining rate discipline and continuing to prioritize the health and wellbeing of residents and associates. For the first time during the pandemic, Brookdale reported quarterly year-over-year occupancy growth, in the fourth quarter 2021. Management also successfully closed Brookdale’s sale of 80% of its equity in its Health Care Services segment for net cash proceeds of $312.6 million and completed several refinancing transactions, strengthening Brookdale’s liquidity position at a critical time in the recovery process. The Board is committed to ensuring Brookdale emerges from the pandemic a stronger organization, and we are optimistic that Brookdale will be well positioned to serve and care for more seniors as demographic tailwinds occur.

Whether or not you expect to attend the Annual Meeting, it is important that your shares be represented and voted at the Annual Meeting. Please promptly vote your shares by submitting your proxy by telephone or Internet or by completing, signing, dating, and returning your proxy card or voting instruction form.

We thank you for your continued investment in Brookdale.

Very truly yours,

 

 

LOGO

Guy P. Sansone

Chairman of the Board of Directors


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Brookdale Senior Living Inc.

Notice of 2022 Annual Meeting of Stockholders

May 2, 2022

The 2022 Annual Meeting of Stockholders (including any adjournments or postponements thereof, the “Annual Meeting” or the “2022 Annual Meeting”) of Brookdale Senior Living Inc. (“Brookdale” or the “Company”) will be held on Tuesday, June 21, 2022 at 10:00 a.m. Central time at the Company’s principal executive offices located at 111 Westwood Place, Brentwood, Tennessee for the purpose of voting on the following proposals:

 

1.

To elect nine directors nominated by the Company’s Board of Directors (the “Board of Directors” or the “Board”), each to serve for a one-year term expiring at the 2023 annual meeting of stockholders (the “2023 Annual Meeting”);

 

2.

To approve, on an advisory basis, the Company’s named executive officer compensation;

 

3.

To ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for 2022; and

 

4.

To transact such other business as may properly come before the Annual Meeting or any adjournments or postponements thereof.

The close of business on April 27, 2022 has been fixed as the record date for the determination of stockholders entitled to notice of, and to vote at, the Annual Meeting. We are making this Notice of 2022 Annual Meeting and proxy statement first available on or about May 2, 2022.

Your vote is important. Unless you attend the Annual Meeting and vote in person, please vote as soon as possible by one of the methods shown below. Be sure to have your proxy card, voting instruction form, or Notice of Internet Availability of Proxy Materials in hand and follow the below instructions:

By Phone - You can vote your shares by calling (844) 326-5741 toll free through 11:59 p.m. Eastern time on June 20, 2022

By Internet - You can vote your shares online at www.proxypush.com/BKD through 11:59 p.m. Eastern time on June 20, 2022

By Mail - You can complete, sign, date, and return your proxy card or voting instruction form in the postage-paid envelope provided

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON JUNE 21, 2022: This proxy statement and our 2021 Annual Report to Stockholders (the “2021 Annual Report”) are available at www.proxydocs.com/BKD.

By Order of the Board of Directors

 

 

LOGO

Chad C. White

Executive Vice President, General Counsel and Secretary


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Brookdale Senior Living Inc.

2022 Proxy Statement

 

Proxy Statement Summary      ii  
General Information about the Annual Meeting      1  
Proposal 1: Election of Directors      5  

Board Composition

     5  

Annual Evaluation of Board Composition

     5  

Identifying Director Candidates

     5  

Evaluating Director Candidates

     6  

Board Diversity

     6  

Director Orientation and Continuing Education

     7  

Majority Voting for Director Elections

     7  

Director Nominees

     8  
Corporate Governance      13  

Corporate Governance Guidelines and Code of Business Conduct and Ethics

     13  

Director Independence

     13  

Board Leadership Structure

     13  

Risk Oversight

     13  

Social and Environmental Responsibility

     14  

Meetings of the Board

     14  

Communications from Stockholders

     14  

Committees of the Board

     15  
Director Compensation      17  

Non-Employee Director Compensation Program

     17  

Compensation of Non-Executive Chairman of the Board

     18  

Director Stock Ownership Guidelines

     18  

Director Compensation for 2021

     18  
Executive Officers      19  
Executive Compensation      21  

Compensation Discussion and Analysis

     21  

Compensation Committee Report

     43  

Summary Compensation Table for 2021

     44  

Grants of Plan-Based Awards

     45  

Outstanding Equity Awards at Fiscal Year-End

     47  

Stock Vested for 2021

     48  

Pension Benefits

     48  

Nonqualified Deferred Compensation

     48  

Potential Payments Upon Termination or Change in Control

     49  

Compensation Committee Interlocks and Insider Participation

     57  

Pay Ratio

     57  
Proposal 2: Advisory Approval of Named Executive Officer Compensation      58  
Proposal 3: Ratification of Appointment of Independent Registered Public Accounting Firm for 2022      59  

Proposed Independent Registered Public Accounting Firm

     59  

Audit Fees, Audit-Related Fees, Tax Fees and All Other Fees

     60  

Audit Committee Pre-Approval Policies and Procedures

     60  

Audit Committee Report

     61  
Certain Relationships and Related Transactions      62  
Stock Ownership Information      64  
Additional Information      66  
Appendix A: Reconciliations of Non-GAAP Financial Measures      A-1  

 

 

  

 

2022 PROXY STATEMENT

 

 

 

 

 

        i


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           Proxy Statement Summary  

 

 

Information about the Annual Meeting

Whether or not you expect to attend the Annual Meeting, we strongly encourage you to vote as soon as possible to ensure your shares are represented and voted at the meeting. See page 4 for more details about attending the Annual Meeting.

 

 

Date and Time

  

 

Location

  

 

Record Date

Tuesday, June 21, 2022

10:00 a.m. Central Time

   Brookdale Senior Living Inc.
111 Westwood Place
Brentwood, Tennessee
   April 27, 2022

2022 Proposals

The Board recommends that you vote as follows. If you properly submit your proxy and do not specify how your shares are to be voted, your shares will be voted in accordance with the recommendations of the Board.

 

Proposals

  

 

Unanimous
Recommendation of the
Board

  

Page Reference 

(for more detail) 

 

1.  Election of nine directors nominated by the Board, each for a one-year term expiring at the 2023 Annual Meeting

  

 

 FOR
each nominee

 

  

 

5

 

2.  Advisory approval of our named executive officer compensation

 

  

 

 

 FOR

  

 

 

58

 

3.  Ratification of the appointment of Ernst  & Young LLP as independent registered public accounting firm for 2022

 

  

 

 

 FOR

  

 

 

59

How to Vote

You can submit your proxy vote by any of the following methods:

 

LOGO

You can vote your shares
online at
www.proxypush.com/BKD

through 11:59 p.m. Eastern
time on June 20, 2022

 

LOGO

You can vote your shares
by calling
(844) 326-5741 toll free

through 11:59 p.m. Eastern
time on June 20, 2022

 

LOGO

You can complete, sign,
date, and return your
proxy card or voting
instruction form in the
postage-paid envelope
provided

 

LOGO

You can vote your shares
by attending the 2022
Annual Meeting and
voting in person

 

 

 

ii        

 

 

  LOGO  

 


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Proxy Statement Summary

 

Director Nominees and Board Composition

The Board has unanimously nominated each of the nine current directors for election at the 2022 Annual Meeting for a one-year term expiring at the 2023 Annual Meeting. The Board seeks composition of its members that reflects an appropriate balance of knowledge, experience, skills, expertise, and diversity in order to support our business strategy. The following tables reflect the experience and core competencies, and the diversity, of the Board.

 

   Experience and Core
   Competencies
  Asher   Baier   Bromley   Bumstead   Freed   Johnson-
Mills
  Sansone   Warren   Wielansky

Current or Former CEO

                       

Current or Former CFO

                           

Senior Housing Operations

                               

Healthcare (Operations & Strategy)

                         

Healthcare (Clinical)

                                 

Hospitality

                               

Sales & Marketing

                                 

Real Estate

                           

Finance

                       

Mergers & Acquisitions

                       

Risk Management

                       

Other Public Board Service

                   

 

Board Demographic Matrix

  Commitment to Board Diversity

Total Number of Directors

   9   The Board is committed to ensuring it includes diverse representation, demonstrated by its membership, which includes 44% women, 11% racial minority, and 22% U.S. veteran representation. Brookdale has signed on to The Board Challenge and committed to help foster continued efforts to improve the representation of Black directors on public boards. In addition, Ms. Baier serves on the NYSE Board Advisory Council, which identifies and connects diverse board candidates to NYSE-listed companies seeking new directors.

 

Independent Directors

  

 

8 (89%)

Average Tenure

  

 

5 years

Average Age

  

 

65

 

  

 

Female

 

 

Male

Gender Identity

  

 

4 (44%)

 

 

5 (56%)

African American or Black    

  

 

1 (11%)

 

 

–  

White

  

 

3 (33%)

 

 

5 (56%)

U.S. Veteran

  

 

–  

 

 

2 (22%)

 

 

  

 

2022 PROXY STATEMENT

 

 

 

 

 

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Commitment to Governance Practices

 

Commitment to Governance Practices

 

Independent Non-Executive Chairman of the Board with robust authority, including to approve Board agendas and call and preside over meetings of the independent directors

 

Declassified Board such that all directors stand for election for annual terms

 

Bylaws contain majority voting standard for uncontested director elections

 

Bylaws contain proxy access procedures

 

Corporate Governance Guidelines limit service on other public company boards (no more than three for independent directors and no more than one for the CEO)

 

Annual evaluations of the Board and its committees

 

Meaningful director stock ownership guidelines (5x annual retainer)

 

Insider trading policy prohibits directors and executive officers from pledging or hedging Brookdale stock

 

No stockholder rights plan (poison pill) or similar plan

 

New director orientation and continuing education programs overseen by Nominating and Corporate Governance Committee

 

 

 

 

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General Information about the Annual Meeting  

 

 

This proxy statement is furnished in connection with the solicitation of proxies by the Board of Directors (the “Board of Directors” or the “Board”) of Brookdale Senior Living Inc. (“Brookdale” or the “Company”) to be voted at the 2022 Annual Meeting of Stockholders to be held on Tuesday, June 21, 2022, and at any adjournment or postponement of the meeting (the “Annual Meeting” or the “2022 Annual Meeting”).

Distribution of Proxy Materials

On or about May 2, 2022, we expect to start mailing to holders of our common stock (other than those who previously requested electronic or paper delivery of proxy materials) a Notice of Internet Availability of Proxy Materials (“Notice”), which explains how to access the proxy materials online and to make the materials available on www.proxydocs.com/BKD. If you receive a Notice by mail, you will not receive a printed copy of the proxy materials in the mail. Instead, the Notice tells you how to access and review the proxy materials online. The Notice also tells you how to submit your proxy via the Internet. If you received a Notice by mail and would like to receive a printed copy of our proxy materials, follow the instructions in the Notice explaining how to request printed materials on a one-time or ongoing basis. Our proxy materials include the notice of the Annual Meeting, this proxy statement, and our 2021 Annual Report. Copies of these documents also are available on our website at www.brookdale.com/proxy. Except to the extent specifically referenced herein, information contained or referenced on our website is not incorporated by reference into, and does not form a part of, this proxy statement.

Stockholders Entitled to Vote

Only stockholders of record at the close of business on April 27, 2022, the record date for the Annual Meeting, are entitled to receive notice of, attend, and vote at the Annual Meeting. As of the record date, there were outstanding and entitled to vote 186,752,412 shares of our common stock, excluding restricted shares and restricted stock units (“RSUs”) for which the holders have no voting rights. Each share of our common stock entitles the holder to one vote. A list of stockholders entitled to vote at the Annual Meeting will be available for examination at our principal executive offices for the ten days before the Annual Meeting between 9:00 a.m. and 5:00 p.m. Central time and at the Annual Meeting for any purpose germane to the meeting.

Voting Choices and Recommendations of the Board

With respect to Proposal 1 (Election of Directors) you will have the choice to vote “FOR,” “AGAINST” or “ABSTAIN” with respect to each nominee. With respect to all other proposals you will have the choice to vote “FOR,” “AGAINST” or “ABSTAIN.” The Board recommends a vote:

 

1.

“FOR” the election of each of the nine directors nominated by the Board, each for a one-year term expiring at the 2023 annual meeting of stockholders (the “2023 Annual Meeting”);

 

2.

“FOR” advisory approval of our named executive officer compensation; and

 

3.

“FOR” ratification of the appointment of Ernst & Young LLP (“EY”) as independent registered public accounting firm for 2022.

 

 

  

 

2022 PROXY STATEMENT

 

 

 

 

 

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General Information about the Annual Meeting

 

Stockholders of Record and Beneficial Holders

If your shares of common stock are owned directly in your name with our transfer agent, American Stock Transfer & Trust Company, you are considered a registered holder of those shares. If you are the beneficial owner of shares of common stock held by a broker or other custodian, you hold those shares in “street name” and are not a registered stockholder. If you hold your shares in “street name,” your broker or other custodian will vote your shares as you direct. However, if you do not give specific voting instructions to your broker, generally your broker will have discretion to vote your shares on routine matters but will not have discretion to vote your shares on non-routine matters. When the broker exercises its discretion to vote on routine matters in the absence of voting instructions from you, a broker non-vote occurs with respect to the non-routine matters since the broker will not have discretion to vote on such non-routine matters. The election of directors (Proposal 1) and the advisory approval of our named executive officer compensation (Proposal 2) will be considered non-routine matters. The ratification of the appointment of EY (Proposal 3) will be considered a routine matter. Therefore, if you hold your shares in “street name” and do not submit voting instructions to your broker or other custodian, they will only be authorized to vote your shares on Proposal 3.

Quorum Requirement

The presence at the Annual Meeting, in person or by proxy, of the holders of a majority of the shares of our common stock issued and outstanding on the record date will constitute a quorum for the transaction of business. We will count abstentions and broker non-votes for the purpose of determining the presence of a quorum. If a quorum is not present, the Annual Meeting may be adjourned by the chairman of the meeting or by the vote of a majority of the shares represented at the Annual Meeting until a quorum has been obtained.

Voting Instructions and Information

 

 

 

 Voting Instructions

You may vote by proxy or in person at the Annual Meeting. Whether or not you plan to attend the Annual Meeting, you are encouraged to vote as soon as possible to ensure that your shares are represented and voted at the Annual Meeting. If you hold your shares as a record holder, you may vote your shares by proxy via the phone or the Internet by following the instructions provided on your Notice or proxy card or, if you received a printed set of proxy materials by mail, by completing, signing, dating, and returning your proxy card in the postage-paid envelope provided. If you hold your shares through your broker or other custodian, please follow the instructions you received from the holder of record to vote your shares.

 

 

 

2        

 

 

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Voting Instructions and Information

 

 

 Revoking or Changing Your Vote

Stockholders of record may revoke their proxy or change their vote at any time prior to exercise of the proxy at the Annual Meeting by:

 

 

Delivering a written notice of revocation to our Secretary at 111 Westwood Place, Suite 400, Brentwood, Tennessee 37027;

 

 

Submitting another properly completed proxy card with a later date;

 

 

Submitting another timely proxy via the phone or the Internet through 11:59 p.m. Eastern time on June 20, 2022; or

 

 

Attending the Annual Meeting and voting in person.

Stockholders holding shares beneficially in street name should contact their broker or other custodian for instructions on how to revoke or change their voting instructions. For all methods of voting, the last vote properly cast will supersede all previous votes. Attendance at the Annual Meeting will not cause your previously granted proxy to be revoked unless you specifically make that request or vote in person at the Annual Meeting.

 

 

 Voting of Proxies

If you properly submit your signed proxy card or voting instruction form, or complete your proxy by telephone or the Internet, your shares will be voted as you direct or will be voted as specified in the above Board recommendations if you do not direct a particular vote. With respect to director elections, should any nominee be unable to serve, the persons designated as proxies reserve full discretion to vote for another person. The Board currently has no reason to believe that any nominee will be unable to serve if elected.

The Board does not intend to bring any other business before the Annual Meeting, and it does not know of any other matters that may come before the Annual Meeting. However, if any other matters are properly presented at the meeting, proxies will be voted in accordance with the judgment of the persons designated as proxies.

Vote Required to Approve Proposals

The following table summarizes the votes required for passage of each proposal and the effect of abstentions and broker non-votes.

 

Proposal

   Vote required for approval    Effect of
Abstentions
  

Effect of
Broker Non-

Votes

1.  Election of directors

  

Majority of votes cast with respect to each director

  

No effect

  

No effect

2.  Advisory vote to approve named executive officer compensation (say-on-pay)

  

Majority of shares present and entitled to vote on the matter

  

Against

  

No effect

3.  Ratification of appointment of independent registered public accounting firm for 2022

  

Majority of shares present and entitled to vote on the matter

  

Against

  

N/A

 

 

  

 

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General Information about the Annual Meeting

 

Attending the Annual Meeting

Only stockholders as of the record date, or their duly appointed proxies, and invited guests of the Company may attend the Annual Meeting. Admission to the Annual Meeting will begin at approximately 9:30 a.m. Central time. In order to be admitted, you should:

 

 

bring current, government-issued photo identification, such as a driver’s license, and proof of ownership of common stock on the record date. If you are a holder of record, your identity will be checked against a list of registered holders at the Annual Meeting. If you hold your shares in street name, a recent brokerage statement or a letter from your bank, broker, trustee, or other nominee are examples of proof of ownership. If you want to vote your shares held in street name in person, you must obtain a legal proxy in your name from the broker, bank, trustee, or other nominee that holds your shares of common stock;

 

 

leave your camera at home because cameras, transmission, broadcasting, and other recording devices will not be permitted in the meeting room;

 

 

be prepared to comply with mask and social distancing guidelines and other procedures designed to address public health and safety concerns;

 

 

be prepared to comply with security requirements, which may include, among other security measures, security guards searching all bags and attendees passing through a metal detector; and

 

 

arrive shortly after 9:30 a.m. Central time to ensure that you are seated by the start of the Annual Meeting.

Any holder of a proxy from a stockholder must present a properly executed legal proxy and a copy of the proof of ownership. If you do not provide photo identification and comply with the other procedures outlined above for attending the Annual Meeting in person, you will not be admitted to the Annual Meeting.

 

 

 

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Proposal 1: Election of Directors  

 

 

The Board is comprised of nine directors, and each of their terms will expire at the 2022 Annual Meeting. The Board has unanimously nominated each of the current directors for election at the 2022 Annual Meeting, each to hold office for a one-year term expiring at the 2023 Annual Meeting. If any of the nominees becomes unavailable or unwilling to serve, an event that the Board does not presently expect, the named proxies will vote the shares represented by proxies for the election of directors for the election of such other person(s) as the Board may recommend.

The Company’s Bylaws provide that the election of director nominees at the 2022 Annual Meeting will be by the vote of the majority of the votes cast with respect to each director’s election. Accordingly, each director nominee will be elected if he or she receives more votes “FOR” his or her election than “AGAINST” his or her election. Shares that are not voted in the election of directors, including abstentions and broker non-votes, have no direct effect in the election of directors. Those shares, however, are taken into account in determining whether a sufficient number of shares are present to establish a quorum.

 

           

 

The Board unanimously recommends that you vote “FOR” the election of each of the nine directors nominated by the Board, each for a one-year term expiring at the 2023 Annual Meeting. Unless otherwise instructed, the named proxies will vote all proxies we receive “FOR” the election of the Board’s nominees.

 

Board Composition

The process for evaluating our Board composition and identifying and evaluating director candidates is outlined below. Through this process, in the past four years the Board has enhanced its collective skills and experience by bringing on five new directors who have decades of operations, sales and marketing, and clinical experience in the senior housing, hospitality, and healthcare industries.

 

 

 

 Annual Evaluation of Board Composition

At least annually the Nominating and Corporate Governance Committee seeks input from each director regarding the composition of the Board. The Nominating and Corporate Governance Committee uses these results to assess with the Board whether the Board’s composition reflects an appropriate balance of knowledge, experience, skills, expertise, and diversity in order to support our business strategy. From time to time, the Nominating and Corporate Governance Committee may also seek and receive input from certain stockholders regarding the skills, experience, and other characteristics that stockholders believe would be beneficial to our Board composition. The Nominating and Corporate Governance Committee also reviews the size of the Board and, if deemed appropriate, will recommend to the Board any changes to its size.

 

 

 

 Identifying Director Candidates

The Nominating and Corporate Governance Committee may engage an independent search firm to conduct targeted searches to identify well-qualified candidates who meet the needs of the Board. When an independent search firm is used, the Nominating and Corporate Governance Committee retains the firm and approves payment of its fees. Potential director candidates may also be identified by the Nominating and Corporate Governance Committee by asking current directors and executive officers to notify the committee if they become aware of candidates who possess skills, experience, or other characteristics needed for the Board.

 

 

  

 

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Proposal 1: Election of Directors

 

The Nominating and Corporate Governance Committee also will consider candidates recommended by stockholders, and its process for evaluating stockholder-recommended candidates is no different than its process for evaluating candidates suggested by search firms, directors, or executive officers. To make a formal nomination of a director candidate, a stockholder must comply with either the proxy access or advance notice provisions of our Bylaws. Proxy access permits a stockholder, or a group of up to 20 stockholders, owning at least three percent of our outstanding common stock continuously for at least three years, to nominate and include in our annual meeting proxy materials director nominees constituting up to the greater of two director nominees or 20% of the number of directors in office (rounded down to the nearest whole number), provided that the stockholders and nominees satisfy the requirements specified in our Bylaws. See “Stockholder Proposals for 2023 Annual Meeting” in this proxy statement for further information regarding the process for stockholders to formally nominate director candidates and the deadlines for making such nominations. Stockholders who wish to submit a nomination are encouraged to seek independent counsel about requirements under our Bylaws.

 

 

 

 Evaluating Director Candidates

The Nominating and Corporate Governance Committee is responsible for evaluating director candidates and recommending nominees to the Board for Board membership. The Nominating and Corporate Governance Committee evaluates biographical and background information relating to director candidates and interviews candidates selected by the committee and by the Board in making its decisions whether to recommend director candidates to the Board. When evaluating director candidates, the Nominating and Corporate Governance Committee considers whether candidates have demonstrated, by significant accomplishment in their field, an ability to make a meaningful contribution to the Board’s oversight of our business, and the candidates’ reputation for honesty and ethical conduct in their personal and professional activities. The Nominating and Corporate Governance Committee also thoroughly examines a candidate’s senior housing, real estate, finance, operations, sales, marketing, healthcare, and other relevant experience, understanding of our business, educational and professional background, and contributions to diversity on the Board. In order to ensure that director candidates are able to commit the substantial time required to fulfill their Board responsibilities, the Nominating and Corporate Governance Committee also considers the number of public company boards and other boards on which the candidate is a member. Our Corporate Governance Guidelines limit the number of outside public company boards on which a director may serve (three for independent directors and one for the CEO). In determining whether to recommend a director for re-election, the Nominating and Corporate Governance Committee also considers the director’s tenure, past attendance at meetings, participation in and contributions to the activities of the Board, and participation in continuing education programs. Although the Nominating and Corporate Governance Committee considers directors’ tenure and age as part of its overall evaluation process, the Board does not believe that term limits or a mandatory retirement age are appropriate. The committee evaluates each candidate, including existing directors, in the context of the Board as a whole, with the objective of recommending director nominees who can best support our business strategy and represent stockholder interests through the exercise of sound judgment.

 

 

 

 Board Diversity

Diversity is one of the characteristics the Nominating and Corporate Governance Committee considers in identifying and evaluating director candidates, and the Board is committed to ensuring it includes diverse representation. The Board seeks directors who have different backgrounds, experiences, and perspectives, including race and gender characteristics, which the Board believes will enhance the quality of its deliberations and decisions. The Board’s diversity commitment is demonstrated by its membership, which includes 44% women, 11% racial minority, and 22% U.S. veteran representation. Brookdale has signed on to The Board Challenge and committed to help foster continued efforts to improve the representation of Black directors on public boards. In addition, Ms. Baier serves on the New York Stock Exchange (“NYSE”) Board Advisory Council, which identifies and connects diverse board candidates to NYSE-listed companies seeking new directors.

 

 

 

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Majority Voting for Director Elections

 

 

 

 Director Orientation and Continuing Education

The Nominating and Corporate Governance Committee oversees our director orientation and continuing education programs. As part of the director orientation program, new directors engage in one-on-one introductory meetings with our business and functional leaders regarding our strategic plans, financial statements, and key issues, policies and practices. Chairs of the Board’s committees coordinate orientation for new committee members. Our senior management also meets regularly with our directors regarding specific functional topics of importance. The Nominating and Corporate Governance Committee highlights for directors available continuing education programs hosted by third parties on a variety of relevant topics, including corporate governance, risk management, compliance, and executive compensation. During 2021, all of our directors participated in director continuing education programs.

Majority Voting for Director Elections

Our Bylaws provide for a majority voting standard in uncontested director elections. Each director will be elected by a vote of the majority of votes cast with respect to that director’s election at any meeting for the election of directors at which a quorum is present. For these purposes, a majority of votes cast means that the number of votes cast for a director’s election exceeds the number of votes cast against that director’s election, with abstentions and broker non-votes not counted as a vote cast either for or against. An election will be considered contested if as of the tenth day preceding the date we first mail our notice of meeting for such meeting to stockholders, the number of nominees exceeds the number of directors to be elected. Since the number of director nominees for election at the 2022 Annual Meeting does not exceed the number of directors to be elected, the director elections at the 2022 Annual Meeting will be subject to the majority voting standard.

In order for any person to be nominated by the Board for election as a director, such nominee must submit an irrevocable resignation, contingent on that nominee not receiving a majority of the votes cast in an election that is not a contested election and acceptance of that resignation by the Board in accordance with the policies and procedures adopted by the Board for such purpose. In the event a nominee fails to receive a majority of the votes cast in an election that is not a contested election, the Nominating and Corporate Governance Committee will make a recommendation to the Board as to whether to accept or reject the resignation of such nominee, or whether other action should be taken. The Board will act on the resignation, taking into account the Nominating and Corporate Governance Committee’s recommendation, and publicly disclose (by a press release and filing an appropriate disclosure with the SEC) its decision regarding the resignation and, if such resignation is rejected, the rationale behind the decision within ninety (90) days following certification of the election results. The Nominating and Corporate Governance Committee in making its recommendation and the Board in making its decision each may consider any factors and other information that it considers appropriate and relevant. Any nominee who tenders his or her resignation as described herein will not participate in the deliberations of the Nominating and Corporate Governance Committee or the Board regarding whether to accept the resignation. If the Board accepts a nominee’s resignation, then the Nominating and Corporate Governance Committee will recommend to the Board whether to fill the resulting vacancy or vacancies or to reduce the size of the Board. Each of the nominees for election at the 2022 Annual Meeting has submitted the irrevocable resignation described above.

 

 

  

 

2022 PROXY STATEMENT

 

 

 

 

 

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Proposal 1: Election of Directors

 

Director Nominees

Biographical information for the nine current directors nominated for election at the 2022 Annual Meeting is set forth below.

 

Guy P. Sansone

Non-Executive Chairman & Independent Director

   

Lucinda M. Baier

Director, President and Chief Executive Officer

LOGO

 

Director Since: October 2019

 

Age: 57

 

Public Company Directorships:

•   Mednax, Inc.

(2020 – current)

•  Magellan Health, Inc.

(2019 – 2022)

•  Civitas Solutions, Inc.

(2009 – 2019)

•  Rotech Healthcare Inc.

(2004 – 2005)

 

   

LOGO

 

Director Since: February 2018

 

Age: 57

 

Public Company Directorships:

•  The Bon-Ton Stores, Inc. (2007-2016)

Mr. Sansone joined Brookdale’s Board in October 2019 and became Non-Executive Chairman of the Board in January 2020. For more than 25 years, he has led efforts to optimize the performance of healthcare and senior housing companies. Mr. Sansone has served as Chairman and CEO of H2 Health, a leading regional provider of physical rehabilitation services and clinician staffing solutions, since February 2020. Prior to that, he served as a Managing Director of Alvarez & Marsal, a global professional services firm specializing in performance improvement for large, high profile businesses, where he served as Chairman of the firm’s Healthcare Industry Group, which he founded in 2004. Mr. Sansone also served as interim Chief Executive Officer of the Visiting Nurse Service of New York, the largest non-profit home and community-based health care organization in the United States, from November 2014 to December 2016 and, prior to that, served in various executive roles at numerous healthcare companies. His prior experience in the senior housing industry includes having served as Chief Restructuring Officer and a member of the Board of Erickson Retirement Communities and as a senior consultant to Sunrise Senior Living. Mr. Sansone has served as Chairman of the Board of Directors of Mednax, Inc. since July 2020 and also serves and has served on the Boards of Directors of numerous investor-owned and not-for-profit companies, primarily in the healthcare industry. Mr. Sansone earned a B.S. in Economics from the State University of New York at Albany.

 

   

Ms. Baier has served as Brookdale’s President and Chief Executive Officer and as a member of the Board since February 2018, after having served as Brookdale’s Chief Financial Officer since December 2015. Ms. Baier joined Brookdale from Navigant Consulting, Inc. where she served as Executive Vice President and Chief Financial Officer since 2013. In addition, Ms. Baier has had multi-billion dollar operations responsibility, been the chief executive officer for a publicly-traded retailer, and served as an executive officer of a Fortune 30 company. She has served for more than a decade as a board member of public and private companies and organizations and currently serves on the board of directors of Argentum, the National Investment Center for Seniors Housing & Care (NIC), and the Nashville Health Care Council, where she serves as Vice Chair. She is a member of the NYSE Board Advisory Council, which identifies and connects diverse board candidates to NYSE-listed companies seeking new directors, and serves on Vanderbilt University Medical Center’s Audit and Compliance Committee and Quality and Safety Committee. A number of organizations have recognized Ms. Baier, including the CEO Forum Group’s 2021 Top 10 CEOs Transforming Healthcare in America; Nashville Medical News’ Class of 2021 “Women to Watch “; Corporate Citizenship 2020 Award from the Committee for Economic Development of The Conference Board; one of McKnight’s 2020 “Women of Distinction”; and Nashville Business Journal’s “Most Admired CEO” list for two consecutive years. Ms. Baier is a Certified Public Accountant and a graduate of Illinois State University, with B.S. and M.S. degrees in Accounting.

 

Mr. Sansone’s executive, senior advisory, and board leadership of public and private organizations, including his extensive service to companies in the healthcare and senior housing industries, led to the conclusion that he should serve as a member of the Board.

 

   

Ms. Baier’s continued leadership and accomplishments in the areas of our people, portfolio, and operations and strong crisis management as the Company’s President and Chief Executive Officer, and her prior leadership roles at other companies, led to the conclusion that she should serve as a member of the Board.

 

 

 

 

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Director Nominees

 

Jordan R. Asher, MD

Independent Director

   

Marcus E. Bromley

Independent Director

LOGO

 

Director Since: February 2020

 

Age: 57

 

Brookdale Board Committees:

•  Audit

•  Investment

     

LOGO

 

Director Since: July 2017

 

Age: 72

 

Brookdale Board Committees:

•   Audit

•   Investment

 

Public Company Directorships:

•  CIM Mortgage Finance Trust
(2021)

•  Cole Credit Property Trust V, Inc. (2015 – 2020)

•  Cole Corporate Income Trust, Inc. (2011 – 2015)

•  Cole Credit Property Trust II, Inc. (2005 – 2013)

•  Cole Credit Property Trust III, Inc. (2008 – 2012)

•  Gables Residential Trust
(1993 – 2005)

Dr. Asher brings more than 20 years of expertise and a history of success in large matrixed, mission-based, national healthcare systems. Since 2018, he has served as the Chief Physician Executive and Senior Vice President of Sentara Healthcare, a large integrated delivery health system including a clinically integrated network and insurance company serving Virginia and North Carolina, where he has a wide range of responsibilities, including a focus on growth strategies for clinical care and development and implementation of value-based care and payment models. Prior to Sentara, Dr. Asher served in several executive roles with Ascension since 2006, including Chief Clinical Officer of its Ascension Care Management subsidiary from 2016 to 2018 with responsibility for network development and population and risk management, Chief Clinical Officer and Chief Innovation Officer of Ascension’s MissionPoint Health Partners subsidiary from 2015 to 2016, and Chief Medical Officer and Chief Integration Officer of MissionPoint Health Partners from 2011 to 2015. Dr. Asher earned a B.S. in Biology from Emory University, an M.D. from Vanderbilt University School of Medicine, and an M.S. in Medical Management from the University of Texas at Dallas and Southwestern Medical Center.

 

   

Mr. Bromley brings more than 35 years of real estate industry leadership experience. He served as Chairman of the Board and Chief Executive Officer of Gables Residential Trust from 1993 until 2000, and then as a member of its Board until the company was acquired in 2005. Prior to joining Gables Residential Trust, Mr. Bromley was a division partner for the Southeast operation of Trammell Crow Residential Company. Mr. Bromley has served as a member of the Board of several non-listed real estate investment trusts, including serving as Non-Executive Chairman of Cole Credit Property Trust V, Inc. from June 2015 to August 2018. Mr. Bromley currently serves as a member of the advisory board of Nancy Creek Capital Management, LLC, a private mezzanine debt and equity investment firm, and Sealy Industrial Partners, a private partnership specializing in the acquisition and operation of various industrial real estate properties. Mr. Bromley holds a B.S. in Economics from Washington & Lee University and an M.B.A. from the University of North Carolina.

 

Dr. Asher’s deep experience in the evolving healthcare landscape, including a combination of clinical training and executive leadership experience, particularly in light of the healthcare industry’s transition to more integrated, value-based delivery and payment models, led to the conclusion that he should serve as a member of the Board.

   

Mr. Bromley’s significant executive, leadership, and advisory experience in the real estate industry led to the conclusion that he should serve as a member of the Board.

 

 

 

  

 

2022 PROXY STATEMENT

 

 

 

 

 

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Proposal 1: Election of Directors

 

Frank M. Bumstead

Independent Director

   

Victoria L. Freed

Independent Director

LOGO

 

 

 

Director Since: August 2006

 

Age: 80

 

Brookdale Board Committees:

•   Compensation

•  Investment

•  Nominating and Corporate Governance

 

Public Company Directorships:

•   Syntroleum Corporation

(1993 – 2014)

•   American Retirement Corp.

(1997 – 2006)

     

LOGO

 

Director Since: October 2019

 

Age: 65

 

Brookdale Board Committees:

•   Compensation (Chair)

•   Nominating and Corporate Governance

 

Public Company Directorships:

•   ILG, Inc. (f/k/a Interval Leisure Group, Inc.) (2012 – 2018)

 

Mr. Bumstead has over 40 years’ experience in the field of business and investment management and financial and investment advisory services, including representing buyers and sellers in a number of merger and acquisition transactions. Mr. Bumstead is a principal shareholder of Flood, Bumstead, McCready & McCarthy, Inc., a business management firm that represents artists, songwriters and producers in the music industry as well as athletes and other high net worth clients, and has been with the firm since 1989. From 1993 to December 1998, Mr. Bumstead served as the Chairman and Chief Executive Officer of FBMS Financial, Inc., a registered investment advisor. He previously served as Chairman of the Board of Directors of the Country Music Association, Vice Chairman of the Board of Directors and Chairman of the Finance and Investment Committee of the Memorial Foundation, Inc., a charitable foundation, and as a member of the Board of Advisors of United Supermarkets of Texas, LLC and was Chairman of its Finance and Audit Committee. Mr. Bumstead received a B.B.A. degree from Southern Methodist University and a Masters of Business Management from Vanderbilt University’s Owen School of Management.

 

   

Ms. Freed brings more than 25 years of executive leadership in the areas of sales, customer service, and marketing, and has earned numerous awards for outstanding achievement in sales and marketing during her career. Ms. Freed is Senior Vice President of Sales, Trade Support and Service for Royal Caribbean International, having served in that role since 2008, where she oversees the largest sales team in the cruise line industry and also manages the company’s consumer outreach, reservations, group sales, and customer service functions. Prior to her service with Royal Caribbean, Ms. Freed worked for 29 years with Carnival Cruise Lines, where she served as Senior Vice President of Sales and Marketing during the last 15 years of her tenure. She is a trustee of the United Way of Miami-Dade County and serves as a member of the board of Jewish Adoption and Foster Care Options (JAFCO). Ms. Freed earned a bachelor’s degree in business with an emphasis in marketing from the University of Colorado.

 

Mr. Bumstead’s experience in business management and as a director of several public companies, along with his knowledge of the senior housing industry (through his prior service as a director of American Retirement Corporation), led to the conclusion that he should serve as a member of the Board.

   

Ms. Freed’s decades of executive leadership in sales, customer service, and marketing in the hospitality industry led to the conclusion that she should serve as a member of the Board.

 

 

 

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Director Nominees

 

Rita Johnson-Mills

Independent Director

   

Denise W. Warren

Independent Director

 

 

LOGO

 

Director Since: August 2018

 

Age: 63

 

Brookdale Board Committees:

•  Nominating and Corporate Governance (Chair)

•  Investment

 

Public Company Directorships:

•  Nyxoah SA (2021 – current)

 

     

 

LOGO

 

Director Since: October 2018

 

Age: 60

 

Brookdale Board Committees:

•  Audit (Chair)

•  Compensation

 

Public Company Directorships:

•  Computer Programs and Systems, Inc.
(2017 – current)

 

   

Ms. Johnson-Mills is a healthcare executive with more than 25 years of combined federal, state, and private industry experience. She has served as President (Southern Region) of CINQCARE since March 2022. Prior to that, Ms. Johnson-Mills served as founder and CEO of consulting firm RJM Enterprises from January 2018 to February 2022. From August 2014 to December 2017 she served as President and Chief Executive Officer of UnitedHealthcare Community Plan of Tennessee, a health plan serving more than 500,000 government sponsored healthcare consumers with over $2.5 billion of annual revenue, after having previously served as Senior Vice President, Performance Excellence and Accountability for UnitedHealthcare Community & State since 2006, and was a founding member of UnitedHealthGroup’s Diversity and Inclusion Council. Ms. Johnson-Mills also previously served as the Director of Medicaid Managed Care for the Centers for Medicare and Medicaid Services and as Chief Executive Officer of Managed Health Services Indiana and Buckeye Health Plan, wholly owned subsidiaries of Centene Corporation. She currently serves on the Board of Directors of Ellipsis Health, Inc., Nyxoah SA, and Quest Analytics, LLC and is a Governance Fellow with the National Association of Corporate Directors (NACD). She is a Hogan Certified Executive Coach and a Senn Delaney Certified Corporate Culture Facilitator. Ms. Johnson-Mills earned a B.S. degree from Lincoln University and an M.A. degree in Labor and Human Resource Management and M.P.A. degree in Public Policy and Management from The Ohio State University.

 

   

Ms. Warren brings more than 30 years of operational, financial and healthcare experience. Most recently, she served as Executive Vice President and Chief Operating Officer of WakeMed Health & Hospitals from October 2015 through December 2020, where she was responsible for the strategic, financial and operational performance of the organization’s network of facilities in the North Carolina Research Triangle area. Prior to that, from 2005 to September 2015, Ms. Warren served as Chief Financial Officer of Capella Healthcare, Inc., an owner and operator of general acute-care hospitals, as well as its Executive Vice President since January 2014, and as its Senior Vice President prior to that. Before joining Capella, she served as Senior Vice President and Chief Financial Officer of Gaylord Entertainment Company from 2000 to 2001, as Senior Equity Analyst and Research Director for Avondale Partners LLC and as Senior Equity Analyst for Merrill Lynch & Co. She currently serves on the Board of Directors of Computer Programs and Systems, Inc., Newport Healthcare, Straive, and Virtusa, Inc. Ms. Warren is National Association of Corporate Directors (NACD) Directorship CertifiedTM and received a Corporate Directors Certificate from Harvard Business School. Ms. Warren earned a B.S. degree in Economics from Southern Methodist University and a M.B.A. from Harvard University.

 

 

Ms. Johnson-Mills’ experience as an executive in the healthcare space, including her expertise in healthcare operations and strategy, led to the conclusion that she should serve as a member of the Board.

   

Ms. Warren’s extensive executive, financial, and operational experience in the healthcare and other industries led to the conclusion that she should serve as a member of the Board.

 

 

 

  

 

2022 PROXY STATEMENT

 

 

 

 

 

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Table of Contents

 

Proposal 1: Election of Directors

 

Lee S. Wielansky

Independent Director

 

LOGO

 

Director Since: April 2015

 

Age: 70

 

Brookdale Board Committees:

•  Audit

•   Investment (Chair)

 

Public Company Directorships:

•  Acadia Realty Trust

(2000 – current)

•   Isle of Capri Casinos, Inc.

(2007 – 2017)

•   Pulaski Financial Corp.

(2005 – 2016)

 

 

Mr. Wielansky has more than 40 years of commercial real estate investment, management, and development experience. He currently serves as Chairman and CEO of Opportunistic Equities, which specializes in low income housing. He has also served as Chairman and CEO of Midland Development Group, Inc., which he re-started in 2003 and focused on the development of retail properties in the mid-west and southeast. Prior to Midland, he served as President and CEO of JDN Development Company, Inc. and as a director of JDN Realty Corporation. Before joining JDN, he served as Managing Director – Investments of Regency Centers Corporation, which in 1998 acquired Midland Development Group, a retail properties development company co-founded by Mr. Wielansky in 1983. Mr. Wielansky joined the Company’s Board of Directors in April 2015 and served as Non-Executive Chairman of the Board from February 2018 through December 2019. He also serves as Lead Trustee of Acadia Realty Trust and served as a director of Isle of Capri Casinos, Inc. from 2007 to 2017 and Pulaski Financial Corp. from 2005 to 2016. Mr. Wielansky received a bachelor’s degree in Business Administration, with a major in Real Estate and Finance, from the University of Missouri – Columbia, where he is currently a member of the Strategic Development Board of the College of Business. He also served on the Board of Directors of The Foundation for Barnes-Jewish Hospital.

 

Mr. Wielansky’s real estate investment, management, and development experience, as well as his service as a director of several public companies, led to the conclusion that he should serve as a member of the Board.

 

 

 

 

 

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Corporate Governance  

 

 

Corporate Governance Guidelines and Code of Business Conduct and Ethics

The Board has adopted Corporate Governance Guidelines setting forth the expectations and standards the Board has with respect to the role, size, and composition of the Board and its committees, the functioning of the Board and its committees, evaluation of the Board and its committees, director compensation, succession planning, and other matters. The Board also has adopted a Code of Business Conduct and Ethics that applies to all employees, directors, and officers, as well as a Code of Ethics for Chief Executive and Senior Financial Officers, which applies to our President and Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, and Treasurer. These guidelines and codes are available on our website at www.brookdale.com/investor. Any amendment to, or waiver from, a provision of such codes of ethics granted to a principal executive officer, principal financial officer, principal accounting officer, or controller, or person performing similar functions, or to any executive officer or director, will be posted on our website.

Director Independence

Our Corporate Governance Guidelines and the listing standards of the NYSE require that the Board be comprised of a majority of independent directors. The Board has affirmatively determined that eight of our nine directors, Mses. Freed, Johnson-Mills, and Warren, Dr. Asher, and Messrs. Sansone, Bromley, Bumstead, and Wielansky are “independent” under Section 303A.02 of the listing standards of the NYSE. In each case, the Board affirmatively determined that none of such individuals had a material relationship with the Company. In making these determinations, the Board considered all relevant facts and circumstances, as required by applicable NYSE listing standards. There were no transactions, relationships, or arrangements not disclosed pursuant to Item 404(a) of Regulation S-K that were considered by the Board in making the required independence determinations. None of the directors that were deemed independent had any relationship with us (other than as a director or stockholder). The Board also determined that each member of the Audit, Compensation, and Nominating and Corporate Governance Committees is independent, including that each member of the Audit Committee is independent under the listing standards of the NYSE and under section 10A(m)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Ms. Baier is not independent due to her employment as our President and Chief Executive Officer.

Board Leadership Structure

Our Corporate Governance Guidelines do not require the separation of the positions of Chairman of the Board and Chief Executive Officer and provide that the Board is free to choose its Chairman in any way that it deems best for the Company at any given time. However, since the date of our formation, the Board has separated the positions of Chairman and Chief Executive Officer in the belief that this structure improves management’s accountability to the Board. Mr. Sansone currently serves as Non-Executive Chairman of the Board, and Ms. Baier serves as President, Chief Executive Officer and director.

Risk Oversight

The business of the Company is managed with the oversight of the Board. As contemplated by the NYSE listing standards and as reflected in the charter of the Audit Committee, the Board has delegated to the Audit Committee the responsibility to discuss guidelines and policies governing the process by which our senior management and the relevant departments and functions of the Company (including our internal audit function) assess and manage our

 

 

  

 

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Corporate Governance

 

exposure to risk. To that end, the Audit Committee regularly reviews our processes for risk assessment and risk management, as well as our major financial risk exposures and the steps management has taken to monitor and control such exposures. The Audit Committee also reviews our exposure to cyber security risk, the effectiveness of our cyber security, and the knowledge, experience and capabilities of the Audit Committee and management with respect to cyber security and cyber security risk. Annually, the Compensation Committee conducts a risk assessment of our compensation programs. The Board regularly receives reports from management regarding our risk exposures and monitors our risk management activities.

Social and Environmental Responsibility

The Board is responsible for overseeing and ensuring our strategy is informed by the opportunities and risks associated with our human capital resources and environmental changes and looks to the Nominating and Corporate Governance Committee to report on various social and environmental topics. The Nominating and Corporate Governance Committee reviews management’s work to develop our social and environmental initiatives and reporting. As a business of people taking care of people, we focus on human capital management, including diversity and inclusion, workplace safety, and maximizing employee satisfaction and retention. Please see our 2022 ESG Update posted to our website at www.brookdale.com/esg for more information about our social and environmental initiatives.

Meetings of the Board

The Board met six times in 2021. Each director attended at least 75% of the total number of meetings of the Board and committees of the Board on which he or she served during 2021. Our non-management directors, i.e., those who are not executive officers, meet in regularly scheduled executive sessions without management. Any non-management director may request that additional executive sessions be scheduled. Under our Corporate Governance Guidelines, our Non-Executive Chairman of the Board presides at executive sessions of our non-management directors. The Board has not adopted a formal policy that requires directors to attend our annual stockholders’ meetings, although they are invited and encouraged to attend. All of the members of the Board attended the 2021 annual meeting of stockholders.

Communications from Stockholders

The Board has in place a process for security holders to send communications to the Board. Specifically, the Board will review and give appropriate attention to written communications submitted by stockholders and other interested parties, and will respond if and as appropriate. Absent unusual circumstances or as otherwise contemplated by committee charters, the Chairperson of the Nominating and Corporate Governance Committee will, with the assistance of our General Counsel, be primarily responsible for monitoring communications from stockholders and provide copies or summaries of such communications to the other directors as he or she considers appropriate. Communications will generally be forwarded to all directors if they relate to substantive matters and include suggestions or comments that the Chairperson of the Nominating and Corporate Governance Committee considers to be important for the directors to consider. Stockholders and other interested parties who wish to send communications on any topic to the Board should address such communications to Chairperson of the Nominating and Corporate Governance Committee, c/o General Counsel, Brookdale Senior Living Inc., 111 Westwood Place, Suite 400, Brentwood, Tennessee 37027. Stockholders who wish to contact any non-management director, including the Non-Executive Chairman of the Board, or the non-management directors as a group, should address such communications to the non-management director (or group of directors) they wish to contact (or if any, to “Any Non-Management Director”), c/o General Counsel, at such address.

 

 

 

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Committees of the Board

 

Committees of the Board

The Board has four separate standing committees: the Audit Committee, the Compensation Committee, the Investment Committee, and the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee is responsible for making recommendations to the Board with respect to committee membership assignments after consultation with the Chairman of the Board and the Chief Executive Officer. The Board is responsible for appointing committee chairs and members following review of such recommendations. The Board has adopted written charters for the standing committees, copies of which are available on our website located at www.brookdale.com/investor.

The following table identifies the current members of the Board’s standing committees and the number of meetings held by each committee during 2021. The Non-Executive Chairman is invited to attend, and generally attends, the regularly scheduled meetings of the standing committees.

 

     Audit Committee      Compensation
Committee
   Investment
Committee
   NCG  
Committee  

Jordan R. Asher

  

       

    

Marcus E. Bromley

  

       

    

Frank M. Bumstead

       

  

  

Victoria L. Freed

       

Chair

       

Rita Johnson-Mills

            

  

Chair

Denise W. Warren

  

Chair

  

         

Lee S. Wielansky

  

       

Chair

    

Number of Meetings in 2021

  

5

  

5

  

4

  

4

 

 

  

 

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Corporate Governance

 

The following table provides information about the key responsibilities and functions of the Board’s standing committees.

 

Committee

  

Key Functions and Additional Information

Audit Committee

  

•   Reviews the audit plans and findings of the independent registered public accounting firm and our internal audit and compliance functions, as well as the results of regulatory examinations, and tracks management’s corrective action plans where necessary

 

•   Reviews our financial statements (and related regulatory filings), including any significant financial items and/or changes in accounting policies, with our senior management and independent registered public accounting firm

 

•   Reviews our risk and control issues, compliance programs, and significant tax and legal matters

 

•   Appoints annually, in its sole discretion, the independent registered public accounting firm and evaluates its independence and performance, as well as sets clear hiring policies for our hiring of employees or former employees of the independent registered public accounting firm

 

•   Reviews our risk management processes

 

•   Reviews our exposure to cyber security risk, the effectiveness of our cyber security, and the knowledge, experience and capabilities of the Audit Committee and management with respect to cyber security and cyber security risk

 

•   The Board has determined that each of Ms. Warren and Messrs. Bromley and Wielansky is an “audit committee financial expert” as defined by the rules of the SEC. No member of the Audit Committee simultaneously serves on the audit committees of more than three public companies.

Compensation

Committee

  

•   Reviews and approves equity-related grants for our directors, officers, key employees, and consultants

 

•   Reviews and approves corporate goals and objectives relevant to our Chief Executive Officer’s and other executive officers’ compensation, evaluates the Chief Executive Officer’s and other executive officers’ performance in light of those goals and objectives, and determines the Chief Executive Officer’s and other executive officers’ compensation based on that evaluation

 

•   Recommends to the Board the compensation of our non-employee directors

 

•   Oversees our compensation and employee benefit and incentive compensation plans, and administers our 2014 Omnibus Incentive Plan

Investment

Committee

  

•   Reviews and approves (or recommends that the Board approve, as applicable) certain investments and proposed transactions on behalf of the Board

 

•   Reviews and evaluates (and makes recommendations to the Board regarding) our capital structure and financial strategies, our material capital allocation plans, and our dividend and share repurchase policies and programs

 

•   Performs such other responsibilities as may be delegated to it by the Board from time to time

Nominating and

Corporate

Governance

Committee

  

•   Reviews the performance of the Board and incumbent directors and makes recommendations to the Board regarding the selection of candidates, qualification, and competency requirements for service on the Board and the suitability of proposed nominees as directors

 

•   Advises the Board with respect to our Corporate Governance Guidelines

 

•   Oversees the annual evaluation of the Board and its committees and our management

 

•   Reports to the Board on various social, environmental, and governance topics, and reviews management’s work to develop our social and environmental initiatives and reporting

 

 

 

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Director Compensation  

 

 

Non-Employee Director Compensation Program

The table below sets forth the elements of the non-employee director compensation program. No changes were made to the non-employee director compensation program for 2021 compared to the prior year.

 

Cash Fees

   2021      Description

Annual Retainer

  

 

$    100,000

 

   Cash retainers are payable quarterly in arrears and are pro-rated for service less than the full year. Cash meeting fees are paid only if a director’s attendance exceeds six Board meetings or eight committee meetings per year and are payable quarterly in arrears. Each director has the opportunity to elect to receive either immediately vested shares or RSUs in lieu of up to 50% of quarterly cash compensation, as described below.

Annual Committee Chair Retainers:

  

Audit

  

 

$      20,000

 

Compensation, NCG & Investment

  

 

$      15,000

 

Meeting Attendance Fees:

  

Per Board Meeting

     $        3,000  

Per Committee Meeting
(Members Only)

  

 

$        2,000

 

Equity Awards

           

Annual Grant of Immediately Vested Stock under 2014 Omnibus Incentive Plan

     $    135,000      Typically granted in February each year for service in the prior year and pro-rated for service less than the full year. Directors may elect to receive RSUs (as described below) in lieu of the immediately vested shares. If a director retires prior to the annual grant date or concludes his or her service at the expiration of his or her term of office, a pro-rata cash amount will be payable to the director at the time of retirement or expiration in lieu of the annual grant of immediately vested shares, in recognition of the partial year of service.

Initial Grant of Restricted Shares under 2014 Omnibus Incentive Plan

     $    100,000     

Granted to each new non-employee director upon joining the Board and generally will be eligible to vest on the first anniversary of the director’s appointment to the Board, subject to the director’s continued service.

 

Each non-employee director has the opportunity to elect to receive either immediately vested shares or RSUs in lieu of up to 50% of the director’s quarterly cash compensation, and to elect to receive RSUs in lieu of the annual grant of immediately vested shares. Any such immediately vested shares elected are issued under our Director Stock Purchase Plan, and RSUs are issued under our 2014 Omnibus Incentive Plan. With respect to quarterly cash elections, the number of shares or RSUs to be issued is based on the closing price of our common stock on the date of issuance, or if such date is not a trading date, on the previous trading day’s closing price. Each RSU will be payable in the form of one share of our common stock following the director’s termination of service as a member of the Board.

 

 

  

 

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Director Compensation

 

Compensation of Non-Executive Chairman of the Board

The Board appointed Mr. Sansone as Non-Executive Chairman of the Board effective January 1, 2020. In connection with his appointment, the Committee recommended, and the Board approved, Mr. Sansone’s compensation arrangements, which include the compensation applicable generally to non-employee directors described above and an additional annual cash retainer of $100,000 for his service as Non-Executive Chairman. All cash amounts are payable as noted in the table above.

Director Stock Ownership Guidelines

The Board has adopted Stock Ownership Guidelines that require each of our non-employee directors to maintain ownership of our stock with a value of at least 5.0x the non-employee director’s annual cash retainer for service on the Board, exclusive of any retainers for service as chairman of the Board or any of its committees and any cash meeting fees. Unvested equity awards do not generally count toward satisfaction of the guidelines. Stock ownership levels are required to be achieved by the fifth anniversary of the director’s initial appointment or election to the Board. Until the expected ownership level is achieved, each director is expected to retain at least 50% of any shares obtained through our stock incentive plans. As of April 27, 2022, each of our non-employee directors is in compliance with the guidelines and each, other than Dr. Asher, Ms. Freed and Mr. Sansone, owns stock with a value of at least 5.0x the annual cash retainer for service on the Board. Therefore, Dr. Asher, Ms. Freed and Mr. Sansone will be expected to retain at least 50% of any shares obtained through our stock incentive plans until the required holding level is met.

Director Compensation for 2021

The following table sets forth the compensation awarded to, earned by, or paid to our directors for the year ended December 31, 2021, other than Ms. Baier whose compensation information is set forth under “Executive Compensation”. Each of the directors included in the table served for the full-year 2021.

 

Name

   Fees Earned or
Paid in Cash
  

Stock       

Awards (1)(2)

   All Other
Compensation
   Total  

Jordan R. Asher

     $ 102,000        $ 115,080       

$

      –

    

$

217,080

 

Marcus E. Bromley

    

$

102,000

 

     $ 134,997       

$

    

$

236,997

 

Frank M. Bumstead

     $ 117,000        $ 134,997       

$

    

$

251,997

 

Victoria L. Freed

    

$

102,000

 

     $ 134,997       

$

    

$

236,997

 

Rita Johnson-Mills

    

$

115,000

 

     $ 134,997       

$

    

$

249,997

 

Guy P. Sansone

    

$

  200,000

 

     $ 134,997       

$

    

$

334,997

 

Denise W. Warren

    

$

124,000

 

     $ 134,997       

$

    

$

  258,997

 

Lee S. Wielansky

    

$

117,000

 

     $   134,997       

$

    

$

251,997

 

 

(1)

Represents the grant date fair value of the annual grant of equity for the previous year served awarded on February 22, 2021, computed in accordance with Accounting Standards Codification 718, Stock Compensation (“ASC 718”) consisting of: 26,522 immediately vested shares for each of Directors Bumstead, Johnson-Mills, Warren, and Wielansky; 26,522 vested RSUs for Directors Bromley, Freed, and Sansone (issued in lieu of immediately vested shares at his or her election); and 22,609 immediately vested shares for Director Asher (whose award amount reflects a pro-rata amount of the annual award for his partial year of service in 2020 beginning February 24, 2020). See Note 2 to our Consolidated Financial Statements included in our 2021 Annual Report for a summary of the assumptions made in the valuation of these awards.

 

(2)

As of December 31, 2021, none of the directors held any unvested stock awards, and the following directors held the number of vested RSUs indicated: Mr. Bromley–40,727; Ms. Freed–26,522; Ms. Johnson-Mills–12,841; and Mr. Sansone–26,522.

 

 

 

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Executive Officers  

 

 

The following table sets forth certain information concerning our executive officers. See “Director Nominees” above for biographical information for Ms. Baier.

 

  Name

  

Age

  

Position

  Lucinda M. Baier

  

57

  

President, Chief Executive Officer and Director

  Kevin W. Bowman

  

59

  

Executive Vice President–Community Operations

  George T. Hicks

  

64

  

Executive Vice President–Finance and Treasurer

  H. Todd Kaestner

  

66

  

Executive Vice President–Corporate Development and President–CCRCs

  Jaclyn C. Pritchett

  

37

  

Executive Vice President–Human Resources

  Steven E. Swain

  

54

  

Executive Vice President and Chief Financial Officer

  Chad C. White

  

46

  

Executive Vice President, General Counsel and Secretary

Kevin W. Bowman joined Brookdale in April 2016 and has served as our Executive Vice President–Community Operations since October 2021. He previously served as our Division Vice President–Operations (West Division) from April 2020 until October 2021, our Senior Regional Vice President–Operations from January 2017 until April 2020, and our Regional Vice President–Operations prior to that. Before joining Brookdale, Mr. Bowman served 25 years in senior living, holding roles of escalating responsibility. Mr. Bowman received a B.A. in Communication from California State University, Fullerton, and was honorably discharged from the United States Army in 1988 after serving four and a half years. He previously served as a member of the Board of Directors of the California Assisted Living Association.

George T. Hicks became our Executive Vice President–Finance in July 2006, and our Treasurer in January 2016. Prior to July 2006, Mr. Hicks served as Executive Vice President–Finance and Internal Audit, Secretary and Treasurer of American Retirement Corporation (ARC) since September 1993. He had served in various capacities for ARC’s predecessors since 1985, including Chief Financial Officer from September 1993 to April 2003 and Vice President–Finance and Treasurer from November 1989 to September 1993. Mr. Hicks received a bachelor’s degree with distinction in philosophy from Stanford University in 1979 and an M.B.A. in finance from the University of Tennessee in 1982.

H. Todd Kaestner became our Executive Vice President–Corporate Development and President–CCRCs in August 2021. Prior to that, Mr. Kaestner served as our Executive Vice President–Asset Management and Division President–Entry Fee since June 2019 and Executive Vice President–Corporate Development since July 2006. Prior to joining Brookdale, Mr. Kaestner served as Executive Vice President–Corporate Development of American Retirement Corporation since September 1993 and served in various capacities for ARC’s predecessors since 1985, including Vice President–Development from 1988 to 1993 and Chief Financial Officer from 1985 to 1988. Mr. Kaestner is an honors graduate of Vanderbilt University, where he studied economics, and holds an M.B.A. in finance and economics from University of Louisville.

Jaclyn C. Pritchett joined Brookdale in 2016 and has served as Executive Vice President–Human Resources since March 2022. She previously served as Senior Vice President–Human Resources since January 2021, Senior Vice President–HR Field Operations and Talent Management from October 2020 until January 2021, Vice President of HR Field Operations from March 2019 until October 2020, and in other human resources management roles from 2016 to February 2019. Before joining Brookdale, Ms. Pritchett served as Senior Manager of Leadership Development at Bridgestone Americas. Ms. Pritchett received her B.A. in Psychology from Auburn University, as well as a Master’s degree in Industrial-Organizational Psychology from Middle Tennessee State University. She currently serves on the

 

 

  

 

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Executive Officers

 

board of directors for New Frontiers and as Executive Sponsor, Leadership Development for Middle Tennessee Society for Human Resource Management.

Steven E. Swain joined Brookdale as Executive Vice President and Chief Financial Officer in September 2018. Prior to joining Brookdale, Mr. Swain served as Senior Vice President and Chief Financial Officer of DISH Network Corporation from October 2014 to August 2018, after having served as its Senior Vice President of Programming from April 2014 to October 2014, and as its Vice President of Corporate Financial Planning and Analysis since joining the company in 2011. Prior to DISH Network, Mr. Swain spent more than 15 years working in the telecommunications sector, most recently at CenturyLink, Inc. and Qwest Communications International, Inc. (acquired by CenturyLink), where he served in multiple leadership roles in finance, including corporate financial planning and analysis, treasury, and investor relations, as well as in network engineering. Mr. Swain earned his B.S. degree in Chemical Engineering from the University of Wisconsin–Madison and his M.B.A. degree from the University of Chicago Booth School of Business.

Chad C. White joined Brookdale in February 2007 and has served as our Executive Vice President since January 2018, our General Counsel since March 2017 and our Secretary since March 2013. He previously served as our Senior Vice President and General Counsel from March 2017 until January 2018, our Senior Vice President and Co-General Counsel from July 2014 to March 2017, our Vice President and Co-General Counsel from March 2013 to July 2014, and our Associate General Counsel and Assistant Secretary prior to that. Before joining Brookdale, Mr. White served in legal roles with Dollar General Corporation and Bass, Berry & Sims PLC. Mr. White received his law degree from the Vanderbilt University School of Law where he was elected to the Order of the Coif, and a B.S. in Mass Communication and Political Science from Middle Tennessee State University.

 

 

 

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Executive Compensation  

 

 

Compensation Discussion and Analysis

This Compensation Discussion and Analysis explains the key elements of our executive compensation program and compensation decisions regarding the following named executive officers (NEOs) for 2021:

 

Name

      Position

Lucinda M. Baier

      President and Chief Executive Officer

Steven E. Swain

      Executive Vice President and Chief Financial Officer

Kevin W. Bowman

      Executive Vice President – Community Operations

Chad C. White

      Executive Vice President, General Counsel and Secretary

H. Todd Kaestner

      Executive Vice President – Corporate Development and President – CCRCs

Cindy R. Kent

      Former Executive Vice President and President – Senior Living Community Operations

Each of the named executive officers served in the roles indicated for the full-year 2021, except that Mr. Bowman served as Division Vice President – Operations (West Division) before being appointed to his current role effective October 1, 2021; Mr. Kaestner served as Executive Vice President – Asset Management and Division President – Entry Fee before being appointed to his current role effective August 1, 2021; and Ms. Kent served as Executive Vice President and President of Senior Living before being appointed as Executive Vice President and President – Senior Living Community Operations effective August 1, 2021 and resigned effective October 1, 2021.

 

 

Table of Contents to Compensation Discussion and Analysis

 

 

 

  

 

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Executive Compensation

 

 

Executive Compensation Program Highlights

 

LOGO  What We Do

Pay for Performance A significant portion of our NEOs’ target direct compensation is awarded in the form of variable, at-risk compensation based on company performance.

Clawback Policy Clawback policy provides the Compensation Committee the ability to recover or require the forfeiture of performance-based compensation paid as a result of any material financial restatement or material miscalculation of a financial metric used to determine the vesting or payment of performance-based compensation.

Caps on Annual Incentive Payouts Payouts under our annual cash incentive plan are capped.

Annual Say on Pay “Say-on-pay” advisory vote conducted annually to solicit stockholders’ views on our executive compensation programs.

Robust Stock Ownership Guidelines Ownership guidelines require our CEO, CFO, and other executive officers to hold stock valued at 5x, 4x, and 3x base salary, respectively.

Annual Risk Assessment The Committee conducts a compensation program risk assessment annually.

LOGO  What We Do NOT Do

No Above Median Benchmarking The Committee aims to provide target total direct compensation for NEOs that is within or below the market median range identified in the independent compensation consultant’s market study.

No Defined Benefit Plans/SERPs We do not sponsor any defined benefit pension or supplemental executive retirement plans (SERPs).

No Tax Gross Ups Tax gross-ups are not provided except in the limited circumstance of certain relocation expenses.

No Excessive Perquisites Minimal perquisites are provided, other than certain relocation expenses.

No Guaranteed Incentive Compensation Our annual incentive plan and performance-based long-term incentive awards do not have minimum guaranteed payout levels–this compensation is “at risk.”

No Pledging or Hedging Our insider trading policy prohibits all our directors and executive officers from pledging or hedging Brookdale stock.

No Stock Options We have never granted stock options.

 

 

2021 Target Total Direct Compensation Mix (1)

 

 

LOGO

 

(1) 

Represents elements of 2021 target total direct compensation and, for other NEO’s, the average of such other NEO’s pay mix elements. See “Summary of 2021 Compensation Program” below for more information.

 

 

 

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Compensation Discussion and Analysis

 

 

 

 

Key 2021 Executive Compensation Decisions

The Compensation Committee (the “Committee”) made its annual executive compensation decisions in February 2021. Up to that time, the COVID-19 pandemic had resulted in consecutive monthly senior housing occupancy losses for each month since March 2020 and unsustainable occupancy levels. In addition, the pandemic and its continuing impact on the senior housing industry and our business presented significant uncertainties with respect to forecasting the timing and pace of our recovery during 2021, including uncertainties regarding potential future variants. Ultimately, we lost 1,330 basis points of weighted average consolidated senior housing occupancy from March 2020 through February 2021. Consistent with our 2021 business plan, the Committee desired to focus management’s efforts on recovering lost occupancy while maintaining rate and expense discipline and continuing to prioritize the health and wellbeing of our residents and associates. The Committee also considered the pandemic’s continued pressure on our stock price at the time of the Committee’s annual decisions and the share burn rate that would result from granting long-term equity awards amid such pressure. Finally, the Committee desired to ensure that its annual compensation decisions would further its underlying compensation philosophy of emphasizing pay for performance, aligning our executives’ long-term interests with those of our stockholders, and retaining key executives to execute on our strategy.

After deliberation regarding the foregoing considerations, the Committee made the following key decisions regarding our 2021 executive compensation program.

 

 

Annual Incentive Objectives. The Committee determined to use 2021 consolidated portfolio revenue per available unit (“RevPAR”) and 2021 consolidated facility operating income (excluding pandemic-related expenses) as the financial objectives for the 2021 annual incentive plan. The Committee believed that such objectives would incentivize occupancy growth and rate and expense discipline, which are critical foundations for our recovery from the pandemic. The financial objectives had two six-month performance periods (the first half and second half of 2021) due to the uncertainties associated with the pandemic’s continued impact on our performance. Target levels of performance generally reflected our 2021 budget approved by the Board at the beginning of 2021 and the uncertainties as to the timing and pace of our recovery during the year. As described in more detail below, our performance against such financial objectives is indicative of our achieving ten consecutive months of weighted average consolidated senior housing occupancy growth beginning in March 2021 while maintaining rate discipline.

 

 

Form of Long-Term Incentive Awards. The Committee determined to grant 50% of the target grant value of long-term incentive awards in the form of time-based RSUs consistent with the prior year. In lieu of using performance-based equity as were used historically for performance-based long-term incentive awards, the Committee determined to grant 50% of the target grant value of long-term incentive awards in the form of performance-based awards denominated in cash (i.e., not indexed to or payable in stock). This balanced approach allowed the Committee to achieve its stockholder alignment objective (through the RSU component) as well as its objective to provide 50% of the target long-term incentive award value in the form of performance-vesting awards (through the cash-based long-term incentive component). The Committee’s use of performance-based cash awards in lieu of equity reduced the potential share burn rate and dilution associated with our long-term incentive awards at a time that our stock price continued to experience pressure from the pandemic.

 

 

Long-Term Incentive Award Objectives. Due to the Committee’s desire to emphasize our recovery from the pandemic, the Committee determined to use three consecutive annual performance periods for 75% of the target grant value of the performance-based cash awards rather than using a three-year performance period as was the case in our prior year awards. The first annual objective for 2021 was resident and associate COVID-19 vaccine acceptance, and the second and third objectives are year-over-year same community RevPAR growth for 2022 and 2023, respectively. Three-year relative TSR for the period ending December 31, 2023 was used for 25% of the target grant value of the performance-based cash awards. The Committee believed these performance objectives will encourage executives to focus on initiatives to navigate and recover from the COVID-19 pandemic in a balanced manner, including encouraging vaccine acceptance among residents and associates, recovering lost occupancy while maintaining rate discipline, and increasing the market value of our common stock.

 

 

  

 

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Executive Compensation

 

 

 

 

Compensation Philosophy

The Committee intends to ensure market-competitive executive compensation opportunities through a program designed to:

 

 

emphasize pay for performance by linking a significant portion of target total direct compensation to variable, at-risk components measured by our short- and long-term financial performance and other objectives designed to focus executives on key strategic initiatives;

 

 

align our executives’ long-term interests with those of our stockholders; and

 

 

attract and retain key executives to execute on our strategy.

In determining the appropriate level and mix of compensation for each executive officer, the Committee takes into account the officer’s experience, scope of responsibility, individual performance, and retention risk; the Committee’s independent consultant’s market compensation studies; management input; internal equity; and other information as it deems necessary and appropriate. No pre-determined weighting is assigned to any factor, and the emphasis placed on a specific factor may vary among executive officers, reflecting market practice, business needs, and retention and succession considerations at the time compensation decisions are made.

 

 

 

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Compensation Discussion and Analysis

 

 

 

 

Principal Elements of Compensation

Our 2021 executive compensation program generally consisted of the following principal elements:

 

Element

  

Form

  

Description

  

Link to Stockholder Value

Base Salary

   Cash    Amount intended to reflect the level and scope of responsibility, experience, and skills of an executive, the individual performance of the executive, retention risks, and competitive market practices.    Assists us in attracting, and encourages retention of, key executives through an amount of fixed income paid throughout the year.

Annual Incentive Plan

   Cash    Opportunity is at-risk with no guaranteed payout. Level of payout tied to achievement of financial and strategic objectives approved by the Committee each year, which generally are reflective of, and support, our annual budget and business plan.    Focuses executives on taking steps necessary to meet expectations set forth in the annual budget and business plan, including for 2021 navigating and recovering from the COVID-19 pandemic, which the Committee believes will in turn drive longer-term performance results.

Long- Term Incentive Awards

   50%–Time-Based RSUs    Eligible to vest ratably in four annual installments beginning approximately one year following the grant date, subject to continued employment.    Promotes retention, stock ownership, and alignment of executives’ long-term interests with those of our stockholders.
   50%–Performance-Based Cash    Opportunity is at-risk with no guaranteed vesting. 75% of the 2021 award is eligible to vest in February 2024 based on COVID-19 vaccine acceptance and same community revenue per available unit (“RevPAR”) growth, and 25% of the award is eligible to vest in February 2025 based on our 3-year relative total shareholder return (“TSR”) performance. RevPAR is a key performance metric that reflects the impact of both occupancy and rate. For 2021, awards were denominated in cash (i.e., not indexed to or payable in stock).    Encourages executives to focus on initiatives to navigate and recover from the COVID-19 pandemic, including encouraging vaccine acceptance among residents and associates, recovering lost occupancy while maintaining rate discipline, and increasing the market value of our common stock.

 

 

 

Process for Determining Executive Compensation

The Committee’s process for determining executive compensation is outlined below, including the roles of the Committee, results of our annual say-on-pay advisory vote, the Committee’s independent consultant, our management, and our compensation peer group.

 

 

  

 

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Executive Compensation

 

Role of the Committee

The Committee, which is comprised solely of independent directors, is responsible for developing, reviewing annually, and administering our compensation program and plans applicable to our executive officers. The Committee meets regularly, typically at least four times per year, to approve all decisions regarding the compensation of our executive officers. Compensation decisions regarding our President and Chief Executive Officer are also approved by the independent members of the Board. The Committee reports on its actions to the full Board following each Committee meeting. In fulfilling its responsibilities with respect to executive compensation, the Committee reviews and approves:

 

 

Any changes to our executive compensation philosophy;

 

 

The base salary, levels of incentive-based compensation, and all other compensation or perquisites of our executive officers;

 

 

The design and framework of our incentive-based compensation plans and awards, including the applicable performance objectives and targets;

 

 

Levels of achievement under such performance objectives and targets;

 

 

Updates to our compensation peer group;

 

 

Any employment agreements or severance arrangements with our executive officers; and

 

 

Compliance with, and any changes to, our officer stock ownership and retention guidelines.

Role of Say-on-Pay Vote

The Committee considers the results of our annual say-on-pay advisory vote and other feedback received from stockholders throughout the year when making executive compensation decisions. At our 2021 annual meeting of stockholders, more than 98% of the votes cast on the say-on-pay advisory vote were in favor of our executive compensation program. The Committee believes this vote affirmed our stockholders’ support of our executive compensation approach and provided assurance the program is reasonable and aligned with stockholder expectations.

Role of Independent Compensation Consultant

As a best practice, the Committee periodically evaluates its selection of an independent compensation consultant. For 2021 executive compensation decisions, the Committee determined to continue to engage F.W. Cook & Co., Inc. (the “Consultant”) as its independent compensation consultant. The Consultant reports directly to the Committee, which has the direct responsibility for appointment, compensation, and oversight of the work of the Consultant. From time to time at the request of the Committee, the Consultant provides recommendations regarding the design and framework of, and amounts awarded under, our executive compensation programs, recommends updates to our compensation peer group and conducts independent market compensation studies using that peer group and other published survey information, attends meetings of the Committee, and communicates with one or more members of the Committee outside of such meetings. For our 2021 compensation programs, the Consultant provided each of these services. The Committee conducted a specific review of its relationship with the Consultant and determined that the Consultant’s work for the Committee did not raise any conflicts of interest, consistent with the guidance provided under the Dodd-Frank Act of 2010 by the SEC and by the NYSE.

Role of Management

When making compensation decisions, the Committee considers input from our President and Chief Executive Officer and certain of our other executive officers. Such input generally includes providing information and analyses for review and advising the Committee concerning compensation decisions (other than when their own compensation is determined) and the design, framework, and performance objectives of our incentive-based compensation plans and awards. Our President and Chief Executive Officer provides compensation recommendations related to our other executive officers for the Committee’s consideration.

 

 

 

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Compensation Discussion and Analysis

 

Compensation Peer Group

Typically annually, the Committee reviews and approves a compensation peer group comprised of companies recommended by the Consultant. The compensation peer group data is then used by the Consultant when preparing independent market compensation studies for the Committee. The Committee generally uses such peer group data and the Consultant’s studies:

 

 

As inputs when determining amounts of base salaries and the target amounts of annual and long-term incentive compensation;

 

 

To assess the competitiveness of the target direct compensation and underlying pay mix awarded to our executive officers; and

 

 

To evaluate the design, framework, and performance objectives of our incentive-based compensation plans and awards.

The Committee, as advised by the Consultant, generally considered base salary and target annual cash compensation within a range of +/- 15%, and target total direct compensation within a range of +/- 20%, of median as reported in the Consultant’s market compensation studies to be competitive.

The peer group used to inform 2021 target compensation opportunities included 16 companies in the health care facilities, healthcare services, healthcare REIT, hospitality, and restaurant industries. The Committee believes that inclusion of companies from these industries is reflective of the talent market for our business. The peer group companies chosen from the various industries are intended to be reasonably comparable to Brookdale in terms of their median levels of revenue, market capitalization, enterprise value, EBITDA, and number of employees. For 2021 compensation decisions, the Consultant recommended no updates to our prior-year compensation peer group, which is set forth below.

 

    

2021 Peer Group

    
     
Acadia Healthcare Company, Inc.    Encompass Health Corporation    Select Medical Holdings Corporation
Amedysis, Inc.    Hyatt Hotels Corporation    The Ensign Group, Inc.
Bloomin’ Brands, Inc.    LHC Group, Inc.    Universal Health Services, Inc.
Chemed Corporation    National Healthcare Corp.    Welltower Inc.
Community Health Systems, Inc.   

Norwegian Cruise Line Holdings Ltd

Quest Diagnostics Incorporated

   Wyndham Hotels & Resorts, Inc.

 

 

 

2021 Compensation Decisions

Summary of 2021 Compensation Program

Annual Compensation Decisions

When making annual executive compensation decisions in February 2021, the Committee considered the continuing impact of the COVID-19 pandemic on our performance, including the uncertainties regarding the timing and pace of our recovery. The Committee desired to focus management’s efforts on recovering lost occupancy while maintaining rate and expense discipline and continuing to prioritize the health and wellbeing of our residents and associates. The Committee also considered the Consultant’s market compensation study based on the peer group adopted by the Committee, our 2021 business plan, performance objectives under our incentive plans, the responsibilities and individual performance of each executive officer, and internal pay equity. The Committee took into account the pandemic-related decisions it made in early February 2021 related to management’s extraordinary efforts in 2020, which included discretionary payouts under our 2020 annual incentive plan conditioned on the executives agreeing to forfeit a majority of their outstanding performance-based restricted shares and RSUs. Such pandemic-related decisions are described in detail in our proxy statement for the 2021 annual meeting of stockholders (the “2021 Proxy

 

 

  

 

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Statement”). Mr. Bowman became an executive officer in connection with his promotion effective October 1, 2021, and his compensation arrangements are discussed separately under “Compensation Arrangements with Mr. Bowman” below.

Following conclusion of this review, the Committee found that Ms. Baier’s target total direct compensation approximated the market median, with her target annual cash compensation at the low end of the market median range and her target long-term incentive awards slightly above the median. The Committee determined that the target total direct compensation of Ms. Kent was below the market median range, and took into account the expansion of Mr. Kaestner’s scope of responsibilities. To motivate and retain our executive officers in our recovery from the COVID-19 pandemic, the Committee also desired to provide higher target grant values of long-term incentive awards.

The Committee determined not to make adjustments to the base salary for Ms. Baier, Mr. Swain, and Mr. White or to the target annual incentive awards as a percent of base salary for the executive officers. The Committee determined to increase Ms. Kent’s and Mr. Kaestner’s base salary by 5% and 10%, respectively, due to the factors noted above. The Committee also determined to increase the target grant values of the long-term incentive awards due to the factors noted above, including to incentivize management’s continued focus on recovering from the pandemic. The Committee believes awarding such additional long-term incentive awards is consistent with our pay-for-performance philosophy and further aligns our executives’ interests with the long-term interests of our stockholders.

The table below sets forth the annual compensation decisions with respect to the named executive officers other than Mr. Bowman. The table excludes the amounts reported in the All Other Compensation column of the Summary Compensation Table (generally employer matching on our 401(k) plan and employer-paid premiums on life and disability insurance) and the Bonus column of the Summary Compensation Table.

 

    2021 Base
Salary
  Change v.
2020
  2021 Target
Annual
Incentive
Opportunity
  Change v.
2020
  2021 Grant
Value of
Long-
Term
Incentive
Awards(1)
  Change v.
2020
  2021 Target
Total Direct
Compensation
  Change v.
2020

Ms. Baier

   

 

$ 938,000

 

   

 

–  

 

   

 

135%

 

   

 

–  

 

   

$

5,530,005

 

   

 

13%

 

   

 

7,734,305

 

   

 

9%

 

Mr. Swain

   

 

$ 575,000

 

   

 

–  

 

   

 

100%

 

   

 

–  

 

   

$

 1,925,004

 

   

 

13%

 

   

 

3,075,004

 

   

 

8%

 

Mr. White

   

 

$ 425,000

 

   

 

–  

 

   

 

70%

 

   

 

–  

 

   

$

   645,002

 

   

 

17%

 

   

 

1,367,502

 

   

 

7%

 

Mr. Kaestner

   

 

$ 390,000

 

   

 

10%

 

   

 

70%

 

   

 

–  

 

   

$

 485,003

 

   

 

39%

 

   

 

1,148,003

 

   

 

20%

 

Ms. Kent

   

 

$ 540,000

 

   

 

5%

 

   

 

100%

 

   

 

–  

 

   

$

1,250,001

 

   

 

25%

 

   

 

2,333,001

 

   

 

15%

 

 

(1)

The dollar amount of the long-term incentive awards, and the percentage change versus 2020, is based on the grant value of such awards (i.e., the number of RSUs granted at target performance, multiplied by the stock price on the date of grant and the target amount of cash for performance-based cash awards granted in 2021).

Compensation Arrangements with Mr. Bowman

Mr. Bowman served as Division Vice President – Operations (West Division) until October 1, 2021. His 2021 compensation arrangements in effect prior to becoming an executive officer included a base salary of $302,722, a target annual incentive opportunity of 50% of base salary, and an annual grant of long-term incentive awards in February 2021 with a $175,000 target grant value. In connection with Mr. Bowman’s promotion to Executive Vice President – Community Operations effective October 1, 2021, the Committee approved the terms of Mr. Bowman’s offer letter dated September 13, 2021. The offer letter provided for an annual base salary of $450,000, a target annual incentive opportunity of 100% of base salary, and long-term incentive awards with a target annual grant value of

 

 

 

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Compensation Discussion and Analysis

 

$750,000. The first full long-term incentive award would be granted in 2022, and Mr. Bowman would receive pro-rated long-term incentive awards for his partial year of service in his new role based reflecting the difference between his February 2021 annual grant value and the new grant value. Such pro-rated long-term incentive awards were granted on October 28, 2021. The offer letter further provided that Mr. Bowman would be eligible for relocation assistance in accordance with our policy to assist his move to the Nashville, Tennessee area. Mr. Bowman has agreed to reimburse us for the full amount of relocation benefits provided to him if he voluntarily terminates his full-time employment prior to the second anniversary of his promotion.

Annual Incentive Plan

The named executive officers were eligible to participate in our 2021 annual incentive plan adopted by the Committee in February 2021, with Mr. Bowman’s participation in the executive-level plan beginning in connection with his promotion effective October 1, 2021. The Committee reviewed the plan’s framework in the context of management’s continued execution on initiatives to navigate and recover from the COVID-19 pandemic. Due to the pandemic, we lost 1,330 basis points of weighted average consolidated senior housing occupancy from March 2020 through February 2021, which resulted in unsustainably low occupancy at our communities. Consistent with our 2021 business plan, the Committee desired to focus management’s efforts on recovering lost occupancy while maintaining rate and expense discipline, and the Committee considered the uncertainties associated with forecasting the timing and pace of our recovery from the pandemic at the time of its decisions in early 2021. The Committee also considered the Company’s efforts to sell 80% of its equity in its Health Care Services segment to HCA Healthcare, Inc. (the “HCS Sale”) as the parties were nearing completion of negotiation of the purchase agreement ultimately entered into on February 24, 2021.

The Committee determined to increase the weighting of financial objectives to 70%, from 60% in the prior year plan, and to decrease the weighting of strategic objectives to 30%, from 40% in the prior year plan. The financial objectives had two six-month performance periods (the first half and second half of 2021) due to the uncertainties associated with the pandemic’s continued impact on our performance, and the strategic objectives were to be measured on an annual basis. Cash amounts payable under the plan were to be determined by the Committee following conclusion of fiscal 2021 based on our results relative to performance targets approved by the Committee. There were no guaranteed payout levels utilized, and the aggregate threshold and maximum payouts were 25% and 185%, respectively, of the target opportunity.

The Committee determined to use 2021 consolidated portfolio RevPAR and 2021 consolidated facility operating income (FOI) excluding pandemic-related expenses as the financial objectives for the 2021 annual incentive plan, with the target levels of performance generally reflective of our 2021 budget approved by the Board at the beginning of 2021. In light of the progressing negotiations related to the HCS Sale, the 2021 annual incentive plan provided that the FOI performance targets, and our actual performance, would exclude the former Health Care Services segment to the extent the HCS Sale were closed during 2021. The closing of the transaction occurred on July 1, 2021 for net cash proceeds of $312.6 million, and we retain a 20% interest in the venture with HCA Healthcare, Inc.

The strategic objectives focused on our human capital resources and included retention of key community leadership at our consolidated comparable community portfolio and retention of our corporate associates. Key community leadership includes our executive directors, health and wellness/nursing directors, and sales directors. The consolidated comparable community portfolio excluded approximately 19 of our consolidated communities identified for disposition, undergoing Program Max renovations or significant remediation projects, temporarily closed due to hurricane or other natural disasters, and otherwise with significant capacity changes.

The table on the following page sets forth the performance objectives, weighting, performance targets, and our actual performance with respect to the 2021 annual incentive plan. Since the Company successfully closed the sale of 80% of its equity interest in its former Health Care Services segment on July 1, 2021, the results of the former Health Care Services segment are excluded from both the performance targets and our actual performance with respect to the FOI performance objectives, in accordance with the plan. The original FOI targets were reduced by $12 million and $17 million for the first half and second half of 2021, respectively, as a result of closing the HCS Sale.

 

 

  

 

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Executive Compensation

 

 

Objective

 

 

 

Weighting

 

   

 

Description and Link to Strategy and Business Plan

 

               
         

RevPAR (1H 2021)

    20%     RevPAR is a key performance metric that reflects the impact of both occupancy and rate. For purposes of the 2021 annual incentive plan, RevPAR was defined as our resident fee revenue for the consolidated communities portfolio (excluding Health Care Services segment revenue and entrance fee amortization) for the applicable period, divided by the weighted average number of available units in the portfolio for the period, divided by the number of months for the period. The Board and management use this measure in the budgeting process and when evaluating our results. This measure was intended to focus management on recovering occupancy lost due to the COVID-19 pandemic while maintaining rate discipline. The target levels of performance generally reflected our 2021 budget approved by the Board at the beginning of 2021 and required sequential RevPAR improvement for the second half compared to the first half of 2021.   Level     Payout       Target / Actual  
  Maximum     200%     $ 3,747  
  Actual     152%     $ 3,662  
  Target     100%     $ 3,569  
  Threshold     25%     $ 3,391  
       

RevPAR (2H 2021)

    20%     Level     Payout       Target / Actual  
  Maximum     200%     $ 3,924  
  Actual     137%     $ 3,806  
  Target     100%     $ 3,737  
  Threshold     25%     $ 3,550  
 

 

 

 

 

 

 

 

 

 

     
       
                                 

FOI (1)

(1H 2021)

    15%     FOI was defined as our 2021 consolidated resident fee revenue less facility operating expense, excluding incremental direct COVID-19 expenses. As discussed above, FOI also excluded results of our former Health Care Services segment as a result of our closing the HCS Sale on July 1, 2021. FOI reflects the net result of our revenue and the facility operating expenses of our consolidated senior housing portfolio, which are the largest drivers of our financial results and which management has the ability to impact on a day-to-day basis. The Board and management use this measure in the budgeting process and when evaluating our results. This measure was intended to focus management on recovering occupancy lost due to the COVID-19 pandemic while maintaining rate and expense discipline. The target levels of performance generally reflected our 2021 budget approved by the Board at the beginning of 2021 and would require management to stabilize and maintain our FOI, which had deteriorated substantially during 2020 due to the pandemic.   Level     Payout      

Target / Actual

($ in MM)

 

 

  Actual     200%     $ 263  
  Maximum     200%     $ 254  
  Target     100%     $ 231  
  Threshold     25%     $ 208  
       

FOI (1)

(2H 2021)

    15%     Level     Payout      

Target / Actual

($ in MM)

 

 

  Maximum     200%     $ 256  
    Actual     165%     $ 247  
    Target     100%     $ 232  
    Threshold     25%     $ 209  
       
                   
         

Key Community Leader Retention (FY 2021)

    20%     Brookdale’s culture is based on servant leadership, and we believe engaged associates lead to an enhanced resident experience and lower turnover, leading to improved operations. The key community leader retention objective applied to the three key positions at our consolidated comparable communities (executive directors, sales directors, and health and wellness/nursing directors). The target level performance reflected a 2% improvement from our 2020 performance.   Level     Payout       Target / Actual(2)  
    Maximum     150%       70.1
    Target     100%       67.6
    Actual     25%       65.1
    Threshold     25%       65.1
       
       
       

Corporate Associate Retention (FY 2021)

    10%     The corporate associate objective applied to our non-community-level associates. The target level performance reflected a 1.7% decrease from our 2020 performance due to our high level of retention during 2020.   Level     Payout       Target / Actual(2)  
  Maximum     150%       88.1
  Target     100%       85.6
  Threshold      25%       83.1
    Actual     0%       80.8
       
                                 

 

(1)

FOI is a financial measure that is not calculated in accordance with generally accepted accounting principles (“GAAP”). Appendix A to this proxy statement shows how we calculated FOI for the first half and second half of 2021, including reconciliations to the closest GAAP financial measures.

 

(2)

As described further in “Annual Incentive Plan Results” below, the Committee determined to exclude from our actual results associate departures directly related to enforcement of our policy requiring associates to be vaccinated against COVID-19, which we adopted in the second half of 2021. Such exclusions are reflected in the actual achievement levels.

 

 

 

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Compensation Discussion and Analysis

 

For his service through October 1, 2021, Mr. Bowman participated in the annual incentive plan applicable to our West Division leadership. The plan utilized performance objectives similar to the annual incentive plan applicable to executive officers, but which were specific to the West Division’s performance: division RevPAR (40% weighting), division FOI (30% weighting), and division key community leader retention (30% weighting). The financial objectives had two six-month performance periods (the first half and second half of 2021), and the strategic objective was to be measured on an annual basis. Cash amounts payable under the plan were to be determined by management following conclusion of fiscal 2021 based on our results relative to the performance targets established by management.

There were no guaranteed payout levels utilized, and the aggregate threshold and maximum payouts were 25% and 185%, respectively, of the target opportunity. The table below sets forth the performance objectives, weighting, performance targets, and our actual performance with respect to the West Division 2021 annual incentive plan applicable to Mr. Bowman.

 

Objective

   Weighting         

West Division RevPAR (1H 2021)

     20    Level    Payout      Target /Actual  
   Maximum    200%    $ 3,787  
   Actual    133%    $ 3,667  
   Target    100%    $ 3,607  
   Threshold    25%    $ 3,427  

West Division RevPAR (2H 2021)

     20    Level    Payout      Target /Actual  
      Maximum    200%    $ 3,833  
      Target    100%    $ 3,650  
      Actual    92%    $ 3,631  
      Threshold    25%    $ 3,468  
                             

West Division FOI (1H 2021)

     15    Level    Payout     

Target /Actual

($ in MM)

 

 

   Actual    200%    $ 157  
   Maximum    200%    $ 155  
   Target    100%    $ 141  
   Threshold    25%    $ 127  

West Division FOI (2H 2021)

     15    Level    Payout     

Target /Actual

($ in MM)

 

 

      Maximum    200%    $ 159  
      Target    100%    $ 145  
      Actual    88%    $ 142  
      Threshold    25%    $ 130  
                             

Key Community Leader Retention
(FY 2021)

     30    Level    Payout      Target /Actual (1)  
      Maximum    150%      250 bps above target  
      Target    100%      2% improvement to 2021  
      Actual    51%      162 bps below target  
      Threshold    25%      250 bps below target  

 

(1)

As described further in “Annual Incentive Plan Results” below, associate departures directly related to enforcement of our policy requiring associates to be vaccinated against COVID-19, which we adopted in the second half of 2021, are excluded from actual results.

 

 

  

 

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Executive Compensation

 

Long-Term Incentive Awards

For the 2021 executive officer compensation program, the Committee used a 50/50 grant value mix of time- and performance-based long-term incentive awards, consistent with the prior year program. When considering the forms of the awards, the Committee evaluated the number of shares remaining available for issuance under our 2014 Omnibus Incentive Plan and the share burn rate that would result from awarding equity while the COVID-19 pandemic continued to pressure our stock price. It also considered the alignment of executives’ interests with those of our stockholders created by awarding long-term compensation in the form of equity. After deliberation, the Committee determined to grant the time-based awards in the form of RSUs consistent with the prior year and to grant performance-based awards denominated in cash (i.e., not indexed to or payable in stock). This balanced approach allowed the Committee to achieve its stockholder alignment objective (through the RSU component) as well as its objective to provide 50% of the target long-term incentive award value in the form of performance-vesting awards (through the cash-based long-term incentive component). The Committee’s use of performance-based cash awards in lieu of equity reduced the potential share burn rate and dilution associated with our long-term incentive awards. The long-term incentive awards granted to Mr. Bowman prior to his promotion effective October 1, 2021 are discussed separately under “Long-Term Incentive Awards Granted to Mr. Bowman” below.

The agreements associated with the 2021 long-term incentive awards for the executive officers contain non-competition, non-solicitation, non-disparagement, and confidentiality covenants and set forth the treatment of such awards in connection with termination of employment and a change in control (as described below under “Potential Payments Upon Termination or Change in Control”). Consistent with the prior year, “double-trigger” acceleration of vesting applies in connection with a change in control. That is, vesting will only accelerate in connection with a change in control if either the awards are not assumed, continued, or substituted with an award on the same terms and conditions that were applicable to the outstanding awards immediately prior to the change in control, and in the case of the RSUs, relating to a publicly-traded security of the acquiror (or the Company), or the participant experiences a qualifying termination within 12 months after the change in control.

Awards of Time-Based RSUs. The awards of time-based RSUs granted in February 2021 are eligible to vest ratably in four annual installments beginning February 27, 2022, subject to continued employment. Each RSU is payable in the form of one share of our common stock upon vesting. To the extent we declare cash or stock dividends on our shares of common stock, the RSUs awarded will accrue cash equivalents or shares to be paid only to the extent the underlying RSUs ultimately vest.

 

 

 

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Awards of Performance-Based Cash. With respect to the awards of performance-based cash granted in February 2021, 75% of the awards are eligible to vest on February 27, 2024 and 25% are eligible to vest on February 27, 2025, in each case subject to continued employment and achievement of performance objectives established by the Committee. The portion of the target award eligible to vest on February 27, 2024 is divided into three equal tranches. Achievement at the threshold, target, and maximum or above performance levels will result in vesting of 50% (or 25% in the case of each of the vaccine participation objectives), 100%, and 150% of the target cash amount, respectively, with vesting percentages to be interpolated for performance between the levels. The weighting, performance objectives, and performance targets for the performance-based restricted shares are outlined below.

 

Performance Objective

  Weighting    

Description and Link to Strategy

and Business Plan

  Vesting
Date
  Performance Targets  

2021 resident COVID-19 vaccine acceptance rate (50% sub-weighting)

    25%     Throughout 2021, management continued its response to the COVID-19 pandemic within our communities, including its critically important effort to prepare for and host vaccine clinics as quickly as possible through the Pharmacy Partnership for Long-Term Care Program offered through the U.S. Centers for Disease Control and Prevention. Given the disproportionately higher risk of our residents becoming severely ill from COVID-19, the Committee desired to incentivize management’s efforts to promote COVID-19 vaccine acceptance and availability among our residents and associates. Measurement of the participation rates was conducted on timeframes consistent with community-level vaccination incentive programs and reflects performance as of April 30, 2021. This measurement date was prior to our adoption of an associate vaccine requirement in the second half of 2021.   2/27/2024   Level   % of Target
Cash
Vesting
   


2021
Resident
Vaccine
Rate
 
 
 
 
      Maximum   150%     95%  
      Actual   125%     93%  
      Target   100%     90%  
      Threshold   25%     75%  
         

 

   

 

   

 

 

 

 

 

     

 

 

 

 

 

 

 

2021 associate COVID-19 vaccine acceptance rate (50% sub-weighting)

    2/27/2024   Level   % of Target
Cash

Vesting

   


2021
Associate

Vaccine
Rate

 
 

 
 

      Maximum   150%     85%  
      Target   100%     75%  
      Threshold   25%     60%  
      Actual   0%     57%  
                     

 

   

 

   

 

 

 

 

 

2022 year-over-year improvement to same community RevPAR(1)

    25%     The Committee determined to use year-over-year growth in same community RevPAR to incentivize management to deliver long-term top-line growth by recovering occupancy lost due to the pandemic while maintaining rate discipline. RevPAR is a key performance metric utilized by the Board and management that reflects the impact of both occupancy and rate.   2/27/2024   Level   % of Target
Cash
Vesting
   

2022

Growth

 

 

      Maximum   150%     3.5%  
      Target   100%     2.5%  
      Threshold   50%     1.5%  
         

 

   

 

   

 

 

 

 

 

     

 

 

 

 

 

 

 

2023 year-over-year improvement to same community RevPAR (1)

    25%     2/27/2024   Level   % of Target
Cash
Vesting
   

2023

Growth

 

 

      Maximum   150%     3.5%  
      Target   100%     2.5%  
      Threshold   50%     1.5%  
                 

 

   

 

   

 

 

 

 

 

       

 

 

 

 

 

 

 

3-Year Relative TSR Compared to S&P Midcap 400 Index Companies (2)

    25%    

The relative total shareholder return (“TSR”) objective aligns our management’s priorities with those of our stockholders to establish and achieve long-term goals designed to increase the market value of our common stock relative to the constituent companies of a broad-based comparable index of companies.

 

  2/27/2025   Level   % of Target
Cash

Vesting

   
Relative
TSR Rank

 
      Maximum   150%     75th %ile  
      Target   100%     50th %ile  
                Threshold   50%     25th %ile  

 

(1)

Same community RevPAR means the average monthly senior housing resident fee revenues per available unit of the same community portfolio as reported in our SEC filings for the applicable performance period. Same community RevPAR is calculated as resident fee revenues, excluding revenue from our former Health Care Services segment, revenue for private duty services

 

 

  

 

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Executive Compensation

 

  provided to seniors living outside our communities, and entrance fee amortization, of the same community portfolio for the applicable fiscal year, divided by the weighted average number of available units in the same community portfolio for the applicable fiscal year, divided by twelve.

 

(2)

3-Year Relative TSR compares our compound annual TSR to the constituent companies of the S&P Midcap 400 index for the period beginning January 1, 2021 and ending December 31, 2023, assuming reinvestment of dividends or distributions. The award agreement provides that no additional cash beyond the target amount will be paid on such tranche if our compound annual TSR is negative for the performance period.

In February 2022 the Committee determined that our resident COVID-19 vaccine acceptance performance was 93% as of April 30, 2021, corresponding to a payout of 125% of target, and that the threshold level of performance had not been achieved for the associate COVID-19 vaccine acceptance objective as of April 30, 2021, resulting in forfeiture of the target amount associated with such performance objective. As a result, with respect to the 2021 performance period, the named executive officers forfeited the following amount of performance-based cash awards granted in 2021: Ms. Baier–$259,219; Mr. Swain–$90,234; Mr. Bowman–$13,160; Mr. White–$30,234; and Mr. Kaestner–$22,734. Earned amounts for the 2021 performance period will vest on February 27, 2024 (or November 19, 2024 in the case of Mr. Bowman’s October 2021 award), subject to the executives’ continued employment.

Long-Term Incentive Awards Granted to Mr. Bowman

In February 2021, the Committee granted long-term incentive awards to Mr. Bowman prior to his becoming an executive officer with a target grant value of $175,000 using a 75/25 grant value mix of time- and performance-based awards, consistent with his role as Division Vice President – Operations (West Division). Fifty percent of the target grant value was awarded in time-based RSUs (representing 17,191 shares) and twenty-five percent of the target grant value was awarded in performance-based cash, in each case generally consistent with the terms described above for the other named executive officers. The remaining twenty-five percent of Mr. Bowman’s target grant value was awarded in the form of time-based cash, which vested or is eligible to vest ratably in four annual installments beginning February 27, 2022, subject to continued employment. In connection with Mr. Bowman’s promotion to Executive Vice President – Community Operations effective October 1, 2021, the Committee granted long-term incentive awards to Mr. Bowman with a grant value of $144,932 using the 50/50 grant value mix described above for the other named executive officers. The amount of such awards reflected his partial-year of service in his new role. The vesting terms of such awards are generally consistent with those described above, except that his time-based RSU awards are eligible to vest ratably in four annual installments beginning November 19, 2022, and Mr. Bowman’s performance-based cash award is equally weighted among the 2021 vaccine acceptance and 2022 and 2023 year-over-year same community RevPAR growth objectives outlined above (i.e., the award does not include the relative TSR performance objective) and is eligible to vest on November 19, 2024. Mr. Bowman’s 2021 long-term incentive award agreements do not provide for a non-competition or non-solicitation clause; however, his 2022 long-term incentive award agreements contain such covenants consistent with the other named executive officers.

 

 

 

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Compensation Discussion and Analysis

 

 

 

2021 Compensation Results

Summary of Compensation Results

The table below sets forth the amount of compensation earned for 2021 by our named executive officers. The value of restricted shares and RSUs that vested is based on the closing price per share of our stock on the applicable vesting dates. The table excludes the amounts reported in the All Other Compensation column of the Summary Compensation Table (generally employer matching on our 401(k) plan, employer-paid premiums on life and disability insurance, and the incremental cost to us of relocation expenses).

 

    Base Salary Earned     Annual Incentive
Earned
    Value of Restricted
Shares and RSUs
that Vested
    Special
Performance
Compensation
    Total
Compensation
Earned
 

Ms. Baier

  $ 938,000     $ 1,488,391     $ 1,845,871     $ 100,000     $ 4,372,262  

Mr. Swain

  $ 575,000     $ 675,847     $ 384,524     $     $ 1,635,371  

Mr. Bowman

  $ 339,844     $ 253,921     $ 59,917     $     $ 653,682  

Mr. White

  $ 425,000     $ 349,677     $ 220,467     $ 73,000     $ 1,068,144  

Mr. Kaestner

  $ 390,000     $ 320,880     $ 208,100     $ 75,000     $ 993,980  

Ms. Kent (1)

  $ 405,370     $     $ 144,668     $     $ 550,038  

 

(1)

Ms. Kent voluntarily resigned effective October 1, 2021.

Annual Incentive Plan Results

As described above, we achieved in excess of target-level performance for each of the financial objectives under our annual incentive plan. Such performance reflects that we achieved ten consecutive months of weighted average consolidated senior housing occupancy growth in 2021 after twelve consecutive months of pandemic-related occupancy losses, while maintaining rate discipline. In accordance with the terms of the 2021 annual incentive plan, the results of the former Health Care Services segment were excluded from both the performance targets and our actual performance with respect to the FOI performance objectives as a result of our successfully closing the HCS Sale on July 1, 2021.

For the strategic objectives under our annual incentive plan, the Committee determined to exclude from our actual associate retention results any associate departures directly related to enforcement of our policy requiring associates to be vaccinated against COVID-19. We adopted such policy in the second half of 2021 after completing vaccine acceptance and education programs and the vaccine being widely available to our associates. The Board and management believed that adoption of the policy was necessary in light of the emergence and spread of the Delta variant of COVID-19, to continue promoting the health and wellbeing of our residents and associates, and to maintain the trust of residents and their families, and the Committee desired to remove any potential disincentives for enforcement of the policy.

 

 

  

 

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Executive Compensation

 

A summary of the achievement and payment to our named executive officers under the 2021 annual incentive plan applicable to executive officers is provided below. See “2021 Compensation Decisions–Annual Incentive Plan” above for the performance objectives and targets, and our actual performance, for each of the financial and strategic objectives.

 

     Financial Objectives
(70% Weighting)
            Strategic Objectives
(30% Weighting)
            Total  
     Achieved    Payout             Achieved    Payout             Achieved    Payout  

Ms. Baier

   160.7%    $ 1,423,462         17.1%    $ 64,929         117.6%    $ 1,488,391  

Mr. Swain

   $ 646,364         $ 29,483         $ 675,847  

Mr. Bowman (1)

   $ 118,536         $ 5,835         $ 124,370  

Mr. White

   $ 334,423         $ 15,254         $ 349,677  

Mr. Kaestner

   $ 306,882               $ 13,998               $ 320,880  

 

(1)

Mr. Bowman’s payout represents 109.3% achievement under the second half 2021 financial objectives and full-year strategic objectives of the 2021 annual incentive plan for his service beginning October 1, 2021. He also earned payout of $129,551 for his service as Division Vice President – Operations (West Division) through September 30, 2021, described below.

Mr. Bowman’s achievement and payment under the 2021 annual incentive plan applicable to the West Division for his service until September 30, 2021 is provided below. Such amount was paid in addition to the payment in the table above.

 

     Financial Objectives
(70% Weighting)
     Strategic Objectives
(30% Weighting)
            Total  
     Achieved      Payout      Achieved   Payout            Achieved      Payout  

Mr. Bowman

     135.6%      $ 111,482      51.3%   $ 18,069                110.3    $ 129,551  

Long-Term Incentive Awards Results

Summary of Vesting

During 2021, the named executive officers realized the compensation shown in the table below with respect to vesting of restricted shares and RSUs granted prior to 2021. The value of shares that vested is based on the closing price per share of our stock on the vesting date.

 

     Vesting of Time-Based
Restricted Shares and
RSUs
Granted in 2017–2020
     Vesting of Performance-Based
Restricted Shares Granted in
2017 (1)
            Total Vesting of Restricted
Shares and RSUs in 2021
 
     No. of Shares      Value      No. of Shares      Value            No. of Shares      Value  

Ms. Baier

     304,525      $ 1,772,335        12,635      $ 73,536                317,160      $ 1,845,871  

Mr. Swain

     64,171      $  384,524             $                64,171      $ 384,524  

Mr. Bowman

     10,295      $ 59,917             $                10,295      $ 59,917  

Mr. White

     37,161      $ 216,277        720      $ 4,190                37,881      $ 220,467  

Mr. Kaestner

     32,808      $  190,943        2,948      $ 17,157                35,756      $ 208,100  

Ms. Kent

     24,857      $ 144,668             $                24,857      $ 144,668  

 

(1)

Details regarding our performance relative to the applicable performance targets are provided in the section below.

 

 

 

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Compensation Discussion and Analysis

 

Results of Performance-Based Restricted Shares Eligible to Vest in 2021

During 2021, performance-based restricted shares awarded in 2017 and 2018 were eligible to vest, subject to continued employment and achievement of performance objectives established for each award by the Committee. The table below sets forth information regarding the performance objectives and targets, our results, and the percentage of shares that vested on February 27, 2021 based on those results. Achievement of the targeted level of performance (or above) would have resulted in the vesting of 100% of the applicable performance-based restricted shares, and vesting percentages were to be interpolated for performance between the steps shown in the table below.

 

Award
Year
 

Performance

Objective

  % of Shares
Eligible to Vest
  Goals   Results   Percent
that
Vested
2017   2020 ROI on Program Max Projects approved in 2017 and completed prior to the end of 2018 or approved prior to 2017 and completed during 2018 (1)  

100% (Target/Max) 60%

20% (Threshold)

  11.0% 9.0% 8.0%   13.8% (2)   100%
2018   Compound annual TSR, comparing the starting share price of $6.53 to the volume-weighted average price for the 15 trading days ending December 31, 2020 (3)   100% (Target/Max) 75%
50% (Threshold)
   23.91% 20.17% 16.20%   <0%   0%

 

(1)

Program Max is our development capital expenditures initiative through which we expand, renovate, reposition, or redevelop selected existing communities where economically advantageous.

 

(2)

As described in further detail in the 2021 Proxy Statement, the Committee took into advisement that our ROI performance was on track to exceed the target level of performance prior to the COVID-19 pandemic and that our actual ROI performance adjusted to include estimated lost revenue and exclude incremental expense due to COVID-19 was 13.8%, exceeding the target level of performance for 2020. The Committee exercised discretion to approve vesting on February 27, 2021 at target.

 

(3)

Compound annual TSR was calculated assuming reinvestment in our common stock of any dividends or distributions paid during the performance period. The $6.53 beginning share price represents our closing price per share on February 28, 2018, the date that Ms. Baier became President and Chief Executive Officer. With respect to the 2018 performance-based restricted shares eligible to vest on February 27, 2021, the following number of shares were forfeited as a result of failure to achieve the threshold level of performance: Ms. Baier–207,469 shares; and Mr. Swain–53,248 shares.

Special Performance Compensation

The Committee evaluated the extraordinary efforts of management to successfully negotiate and close the HCS Sale and determined to award Ms. Baier, Mr. White, and Mr. Kaestner cash amounts of $100,000, $25,000, and $75,000, respectively. We entered into the definitive transaction agreement to sell 80% of our equity in our home health, hospice and outpatient therapy business to affiliates of HCA Healthcare on February 24, 2021, and we successfully closed the transaction on July 1, 2021. The HCS Sale generated $312.6 million of net cash proceeds, which strengthened our liquidity at a crucial time during the COVID-19 pandemic, and we retained a 20% interest in the venture allowing us to participate in future growth. The Committee also determined to award special performance bonuses in the aggregate amount of $48,000 to Mr. White for his service as interim leader of the compensation and benefits function throughout 2021 following the departure of our former Executive Vice President – Human Resources, which additional compensation ceased at the end of 2021.

 

 

  

 

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Status of Outstanding Performance-Based Awards Granted Prior to 2021

As of December 31, 2021, the named executive officers held the number of performance-based restricted shares and RSUs awarded prior to 2021 as outlined in the table below. Vesting of the performance-based awards is subject to continued employment and achievement of performance objectives established by the Committee. Performance below the threshold level of achievement has resulted or will result in forfeiture of the applicable award, and vesting percentages will be interpolated between the steps shown in the table below.

 

Award

Year

   Performance
Objective
   Vesting
Date
   % of Award
Eligible to Vest
   Goals                  Shares at Target  

2019

   3-Year Relative TSR (1)(2)    2/27/2023   

150% (Max)

100% (Target)

50% (Threshold)

    75th %ile
50th %ile
25th %ile
                   Ms. Baier      75,541  
   Mr. Swain      20,674  
   Mr. White      7,156  
   Mr. Kaestner      5,566  

2020

   3-Year Relative TSR (1)    2/27/2024   

150% (Max)

100% (Target)

50% (Threshold)

    75th %ile
50th %ile
25th %ile
                   Ms. Baier      87,003  
   Mr. Swain      30,185  
   Mr. White      9,766  
   Mr. Kaestner    6,215  

 

(1)

3-Year Relative TSR compares our compound annual TSR to the constituent companies of the S&P Midcap 400 index for the three year period ending December 31, 2021 (for the 2019 award) and December 31, 2022 (for the 2020 award), assuming reinvestment of dividends or distributions. The award agreements provide that no additional shares beyond the target amount will be issued on such award if our compound annual TSR is negative for the applicable performance period.

 

(2)

Based on our actual relative TSR results for the three years ended December 31, 2021, all of the performance-based restricted shares eligible to vest on February 27, 2023 were forfeited on February 10, 2022 due to failure to achieve the threshold level of performance.

 

Other Compensation Policies

Annual Risk Assessment

In accordance with its charter, the Committee conducts an assessment annually of the relationship between our risk management policies and practices, corporate strategy, and our compensation arrangements. As part of this assessment, the Committee evaluates whether any incentive and other forms of pay encourage unnecessary or excessive risk taking. For our 2021 executive compensation program, the Committee concluded that the program, including the performance objectives and targets used for incentive compensation, is appropriately structured not to encourage unnecessary or excessive risk taking, and that any risks arising from the program are not reasonably likely to have a material adverse effect on us.

 

 

 

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Compensation Discussion and Analysis

 

Stock Ownership and Retention Guidelines

 

Our stock ownership and retention guidelines are applicable to certain of our officers, including our named executive officers, and are intended to further align the interests of our executives with those of our stockholders. Our named executive officers are expected to hold a number of shares with a minimum market value expressed as a     
      

 

Multiple of Base Salary     

 

 

Chief Executive Officer

  

 

5.0x

 

 

Chief Financial Officer

  

 

4.0x

 

 

Executive Vice Presidents                                                 

  

 

3.0x

    

multiple of their base salary as shown in the table. Unvested equity awards do not count toward the expected level of ownership, except that the estimated number of after-tax time-based equity awards scheduled to vest within 90 days may be counted towards compliance. The expected level of ownership must be achieved by the fifth anniversary of such officer’s becoming subject to the guidelines. We encourage our executives to retain shares obtained through our equity compensation programs, and until the expected ownership level is achieved the guidelines require each officer to retain at least 50% of after-tax shares obtained through those plans. This retention requirement also applies in situations where an officer has achieved the expected stock ownership level but changes in the market price of our stock or the officer’s base salary result in such officer’s failure to maintain the expected stock ownership level. All of our current named executive officers are in compliance with our stock ownership and retention guidelines and will be expected to retain at least 50% of their after-tax shares obtained through our equity compensation plans until they meet their applicable required holdings.

Policy on Derivatives, Hedging and Pledging

Our insider trading policy provides that no one subject to the policy, which includes all our directors, officers, employees and their immediate family members and controlled entities, may engage in short sales, puts, calls, or other derivative transactions, or in any hedging or monetization transactions (i.e., prepaid variable forward contracts, equity swaps, collars, and exchange funds), involving our securities. It also provides that our directors and officers may not pledge our securities as collateral for a loan, or hold our securities in a margin account.

Clawback Policies

The Committee has adopted a Clawback and Forfeiture Policy, which applies to our current and former officers as defined in Rule 16a-1 of the Exchange Act. By its terms, the policy will apply to all short-term and long-term cash or equity-based incentive compensation paid, earned, vested, or otherwise awarded based on performance objectives, beginning with the 2020 annual incentive plan and performance-based long-term incentive awards. The policy provides that in the event of any material financial restatement of our reported consolidated financial statements, or that the Committee otherwise determines that a financial metric used to determine the vesting or payment of any such performance-based compensation was calculated incorrectly in any material respect, the Committee, in its discretion, may require reimbursement of an amount equal to all or a portion of such performance-based compensation previously vested or paid for any performance periods which include any of the three full fiscal years immediately preceding the announcement of any financial restatement or the determination of any inaccuracy regarding calculation of a financial metric. The amount of the recoupment will be determined by the Committee in its discretion, up to the amount of such performance-based compensation previously paid or vested with respect to such officer that is in excess of the performance-based compensation that would have been received based on the correct financial metric or restated results. To the extent the Committee determines that any such amount should be recouped, the Committee may seek recovery by, among other things, requiring reimbursement of performance-based compensation previously paid, canceling or rescinding outstanding equity awards, adjusting or withholding unpaid compensation, or setting off against future grants of equity-based awards.

Our 2014 Omnibus Incentive Plan provides that any award thereunder shall be subject to forfeiture, reduction, or recoupment to the extent provided in our Clawback and Forfeiture Policy or any other future recoupment or clawback policy adopted by us. Awards thereunder continue to be subject to forfeiture, reduction, or recoupment to the extent we adopt a policy to comply with the requirements of any applicable laws, rules, regulations, or stock

 

 

  

 

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exchange listing requirements, including pursuant to final SEC rules under the Dodd-Frank Wall Street Reform and Consumer Protection Act and to the extent provided under applicable legal requirements which impose recoupment, including the Sarbanes-Oxley Act of 2002.

The long-term incentive award agreements for awards made in 2020 and after to the executive officers provide that in the event of a breach by the executive officer of the non-competition, non-solicitation, non-disparagement, or confidentiality covenants contained in the agreements, we will have the authority to cancel all such outstanding awards, cancel all shares of stock beneficially owned by the named executive officer that were issued in settlement of RSUs within 12 months on or prior to, or at any time after, the termination of the named executive officer’s employment, and recoup from the named executive officer any proceeds from such officer’s sale, transfer, or other disposition of any such cancellable shares or amounts paid under the award during such period.

To the extent the named executive officers are eligible to receive severance pay and benefits under Ms. Baier’s employment agreement and the Severance Policy (as defined below), as applicable, such agreement and policy provide that any breach of a restrictive covenant applicable to the named executive officer will result in the immediate and permanent cessation of payment of severance pay and benefits, the obligation of the named executive officer to repay to us upon our demand 90% of the amount or cost of such severance pay and benefits, and the obligation of the named executive officer to pay our costs and expenses to enforce such obligation.

Tax Considerations

Section 162(m) of the Internal Revenue Code places a limit of $1 million on the amount that a company may deduct in any one year with respect to compensation paid to any “covered employee.” The Committee believes that the interests of our stockholders are best served if it maintains flexibility in compensating executive officers in a manner designed to promote varying corporate goals even though some compensation awards may result in non-deductible compensation expense. In making decisions about executive compensation, the Committee also considers the impact of other tax laws, including Section 409A of the Internal Revenue Code regarding non-qualified deferred compensation and Section 280G of the Internal Revenue Code regarding compensation in connection with a change in control.

 

 

 

Employment Agreement and Severance Policies Applicable to Named Executive Officers

We are party to an employment agreement dated November 3, 2021 with Ms. Baier. The agreement amended and restated her prior employment agreement dated March 1, 2018, which had auto-renewed for one year following the initial three-year term. The new employment agreement has a five year term, subject to automatic extensions for additional one year periods, unless either we or Ms. Baier gives written notice to the other party no less than 90 days prior to the expiration of the term that the term will not be extended. The employment agreement provides an initial base salary of $938,000 per year (Ms. Baier’s then current annual base salary), which shall be reviewed annually and may be increased from time to time at the Board’s sole discretion. Ms. Baier’s base salary may not be reduced without Ms. Baier’s approval. Ms. Baier will have an annual cash incentive opportunity target of 135% of cumulative base salary paid during the calendar year (Ms. Baier’s then current annual cash incentive opportunity target), subject to the terms of our annual incentive plan for senior executive officers. At least annually, Ms. Baier will be considered for an award of long-term incentive awards at a level commensurate with her position and in a form and on terms no less favorable than as provided to our other senior executive officers. Any reduction to such long-term incentive awards will be subject to the definition of good reason. We will provide Ms. Baier with basic term life insurance benefits of at least 100% of her base salary at no cost to Ms. Baier. Termination of Ms. Baier’s employment within 30 days of the end of the initial term or any renewal term of the Employment Agreement following the provision of written notice of non-renewal by the Company will be treated as a termination of Ms. Baier’s employment without cause for purposes of the employment agreement and her then outstanding long-term incentive awards. Under her employment agreement, Ms. Baier is entitled to severance payments if her employment is terminated by us without

 

 

 

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cause or by her for good reason. Severance payments in connection with a change in control are “double trigger,” which requires the occurrence of a change in control followed by termination of employment within 18 months of the change in control by us without cause or by Ms. Baier for good reason. Any payments that are not deductible by us under Section 280G of the Internal Revenue Code will be cut back only to the extent that the cutback results in a better after-tax position for Ms. Baier. The employment agreement contains non-competition, non-solicitation, confidentiality, and mutual non-disparagement covenants. The non-competition restrictions will continue in effect during Ms. Baier’s employment and for one year following termination of employment. The non-solicitation restrictions will continue in effect during her employment and for two years following her termination of employment. The confidentiality and mutual non-disparagement obligations will apply during her employment and thereafter.

Our other named executive officers do not have employment agreements, but are eligible to participate in the Amended and Restated Tier I Severance Pay Policy dated February 10, 2022 (the “Severance Policy”). Under the Severance Policy, the participating named executive officers are entitled to severance payments if their employment is terminated by us without cause or, following a change in control, by the executive for good reason. The severance payments under the Severance Policy applicable in connection with a change in control are “double trigger,” which require the occurrence of a change in control followed by termination of employment by us without cause or by the executive for good reason. If payments pursuant to the Severance Policy and other arrangements are not deductible by us under Section 280G of the Internal Revenue Code, such payments shall be reduced (or repaid) in order to ensure our deduction of payments in connection with a change in control.

A detailed description of potential severance payments pursuant to the foregoing employment agreement and the Severance Policy, as well as the effect of certain terminations and a change in control pursuant to outstanding long-term incentive award agreements, is set forth under “Potential Payments Upon Termination or Change in Control” below.

 

 

 

2022 Compensation Decisions

When making annual compensation decisions for 2022, the Committee reviewed the compensation peer group used for 2021 decisions with the Consultant and, upon the Consultant’s recommendation, determined to remove Norwegian Cruise Line Holdings Ltd and to add Brinker International, Inc. and Mednax, Inc. The Consultant completed a market compensation study using this peer group. Following its review of our executive compensation program, the Committee approved the principal elements of compensation of our named executive officers for 2022 as summarized in the table below. Percentage changes from 2021 are based on the compensation arrangements in place as of December 31, 2021.

 

    2022 Base
Salary
    Change v.
2021
    2022 Target
Annual
Incentive
Opportunity
    Change v.
2021
    2022 Grant
Value of
Long-
Term
Incentive
Awards(1)
    Change v.
2021 (1)
    2022 Target
Total Direct
Compensation
    Change v.
2021
 

Ms. Baier

    $975,000       4%       135%       –%       $5,000,000       -10%       $7,291,250       -6%  

Mr. Swain

    $590,000       3%       100%       –%       $1,775,000       -8%       $2,955,000       -4%  

Mr. Bowman

    $475,000       6%       100%       –%       $850,000       13%       $1,800,000       9%  

Mr. White

    $465,000       9%       80%       14%       $650,000       1%       $1,487,000       9%  

Mr. Kaestner

    $430,000       10%       80%       14%       $450,000       -7%       $1,224,000       7%  

 

(1)

The dollar amount of the long-term incentive awards, and the percentage change versus 2021, is based on the grant value of such awards (i.e., the number of RSUs granted at target performance, multiplied by the stock price on the date of grant, and, for the 2021 performance-based cash awards, the target amount of cash).

 

 

  

 

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The 2022 annual incentive plan, as approved by the Committee, continues to be based on company financial and strategic objectives weighted 70% and 30% of target, respectively, and will be measured on an annual basis. All amounts earned will be paid out following the end of the year. The financial objectives are our full-year 2022 consolidated portfolio RevPAR and consolidated facility operating income (FOI) excluding pandemic-related expenses, with the target levels of performance generally reflective of our 2022 budget approved by the Board at the beginning of 2022. The strategic objectives include retention of key community leadership at our consolidated comparable community portfolio and retention of our corporate associates. The 2022 plan also includes an ESG-related strategic objective focused on our diversity initiatives. Such objective will measure our progress on designing, developing, and deploying the Brookdale EXPAND program and completing an initial cohort. The Brookdale EXPAND program is designed to help develop and prepare a diverse cohort of high potential community leaders who have interest in future roles as executive directors of our communities.

A 50/50 grant value mix of time- and performance-based long-term incentive awards was used for the named executive officers, consistent with the 2021 program. The Committee evaluated the number of shares remaining available for issuance under our 2014 Omnibus Incentive Plan and considered the benefits of aligning executives’ interests with those of our stockholders created by awarding long-term compensation in the form of equity. For the 2022 program, the Committee determined to return to its pre-pandemic practice of awarding all long-term incentive awards in the form of RSUs. The performance objectives for the performance-based RSUs include year-over-year same community RevPAR growth for fiscal 2022, 2023, and 2024, weighted 75%, and TSR relative to the companies in the S&P 400 Index for the three-year period ending December 31, 2024, weighted 25%. Any performance-based RSUs earned from achievement of the RevPAR growth objectives are eligible to vest on February 27, 2025, subject to continued employment. Any performance-based RSUs earned from achievement of the relative TSR objective are eligible to vest on February 27, 2026, subject to continued employment. Performance at the threshold level of achievement for a performance objective will result in vesting of 25% for the RevPAR growth objectives and 50% for the relative TSR objective. Performance at the target and maximum level of achievement will result in vesting of 100% and 150%, respectively, for such objectives. Vesting percentages will be interpolated for performance between the levels. No additional RSUs beyond the target RSUs will be issued on the relative TSR performance objective if our compound annual TSR is negative for the performance period.

 

 

 

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Compensation Committee Report

 

Compensation Committee Report

The Compensation Committee has reviewed and discussed the disclosure set forth above under the heading “Compensation Discussion and Analysis” with management and, based on the review and discussions, it has recommended to the Board that the “Compensation Discussion and Analysis” be included herein.

Respectfully submitted by the Compensation Committee of the Board,

COMPENSATION COMMITTEE

Victoria L. Freed, Chair

Frank M. Bumstead

Denise W. Warren

 

 

  

 

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Summary Compensation Table for 2021

The following summary compensation table sets forth information concerning the compensation earned by, awarded to, or paid to our named executive officers for the periods indicated.

 

Name and Principal Position (1)

  Year     Salary
($)
    Bonus
($) (2)
    Stock
Awards
($) (3)
    Non-Equity
Incentive Plan
Compensation
($)(4)
    All Other
Compensation
($) (5)
   

Total

($)

 

Lucinda M. Baier

President and

Chief Executive Officer

    2021       938,000       100,000       2,765,005       1,488,391       8,852       5,300,248  
    2020       938,000       1,044,698       4,939,153       158,288       7,331       7,087,470  
    2019       910,000       –         4,773,420       657,295       10,186       6,350,901  

Steven E. Swain

Executive Vice President and

Chief Financial Officer

    2021       575,000       –         962,504       675,847       8,193       2,221,544  
    2020       575,000       474,375       1,713,588       71,875       6,918       2,841,756  
    2019       515,000       –         1,306,414       275,545       20,490       2,117,449  

Kevin W. Bowman

Executive Vice President – Community Operations

    2021       339,844       –         159,968       253,921       16,847       770,580  

Chad C. White

Executive Vice President,

General Counsel and
Secretary

    2021       425,000       73,000       322,502       349,677       7,143       1,177,322  
    2020       425,000       245,438       554,395       37,188       5,643       1,267,364  
    2019       397,500       40,000       452,219       148,874       7,807       1,046,400  

H. Todd Kaestner

Executive Vice President – Corporate Development and President – CCRCs

    2021       390,000       75,000       242,503       320,880       7,596       1,035,979  
    2020       355,000       205,013       352,797       31,063       7,182       951,055  
    2019       344,500       –         351,731       129,024       9,134       834,389  

Cindy R. Kent

Former Executive Vice President and President – Senior Living Community Operations

    2021       405,370       –         625,001       –         14,168       1,044,539  
    2020       509,103       287,462       1,157,995       63,638       91,129       2,109,327  
                                                       

 

(1)

The named executive officers served in the positions noted in the table at all times during the years presented, except that: Mr. Bowman served as Division Vice President – Operations (West Division) before being appointed to his current role effective October 1, 2021; Mr. Kaestner served as Executive Vice President – Asset Management and Division President – Entry Fee from July 1, 2019 to July 31, 2021 and Executive Vice President – Corporate Development prior to that; and Ms. Kent served as Executive Vice President and President of Senior Living from January 6, 2020 through July 31, 2021 and Executive Vice President and President – Senior Living Community Operations from August 1, 2021 until her resignation effective October 1, 2021.

 

(2)

The 2021 amount for Ms. Baier and Mr. Kaestner consists of, and for Mr. White includes, a cash award paid to each of them for their successful closing of the Company’s sale of 80% of its equity in its Health Care Services segment on July 1, 2021. Mr. White’s 2021 amount also includes $48,000 of special performance amounts paid for his service as interim leader of the compensation and benefits functions throughout 2021.

 

(3)

Represents the aggregate grant date fair value of time-based RSUs awarded in 2021 and time- and performance-based RSUs and restricted stock awarded in prior years, in each case computed in accordance with ASC 718. See Note 2 to our Consolidated Financial Statements included in our 2021 Annual Report for a summary of the assumptions made in the valuation of these awards.

 

(4)

Represents the payout of each named executive officer’s annual cash incentive opportunity with respect to performance in the applicable year.

 

(5)

For each of the named executive officers, the 2021 amount includes the employer matching contribution to our 401(k) Plan and premiums on Company-provided life and disability insurance. For Mr. Bowman, the 2021 amount also includes the incremental cost to the Company of $12,549 for relocation assistance provided, including associated tax gross ups of $2,485. For Ms. Kent, the 2021 amount also includes $10,385, representing the payout of a portion of her accrued paid time off (PTO) balance in accordance with our PTO policy.

 

 

 

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Grants of Plan-Based Awards

 

Grants of Plan-Based Awards

The following table summarizes grants of plan-based awards made to our named executive officers in 2021. To the extent we declare cash or stock dividends on our shares of common stock, the RSUs awarded will accrue cash equivalents or shares to be paid only to the extent the underlying RSUs ultimately vest.

 

Name

  Grant Date    

Estimated Possible Payouts

Under Non-Equity Incentive

Plan Awards

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

Grant Date

Fair Value of
Stock Awards

($)

 
 

Threshold

($)

   

Target

($)

   

Maximum

($)

 

Ms. Baier

    –  (1)       316,575       1,266,300       2,342,655      
    2/22/2021  (2)       1,209,688       2,765,000       4,147,500      
    2/22/2021  (3)                               543,223       2,765,005  

Mr. Swain

    –  (1)       143,750       575,000       1,063,750      
    2/22/2021  (2)       421,094       962,500       1,443,750      
    2/22/2021  (3)                               189,097       962,504  

Mr. Bowman

    –  (4)       29,363       117,451       217,285      
    2/22/2021  (2)       19,141       43,750       65,625      
    2/22/2021  (3)             17,191       87,502  
    2/22/2021  (5)       –         43,750       –        
    –  (1)       28,448       113,793       210,517      
    10/28/2021  (6)       30,194       72,466       108,699      
    10/28/2021  (3)                               10,832       72,466  

Mr. White

    –  (1)       74,375       297,500       550,375      
    2/22/2021  (2)       141,094       322,500       483,750      
    2/22/2021  (3)                               63,360       322,502  

Mr. Kaestner

    –  (1)       68,250       273,000       505,050      
    2/22/2021  (2)       106,094       242,500       363,750      
    2/22/2021  (3)                               47,643       242,503  

Ms. Kent

    –  (1)       101,342       405,370       749,934      
    2/22/2021  (2)       273,438       625,000       937,500      
    2/22/2021  (3)                               122,790       625,001  

 

(1)

Amounts represent the threshold, target, and maximum payout levels under our 2021 annual incentive plan applicable to the executive officers, as described above. Amounts for Mr. Bowman reflect his participation in the plan beginning on October 1, 2021 in connection with his promotion. Amounts for Ms. Kent reflect her partial year of service. The actual payouts are reported in the Summary Compensation Table as Non-Equity Incentive Plan Compensation for 2021 in the following amounts: Ms. Baier–$1,488,391; Mr. Swain–$675,847; Mr. Bowman–$124,370; Mr. White–$349,677; Mr. Kaestner–$320,880; and Ms. Kent–$0.

 

 

  

 

2022 PROXY STATEMENT

 

 

 

 

 

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Table of Contents

 

Executive Compensation

 

(2)

Represents performance-based awards granted under the 2014 Omnibus Incentive Plan, or for Ms. Baier outside the 2014 Omnibus Incentive Plan, denominated in cash (i.e., not indexed to or payable in stock). Seventy-five percent of the target cash awards are eligible to vest on February 27, 2024 and twenty-five percent are eligible to vest on February 27, 2025, in each case subject to continued employment and achievement of performance objectives established by the Committee. The portion of the target award eligible to vest on February 27, 2024 is divided into three equal tranches: resident and associate COVID-19 vaccine participation rate during 2021 and one-year same-community RevPAR growth for years 2022 and 2023. The portion of the target award eligible to vest on February 27, 2025 is subject to a relative TSR performance objective for the three year period ending December 31, 2023. Achievement at the threshold, target, and maximum or above performance levels will result in vesting of 50% (or 25% in the case of each of the vaccine participation objectives), 100%, and 150% of the target cash amount, respectively. No additional cash beyond the target cash amount will be paid on the relative TSR performance objective if our compound annual TSR is negative for the performance period. Vesting percentages will be interpolated for performance between the foregoing levels. Failure to achieve the threshold performance level will result in forfeiture of the applicable portion of such cash awards. Ms. Kent’s award was forfeited on October 1, 2021 in connection with her resignation.

 

(3)

Represents time-based RSUs granted under our 2014 Omnibus Incentive Plan which are eligible to vest ratably in four annual installments beginning on February 27, 2022 (November 19, 2022 for Mr. Bowman’s October 28, 2021 award), subject to continued employment. Each RSU is payable in the form of one share of our common stock upon vesting. Ms. Kent’s award was forfeited on October 1, 2021 in connection with her resignation.

 

(4)

Amounts represent the threshold, target, and maximum payout levels under our 2021 annual incentive plan applicable to the West Division leadership, as described above, and reflect Mr. Bowman’s participation in the plan until his promotion on October 1, 2021. The actual payout of $129,551 is reported in the Summary Compensation Table as Non-Equity Incentive Plan Compensation for 2021.

 

(5)

Represents a time-based award denominated in cash (i.e., not indexed to or payable in stock), which is eligible to vest ratably in four annual installments beginning on February 19, 2022, subject to continued employment.

 

(6)

Represents performance-based awards granted under the 2014 Omnibus Incentive Plan denominated in cash (i.e., not indexed to or payable in stock). The award is eligible to vest on November 19, 2024 subject to continued employment and achievement of performance objectives established by the Committee. The award is divided into three equal tranches: resident and associate COVID-19 vaccine participation rate during 2021 and one-year same-community RevPAR growth for years 2022 and 2023. Achievement at the threshold, target, and maximum or above performance levels will result in vesting of 50% (or 25% in the case of each of the vaccine participation objectives), 100%, and 150% of the target cash amount, respectively. Vesting percentages will be interpolated for performance between those levels. Failure to achieve the threshold performance level will result in forfeiture of the applicable portion of such cash award.

 

 

 

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Table of Contents

 

Outstanding Equity Awards at Fiscal Year-End

 

Outstanding Equity Awards at Fiscal Year-End

The following table summarizes the outstanding equity awards held by each of our named executive officers as of December 31, 2021, with market values of such awards based on $5.16 per share, the closing market price of our stock on such date.

 

          Stock Awards  

Name

  Grant Date     Number of Shares
or Units of Stock
That Have Not
Vested (#)(1)
    Market Value of
Shares or Units of
Stock That Have
Not Vested ($)
    Equity Incentive Plan
Awards: Number of
Unearned Shares,
Units or Other
Rights That Have
Not Vested (#)
    Equity Incentive Plan
Awards: Market or
Payout Value of
Unearned Shares, Units
or Other Rights That
Have Not Vested ($)
 

Ms. Baier

   

 

1/5/2018

 

 

 

    19,370       99,949      
   

 

1/5/2018

 

 

 

   

 

19,370

 

 

 

   

 

99,949

 

 

 

   
   

 

3/5/2018

 

 

 

   

 

51,868

 

 

 

   

 

267,639

 

 

 

   
   

 

2/11/2019

 

 

 

   

 

151,082

 

 

 

   

 

779,583

 

 

 

   

 

37,771  (2)

 

 

 

   

 

194,898

 

 

 

   

 

2/12/2020

 

 

 

   

 

261,009

 

 

 

   

 

1,346,806

 

 

 

   

 

43,502  (3)

 

 

 

   

 

224,470

 

 

 

   

 

2/22/2021

 

 

 

   

 

543,223

 

 

 

   

 

2,803,031

 

 

 

               

Mr. Swain

   

 

9/10/2018

 

 

 

   

 

13,313

 

 

 

   

 

68,695

 

 

 

   
   

 

2/11/2019

 

 

 

   

 

41,349

 

 

 

   

 

213,361

 

 

 

   

 

10,337 (2)

 

 

 

   

 

53,339

 

 

 

   

 

2/12/2020

 

 

 

   

 

90,555

 

 

 

   

 

467,264

 

 

 

   

 

15,093 (3)

 

 

 

   

 

77,880

 

 

 

   

 

2/22/2021

 

 

 

   

 

189,097

 

 

 

   

 

975,741

 

 

 

               

Mr. Bowman

   

 

1/5/2018

 

 

 

   

 

2,418

 

 

 

   

 

12,477

 

 

 

   
   

 

2/11/2019

 

 

 

   

 

5,955

 

 

 

   

 

30,728

 

 

 

   
   

 

2/12/2020

 

 

 

   

 

9,972

 

 

 

   

 

51,456

 

 

 

   
   

 

2/22/2021

 

 

 

   

 

17,191

 

 

 

   

 

88,706

 

 

 

   
   

 

10/28/2021

 

 

 

   

 

10,832

 

 

 

   

 

55,893

 

 

 

               

Mr. White

   

 

1/5/2018

 

 

 

   

 

4,520

 

 

 

   

 

23,323

 

 

 

   
   

 

1/5/2018

 

 

 

   

 

4,520

 

 

 

   

 

23,323

 

 

 

   
   

 

2/11/2019

 

 

 

   

 

14,313

 

 

 

   

 

73,855

 

 

 

   

 

3,578 (2)

 

 

 

   

 

18,462

 

 

 

   

 

2/12/2020

 

 

 

   

 

29,298

 

 

 

   

 

151,178

 

 

 

   

 

4,883 (3)

 

 

 

   

 

25,196

 

 

 

   

 

2/22/2021

 

 

 

   

 

63,360

 

 

 

   

 

326,938

 

 

 

               

Mr. Kaestner

   

 

1/5/2018

 

 

 

   

 

4,520

 

 

 

   

 

23,323

 

 

 

   
   

 

1/5/2018

 

 

 

   

 

4,520

 

 

 

   

 

23,323

 

 

 

   
   

 

2/11/2019

 

 

 

   

 

11,133

 

 

 

   

 

57,446

 

 

 

   

 

2,783 (2)

 

 

 

   

 

14,360

 

 

 

   

 

2/12/2020

 

 

 

   

 

18,644

 

 

 

   

 

96,203

 

 

 

   

 

3,108 (3)

 

 

 

   

 

16,037

 

 

 

   

 

2/22/2021

 

 

 

   

 

47,643

 

 

 

   

 

245,838

 

 

 

               

 

(1)

Represents time-based restricted shares or RSUs, the vesting of which is subject to continued employment. The awards have vested or are eligible to vest ratably in four annual installments beginning on February 27 in the year following the year of grant, except that: with respect to the first award with a grant date of January 5, 2018 for Ms. Baier and Messrs. White and Kaestner, 75% of the award was eligible to vest and vested on February 27, 2021 and 25% of the award was eligible to vest and vested on February 27, 2022; with respect to Mr. Swain’s September 2018 award, the award has vested or is eligible to vest ratably in four annual installments beginning on November 19, 2019; and with respect to Mr. Bowman’s October 2021 award, the award is eligible to vest ratably in four annual installments beginning on November 19, 2022.

 

(2)

Represents performance-based restricted shares which were eligible to vest on February 27, 2023 subject to continued employment and the achievement of specified performance targets based on our 3-year relative TSR for the period of January 1, 2019 to December 31, 2021. The number of shares reported represents the threshold level of performance. Upon the Committee’s determination that the threshold level of performance had not been achieved, the named executive officers forfeited the following number of restricted shares on February 10, 2022: Ms. Baier–75,541; Mr. Swain–20,674; Mr. White–7,156; and Mr. Kaestner–5,566.

 

(3)

Represents performance-based RSUs eligible to vest on February 27, 2024 subject to continued employment and the achievement of specified performance targets based on our 3-year relative TSR for the period of January 1, 2020 to December 31, 2022. The number of shares reported represents the threshold level of performance.

 

 

  

 

2022 PROXY STATEMENT

 

 

 

 

 

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Table of Contents

 

Executive Compensation

 

Stock Vested for 2021

The following table summarizes the vesting of time-based restricted shares and RSUs and the value realized by our named executive officers as a result of such vesting during 2021.

 

     Stock Awards  
     Number of Shares Acquired on Vesting (#)      Value Realized on Vesting ($) (1)  
  Ms. Baier      317,160        1,845,871  
  Mr. Swain      64,171        384,524  
  Mr. Bowman      10,295        59,917  
  Mr. White      37,881        220,467  
  Mr. Kaestner      35,756        208,100  
  Ms. Kent      24,857        144,668  

 

(1)

The value realized is based on the closing market price of the underlying stock on the date the shares vested (or the most recent trading day if such date was not a trading day): February 27, 2021 (Ms. Baier–317,160 shares; Mr. Swain–50,859 shares; Mr. Bowman–10,295 shares; Mr. White–37,881 shares; Mr. Kaestner–35,756 shares; and Ms. Kent–24,857 shares); and November 19, 2021 (Mr. Swain–13,312 shares).

Pension Benefits

None of our named executive officers participates in or has account balances in qualified or non-qualified defined benefit plans sponsored by us. The Committee may elect to adopt qualified or non-qualified defined benefit plans in the future if it determines that doing so is in our best interests.

Nonqualified Deferred Compensation

None of our named executive officers participates in or has an accrued benefit in non-qualified defined contribution plans or other non-qualified deferred compensation plans maintained by us. The Committee may elect to adopt non-qualified defined contribution plans or other non-qualified deferred compensation plans in the future if it determines that doing so is in our best interests.

 

 

 

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Potential Payments Upon Termination or Change in Control

 

Potential Payments Upon Termination or Change in Control

The following table sets forth potential amounts payable upon termination of employment or a change in control to our named executive officers assuming termination of employment on December 31, 2021, with long-term equity incentive amounts based on $5.16 per share, the closing market price of our stock on December 31, 2021.

 

Name/Benefit

  Voluntary
Resignation by
Executive
($)
    Termination
by us for
Cause
($)
    Termination
by us without
Cause
($)
    Termination
by us without
Cause
following a
Change in
Control
($)
    Termination
by Executive
for Good
Reason
($)
    Disability
($)
    Death
($)
 

Ms. Baier

             

Salary

                1,407,000       1,876,000       1,407,000              

Pro-Rata Bonus (1)

                1,488,391       1,488,391       1,488,391       1,488,391       1,488,391  

Severance Bonus

                1,899,450       2,532,600       1,899,450              

PTO

    54,113       54,113       54,113       54,113       54,113       54,113       54,113  

COBRA

                17,885       17,885       17,885              

Accelerated Vesting of Long-Term Incentive Awards (2)

                2,439,049       8,351,674       2,239,151       2,439,049       2,439,049  

Total

    54,113       54,113       7,305,888       14,320,663       7,106,990       3,981,553       3,981,553  

Mr. Swain

             

Salary

                575,000       862,500                    

Pro-Rata Bonus (1)

                675,847       675,847             675,847       675,847  

Severance Bonus

                575,000       862,500                    

PTO

    21,020       21,020       21,020       21,020       21,020       21,020       21,020  

COBRA

                10,251       15,377                    

Accelerated Vesting of Long-Term Incentive Awards (2)

                725,452       2,753,080             725,452       725,452  

Total

    21,020       21,020       2,582,570       5,190,324       21,020       1,422,319       1,422,319  

Mr. Bowman

             

Salary

                450,000       675,000                    

Pro-Rata Bonus (1)

                253,921       253,921             253,921       253,921  

Severance Bonus

                231,244       346,867                    

PTO

    25,962       25,962       25,962       25,962       25,962       25,962       25,962  

COBRA

                16,183       24,275                    

Accelerated Vesting of Long-Term Incentive Awards (2)

                60,702       383,790             60,702       60,702  

Total

    25,962       25,962       1,038,012       1,709,815       25,962       340,585       340,585  

Mr. White

             

Salary

                425,000       637,500                    

Pro-Rata Bonus (1)

                349,677       349,677             349,677       349,677  

Severance Bonus

                297,500       446,250                    

PTO

    24,520       24,520       24,520       24,520       24,520       24,520       24,520  

COBRA

                                         

Accelerated Vesting of Long-Term Incentive Awards (2)

                266,089       941,275