DEF 14A of National Healthcare Properties, Inc., Apr 15, 2024

DEF 14A of National Healthcare Properties, Inc.

Filed Apr 15, 2024 · FY20230001104659-24-047335

Open on EDGAR

  1. Board of Directors and Executive Officers

    Board of Directors and Executive Officers The table set forth below lists the names, ages and certain other information about each member of the Board of Directors, including B.J. Penn who is a Class I director with a term expiring at the Annual Meeting. Mr. Penn has been nominated for reelection. We have also included information regarding each of the continuing members of our Board and for each of our executive officers:

  2. Board of Directors and Executive Officers

    | Directors with Terms expiring at the Annual | Class | Age | Position | Director Since | Current Term Expires | Expiration of Term for Which Nominated | | B.J. Penn | I | 86 | Independent Director | 2019 | 2024 | 2027 | | Continuing Directors | | | | | | | | Edward G. Rendell | II | 80 | Independent Director | 2015 | 2025 | — | | Elizabeth K. Tuppeny | II | 63 | Independent Director | 2013 | 2025 | — | | Edward M. Weil, Jr. | III | 57 | Managing Director | 2016 | 2026 | — | | Leslie D. Michelson | III | 73 | Non-Executive Chairman; Audit Committee Chair | 2015 | 2026 | — | | Executive Officers (not listed above) | | | | | | | | Michael Anderson | N/A | 35 | Chief Executive Officer | N/A | N/A | N/A | | Scott M. Lappetito | N/A | 37 | Chief Financial Officer, Treasurer and Secretary | N/A | N/A | N/A |

  3. Nominee for Class I Director

    Nominee for Class I Director B.J. Penn B.J. Penn, a Class I director, has served as an independent director of the Company since July 2019. Previously, Mr. Penn served as an independent director of American Realty Capital Healthcare Trust III, Inc. (“HT III”) from August 2014 until its dissolution and liquidation in March 2019 following the completion of the sale of substantially all its assets to the Company. Mr. Penn has served as president of Penn Construction Group, Inc., a company that provides design/engineering, construction solutions and project management services, since January 2010, and has served as president and chief executive officer of Genesis IV, LLC, a company that provides consulting services in the areas of cyber procurement and systems acquisition, since October 2010. Mr. Penn is the chairman of the board of directors of Spectra Systems Corporation, is a trustee emeritus at the George Washington University and serves on the boards of the National Trust for the Humanities and the Naval Historic Foundation. Mr. Penn previously served as Acting Secretary of the Navy and as Assistant Secretary (Installations and Environment) of the Navy where he was responsible for managing Navy and Marine Corps real property, housing and other facilities totaling 72,500 buildings and 4,484,000 acres. Mr. Penn earned a Masters of Science from the George Washington University and a Bachelor of Science from Purdue University. Our Board of Directors believes that Mr. Penn’s experience as a director or executive officer of the companies described above and his experience in various leadership positions in the Navy make him a valuable and well qualified member of our Board of Directors.

  4. Continuing Directors

    Continuing Directors Governor Edward G. Rendell Gov. Edward G. Rendell, a Class II director, has served as an independent director of the Company since December 2015. Gov. Rendell has also served as an independent director of Global Net Lease Inc. (“GNL”) since March 2012 and as GNL’s compensation committee chair since March 2017. Gov. Rendell has served as an independent director of Healthcare Trust, Inc. (“HTI”) since December 2015 and as an independent director of The Necessity Retail REIT, Inc. (formerly known as American Finance Trust, Inc.) (“RTL”) from February 2017 through September 2023. Gov. Rendell has served as an independent director of Franklin BSP Lending Corp (formerly known as BDCA), an entity which was previously advised by an affiliate of AR Global Investments, LLC (“AR Global”), since January 2011. In November 2016, BDCA’s external advisor was acquired by Benefit Street Partners, L.L.C. Gov. Rendell previously served as an independent director of American Realty Capital — Retail Centers of America, Inc. (“RCA”) from October 2012 until the close of RCA’s merger with AFIN in February 2017, and also previously served as an independent director of RCA from February 2011 until March 2012. He previously served as an independent director of Business Development Corporation of America II (“BDCA II”) from August 2014 until its liquidation and dissolution in September 2016. Gov. Rendell served as an independent director of American Realty Capital Trust III, Inc. (“ARCT III”) from March 2012 until the close of ARCT III’s merger with VEREIT, Inc. (“VEREIT”) in February 2013. Gov. Rendell served as an independent director of VEREIT from February 2013 until April 2015. Gov. Rendell served as the 45th Governor of the Commonwealth of Pennsylvania from January 2003 through January 2011 and as the Mayor of Philadelphia from January 1992 through January 2000. Gov. Rendell was also the General Chairperson of the National Democratic Committee from November 1999 through February 2001. Gov. Rendell has also worked as an attorney in private practice. An Army veteran, Gov. Rendell holds a B.A. from the University of Pennsylvania and a J.D. from Villanova Law School. Our Board of Directors believes that Gov. Rendell’s experience as a director of multiple companies, as well as his experience as the chief executive of Pennsylvania and Philadelphia, make him well qualified to serve as a member of our Board of Directors. Elizabeth K. Tuppeny Elizabeth K. Tuppeny, a Class II director, has served as an independent director of the Company since January 2013, including as the chair of our nominating and corporate governance committee since January 2016. Ms. Tuppeny has also served as an independent director of American Strategic Investment Co. (“NYC”), a New York Stock Exchange (“NYSE”) listed real estate investment trust (“REIT”) with a $863.6 million portfolio of high-quality commercial real estate located within the five boroughs of New York City, particularly in Manhattan, since March 2014, including as NYC’s lead independent director since December 2014. Ms. Tuppeny has also served as an independent director of Franklin BSP Realty Trust, Inc., a wholly-owned subsidiary of Franklin Templeton and a real estate finance company focused on mortgage originations and acquisitions for a diversified portfolio of commercial real estate debt secured by properties located in the United States, since January 2013, including as its lead independent director since July 2016. Ms. Tuppeny also served as an independent director of American Realty Capital Trust IV, Inc. from May 2012 until January 2014. As the chief executive officer and founder of Domus, Inc. (“Domus”), a full-service marketing communications agency, Ms. Tuppeny has over 30 years of experience in the branding and advertising industries and has driven business strategies for Fortune 500 companies, focused on maximizing return on investment with internal, external and brand advocacy marketing. Domus provides services to Fortune 500 companies, including Chevron, Citibank, ConAgra, Diageo, DuPont, Epson, Mattel, Merck, Merrill Lynch, Procter & Gamble, Ralph Lauren and Westinghouse. Domus’ real estate clients include Ritz Carlton Residences, S&H Associate’s (Tel Aviv) Parkway 22, and PMC Real Estate. Ms. Tuppeny also founded EKT Development, LLC to pursue entertainment projects in publishing, feature film and education video games. Ms. Tuppeny served on the board of directors and executive committee of the Philadelphia Industrial Development Council, a public-private development organization, for three-plus years where she evaluated and approved over 500- industrial and commercial real estate transactions totaling over $1 billion that helped to attract jobs to Philadelphia, including Citizen’s Bank Park and The Navy Yard. Ms. Tuppeny has served on the boards of directors and advisory committees for the Arthur Ashe Foundation, Avenue of the Arts, Drexel Medical School, Philadelphia International Tourism Cabinet, Pennsylvania Commission for Women, Penn Relays and the Police Athletic League. Ms. Tuppeny was the recipient of the prestigious national Stevie Award as the nation’s top woman entrepreneur in 2004, outperforming 13,000 entrants, and was named as a “Top Woman in Philadelphia Business” in 1996, one of the “Top 50 Women in Pennsylvania” in 2004 and as the “Businessperson of the Year” in 2003 by the Greater Philadelphia Chamber of Commerce. Ms. Tuppeny has expertise in world-class governance best practices from her certifications from Harvard Business School’s Executive Leadership program, Making Corporate Boards More Effective; the National Association of Corporate Directors’ Master Class, MIT’s Cybersecurity: Technology, Application and Policy, EY’s Center for Board Matters and is currently completing Leverage Diversity and Inclusion for Organizational Excellence at Stanford’s Graduate School of Business. Ms. Tuppeny has taught at Temple University, taught post-graduate students Strategic Positioning and Branding at New York University, and has guest-lectured on the same topic at the University of Pennsylvania, where she received her undergraduate degree from the University of Pennsylvania’s College of Arts and Sciences and The Annenberg School of Communications. Ms. Tuppeny was inaugurated into the University of Pennsylvania’s Senior Honor Society and is a member of the University of Pennsylvania’s Sports Hall of Fame, where she held five all-time school records. Our Board of Directors believes that Ms. Tuppeny’s extensive experience as a director of the companies described above and as chief executive officer and founder of Domus makes her well qualified to serve on our Board of Directors. Leslie D. Michelson Leslie D. Michelson, a Class III director, has served as an independent director of the Company since December 2015, including as non-executive chair since October 2016. Mr. Michelson has served as an independent director of FBLC since January 2011, including as lead independent director since February 2016. In November 2016, FBLC’s external advisor was acquired by Benefit Street Partners, L.L.C. Mr. Michelson has served as an independent director of RTL since February 2017 through September 2023 and as an independent director of GNL from September 2023 through the present. Mr. Michelson has served as an independent director and lead independent director of BSP Franklin Capital Corp. since March 2020. Mr. Michelson has served as an independent director and lead independent directory of Franklin BSP Private Credit Fund since March 2021.

  5. Continuing Directors

    From April 2007 until February 2020, Mr. Michelson served as the chairman and chief executive officer of Private Health Management Inc. and, since March 2020, Mr. Michelson has served as executive chairman and a director of Private Health Management, Inc., which assists corporate employees and their dependents, families and individuals obtain the best healthcare. Mr. Michelson has served as a member of the Board of Advisors for the UCLA Fielding School of Public Health since October 2013. He served as a director of Druggability Technologies Holdings Ltd., a proprietary pharmaceutical product business dedicated developing and commercializing high-value pharmaceutical products, from April 2013 until September 2018. He has served as founder and chief executive officer of Michelson on Medicine, LLC since January 2011. Earlier in his career, Mr. Michelson served as a director and executive officer of multiple public and private companies, including foundations, in the healthcare, technology and real estate industries. Mr. Michelson received his B.A. from The Johns Hopkins University in 1973 and a J.D. from Yale Law School in 1976. Our Board of Directors believes that Mr. Michelson’s experience as a director and executive officer of multiple companies make him well qualified to serve as a member of our Board of Directors. Edward M. Weil, Jr. Edward M. Weil, Jr., a Class III director, has served as a director of the Company since October 2016. Mr. Weil served as chief executive officer and president of the Company, the Advisor and the Property Manager from August 2018 to September 2023. Mr. Weil also previously served as an executive officer of the Company, the Advisor and the Property Manager from formation in October 2012 until November 2014. Mr. Weil also has been the chief executive officer of AR Global since January 2016 and owns a non-controlling interest in the parent of AR Global. He also has served GNL as director since January 2017, its chief executive officer since September 2023 and its president since April 2024. Mr. Weil previously served as an executive officer of GNL, GNL’s advisor and the GNL’s property manager from their respective formations in July 2011, July 2011 and January 2012, until October 2014. Mr. Weil also previously served as a director of GNL from May 2012 until September 2014. He also served as chairman of the board of directors of The Necessity Retail REIT, Inc. (“RTL”) and as chief executive officer and president of RTL and RTL’s advisor and RTL’s property manager from November 2015 until their merger and internalization with NYSE-listed GNL in September 2023; as executive chairman of NYSE-listed American Strategic Investment Co. (formerly known as New York City REIT, Inc.) (“NYC”) from November 2015 until September 2023, and for which he continues to serve as a director, and as chief executive officer, president and secretary of NYC and its advisor and property manager from March 2017 to September 2023. From March 2021 until November 2022 he has also served as a director of G&P Acquisition Corp., a special purpose acquisition company previously listed on the NYSE that was sponsored by affiliates of AR Global. Mr. Weil previously served in leadership positions at multiple REITs and other entities advised by affiliates of AR Global, including: as chairman, chief executive officer, president of HT III until its liquidation and dissolution in March 2019; as executive chairman of American Realty Capital Global Trust II, Inc. (“Global II”) until its merger with GNL in December 2016; as a director of FBLC until November 2016, when FBLC’s external advisor was acquired by Benefit Street Partners, L.L.C.; as chief executive officer, president and chairman of RCA until its merger with RTL in February 2017; as a trustee of American Real Estate Income Fund until its liquidation in August 2016; as a trustee of Realty Capital Income Funds Trust until its dissolution in January 2017; and as an executive officer and director of American Realty Capital Daily Net Asset Value Trust, Inc. during multiple periods until its dissolution and liquidation in April 2016. Mr. Weil also served as chairman of Realty Capital Securities, LLC (“RCS”) from September 2013 until November 2015 and was the interim chief executive officer of RCS from May 2014 until September 2014 and the chief executive officer of RCS from December 2010 until September 2013. Mr. Weil served as a director of RCS Capital Corporation (“RCAP”), the parent company of RCS, from February 2013 until December 2015 and served as an executive officer of RCAP from February 2013 until November 2015, including as chief executive officer from September 2014 until November 2015. RCAP filed for Chapter 11 bankruptcy in January 2016. Mr. Weil was formerly the senior vice president of sales and leasing for American Financial Realty Trust, where he was responsible for the disposition and leasing activity for a 33 million square foot portfolio of properties. Mr. Weil also previously served on the board of directors of the Real Estate Investment Securities Association (now known as ADISA) from 2012 to 2014, including as its president in 2013. Mr. Weil attended George Washington University. Our Board of Directors believes that Mr. Weil’s experience as a director or executive officer of the companies described above and his significant experience in real estate make him well qualified to serve as a member of our Board of Directors.

  6. Information About the Board of Directors and its Committees

    Information About the Board of Directors and its Committees The Board of Directors is responsible for overseeing the management of our business and operations. Our current executive officers are employees of affiliates of the Advisor. We have no employees. The Advisor manages our day-to-day business with the assistance of our Property Manager, and affiliates of the Advisor employ the persons who provide these services, including our named executive officers. The Advisor and the Property Manager are under common control with AR Global. Mr. Weil, one of our directors, is the chief executive officer of AR Global and owns a non-controlling interest in the parent of AR Global. The Board held a total of 10 meetings and took action by written consent or electronically on 12 occasions during the year ended December 31, 2023. All directors attended all of the Board meetings and all of the meetings of the Board committees on which such directors served during such period, with the exception of Mr. Penn, who attended at least 75% of the aggregate meetings of the Board and the Board committees on which he served during such period. All directors attended the 2023 Annual Meeting of Stockholders. We encourage all directors to attend our annual meetings of stockholders. The Board has a standing audit committee and a nominating and corporate governance committee. The Company does not currently have a compensation committee, but the nominating and corporate governance committee carries out the responsibilities typically associated with a compensation committee.

  7. Pay Ratio

    Pay Ratio We have not included a ratio of the compensation our chief executive officer to our median employee because we do not have any employees.

  8. Summary Compensation Table

    Summary Compensation Table The following table summarizes the annual compensation received by our named executive officers for the fiscal years ended December 31, 2023, 2022 and 2021:

  9. Summary Compensation Table

    | Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | All Other Compensation ($) | Total ($) | | Edward M. Weil, Jr., Former Chief Executive Officer and President** | 2023 | — | — | — | — | — | | | 2022 | — | — | — | — | — | | | 2021 | — | — | — | — | — | | Scott M, Lappetito, Chief Executive Officer, Secretary and Treasurer | 2023 | $312,768 | $72,177 | — | $35,287(2) | $420,232 | | | 2022 | $321,521 | $47,666 | — | $29,023(2) | $398,210 | | | 2021 | $21,208(1) | $4,936(1) | — | $2,166(2) | $28,310 | | Michael Anderson, Chief Executive Officer*** | 2023 | $104,999(1) | $33,636(1) | — | $15,750(3) | $154,385 | | | 2022 | — | — | — | — | — | | | 2021 | | | | | |

  10. Summary Compensation Table

    ** Mr. Weil served as the Company’s Chief Executive Officer and President until September 2023. *** Mr. Anderson has served as the Company’s Chief Executive Officer since September 2023. (1) Represents the allocable share of salary and bonus paid by the Advisor or its affiliates to each of Mr. Lappetito and Mr. Anderson, respectively, during the applicable year that was reimbursed by the Company pursuant to its advisory agreement. (2) Represents the allocable share of certain expenses incurred by the Advisor or its affiliates with respect to Mr. Lappetito that was reimbursed by the Company pursuant to our advisory agreement as follows: (1) for 2023: (a) $22,232 for payroll taxes and (b) $13,055 for matching contributions to Mr. Lappetitio’s 401(k); (2) for 2022: (a) $16,954 for payroll taxes; and (b) $12,069 for matching contributions to Mr. Lappetito’s 401(k); and (3) for 2021: (a) $1,218 for payroll taxes; and (b) $948 for matching contributions to Mr. Lappetito’s 401(k). (3) Represents the allocable share of certain expenses incurred by the Advisor or its affiliates with respect to Mr. Anderson that was reimbursed by the Company pursuant to our advisory agreement as follows: (a) $5,281 for payroll taxes and (b) $10,469 for matching contributions to Mr. Anderson’s 401(k).

  11. Compensation of Directors

    Compensation of Directors We pay to each of our independent directors the fees described below. If a director is our employee or an employee of the Advisor or any of its affiliates, we do not pay compensation for services rendered as a director. All directors also receive reimbursement of reasonable out-of-pocket expenses incurred in connection with attendance at meetings of our Board of Directors and its committees. We pay our independent directors a yearly retainer of $30,000 and an additional yearly retainer of $55,000 for the lead independent director or non-executive chairman; $2,000 for all meetings personally attended by the directors ($2,500 for attendance by the chairperson of the audit committee at each meeting of the audit committee) and $1,500 for each meeting attended via telephone; $750 per transaction reviewed and voted upon electronically up to a maximum of $2,250 for three or more transactions reviewed and voted upon per meeting. If there are a Board meeting and one or more committee meetings in one day, the director’s fees may not exceed $2,500 ($3,000 for the chairperson of the audit committee if there is a meeting of such committee). In addition, since April 2017 our non-executive chairman has received a monthly retainer of $25,000, and our independent directors (with Mr. Michelson abstaining) approved the continued payment of this monthly retainer during each month of the year ending December 31, 2023. We also pay a fee to each independent director for each external seminar, conference, panel, forum or other industry-related event attended in person and in which the independent director actively participates, solely in such person’s capacity as an independent director of the Company, in the following amounts: • $2,500 for each day of an external seminar, conference, panel, forum or other industry-related event that does not exceed four hours, or • $5,000 for each day of an external seminar, conference, panel, forum or other industry-related event that exceeds four hours. In either of the above cases, we will reimburse, to the extent not otherwise reimbursed, an independent director’s reasonable expenses associated with attending external seminars, conferences, panels, forums or other industry-related events. An independent director cannot be paid or reimbursed for attending a single external seminar, conference, panel, forum or other industry-related event by us and another company for which he or she is a director. The following table sets forth information regarding compensation of our directors during the year ended December 31, 2023:

  12. Compensation of Directors

    | Name | Fees Paid in Cash ($) | Stock Awards ($)(1) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Changes in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total Compensation ($) | | Edward M. Weil, Jr. | — | — | — | — | — | — | — | | Leslie D. Michelson | $413,500 | — | — | — | — | — | $413,500 | | Edward G. Rendell | $56,500 | — | — | — | — | — | $56,500 | | B.J. Penn | $55,000 | — | — | — | — | — | $55,000 | | Elizabeth K. Tuppeny | $56,500 | — | — | — | — | — | $56,500 |

  13. Compensation of Directors

    (1) No restricted shares were granted during the year ended December 31, 2023. As of December 31, 2023, Mr. Michelson, held 51,643 unvested restricted shares, inclusive of 9,570 unvested restricted shares issued as quarterly stock dividends from October 2020 through January 2024. During the year ended December 31, 2023, Mr. Michelson received 5,171 shares of common stock in connection with quarterly stock dividends on the unvested restricted shares referenced in the immediately preceding footnote originally granted in August 2017. Dividends payable entirely in shares of common stock are treated in a fashion similar to a stock split for accounting purposes specifically related to per-share calculations for the current and prior periods. See Note 1- Organization to our 2023 Annual Report. These unvested restricted shares relate to a grant in August 2017 of 300,000 restricted shares to Mr. Michelson, with one-seventh of the shares vesting annually in equal increments over a seven-year period with initial vesting on August 4, 2018.

  14. Pay Versus Performance Disclosure

    Pay Versus Performance Disclosure As required by Item 402(v) of Regulation S-K, which was mandated by Section 953(a) of the Dodd-Frank Act, we are providing the following information about the relationship between “compensation actually paid” to our principal executive officer or “PEO” and average “compensation actually paid” to our named executive officers or “NEOs” and the financial performance of the Company during the years ended December 31, 2023, 2022 and 2021, respectively, in each case calculated in a manner consistent with SEC rules.

  15. Pay Versus Performance Disclosure

    | Name | Summary Compensation Table Total for PEO(1) | Compensation Actually Paid to PEO(1)(2) | Average Summary Compensation Table Total for Non-PEO NEOs(2)(3) | Average Compensation Actually Paid to Non-PEO NEOs(3) | Net Loss Attributable to Common to Stockholders | Modified Funds from Operations | | | | | | | (in thousands) | (in thousands) | | 2023 | $154,385 | $154,385 | $420,232 | $420,232 | $(86,097) | $6,030 | | 2022 | $— | — | $398,210 | $398,210 | $(93,285) | $12,642 | | 2021 | $— | — | $28,310 | $28,310 | $(92,942) | $22,940 |

  16. Pay Versus Performance Disclosure

    (1) Edward M. Weil, Jr. and Michael Anderson are the PEOs reflected in these columns for the fiscal year ended December 31, 2023. Mr. Weil was the sole PEO reflected in these columns for the fiscal years ended 2022 and 2021. (2) Compensation actually paid or “CAP” to our PEO and Non-PEO NEO is calculated based on the “Total Compensation” reported in the Summary Compensation Table above for each of the applicable fiscal years, adjusted to exclude and include certain items in accordance with Item 402(v) of Regulation S-K as follows. (3) Scott M. Lappetito is the non-PEO NEO reflected in these columns, and our only non-PEO for the covered fiscal years. Mr. Lappetito is the Company’s chief financial officer, treasurer and secretary.

  17. PROPOSAL NO. 1 — ELECTION OF DIRECTORS

    PROPOSAL NO. 1 — ELECTION OF DIRECTORS Our Board of Directors is currently comprised of five members, of which four are independent directors as that term is defined in the Nasdaq rules and our Bylaws. Our Bylaws provide that the number of directors may not be less than one, which is the minimum number required by the MGCL, or more than 15. The Board of Directors is divided into three classes of directors. At the Annual Meeting, one Class I director will be elected to serve until the 2027 Annual Meeting and until his successor is duly elected and qualifies. Each director serves until the annual meeting of stockholders held in the third year following the year of his or her election and until his or her successor is duly elected and qualifies. The number of directors in each class may be changed from time to time by the Board to reflect matters such as an increase or decrease in the number of directors so that each class, to the extent possible, will have the same number of directors. The Board of Directors has nominated B.J. Penn for election as a Class I director at the Annual Meeting, to serve until our 2027 Annual Meeting and until his successor is duly elected and qualifies. Mr. Penn currently serves as a Class I director of the Company. The proxy holder named on the proxy card intends to vote “FOR” the election of Mr. Penn as the Class I director. The election of the Class I director requires the affirmative vote of a plurality of all the votes cast at the Annual Meeting, provided that a quorum is present. Withhold votes and broker non-votes, if any are applicable, will have no effect on the result of the vote, although they will be considered present for the purpose of determining the presence of a quorum. We know of no reason why Mr. Penn will be unable to serve if elected. If, at the time of the Annual Meeting, Mr. Penn should become unable to serve, shares represented by proxies will be voted “FOR” any substitute nominee designated by the Board of Directors. No proxy will be voted for a greater number of persons than the number of nominees described in this Proxy Statement. THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE ELECTION OF B.J. PENN AS A CLASS I DIRECTOR, TO SERVE UNTIL THE COMPANY’S 2027 ANNUAL MEETING AND UNTIL HIS SUCCESSOR IS DULY ELECTED AND QUALIFIES.