UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): November 1, 2016
COMMUNITY HEALTHCARE TRUST INCORPORATED
(Exact Name of Registrant as Specified in Charter)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MARYLAND
|
|
001-37401
|
|
46-5212033
|
|
(State or other jurisdiction of incorporation)
|
|
(Commission File Number)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
|
|
3326 Aspen Grove Drive, Suite 150, Franklin, Tennessee 37067
|
|
(Address of principal executive offices) (Zip Code)
|
(615) 771-3052
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (
see
General Instruction A.2. below):
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 5.02
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(e)
On November 1, 2016, the Board of Directors (the “
Board
”) of Community Healthcare Trust Incorporated (the “
Company
”), at the recommendation of the compensation committee of the Board (the “
Committee
”), approved and adopted each of the Amended and Restated Alignment of Interest Program (the “
Restated Alignment Program
”) and the Amended and Restated Executive Officer Incentive Program (the “
Restated Officer Program
”).
Restated Alignment Program
The principal change in the Restated Alignment Program is to reserve 500,000 shares of the Company’s common stock, par value $0.01 per share, to be issued under this program (the “
Program Pool
”) as Acquisition Shares (as defined below). Previously, shares of restricted common stock of the Company issued to employees under the Restated Alignment Program in exchange for such employee’s cash compensation (“
Acquisition Shares
”) were issued from the pool of shares created and reserved for issuance under Section 3.1 of the 2014 Incentive Plan (the “
Plan Pool
”). The Restated Alignment Program now requires that Acquisition Shares be issued from the Program Pool going forward instead of from the Plan Pool.
The foregoing description of the Restated Alignment Program is qualified in its entirety by reference to the Amended and Restated Alignment of Interest Program, which is included as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated by reference into this Item. The foregoing description of the Restated Alignment Program does not purport to be complete and is qualified in its entirety by reference to such exhibits.
Restated Officer Program
The principal change in the Restated Officer Program from the initial Officer Incentive Program is to limit participation in this program to only executive officers of the Company. Under the Restated Officer Program, executive officers of the Company may be issued awards in the form of cash or restricted stock. Further, the revisions to the Restated Officer Program adjusted fair market value determination dates for calculating total shareholder return awards and conformed the peer group to the peer group chosen by the Committee’s compensation consultant.
The foregoing description of the Restated Officer Program is qualified in its entirety by reference to the Amended and Restated Executive Officer Incentive Program, which is included as Exhibit 10.2 to this Current Report on Form 8-K and is incorporated by reference into this Item. The foregoing description of the Restated Officer Program does not purport to be complete and is qualified in its entirety by reference to such exhibits.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
|
|
|
|
|
|
Exhibit Number
|
Description of Exhibits
|
|
10.1
|
Amended and Restated Alignment of Interest Program
|
|
10.2
|
Amended and Restated Executive Officer Incentive Program
|
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMMUNITY HEALTHCARE TRUST INCORPORATED
|
|
|
|
|
|
|
By:
|
/s/ W. Page Barnes
W. Page Barnes
Executive Vice President and
Chief Financial Officer
|
|
Date: November 4, 2016
|
|
|
EXHIBIT INDEX
|
|
|
|
|
|
Exhibit Number
|
Description of Exhibits
|
|
10.1
|
Amended and Restated Alignment of Interest Program
|
|
10.2
|
Amended and Restated Executive Officer Incentive Program
|
Exhibit 10.1
COMMUNITY HEALTHCARE TRUST
INCORPORATED
AMENDED AND RESTATED
ALIGNMENT OF INTEREST PROGRAM
1.
Purpose.
The Community Healthcare Trust Incorporated 2014 Incentive Plan (the "Plan") was adopted to promote the interests of Community Healthcare Trust Incorporated (the "Company") and its stockholders by
|
|
|
|
•
|
strengthening the Company's ability to attract, motivate, and retain those Eligible Persons upon whose judgment, initiative, and efforts the financial success and growth of the business of the Company largely depend;
|
|
|
|
|
•
|
offering such Eligible Persons additional incentives to put forth maximum efforts for the success of the business; and
|
|
|
|
|
•
|
affording such Eligible Persons an opportunity to acquire a proprietary interest in the Company through stock ownership and other performance-based rights.
|
This Amended and Restated Alignment of Interest Program is being adopted in accordance with the Plan and is intended to further the purposes of the Plan by providing incentives to Eligible Persons to receive restricted stock with long-term vesting. The Committee believes that utilizing restricted stock with long-term vesting aligns the interests of Participants with those of the Company's shareholders.
2.
Definitions.
Whenever capitalized terms are used herein, but not defined, they shall have the meanings attributed to such terms in the Plan.
3.
Participation.
The Participants in this Amended and Restated Alignment of Interest Program are the Eligible Persons who have been named by the Committee to participate in this program.
4.
Awards.
Each year, Participants may (i) elect to reduce Compensation that might be payable in cash the subsequent year (the "Reduction Year") by a percentage amount to be applied to the acquisition of restricted stock ("Acquisition Shares") and (ii) receive an Award based upon a multiple of the Acquisition Shares determined by the restriction period selected by the Participant (the "Restriction Multiple").
For the avoidance of doubt, Acquisition Shares are restricted shares of Common Stock subject to a substantial risk of forfeiture and are not Awards. Accordingly, Acquisition Shares issued hereunder shall not be subject to the percentage limitation set forth in Section 3.1 of the Plan; provided that any Award issued to an Eligible Person pursuant to this Section 4 of the Alignment of Interest Program shall be subject to such percentage limitation set forth in Section 3.1 of the Plan.
The minimum and maximum percentage of each Compensation type that a Participant may elect to be reduced and applied to Acquisition Shares shall be determined by the Committee. See Exhibit A for the current percentages.
The amount of Base Salary, cash bonus, retainer, fees or other compensation applied to the acquisition of Restricted Stock shall reduce the Base Salary, cash bonus, retainer, fees or other compensation of the Participant for the Reduction Year.
The "Determination Date" shall be January 15 of the year following the Participant's effective election, or, if such date is not a trading day, then the trading day immediately preceding January 15. Notwithstanding the foregoing, the following two exceptions apply:
(i) for a Participant's initial year of participation in the Program, the Determination Date shall be the date that is the fifteenth (15th) business day following the Participant's effective election, and
(ii) if the dollar amount of any reduced compensation has not been determined by January 15, then the Determination Date shall be the fifteenth (15th) business day following the date on which the amount of such compensation (e.g., bonus) is fixed and determined.
Effective as of November1, 2016, the Board hereby reserves an aggregate of 500,000 shares of Common Stock to be issued to Participants upon election to receive Acquisition Shares. The number of Acquisition Shares granted to a Participant shall be determined as follows:
(i) For elections made prior to the date the Company’s Initial Public Offering was completed, May 28, 2015, ("IPO Effective Date"), the number of Acquisition Shares shall be determined as of the IPO Effective Date by dividing the total of the Participant's elected reduced Salary or retainer, fees for the remainder of such year by the price per share sold to the public by the underwriters of the Company's Initial Public Offering; or
(ii), For all periods after the IPO Effective Date, the number of Acquisition Shares shall be determined as of the Determination Date by dividing the total of the Participant's elected reduced Salary, cash bonus, retainer, fees or other compensation by the average closing price of the common stock for the 10 trading days immediately preceding the Determination Date.
The Restriction Multiple and restriction period shall be established by the Committee in its sole discretion. See Exhibit A for the current multiples. The Restriction Multiple shall be determined by Participant's selection of a restriction period.
Each Participant must deliver written notice of Participant's election to obtain an Award pursuant to this Section 4 to the Director of Human Resources of CHCT, or other person appointed by the Committee, prior to the end of the last business day before the beginning of the Reduction Year. The notice shall contain the percentage reduction and the restriction period selected by the Participant. Unless otherwise approved by the Director of Human Resources of CHCT, this election shall be irrevocable by the Participant.
The product of the Restriction Multiple multiplied by the Acquisition Shares, rounded to the nearest share, shall be the number of shares constituting an Award (the “Award Shares”) pursuant to this Section 4. See Exhibit B for illustrative examples of the calculations. Acquisition Shares and Award Shares determined pursuant to this Section 4 shall be delivered to each Participant as soon as administratively feasible, but generally prior to the record date for payment of the dividend declared in January of the Reduction Year. Each Participant must be an Eligible Person at the date of delivery of the Award to receive the Award Shares.
The Committee shall have the discretion to alter the administration of awards under this Amended and Restated Alignment of Interest Program at any time prior to the grant of any such award, in accordance with Section 4.3 of the Plan.
5.
Termination of Employment.
In the event of termination of a Participant's employment, the disposition of any unvested Awards will be determined in accordance with such Participant's written employment agreement and Award Agreement, if applicable. If a Participant is not employed pursuant to a written employment agreement and voluntarily terminates his or her employment, or is terminated for Cause (as such term is defined in the Plan), such Participant will forfeit any unvested Awards. If a Participant is not employed pursuant to a written employment agreement and such employment is terminated by the Company without Cause, or by reason of Participant's death, disability or retirement (upon attainment of eligibility to retire in accordance with any applicable Company policy then in effect) all unvested Awards will continue to vest pursuant to the Restricted Stock Agreement such stock is subject to. The provisions of Section 7 of the Plan will govern in the event of a Change of Control and are not intended to be altered by this Section 5. Notwithstanding the foregoing, for any Participant who is subject to Code Section 162(m) compensation restrictions, no unvested Awards which are intended to be performance-based compensation under Code Section 162(m) shall vest unless the performance goals have been satisfied on a pro rata basis by the termination date.
6.
Amendments.
The Committee may from time to time amend or modify this Amended and Restated Alignment of Interest Program, provided that no such action shall adversely affect Awards previously granted hereunder.
7. Survival.
This Amended and Restated Alignment of Interest Program shall continue in effect as long as the Plan is in effect or until terminated by the Committee.
EXHIBIT A
Initial Percentages/Multiples Pursuant to
Amended and Restated
Alignment of Interest Program
|
|
|
|
|
|
|
Range of Elective Deferral Percentages
|
|
Compensation Type
|
Minimum
|
Maximum
|
|
Base Salary
|
0.00%
|
100.00%
|
|
Cash Bonus
|
0.00%
|
100.00%
|
|
Other Compensation
|
0.00%
|
100.00%
|
|
|
|
|
|
|
|
|
Employee Restriction Multiples
|
|
Compensation Type
|
3 Year Restriction
|
5 Year Restriction
|
8 Year Restriction
|
|
Base Salary
|
0.3X
|
0.5X
|
1.0X
|
|
Cash Bonus
|
0.3X
|
0.5X
|
1.0X
|
|
Other Compensation
|
0.3X
|
0.5X
|
1.0X
|
|
|
|
|
|
|
|
|
Director Restriction Multiples
|
|
Compensation Type
|
1 Year Restriction
|
2 Year Restriction
|
3 Year Restriction
|
|
Retainer
|
0.2X
|
0.4X
|
0.6X
|
|
Fees
|
0.2X
|
0.4X
|
0.6X
|
|
Other Compensation
|
0.2X
|
0.4X
|
0.6X
|
EXHIBIT B
Examples
Employee/Contractor Example
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Initial
Cash
Amounts
|
Elected
Deferral
Percent
|
Deferred
Amount
|
Current
Year Cash
Received
|
Share
Price
|
Acquisition
Shares
|
Elected
Deferral
Period
|
Restriction
Multiple
|
Alignment
of Interest
Award
|
Total
Restricted
Shares
|
|
Base Salary
|
150,000
|
|
25%
|
37,500
|
|
112,500
|
|
$20.00
|
1,875
|
|
5 year
|
0.5
|
937.5
|
|
2,812.5
|
|
|
Cash Bonus
|
50,000
|
|
100%
|
50,000
|
|
0
|
|
$20.00
|
2,500
|
|
3 year
|
0.3
|
750.0
|
|
3,250.0
|
|
|
Other
Compensation
|
50,000
|
|
50%
|
25,000
|
|
25,000
|
|
$20.00
|
1,250
|
|
8 year
|
1.0
|
1,250.0
|
|
2,500.0
|
|
|
Totals
|
250,000
|
|
|
112,500
|
|
137,500
|
|
|
5,625
|
|
|
|
2,937.5
|
|
8,562.5
|
|
Director Example
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Initial
Cash
Amounts
|
Elected
Deferral
Percent
|
Deferred
Amount
|
Current
Year Cash
Received
|
Share
Price
|
Acquisition
Shares
|
Elected
Deferral
Period
|
Restriction
Multiple
|
Alignment
of Interest
Award
|
Total
Restricted
Shares
|
|
Annual Retainer
|
25,000
|
|
100%
|
25,000
|
|
—
|
|
$20.00
|
1,250
|
|
3 year
|
0.6
|
750.0
|
|
2,000.0
|
|
|
Meeting Fees
|
7,500
|
|
100%
|
7,500
|
|
—
|
|
$20.00
|
375
|
|
2 year
|
0.4
|
150.0
|
|
525.0
|
|
|
Other
Compensation
|
10,000
|
|
0%
|
0
|
|
10,000
|
|
$20.00
|
0
|
|
|
|
0.0
|
|
0.0
|
|
|
Totals
|
42,500
|
|
|
32,500
|
|
10,000
|
|
|
1,625
|
|
|
|
900.0
|
|
2,525.0
|
|
Exhibit 10.2
COMMUNITY HEALTHCARE TRUST
INCORPORATED
AMENDED AND RESTATED
EXECUTIVE OFFICER INCENTIVE PROGRAM
1.
Purpose.
The Community Healthcare Trust Incorporated Amended and Restated 2014 Incentive Plan (the "Plan") was adopted to promote the interests of Community Healthcare Trust Incorporated (the "Company") and its stockholders by
|
|
|
|
•
|
strengthening the Company's ability to attract, motivate, and retain select Eligible Persons upon whose judgment, initiative, and efforts the financial success and growth of the business of the Company largely depend;
|
|
|
|
|
•
|
offering such individuals additional incentives to put forth maximum efforts for the success of the business; and
|
|
|
|
|
•
|
affording such select Eligible Persons an opportunity to acquire a proprietary interest in the Company through stock ownership and other performance-based rights.
|
This Amended and Restated Executive Officer Incentive Program is being adopted in accordance with the Plan and is intended to further the purposes of the Plan by providing incentives to the Company's executive officers that are designed to reward individual performance, the achievement of specific Company-level financial goals and total shareholder return.
2.
Definitions.
Whenever the following capitalized terms are used in this Amended and Restated Executive Officer Incentive Program, they shall have the meanings specified below:
"1-year TSR"
means for any person for any year the sum of: (X) the per share Fair Market Value as of June 30 of such year minus the per share Fair Market Value of the Common Stock as of July 1 of the immediately prior year, and (Y) the aggregate dividends paid to common stockholders during such year divided by (Z) the per share Fair Market Value as of July 1 of the immediately prior year, expressed as a percentage.
"3-year TSR"
means for any person for any three-year period the sum of: (X) the per share Fair Market Value as of the last June 30 of such three-year period minus the per share Fair Market Value of the Common Stock as of the first July 1 of such three-year period, and (Y) the aggregate dividends paid to common stockholders during such three-year period divided by (Z) the per share Fair Market Value as of the first July 1 of such three-year period, expressed as a percentage.
"AFFO"
means adjusted funds from operations per share, as reported to the public by the Company in its earnings and results of operations news releases and in its periodic reports filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended with adjustments made to normalize the effect of equity offerings.
"Peer Group"
means the most recent group of equity real estate investment trusts ("REITs") that the Committee’s compensation consultant chooses as the Company’s Peer Group.
Other capitalized terms used herein, but not defined, shall have the meanings attributed to such terms in the Plan.
3.
Participation.
The Participants in this Amended and Restated Executive Officer Incentive Program are the Eligible Persons who are executive officers of CHCT or its Affiliates or Subsidiaries and who have been named by the Committee to participate in this program.
4.
Awards.
Awards may be in the form of cash or restricted stock as outlined below and may be granted to each Participant upon the Committee's determination and in its discretion and shall be subject to such vesting periods as outlined below. Awards shall generally be of the following types:
"Individual Performance Awards"
("IPA") are in the discretion of the Committee and shall be for the purposes of: (i) rewarding a Participant's individual efforts in contributing to the success of the Company and the Participant's demonstration of competency within his or her job description and requisite
skill sets and (ii) retaining the Participant as an executive officer of the Company. The Committee anticipates that Participants will have the opportunity to earn an IPA each year. The Company will generally target a maximum IPA for each Participant of up to 50% of such Participant's Base Salary.
"Company Performance Awards "
("CPA") shall be based on specific Company performance targets. The Committee may determine, in its discretion, the particular financial and/or operating metrics to be targeted, which may include, but are not limited to FAD, AFFO, payout percentages, etc. The measurement period shall be four consecutive quarters ending on June 30 of each year or such date as the Committee may determine. The Committee anticipates that Participants will have the opportunity to earn Company Performance Awards each year. The Company will generally target a maximum of two performance metrics during any given measurement period and a maximum combined award for all such metrics of up to 50% of such Participant's Base Salary. The initial Company performance metric is as outlined on Exhibit B hereto.
"TSR Awards"
("TSRA") shall be based on the Company's total shareholder return, as measured against the Peer Group as of the last trading day of the year. The criteria for awarding TSRAs shall be the Company's relative total shareholder return performance measured as a percentile, as compared to the total shareholder returns of the companies in the Peer Group. The measurement period shall be four and twelve consecutive quarters as outlined in Section 2 above. The Company will generally target a maximum TSRA for each Participant of up to 200% of such Participant's Base Salary. Participants shall have the opportunity to earn TSRAs each year based on 1-year TSR and 3-year TSR. TSRAs shall be in the form of Restricted Stock Awards with an eight-year cliff vesting period and shall not be available for the Company’s Alignment of Interest Program. The initial TSRA percentages are as outlined in Exhibit B hereto. The Determination Date shall be June 30 of each year or, if such date is not a trading day, then the trading day immediately preceding June 30. The number of shares shall be determined as of the Determination Date by dividing the total of the Participant's TSRA by the average closing price of the common stock for the 10 trading days immediately preceding the Determination Date
The Committee shall have the discretion to alter the administration of awards under this Amended and Restated Executive Officer Incentive Program at any time prior to the grant of any such award, in accordance with Section 4.3 of the Plan.
5.
Restricted Stock Election Awards.
At the election of the Participant, the Participant may use any Individual Performance Awards and/or Company Performance Awards paid in cash under this Amended and Restated Executive Officer Incentive Plan to purchase restricted stock, of the Company in accordance with the terms and provisions of the Plan and the Company's Alignment of Interest Program.
6.
Termination of Employment.
In the event of termination of a Participant's employment, the disposition of any unvested Awards will be determined in accordance with such Participant's written employment agreement and Award Agreement, if applicable. If a Participant is not employed pursuant to a written employment agreement and voluntarily terminates his or her employment, or is terminated for Cause (as such term is defined in the Plan), such Participant will forfeit any unvested Awards. If a Participant is not employed pursuant to a written employment agreement and such employment is terminated by the Company without Cause, or by reason of Participant's death, Disability or retirement (upon attainment of eligibility to retire in accordance with any applicable Company policy then in effect) all unvested Awards will continue to vest pursuant to the Restricted Stock Agreement such stock is subject to. The provisions of Section 7 of the Plan will govern in the event of a Change of Control and are not intended to be altered by this Section 6. Notwithstanding the foregoing, for any Participant who is subject to Code Section 162(m) compensation restrictions, no unvested Awards which are intended to be performance-based compensation under Code Section 162(m) shall vest unless the performance goals have been satisfied on a pro rata basis by the termination date.
7.
Amendments.
The Committee may from time to time amend or modify this Amended and Restated Executive Officer Incentive Program, provided that no such action shall adversely affect Awards previously granted hereunder.
8. Survival.
This Amended and Restated Executive Officer Incentive Program shall continue in effect as long as the Plan is in effect or until terminated by the Committee.
Exhibit A Company Performance Metric
|
|
|
|
|
|
|
|
|
AFFO Payout Percentage
Required To Pay Target Dividend
|
Company Performance
Award Percentage
|
|
|
|
95%
|
10%
|
|
|
|
94%
|
20%
|
|
|
|
93%
|
30%
|
|
|
|
92%
|
40%
|
|
|
|
91%
|
50%
|
|
|
|
90%
|
60%
|
|
|
|
89%
|
70%
|
|
|
|
88%
|
80%
|
|
|
|
87%
|
90%
|
|
|
|
86%
|
100%
|
|
|
|
85%
|
110%
|
|
|
|
84%
|
120%
|
|
|
|
83%
|
130%
|
|
|
|
82%
|
140%
|
|
|
|
<81%
|
150%
|
|
AFFO Payout Percentages for other than whole integers shall be prorated with the corresponding Company Performance Index. For Example, a Payout Percentage of 94.5% shall equate to a Company Performance Index of 15%.
|
|
|
|
|
|
|
|
|
|
TARGET DIVIDENDS
|
|
|
PLAN YEAR END
|
TARGET DIVIDEND
|
|
|
|
6/30/17
|
$1.55
|
|
|
|
6/30/18
|
$1.60
|
|
|
|
6/30/19
|
$1.65
|
|
|
|
6/30/20
|
$1.70
|
|
|
|
6/30/21
|
$1.75
|
|
|
|
6/30/22
|
$1.80
|
|
|
|
6/30/23
|
$1.85
|
|
|
|
6/30/24
|
$1.90
|
|
Exhibit B Total Shareholder Return Award Percentages of Base Salary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TSR Measure
|
<25th Percentile
|
>=25th Percentile
|
>=50th Percentile
|
>=75th Percentile
|
>100th Percentile
|
|
1-Year TSR
|
0.0
|
%
|
25.0
|
%
|
50.0
|
%
|
75.0
|
%
|
100.0
|
%
|
|
3-Year TSR
|
0.0
|
%
|
25.0
|
%
|
50.0
|
%
|
75.0
|
%
|
100.0
|
%
|