DEF 14A of National Health Investors Inc, Apr 4, 2024

DEF 14A of National Health Investors Inc

Filed Apr 4, 2024 · FY20230000877860-24-000035

Open on EDGAR

  1. Table of Contents

    | Pay Versus Performance Disclosure | 30 | | Equity Compensation Plan Information | 34 | | Independent Registered Public Accounting Firm Fees and Services | 35 | | Compensation Committee Interlocks and Insider Participation | 36 | | Certain Relationships and Related Party Transactions | 36 | | National HealthCare Corporation | 36 | | Pinnacle Financial Partners | 37 | | Policy Regarding Related Party Transactions | 37 | | Beneficial Ownership | 37 | | Proposal 2 Advisory Vote on Compensation of our Named Executive Officers | 38 | | Proposal 3 Ratification of Selection of Independent Registered Public Accounting Firm | 39 | | Voting and Meeting Information | 40 | | Stockholder Communications | 43 | | Additional Information | 43 | | How We Count the Votes | 44 | | Householding | 44 | | Appendix A - Reconciliation of Non-GAAP Financial Measures | 45 |

  2. Our Directors

    Our Directors NHI is currently managed by an eight-person Board. A director may be removed from office for cause only. Three of the directors are standing for re-election at the Meeting in accordance with the Company’s bylaws (as amended and/or restated to date, the “Bylaws”). The Board believes that each of the director nominees is qualified to serve as a director of NHI and possesses the qualities and skills described in the section of the proxy statement captioned “Proposal 1 - Election of Directors,” beginning on page 3.

  3. Our Directors

    | Name | Age | Director Since | Position | Expiration of term | | Nominees | | | | | | D. Eric Mendelsohn | 62 | 2021 | Director, President & Chief Executive Officer | 2024 | | Charlotte A. Swafford | 76 | 2020 | Director | 2024 | | Robert T. Webb | 79 | 1991 | Director | 2024 | | Continuing Directors | | | | | | Robert G. Adams | 77 | 2020 | Director | 2025 | | James R. Jobe | 62 | 2013 | Director | 2025 | | W. Andrew Adams | 78 | 1991 | Chairperson of the Board | 2026 | | Tracy M. J. Colden | 62 | 2022 | Director | 2026 | | Robert A. McCabe, Jr. | 73 | 2001 | Director | 2026 |

  4. Our Directors

    The following matrix provides information regarding the members of our Board, including demographic information for, and certain qualifications and experience possessed by, the members of our Board, which our Board believes are relevant to our business and industry and provide a range of viewpoints that are invaluable for our Board’s discussions and decision-making processes. In addition, each of our current directors, other than Mr. Mendelsohn, is considered independent by our Board based on the independence standards of the New York Stock Exchange (the “NYSE”). The matrix does not encompass all of the qualifications, experiences or attributes of the members of our Board, and the fact that a particular qualification, experience or attribute is not listed does not mean that a director does not possess it. In addition, the absence of a particular qualification, experience or attribute with respect to any of the members of our Board does not mean the director in question is unable to contribute to the decision-making process in that area. The type and degree of qualification and experience listed below may vary among the members of the Board.

  5. Our Directors

    | Skills and Experience | | W. A. Adams | Colden | McCabe | R. Adams | Jobe | Swafford | Webb | Mendelsohn | | | Public Company Board Experience | x | x | x | x | x | | | | | C-Suite Leadership | | x | | x | x | | | | x | | | Financial Literacy/Accounting | x | x | x | x | x | x | x | x | | | Healthcare | x | | | x | | x | | x | | | Risk Management/Strategic Planning | x | x | x | x | x | x | x | x | | | Corporate Governance/Legal | | x | | | | | | x | | Background | | | | | | | | | | | | Gender | Male | Female | Male | Male | Male | Female | Male | Male | | | Race/Ethnicity | White | African/American | White | White | White | White | White | White | | | Age | 78 | 62 | 73 | 77 | 62 | 76 | 79 | 62 | | | Tenure (years) | 32 | 2 | 23 | 4 | 10 | 4 | 32 | 3 |

  6. We Invest in Relationships, not Just Properties

    We Invest in Relationships, not Just Properties Incorporated in 1991, we are a real estate investment trust (“REIT”) specializing in sale-leaseback, joint-venture, and mortgage and mezzanine financing of need-driven and discretionary senior housing and medical investments. Our portfolio consists of independent, assisted and memory care communities, entrance-fee communities, skilled nursing facilities, and a specialty hospital.

  7. PROPOSAL 1- ELECTION OF DIRECTORS

    PROPOSAL 1- ELECTION OF DIRECTORS Pursuant to the Company’s Articles of Incorporation, the directors have been divided into three classes. Each class is elected for a three-year term and only one group is up for election each year. The Company’s Articles of Incorporation and Bylaws provide that the number of directors to be elected by the stockholders shall be at least three and not more than nine, as established by the Board from time to time. In May 2022, the Board expanded the Board from seven to eight members. On February 16, 2024, the Board’s Nominating and Corporate Governance Committee recommended, and the full Board nominated, Mr. Mendelsohn, Ms. Swafford and Mr. Webb for re-election to the Board for a three-year term or until their successors are duly elected and qualified. Our director nominees were assessed and chosen in accordance with our Nominating and Corporate Governance Committee’s charter. Our Bylaws require that directors be elected by a majority of the votes cast with respect to their election at the Meeting. If your proxy does not specifically instruct the proxy holder to vote against the election of Mr. Mendelsohn, Ms. Swafford and/or Mr. Webb, your proxy holder intends to vote for the election of Mr. Mendelsohn, Ms. Swafford and/or Mr. Webb to hold office as a director for the term described above or until their successor has been duly elected and qualified. Each nominee has indicated that he or she will serve if elected. We do not anticipate that any nominee will be unable or unwilling to stand for re-election, but if that happens, your proxy may be voted for another person nominated by the Board or the Board may reduce the number of directors to be elected. If elected at the Meeting, the nominees will hold office until the 2027 Annual Meeting of Stockholders and until their successors have been elected and qualified.

  8. Our Director Nominees

    Our Director Nominees

  9. Our Director Nominees

    | | D. Eric Mendelsohn | | | Age 62 | | | Director since 2021 | | | Committees: | | | None | | Background | | | Mr. Mendelsohn joined NHI in January 2015 as Executive Vice President of Corporate Finance. He was named interim Chief Executive Officer (“CEO”) in August 2015 and CEO and President in October 2015. Mr. Mendelsohn became a director in February 2021. He has over 20 years of healthcare real estate and financing experience. Previously, Mr. Mendelsohn was with Emeritus Senior Living for nine years, most recently as a senior vice president of corporate development where he was responsible for the financing and acquisition of assisted living properties, home health care companies, administration of joint venture relationships and executing corporate finance strategies. Prior to Emeritus, Mr. Mendelsohn was with the University of Washington as a transaction officer where he worked on the development, acquisition and financing of research, clinic and medical properties. Prior to that, Mr. Mendelsohn was a practicing transactional attorney, representing lenders and landlords. Mr. Mendelsohn has a Bachelor of Science degree from American University in International Relations, a Juris Doctor degree from Pepperdine University, and a Masters (LLM) in Banking and Finance from Boston University. Mr. Mendelsohn is a member of the Florida and Washington State Bar Associations. | | | Qualifications | | | Mr. Mendelsohn is the only management member of the Board and as such the Board concluded that his perspective is important in developing the strategic and operation direction of the Company and thus Mr. Mendelsohn should serve as a director of the Company based on his role as CEO and his executive experience in the senior care industry. | |

  10. Our Director Nominees

    | | Charlotte A. Swafford | | | Age 76 | | | Director since 2020 | | | Committees: | | | Compensation Committee | | | Audit Committee | | | Nominating & Corporate Governance Committee | | Background | | | Ms. Swafford joined the Board in May 2020. She served as senior vice president and treasurer of National HealthCare Corporation (“NHC”) from 1985 until her retirement on December 31, 2016. She joined NHC in 1973 and served as staff accountant, accounting manager and assistant treasurer. NHC served as the Company's Investment Advisor from 1991 through October 2004, and as a result, Ms. Swafford served as Treasurer of the Company during that period. She has not provided any services to the Company (other than as a director) since October 2004. Ms. Swafford has a Bachelor of Science degree from Tennessee Technological University. | | | Qualifications | |

  11. Our Director Nominees

    | The Board concluded that Ms. Swafford should serve as a director of the Company based on her extensive healthcare, accounting and financial background. |

  12. Our Director Nominees

    | | Robert T. Webb | | | Age 79 | | | Director since 1991 | | | Committees: | | | Compensation Committee (Chairperson) | | | Audit Committee | | | Nominating & Corporate Governance Committee | | Background | | | Mr. Webb has served as a director of the Company since its inception in 1991. Mr. Webb is the owner of commercial buildings in the Middle Tennessee area and is a subdivision developer. Additionally, Mr. Webb is the vice president and treasurer of Webb’s Refreshments, Inc., which has been in operation serving the Middle Tennessee area since 1976. Mr. Webb served as president of Webb’s Refreshments until that position was assumed by his son in 2010. He attended David Lipscomb College and received a Bachelor of Arts in business marketing from Middle Tennessee State University in 1969. | | | Qualifications | | | The Board concluded Mr. Webb should serve as a director of the Company based on his extensive real estate business experience, his leadership qualities and his independence from the Company. | |

  13. Our Director Nominees

    The Board Recommends a Vote “For” the Election of Mr. Mendelsohn, Ms. Swafford and Mr. Webb as Provided In Proposal 1.

  14. Our Continuing Directors

    Our Continuing Directors

  15. Our Continuing Directors

    | | Robert G. Adams | | | Age 77 | | | Director since 2020 | | | Committees: | | | Compensation Committee | | | Nominating & Corporate Governance Committee | | | Other Current Public Directorship: National HealthCare Corporation | | Background | |

  16. Our Continuing Directors

    | Mr. R. Adams joined NHI as a director in May 2020. He was with NHC for 45 years. He became chairperson of the board of NHC on January 1, 2009 and served as chief executive officer of NHC from November 1, 2004 until his retirement on December 31, 2016. Mr. R. Adams remains non-executive chairman of the NHC board. He has extensive long-term healthcare experience, including serving NHC as a healthcare center administrator and regional vice president. NHC served as the Company's Investment Advisor from 1991 through October 2004 and as a result, Mr. R. Adams served as Vice President of the Company during that period. He has not provided any services to the Company (other than as a director) since October 2004. He also served on the board of National Health Realty, Inc. (“NHR”), a publicly-traded REIT from December 1997 through October 2007. Mr. R. Adams has a Bachelor of Science degree from Middle Tennessee State University. He is the brother of W. Andrew Adams, the Chairperson of the Board. | | | Qualifications | | | The Board concluded Mr. R. Adams should serve as a director of the Company because he provides a valuable perspective regarding the long-term healthcare industry and brings his NHC experience in all aspects of the Board’s deliberations. | | | | James R. Jobe | | | Age 62 | | | Director since 2013 | | | Committees: | | | Audit Committee | | | Compensation Committee | | | Nominating & Corporate Governance Committee (Chairperson) | | Background Mr. Jobe joined NHI as a director in April, 2013. Mr. Jobe is a partner in the accounting firm of Jobe, Hastings & Associates, CPA’s, established in 1984 in Murfreesboro, Tennessee. In that capacity, he has provided accounting and consulting services in the healthcare and long-term care industries for over 30 years. Mr. Jobe previously served as an independent director of NHR, until its merger with NHC in 2007. He received his Bachelor of Business Administration in Accounting from Middle Tennessee State University in 1984 and became a certified public accountant in 1986. Qualifications The Board concluded that Mr. Jobe should serve as a director of the Company based on his public company director experience, his accounting experience within the long-term care industry, and his independence from the Company. | |

  17. Our Continuing Directors

    | | W. Andrew Adams | | | Chairperson of the Board | | | Age 78 | | | Director since 1991 | | | Committees: None | | | Other Current Public Directorships: National HealthCare Corporation | | Background Mr. W. A. Adams has been our Chairperson of the Board since our inception in 1991. Mr. W. A. Adams served as both President and Chief Executive Officer (“CEO”) of the Company from our inception until his retirement as President in February 2009 and as CEO in March 2011. Mr. W. A. Adams was president and chief executive officer of NHC until he resigned those positions in 2004. He remains on NHC’s board of directors and served as chairman of the board of NHC until 2008. Mr. W. A. Adams served as president of National Health Realty, Inc. (“NHR”), a publicly-traded REIT from 1997 until November 2004 and served as chairman of the board of NHR until its merger with NHC in 2007. Effective January 16, 2017, Mr. W. A. Adams was appointed to the Governing Board of Middle Tennessee State University. Mr. W. A. Adams has previously served on the boards of Assisted Living Concepts, SunTrust Bank, David Lipscomb University and the Boy Scouts of America. He received his Bachelor of Science and Master of Business Administration degrees from Middle Tennessee State University. He is the brother of director Robert G. Adams. Qualifications The Board concluded Mr. W.A. Adams should serve as a director of the Company based on his prior role as CEO of the Company, extensive experience in the healthcare and REIT industries and his thorough understanding of the Company. | |

  18. Our Continuing Directors

    | | Tracy M. J. Colden | | | Age 62 | | | Director since 2022 | | | Committees: | | | Nominating & Corporate Governance Committee | | Background Ms. Colden was added as a director of the Company in June 2022. Ms Colden has served as general counsel, executive vice president and corporate secretary with Playa Hotels & Resorts N. V. (NASDAQ: PLYA) since January 2020. Ms. Colden has more than 30 years of experience in the hospitality and lodging industry. Ms. Colden has previously served as general counsel, executive vice president and corporate secretary for Highland Hospitality Corporation and Crestline Capital Corporation. Prior to joining Crestline Capital, Ms. Colden was an assistant general counsel at Host Marriott Corporation (now Host Hotels & Resorts, Inc.) and was previously in the private practice of law. Ms. Colden received her Bachelor of Business Administration from the University of Michigan and a Juris Doctor from the University of Virginia School of Law. Ms. Colden is a certified public accountant (inactive) and is a member of the District of Columbia, Florida and Michigan (emeritus status) bars. Qualifications The Board concluded that Ms. Colden should serve as a director of the Company based on her public company experience, legal background, diversity and independence from the Company. | |

  19. Our Continuing Directors

    | | Robert A. McCabe | | | Age 73 | | | Director since 2001 | | | Committees: | | | Audit Committee (Chairperson) | | | Nominating & Corporate Governance Committee | | | Compensation Committee | | | Other Current Public Directorship: Pinnacle Financial Partners | | Background Mr. McCabe has served as a director of the Company since 2001. Mr. McCabe has been chairperson of Pinnacle Financial Partners (“Pinnacle”) in Nashville, Tennessee since August 2000. He began his banking career with the former Park National Bank of Knoxville, Tennessee (“PNB”) and held numerous executive positions with PNB and its successor, First American National Bank. In 1994, Mr. McCabe was appointed vice chairman of First American Corporation. In March 1999, he was appointed by First American to manage all banking and non-banking operations, a position he held until First American’s merger with AmSouth Bancorporation in October 1999. Mr. McCabe previously served as chairman of the Nashville Chamber of Commerce and chairman of Nashville Electric Service, a municipal electric distribution company. Mr. McCabe was a director of Diversicare Healthcare Services, Inc. until it was sold in November 2021. He was also a director of Goldleaf Financial Solutions, Inc. until its sale in 2009 and a director of SSC Services of Knoxville, Tennessee until 2010. Mr. McCabe has been active in various civic organizations within his community, including Leadership Knoxville and Leadership Nashville. He is a member of the World Presidents’ Organization and the Chief Executives Organization, and served as the past chairman of the board of trustees of The Ensworth School and Cheekwood Botanical Gardens and Museum of Art. He is also the past chairman of the Middle Tennessee Boy Scout Council, the Nashville Symphony and the Nashville Downtown Partnership. Mr. McCabe received his Master of Business Administration degree from the University of Tennessee and completed the Advanced Management Program of Harvard Business School. | | | Qualifications | | | The Board concluded Mr. McCabe should serve as a director of the Company because of his extensive leadership experience, his understanding of finance, accounting and the banking industry, and his independence from the Company. | |

  20. DIRECTOR COMPENSATION

    DIRECTOR COMPENSATION During 2023, the independent directors received compensation for their Board service including an annual retainer of $75,000 and a $7,500 per meeting fee. Each committee chairperson received an annual retainer of $5,000 and the Audit Committee Chairperson received a $2,500 meeting fee. In 2023, each director received a fully vested option to purchase 10,000 shares of Company stock based on the closing price of NHI’s shares on February 24, 2023, the third business day following the Company’s annual earnings release. Additionally, the Company reimburses all directors for travel expenses incurred in connection with their duties as directors of the Company. Our option grants only have value if the Company’s stock price increases. We believe our director compensation package is reasonable.

  21. 2023 Director Compensation

    2023 Director Compensation

  22. 2023 Director Compensation

    | Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) | Option Awards (1)($) | Non-Equity Incentive Plan Comp.($) | Change in Pension Value and Nonqualified Deferred Comp. Earnings | All Other Comp. ($) | Total ($) | | W. Andrew Adams | 105,000 | — | 70,860 | — | — | — | 175,860 | | Robert T. Webb | 110,000 | — | 70,860 | — | — | — | 180,860 | | Robert A. McCabe, Jr. | 120,000 | — | 70,860 | — | — | — | 190,860 | | Tracy M.J. Colden | 105,000 | | 70,860 | — | — | — | 175,860 | | James R. Jobe | 110,000 | — | 70,860 | — | — | — | 180,860 | | Charlotte Swafford | 105,000 | — | 70,860 | — | — | — | 175,860 | | Robert G. Adams | 105,000 | — | 70,860 | — | — | — | 175,860 |

  23. 2023 Director Compensation

    (1) This represents the amount of stock compensation expense recorded by the Company in 2023 for the annual grant of options to purchase 10,000 shares to each independent director on the third day following the Company’s annual earnings release. The exercise price of the options is the closing price of our common stock on the NYSE on the day the options are granted. The options vest immediately upon grant. At year-end, the aggregate number of outstanding option awards held by each independent director was as follows: Mr. W. A. Adams, 110,000; Mr. R. Adams, 60,000; Ms. Colden 35,000; Mr. Jobe, 85,000; Mr. McCabe, 85,000; Ms. Swafford, 60,000; and Mr. Webb, 110,000.

  24. Objectives

    Objectives The objectives of our compensation programs are to actively motivate and retain qualified senior officers and other key employees who are responsible for our Company’s success. The compensation program is designed to reward our officers for the Company’s performance as a whole and for each officer’s individual effort in achieving the Company’s goals. Our compensation program includes the elements of (a) a base salary that is reflective of job responsibilities, expertise and market demands, (b) an annual incentive bonus award to reward individual effort in achieving the Company’s goals, and (c) share-based compensation, which we have historically paid in the form of stock options, to align the financial interests of our senior officers with those of our stockholders. In 2023, the Compensation Committee also granted shares of restricted stock. The Compensation Committee has not engaged a compensation consultant to date.

  25. Incentive Awards

    Incentive Awards Annual incentive awards are designed to focus management attention on key operational goals for the current fiscal year and are paid in cash. The key operational goals are a combination of each executive’s area of responsibility and the overall financial performance by the Company. In approving annual incentive awards, the Compensation Committee considers, among other factors, the Company’s revenue growth and profitability, the development and expansion of its business, the executive’s work during the year, past compensation, perceived contribution to the Company, level of responsibility, and any notable individual achievements or failings in the year in question. Those executives in a position to have a more significant impact on the financial performance of the Company are eligible to receive substantially larger bonuses than executives who are not in such a position. As part of the annual incentive awards, the Compensation Committee originally adopted a Cash Performance Incentive Plan (“Prior Incentive Plan”) in 2009, which for 2022 was driven 50% by the Company’s Normalized FAD and 50% by the Company’s recurring dividend growth. Under the Prior Incentive Plan, for 2022 the named executive officers were entitled to an award based on Normalized FAD growth provided that the Company’s Normalized FAD increased at least 5% over the previous year’s Normalized FAD and an award based on dividend growth provided the Company’s recurring dividend increased at least 5% over the previous year’s recurring dividend.

  26. Equity Awards

    Equity Awards Long-term equity awards are granted to align the executives’ financial interests with those of our stockholders. We believe that long-term compensation should motivate and reward the creation and preservation of long-term stockholder value through both price increases and dividends. Long-term equity awards typically vest over three to five years and are subject to forfeiture if the executive leaves the Company prior to vesting. The Company has historically relied solely on stock options for equity awards to all employees, including the named executive officers. Such grants provide our executive officers the opportunity to purchase shares of NHI common stock at some future date at the fair market value of the stock on the date of the stock option grant. Stock option grants are designed to provide long-term (up to ten years) incentives linked directly to the price of our common stock. Stock options add value to the recipient only when stockholders benefit from stock price appreciation.

  27. 2023 Incentive Plan

    2023 Incentive Plan The Compensation Committee considered that the Prior Incentive Plan did not provide much of an incentive for the named executive officers given the difficulties encountered by the industry over the past three years. The Prior Incentive Plan operated in a way that the named executive officers either received the full target bonus payout amount for each element or received no incentive bonus if the target was not met. The Compensation Committee also recognized that under the Prior Incentive Plan, it was highly unlikely that any of the named executive officers would be able to meet the incentive goals for 2023. In addition, the Company’s new SHOP segment requires different management skills and provides different goals than under the Prior Incentive Plan for 2022. As a result, the Compensation Committee redesigned the Prior Incentive Plan by adopting the 2023 Incentive Plans (the “2023 Incentive Plans”) to replace the Prior Incentive Plan. Under the 2023 Incentive Plans, each named executive officer has an individual plan with specific goals aligned with the individual officer’s area of responsibility. Under the 2023 Incentive Plans, the Compensation Committee established a target payout amount based on budgeted outcomes, but provided for additional amounts if performance exceeds expectations. The 2023 Incentive Plans also provides for reduced amounts if certain goals are not accomplished. Thus the 2023 Incentive Plans are not all-or-nothing plans like the Prior Incentive Plan. Mr. Mendelsohn’s 2023 Incentive Plan which provided incentive compensation, linked to Company performance and investor returns, was based on the following categories and provided that the incentive compensation will be paid in cash, or with respect to Items (5) and (6) may be paid in cash or restricted stock, at Mr. Mendelsohn’s election: •Normalized FAD/Dividend increases. This category is similar to the Prior Incentive Plan for 2022, but provides for modified Normalized FAD/dividend increase goals which grants tiered levels of incentive compensation based on the increase in Normalized FAD above $4.38 and the increase in the annual dividend above $3.60. •Normalized FAD payout ratio. This category provides for different incentive compensation levels for a Normalized FAD payout ratio at or below 80% or at or below 85% •New investments. This category provides for incentive compensation based on the average annual return on new investments. •SHOP revenue goals. This category provides for incentive compensation based on certain percentage increases in SHOP revenue. •Net debt to Adjusted EBITDA. This category provides incentive compensation for a net debt to Adjusted EBITDA ratio of 4.5 times or less. •Collection of deferrals. This category provides incentive compensation based on the collection of deferrals previously granted by the Company to certain of its tenants. The Compensation Committee considered the Normalized FAD increases, Normalized FAD payout ratio, New investment yield, SHOP revenue increases and deferral collections as the most meaningful performance measures. Normalized FAD, as calculated by us, is net income (computed in accordance with GAAP) with adjustments to exclude various items, as described below. Adjustments related to real estate activities include gains (or losses) from sales of real estate property, impairments of real estate, real estate depreciation and amortization, and the results of unconsolidated partnerships and joint ventures, if any. Other adjustments are made for certain items which, due to their infrequent or unpredictable nature, may create some difficulty in comparing results across periods, and may include, but are not limited to, impairment of non-real estate assets, gains and losses attributable to the acquisition and disposition of assets and liabilities, and recoveries of previous write-downs. Adjusted EBITDA, as calculated by us, is earnings before interest, taxes, depreciation and amortization, including amounts in discontinued operations, excluding real estate asset impairments and gains on dispositions. GAAP requires a lessor to recognize contractual lease payments into income on a straight-line basis over the expected term of the lease. This straight-line adjustment has the effect of reporting lease income that is significantly more or less than the contractual cash flows received pursuant to the terms of the lease agreement. GAAP also requires any discount or premium related to indebtedness and debt issuance costs to be amortized as non-cash adjustments to earnings. The Company adjusts Normalized FAD for these non-cash items as well as for the net change in the allowance for expected credit losses, non-cash stock-based compensation, senior housing portfolio capital expenditures, and for certain non-cash items related to equity method investments such as straight-line lease expense and amortization of purchase accounting adjustments. Normalized FAD is an important supplemental measure of liquidity for a REIT as a useful indicator of the ability to distribute dividends to stockholders. Normalized FAD payout ratio and net debt to Adjusted EBITDA are non-GAAP measures that we use to measure our performance. Normalized FAD payout ratio is our Normalized FAD divided by our distributions to common stockholders, expressed as a percentage. Net debt is our total debt less cash and cash equivalents and we divide that by Adjusted EBITDA, to calculate our net debt to Adjusted EBITDA. See Appendix A for additional information on Normalized FAD, Adjusted EBITDA and net debt to Adjusted EBITDA ratio. Any incentive bonus paid in restricted stock would vest one-third on the date of grant and one-third on each of the first and second anniversary of the date of grant. Under the 2023 Incentive Plan for Mr. Mendelsohn, the target payout amount was $845,000. The other named executive officers had similar individual plans as outlined in the following table:

  28. 2023 Incentive Plan

    | Named Executive Officer | Categories | | Target Payout amount | | Kristin S. Gaines | •Normalized FAD growth (1) | •Number of closed transactions | $355,000 | | | •Conversion to SharePoint | •Timing of converting LOI to PSA(3) | | | | •TSR goals(2) | | | | Kevin C. Pascoe | •Normalized FAD growth | •Collection of deferrals | $450,000 | | | •SHOP revenue increase | •TSR goals | | | | •New investments | | | | John L. Spaid | •Normalized FAD/Dividend growth | •Capital structure and liquidity | $400,000 | | | •Normalized FAD guidance accuracy | •TSR goals | | | | •Credit ratings | •Net debt to Adjusted EBITDA | | | David L. Travis | •Normalized FAD/Dividend growth | •Timely filing of financial statements | $225,000 | | | •TSR goals | •No restatement/adjustments | | | | •Shorten closing schedule | | |

  29. 2023 Incentive Plan

    (1) For the other named executive officers, the growth in Normalized FAD was based on growth above $4.26. (2) TSR was based on the Company’s total stockholder return (“TSR”) for 2023 and compared to six peers, consisting of LTC Properties, Inc.; Sabra Health Care REIT, Inc.; Welltower, Inc.; Ventas, Inc.; CareTrust REIT, Inc.; and Omega Healthcare Investors, Inc. (3) This is based on the number of days involved in moving a potential transaction from the signed letter of intent stage to the signed purchase agreement. Based on the above described 2023 Incentive Plans, the following amounts were earned by each of the named executive officers:

  30. 2023 Incentive Plan

    | Named Executive Officer | Amount Earned Under 2023 Incentive Plans | | D. Eric Mendelsohn | $875,044 | | Kristin S. Gaines | $271,333 | | Kevin C. Pascoe | $450,000 | | John L. Spaid | $345,728 | | David L. Travis | $201,171 |

  31. 2023 Incentive Plan

    All of the amounts earned under the 2023 Incentive Plans were paid in cash. The Normalized FAD for 2023 was $4.33, which resulted in no amount earned for that measure for Mr. Mendelsohn, but a portion of the target amount earned for each of the other named executive officers. There was no increase in dividends during 2023 and the SHOP revenue did not increase by a sufficient amount to meet that performance measure during 2023, so no amount was earned for those measures. However, with the exception of the TSR, substantially all of the individual goals were met by each of the named executive officers, but there was no mechanism within certain specified individual goals to allow for any additional amounts to be earned if performance exceeded expectations, while other individual goals did provide such a mechanism. The Compensation Committee closely reviewed each of the individual 2023 Incentive Plans, each of the elements of the 2023 Incentive Plans and the lack of consistency among the various named executive officers as the 2023 Incentive Plans were applied. It was noted that the new investments measure and the deferral collections measure did provide for additional amounts to be earned when performance exceeded expectations; however, Mr. Mendelsohn and Mr. Pascoe were the only named executive officers whose 2023 Incentive Plans included these measures. As a result, the Compensation Committee determined that the lack of consistency among the various 2023 Incentive Plans needed to be addressed. After careful consideration, the Compensation Committee concluded that structures of the individual 2023 Incentive Plans had led to inconsistent bonuses for the named executive officers. As a result, the Compensation Committee made several changes to the 2023 Incentive Plan for 2024 as described under “2024 Incentive Plan” below. In addition, the Compensation Committee elected to pay a discretionary bonus to each of Ms. Gaines ($83,667), Mr. Spaid ($54,272) and Mr. Travis ($23,829) in order to make the total incentive compensation more internally consistent and to recognize their performance relative to their individual goals. The Compensation Committee believes that the revisions made to the 2024 Incentive Plans will address this issue and does not expect to make additional discretionary bonuses for 2024. In granting the discretionary bonus, the Compensation Committee specifically considered: (a) the increase in Normalized FAD (despite the positive impact on 2022 Normalized FAD by the settlement of the Welltower litigation which resulted in recovering 2021 rents in 2022); (b) TSR was just over 14% for the year; (c) the Normalized FAD payout and net debt to Adjusted EBITDA leverage ratios (the company maintained a strong balance sheet which provided capital at accretive investment spreads); and (d) the improvement in customer coverage ratios, occupancies, and SHOP NOI (resulted in deferral collections and meeting SHOP targets). Under the Clawback Policy described below, incentive compensation amounts paid under the 2023 Incentive Plans will be subject to clawback in the event the Company restates its financial statements and the Compensation Committee determines that the incentive compensation paid to the executive officer would not have been paid had it been based on the restated results, or otherwise if required under any Company Clawback Policy.

  32. 2024 Incentive Plan

    2024 Incentive Plan In order to align executive compensation with Company performance and investor returns, the 2024 Incentive Plan for each of the named executive officers provides incentive compensation based on the following categories and provides that the incentive compensation will be paid in cash: •Normalized FAD increases. This category is similar to the 2023 Incentive Plan, but provides for modified Normalized FAD increase goals which grants tiered levels of incentive compensation based on the increase in Normalized FAD above $4.33 per diluted common share. •Normalized FAD payout ratio. This category provides for different incentive compensation levels for a Normalized FAD payout ratio below 90%. The calculation of the amount earned is to be adjusted if the Board of Directors increases the dividend during 2024. •New investments. This category provides for incentive compensation based on the weighted-average cash yield of new investments in excess of the weighted-average cost of capital at the time of new investment. •SHOP NOI growth. This category provides for incentive compensation based on certain increases in SHOP NOI over the prior year. •Leverage Ratio. This category provides tiered levels of incentive compensation for a net debt to Adjusted EBITDA ratio at 5.0 times or less. •Deferral collections. This category provides incentive compensation based on the collection of deferrals previously granted by the Company to certain of its tenants. •Total Shareholder Return goals. This category provides for tiered levels of incentive compensation based on the Company’s total shareholder return for the year relative to three peers ( LTC Properties, Inc.; Sabra Health Care REIT, Inc.; and CareTrust REIT, Inc.) The individual 2024 Incentive Plans contain each of the above categories with certain threshold differences and contain target payout amounts as noted in the table below:

  33. 2024 Incentive Plan

    | Named Executive Officer | Target Payout Amount | | D. Eric Mendelsohn | $945,000 | | Kristin S. Gaines | $375,000 | | Kevin C. Pascoe | $500,000 | | John L. Spaid | $450,000 | | David L. Travis | $275,000 |

  34. 2024 Incentive Plan

    Under the Clawback Policy described below, incentive compensation amounts paid under the 2024 Incentive Plans will also be subject to clawback in the event the Company restates its financial statements and the Compensation Committee determines that the incentive compensation paid to the executive officer would not have been paid had it been based on the restated results, or otherwise if required under any Company Clawback Policy.

  35. 2023 Equity Awards

    2023 Equity Awards In 2023 we significantly reduced the number of options granted to our named executive officers. At our 2023 annual meeting of stockholders, our stockholders approved our Amended and Restated 2019 Stock Incentive Plan (the “2019 Plan”) to permit, in part, the granting of restricted stock under the 2019 Plan. Restricted stock encourages recipients to maintain equity ownership in the Company which helps align their interest with those of our stockholders. Restricted stock also encourages recipients to remain with the Company until the restriction periods lapse. Following the approval of the 2019 Plan at the 2023 annual meeting, effective May 5, 2023, we granted restricted stock to our named executive officers. The following table compares the 2022 option grants to the 2023 option/restricted stock grants:

  36. 2023 Equity Awards

    | | 2022 | 2023 | | | Named Executive Officer | Option Grant(#) | Option Grant(#) | Restricted Stock Grant(#) | | D. Eric Mendelsohn | 125,000 | 40,000 | 5,000 | | Kristin S. Gaines | 55,000 | 25,000 | 4,000 | | Kevin C. Pascoe | 55,000 | 25,500 | 4,000 | | John L. Spaid | 55,000 | 25,500 | 4,000 | | David L.Travis | 35,000 | 25,000 | 4,000 |

  37. Eric Mendelsohn

    Eric Mendelsohn On February 1, 2023, Mr. Mendelsohn's salary for 2023 was set at $500,000 and his 2023 Incentive Plan bonus target payout was set at $845,000. Mr. Mendelsohn’s 2023 Incentive Plan performance goals were as described above. On February 17, 2023, the Company approved a grant to Mr. Mendelsohn of an option to purchase 40,000 shares of common stock at the closing price of our common stock on February 24, 2023 (the grant date). Mr. Mendelsohn’s option vests one-third on the date of grant and one-third on each of the first and second anniversary of the date of grant. On May 5, 2023, the Company granted Mr. Mendelsohn 5,000 shares of restricted stock, which shares vest over five years, with 20% vesting on each of the first five anniversaries of the date of grant. These 2023 equity grants related primarily to 2022 performance. Based on the 2023 results, on January 17, 2024, the Compensation Committee approved Mr. Mendelsohn’s 2023 incentive bonus of $875,044. On February 16, 2024, the Company also approved the grant of 3,000 shares of restricted stock and an option to purchase 40,000 shares of common stock at the closing price of our common stock on February 23, 2024 (the grant date). Mr. Mendelsohn’s option vests one-third on the date of grant and one-third on each of the first and second anniversary of the date of grant and the restricted stock vests over five years, with 20% vesting on each of the first five anniversaries of the date of grant. These 2024 equity grants related primarily to 2023 performance. On January 17, 2024, Mr. Mendelsohn’s salary for 2024 was set at $525,000 and his 2024 Incentive Plan bonus target payout was set at $945,000 based on the 2024 Incentive Plan described above.

  38. Kristin S. Gaines

    Kristin S. Gaines On February 1, 2023, Ms. Gaines’ salary for 2023 was set at $206,000 and her 2023 Incentive Plan bonus target payout was set at $355,000 Ms. Gaines’ 2023 Incentive Plan performance goals were as described above. On February 17, 2023, the Company approved a grant to Ms. Gaines of an option to purchase 25,000 shares of our common stock at the closing price of our common stock on February 24, 2023 (the grant date). Ms. Gaines’ option vests one-third on the date of grant and one-third on each of the first and second anniversary of the date of grant. On May 5, 2023, the Company granted to Ms. Gaines 4,000 shares of restricted stock, which shares vest over five years, with 20% vesting on each of the first five anniversaries of the date of grant. These 2023 equity grants related primarily to 2022 performance. Based on the 2023 results, on January 17, 2024, the Compensation Committee approved Ms. Gaines’ 2023 incentive bonus of $271,333. As noted above, on January 17, 2024, the Compensation Committee also approved a discretionary bonus of $83,667 for Ms. Gaines based on 2023 performance. On February 16, 2024, the Company also approved the grant of 3,000 shares of restricted stock and an option to purchase 25,000 shares of common stock at the closing price of our common stock on February 23, 2024 (the grant date). Ms. Gaines’ option vests one-third on the date of grant and one-third on each of the first and second anniversary of the date of grant and the restricted stock vests over five years, with 20% vesting on each of the first five anniversaries of the date of grant. These 2024 equity grants related primarily to 2023 performance. On January 17, 2024, Ms. Gaines’ salary for 2024 was set at $216,300 and her 2024 Incentive Plan bonus target payout was set at $375,000 based on the 2024 Incentive Plan described above.

  39. Kevin C. Pascoe

    Kevin C. Pascoe On February 1, 2023, Mr. Pascoe’s salary for 2023 was set at $242,265 and his 2023 Incentive Plan bonus target payout was set at $450,000 based on the 2023 Incentive Plan described above. On February 17, 2023, the Company approved a grant to Mr. Pascoe of an option to purchase 25,500 shares of common stock at the closing price of our common stock on February 24, 2023 (the grant date). Mr. Pascoe’s option vests one-third on the date of grant and one-third on each of the first and second anniversary of the date of grant. On May 5, 2023, the Company granted to Mr. Pascoe 4,000 shares of restricted stock, which shares vest over five years, with 20% vesting on each of the first five anniversaries of the date of grant. These 2023 equity grants related primarily to 2022 performance. Based on the 2023 results, on January 17, 2024, the Compensation Committee approved Mr. Pascoe’s 2023 incentive bonus of $450,000. On February 16, 2024, the Company also approved the grant of 3,000 shares of restricted stock and an option to purchase 25,500 shares of common stock at the closing price of our common stock on February 23, 2024 (the grant date). Mr. Pascoe’s option vests one-third on the date of grant and one-third on each of the first and second anniversary of the date of grant and the restricted stock vests over five years, with 20% vesting on each of the first five anniversaries of the date of grant. These 2024 equity grants related primarily to 2023 performance. On January 17, 2024, Mr. Pascoe’s salary for 2024 was set at $249,532 and his 2024 Incentive Plan bonus target payout was set at $500,000 based on the 2024 Incentive Plan described above.

  40. John L. Spaid

    John L. Spaid On February 1, 2023, Mr. Spaid’s salary for 2023 was set at $400,000 and his 2023 Incentive Plan bonus target payout was set at $400,000, based on the 2023 Incentive Plan described above. On February 17, 2023, the Company approved a grant to Mr. Spaid of an option to purchase 25,500 shares of common stock at the closing price of our common stock on February 24, 2023 (the grant date). Mr. Spaid’s option vests one-third on the date of grant and one-third on each of the first and second anniversary of the date of grant. On May 5, 2023, the Company granted Mr. Spaid 4,000 shares of restricted stock, which shares vest over five years, with 20% vesting on each of the first five anniversaries of the date of grant. These 2023 equity grants related primarily to 2022 performance. Based on the 2023 results, on January 17, 2024, the Compensation Committee approved Mr. Spaid’s incentive bonus of $345,728. As noted above, on January 17, 2024, the Compensation Committee also approved a discretionary bonus of $54,272 for Mr. Spaid based on 2023 performance. On February 16, 2024, the Company also approved the grant of 3,000 shares of restricted stock and an option to purchase 25,500 shares of common stock at the closing price of our common stock on February 23, 2024 (the grant date). Mr. Spaid’s option vests one-third on the date of grant and one-third on each of the first and second anniversary of the date of grant and the restricted stock vests over five years, with 20% vesting on each of the first five anniversaries of the date of grant. These 2024 equity grants related primarily to 2023 performance. On January 17, 2024, Mr. Spaid’s salary for 2024 was set at $420,000 and his 2024 Incentive Plan bonus target payout was set at $450,000 based on the 2024 Incentive Plan described above.

  41. David L. Travis

    David L. Travis On February 1, 2023, Mr. Travis’ salary for 2023 was set at $300,000 and his 2023 Incentive Plan bonus target payout was set at $225,000, based on the 2023 Incentive Plan described above. On February 17, 2023, the Company approved a grant to Mr. Travis of an option to purchase 25,000 shares of our common stock at the closing price of our common stock on February 24, 2023 (the grant date). Mr. Travis’ option vests one-third on the date of grant and one-third on each of the first and second anniversary of the date of grant. On May 5, 2023, the Company granted Mr. Travis 4,000 shares of restricted stock, which shares vest over five years, with 20% vesting on each of the first five anniversaries of the date of grant. These 2023 equity grants related primarily to 2022 performance. Based on the 2023 results, on January 17, 2024, the Compensation Committee approved Mr. Travis’ 2023 incentive bonus of $201,171. As noted above, on January 17, 2024, the Compensation Committee also approved a discretionary bonus of $23,829 for Mr. Travis based on 2023 performance. On February 16, 2024, the Company approved the grant of 3,000 shares of restricted stock and an option to purchase 25,000 shares of common stock at the closing price of our common stock on February 23, 2024 (the grant date). Mr. Travis’ option vests one-third on the date of grant and one-third on each of the first and second anniversary of the date of grant and the restricted stock vests over five years, with 20% vesting on each of the first five anniversaries of the date of grant. These 2024 equity grants related primarily to 2023 performance. On January 17, 2024, Mr. Travis’ salary for 2024 was set at $315,000 and his 2024 Incentive Plan bonus target payout was set at $275,000 based on the 2024 Incentive Plan described above.

  42. 2023 Summary Compensation Table

    2023 Summary Compensation Table The following table sets forth the compensation earned by the Chief Executive Officer and President, Chief Financial Officer, Chief Transaction Officer, Chief Investment Officer and Chief Accounting Officer at December 31, 2023, (collectively, the “named executive officers”) for their services in all capacities to the Company for the 2023, 2022 and 2021 fiscal years.

  43. 2023 Summary Compensation Table

    | Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards($)(1) | Option Awards ($)(2) | Non-Equity Incentive Plan Comp. ($)(3) | Change in Pension Value and Nonqualified Deferred Comp. Earnings ($) | All Other Comp. ($)(4) | Total ($) | | D. Eric Mendelsohn CEO and President | 2023 | 500,000 | — | 246,500 | 453,123 | 875,044 | — | 9,900 | 2,084,567 | | | 2022 | 417,730 | 780,000 | — | 1,458,103 | — | — | 9,150 | 2,664,983 | | | 2021 | 397,838 | 370,000 | — | 1,790,815 | — | — | 8,700 | 2,567,353 | | Kristin S. Gaines Chief Transaction Officer | 2023 | 206,000 | 83,667 | 197,200 | 283,204 | 271,333 | — | 9,900 | 1,051,304 | | | 2022 | 200,788 | 355,000 | — | 641,565 | — | — | 9,150 | 1,206,503 | | | 2021 | 191,227 | 172,500 | — | 787,958 | — | — | 8,700 | 1,160,385 | | Kevin C. Pascoe Chief Investment Officer | 2023 | 242,265 | — | 197,200 | 288,865 | 450,000 | — | 9,900 | 1,188,230 | | | 2022 | 235,208 | 212,500 | — | 641,565 | — | — | 9,150 | 1,098,423 | | | 2021 | 224,008 | 200,000 | — | 787,958 | — | — | 8,700 | 1,220,666 | | John L. Spaid Chief Financial Officer | 2023 | 400,000 | 54,272 | 197,200 | 288,865 | 345,728 | — | 9,900 | 1,295,965 | | | 2022 | 315,000 | 375,000 | — | 641,565 | — | — | 9,150 | 1,340,715 | | | 2021 | 300,000 | 175,000 | — | 787,958 | — | — | 8,700 | 1,271,658 | | David L. Travis Chief Accounting Officer | 2023 | 300,000 | 23,829 | 197,200 | 283,203 | 201,171 | — | 9,900 | 1,015,303 | | | 2022 | 275,000 | 200,000 | — | 408,268 | — | — | 9,150 | 892,418 | | | 2021 | 206,000 | 82,500 | — | 501,427 | — | — | 8,700 | 798,627 |

  44. 2023 Summary Compensation Table

    (1) The dollar value of the restricted stock grants is based on the grant date fair value. The grant date fair value is determined in accordance with ASC Topic 718. For additional information on the valuation assumptions with respect to the grant date fair value, refer to the notes of NHI’s consolidated financial statements in its Annual Report on Form 10-K for the years ended December 31, 2023 as filed with the SEC. The grant date fair value does not represent cash received by the executive. (2) The dollar value of the stock option grants is based on the grant date fair value. The grant date fair value is determined in accordance with ASC Topic 718. For additional information on the valuation assumptions with respect to the grant date fair value, refer to the notes of NHI’s consolidated financial statements in its Annual Report on Form 10-K for the years ended December 31, 2023, 2022 and 2021, as filed with the SEC. The grant date fair value does not represent cash received by the executive. (3) Represents the amount earned under the Incentive Plans described above and in each case was paid in February of the year following the reporting year. (4) Represents employer contributions to NHI’s 401(k) Plan.

  45. Grants of Plan-Based Awards in 2023

    Grants of Plan-Based Awards in 2023

  46. Grants of Plan-Based Awards in 2023

    | Name | Approval Date | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | All Other Stock Awards: Number of Shares of Stock or Units (#)(2) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(3) | | | | | Threshold ($) | Target ($)(1) | Maximum ($) | | | | | | D. Eric Mendelsohn | 2/1/2023 | 2/24/2023 | — | 845,000 | — | — | 40,000 | 54.73 | $453,123 | | D. Eric Mendelsohn | 2/27/2023 | 5/5/2023 | — | — | — | 5,000 | — | | $246,500 | | Kristin S. Gaines | 2/1/2023 | 2/24/2023 | — | 355,000 | — | — | 25,000 | 54.73 | $283,204 | | Kristin S. Gaines | 2/27/2023 | 5/5/2023 | — | — | — | 4,000 | — | | $197,200 | | Kevin C. Pascoe | 2/1/2023 | 2/24/2023 | — | 450,000 | — | — | 25,500 | 54.73 | $288,865 | | Kevin C. Pascoe | 2/27/2023 | 5/5/2023 | — | — | — | 4,000 | — | | $197,200 | | John L. Spaid | 2/1/2023 | 2/24/2023 | — | 400,000 | — | — | 25,500 | 54.73 | $288,865 | | John L. Spaid | 2/27/2023 | 5/5/2023 | — | — | — | 4,000 | — | | $197,200 | | David L. Travis | 2/1/2023 | 2/24/2023 | — | 225,000 | — | — | 25,000 | 54.73 | $283,203 | | David L. Travis | 2/27/2023 | 5/5/2023 | — | — | — | 4,000 | — | | $197,200 |

  47. Grants of Plan-Based Awards in 2023

    (1)Amounts represent 2023 Incentive Plan bonus target payout for 2023. The target payout amount is based on the executive achieving each anticipated bonus target described above. For each of Ms. Gaines, Mr. Pascoe, Mr. Spaid and Mr. Travis, the Target amount was also the maximum amount. Mr. Mendelsohn did not have a maximum amount. The actual 2023 Incentive Plan amounts paid in 2023 are included in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table. (2) Represents shares of restricted stock granted, which stock vests 20% on each of the first five anniversaries of the date of grant. Restricted stock is entitle to vote and eligible to receive dividends, however may not be sold until the restrictions lapse and are forfeited if the recipient leaves the Company prior to the vesting date. (3) The grant date fair value is determined in accordance with ASC Topic 718 and does not represent cash received by the named executive officers in 2023.

  48. 2023 Option Exercises and Stock Vested at Fiscal Year-End

    2023 Option Exercises and Stock Vested at Fiscal Year-End No options were exercised and no stock vested during 2023.

  49. 2023 Outstanding Equity Awards at Fiscal Year-End

    2023 Outstanding Equity Awards at Fiscal Year-End

  50. 2023 Outstanding Equity Awards at Fiscal Year-End

    | | Options Awards | | | | Restricted Stock Awards | | | Name | Number of Securities Underlying Unexercised Options (#) Exercisable(1) | Number of Securities Underlying Unexercised Options (#) Unexercisable (1) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(3) | | D. Eric Mendelsohn | 83,334 | — | 79.96 | 2/21/2024 | 5,000 | 279,250 | | | 125,000 | — | 90.79 | 2/21/2025 | — | — | | | 125,000 | — | 69.20 | 2/25/2026 | — | — | | | 83,332 | 41,668 | 53.41 | 2/25/2027 | — | — | | | 13,333 | 26,667 | 54.73 | 2/24/2028 | — | — | | Kristin S. Gaines | 55,000 | — | 79.96 | 2/21/2024 | 4,000 | 223,400 | | | 55,000 | — | 90.79 | 2/21/2025 | — | — | | | 55,000 | — | 69.20 | 2/25/2026 | — | — | | | 36,666 | 18,334 | 53.41 | 2/25/2027 | — | — | | | 8,333 | 16,667 | 54.73 | 2/24/2028 | — | — | | Kevin C. Pascoe | 18,334 | — | 79.96 | 2/21/2024 | 4,000 | 223,400 | | | 55,000 | — | 90.79 | 2/21/2025 | — | — | | | 55,000 | — | 69.20 | 2/25/2026 | — | — | | | 18,333 | 18,334 | 53.41 | 2/25/2027 | — | — | | | 8,500 | 17,000 | 54.73 | 2/24/2028 | — | — | | John Spaid | 47,500 | — | 79.96 | 2/21/2024 | 4,000 | 223,400 | | | 55,000 | — | 90.79 | 2/21/2025 | — | — | | | 55,000 | — | 69.20 | 2/25/2026 | — | — | | | 36,666 | 18,334 | 53.41 | 2/25/2027 | — | — | | | 8,500 | 17,000 | 54.73 | 2/24/2028 | — | — | | David L. Travis | 7,500 | — | 53.76 | 5/1/2025 | 4,000 | 223,400 | | | 35,000 | — | 69.20 | 2/25/2026 | — | — | | | 23,332 | 11,668 | 53.41 | 2/25/2027 | — | — | | | 8,333 | 16,667 | 54.73 | 2/24/2028 | — | — |

  51. 2023 Outstanding Equity Awards at Fiscal Year-End

    (1)All options granted to the named executive officers vest one-third on the date of grant and one-third on each of the first and second anniversary of the date of grant. (2) All restricted stock granted to the named executive officers vest 20% on each of the first five anniversaries of the date of grant. (3) Market value calculated using the closing market price of the Company’s common stock on December 29, 2023 of $55.85.

  52. Potential Payments upon Termination or Change-in-Control

    Potential Payments upon Termination or Change-in-Control Effective February 15, 2019, the Company and Mr. Mendelsohn entered into an amended and restated employment agreement (the “Amended Agreement”). The Amended Agreement had an initial term until December 31, 2020 and automatically renews each year unless 90 days’ notice of intention not to renew is given by either party. The Amended Agreement provided an initial base salary of $350,000, which is reviewed annually and is subject to adjustment according to the Company’s policies and practices, and provides a discretionary bonus, as well as an Incentive Plan which is driven by the Company’s adjusted funds from operations, which was changed to Normalized FAD in 2021, and recurring dividend growth. In February 2023, the Incentive Plan was amended as described above. The Amended Agreement also provides that Mr. Mendelsohn is subject to a 24-month non-compete and non-solicitation period following termination of his employment. The Amended Agreement further provides that if his employment is terminated due to a Without Cause Termination or Constructive Discharge (each as defined in the Amended Agreement), the Company will pay Mr. Mendelsohn a monthly fee equal to his then current base salary divided by 12 for up to 24 months provided Mr. Mendelsohn has not accepted new employment. If Mr. Mendelsohn had been terminated pursuant to a Without Cause Termination or a Constructive Discharge on December 29, 2023, Mr. Mendelsohn would have been entitled to severance payments equal to $41,666.67 a month up to a maximum of $1,000,000, provided that Mr. Mendelsohn did not become employed during that 24-month period. There is no provision in Mr. Mendelsohn’s employment agreement regarding a change in control, only the above described Without Cause Termination and Constructive Discharge. None of the other executive officers have employment agreements. At December 29, 2023, each of the named executive officers held unvested options as reflected in the following table. The 2012 Stock Option Plan and the 2019 Plan provide that a dissolution or liquidation of the Company or a merger, consolidation or acquisition in which the Company is not the surviving corporation shall cause the vesting date of each outstanding option to accelerate. Thus, if such an event had occurred at December 29, 2023, each of the named executive officers would have received the value reflected in the table based on the number of unvested options would have vested upon such event multiplied by the difference between the exercise price of such unvested options and $55.85, the closing market price of the Company’s common stock on December 29, 2023.

  53. Potential Payments upon Termination or Change-in-Control

    | Named Executive Officer | Unvested Options | Value upon Vesting | | D. Eric Mendelsohn | 68,334 | $131,534.52 | | Kristin S. Gaines | 35,001 | $63,402.00 | | Kevin C. Pascoe | 35,334 | $63,774.96 | | John L. Spaid | 35,334 | $63,774.96 | | David L. Travis | 28,335 | $47,136.96 |

  54. Pay Ratio Disclosure

    Pay Ratio Disclosure The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 requires reporting companies to disclose the ratio of the annual compensation of the company's median employee to the annual compensation of its principal executive officer. We believe our executive compensation program must be internally consistent and equitable to motivate our employees to create stockholder value. For 2023, the total compensation of our CEO as reported in the Summary Compensation Table was $2,084,567 and for the median employee was $174,444. The resulting ratio of our CEO’s pay to the pay of our median employee for fiscal year 2023 was approximately 12 to 1. Our CEO to median pay ratio is calculated in accordance with SEC requirements pursuant to Item 402(u) of Regulation S-K. We identified the median employee by examining the 2023 total compensation for our 28 individual employees, excluding our CEO, who were employed by us on December 1, 2023, the first day of the last month of our fiscal year. We did not make any assumptions, adjustments or estimates with respect to total compensation. We believe the total compensation for all employees is a consistently applied compensation measure. After identifying the median employee, we calculated annual total compensation for such employee using the same methodology we use for our named executive officers as set forth in the Summary Compensation Table. The SEC rules for identifying the median employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions and to make reasonable estimates and assumptions. As such, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.

  55. Pay Versus Performance Disclosure

    Pay Versus Performance Disclosure In accordance with rules adopted by the SEC to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, we provide the following disclosure regarding executive compensation for our principal executive officer (“PEO”) and Non-PEO NEO named executive officers (“NEO”) and Company performance for the fiscal years listed below. The Compensation Committee did not consider the pay versus performance disclosure below in making its pay decisions for any of the years shown.

  56. Pay Versus Performance Disclosure

    | Year | Summary Compensation Table Total for PEO1 ($) | Compensation Actually Paid to PEO1,2,3 ($) | Average Summary Compensation Table Total for Non-PEO NEOs1 ($) | Average Compensation Actually Paid to Non-PEO NEOs1,2,3 ($) | Value of Initial Fixed $100 Investment based on:4 | | Net Income ($ Millions) | Normalized Funds Available for Distribution ($ Millions)5 | | | | | | | TSR ($) | Peer Group TSR ($) | | | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | | 2023 | 2,084,567 | 1,981,719 | 1,137,701 | 1,073,457 | 88.93 | 113.54 | 134 | 188 | | 2022 | 2,664,983 | 1,839,729 | 1,134,515 | 799,629 | 77.75 | 99.82 | 66 | 201 | | 2021 | 2,567,353 | 2,103,364 | 1,112,834 | 937,282 | 80.40 | 132.23 | 112 | 209 | | 2020 | 1,789,030 | 3,117,622 | 718,720 | 1,149,376 | 90.97 | 92.43 | 185 | 240 |

  57. Pay Versus Performance Disclosure

    1 D. Eric Mendelsohn was our PEO for each year presented. The individuals comprising the Non-PEO NEOs for each year presented are Kristin S. Gaines, Kevin C. Pascoe, John L. Spaid, and David L. Travis. 2 The amounts shown for Compensation Actually Paid have been calculated in accordance with Item 402(v) of Regulation S-K and do not reflect compensation actually earned, realized, or received by the Company’s NEOs. These amounts reflect the Summary Compensation Table Total with certain adjustments as described in footnote 3 below. 3 Compensation Actually Paid reflects the exclusions and inclusions of certain amounts for the PEO and the Non-PEO NEOs as set forth below. Equity values are calculated in accordance with FASB ASC Topic 718. Amounts in the Exclusion of Option Awards column are the totals from the Option Awards column set forth in the Summary Compensation Table. Neither the PEO nor the Non-PEO NEOs are accruing benefits under a pension plan for services rendered in the covered years, and therefore no additions are required for pension plan service cost in determining Compensation Actually Paid.

  58. Pay Versus Performance Disclosure

    | Year | Summary Compensation Table Total for PEO | Exclusion of Stock Awards and Option Awards for PEO | Inclusion of Equity Values for PEO | Compensation Actually Paid to PEO | | | ($) | ($) | ($) | ($) | | 2023 | 2,084,567 | (699,623) | 596,775 | 1,981,719 |

  59. Pay Versus Performance Disclosure

    | Year | Average Summary Compensation Table Total for Non-PEO NEOs | Average Exclusion of Option Awards for Non-PEO NEOs | Average Inclusion of Equity Values for Non-PEO NEOs | Average Compensation Actually Paid to Non-PEO NEOs | | | ($) | ($) | ($) | ($) | | 2023 | 1,137,701 | (483,234) | 418,990 | 1,073,457 |

  60. Pay Versus Performance Disclosure

    The amounts in the Inclusion of Equity Values in the tables above are derived from the amounts set forth in the following tables:

  61. Pay Versus Performance Disclosure

    | Year | Year-End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year for PEO | Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards for PEO | Vesting-Date Fair Value of Equity Awards Granted During Year that Vested During Year for PEO | Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year for PEO | Fair Value at Last Day of Prior Year of Equity Awards Forfeited During Year for PEO | Value of Dividends or Other Earnings Paid on Equity Awards Not Otherwise Included for PEO | Total - Inclusion of Equity Values for PEO | | | ($) | ($) | ($) | ($) | ($) | ($) | ($) | | 2023 | 471,484 | (36,494) | 94,478 | 67,307 | — | — | 596,775 |

  62. Pay Versus Performance Disclosure

    | Year | Average Year-End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year for Non-PEO NEOs | Average Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards for Non-PEO NEOs | Average Vesting-Date Fair Value of Equity Awards Granted During Year that Vested During Year for Non-PEO NEOs | Average Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year for Non-PEO NEOs | Average Fair Value at Last Day of Prior Year of Equity Awards Forfeited During Year for Non-PEO NEOs | Average Value of Dividends or Other Earnings Paid on Equity Awards Not Otherwise Included for Non-PEO NEOs | Total - Average Inclusion of Equity Values for Non-PEO NEOs | | | ($) | ($) | ($) | ($) | ($) | ($) | ($) | | 2023 | 347,026 | (14,598) | 59,640 | 26,922 | — | — | 418,990 |

  63. Pay Versus Performance Disclosure

    4 The Peer Group TSR set forth in this table utilizes the MSCI US REIT index, which we also utilize in the stock performance graph required by Item 201(e) of Regulation S-K included in our Annual Report for the year ended December 31, 2023. The comparison assumes $100 was invested for the period starting December 31, 2019, through the end of the listed year in the Company and in the MSCI US REIT Index, respectively. Historical stock performance is not necessarily indicative of future stock performance. 5 We determined Normalized Funds Available for Distribution (“Funds Available for Distribution”) to be the most important financial performance measure used to link Company performance to Compensation Actually Paid to our PEO and Non-PEO NEOs for 2023. See page 18 under 2023 Incentive Plan for a description of Normalized Funds Available for Distribution and how it is calculated. This performance measure may not have been the most important financial performance measure for years 2022, 2021 a nd 2020 and we may determine a different financial performance measure to be the most important financial performance measure in future years.

  64. Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Company and Peer Group TSR

    Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Company and Peer Group TSR The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our Non-PEO NEOs, and the Company’s cumulative TSR over the four most recently completed fiscal years, and the MSCI US REIT Index TSR over the same period.

  65. Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Net Income

    Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Net Income The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our Non-PEO NEOs, and our Net Income during the four most recently completed fiscal years.

  66. Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Funds Available for Distribution

    Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Funds Available for Distribution The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our Non-PEO NEOs, and our Funds Available for Distribution during the four most recently completed fiscal years.

  67. What happens if a director nominee fails to receive a majority vote in an uncontested election at the Meeting?

    What happens if a director nominee fails to receive a majority vote in an uncontested election at the Meeting? In accordance with our Bylaws, the Board will nominate for election or re-election as a director only candidates who agree to promptly tender, following a failure to receive the required vote for election or re-election at the next annual meeting at which they would face election or re-election, an irrevocable resignation that will be effective upon acceptance by the Board. In addition, the Board will fill director vacancies and new directorships only with candidates who agree to tender the same form of resignation. If an incumbent director fails to receive the required vote for re-election, then, within 90 days following certification of the stockholder vote, the Nominating and Corporate Governance Committee will act to recommend to the Board whether to accept the director’s resignation and will submit the recommendation for prompt consideration by the Board, and the Board will act on the Nominating and Corporate Governance Committee’s recommendation. Thereafter, the Board will promptly disclose its decision-making process and decision regarding whether to accept the director’s resignation offer (or the reason(s) for rejecting the resignation offer, if applicable) in a Form 8-K furnished to the SEC. Any director who tenders his or her resignation pursuant to this provision of our Bylaws may not participate in the Nominating and Corporate Governance Committee recommendation or Board action regarding whether to accept the resignation offer.