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 2010 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 2009, as set by the Compensation Committee, were as follows:

• One-year relative total shareholder return. The Company's total shareholder return for 2009 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.
  
  
• Company Performance Based upon Specified Criteria: Company performance based upon a number of specified qualitative criteria as determined by the Compensation Committee accounted for 40% of the value of the annual cash incentive award. For 2009, the specified criteria under this performance measure consisted of normalized FFO per share outcome, prudent acquisitions (if any), balance sheet and liquidity, solid management of the Company's senior living operating portfolio, management of tenant/borrower defaults (if any), and capital markets execution, 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 value of the 2009 annual cash incentive awards.
  
  
• Individual performance. The remaining 35% 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 established for 2009.

In January 2010, 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 2009. 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 2009, the value of the long-term incentive award was based primarily on whether management acted with due caution to protect and enhance the Company's stockholders' best interests in recognition of the then current market conditions in acquisitions, liquidity, finance, capital markets and similar matters. In addition, the Compensation Committee considered the accomplishment of a series of corporate objectives, including total shareholder return (absolute and relative to the Company's peers), strong credit characteristics, balance sheet and liquidity management and capital markets execution, infrastructure investments, effective management of the Company's triple-net leased properties and the Company's senior living operating portfolio, tenant/operator diversification, continued development of the Company's medical office building business, the outcome in the Company's litigation with HCP, Inc., business ethics and reputation and individual performance, and other appropriate factors, in each case at the discretion of the Compensation Committee. While there was no specific weighting or target level attributed to any of these factors, the Compensation Committee carefully analyzed these factors in determining the 2009 long-term incentive awards.

In January 2010, the Compensation Committee determined that each of the executive officers had performed well against the performance objectives under the long-term incentive plan for 2009. Accordingly, the long-term incentive awards granted to the executive officers were between their respective target and maximum levels.

For 2009, 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 management actions that impact short-term and mid-term performance results, the interests of stockholders are also 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 March 8, 2010, Debra A. Cafaro, Chairman, President and Chief Executive Officer of the Company, adopted a written, non-discretionary sales plan 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 $45.39 per share.

Ms. Cafaro's 10b5-1 plan covers the sale at an average minimum sale price exceeding $56 per share, beginning in April 2010, of up to 312,225 shares of Company common stock owned by Ms. Cafaro or expected to be acquired by her through the exercise of options, subject to certain conditions. Ms. Cafaro's proposed disposition of a portion of her equity-based compensation in Ventas pursuant to her 10b5-1 plan is being effected for estate, tax and financial planning purposes. Since 2002, Ms. Cafaro has sold shares of Company common stock through several similar 10b5-1 plans. Ms. Cafaro's 10b5-1 plan is expected to be in effect until March 2011.

On March 8, 2010, a trust (the “Cafaro Trust”) of which Ms. Cafaro’s spouse is the trustee also adopted a written, non-discretionary sales plan that complies with Commission Rule 10b5-1. The Cafaro Trust is the owner of 432,720 options to acquire the Company’s common stock. The Cafaro Trust’s 10b5-1 plan covers the sale at an average minimum sale price of $60 per share, beginning in April 2010, of up to 30,000 shares of Company common stock expected to be acquired by the Cafaro Trust through the exercise of options. The Cafaro Trust's 10b5-1 plan is expected to be in effect until March 2011.

Both plans provide 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.

As of March 8, 2010, Ms. Cafaro beneficially owned 1.5 million shares of the Company's common stock (including options exercisable within 60 days). See Minimum Stock Ownership Plan for Executives.

T. Richard Riney 10b5-1 Plan

On December 10, 2009, 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 covered the sale, beginning in March 2010, of up to 78,924 shares of Company common stock owned by Mr. Riney or expected to be acquired by him through the exercise of options, subject to certain conditions (including certain threshold per share prices), and had a term expiring in December 2010. On March 16, 2010, the conditions to sale under Mr. Riney's 10b5-1 plan had been met, and all 78,924 shares of common stock were sold pursuant thereto.

Mr. Riney's disposition of a portion of his equity-based compensation in Ventas pursuant to his 10b5-1 plan was effected for estate, tax and financial planning purposes.

As of March 8, 2010, Mr. Riney beneficially owned 0.4 million shares of Ventas common stock and options (including options exercisable within 60 days). See Minimum Stock Ownership Plan for Executives.

Updated: March 19, 2010