Compensation provided to Ventas's executive officers generally consists of base salary, annual cash incentive compensation, long-term incentive compensation and certain perquisites and benefits. See 2009 Proxy Statement.

Annual Cash Incentive Compensation

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

The specific performance measures and their weightings under the annual cash incentive plan for 2008, as set by the Compensation Committee, were as follows:

• Normalized Funds from Operations ("FFO") per share. Normalized FFO per share accounted for 25% of the value of the annual cash incentive award.
• One-year relative total shareholder return. The Company's total shareholder return for 2008 compared to the total shareholder return of the reference group approved by the Compensation Committee for the same period accounted for 25% of the value of the annual cash incentive award.
• Investment volume. Investment volume at the end of 2008 accounted for 15% of the value of the annual cash incentive award.
• Pro forma fixed charge coverage. The Company's pro forma fixed charge coverage ratio at the end of 2008 accounted for 10% of the value of the annual cash incentive award.
• Individual performance. The remaining 25% of the value of the annual cash incentive award was to be determined in the discretion of the Compensation Committee taking into account the individual's performance under his or her specified management objectives.

In January 2009, the Compensation Committee determined that each of the executive officers had achieved a high level of performance between the target and maximum levels overall under the annual cash incentive plan for 2008. Accordingly, the annual cash incentive awards granted to the executive officers were between their respective target and maximum levels.

Long-Term Incentive Compensation

The Compensation Committee believes that a substantial portion of each executive officer's compensation should be in the form of long-term incentive compensation. Long-term incentive awards are based on a number of criteria as determined by the Compensation Committee, including the achievement of pre-established corporate and individual goals for the performance year. At the beginning of each year, a range of earnings opportunity, expressed as multiples of base salary and corresponding to three levels of performance (threshold, target and maximum), is established for each executive. Long-term incentive awards are then determined and granted in the first quarter of the year following the performance year.

For 2008, the value of the long-term incentive award was based on the accomplishment of a series of corporate objectives, including total shareholder return (absolute and relative to the Company's peers), the integration of the assets and operations acquired through the Sunrise REIT acquisition, effective diversification, continued development of the Company's medical office building business, strong credit characteristics, balance sheet management and capital markets execution, business ethics and reputation and individual performance, and other factors deemed appropriate by the Compensation Committee, in each case at the discretion of the Compensation Committee. While there was no specific weighting or target level attributed to any of these factors, the Compensation Committee carefully analyzed these factors in determining the 2008 long-term incentive awards.

In January 2009, the Compensation Committee determined that each of the executive officers had performed well against the performance objectives under the long-term incentive plan for 2008. Accordingly, the long-term incentive awards granted to the executive officers equaled 25% of the range between their respective target and maximum levels.

For 2008, long-term incentive compensation consisted of equity awards in the form of stock options (30%) and shares of restricted stock (70%) made pursuant to the Company's 2006 Incentive Plan. The Compensation Committee recognizes that while the annual cash incentive plan provides rewards for positive short-term and mid-term performance, the interests of stockholders are served by giving key employees the opportunity to participate in the appreciation of the Company's common stock through grants of stock options and restricted stock awards. The use of equity awards encourages management to create stockholder value over the long term because the full benefit of the compensation package cannot be realized unless an appreciation in price of the common stock occurs over time. In addition, equity awards are an effective tool for management retention because vesting occurs over a number of years.

These disclosures are consistent with the Company's philosophy and record of open communication with its stakeholders. Ventas management, subject to careful oversight of its Board of Directors, will continue to ensure that its interests remain aligned with those of its shareholders.

Share Withholding Program to Satisfy Minimum Tax Withholding Obligations

The Company has a Share Withholding Program under its 2006 Incentive Plan. The Share Withholding Program permits employees of the Company who receive restricted share awards to satisfy their minimum tax withholding obligations from the restricted shares as they vest. If an employee elects to participate in the Company's Share Withholding Program with respect to any vesting of restricted shares, the Company will deduct from the restricted shares due to the employee that number of shares equal in value to the employee's minimum tax withholding obligation. If an executive employee of the Company participates in the Company's Share Withholding Program, the employee will be obligated to file a Form 4 for the withheld shares.

Sales of Shares Pursuant to Commission Rule 10b5-1

Certain executive officers of the Company from time to time may adopt non-discretionary, written trading plans that comply with Commission Rule 10b5-1, or otherwise monetize their equity-based compensation. Commission Rule 10b5-1 provides executives with a method to monetize their equity-based compensation in an automatic and non-discretionary manner over time. All such activities will be subject to compliance with the Company's Minimum Stock Ownership Plan, Company policies, and applicable laws and regulations.

Debra A. Cafaro 10b5-1 Plan

On August 8, 2008, Debra A. Cafaro, Chairman, President and Chief Executive Officer of Ventas, Inc. (the "Company"), adopted a written, non-discretionary sales plan for 2009 that complies with the requirements of Rule 10b5-1(c) promulgated under the Securities Exchange Act of 1934, as amended. On the date Ms. Cafaro's 10b5-1 plan was adopted, the closing price of the Company's common stock on the New York Stock Exchange was $47.24 per share.

Ms. Cafaro's 10b5-1 plan covers the sale, beginning in January 2009, of up to 185,765 shares of Company common stock owned by Ms. Cafaro (although less than the maximum number of shares are expected to be sold), subject to certain conditions. Ms. Cafaro has never modified or amended the plan. Since 2002, Ms. Cafaro has sold shares of Company common stock through several similar 10b5-1 plans entered into for estate, tax and financial planning purposes.

With respect to 41,547 shares of common stock that were directed by Ms. Cafaro to be sold during the first quarter of 2009 to pay taxes, the 2009 10b5-1 plan stipulated a minimum sale price of $35 per share. The plan further provides that any shares not sold on a given sale date due to an inability to execute the sale at or above the minimum sale price are carried forward to the next succeeding trading day(s) until such condition is met.

Because the trading price of the Company's common stock, as quoted on the New York Stock Exchange, did not exceed the minimum sale price specified in Ms. Cafaro's 10b5-1 plan at any time since January 1, 2009, no shares had been sold under the plan prior to July 30, 2009. On July 30, 2009, however, the Company's common stock traded above $35 per share for the first time in 2009. Accordingly, on that date, 41,547 shares of Company common stock held for sale under Ms. Cafaro's 10b5-1 plan were sold by the plan agent pursuant to the terms of the plan and without any subsequent direction by Ms. Cafaro. The sale price for those shares averaged $35.18 per share.

After taking into account the July 30, 2009 non-discretionary sale of 41,547 shares under Ms. Cafaro's 10b5-1 plan, Ms. Cafaro currently owns more than 1.4 million shares (as of October 19, 2009) of the Company's common stock and options to purchase common stock, none of which are pledged. Ms. Cafaro's 2009 10b5-1 plan is expected to expire in December 2009.

See Minimum Stock Ownership Plan for Executives.

T. Richard Riney 10b5-1 Plan

T. Richard Riney, Executive Vice President, Chief Administrative Officer, General Counsel and Corporate Secretary of the Company, adopted a non-discretionary, written trading plan that complies with Commission Rule 10b5-1. Mr. Riney's 10b5-1 plan covers the sale, beginning in October 2008, of up to 72,000 shares of common stock owned by him and is expected to be in effect through September 2009.

Mr. Riney's proposed disposition of a portion of his equity-based compensation in Ventas pursuant to his Plan is being effected for estate, tax and financial planning purposes.

As of October 19, 2009, Mr. Riney beneficially owned 0.4 million shares of Ventas common stock and options. See Minimum Stock Ownership Plan for Executives.

Updated: October 19, 2009