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 2008 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 2007, as set by the Compensation Committee, were as follows:

• Normalized Funds from Operations (“FFO”) per share growth. Normalized FFO per share growth accounted for 40% of the value of the annual cash incentive award.
• One-year relative total shareholder return. The Company’s total shareholder return for 2007 compared to the total shareholder return of the comparable companies for the same period accounted for 25% 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 2007 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 2008, the Compensation Committee determined that each of the executive officers (other than the Chief Executive Officer, whose annual cash incentive bonus was predetermined in connection with the negotiation of her amended and restated employment agreement in December 2006) had met and exceeded the maximum level performance objectives under the annual cash incentive plan for 2007. Accordingly, the annual cash incentive awards granted to the executive officers (other than Ms. Cafaro) equaled the maximum 2.1x base salary. Ms. Cafaro’s annual cash incentive award for 2007 was predetermined to be $2.1 million (or 3.5x her base salary) in connection with the negotiation of her amended and restated employment agreement in December 2006.

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 2007, 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, FFO per share growth, effective diversification, 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 2007 long-term incentive awards.

In January 2008, the Compensation Committee determined that each of the executive officers (other than the Chief Executive Officer, whose long-term incentive award was predetermined in connection with the negotiation of her amended and restated employment agreement in December 2006) had met and exceeded the maximum level performance objectives under the long-term incentive plan for 2007. Accordingly, the long-term incentive awards granted to the executive officers (other than Ms. Cafaro) equaled the maximum 2.4x to 3x base salary. Ms. Cafaro’s long-term incentive award for 2007 was predetermined to have an aggregate value of $5.4 million (or 9.0x her base salary) in connection with the negotiation of her amended and restated employment agreement in December 2006.

For 2007, 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 may from time to time 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, Chairman, President and CEO of the Company, has adopted a non-discretionary, written trading plan that complies with Commission Rule 10b5-1. Ms. Cafaro's 2008 10b5-1 plan covers 63,490 shares of common stock owned by her and 102,831 shares of common stock expected to be acquired by her through the exercise of options previously granted to her as a portion of her long-term incentive compensation. The plan is expected to be in effect through December 2008. Ms. Cafaro's proposed disposition of a portion of her equity-based compensation in Ventas is being effected for estate, tax and financial planning purposes.

At May 2, 2008, Ms. Cafaro owns approximately 1.2 million shares of Ventas common stock and options. See Minimum Stock Ownership Plan for Executives.

Updated: May 2, 2008