DEF 14A



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant x    Filed by a Party other than the Registrant o
Check the appropriate box:
o
Preliminary Proxy Statement
o
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
x
Definitive Proxy Statement
o
Definitive Additional Materials
o
Soliciting Material under §240.14a-12

EPR Properties
(Name of registrant as specified in its charter)
(Name of person(s) filing proxy statement, if other than the registrant)
Payment of Filing Fee (Check the appropriate box):
x    No fee required.
o    Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1)
Title of each class of securities to which the transaction applies:
(2)
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(3)
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o    Fee paid previously with preliminary materials.
o    Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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Date Filed:


NOTICE OF 2016 ANNUAL MEETING
OF SHAREHOLDERS

Meeting Information
Date:        May 11, 2016
Time:        11:00 a.m.
Location:    EPR Properties
909 Walnut Street, Suite 200
Kansas City, Missouri 64106
April 1, 2016
Dear Shareholders:
The 2016 annual meeting of shareholders of EPR Properties will be held at our offices at 909 Walnut Street, Suite 200, Kansas City, Missouri 64106 on May 11, 2016 at 11:00 a.m. (local time). At the meeting, our shareholders will vote:
•
To elect Barrett Brady and Peter C. Brown as Class I trustees to serve for a three-year term (Proposal No. 1);
•
To approve our named executive officers' compensation in an advisory vote (Proposal No. 2);
•
To approve our 2016 Equity Incentive Plan (Proposal No. 3); and
•
To ratify the appointment of KPMG LLP as our independent registered public accounting firm for 2016 (Proposal No. 4).
Shareholders will also transact any other business that may properly come before the meeting.
All holders of record of our common shares at the close of business on March 17, 2016 are entitled to vote at the meeting or any postponement or adjournment of the meeting.
We are pleased to continue to take advantage of the Securities and Exchange Commission rules that allow companies to furnish their proxy materials to their shareholders over the Internet. As a result, we are mailing to our shareholders a notice instead of a printed copy of this proxy statement and our 2015 annual report to shareholders. The notice contains instructions on how to access those documents over the Internet. The notice also contains instructions on how each of those shareholders can receive a printed copy of our proxy materials, including this proxy statement, our 2015 annual report to shareholders and a form of proxy card or voting instruction form. Continuing to employ this distribution process will conserve natural resources and reduce the costs of printing and distributing our proxy materials.
You are cordially invited to attend the meeting in person. Whether or not you intend to be present at the meeting, our Board of Trustees asks that you vote as promptly as possible. You may vote by proxy over the Internet or by telephone, or, if you requested to receive printed proxy materials, by mailing a proxy or voting instruction form. Please review the instructions on each of your voting options described in this proxy statement, as well as in the notice you received in the mail. Your vote is important and all shareholders are encouraged to attend the meeting and vote in person or by proxy.
BY ORDER OF THE BOARD OF TRUSTEES
Craig L. Evans
Senior Vice President, General Counsel and Secretary

909 Walnut, Suite 200 Kansas City, MO 64106 816.472.1700 Toll Free: 888 EPR REIT Fax: 816.472.5794 www.eprkc.com


Proxy Statement
EPR Properties
909 Walnut Street, Suite 200
Kansas City, Missouri 64106  

This proxy statement (this "Proxy Statement") provides information about the 2016 annual meeting of shareholders (the "Annual Meeting") of EPR Properties ("we," "us" or the "Company") to be held at our offices at 909 Walnut Street, Suite 200, Kansas City, Missouri 64106, on May 11, 2016, beginning at 11:00 a.m. (local time), and at any postponements or adjournments of the meeting.
The Notice Regarding the Availability of Proxy Materials and this Proxy Statement and form of proxy are being distributed and made available on or about April 1, 2016.


TABLE OF CONTENTS

 
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ABOUT THE PROXY MATERIALS AND ANNUAL MEETING
Why am I receiving these materials?
We have made these materials available to you over the Internet or, upon your request, have delivered printed copies of these materials to you by mail, in connection with the Board's solicitation of proxies for use at the Annual Meeting, which will take place on Wednesday, May 11, 2016. As a shareholder, you are invited to attend the Annual Meeting and vote on the items of business described in this Proxy Statement. This Proxy Statement includes information that we are required to provide to you under the rules of the U.S. Securities and Exchange Commission (the "SEC") and that is designed to assist you in voting your shares.
What is included in the proxy materials?
The proxy materials include:
•
This Proxy Statement for the Annual Meeting; and
•
Our 2015 annual report to shareholders, which includes our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 (the "Annual Report").
If you received a printed copy of these materials by mail, the proxy materials also include a proxy card or a voting instruction form for the Annual Meeting.
What am I voting on?
Our Board of Trustees (also referred to herein as the "Board") is soliciting your vote for:
•
The election of Barrett Brady and Peter C. Brown as Class I trustees to serve for a three-year term (Proposal No. 1);
•
The approval, on a non-binding advisory basis, of the compensation of our named executive officers as disclosed in these materials (Proposal No. 2);
•
The approval of our 2016 Equity Incentive Plan (the "2016 Plan") (Proposal No. 3); and
•
The ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2016 (Proposal No. 4).
What are the Board's recommendations?
The Board recommends you vote:
•
"FOR" the election of Barrett Brady and Peter C. Brown as Class I trustees to serve for a three-year term (Proposal No. 1);
•
"FOR" the approval, on a non-binding advisory basis, of the compensation of our named executive officers as disclosed in these materials (Proposal No. 2);
•
"FOR" the approval of the 2016 Plan (Proposal No. 3); and
•
"FOR" the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2016 (Proposal No. 4).
Why did I receive a one-page notice in the mail regarding the Internet availability of proxy materials instead of a full set of proxy materials?
Pursuant to rules adopted by the SEC, we have elected to provide access to our proxy materials via the Internet. Accordingly, we are sending a Notice of Internet Availability of Proxy Materials (the "Notice") to our shareholders. All shareholders will have the ability to access the proxy materials on the website

 
 
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referred to in the Notice or request to receive a printed set of the proxy materials. Instructions on how to access the proxy materials over the Internet or to request a printed copy may be found in the Notice. In addition, shareholders may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis. We encourage shareholders to take advantage of the availability of the proxy materials on the Internet to help reduce the environmental impact of our annual meetings.
If I share an address with another shareholder, and we received only one paper copy of the proxy materials, how may I obtain an additional copy of the proxy materials?
We have adopted a procedure called "householding," which the SEC has approved. Under this procedure, we are delivering a single copy of the Notice and, if applicable, this Proxy Statement and the Annual Report to multiple shareholders who share the same address unless we have received contrary instructions from one or more of the shareholders. This procedure reduces our printing costs, mailing costs and fees. Shareholders who participate in householding will continue to be able to access and receive separate proxy cards. Upon written or oral request, we will deliver promptly a separate copy of the Notice and, if applicable, this Proxy Statement and the Annual Report to any shareholder at a shared address to which we delivered a single copy of any of these documents. To receive a separate copy of the Notice and, if applicable, this Proxy Statement or the Annual Report, shareholders may write or call us at the following address and telephone number:
EPR Properties
Attention: Secretary
909 Walnut Street, Suite 200
Kansas City, Missouri 64106
(816) 472-1700
Shareholders who hold shares in "street name" (as described below) may contact their broker, bank or other similar nominee to request information about householding.
How can I get electronic access to the proxy materials?
The Notice will provide you with instructions regarding how to:
•
View on the Internet the Company's proxy materials for the Annual Meeting; and
•
Instruct the Company to send future proxy materials to you by email.
Our proxy materials are also available on the Internet at www.envisionreports.com/EPR.
Choosing to receive future proxy materials by email will save us the cost of printing and mailing documents to you and will reduce the impact of our annual meetings on the environment. If you choose to receive future proxy materials by email, you will receive an email message next year with instructions containing a link to those materials and a link to the proxy voting website. Your election to receive proxy materials by email will remain in effect until you terminate it.
Who is entitled to vote at the meeting?
Holders of record of our common shares at the close of business on March 17, 2016 (the "Record Date"), are entitled to receive notice of the Annual Meeting and to vote their common shares held on that date at the meeting or any postponements or adjournments of the Annual Meeting. On the Record Date, 63,341,148 common shares of the Company were outstanding.
How many votes do I have?
On each matter presented at the Annual Meeting, you are entitled to one vote for each common share owned by you at the close of business on the Record Date.



 
 
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What is the difference between a shareholder of record and a beneficial owner of shares held in street name?
Shareholder of Record. If your shares are registered directly in your name with our transfer agent, Computershare Trust Company, N.A., you are considered the shareholder of record with respect to those shares, and we sent the Notice directly to you. If you requested printed copies of the proxy materials by mail, you will receive a proxy card.
Beneficial Owner of Shares Held in Street Name. If your shares are held in an account at a broker, bank or other nominee, then you are the beneficial owner of those shares in "street name," and the Notice was forwarded to you by your broker, bank or other nominee who is considered the shareholder of record with respect to those shares. As a beneficial owner, you have the right to instruct your broker, bank or other nominee on how to vote the shares held in your account. Those instructions are contained in a "vote instruction form." If you request printed copies of the proxy materials by mail, you will receive a vote instruction form.
If I am a shareholder of record of the Company's shares, how do I vote?
There are four ways to vote:
•
In Person. If you are a shareholder of record, you may vote in person at the Annual Meeting. We will give you a ballot when you arrive.
•
Via the Internet. You may vote by proxy via the Internet by following the instructions provided in the Notice.
•
By Telephone. If you request printed copies of the proxy materials by mail, you may vote by proxy by calling the toll-free number found on the proxy card.
•
By Mail. If you request printed copies of the proxy materials by mail, you may vote by proxy by filling out the proxy card and sending it back in the envelope provided.
If I am a beneficial owner of shares held in street name, how do I vote?
There are four ways to vote:
•
In Person. If you are a beneficial owner of shares held in street name and you wish to vote in person at the Annual Meeting, you must obtain a legal proxy from the broker, bank or other nominee that holds your shares. Please contact your broker, bank or other nominee for instructions regarding obtaining a legal proxy.
•
Via the Internet. You may vote by proxy via the Internet by following the instructions provided in the Notice.
•
By Telephone. If you request printed copies of the proxy materials by mail, you may vote by proxy by calling the toll-free number found on the vote instruction form.
•
By Mail. If you request printed copies of the proxy materials by mail, you may vote by proxy by filling out the vote instruction form and sending it back in the envelope provided.
What constitutes a quorum?
The presence at the Annual Meeting, in person or by proxy, of the holders of a majority of our common shares outstanding on the Record Date will constitute a quorum, permitting the Annual Meeting to proceed. If a quorum is not present, the Annual Meeting will be adjourned until a quorum is obtained.

 
 
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How are proxies voted?
All shares represented by valid proxies received prior to the Annual Meeting will be voted and, where a shareholder specifies by means of the proxy a choice with respect to any matter to be acted upon, the shares will be voted in accordance with the shareholder's instructions.
What happens if I do not give specific voting instructions?
Shareholders of Record. If you are a shareholder of record and you:
•
Indicate when voting on the Internet or by telephone that you wish to vote as recommended by the Board; or
•
Sign and return a proxy card without giving specific voting instructions,
then the proxy holders will vote your shares in the manner recommended by the Board on all matters presented in this Proxy Statement and as the proxy holders may determine in their discretion with respect to any other matters properly presented for a vote at the Annual Meeting.
Beneficial Owners of Shares Held in Street Name. If you are a beneficial owner of shares held in street name and do not provide the broker, bank or other nominee that holds your shares with specific voting instructions, under the rules of various national and regional securities exchanges, the broker, bank or other nominee that holds your shares may generally vote on routine matters but cannot vote on non-routine matters. If the broker, bank or other nominee that holds your shares does not receive instructions from you on how to vote your shares on a non-routine matter, the broker, bank or other nominee that holds your shares will inform the inspector of election that it does not have the authority to vote on this matter with respect to your shares. This is generally referred to as a "broker non-vote."
Which ballot measures are considered "routine" or "non-routine"?
The ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2016 (Proposal No. 4) is a matter considered routine under applicable rules. A broker, bank or other nominee may generally vote on routine matters, and therefore no broker non-votes are expected to exist in connection with Proposal No. 4.
The election of trustees (Proposal No. 1), the advisory vote on executive compensation (Proposal No. 2) and the approval of the 2016 Plan (Proposal No. 3) are matters considered non-routine under applicable rules. A broker, bank or other nominee cannot vote without instructions on non-routine matters, and therefore broker non-votes may exist in connection with Proposal Nos. 1, 2 and 3.
How many votes are needed to approve each item?
We have adopted a majority vote standard for the election of trustees. The affirmative vote of a majority of votes cast at the Annual Meeting is required for the election of trustees (Proposal No. 1). This means that the number of shares voted "FOR" each trustee nominee must exceed the number of votes "WITHHELD" from that trustee nominee in order for that nominee to be elected.
The affirmative vote of a majority of votes cast at the Annual Meeting is required to: (i) approve, on a non-binding advisory basis, the compensation of our named executive officers as disclosed in these materials (Proposal No. 2); (ii) approve the 2016 Plan (Proposal No. 3), and (iii) ratify the appointment of KPMG LLP as our independent registered public accounting firm for 2016 (Proposal No. 4). This means that the number of shares voted "FOR" each proposal must exceed the number of votes "AGAINST" that proposal in order for that proposal to be approved.
How are abstentions and broker non-votes counted?
Abstentions or withhold votes and broker non-votes will be counted to determine whether there is a quorum present. Each trustee nominee is elected by the affirmative vote of a majority of the votes cast for the election of that trustee nominee at the Annual Meeting. Only votes "FOR" or "WITHHELD" with

 
 
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respect to each trustee nominee are counted as votes cast. Broker non-votes are not counted as votes cast and will be entirely excluded from the vote and will have no effect on its outcome.
The proposal to approve, on a non-binding advisory basis, the compensation of our named executive officers as disclosed in these materials (Proposal No. 2), the proposal to approve the 2016 Plan (Proposal No. 3), and the proposal to ratify the appointment of KPMG LLP as our independent registered public accounting firm for 2016 (Proposal No. 4) each require the affirmative vote of a majority of the votes cast for that proposal at the Annual Meeting. Only votes "FOR" or "AGAINST" each proposal are counted as votes cast. Abstentions and broker non-votes are not counted as votes cast and will be entirely excluded from the vote and will have no effect on its outcome.
What is the effect of the advisory vote?
The vote of the shareholders regarding the compensation of our named executive officers as disclosed in these materials (Proposal No. 2) is an advisory vote, and the results will not be binding on the Board of Trustees or the Company. However, the Board and the Compensation and Human Capital Committee (the "Compensation Committee"), which is comprised of independent trustees, will consider the outcome of the vote when making future executive compensation decisions.
Can I change my vote after I have voted?
You may revoke your proxy and change your vote at any time before the final vote at the Annual Meeting. You may vote again on a later date via the Internet or by telephone (in which case only your latest Internet or telephone proxy submitted prior to the Annual Meeting will be counted), by signing and returning a new proxy card or vote instruction form with a later date, or by attending the Annual Meeting and voting in person. However, your attendance at the Annual Meeting will not automatically revoke your proxy unless you vote again at the Annual Meeting or specifically request that your prior proxy be revoked by delivering to the Company's Secretary a written notice of revocation prior to the Annual Meeting.
Does the Company have a policy for confidential voting?
We have a confidential voting policy. Your proxy will be kept confidential and will not be disclosed to third parties, other than our inspector of election and personnel involved in processing the proxy instructions, ballots and voting tabulations, except where disclosure is mandated by law and in other limited circumstances.
Where can I find the voting results of the Annual Meeting?
The Company intends to announce preliminary voting results at the Annual Meeting and disclose final results in a current report on Form 8-K or quarterly report on Form 10-Q filed with the SEC within four business days after the Annual Meeting. If final results are not yet known within that four business day period, the Company will disclose preliminary voting results in a Form 8-K and file an amendment to the Form 8-K to disclose the final results within four business days after such final results are known.

 
 
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COMPANY GOVERNANCE
Proposal No. 1 – Election of Trustees
What are you voting on?
The Board of Trustees consists of seven members and is divided into three classes having three-year terms that expire in successive years. The Board has nominated Barrett Brady and Peter C. Brown to serve as Class I trustees for a term expiring at the 2019 annual meeting or until their successors are duly elected and qualified. Messrs. Brady and Brown are currently trustees who were elected by shareholders at the 2013 annual meeting.

The nominees, Messrs. Brady and Brown, have been nominated upon the recommendation of the Nominating/Company Governance Committee, which is comprised solely of independent trustees. Holders of proxies solicited by this Proxy Statement will vote the proxies received by them in accordance with the shareholder's instruction or, if no instruction is made, for the election of the Board's nominees for trustee.
Vote
Required
Each trustee nominee who receives a majority of the votes cast in favor of such trustee nominee's election (i.e., the number of shares voted "FOR" a trustee nominee must exceed the number of shares "WITHHELD" from that trustee nominee, excluding abstentions) will be elected a trustee, in an uncontested election.
The Company’s Trustee Resignation Policy provides that any trustee nominee who does not receive a majority of votes cast in favor of such trustee nominee's election must promptly tender his or her irrevocable resignation to the Company’s Board, subject only to the condition that the Board accept the resignation. The Board and the Nominating/Company Governance Committee must consider and act on the resignation, as more fully described under "Additional Information Concerning the Board of Trustees – Mandatory Trustee Resignation Policy."
 
Your Board recommends a vote "FOR" the election of Barrett Brady and Peter C. Brown as Class I trustees.

Here is a brief description of the backgrounds and principal occupations of the two individuals nominated for election as trustees and each trustee whose term of office will continue after the Annual Meeting.

 
 
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Class I Trustees
(Serving and Nominated for a Term Expiring at the 2019 Annual Meeting)
 
Barrett
Brady
 
Trustee since: 2004 and Nominee

Age: 69

Independent

 



Mr. Brady retired December 31, 2008 from his position as Senior Vice President of Highwoods Properties, Inc., a NYSE-listed real estate investment trust. Mr. Brady served as President and Chief Executive Officer of J.C. Nichols Company, a real estate company headquartered in Kansas City, Missouri, until its acquisition in 1998 by Highwoods Properties, Inc. Before joining J.C. Nichols Company in 1995, Mr. Brady was President and Chief Executive Officer of Dunn Industries, Inc., a major construction contractor. Mr. Brady serves on the board of directors, the audit and executive committees, and is chairman of the ESOP of J.E. Dunn Construction Group, Inc. He also serves on the board of directors, the compensation and nominating committees and is chairman of the audit committee of NASB Financial, Inc., a thrift holding company of North American Savings Bank, F.S.B., and he serves on the board of directors and is chairman of the audit committee of North American Savings Bank, F.S.B. He also serves on the board of directors and the audit and corporate governance committees of CorEnergy Infrastructure Trust, Inc., a NYSE-listed owner of U.S. energy infrastructure assets. Mr. Brady also serves on the board of directors and compensation committee of MRIGlobal. Mr. Brady received a B.B.A. from Southern Methodist University and an M.B.A. from the University of Missouri
 
 
Peter C. Brown 
 
Trustee since: 2010 and Nominee

Age: 57

Independent

 



Mr. Brown is Chairman of Grassmere Partners, LLC, a private investment firm. Prior to founding Grassmere Partners, Mr. Brown served as Chairman of the Board, Chief Executive Officer and President of AMC Entertainment Inc., one of the world's leading theatrical exhibition and entertainment companies, from July 1999 until his retirement in February 2009. He joined AMC in 1990 and served as AMC's President from January 1997 to July 1999, and Senior Vice President and Chief Financial Officer from 1991 to 1997. Mr. Brown served as the non-executive Chairman of the Board of Trustees of the Company from 1997 to 2003. Mr. Brown currently serves on the board of directors and audit and risk evaluation committees of CenturyLink, Inc., a NYSE-listed and Fortune 500 provider of communications services, and he serves on the board of directors and audit and nominating committees of Cinedigm Corp., a NASDAQ-listed leading independent content distributor. Mr. Brown has previously served on the board of directors of National CineMedia, Inc., Midway Games, Inc., LabOne, Inc. and Protection One, Inc. Mr. Brown is a graduate of the University of Kansas.

 
 
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Class II Trustees
(Serving for a Term Expiring at the 2017 Annual Meeting)
Robert J. Druten
 
Trustee since: 2004 and Nominee

Age: 69

Independent




Mr. Druten is Chairman of our Board of Trustees. In August 2006, Mr. Druten retired as Executive Vice President and Chief Financial Officer and a Corporate Officer of Hallmark Cards Incorporated. Mr. Druten serves as the chairman of the board of directors and chairman of the executive committee of Kansas City Southern, a NYSE-listed transportation company. Mr. Druten also serves on the compensation and nominating and governance committees of Kansas City Southern. Mr. Druten serves on the board of directors of Alliance GP, LLC, the managing general partner of Alliance Holdings GP, L.P., a NASDAQ-listed company indirectly engaged in the production and marketing of coal to utilities and industrial users. Mr. Druten also serves on the audit and conflicts committees of Alliance GP, LLC. Mr. Druten previously served on the board of directors of American Italian Pasta Company, from 2007 until it was acquired by Ralcorp Holdings, Inc. in July 2010, where he was the chairman of the audit committee and also served on the compensation committee. Mr. Druten received a B.S. in Accounting from the University of Kansas and an M.B.A. from Rockhurst University.
Gregory K. Silvers
 
Trustee since: 2015
Age: 52

 



Mr. Silvers was appointed as our Chief Executive Officer and President in February 2015. Prior to being appointed as our Chief Executive Officer and President, Mr. Silvers served as our Executive Vice President since February 2012 and as our Chief Operating Officer since 2006 and Chief Development Officer since 2001. Mr. Silvers previously served as our Vice President from 1998 until February 2012 and as our Secretary and General Counsel from 1998 until October 2012. From 1994 to 1998, he practiced with the law firm of Stinson Leonard Street LLP specializing in real estate law. Mr. Silvers received his J.D. in 1994 from the University of Kansas.
Robin P. Sterneck
 
Trustee since: 2013

Age: 58

Independent




Ms. Sterneck is President of Highland Birch Group, a private business consulting firm, and dedicates a portion of her time to Sterneck Capital Management, LLC. Prior to founding Highland Birch Group, Ms. Sterneck served in various capacities at Swiss Reinsurance ("Swiss Re"), a leading wholesale provider of reinsurance, insurance and other insurance-based forms of risk transfer, including serving as Managing Director, Head of Global Talent from January 2009 until her retirement in September 2009, and as Managing Director, Head of Commercial Insurance from 2006 until 2009. Ms. Sterneck joined Swiss Re upon its acquisition of GE Insurance Solutions in 2006. Prior to the acquisition, Ms. Sterneck served in a number of positions at GE Insurance Solutions beginning in 1999, including Head of the Commercial Insurance Division, a member of the Executive Leadership Team and a Global Marketing Leader. She also served as Senior Vice President of GE Capital from 1996 until 2006, and she previously held a number of positions with various subsidiaries of General Electric Co. ("GE"). Prior to joining GE in 1996, Ms. Sterneck spent 15 years in investment banking and public finance, including serving as Managing Director of Public Finance for Clayton Brown & Associates and as Senior Vice President for Shearson Lehman Brothers. Ms. Sterneck currently serves and has served on numerous non-profit and private company boards. She received a B.S. in Science from Trinity College of Vermont and an M.B.A. from Tulane University.

 
 
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Class III Trustees
(Serving for a Term Expiring at the 2018 Annual Meeting)
Thomas M. Bloch
 
Trustee since: 2013
Age: 62

Independent




Mr. Bloch retired as President and Chief Executive Officer of H&R Block, Inc. in 1995, after a nineteen-year career with the company. He began teaching math in Kansas City's urban core at St. Francis Xavier School in 1995 and then in 2000 co-founded University Academy, an urban college preparatory public charter school. Until 2013, Mr. Bloch served in numerous positions at the nationally recognized charter school, including as President of the Board for its first ten years and as a teacher. A past Chairman of the University of Missouri-Kansas City (UMKC) Trustees, he currently serves as President of Endowment Board for UMKC's Henry W. Bloch School of Management and Vice Chairman of the UMKC Foundation, the Marion and Henry Bloch Family Foundation, and the H&R Block Foundation. He is the author of two books, Stand for the Best and Many Happy Returns. Mr. Bloch graduated cum laude from Claremont McKenna College in Claremont, California in 1976.

Jack A. Newman, Jr.
 
Trustee since: 2009
Age: 68

Independent




Mr. Newman currently runs his own company, Jack Newman Advisory Services, through which he offers strategy and general business consulting services. Prior to establishing this entity in 2008, Mr. Newman served for over 12 years as Executive Vice President for Cerner Corporation, a NASDAQ-listed health care information systems and knowledge services company. Prior to joining Cerner Corporation, Mr. Newman spent 22 years with KPMG LLP, including 14 years as a partner, the last four of which he served as National Partner-in-Charge of KPMG LLP's Health Care Strategy Practice. He serves on four other boards, one of which is the legal board of Enterprise Bank and Trust, the banking subsidiary of Enterprise Financial Services Corp., a NASDAQ-listed financial holding company. Mr. Newman formerly served on the board of directors of Ferrellgas Partners, L.P., a NYSE-listed distributor of propane and related equipment and supplies. Mr. Newman is a C.P.A., has a Bachelor of Arts degree from Benedictine College and a Master's degree in Public Administration from the University of Missouri-Kansas City.

The Nominating/Company Governance Committee and the Board of Trustees have evaluated the specific experience, qualifications, attributes, and skills of each nominee and trustee to determine that such person should serve as a trustee of the Company at this time. In doing so, the Nominating/Company Governance Committee and the Board focused primarily on the credentials described in the biographical information set forth above for each nominee or trustee. Particular consideration was given to the many years of experience each nominee and trustee has in real estate, finance and the entertainment, recreation and education businesses, and the diversity of experience, background and other relevant distinctions among the trustees. The Nominating/Company Governance Committee and the Board believe that such experience and diversity are vital in order to quickly identify, understand, and address new trends, challenges, and opportunities for the Company. The Nominating/Company Governance Committee and the Board also recognized the value of participation by each of the current members of the Board in the National Association of Corporate Directors ("NACD"), and particularly their access to NACD resources, presentations and updates regarding company governance, executive compensation, risk oversight and strategic planning. The Nominating/Company Governance Committee and the Board believe that these resources ensure that our trustees are fully informed of current issues and best governance practices.
The Nominating/Company Governance Committee and the Board identified the knowledge and understanding of the commercial real estate industry of Messrs. Brady and Silvers primarily from their

 
 
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experience as executive officers of companies investing in and operating real estate properties. With regard to each nominee and trustee, the Nominating/Company Governance Committee and the Board considered their extensive knowledge of corporate finance, accounting, the public and private debt and equity markets, bank markets, mergers and acquisitions. The Nominating/Company Governance Committee and the Board identified the knowledge and understanding of corporate governance issues developed by Messrs. Brady, Brown, Druten, Bloch and Newman from years of service on corporate boards. For Mr. Brown, consideration was also given to his extensive experience in the movie exhibition business. For Mr. Bloch, consideration was also given to his extensive experience founding and leading an urban college preparatory charter school. For Ms. Sterneck, consideration was also given to her significant executive leadership experience, particularly in strategic planning and organizational design, and her completion of the NACD's Master Class program involving an in-depth review of topics and emerging issues, including leadership and process, performance metrics, future trends, disruptive forces and other topics relevant to the boardroom.
Each of Messrs. Brady and Brown has consented to serve on the Board of Trustees. If either Mr. Brady or Mr. Brown should become unavailable to serve as a trustee, the Board of Trustees or the Nominating/Company Governance Committee may designate a substitute nominee or may elect to keep the vacancy unfilled. In that case, the persons named as proxies will vote for the substitute nominee designated by the Board of Trustees or the Nominating/Company Governance Committee.

ADDITIONAL INFORMATION CONCERNING THE BOARD OF TRUSTEES
Our Board of Trustees is committed to effective company governance. We have adopted Company Governance Guidelines, Independence Standards for Trustees and a Code of Business Conduct and Ethics for all officers, employees and trustees. Those documents and the charters of our Audit Committee, Nominating/Company Governance Committee, Finance Committee and Compensation Committee may be found at the Company Governance section of our website at www.eprkc.com and are available in print to any shareholder or interested party who requests them. Requests for printed copies of our Company Governance Guidelines, Independence Standards for Trustees, Code of Business Conduct and Ethics or any charters of our Board committees should be submitted in writing to the Secretary of the Company at 909 Walnut Street, Suite 200, Kansas City, Missouri 64106.
Company Governance Guidelines and Code of Business Conduct and Ethics
Our Company Governance Guidelines address a number of topics, including the role and responsibilities of our Board, the qualifications of independent trustees, the ability of shareholders and interested parties to communicate directly with the independent trustees, Board committees, separation of the offices of Chairman and Chief Executive Officer, trustee compensation, and management succession. Our Nominating/Company Governance Committee reviews our Company Governance Guidelines on a periodic basis to ensure their continued effectiveness.
We have also adopted a Code of Business Conduct and Ethics that applies to our Chief Executive Officer, Chief Financial Officer, and all other officers, employees and trustees. We intend to disclose any changes in or waivers from our Code of Business Conduct and Ethics by posting such information on our website or by filing a Form 8-K with the SEC.
Trustee Independence
Our Company Governance Guidelines and the NYSE's governance rules require that a majority of our trustees be independent. To qualify as independent for this purpose, our Board must affirmatively determine that a trustee has no material relationship with the Company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company). To assist our Board in making this determination, the Board has used our Independence Standards for Trustees as categorical standards to evaluate the independence of our independent trustees. Using those standards, the Board reviewed the independence of each of our trustees and trustee nominees. Based upon that review, the Board has affirmatively determined that each of our trustees and trustee nominees, except Mr. Silvers,

 
 
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have no material relationship with the Company and are thus independent in accordance with our Company Governance Guidelines and NYSE rules.
The following is a summary of our Independence Standards for Trustees. For a complete description of those standards, please review our Independence Standards for Trustees at the Company Governance section of our website at www.eprkc.com.
•
A trustee is not independent if:
•
The trustee is, or has been within the last 3 years, an employee of the Company, or an immediate family member of the trustee is, or has been within the last 3 years, an executive officer of the Company,
•
The trustee has received, or has an immediate family member who has received, during any 12-month period within the last 3 years, more than $100,000 in direct compensation from the Company, other than trustee and committee fees and pensions or other forms of deferred compensation (provided such compensation is not contingent on future service),
•
(A) The trustee or an immediate family member is a current partner of the firm that is our internal or external auditor, (B) the trustee is a current employee of such firm, (C) the trustee has an immediate family member who is a current employee of such firm and who participates in the firm's audit, assurance or tax compliance (but not tax planning) practice, or (D) the trustee or an immediate family member was within the last 3 years (but is no longer) a partner or employee of such firm and personally worked on the Company's audit within that time,
•
The trustee or an immediate family member is, or has been within the last 3 years, employed as an executive officer of another company where any of the Company's present executive officers at the same time serves on that company's compensation committee, or
•
The trustee is a current employee, or an immediate family member is a current executive officer, of a company that has made payments to, or received payments from, the Company for property or services in an amount which, in any of the last 3 years, exceeds the greater of $1 million or 2% of such other company's consolidated gross revenues.
•
A person who is an executive officer or affiliate of an entity that provides non-advisory financial services such as lending, check clearing, maintaining customer accounts, stock brokerage services or custodial and cash management services to the Company or its affiliates may be determined by the Board of Trustees to be independent if the following conditions are satisfied:
•
The entity does not provide financial advisory services to the Company,
•
The annual interest and/or fees payable to the entity by the Company do not exceed the numerical limitation described above,
•
Any loan provided by the entity is made in the ordinary course of business of the Company and the lender and does not represent the Company's principal source of credit or liquidity,
•
The trustee has no involvement in presenting, negotiating, underwriting, documenting or closing any such non-advisory financial services and is not compensated by the Company, the entity or any of its affiliates in connection with those services,
•
The Board affirmatively determines that the terms of the non-advisory financial services are fair and reasonable and advantageous to the Company and no more favorable to the provider than generally available from other providers,
•
The provider is a recognized financial institution, non-bank commercial lender or securities broker,

 
 
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•
The trustee abstains from voting as a trustee to approve the transaction, and
•
All material facts related to the transaction and the relationship of the person to the provider are disclosed by the Company in its reports under the Securities Exchange Act of 1934, as amended (the "Exchange Act") and proxy statement.
•
No person who serves, or whose immediate family member serves, as a partner, member, executive officer or in a comparable position of any firm providing accounting, consulting, legal, investment banking or financial advisory services to the Company, or as a securities analyst covering the Company, will be considered independent until after the end of that relationship.
•
No person who is, or who has an immediate family member who is, an officer, director, more than 5% shareholder, partner, member, attorney, consultant or affiliate of any tenant of the Company or any affiliate of such tenant will be considered independent until three years after the end of the tenancy or such relationship.
Mandatory Trustee Resignation Policy
The Company’s Trustee Resignation Policy provides that any trustee nominee who receives a greater number of votes "withheld" from his or her election than votes "for" such election must promptly tender his or her written offer of resignation to the Board following certification of the shareholder vote from the meeting at which the election occurred. The policy applies only to uncontested elections of trustees, which is defined as any election in which the number of trustee nominees for election does not exceed the number of trustees to be elected. Once such a resignation is tendered, the Nominating/Company Governance Committee will make a recommendation to the Board as to whether to accept or reject the resignation. The Board will then act on the tendered resignation, taking into account the recommendation of the Nominating/Company Governance Committee, and publicly disclose its decision regarding the tendered resignation and the rationale behind the decision within ninety days from the date of the certification of the election results. The Nominating/Company Governance Committee in making its recommendation, and the Board in making its decision, may consider any factors or other information that it considers appropriate and relevant. The trustee who tenders his or her resignation is not permitted to participate in the proceedings of the Nominating/Company Governance Committee or the decision of the Board with respect to his or her resignation. If the Board accepts a trustee’s resignation, or if a non-incumbent nominee for trustee is not elected, then the Board may fill the vacant position or decrease the size of the Board in accordance with the Company’s Bylaws.
In addition, our Company Governance Guidelines provide that any trustee who experiences any significant change in their personal circumstances, including a change in their principal job or professional responsibilities, must submit a letter of resignation to the Board to be effective on acceptance by a majority of the disinterested members of the Board at a meeting thereof duly called and held.
Trustee Age Limit
Our Company Governance Guidelines provide that the Nominating/Company Governance Committee will not recommend for election to the Board any incumbent trustee who has turned, or prior to the Company's next annual meeting of shareholders will turn, 72 years of age.
Frequency of Board Meetings
The Board of Trustees met eight times in 2015. Each trustee attended all of the meetings of the Board and committees on which he or she served during 2015 (or portion of such year during which he or she served as a trustee or committee member). Our trustees discharge their responsibilities throughout the year, not only at Board of Trustees and committee meetings, but also through personal meetings, actions by unanimous written consent and communications with members of management and others regarding matters of interest and concern to the Company.

 
 
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Executive Sessions
The independent trustees meet regularly in separate executive sessions without management. Mr. Druten serves as the presiding trustee during those sessions.
Shareholder Communications with the Board
Any shareholder or interested party is welcome to send a written communication to the non-management trustees about any matter of interest related to the Company. A shareholder or interested party may communicate with the non-management trustees by either sending a letter to our address listed on the cover page of this Proxy Statement, or by visiting the Company Governance section of our website at www.eprkc.com, clicking on "Communicate Anonymously with Our Board of Trustees," and following the instructions for making a confidential submission. Such written or electronic communication will be forwarded directly to the non-management trustees and will not be screened by management. Shareholders may also make proposals and nominate candidates for trustee for consideration at any annual meeting in accordance with the procedures described in "Shareholder Proposals, Trustee Nominations and Related Bylaw Provisions" below.
Board Committees
The Board of Trustees has established an Audit Committee, a Nominating/Company Governance Committee, a Finance Committee and a Compensation Committee. All of our non-management trustees serve on all four committees. The Board believes this promotes access to a variety of views on all four committees and helps ensure that all of the committees have a broad perspective on the Company's operations as a whole. Under our Company Governance Guidelines, members of the Audit Committee, Compensation Committee and Nominating/Company Governance Committee must satisfy the NYSE's independence requirements in addition to certain requirements applicable specifically to the Audit Committee and Compensation Committee. Copies of the committee charters may be obtained at the Company Governance section of our website at www.eprkc.com.
Audit Committee. The Board of Trustees has appointed an Audit Committee consisting of Messrs. Bloch, Brady, Brown, Druten and Newman and Ms. Sterneck. The Board of Trustees has determined that all the committee members are independent in accordance with our Company Governance Guidelines and NYSE rules. The committee members also meet the additional independence standards of Exchange Act Rule 10A-3. The Board of Trustees has determined that Messrs. Bloch, Brady, Brown, Druten and Newman and Ms. Sterneck are "audit committee financial experts," as defined by the SEC rules, by virtue of their experience and positions held as described elsewhere in this proxy statement. Mr. Newman serves as the Chair of the Audit Committee. The committee met four times in 2015.
The primary responsibility of the Audit Committee is to assist the Board's oversight of the integrity of the Company's financial statements, the Company's compliance with legal and regulatory requirements, the qualifications and independence of the Company's independent registered public accounting firm, and the performance of the Company's internal audit function and internal control over financial reporting. The independent registered public accounting firm is responsible for auditing the Company's annual financial statements and expressing an opinion on the conformity of those audited financial statements with generally accepted accounting principles. The independent registered public accounting firm is also responsible for auditing the effectiveness of management's internal control over financial reporting and expressing an opinion on the effectiveness of its internal control over financial reporting.
The Audit Committee has sole authority to engage the independent registered public accounting firm to perform audit services (subject to shareholder ratification), audit-related services, tax services and permitted non-audit services and the authorization of the payment of fees therefor. The independent registered public accounting firm reports directly to the committee and is accountable to the committee.
The Audit Committee has adopted policies and procedures for the pre-approval of the performance of services by the independent registered public accounting firm on behalf of the Company. Those policies generally provide that:

 
 
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•
The performance by the firm of any audit services, audit-related services, tax services or other permitted non-audit services, and the related fees, must be specifically pre-approved by the committee or, in the absence of one or more of the committee members, a designated member of the committee;
•
Pre-approvals must take into consideration, and be conducted in a manner that promotes, the effectiveness and independence of the firm; and
•
Each particular service to be approved must be described in detail and be supported by detailed back-up documentation.
The Audit Committee has appointed KPMG LLP as the Company's independent registered public accounting firm to audit the 2016 consolidated financial statements and internal control over financial reporting for 2016, subject to shareholder ratification, and has engaged KPMG to perform specific tax return preparation and compliance, tax consulting and tax planning services during 2016. See "Proposal No. 4: Ratification of Appointment of Independent Registered Public Accounting Firm."
The Audit Committee does not itself prepare financial statements or perform audits, and its members are not auditors or certifiers of the Company's financial statements. The members of the Audit Committee are not professionally engaged in the practice of accounting and, notwithstanding the designation of the Audit Committee members as "audit committee financial experts" pursuant to SEC rules, are not experts in the field of accounting or auditing, including auditor independence. Members of the Audit Committee rely without independent verification on the information provided to them and the representations made to them by management, and look to management to provide full and timely disclosure of all material facts affecting the Company. Accordingly, the Audit Committee's oversight does not provide an independent basis to determine that management has maintained appropriate accounting and financial reporting policies, appropriate internal controls and procedures to ensure compliance with accounting standards and applicable laws and regulations, appropriate disclosure controls and procedures, appropriate internal control over financial reporting, or an appropriate internal audit function, or that the Company's reports and information provided under the Exchange Act are accurate and complete. Furthermore, the Audit Committee's considerations and discussions referred to above and in its charter do not assure that the audit of the Company's financial statements has been carried out in accordance with Public Company Accounting Oversight Board rules, that the financial statements are free of material misstatement or presented in accordance with generally accepted accounting principles, that there were no significant deficiencies or material weaknesses in the Company's internal control over financial reporting, that the Company's independent registered public accounting firm is in fact "independent," or that the matters required to be certified by the Company's Chief Executive Officer and Chief Financial Officer in the Company's annual reports on Form 10-K and quarterly reports on Form 10-Q under the Sarbanes-Oxley Act and related SEC rules have been properly and accurately certified.
Nominating/Company Governance Committee. The Board of Trustees has appointed a Nominating/Company Governance Committee consisting of Messrs. Bloch, Brady, Brown, Druten and Newman and Ms. Sterneck. The Board of Trustees has determined that all the committee members are independent in accordance with our Company Governance Guidelines and NYSE rules. The Nominating/Company Governance Committee evaluates and nominates candidates for election to the Board of Trustees and assists the Board in ensuring the effectiveness of our governance policies and practices. Candidates for nomination to the Board are evaluated and recommended on the basis of the value they would add to the Board in light of their integrity, diversity of experience, training and judgment, their financial literacy and sophistication and knowledge of corporate and real estate finance, their knowledge of the real estate and/or our investment segment industries, their independence from Company management and other factors. The committee will consider nominations made by shareholders in compliance with the procedures described in "Shareholder Proposals, Trustee Nominations and Related Bylaw Provisions" below. The committee will use the same criteria to evaluate nominees recommended in good faith by shareholders as it uses to evaluate its own nominees, but may give greater weight to nominees recommended by holders of more than 5% of our outstanding common shares. Mr. Bloch serves as Chair of the Nominating/Company Governance Committee. The committee met three times in 2015.

 
 
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Finance Committee. The Board of Trustees has appointed a Finance Committee consisting of Messrs. Bloch, Brady, Brown, Druten and Newman and Ms. Sterneck. The Board of Trustees has determined that all the committee members are independent in accordance with our Company Governance Guidelines and NYSE rules. The primary purpose of the Finance Committee is to review the Company's financial policies, strategies and capital structure and take such action and make such reports and recommendations to the Board of Trustees as it deems advisable. Mr. Brown serves as Chair of the Finance Committee. The committee met four times in 2015.
Compensation Committee. The Board of Trustees has appointed a Compensation Committee consisting of Messrs. Bloch, Brady, Brown, Druten and Newman and Ms. Sterneck. The Board of Trustees has determined that all the committee members are independent in accordance with our Company Governance Guidelines and NYSE rules. As required under our Company Governance Guidelines, members of the Compensation Committee each meet the definition of "non-employee director" under SEC Rule 16b-3 and "outside director" under Section 162(m) of the Internal Revenue Code (the "Code"). The primary responsibilities of the Compensation Committee are to (1) review and approve Company goals and objectives relevant to the Chief Executive Officer's compensation, evaluate the Chief Executive Officer's performance in light of those goals and objectives, and determine and approve the Chief Executive Officer's compensation level based on that evaluation, (2) make recommendations to the Board regarding the compensation of the Company's other executive officers and the independent trustees, as well as incentive compensation and equity-based plans that are subject to Board approval, and (3) provide oversight and guidance with respect to our human capital management, including attraction, motivation, development and retention of employees of the Company. The Compensation Committee may establish sub-committees consisting of one or more members to carry out duties that the Compensation Committee may assign. Ms. Sterneck serves as Chair of the Compensation Committee. The committee met eight times in 2015.
Role of Compensation Consultants
To assist in carrying out its responsibilities, the Compensation Committee regularly consults with the committee's outside compensation consultant. Under its charter, the Compensation Committee has authority to retain and terminate outside compensation consultants, including authority to approve the consultant's fees and other retention terms. The Compensation Committee retained FPL Associates L.P. ("FPL") to advise the committee with respect to its 2015 review of compensation levels for executive officers and trustees. In this role, our compensation consultant performed such duties as were requested by the committee. Those duties consisted primarily of providing market data and advice to the committee that were used to determine executive and trustee compensation, particularly analyses of the Company's executive and trustee compensation in comparison to the benchmark companies. Representatives of our compensation consultant spoke with the Chair of the Compensation Committee, as well as with management, in preparing for committee meetings, attended committee meetings and met in executive session with the Compensation Committee without the presence of management.
Applicable SEC rules require companies to assess whether the work of any compensation consultant who has played any role in determining or recommending the amount or form of executive or director compensation raises any "conflicts of interest." If so, the company must disclose in its proxy statement the nature of any such conflict of interest and how it is being addressed. The Company reviewed the relationships among FPL and the Company's directors and executives officers in order to assess whether the work done by FPL raised any conflicts of interest. The Company did not identify any such conflicts of interest in its inquiry of these parties as a part of this assessment. Under its charter, the Compensation Committee also has the authority to retain, approve fees for and terminate advisors, consultants and legal counsel as it deems necessary to assist in the fulfillment of its responsibilities. Prior to engaging any such advisor, consultant or legal counsel, the Compensation Committee conducts an independence assessment of such advisor pursuant to applicable NYSE and SEC rules, but the committee retains discretion to engage any such advisor, without regard to its independence, after considering the findings in such assessment.


 
 
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Trustee Attendance at Annual Meetings
Our trustees are expected to attend each annual meeting of shareholders, although conflict situations can arise from time to time. All of our trustees attended the 2015 annual meeting.
Family Relationships
No family relationships exist between any of our trustees, nominees or executive officers.
Board Leadership Structure and Role in Risk Oversight
The Company believes that its Board is best characterized as independent. As noted above, a majority of the Board's members are independent and unaffiliated, with our Chief Executive Officer being the only trustee who is also a member of management. Further, although not required by our governance documents, the Company has chosen to bifurcate the role of Chief Executive Officer and Chairman of the Board of Trustees. We believe that having an independent, non-executive Chairman of the Board represents an appropriate governance practice for the Company at this time. This structure creates a separation of the day-to-day administrative and strategic planning activities of management from the Board's oversight function. This separation in turn diffuses decision-making power and fosters the need for better and more purposeful communication between management and the Board in order to achieve corporate goals that are aligned with shareholder interests.
As described in detail above, there are four committees of the Board of Trustees: the Audit Committee, the Nominating/Company Governance Committee, the Compensation Committee and the Finance Committee.
The Board of Trustees and its committees play an important risk oversight role at the Company. The entire Board reviews and determines the Company's overall business strategy, the management of its balance sheet, and each year's annual budget. The Board also reviews all material acquisition, investment and disposition transactions entered into by the Company and its subsidiaries. The Audit Committee of the Board is specifically charged with reviewing the Company's financial risk exposures. Further, the Company's independent auditors report directly to the Audit Committee.
The administration of the Board's risk oversight role does not have any direct effect on the Board's leadership structure. However, we believe that the Board's structure, its committees, and the experience and diverse backgrounds of our trustees all help to ensure the integrity of the Company's risk management and oversight.
Securities Trading Policy and Policy Against Hedging
Our insider trading policy prohibits executive officers, trustees, certain employees with access to our material, non-public information and certain of their family members ("Covered Persons") from purchasing or selling any type of security, whether issued by us or another company, while such person is aware of material, non-public information relating to the issuer of the security or from providing such material, non-public information to any person who may trade while aware of such information. This policy also prohibits Covered Persons from engaging in speculative hedging transactions in our securities.

 
 
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TRUSTEE COMPENSATION
During 2015, each non-employee trustee received:
•
An annual retainer of $50,000, which could be taken in the form of cash or in restricted share units valued at 150% of the cash retainer amount. In 2015, each of the non-employee trustees elected to take this retainer in the form of restricted share units;
•
On the date of the annual meeting of shareholders, equity awards valued at $75,000 in the form of restricted share units;
•
$3,000 in cash for each Board meeting attended;
•
$2,000 in cash for each committee meeting attended; and
•
Reimbursement for any out-of-town travel expenses incurred in attending Board or committee meetings and other expenses incurred on behalf of the Company and reimbursement of up to $10,000 annually for continuing director education.
The Chairman of the Board received an additional annual retainer of $30,000, and the Chairs of the Audit, Compensation, Finance and Nominating/Company Governance Committees each received additional annual retainers of $15,000, which could be taken in cash or in restricted share units valued at 150% of the cash retainer amount. In 2015, each of the non-employee trustees elected to take these additional retainers in the form of restricted share units. In addition, the Board has established an Investment Committee to review potential investments prior to Board approval, chaired by one Board representative. The Chair of the Investment Committee may select, from time to time, one or more other trustees to participate in meetings of the committee. In 2015, the Chair of the Investment Committee received an additional monthly retainer of $1,000 in cash and an additional annual retainer of $15,000, which could be taken in cash or in restricted share units valued at 150% of the cash retainer amount. Other trustees who participate in meetings of the Investment Committee at the request of the Chair of the Investment Committee receive an additional monthly retainer of $2,000 in cash for any month in which the trustee participates in a meeting. No trustee, other than Mr. Brady, who served as Chair of the Investment Committee, participated in meetings of the Investment Committee during 2015. In 2015, Mr. Brady elected to take his additional annual retainer for serving as Chair of the Investment Committee in the form of restricted share units.
Each restricted share unit granted to the non-employee trustees initially represents one common share. The restricted share units vest upon the earlier of the day preceding the Company's next annual meeting of shareholders or a change in control of the Company. Vested restricted share units entitle the holders thereof to receive one common share for each unit upon the date such holder is no longer a trustee or such other date or dates as specified by the trustee prior to the grant. All of the restricted share units granted to our non-employee trustees during 2015 were issued under our 2007 Equity Incentive Plan, as amended (the "2007 Equity Incentive Plan").
Employees of the Company or its affiliates who are trustees are not paid any additional compensation for their service on the Board. Therefore, Mr. Silvers, who served as trustee during 2015, is not listed in the Trustee Compensation table below.


 
 
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Trustee Compensation for Fiscal 2015
The following table contains information regarding the compensation earned by the non-employee members of the Board of Trustees during 2015:
Name(1)
Fees
Earned or
Paid in
Cash(2)
Stock
Awards
(2) (3)
Option
Awards (4)
Non-Equity
Incentive
Plan
Compensa-
tion

Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
All Other
Compensa-
tion
Total
Thomas M. Bloch
$
127,000

$
107,500

$
—

$
—

$
—

$
—

$
234,500

Barrett Brady
139,000

107,500

—

—

—

—

246,500

Peter C. Brown
127,000

107,500

—

—

—

—

234,500

Robert J. Druten
142,000

115,000

—

—

—

—

257,000

Jack A. Newman, Jr.
127,000

107,500

—

—

—

—

234,500

Robin P. Sterneck
127,000

107,500

—

—

—

—

234,500


(1)
Amounts include annual retainers for each trustee, additional annual retainers for each trustee serving as Chairman of the Board or as a chair of committees of the Board (including additional monthly retainers for Mr. Brady, who served as Chair of the Investment Committee), and fees for attending Board and Board committee meetings. Each of the trustees elected to receive their annual retainers and additional annual retainers for 2015 in the form of restricted share units with an aggregate grant date fair value per trustee of $97,500, in the case of Messrs. Bloch, Brady, Brown and Newman and Ms. Sterneck, and $120,000, in the case of Mr. Druten. See note 2 below for a discussion of the method used in determining the aggregate grant date fair value of the restricted share units.
(2)
Amounts reflect the aggregate grant date fair value of such awards computed in accordance with FASB ASC Topic 718. For policies used in determining these values, refer to Note 2 of the Company's financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the SEC.
(3)
Amounts include: (i) restricted share unit awards granted to each trustee on the date of the Company's 2015 annual meeting of shareholders with an aggregate grant date fair value per award of $75,000; and (ii) the incremental aggregate grant date fair value of the restricted share units that a trustee, by accepting restricted share units instead of cash for their annual retainers and additional annual retainers, received in excess of the annual cash retainers that the trustee would have otherwise received in 2015, which was $32,500 per trustee, in the case of Messrs. Bloch, Brady, Brown and Newman and Ms. Sterneck, and $40,000, in the case of Mr. Druten. Nonvested restricted share units held by trustees and outstanding at December 31, 2015 include: (i) Mr. Bloch – 2,942; (ii) Mr. Brady – 2,942; (iii) Mr. Brown – 2,942; (iv) Mr. Druten – 3,326; (v) Mr. Newman – 2,942; and (vi) Ms. Sterneck – 2,942.
(4)
Vested and unexercised option awards held by trustees and outstanding at December 31, 2015 include: (i) Mr. Bloch – 0; (ii) Mr. Brady – 17,557; (iii) Mr. Brown – 0; (iv) Mr. Druten – 17,557; (v) Mr. Newman – 7,557; and (vi) Ms. Sterneck – 0.

 
 
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EXECUTIVE OFFICERS
Here are our executive officers and some brief information about their backgrounds.
Gregory K. Silvers
 
President and Chief Executive Officer
Age: 52



Mr. Silvers is our President and Chief Executive Officer and a member of our Board. His background is described in "Proposal No. 1: Election of Trustees."
Mark A. Peterson
 
Executive Vice President, Chief Financial Officer and Treasurer
Age: 52



Mr. Peterson was appointed an Executive Vice President in May 2015. He previously served as a Senior Vice President from February 2012 until this appointment, and he served as a Vice President from 2004 until February 2012. Mr. Peterson has also served as our Chief Financial Officer and Treasurer since 2006. From 1998 to 2004, Mr. Peterson was with American Italian Pasta Company, a publicly traded manufacturing company, most recently serving as Vice President-Accounting and Finance. Mr. Peterson was Chief Financial Officer of J.C. Nichols Company, a real estate company headquartered in Kansas City, Missouri, from 1995 until its acquisition by Highwoods Properties, Inc. in 1998. Mr. Peterson is a C.P.A. and received a B.S. in Accounting, with highest honors, from the University of Illinois in 1986.

Morgan G. Earnest II
 
Senior Vice President and Chief Investment Officer
Age: 60



Mr. Earnest was appointed a Senior Vice President in February 2012. Mr. Earnest has also served as our Chief Investment Officer since 2009. Prior to joining the Company, he was an Executive Vice-President of Capmark Financial Group, Inc. (formerly GMAC Commercial Mortgage Corporation, or "GMACCM") and was responsible for the co-management of Lending and Originations for both North America and Europe. Formerly, Mr. Earnest was responsible for the GMACCM's Specialty Lending Groups, which consisted of the Healthcare, Hospitality and Construction Lending Divisions. Prior to joining GMACCM, Mr. Earnest was a principal of Lexington Mortgage Company which was acquired by GMACCM in March 1996. Mr. Earnest has an M.B.A. from the Colgate Darden Graduate School of Business Administration, University of Virginia and is a graduate of Tulane University.

 
 
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Craig L. Evans
 
Senior Vice President, General Counsel and Secretary
Age: 55



Mr. Evans was appointed a Senior Vice President and our General Counsel and Secretary in April 2015. From 2006 until his appointment, and from 1995 to 2002, Mr. Evans was a partner in the law firm Stinson Leonard Street LLP. Mr. Evans was partner in the law firm Shook Hardy & Bacon L.L.P. from 2002 to 2006. He has practiced in the areas of corporate and securities law for over 30 years. Mr. Evans received a J.D. from the University of Kansas School of Law in 1985 and received a B.A. in Business Administration from William Jewell College in 1982.

Thomas B. Wright III
 
Senior Vice President - Human Resources and Administration
Age: 59



Mr. Wright was appointed our Senior Vice President, Human Resources and Administration in March 2015. From 2008 until his appointment, Mr. Wright served as managing member of Tom Wright Consulting. Prior to that, Mr. Wright was with Hallmark Cards for 17 years, and during the period from 2005 until 2008, he served as Senior Vice President - Human Resources and a Corporate Officer at Hallmark Cards, Inc. During 2015, he was also an Adjunct Instructor in the Executive MBA Program at the University of Missouri - Kansas City. Mr. Wright received a Bachelor of Business Administration from Marshall University and a Master of Science - Administration from Central Michigan University.

Michael L. Hirons
 
Senior Vice President - Strategy and Asset Management
Age: 45



Mr. Hirons was appointed our Senior Vice President - Strategy and Asset management in February 2016. From February 2012 until his appointment, he served as our Vice President - Strategic Planning. From 2006 to 2012, he served as our Vice President-Finance. From 2004 to 2006, Mr. Hirons was a co-founder and principal with Preferred Finance Partners, Inc., a firm that provided corporate financial consulting services. From 2000 to 2004, Mr. Hirons was with American Italian Pasta Company, a publicly traded manufacturing company, most recently serving as Director of Strategic Business Unit Finance. Mr. Hirons is a C.P.A. and received two bachelor's degrees, with highest distinction, from the University of Kansas in 1993.

Tonya L. Mater
 
Vice President and Chief Accounting Officer
Age: 38



Ms. Mater was appointed as a Vice President and our Chief Accounting Officer on September 9, 2015. From 2012 until this appointment, she served as a Vice President and our Controller and from 2006 to 2012, she served as our Controller. From 2002 to 2006, she served in other capacities within our Accounting Department. Prior to joining the Company in 2002, Ms. Mater worked as an auditor with KPMG and Mayer Hoffman McCann P.C. from 2000 to 2002. Ms. Mater is a C.P.A and received a B.S. in Accounting from the University of Kansas in 2000.


 
 
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EXECUTIVE COMPENSATION
Proposal No. 2 – Advisory Vote to Approve NEO Compensation
What are you voting on?
As required by Section 14A of the Exchange Act, the Company is asking its shareholders to approve, on an advisory basis, the compensation paid to the Company's named executive officers as disclosed in these proxy materials.

The Board recommends a vote FOR this proposal because it believes that our compensation program is effective in achieving the Company’s goals of:
•
Attracting and retaining quality executives,
•
Aligning our executives’ interests with those of our shareholders to create long-term value, and
•
Motivating our executives to achieve, and rewarding them for, superior performance.
This advisory proposal, commonly referred to as a “say-on-pay” proposal, is not binding on the Board or the Compensation Committee. However, the Board and the Compensation Committee believe that it is appropriate to seek the views of shareholders on the design and effectiveness of the Company's executive compensation program on an annual basis.
At the Company's prior annual meeting of shareholders held in May 2015, a substantial majority of the votes cast on the "say on pay" resolution were voted in favor of the resolution. We believe this affirms shareholders' support of the Company's approach to executive compensation.

Vote
Required
The affirmative vote of a majority of the votes cast on this proposal is required to approve, on a non-binding advisory basis, this proposal.
 
 
Your Board recommends a vote "FOR" the approval of the “say-on-pay” advisory vote.



 
 
2016 Proxy Statement
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Compensation Discussion and Analysis

In this section, we describe the material components of our executive compensation program for our named executive officers (“NEOs”), whose compensation is set forth in the Summary Compensation Table and other compensation tables contained in this proxy statement. For our 2015 fiscal year, which ended on December 31, 2015, our NEOs included the following individuals:

Officers
Title as of December 31, 2015
Gregory K. Silvers
President and Chief Executive Officer
Mark A. Peterson
Executive Vice President, Chief Financial Officer and Treasurer
Morgan G. Earnest II
Senior Vice President and Chief Investment Officer
Craig L. Evans
Senior Vice President, General Counsel and Secretary
Michael L. Hirons(1)
Vice President - Strategic Planning
Former Officer
 
David M. Brain(2)
Former President and Chief Executive Officer
(1) Mr. Hirons was promoted to the position of Senior Vice President - Strategy and Asset Management on February 17, 2016
(2) Mr. Brain retired from the Company on March 31, 2015.

In addition, we provide an overview of our executive compensation philosophy and the elements of our executive compensation program. We also explain how and why our Compensation Committee arrives at specific compensation policies and practices involving our NEOs.

Executive Summary of Compensation Program
Our Compensation Committee has designed our compensation program to attract and retain quality executives, aligning our executives’ interests with those of our shareholders, and motivating them to achieve, and rewarding them for, superior performance, with the goal of maximizing long-term shareholder value. Underlying our compensation program is a compensation philosophy that seeks to:
•
Create a balanced and competitive compensation program utilizing base salary, annual incentives, long-term equity-based incentive compensation and other benefits,
•
Emphasize variable performance-based compensation,
•
Reward executives for performance on measures designed to increase shareholder value, and
•
Use equity-based incentives, including nonvested restricted common shares and nonvested common share options, to ensure that executives are focused on achieving appropriate earnings growth and dividend levels and building shareholder value by aligning the executive’s interests with those of our shareholders.
To accomplish these goals, our executive compensation program emphasizes performance-based incentive compensation under our annual incentive program ("AI") and long-term incentive plan ("LTI") payable primarily through equity grants, all of which are considered at-risk, which means that our NEOs may not realize their total compensation. The AI program evaluates performance over a short term based on the Company’s financial, operational and strategic performance, including results from certain key performance metrics and the executive’s personal performance. The LTI program primarily measures the Company’s total shareholder return relative to other REITs over multiple years.

 
 
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Performance bonuses awarded under the AI are payable in cash, nonvested restricted common shares or a combination of cash and nonvested restricted common shares, at the election of the executive. Each of the NEOs elected to receive 100% of their bonuses in nonvested restricted common shares for 2015.
Awards under the LTI program are made in the form of nonvested restricted common shares, nonvested common share options and, for certain NEOs, a life insurance benefit described below. An initial determination of the value of the awards under the LTI is based on performance-based metrics, consistent with our goal of aligning pay with performance. In addition, vesting for these equity awards is time based, which is intended to incent retention and stability among the Company’s executives.
To ensure our executives' interests are aligned with those of shareholders and to align pay with performance, a substantial portion of our NEOs’ compensation will vary depending on Company and personal performance and is payable primarily in the form of nonvested equity awards that continue to be at-risk for three years (for AI awards) and four years (for LTI awards) after they are earned. With respect to Messrs. Peterson and Hirons, a portion of their LTI awards is payable in the form of a Life Insurance Benefit as defined and described on page 33, which is not subject to any future vesting requirements and is therefore not at-risk. For our CEO, the specific components of total direct compensation for 2015 are illustrated by the chart below on the left. This chart shows that performance-based LTI awards comprised 54% of his total direct compensation and performance-based AI awards comprised 34% of his total direct compensation, all of which was at-risk. The chart below on the right illustrates the specific components of our other NEOs’ average total direct compensation for 2015 (exclusive of Mr. Brain who retired from the Company on March 31, 2015). The chart shows that performance-based LTI awards (including the Life Insurance Benefit) comprised 52% of their total direct compensation and performance-based AI equity awards comprised 32% of their total direct compensation, 97% of which was at-risk with the remaining 3% representing the Life Insurance Benefit which is not at-risk. The components depicted below are more fully described beginning on page 26.

            
(1)
Excludes severance benefits of $11,739,811 payable to our former President and Chief Executive Officer, David M. Brain. Due to his retirement, Mr. Brain did not participate in the AI or the LTI in 2015. Also excludes restricted share grants made in connection with the promotions of Messrs. Silvers and Peterson to the positions of Chief Executive Officer and Executive Vice President, respectively, and grants made with respect to the hiring of Mr. Evans.

 
 
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The variance between our CEO’s compensation and the compensation of the other NEOs reflects the difference in responsibilities and overall accountability to shareholders. Our CEO’s at-risk compensation is higher than the other NEOs because the CEO bears a higher level of responsibility for the Company’s performance, as he is directly responsible for leading the development and execution of the Company’s strategy and for selecting, retaining and managing the executive team.
At our 2015 annual meeting of shareholders, approximately 93% of the votes cast were in favor of our “say-on-pay” executive compensation proposal, which we believe evidences our shareholders’ support of our CEO and other NEO’s compensation arrangements, as well as our executive compensation practices generally.
2015 Results and Accomplishments
The following are highlights of our accomplishments in 2015 that impacted our executive compensation decisions and policies related to executive compensation:
•
Strong 2015 Performance. The following table compares the Company’s actual performance to the targeted level for each performance measure used by the Compensation Committee to set awards under the AI and the LTI for 2015:
Performance Measure(1)
Target
Actual
Performance Against Target
Growth in FFO, as adjusted
6%
7.7%
Above
Investment Spending
$550 million
$632 million
Above
Three-Year TSR vs. UNUS

Plus 150 basis pts.
Plus 328 basis pts.
Above
One-Year TSR vs. Triple-Net Peer Group
50th percentile
85th percentile
Above
(1) A discussion of these performance measures is provided on pages 29 and 30.
Other significant accomplishments include:
¯ We amended, restated and consolidated our prior senior unsecured revolving and senior unsecured term loan credit agreements into one credit agreement providing for a combined maximum principal amount available under the agreement of $1 billion (or $2 billion upon the exercise of an accordion feature), comprised of $650 million under an unsecured revolving credit facility and $350 million under an unsecured term loan facility, and providing for lower interest rates and facility fees compared to the prior credit agreements,
¯ We completed a public offering of $300 million of senior unsecured notes with an interest rate lower than our existing series of senior unsecured notes,
¯ We completed public offerings of common shares under the direct share purchase component of our Dividend Reinvestment and Direct Share Purchase Plan for net proceeds of approximately $190 million,
¯ We maintained our debt to gross assets ratio (i.e., our debt as a percentage of our total assets plus accumulated depreciation) at 42% at December 31, 2015, and
¯ We raised the dividend on our common shares 6.1% over the prior year.
•
Completion of Succession Process. Effective March 31, 2015, Mr. Brain, our former President and Chief Executive Officer, retired and Mr. Silvers was promoted to that position. Under Mr. Brain’s leadership, EPR grew from total investments of approximately $500 million to over $4.1 billion. The Board is pleased with the succession process and believes that we have a strong management team, led by Mr. Silvers and his executive team that has demonstrated stability and is focused on executing our long-term strategy.

 
 
2016 Proxy Statement
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•
Replacement of Prior Employment Agreements. In connection with our succession planning efforts and the retirement of Mr. Brain, the Company undertook a comprehensive review and analysis of the existing employment agreements with its executive officers (including NEOs). At the conclusion of this review and analysis, the Company entered into new employment agreements with these executive officers with terms more consistent with current best practices. Among other things, the new agreements eliminated the "evergreen" term provisions, reduced amounts payable upon severance and eliminated certain tax gross-ups. A more detailed discussion of the new agreements is provided on page 35.
•
Broad-Based Severance Plan. During 2015, our Board adopted an Employee Severance Plan which provides severance benefits for all employees of the Company and will be effective for executive officers (including NEOs) upon expiration of their new employment agreements. The new plan will generally result in a further reduction in the Company's severance payment exposure with respect to executive officers as compared with that provided under the Old Agreements. A more detailed discussion of the new Employee Severance Plan is provided on page 37.
Key Features of our Executive Compensation Program
We believe that our executive compensation program appropriately attracts, rewards and helps retain executives who can lead the Company and continue our long-term track record of profitability, growth and total shareholder return, including share appreciation and dividends (“TSR”). The following are the key features of our executive compensation program:
What We Do
 
What We Don’t Do
P The majority of total compensation is at-risk and tied to performance (i.e., not guaranteed); fixed salaries comprise a modest portion of each NEO’s overall compensation opportunity
P We enhance executive officer retention with time-based, multi-year vesting schedules for equity incentive awards granted for prior-year performance
P To set variable pay, we annually establish performance goals for management, assess performance-against-target and compare our performance on key metrics against other triple-net lease REITs that we consider comparable
P Multi-year, performance-based equity awards use relative TSR as the main metric
P We have share ownership guidelines for our executives and trustees
P We engage an independent compensation consultant to advise the Compensation Committee, which is comprised solely of independent trustees
P We engage executives to elect to receive AI awards in the form of nonvested restricted common shares instead of cash further aligning their interests with shareholders
 
O We do not target compensation above the market median (50th percentile overall) of our comparative group of peer companies; we use the median as the beginning reference point and the Compensation Committee then adjusts pay based on a comprehensive review of performance
O We do not provide our executives and will not provide any new executives with tax gross-ups with respect to payments made in connection with a change of control
O We do not allow hedging of Company securities
O We do not encourage unnecessary or excessive risk taking as a result of our compensation policies; incentive compensation is not based on a single performance metric and we do not have guaranteed minimum payouts
O We do not allow for repricing of common share options
O We do not provide excessive perquisites; we provide perquisites that we believe align management and shareholder interests


 
 
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Executive Compensation Program Summary
The chart below summarizes the elements and objectives of our 2015 executive compensation program for our CEO and other NEO’s.
Component
Purpose
Characteristics
Discussion
Base Salary
Compensates executives competitively relative to the market for their level of responsibility and experience.
Established at a level intended to approximate the median of base salaries provided by our peer group companies for comparable positions and responsibilities, which permits an emphasis on the performance-based components.
page 31
Annual Incentive Awards
Motivates and rewards short-term operational and financial performance.
A variable cash component designed to tie directly to key annual performance drivers and personal performance, with an incentive to convert this award to nonvested equity compensation.
page 31
Long-Term Incentive Awards
Encourages the creation of long-term shareholder value and rewards long-term performance through a combination of nonvested equity grants, the values of which are primarily tied to the long-term value of the Company’s shares which accentuate the creation of long-term shareholder value.
Equity-based compensation designed to align the interests of management and shareholders, by focusing on total shareholder return relative to other REITs over multiple years. For 2015, awards were granted in nonvested restricted common shares, nonvested common share options and a life insurance benefit.
page 33
Health and Welfare Benefits
Offers market-competitive health insurance options and income replacement on death or disability, thus supporting our attraction and retention objectives.
Benefits for executives are generally the same as those available to all employees, including a 401(k) plan with matching Company contributions, health, disability and life insurance, except for a term life insurance benefit discussed below.
page 34
Perquisites
Provides benefits that promote health and work-life balance, thereby supporting our attraction and retention objectives.
Perquisites are not a material component of our executive compensation program.
page 34
Severance Benefits
Provides a severance benefit that is consistent with market practices and supports our attraction and retention objectives.
Under their employment agreements, our CEO and the other NEOs are qualified for certain cash severance benefits that are triggered by permanent disability, termination without cause and termination by the executive for good reason.
page 35


 
 
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The Compensation Committee uses the market median of our compensation peer group for each element of executive compensation as its starting point and as the indicator of competitive market trends and to set opportunity levels within the program intended to align pay with performance as primarily measured by the performance measures established by the Compensation Committee at the beginning of 2015. During the first quarter of 2016, equity awards in the form of nonvested restricted common shares were granted to the NEOs taking into account 2015 Company performance and each executive's personal performance during 2015. Based on these factors, AI bonuses were awarded at 172% to 188% of target levels and LTI awards were granted at 180% to 181% of target levels for each NEO (except for Mr. Brain who retired from the Company on March 31, 2015).
A majority of our executive compensation is variable pay under our AI and LTI, which allows the Compensation Committee to reward good performance and penalize poor performance.
•
AI awards focus on more near-term measures, including growth in FFO, as adjusted, per share and investment spending, two important drivers of the Company’s business. In addition, at the beginning of each year, the Chief Executive Officer develops personal performance objectives for each executive, which are reviewed at the end of the year and are considered in connection with the setting of AI and, to a lesser extent, LTI awards.
•
LTI awards are based primarily on measures of long-term shareholder return, which the Compensation Committee believes is the best method to align management’s incentives with the long-term interests of the Company’s shareholders.
•
LTI awards are granted in the form of equity-based compensation which vest over a period of four years (other than the Life Insurance Benefit, discussed below, which is in the process of being phased-out). AI awards are payable in cash or nonvested restricted common shares which vest over a period of three years, at the election of the executive. The Company incents executives to take nonvested restricted common shares as payment of their annual incentive by valuing the equity award at an amount equal to 150% of the cash amount they otherwise would have received. As a result, for 2015 awards, all NEOs elected to receive nonvested restricted common shares in lieu of cash.
•
The Compensation Committee believes that this combination of performance-based grants and time-based equity awards establishes a proper balance of short-term and long-term performance incentives with strong retention incentives.
Compensation Setting Process
Our Compensation Committee meets at the beginning of each year to make decisions regarding our NEOs' compensation. When making these decisions, our Compensation Committee considers the performance of our Company and of each NEO, available industry-based compensation information and the actual compensation provided to each NEO for each of the last three fiscal years. Based upon the review of this information, together with recommendations provided by our Chief Executive Officer (with respect to other NEOs), our Compensation Committee sets, for each of the NEOs, the base salary for the new fiscal year, and determines the AI and LTI awards for the most recently completed year. In addition to the input of the Chief Executive Officer, other NEOs attend meetings of our Compensation Committee from time to time and provide historical and prospective breakdowns of primary compensation components for each NEO, and additional context with respect to Company performance. Our Compensation Committee makes the final determinations on all elements of each NEO's compensation. Our CEO does not play a role in determining his own compensation, other than discussing his annual performance with the Compensation Committee and sharing his accomplishments and proposed objectives with the Compensation Committee.
Our Compensation Committee attempts to provide base salaries at competitive levels, based on the Compensation Committee's assessment of salary levels that are intended to appeal to talented executives, both prospective new hires and our existing executive team. Similarly, perquisites and other benefits are reviewed annually and provided on such terms as are considered by our Compensation

 
 
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Committee to be reasonable and appropriate relative to those provided for similarly situated executive talent.
The Compensation Committee adopted a threshold performance target of at least 6% annual return on invested capital that must be achieved in order for an executive to be eligible to receive any awards under the AI and the LTI. If this threshold performance target is satisfied, the Compensation Committee will use the performance metrics and qualitative factors discussed below to determine appropriate final awards under those plans.
In addition to the threshold performance target, the Compensation Committee has established formulaic performance targets with respect to incentive compensation under either our AI or our LTI, provided that a portion of each executive’s AI award is calculated based on a subjective assessment of personal performance. The Compensation Committee may make limited adjustments to the amount determined based on subjective and qualitative considerations of individual performance and the performance of the Company.
The Compensation Committee has retained FPL Associates L.P. ("FPL") to advise the Compensation Committee with respect to its review of compensation levels for our NEOs. The Compensation Committee has determined that FPL is independent under our NYSE listing requirements.
For 2015, the Compensation Committee elected to use a peer group modeled primarily from JP Morgan Equity Research's Triple-Net Lease REIT group (the “Triple-Net Peer Group”) for benchmarking purposes, which is the same group used in connection with our LTI performance targets, except that Hospitality Properties Trust was not included in the benchmarking peer group due to its external management structure. The Compensation Committee believes that utilizing the same peer group for both purposes will ensure closer alignment with shareholder returns. In light of the transition to this new peer group, benchmarking was also conducted using the peer group that was used in the prior year. This allowed the Compensation Committee to evaluate whether the change in peer groups would have a material impact on the analysis. Management assisted FPL and the Compensation Committee in the process, providing additional REIT-industry insight. The Compensation Committee reviews this peer group on an annual basis. The following table provides the names and key information for each company in the Triple-Net Peer Group that was used for benchmarking:
Name
Property Focus
Headquarters
Number of Employees(1)
Implied Market Capitalization
As of December 31, 2015
(in millions)(2)
Total Capitalization
As of December 31, 2015
(in millions)(2)
Gaming and Leisure Properties, Inc.
Specialty
Wyomissing, PA
792

$
3,123.5

$
5,723.9

Getty Realty Corp.
Other Retail
Jericho, NY
32

573.2

892.5

Gramercy Property Trust Inc. (3)
Diversified
New York, NY
103

1203.9

2289.3

Lexington Realty Trust
Diversified
New York, NY
54

1,907.2

4,239.0

National Retail Properties, Inc.
Other Retail
Orlando, FL
62

5,647.4

8,198.6

Realty Income Corporation
Other Retail
San Diego, CA
132

12,962.5

18,217.4

Spirit Realty Capital, Inc.
Diversified
Scottsdale, AZ
71

4,427.0

8,519.8

STAG Industrial, Inc.
Industrial
Boston, MA
68

1,321.1

2,447.3

STORE Capital Corporation
Diversified
Scottsdale, AZ
60

3,267.9

5,037.9

VEREIT, Inc.
Diversified
Phoenix, AZ
350

7,354.9

16,485.5

W.P. Carey Inc.
Diversified
New York, NY
314

6,162.5

10,804.4

Median
 
 
71

3,267.9

5,723.9

Average
 
 
185

4,359.2

7,532.3

EPR Properties
Specialty
Kansas City, MO
49

3,555.2

5,883.3

Relative Percentile Rank
 
 
17%-ile

58%-ile

58%-ile

(1)
Based on information reported in each peer company's most recent Annual Report on Form 10-K filed with the     SEC.
(2)
Source: SNL Financial.

 
 
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(3)
Implied market capitalization and total capitalization is as of September 30, 2015, which was the end date for the last completed quarter prior to the acquisition of Gramercy Property Trust Inc. by Chambers Street Properties on December 17, 2015.
FPL’s benchmarking review was based on information disclosed in the peer companies’ 2015 proxy statements, which reported data with respect to fiscal 2014 (the latest year for which comprehensive data is publicly available), as well as FPL’s proprietary database. FPL also reviewed the 2015 NAREIT Compensation Survey (which FPL conducts) and additional proprietary real estate compensation surveys conducted throughout the year by FPL for additional context. FPL’s review compared our executive pay practices to cash and non-cash compensation awarded to executives in comparable positions at peer companies. FPL advised the Compensation Committee that the peer companies generally have compensation programs comparable to ours, with annual bonuses generally in the form of cash and annual long-term compensation generally in the form of equity with time-based vesting over three to five years and a focus on performance-based compensation.
Our Performance Goals
The core elements of our long-held strategy are to:
•
Maintain a specialized orientation complemented by diversification across and within segments,
•
Develop an understanding of segment drivers allowing us to isolate investments others may overlook and distinguish between real and perceived risks,
•
Provide a value-added process focused on collaboration, developing strong and sustainable relationships with our partners, and
•
Focus on growth and strong long-term performance.
Because this strategy spans multiple years, we look at performance more broadly than a year-over-year framework.
The Compensation Committee reviews management’s performance against pre-established business goals, taking into account business conditions and unforeseen developments during the year. The Compensation Committee looks at performance with respect to key operational and financial metrics not only against our own targets, but also against the performance of other triple-net lease REITs that we consider comparable. We focus on key drivers of value creation like FFO, FFO as adjusted, investment spending and balance sheet management in the context of a company like ours that executes a multi-year strategy across multiple markets and segments with different economic drivers. While we have established a formulaic framework for measuring performance against goals to determine compensation, we retain some discretion recognizing that mechanical calculations may have unintended results. The Compensation Committee also reviews our TSR over multiple periods against comparable triple-net lease REITs and the broader FTSE EPRA/NAREIT Equity REIT Index ("UNUS"). We believe that our process achieves the right balance between objective metrics and a basic framework for discretion in setting total executive compensation, which is very heavily weighted towards variable, performance-based pay. The Compensation Committee also takes into account individual roles, responsibilities and performance.
We have established performance measures intended to incent our executives to manage the Company’s business to meet or exceed our strategic goals. On an annual basis, we review growth in diluted FFO per share, as adjusted, and investment spending. The Compensation Committee believes quality of such growth is best measured in the long-term by comparing our TSR to that of UNUS and the Triple-Net Peer Group. Commencing with 2015, we are moving from the Three-Year TSR vs. UNUS to an approach that will compare the Three-Year TSR to the Triple-Net Peer Group. For 2015, Three-Year TSR vs. UNUS constituted 50% of the indicated award, and the One-Year TSR vs. Triple-Net Peer Group constituted 50% of the indicated LTI award. For 2016, Three-Year TSR vs. UNUS will constitute 25% of the indicated LTI award, and the Two-Year TSR vs. Triple-Net Peer Group will constitute 75% of the indicated LTI award. Beginning for 2017 and subsequent years, Three-Year TSR vs. Triple-Net Peer Group will constitute 100% of the indicated award. References to an "indicated award" means the initial specified

 
 
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award prior to the Compensation Committee's exercise of it discretion, if any, to adjust the award. In addition, personal performance objectives are set for each executive, and the executive’s satisfaction of these objectives is considered in determining bonuses under the AI.
•
Growth in FFO, as Adjusted, per Share
Target
Actual
Performance Against Target
$4.38
$4.44
Above
Our 2015 goal was to increase our diluted FFO per share, as adjusted, by 6% over our prior year’s performance of $4.13 per share. Our target was set slightly higher than the midpoint of our initial guidance range of $4.37.
•
Investment Spending
Target
Actual
Performance Against Target
$550 million
$632 million
Above
Our 2015 goal for investment spending was $550 million, which was the high end of our initial guidance range. During 2015 we had aggregate investment spending of $632 million in our Entertainment, Recreation, Education and Other segments, aggregating $106 million, $273 million, $241 million and $12 million, respectively.
•
Three-Year TSR Compared to Three-Year Performance of UNUS
Target
Actual
Performance Against Target
Plus 150 basis points
Plus 328 basis points
Above
Our 2015 goal was for our Three-Year TSR to exceed the three-year performance of UNUS by 150 basis points. Our Three-Year TSR for the year ended December 31, 2015 was 14.6% and the performance of UNUS during that period was 11.3%.
•
One-Year TSR vs. One-Year Performance of our Triple-Net Peer Group
Target
Actual
Performance Against Target
50th percentile
85th percentile
Above
Our 2015 goal was to be at the 50th percentile when comparing our One-Year TSR to the one-year performance of the Triple-Net Peer Group. Our One-Year TSR for the year ended December 31, 2015 was 5.9%.
Alignment of Pay and Performance
Variable pay consisting of LTI equity awards and annual cash bonuses under the AI (or equity awards under the AI at the executive's election), constitutes the majority of our executive compensation (for our Chief Executive Officer and President, 88%, and for our other NEOs, an average of 84% (exclusive of Mr. Brain who retired from the Company on March 31, 2015)). This allows the Compensation Committee to reward good performance and penalize poor performance. To build strong pay-for-performance alignment with our shareholders, LTI equity awards are based on three-year lookback, although, under

 
 
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our transition this year to a comparison to the Triple-Net Peer Group, 50% of this year’s LTI award is calculated on a one-year look-back.
Compensation Program Design and Implementation
Our Compensation Committee uses the elements of executive compensation described below to meet its compensation objectives for executive officers. The percentage of a NEO's total compensation that is comprised of each of the compensation elements is not specifically determined, but instead, is a result of the targeted competitive positioning for each element (i.e., at approximately the market medians for base salaries, and performance based AI and LTI awards that are competitive with those of our peer group and aligned with performance). Typically, LTI awards comprise a significant portion of a NEO's total compensation. This is consistent with our Compensation Committee's desire to reward long-term performance in a way that is aligned with shareholders’ interests.
Base Salary. Base salary is established at a level intended to approximate the median of base salaries provided by a peer group of companies for comparable positions and responsibilities. Setting base salaries at this level is intended to allow us to emphasize performance-based incentive compensation payable under our AI and LTI. The Compensation Committee approved base salaries for 2015 as follows:
 

2015 Base Salary
Percentage
Change from 2014

Gregory K. Silvers(1)
$585,000
18.4
%
Mark A. Peterson(1)
400,000
12.1
%
Morgan G. Earnest, II
412,571
3.0
%
Craig L. Evans(2)
310,000
n/a

Michael L. Hirons
288,915
3.0
%
(1)
Messrs. Silvers and Peterson received increases in base salary over their 2014 base salary of 18.4% and 12.1%, respectively, in recognition of their promotions which occurred during 2015.
(2)
Mr. Evans was hired by the Company on April 6, 2015.

Annual Incentive Program. Our Compensation Committee determines annual incentive amounts based upon an assessment of a combination of the individual performance of the executive and the Company's overall performance as evaluated in terms of a variety of goals and metrics. Our Compensation Committee has identified performance factors that it considers in its determination of performance bonuses, but did not set specific performance goals for all of these metrics. In establishing performance factors, our Compensation Committee strives to ensure that:
•
Incentives are aligned with the strategic goals set by our board,
•
Targets are sufficiently ambitious so as to provide a meaningful incentive, and
•
Bonus payments will be consistent with the overall compensation program established by our Compensation Committee.
At the beginning of 2015, our Compensation Committee identified three primary performance factors:
•
Growth in FFO as adjusted, per share,
•
Investment spending, and
•
Personal objectives for each executive.
Our Board of Trustees tracks FFO and FFO as adjusted, per share growth on a regular basis, and, like many other REITs, considers growth in FFO as adjusted, to be the most important measure of Company

 
 
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performance. The National Association of Real Estate Investment Trusts developed FFO as a relative non-GAAP financial measure of performance of an equity REIT in order to recognize that income-producing real estate historically has not depreciated on the basis determined under GAAP. FFO is a widely used measure of the operating performance of real estate companies. For 2015, the Company achieved 7.7% Growth in FFO as adjusted, per share, which was above the Compensation Committee's target opportunity level for that measure of 6%.
Our Compensation Committee believes that growth in investment spending is a significant driver to the long-term success of the Company. For 2015, the Company achieved investment spending of $632 million exceeding the maximum opportunity level of $605 million.
The Compensation Committee puts a 50% weighting on Growth in FFO as adjusted, per share, and a 30% weighting on Investment Spending, with the remaining 20% weighting placed on personal objectives of the each executive. Upon making this initial determination, the Compensation Committee may increase or reduce the determined amount. These adjustments are based on subjective considerations of individual performance for each NEO and overall Company performance. Our Compensation Committee considers a variety of other factors, some of which are more qualitative in nature, to determine the AI performance bonuses. Included in these factors is their evaluation of the individual performance of each NEO and overall Company performance, including the evaluation of performance factors such as capital formation, debt ratios, expense management, total shareholder returns and dividend rates. After the conclusion of each fiscal year, our Compensation Committee considers the performance of our Company and each NEO, the achievement of these performance factors and the recommendations of our Chief Executive Officer (with respect to other NEOs) and makes a determination as to the amount of any performance bonuses that are awarded.
Our Compensation Committee established for 2015 a minimum, target and maximum level of AI performance bonus packages that may be paid to each NEO. The minimum, the target and the maximum stated opportunities are shown below:
 
Minimum
Target
Maximum
Gregory K. Silvers
50%
100%
200%
Mark A. Peterson
45%
90%
180%
Morgan G. Earnest II
40%
80%
160%
Craig L. Evans
30%
60%
120%
Michael L. Hirons
35%
70%
140%
Based upon our Compensation Committee's evaluation of individual performance, the primary performance factors it articulated for 2015 (discussed above), the Compensation Committee established bonuses under our AI at between 172% and 188% of target levels established for 2015 for each of the NEOs (Mr. Brain did not participate in the AI for 2015 due to his retirement). As a result, in February 2016, our Compensation Committee approved the following bonuses under our AI for our NEOs for 2015:
 
Percent of
Base Salary

Amount
Gregory K. Silvers
188%
$
1,099,800

Mark A. Peterson
169%
676,800

Morgan G. Earnest II
138%
567,697

Craig L. Evans
113%
349,680

Michael L. Hirons
127%
368,078

Performance bonuses awarded under the AI are payable in cash, nonvested restricted common shares or a combination of cash and nonvested restricted common shares, at the election of the executive. Our Compensation Committee believes that allowing executives to receive all, or a portion of their annual

 
 
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incentive in the form of nonvested restricted common shares provides an additional opportunity to increase their ownership levels in the Company and aligns executives' long-term interests with our shareholders' interests in value creation. For 2015, executives electing to receive nonvested restricted common shares as payment of their annual incentive received an award having a value equal to 150% of the cash amount they otherwise would have received. For 2015, each of the NEOs elected to receive 100% of his performance bonus in the form of nonvested restricted common shares. Nonvested restricted common shares issued as payment of annual incentive awards vest at the rate of 331/3 % per year during a three-year period. For purposes of determining the total number of nonvested restricted common shares awarded under the AI, nonvested restricted common shares were valued on the date the award is granted in the first quarter of 2016, using the volume weighted average of the closing price on each of the 10 trading days consisting of the five trading days ending on and the five trading days after December 31, 2015 ($58.36)
Long-Term Incentive Plan. Our Compensation Committee's practice is to award long-term incentives annually in the form of:
•
Nonvested restricted common shares,
•
Nonvested common share options, and
•
Payment of an amount of whole life insurance for the executive plus related income tax (the "Life Insurance Benefit").
At the election of the executive, annual long-term incentive awards are payable in one of three combinations:
•
60% of the value of the award in nonvested restricted common shares and the remaining 40% in nonvested common share options and the Life Insurance Benefit,
•
75% of the value of the award in nonvested restricted common shares and the remaining 25% in nonvested common share options and the Life Insurance Benefit, or
•
100% of the value of the award in nonvested restricted common shares and the Life Insurance Benefit.
Our Compensation Committee believes that providing a portion of the award in the form of nonvested common share options aligns executive and shareholder interests as common share options only increase in value when the share price increases. In addition, offering nonvested restricted common shares, which retain value during difficult business climates, enhances our ability to retain the NEOs. Nonvested restricted common shares and nonvested common share options issued as payment of LTI awards vest at the rate of 25% per year during a four-year period. The Compensation Committee has determined that it will phase out the Life Insurance Benefit over time.
LTI awards are made in the first quarter of each fiscal year, at the same time as AI bonuses are determined. The NEOs may realize awards (stated as a multiple of annual base salary) under the LTI between the minimum and the maximum opportunity levels stated below, subject to the discretion of the Compensation Committee:
 
Minimum
Target
Maximum
Gregory K. Silvers
1.25
2.50
5.00
Mark A. Peterson
1.125
2.25
4.50
Morgan G. Earnest II
1.00
2.00
4.00
Craig L. Evans
0.75
1.50
3.00
Michael L. Hirons
0.80
1.60
3.25
As discussed above, commencing with 2015, the Company is transitioning from the Three-Year TSR vs. UNUS to an approach that will compare the Three-Year TSR to the Triple-Net Peer Group, a group

 
 
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modeled primarily from JP Morgan Equity Research's Triple-Net Lease REIT group. A more detailed discussion of this transition is provided on page 29.
If executives are eligible for an LTI award, the Compensation Committee may make subjective adjustments in the award levels calculated as follows. A determination of such adjustments to the LTI awards will be calculated as discussed above. No awards will be indicated by the initial determination if performance is below the minimum opportunity level, however, the Compensation Committee retains the subjective discretion to provide for an award based upon other factors on the same basis as applied under the AI, provided, that in no event would an indicated award exceed the maximum LTI award opportunity. In applying this discretion, the Compensation Committee is strongly influenced by absolute shareholder returns.
An initial determination is based upon the two performance measures, each constituting 50% of the initial determination for 2015, as follows:
 
Minimum
Target
Maximum
Three-Year TSR vs. UNUS
-150 bps
+150
+450
One-Year TSR vs. Triple-Net Peer Group
30th percentile
50th percentile
80th percentile
The adjustments to the LTI awards will be calculated on a sliding scale determined in the same manner as the AI.
Based upon our Compensation Committee's evaluation of individual performance and the primary performance factors it articulated for 2015, the Compensation Committee made LTI awards to NEOs at levels between target and maximum (Mr. Brain did not participate in the LTI for 2015 due to his retirement). Accordingly, our Compensation Committee made the following LTI awards:
 
Multiple of
Base Salary
Total Value
of Award
Restricted Shares
Awarded(1)
Options
Awarded
Insurance Premium and Tax Benefit
Gregory K. Silvers
4.5
$
2,628,123

46,253
—

$
—

Mark A. Peterson
4.0
1,617,306

25,492
—

168,824

Morgan G. Earnest II
3.6
1,482,786

26,096
—

—

Craig L. Evans
2.7
835,608

14,706
—

—

Michael L. Hirons
2.9
837,915

12,974
—

100,757

(1)
For purposes of determining the total number of nonvested restricted common shares awarded, nonvested restricted common shares were valued on February 17, 2016, the date the award was granted, using the volume weighted average of the closing price on each of the last 30 trading days prior to February 17, 2016 ($56.82).
Health and Welfare Benefits. We provide certain health and welfare benefits to the NEOs, including employer matching contributions to our 401(k) plan, health and welfare benefit programs and life insurance, which are generally the same as such benefits provided to all other full-time employees, except the Company provides NEOs with a term life insurance benefit in connection with their severance upon death as discussed below.
Perquisites and Other Personal Benefits. Our Company offers the following personal benefits and perquisites to the currently employed NEOs:

 
 
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•
Vehicles. We have acquired vehicles that the NEOs are entitled to use. Each of those NEOs is taxed for personal use of the vehicles.
•
Term Life Insurance. Under our Company's insurance benefit plan, our Company pays the premium for term life insurance for the benefit of each NEO payable upon the NEO's severance upon death, which replaced a prior death severance benefit discussed below.
•
Life Insurance Benefit. NEOs may also receive a portion of their LTI award in the form of the Life Insurance Benefit.
Employment Agreements and Severance Benefits
Each of our NEOs has entered into employment agreements with the Company. The employment agreements include severance benefits for the NEOs. These agreements were designed to:
•
Preserve our ability to compete for executive talent, and
•
Provide stability during a potential change in control by encouraging executives to cooperate with a future process that may be supported by the Board, without being distracted by the possibility of termination or demotion after the change in control.
In connection with its ongoing succession planning efforts and the recent retirement of its former President and Chief Executive Officer, the Company undertook a comprehensive review and analysis of the existing employment agreements with its executive officers (the "Old Agreements"). Led by the Compensation Committee, the review and analysis of the Old Agreements resulted in the Compensation Committee's identification of several provisions in the Old Agreements as not reflecting what it understands to be best practices. Among these was an automatic "evergreen" term provision that resulted in the Old Agreement's perpetual duration. The Old Agreements also provided no mechanism for the Company's nonrenewal of them without triggering a substantial severance payment obligation. Together these provisions gave executives considerable leverage to resist changes in the terms and conditions of their employment. In this regard, as previously disclosed, in consideration of the former President and Chief Executive Officer agreeing to retire, the Company was required to pay retirement severance benefits substantially equal to those that would be payable to him under his Old Agreement if he were to be terminated without "cause."
At the conclusion of the Compensation Committee's review and analysis of the Old Agreements, the Compensation Committee and the Company's new President and Chief Executive Officer, Gregory K. Silvers, worked together in developing a new form of employment agreement (the "New Agreements"). The New Agreements were designed with the intent of being more consistent with best practices and providing the Company with greater flexibility in its decision making as to its executives and the terms and conditions of their employment. Despite the perceived economic incentive that most of the executives personally had to retain the Old Agreements, the executives nevertheless agreed to replace the Old Agreements with the New Agreements. On May 13, 2015, the Company entered into the New Agreements with each of its executive officers.
One of the more significant changes reflected in the New Agreements as compared to the Old Agreements is the reduction in the amount of the severance payments available to executive officers upon a termination of employment without "cause" or with "good reason" or a termination of employment due to disability or death. Under the Old Agreements with Messrs. Silvers, Peterson, Earnest and Hirons (Mr. Evans joined the Company in 2015 and was not a party to the Old Agreement), if the employment of each of those executives had been terminated during 2015 as a result of the occurrence of any such event, the aggregate severance payments by the Company would have been equal to approximately $23.1 million. In contrast, the aggregate severance payments by the Company under such circumstances would be approximately $6.3 million (a reduction of approximately $16.8 million) under the New Agreements. This reduction in potential severance payments resulted from a reduction in the severance multiple applicable to most executives and the elimination of LTI awards from the severance payment calculation. In addition, the New Agreements eliminated the severance benefit payable upon the NEO's

 
 
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death. The Company now provides more cost-effective term life insurance to the NEOs at substantially lower levels than prior key-man policies.
The following chart summarizes the material changes implemented by the New Agreements as compared to the Old Agreements:
Provision
Old Agreements
New Agreements
Term
Perpetual, automatic evergreen, term. No ability to prevent a renewal of the term without triggering a substantial severance payment obligation.

Three year term, with no provision for its renewal.
Severance Calculation
The product of the severance multiple (see below) times the sum of:

(i) base salary, plus

(ii) the latest AI award (including the premium for election to receive nonvested restricted common shares), plus

(iii) the latest LTI award.

The product of the severance multiple (see below) times the sum of:
(i) base salary, plus
(ii) the average of the value of the AI awards paid or payable for the three most recently completed years (excluding the premium for election to receive nonvested restricted common shares).
LTI awards have been eliminated from the severance payment calculation.
Severance Multiples
A 3x severance multiple for three of the executive officers.
A 3x severance multiple only applies to the President and Chief Executive Officer. A 2.5x severance multiple applies to the Chief Financial Officer and the Chief Investment Officer, and a 2x severance multiple applies to each other executive officer, except Mr. Evans, who is entitled to a 3x severance multiple if a change of control occurs prior to May 13, 2016, a 2.5x severance multiple if a change of control occurs during the one year period ending on May 13, 2017, and a 2x severance multiple thereafter.

Severance Benefit upon Death
Executive officers receive the full severance benefit upon death. The Company maintained key-man insurance policies to cover this risk.
No severance benefit upon death. The Company provides more cost-effective term life insurance to the executive officers at substantially lower levels than prior key-man policies.

Vesting of Equity Awards
Upon termination without "cause," termination for "good reason," death or disability, nonvested restricted common shares and nonvested common share options vest and common share options are exercisable for 180 days.
No change in the provisions, except that common share options are exercisable for a period ending on the earlier of:
(i) five years from the employment termination date; or
(ii) the expiration dates of the common share options.
 
Tax Gross-Ups
Gross-up for any excise tax relating to parachute payments.
The tax gross-up provision has been eliminated.

 
 
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Employee Severance Plan
In 2015, the Company's Board of Trustees adopted an Employee Severance Plan (the "Severance Plan") which provides severance benefits for all employees of the Company. The Severance Plan will apply to the NEOs upon expiration of their New Agreements in three years. At that time, the severance payment calculation for all NEOs will be based on a 2x severance multiple times the sum of base salary plus the annual incentive bonus, except in the case of a change of control, in which case Mr. Silvers will be entitled to a 3x severance multiple and Mr. Peterson will be entitled to a 2.5x severance multiple. This will generally result in a further reduction in the Company's severance payment exposure with respect to the NEOs as compared with that provided under the Old Agreements.
Chief Executive Officer Compensation
In connection with the promotion of Mr. Silvers to the positions of President and Chief Executive Officer, the Compensation Committee increased his base salary for 2015 to $585,000 and increased his minimum, target and maximum opportunity levels under the AI and the LTI to the same levels that were set for Mr. Brain for his 2014 compensation. In connection with this promotion, Mr. Silvers also received a nonvested restricted common share grant of 15,000 shares, which will vest ratably over a four year period.
In late 2015 and early 2016, the Compensation Committee conducted a formal evaluation of Mr. Silvers and interviewed him regarding his performance and the performance of our Company generally. In establishing Mr. Silvers’ compensation, our Compensation Committee took into account the compensation of similar officers of REITs with comparable market capitalizations. Mr. Silvers’ compensation also reflects his strategic focus for the Company and the changes in organizational structure required by the growth of the Company. Based on his individual performance evaluation and the financial performance of the Company in 2015, the Compensation Committee established bonuses under the AI at 188% of the target level and awards under the LTI for Mr. Silvers at 180% of his target level.
The incentive award paid to Mr. Silvers was based on our Company’s review of the various factors described above, as well as an evaluation of Mr. Silvers’ personal performance during 2015. Mr. Silvers elected to take payment of the bonus in the form of nonvested restricted common shares valued at 150% of the bonus. An award under our LTI valued at $2,628,123 was made for 2015, payable as described above. Based upon its review of the various factors described above, the Compensation Committee believes Mr. Silvers’ compensation is reasonable and not excessive.
Former CEO Compensation and Retirement Agreement
David M. Brain, the Company's former Chief Executive Officer and President, retired from the Company on March 31, 2015. Prior to his retirement, Mr. Brain's base salary for 2015 was $622,326. In connection with his retirement, on March 13, 2015, the Company and Mr. Brain entered into a Retirement Agreement (the “Retirement Agreement”), pursuant to which he agreed to retire on March 31, 2015 in consideration for certain retirement severance benefits substantially equal to those benefits that would be payable to him under his Employment Agreement if he were terminated without “cause.” These benefits included a lump sum payment of $11,580,126 payable within 30 days of his retirement, together with $159,685, which reflects the amount necessary to cover certain health plan coverage for three years. Mr. Brain was not entitled to participate in the AI or the LTI for 2015 due to his retirement. However, under the Retirement Agreement, all of Mr. Brain's then-outstanding equity grants under the Company's 2007 Equity Incentive Plan, including all nonvested common share options and nonvested restricted common shares awarded under the Company's AI and LTI for prior years, became immediately vested or exercisable. As a condition to receiving such payment amounts, Mr. Brain is subject to (i) customary non-disclosure and non-use restrictions, (ii) a release of the Company and its affiliates from any liability and waive certain other claims, (iii) customary non-disparagement restrictions, and (iv) a customary covenant not to sue the Company. Mr. Brain continues to be obligated to comply with certain confidentiality, non-competition and non-solicitation provisions contained in his Employment Agreement for a three-year period.

 
 
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Compensation Committee Discretion
The Compensation Committee has retained the right to increase or reduce the amount of awards and grants under the AI and the LTI determined by the quantitative performance factors. The Compensation Committee may increase or reduce by up to 25% the determined amount under the AI, and if an award is not indicated, an increase of up to 25% of the minimum award. Similarly, the Compensation Committee retains the subjective discretion for a 50% increase or decrease of an award under the LTI, and if an award is not indicated, an increase of up to 50% of the minimum award. Adjustments are based on subjective considerations of individual performance for each NEO and overall Company performance. In applying this discretion, the Compensation Committee is strongly influenced by absolute shareholder returns. The Compensation Committee believes this discretion permits it to better align compensation with individual performance and to make adjustments for circumstances that may not be fully reflected in the quantitative performance factors.
In 2011, the Compensation Committee first established quantitative performance factors for the plans. The chart below sets forth the percentage deviation from the awards indicated by the identified quantitative performance factors for the plans for all NEOs as a group:
 
2011
2012
2013
2014
2015
Annual Incentive Plan
-16%
—%
1%
25%
—%
Long-Term Incentive Plan
-23%
-1%
—%
-6%
—%
As indicated above, the Compensation Committee has been cautious when applying discretionary increases and, as indicated by the discretion applied in 2011 and 2014, is strongly influenced by absolute shareholder returns.
Consideration of the 2015 Advisory Vote on Executive Compensation
In establishing 2015 compensation, the Compensation Committee considered the shareholder vote in 2015 on the compensation paid to NEOs in which more than 93% of the shares voted were in favor. The Compensation Committee viewed this vote as supportive of the Company’s overall approach to executive compensation.
Assessment of Compensation-Related Risks
The Compensation Committee believes that the Company's compensation programs do not encourage excessive risk and instead encourage behavior that supports sustainable value creation by appropriately balancing risk and reward. During each annual compensation setting process, the Compensation Committee considers the Company's compensation policies and practices to determine whether, in its judgment, the compensation programs encourage risk-taking likely to have a material adverse effect on the Company. In particular, there are several design features of those programs that the Compensation Committee believes reduces the likelihood of excessive risk-taking:
•
The executive compensation program design provides a balanced mix of cash and equity, annual and long-term incentives,
•
Maximum payout levels for awards under the AI and LTI are capped,
•
Final awards under the AI and LTI are subject to the discretion of the Compensation Committee, which may consider both quantitative and qualitative factors outside the specified performance factors,
•
Substantially all of the final awards under the AI and LTI are payable in the form of nonvested equity awards that continue to be at-risk for three years (for AI awards) and four years (for LTI awards) after they are earned by executive officers,

 
 
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•
The Board of Trustees has established an Investment Committee chaired by one Board representative that reviews and approves all of the Company's investments, with larger transactions requiring the approval of the Board of Trustees, and
•
Executive officers are subject to share ownership and retention guidelines.
Share Ownership Guidelines
The Compensation Committee has adopted share ownership guidelines applicable to the NEOs and trustees of the Company. Each NEO and trustee is required to have acquired, within four years of his or her election to the position of NEO or trustee, common shares or nonvested restricted common shares or units having a market value in excess of the following:
 
Requirement
Trustees
4x their current basic retainer
CEO
5x his current base salary
CFO
3x their current base salary
Other NEOs
1x their current base salary

Tax Considerations
Section 162(m) of the Code generally disallows a tax deduction to public companies for compensation in excess of $1,000,000 paid for any fiscal year to our Company's Chief Executive Officer and the four other most highly compensated executive officers (other than our Chief Financial Officer). The statute exempts qualifying performance-based compensation from the deduction limit if stated requirements are met. Awards under the AI and the LTI are designed with the intent to qualify as performance-based compensation under Code Section 162(m) to enable the Company to deduct such compensation under Code Section 162(m) to the greatest extent permitted.
Although deductibility of compensation is preferred, tax deductibility is not a primary objective of our compensation programs. We believe it is important to retain the flexibility to compensate executives competitively even if such compensation is potentially not deductible for tax purposes. The Compensation Committee and the Board consider the impacts of Code Section 162(m) in developing, implementing, and administering our compensation programs. However, the Compensation Committee and the Board balance this consideration with our primary goal of structuring compensation programs to attract, motivate, reward, and retain highly talented executives. As such, exceptions may occur when the Compensation Committee or the Board, after balancing tax efficiency with long term strategic objectives, believe it is in the best interests of our shareholders. In addition, because of the uncertainties associated with the application and interpretation of Code Section 162(m) and the regulations issued thereunder, there can be no assurance that compensation intended to satisfy the requirements for deductibility under Code Section 162(m) will in fact be deductible.

 
 
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Summary Compensation Table
The following table contains information on the compensation earned by our Chief Executive Officer, our former Chief Executive Officer, our Chief Financial Officer and our three other most highly compensated executive officers in 2015, which we collectively refer to in this Proxy Statement as our "NEOs." For additional information regarding this compensation, refer to the Compensation Discussion and Analysis section of this Proxy Statement.
Name & Principal Position
Year
Salary
Bonus(1) 
Share
Awards

(2)(3)
Option
Awards

(2)(4)
Non-Equity
Incentive
Plan
Compen-
sation
Change in
Pension
Value &
Nonqualified
Deferred
Compen-
sation
Earnings
All
Other
Compen-
sation(5)
Total
Gregory K. Silvers
2015
$
585,000

$
1,099,800

$
4,375,127

$
—

$
—

$
—

$
59,570

$
6,119,497

President and Chief Executive Officer
2014
494,190

262,693

1,563,819

357,924

—

—

174,819

2,853,445

2013
484,500

682,309

2,063,132

421,702

—

—

154,726

3,806,369

Mark A. Peterson
2015
400,000

676,800

2,537,737

—

—

—

215,662

3,830,199

Executive Vice President, Chief Financial Officer and Treasurer
2014
356,895

168,633

1,003,832

139,295

—

—

217,046

1,885,701

2013
346,500

414,033

1,300,415

177,676

—

—

205,499

2,444,123

Morgan G. Earnest II
2015
412,571

567,697

1,935,773

—

—

—

102,652

3,018,693

Senior Vice President and
Chief Investment Officer
2014
400,554

189,262

1,126,680

345,812

—

—

73,145

2,135,453

2013
392,700

402,204

1,435,973

301,971

—

—

164,822

2,697,670

Craig L. Evans
2015
232,500

349,680

1,566,687

—

—

—

36,574

2,185,441

Senior Vice President, Secretary and General Counsel(6)
 
 
 
 
 
 
 
 


 
 
 
 
 
 
 
 


Michael L. Hirons
2015
288,915

368,078

1,086,973

—

—

—

136,413

1,880,379

Senior Vice President – Strategy
and Asset Management
2014
280,500

115,969

636,880

92,975

—

—

139,450

1,265,774

2013
255,000

253,916

781,156

106,431

—

—

136,029

1,532,532

David M. Brain
2015
148,401

—

—

—

—

—

11,776,079

11,924,480

Former President and Chief Executive Officer(7)
2014
622,326

367,561

1,812,081

543,991

—

—

51,307

3,397,266

2013
587,100

835,150

2,730,695

733,875

—

—

29,330

4,916,150

(1)
Amounts reflect performance bonuses earned by each executive under the annual incentive program. Performance bonuses under the annual incentive program are payable in cash, nonvested restricted common shares or a combination of cash and nonvested restricted common shares, at the election of executive. Executives that elect to receive their performance bonuses in the form of nonvested restricted common shares receive an award of nonvested restricted common shares having a value equal to 150% of the cash amount they otherwise would have received. In each of 2015, 2014 and 2013, the executives elected to receive their performance bonuses payable in that year in the form of nonvested restricted common shares. See note 2 below for a discussion

 
 
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of the method used in determining the aggregate grant date fair value of the nonvested restricted common shares. Mr. Brain departed from the Company prior to the end of the performance period and, therefore, he did not participate in the plan for 2015.
(2)
Amounts reflect the aggregate grant date fair value of such awards, computed in accordance with FASB ASC Topic 718. For policies used in determining these values, refer to Note 2 of the Company's financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the SEC.
(3)
Amounts include: (i) the aggregate grant date fair value of nonvested restricted common shares issued pursuant to the long-term incentive plan (including employment inducement, promotion and other grants); and (ii) the incremental aggregate grant date fair value of nonvested restricted common shares issued pursuant to the annual incentive program that the executive, by accepting nonvested restricted common shares instead of cash, received in excess of the cash amount that that the executive would have otherwise received. In 2015, the incremental aggregate grant date fair value of nonvested restricted common shares issued pursuant to the annual incentive program to Messrs. Silvers, Peterson, Earnest, Evans and Hirons was $639,530, $393,514, $330,086, $203,352, $214,057, respectively. Mr. Brain did not participate in the long-term incentive plan or the annual incentive plan in 2015 as a result of his departure from the Company.
(4)
Amounts include option awards granted to each executive pursuant to the long-term incentive plan.
(5)
The following table sets forth all other compensation for 2015 including amounts relating to personal use of company vehicles, the Company's matching contributions under the Company's 401(k) plan, amounts payable by the Company with respect to term life insurance premiums (and related tax gross-up payments), amounts payable by the Company pursuant to the Life Insurance Benefit, commuting expenses, the dollar value of dividends paid on nonvested restricted shares that were not factored into the grant date fair value of such awards and certain severance paid or accrued to Mr. Brain. See "Compensation Program Design and Implementation – Long-Term Incentive Plan" above for a discussion of the amounts payable by the Company pursuant to the Life Insurance Benefit.
Name
Personal Use of Company Vehicles
401(k) Matching Contributions
Term Life Insurance Premiums and Related Tax Gross-Up
Life Insurance Benefit
Commuting Expense
Dividends
Severance Benefits
Total of All Other Compensation
Gregory K. Silvers
$
7,901

$
24,000

$
18,727

$
—

$
—

$
8,942

$
—

$
59,570

Mark A. Peterson
7,763

24,000

9,335

168,824

—

5,740

—

215,662

Morgan G. Earnest II
3,555

24,000

35,186

—

33,469

6,442

—

102,652

Craig L. Evans
4,210

24,000

8,364

—

—

—

—

36,574

Michael L. Hirons
9,775

18,000

4,195

100,757

—

3,686

—

136,413

David M. Brain
1,597

24,000

—

—

—

10,671

11,739,811

11,776,079

(6)
Mr. Evans joined the Company on April 6, 2015.
(7)
Mr. Brain retired effective May 31, 2015. In connection with his retirement, the Company and Mr. Brain entered into a Retirement Agreement, the terms of which are discussed under "–Former CEO Compensation and Retirement Agreement". The severance benefits paid or accrued to Mr. Brain in 2015 reflected in the "All Other Compensation" column include a lump sum payment of $11,580,126 that was payable within 30 days of his retirement together with a payment of $159,685, which reflects the amount necessary to cover certain health plan coverage for three years, pursuant to his Retirement Agreement. Pursuant to the Retirement Agreement, all of Mr. Brain's previously issued and outstanding nonvested restricted common shares and unexercisable option awards vested or became exercisable.

 
 
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Grants of Plan-Based Awards in Fiscal 2015
The following table provides information about grants of plan-based awards under equity incentive plans to the NEOs in 2015. These grants were made under the 2007 Equity Incentive Plan pursuant to the annual incentive program and the long-term incentive plan. Grants were in the form of nonvested restricted common share awards and common share options. For additional information regarding these awards, refer to the Compensation Discussion and Analysis section of this Proxy Statement.
Name
Grant
Date
Estimated Future
Payouts Under
Non-Equity Incentive
Plan Awards




Estimated Future
Payouts  Under
Equity Incentive
Plan Awards
All  Other
Stock
Awards:
Number  of
Shares of Stock or
Units(1)
All Other
Option
Awards:
Number of
Securities
Underlying
Options(2)
 Exercise
or Base
Price of
Option
Awards
Grant
date  Fair
Value of
Stock  and
Option
Awards(3)
Thres-
hold
Target
Maxi-
mum
 
Thres-
hold
Target
Maxi-
mum
Gregory K. Silvers
2/20/2015
—
—
—
 
—
—
—
—

21,588

$
61.79

$
352,870

2/20/2015
—
—
—
 
—
—
—
29,560

—

—

1,826,512

3/16/2015
—
—
—
 
—
—
—
15,000

—

—

889,650

Mark A. Peterson
2/20/2015
—
—
—
 
—
—
—
—

8,401

61.79

137,320

 
2/20/2015
—
—
—
 
—
—
—
18,975

—

—

1,172,465

 
5/13/2015
—
—
—
 
—
—
—
10,000

—

—

575,700

Morgan G. 
Earnest II
2/20/2015
—
—
—
 
—
—
—
—

20,857

61.79

340,921

2/20/2015
—
—
—
 
—
—
—
21,297

—

—

1,315,942

Craig L. Evans
4/6/2015
—
—
—
 
—
—
—
7,500

—

—

458,475

Michael L. Hirons
2/20/2015
—
—
—
 
—
—
—
—

5,608

61.79

91,666

 
2/20/2015
—
—
—
 
—
—
—
12,184

—

—

752,849

 
9/9/2015
—
—
—
 
—
—
—
1,500

—

—

74,625

David M. Brain(4)
2/20/2015
—
—
—
 
—
—
—
—

32,810

61.79

536,301

 
2/20/2015
—
—
—
 
—
—
—
35,275

—

—

2,179,642

(1)
The column includes nonvested restricted common shares issued pursuant to the annual incentive program (with respect to elections to receive the award in restricted common shares) and the long-term incentive plan (including employment inducement, promotion and other grants). The nonvested restricted common shares issued pursuant to the annual incentive program vest at the rate of 33 1/3% per year for three years and the nonvested restricted commons shares issued pursuant to the long-term incentive plan vest at the rate of 25% per year for four years. See the Compensation Discussion and Analysis section of this Proxy Statement for additional information regarding these awards and the annual incentive program and long-term incentive plan.
(2)
The column includes options issued pursuant to the long-term incentive plan, which vest at the rate of 25% per year for four years and are exercisable during a 10-year period. See the Compensation Discussion and Analysis section of this Proxy Statement for additional information regarding these awards and the long-term incentive plan.
(3)
Amounts reflect the aggregate grant date fair value of such awards, computed in accordance with FASB ASC Topic 718. For policies used in determining these values, refer to Note 2 of the Company's financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the SEC.
(4)
Mr. Brain retired from the Company effective March 31, 2015. In connection with his retirement, the Company and Mr. Brain entered into a Retirement Agreement, the terms of which are discussed under "–Former CEO Compensation and Retirement Agreement." Pursuant to the Retirement Agreement, all of Mr. Brain's previously issued and outstanding nonvested restricted common shares and unexercisable option awards vested or became exercisable.

 
 
2016 Proxy Statement
Page 42
 
 
 


Outstanding Equity Awards at 2015 Fiscal Year-End
The following table provides information regarding outstanding awards to the NEOs that have been granted but not vested or exercised as of December 31, 2015.
 
Option Awards
Stock Awards
Name
Number of
Securities
Underlying
Unexercised
Options
Exercisable
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
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(1)
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares, Units
or Other
Rights that
Have Not
Vested
Equity
Incentive  Plan
Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights that
Have Not
Vested
Gregory K. Silvers(2)
21,820

—

—

$
65.50

1/1/2017

—

$
—

—

—

 
23,092

—

—

47.20

1/1/2018

—

—

—

—

 
9,410

—

—

45.73

1/1/2021

—

—

—

—

 
9,653

3,217

—

45.20

1/1/2022

—

—

—

—

 
9,784

9,782

—

47.21

1/1/2023

—

—

—

—

 
7,651

22,951

—

51.64

1/1/2024

—

—

—

—

 
—

21,588

—

61.79

2/20/2025

—

—

—

—

 
—

—

—

—

—

103,384

6,042,795

—

—

Mark A. Peterson(3)
9,803

—

—

65.50

1/1/2017

—

—

—

—

 
9,482

—

—

47.20

1/1/2018

—

—

—

—

 
8,208

—

—

45.73

1/1/2021

—

—

—

—

 
2,225

2,224

—

47.21

1/1/2023

—

—

—

—

 
3,224

9,670

—

51.64

1/1/2024

—

—

—

—

 
—

8,401

—

61.79

2/20/2025

—

—

—

—

 
—

—

—

—

—

66,357

3,878,567

—

—

Morgan G. Earnest II(4)
2,500

—

—

61.53

5/9/2017

—

—

—

—

 
2,500

—

—

52.72

5/7/2018

—

—

—

—

 
50,000

—

—

19.41

5/19/2019

—

—

—

—

 
1,180

—

—

36.56

1/1/2020

—

—

—

—

 
10,114

—

—

45.73

1/1/2021

—

—

—

—

 
8,541

2,846

—

45.20

1/1/2022

—

—

—

—

 
6,538

6,538

—

47.21

1/1/2023

—

—

—

—

 
5,479

16,435

—

51.64

1/1/2024

—

—

—

—

 
—

20,857

—

61.79

2/20/2025

—

—

—

—

 
—

—

—

—

—

62,152

3,632,784

—

—

Craig L. Evans(5)
—

—

—

—

—

7,500

438,375

—

—

Michael L. Hirons(6)
822

—

—

47.20

1/1/2018

—

—

—

—

 
248

—

—

36.56

1/1/2020

—

—

—

—

 
1,762

—

—

45.73

1/1/2021

—

—

—

—

 
1,413

1,412

—

47.21

1/1/2023

—

—

—

—

 
1,931

5,793

—

51.64

1/1/2024

—

—

—

—

 
—

5,608

—

61.79

2/20/2025

—

—

—

—

 
—

—

—

—

—

35,560

2,078,482

—

—

David M. Brain(7)
—

—

—

—

—

—

—

—

—



 
 
2016 Proxy Statement
Page 43
 
 
 


(1)
The market value of the restricted common share awards is based on the closing market price of the Company's common shares as of December 31, 2015 (the last trading day in the 2015 fiscal year), which was $58.45 per share.
(2)
The unexercisable option awards for Mr. Silvers become exercisable according to the following schedule: 21,156 awards vested January 1, 2016; 17,938 awards will vest on January 1, 2017; 13,047 awards will vest on January 1, 2018; and 5,397 awards will vest on January 1, 2019. The restricted common share awards for Mr. Silvers granted under the annual incentive plan vest according to the following schedule: 13,742 awards vested on January 1, 2016; 9,116 awards will vest on January 1, 2017; and 2,223 awards will vest on January 1, 2018. The restricted common share awards for Mr. Silvers granted under the long-term incentive plan vest according to the following schedule: 27,876 awards vested on January 1, 2016; 23,361 awards will vest on January 1, 2017; 17,594 awards will vest on January 1, 2018; and 9,472 awards will vest on January 1, 2019.
(3)
The unexercisable option awards for Mr. Peterson become exercisable according to the following schedule: 6,437 awards vested on January 1, 2016; 6,435 awards will vest on January 1, 2017; 5,323 awards will vest on January 1, 2018; and 2,100 awards will vest on January 1, 2019. The restricted common share awards for Mr. Peterson granted under the annual incentive plan vest according to the following schedule: 8,467 awards vested on January 1, 2016; 5,609 awards will vest on January 1, 2017; and 1,427 awards will vest on January 1, 2018. The restricted common share awards for Mr. Peterson granted under the long-term incentive plan vest according to the following schedule: 18,448 awards vested on January 1, 2016; 14,897 awards will vest on January 1, 2017; 11,336 awards will vest on January 1, 2018; and 6,173 awards will vest on January 1, 2019.
(4)
The unexercisable option awards for Mr. Earnest become exercisable according to the following schedule: 16,809 awards vested on January 1, 2016; 13,961 awards will vest on January 1, 2017; 10,692 awards will vest on January 1, 2018; and 5,214 awards will vest on January 1, 2019. The restricted common share awards for Mr. Earnest granted under the annual incentive plan vest according to the following schedule: 8,998 awards vested on January 1, 2016; 5,664 awards will vest on January 1, 2017; and 1,602 awards will vest on January 1, 2018. The restricted common share awards for Mr. Earnest granted under the long-term incentive plan vest according to the following schedule: 17,815 awards vested on January 1, 2016; 13,976 awards will vest on January 1, 2017; 9,975 awards will vest on January 1, 2018; and 4,122 awards will vest on January 1, 2019.
(5)
The restricted common share awards for Mr. Evans granted under the long-term incentive plan vest according to the following schedule: 1,875 awards vested on January 1, 2016; 1,875 awards will vest on January 1, 2017; 1,875 awards will vest on January 1, 2018; and 1,875 awards will vest on January 1, 2019.
(6)
The unexercisable option awards for Mr. Hirons become exercisable according to the following schedule: 4,039 awards vested on January 1, 2016; 4,039 awards will vest on January 1, 2017; 3,333 awards will vest on January 1, 2018; and 1,402 awards will vest on January 1, 2019. The restricted common share awards for Mr. Hirons granted under the annual incentive plan vest according to the following schedule: 5,441 awards will vest on January 1, 2016; 3,546 awards will vest on January 1, 2017; and 981 awards will vest on January 1, 2018. The restricted common share awards for Mr. Hirons granted under the long-term incentive plan vest according to the following schedule: 9,206 awards vested on January 1, 2016; 7,930 awards will vest on January 1, 2017; 5,772 awards will vest on January 1, 2018; and 2,684 awards will vest on January 1, 2019.
(7)
Mr. Brain retired from the Company effective March 31, 2015. Pursuant to his Retirement Agreement, all of Mr. Brain's outstanding unvested equity awards vested or became exercisable, and no options remained outstanding as of December 31, 2015.


 
 
2016 Proxy Statement
Page 44
 
 
 


Option Exercises and Stock Vested in Fiscal 2015
The following table provides information regarding option exercises by our NEOs and restricted common shares held by our NEOs which vested during 2015.
 
Option Awards
Stock Awards
Name
Number of  Shares
Acquired
on Exercise(1)
Value Realized
on  Exercise(2)
Number of  Shares
Acquired
on Vesting(1)
Value Realized
on  Vesting(2)
Gregory K. Silvers
23,096

$
381,636

36,121

$
2,081,653

Mark A. Peterson
—

—

24,181

1,393,551

Morgan G. Earnest II
5,000

81,250

26,683

1,537,741

Craig L. Evans
—

—

—

—

Michael L. Hirons
10,068

166,376

13,295

766,191

David M. Brain
415,611

6,448,553

164,850

9,595,982

(1)
In 2015, Messrs. Silvers, Peterson, Earnest, Hirons and Brain surrendered 17,777, 11,933, 13,158, 6,604 and 80,790 shares, respectively, to pay for tax withholdings.
(2)
The "value realized" on exercise of an option award is the difference between the per share closing market price of the Company's common shares on the date of exercise and the exercise price of the option. The "value realized" on vesting of a restricted common share award is the closing market price of the Company's common shares as of the vesting date of the award.


 
 
2016 Proxy Statement
Page 45
 
 
 


Potential Payments Upon Termination or Change of Control
The following table provides information regarding potential payments upon termination of our NEOs or a change of control as of December 31, 2015. These payments are provided for in the employment agreements the Company has entered into with each NEO, which have been previously filed with the SEC and which are described below.
 
 
 
 
 
Before Change
in Control
 
After Change in Control
Name(1)
Benefit
Voluntary
Termination
Death
Disability
Termination
w/o Cause or
for Good
Reason
 
No
Termination
Termination
w/o Cause
or for Good
Reason
Gregory K. Silvers
Cash Severance
$
—

$
—

$
3,799,802

$
3,799,802

 
$
—

$
3,799,802

 
Health Benefits Continuation(2)
—


70,576

70,576

70,576

 
—

70,576

 
Term Life Insurance Proceeds (3)
—


2,500,000

—

—

 
—

—

 
Accelerated Vesting of Options(4)
—


308,871

308,871

308,871

 
308,871

308,871

 
Accelerated Vesting of Restricted Shares(4)
—

6,042,795

6,042,795

6,042,795

 
6,042,795

6,042,795

Mark A. Peterson
Cash Severance
—

—

2,049,555

2,049,555

 
—

2,049,555

 
Health Benefits Continuation(2)
—

59,145

59,145

59,145

 
—

59,145

 
Term Life Insurance Proceeds (3)
—


2,000,000

—

—

 
—

—

 
Accelerated Vesting of Options(4)
—

90,850

90,850

90,850

 
90,850

90,850

 
Accelerated Vesting of Restricted Shares(4)
—