Edgar Filing: VENTAS INC

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )

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[_] Preliminary Proxy Statement

[_] Confidential, for Use of Commission Only (as permitted by Rule 14a-6(e)(2))

[X] Definitive Proxy Statement

[_] Definitive Additional Materials

[_] Soliciting Material Pursuant to (ss.)240.14a-12

VENTAS, INC.
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(Name of Registrant as Specified In Its Charter)

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(Name of Person(s) filing Proxy Statement, if other than Registrant)

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[LOGO] Ventas

4360 Brownsboro Road
Suite 115
Louisville, Kentucky 40207-1642
(502) 357-9000

April 3, 2002

Dear Stockholder:

You are cordially invited to attend the Annual Meeting of Stockholders to be
held at 10:00 a.m., local time on Tuesday, May 14, 2002, at The Olmsted, 3701
Frankfort Avenue, Louisville, Kentucky.

The Board of Directors appreciates your interest in the Company. Regardless
of whether you plan to attend the meeting, it is important that your shares are
represented. Please sign, date and mail the enclosed proxy in the envelope
provided at your earliest convenience.

Sincerely,
/s/ W. BRUCE LUNSFORD
W. Bruce Lunsford
Chairman of the Board

[LOGO] Ventas

4360 Brownsboro Road
Suite 115
Louisville, Kentucky 40207-1642
(502) 357-9000

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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

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To the Stockholders of Ventas, Inc.:

1. The election of directors for the ensuing year;

2. The ratification of the selection of Ernst & Young LLP as the
independent auditors for fiscal year 2002; and

3. Such other business as may properly come before the Annual Meeting or
any adjournments thereof.

The close of business on March 20, 2002, has been fixed as the record date
for determination of stockholders entitled to notice of, and to vote at, the
Annual Meeting or any adjournments thereof. A list of all stockholders entitled
to vote at the Annual Meeting will be available for inspection by any
stockholder for any purpose reasonably related to the Annual Meeting during
ordinary business hours for a period of ten days prior to the Annual Meeting at
the Company's principal executive offices located at 4360 Brownsboro Road,
Suite 115, Louisville, Kentucky. Your attention is directed to the proxy
statement accompanying this notice.

You are cordially invited to attend the Annual Meeting in person. EVEN IF
YOU PLAN TO ATTEND IN PERSON, YOU ARE REQUESTED TO SIGN, DATE AND RETURN THE
ENCLOSED PROXY AT YOUR EARLIEST CONVENIENCE. This will not prevent you from
voting your shares in person if you choose to attend the Annual Meeting.

By Order of the Board of Directors,
/s/ T. RICHARD RINEY
T. Richard Riney
Executive Vice President, General
Counsel and Corporate Secretary

Louisville, Kentucky
April 3, 2002

VENTAS, INC.

4360 Brownsboro Road
Suite 115
Louisville, Kentucky 40207-1642
(502) 357-9000

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PROXY STATEMENT
for
ANNUAL MEETING OF STOCKHOLDERS
May 14, 2002

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GENERAL INFORMATION

The Annual Meeting of Stockholders (the "Annual Meeting") of Ventas, Inc.
(the "Company") will be held at 10:00 a.m., local time on Tuesday, May 14,
2002, at The Olmsted, 3701 Frankfort Avenue, Louisville, Kentucky. This Proxy
Statement is being furnished in connection with the solicitation of proxies by
the Board of Directors of the Company (the "Board of Directors" or the "Board")
to be used at the Annual Meeting and at any adjournments thereof.

Only stockholders of record at the close of business on March 20, 2002, are
entitled to vote at the Annual Meeting or any adjournments thereof. On the
record date, 69,062,484 shares of the Company's common stock, par value $.25
per share ("Common Stock"), were outstanding. Each share of Common Stock
entitles the owner to one vote. However, certain shares designated as "Excess
Shares" pursuant to the Company's Certificate of Incorporation (which are
generally any shares owned in excess of 9% of the Company's outstanding Common
Stock) may not be voted by the record owner thereof, but will instead be voted
in accordance with Article XII of the Certificate of Incorporation.

A majority of the outstanding shares of Common Stock present in person or by
proxy is required to constitute a quorum to transact business at the Annual
Meeting. The vote of a plurality of the outstanding shares of Common Stock
present in person or by proxy will be necessary to elect the director-nominees
listed in this Proxy Statement. The affirmative vote of a majority of the
shares of Common Stock present in person or by proxy will be necessary to
approve all other proposals and matters that may come before the Annual Meeting
for stockholder consideration. Abstentions and proxies relating to "street
name" shares for which brokers have not received voting instruction from the
beneficial owner ("Broker Non-Votes") are counted in determining whether a
quorum is present. In the election of directors, the nominees receiving the
highest number of votes will be elected. Therefore, abstentions or Broker
Non-Votes for a director-nominee will have no effect. With respect to any
matters submitted to the stockholders for their consideration, other than the
election of directors, abstentions will have the same effect as votes against
any such proposal, whereas Broker Non-Votes will have no effect in determining
whether any such proposal has been approved by the stockholders.

The Company intends to first distribute this Proxy Statement and the
materials accompanying it on or about April 3, 2002. If the enclosed proxy card
is properly signed, returned to the Company and not revoked, it will be voted
in accordance with the instructions contained therein. Unless contrary
instructions are given, the proxy will be voted (i) in favor of the nominees
for director named in this Proxy Statement, (ii) in favor of the ratification
of the selection of Ernst & Young LLP as the Company's independent auditors for
the fiscal year 2002, and (iii) in the discretion of the proxy holders on such
other business as may properly come before the Annual Meeting.

A person giving the enclosed proxy has the power to revoke it at any time
before it is exercised. However, such revocation must be made in writing and
received by the General Counsel of the Company at the Company's principal
executive offices located at 4360 Brownsboro Road, Suite 115, Louisville,
Kentucky 40207-1642 at or before the time and date of the Annual Meeting. A
stockholder may also attend the Annual Meeting and vote in person, in which
event any prior proxy given by the stockholder will be revoked automatically.

The cost of soliciting proxies by the Board of Directors will be borne by
the Company. Such solicitation will be made by mail and in addition may be made
personally or by telephone by directors, officers and employees of the Company,
none of whom will receive additional compensation for these services. The
Company's regularly retained investor relations firm, Corporate Communications,
Inc., may also solicit proxies by telephone and mail and, if it is so engaged,
it will be paid a customary fee. Forms of proxies and proxy materials will also
be distributed through brokers, custodians and other like parties to the
beneficial owners of Common Stock. The Company will reimburse such parties for
their reasonable out-of-pocket expenses incurred in connection with the
distribution.

PROPOSAL 1:

ELECTION OF DIRECTORS

The Board of Directors currently consists of eight positions. The Board of
Directors has nominated the seven persons listed below to be elected as
directors at the Annual Meeting. Mr. Walter F. Beran, age 75, a current
director of the Company, will not stand for reelection as a director. Each
director elected at the Annual Meeting will serve, subject to the provisions of
the Company's bylaws, until his or her successor is duly elected and qualified.
The names of the nominees proposed for election as directors, all of whom are
presently directors of the Company, together with certain information
concerning the nominees, are set forth below:

Nominees for directors

DEBRA A. CAFARO (age 44) joined the Company as Chief Executive Officer and
President on March 5, 1999. From April 1997 to May 1998, she served as
President and Director of Ambassador Apartments, Inc. (NYSE: AAH), a real
estate investment trust ("REIT") under the Internal Revenue Code of 1986, as
amended (the "Code"). Ms. Cafaro was a founding member of the Chicago law firm
Barack Ferrazzano Kirschbaum Perlman & Nagelberg, becoming a partner in 1987,
where her areas of concentration were real estate, finance and corporate
transactions. From 1988 to 1992 Ms. Cafaro served as an Adjunct Professor of
Law at Northwestern University Law School. Ms. Cafaro is admitted to the Bar in
Illinois and Pennsylvania. She is a member of the Board of Governors of
National Association of Real Estate Investment Trusts ("NAREIT"), the Visiting
Committee of the University of Chicago Law School and a Chapter Director of the
National Association of Corporate Directors. /(1)/

DOUGLAS CROCKER, II (age 61) has been a director of the Company since
September 1998. Mr. Crocker has been a Trustee, Chief Executive Officer and
President of Equity Residential Properties Trust (NYSE: EQR), the nation's
largest apartment real estate investment trust ("EQR"), since March 1993. Mr.
Crocker has been President and Chief Executive Officer of First Capital
Corporation, previously a sponsor of public limited real estate partnerships,
since December 1992 and a director of First Capital Corporation since January
1993. Mr. Crocker also served as Executive Vice President of Equity Financial
and Management Company, a subsidiary of Equity Group Investments, Inc. ("EGI"),
which provides strategic direction and services for EGI's real estate and
corporate activities, from November 1992 until March 1997. Mr. Crocker is also
a director of Wellsford Real Properties, Inc. (AMEX: WRP), a real estate
merchant banking firm. /(1)(2)(3)/

RONALD G. GEARY (age 54), an attorney and certified public accountant, has
served as a director of the Company since May 1, 1998. Mr. Geary has served as
a director and President of Res-Care, Inc. (NASDAQ: RSCR) ("Res-Care"), a
provider of residential training and support services for persons with
developmental disabilities and certain vocational training services, since
February 1990 and as Chief Executive Officer of Res-Care since 1993. Since June
1998, Mr. Geary also has served as Chairman of the Board of Res-Care. Prior to
becoming Chief Executive Officer, Mr. Geary was Chief Operating Officer of
Res-Care from 1990 to 1993. Mr. Geary is also a director of Alterra Healthcare
Corporation (AMEX:ALI), a national assisted living company operating assisted
living residences and providing assisted living services. /(3)(4)(5)/

JAY M. GELLERT (age 47) joined the Company as a director on September 10,
2001. Since 1998, Mr. Gellert has been President and Chief Executive Officer of
Health Net, Inc. (formerly known as Foundation Health Systems, Inc.) (NYSE:
HNT) ("Health Net"), an integrated managed care organization which administers
the delivery of managed healthcare services. Previously, Mr. Gellert was
President and Chief Operating Officer of Health Net from May 1997 until August
1998 and from April 1997 to May 1997, Mr. Gellert served as Executive Vice
President and Chief Operating Officer of Health Net. From June 1996 to March
1997, Mr. Gellert served as President and Chief Operating Officer of Health
Net, then operating as Health Systems International, Inc. ("HSI"), a health
maintenance organization. He served on the Board of Directors of HSI from June
1996 to April 1997. Prior to joining HSI, Mr. Gellert directed strategic
advisory engagements for Shattuck Hammond Partners. Mr. Gellert serves on the
boards of the American Association of Health Plans, MedUnite, Inc. and Miavita,
Inc. /(4)/

GARY W. LOVEMAN (age 41), has been a director of the Company since September
10, 2001. Mr. Loveman has been President of Harrah's Entertainment Inc.
(NYSE: HET) ("Harrah's"), a casino entertainment company, since April 23, 2001,
a director since February 2001 and Chief Operating Officer of Harrah's since
May 1998. Mr. Loveman was a Professor of Business Administration at Harvard
Graduate School of Business Administration from May 1989 to 1998, where his
responsibilities included teaching and research in the field of service
management and advising large service companies. Mr. Loveman is also a director
of Coach, Inc. (NYSE: COH), a marketer of modern classic American accessories.
/(2)/

W. BRUCE LUNSFORD (age 54), a founder of the Company, certified public
accountant and attorney, has served as Chairman of the Board since the Company
commenced operations on May 1, 1998. From May 1, 1998 through December 1998, he
also served as President and Chief Executive Officer of the Company. Mr.
Lunsford was a founder of Vencor, Inc. and served as Chairman of the Board,
Chief Executive Officer and President of Vencor, Inc. from the time it
commenced operations in 1985 until May 1, 1998, the date that the Company
effected a corporate reorganization pursuant to which the Company changed its
name to Ventas, Inc. and spun off a new publicly-held corporation (the "1998
Spin Off"). Mr. Lunsford served as Chairman of the Board and Chief Executive
Officer of the new corporation, Vencor, Inc. (now known as Kindred Healthcare,
Inc. (NASDAQ: KIND) ("Kindred"), from May 1, 1998 until January 21, 1999 and as
President of Kindred from May 1, 1998 until November 1998. Mr. Lunsford is also
a director of National City Bank, Kentucky, Inc. and Res-Care. /(1)(5)/

SHELI Z. ROSENBERG (age 60) has been a director of the Company since January
26, 2001. Ms. Rosenberg has been Vice Chairman of Equity Group Investments, LLC
("EGI LLC"), an investment company, since January 1, 2000 and Chief Executive
Officer and President of EGI LLC from January 1, 1999 to January 1, 2000. From
November 1994 until 1999, Ms. Rosenberg served as Chief Executive Officer,
president and a director of EGI. Ms. Rosenberg was a principal in the law firm
of Rosenberg & Liebentritt, P.C., from 1980 to 1997. Ms. Rosenberg is also a
trustee of EQR and Equity Office Properties Trust (NYSE: EOP), an office
building real estate investment trust. Ms. Rosenberg is a director of Capital
Trust, Inc. a specialized finance company, Manufactured Home Communities, Inc.
(NYSE: MHC), a manufactured home community real estate investment trust, CVS
Corporation (NYSE: CVS), a drug store chain, Dynegy Inc. (NYSE: DYN), a
supplier of electricity and natural gas, Cendant Corporation (NYSE: CD), a
provider of travel related, real estate related and direct marketing consumer
and business services and iDine Rewards Network, Inc. (formerly known as
Transmedia Network, Inc.), a marketer of card based savings plans. /(2)(5)/

The information given in this Proxy Statement concerning the nominees is
based upon statements made or confirmed to the Company by or on behalf of such
nominees, except to the extent certain information appears in the Company's
records. Directors' ages are given as of March 31, 2002.
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(1) Member of the Executive Committee, of which Mr. Lunsford is the Chair.
(2) Member of the Executive Compensation Committee (the "Compensation
Committee"), of which Ms. Rosenberg is the Chair.

(3) Member of the Independent Committee, of which Mr. Crocker is the Chair.
(4) Member of the Audit and Compliance Committee (the "Audit Committee"), of
which Mr. Geary is the Chair.
(5) Member of the Nominating and Governance Committee, of which Ms. Rosenberg
is the Chair.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES. SHARES
OF COMMON STOCK OF THE COMPANY COVERED BY PROXIES EXECUTED AND RECEIVED IN THE
ACCOMPANYING FORM WILL BE VOTED FOR THE ELECTION AS DIRECTORS OF ALL OF THE
NOMINEES, UNLESS OTHERWISE SPECIFIED ON THE PROXY.

The Board of Directors does not contemplate that any of the nominees will be
unable to accept election as a director. However, in the event that one or more
nominees are unable or unwilling to accept or are unavailable to serve, the
persons named in the proxies or their substitutes will have authority,
according to their judgment, to vote or refrain from voting for other
individuals as directors.

CERTAIN INFORMATION CONCERNING THE BOARD OF DIRECTORS

During 2001, the Board of Directors held a total of seven meetings,
including five regular meetings and two special meetings. The Company has an
Executive Committee, Compensation Committee, Audit Committee, Independent
Committee and Nominating and Governance Committee.

The Compensation Committee held two meetings in 2001. The functions of the
Compensation Committee are to establish annual salary levels, approve fringe
benefits and administer the 2000 Incentive Compensation Plan and other
compensation plans or programs for executive officers of the Company.

The Audit Committee held four meetings during 2001. The Audit Committee is
comprised of Messrs. Ronald G. Geary (Chair), Jay M. Gellert and Walter F.
Beran. The Audit Committee:

(i) recommends to the Board the selection of the Company's independent
accountants for the ensuing year, subject to stockholder approval;

(ii) reviews with the independent accountants the scope and results of the
audit;

(iii) reviews management's evaluation of the Company's system of internal
controls; and

(iv) reviews non-audit professional services provided by the independent
accountants and the range of audit and non-audit fees.

The Executive Committee held one meeting during 2001. The Board of Directors
has delegated to the Executive Committee the power to direct the management of
the business and affairs of the Company in the intervals between meetings of
the Board (except for matters reserved to the Board and the Independent
Committee).

The Independent Committee held one meeting during 2001. The function of the
Independent Committee is to (a) review and approve all agreements and
transactions between the Company and Kindred to ensure that such agreements and
transactions represent arm's length negotiations, including without limitation,
the negotiation, enforcement and renegotiation of the terms of any leases
between the Company and Kindred and (b) review all interested and related party
transactions involving a director or officer of the Company.

The Nominating and Governance Committee held one meeting during 2001. The
function of the Nominating and Governance Committee is to (a) recommend
candidates to fill Board vacancies and a slate of directors for election by the
stockholders of the Company at each Annual Meeting, (b) make recommendations to
the Board concerning the composition, size and structure of the Board and its
committees and (c) make recommendations

on all matters concerning the Board's practices and corporate practices,
procedures and policies. The Nominating and Governance Committee will consider
individuals recommended for nomination by the stockholders of the Company in
accordance with the procedures described under "Stockholder Proposals."

EXECUTIVE OFFICERS OF THE REGISTRANT

Set forth below are the names, ages (as of March 31, 2002) and present and
past positions of the persons who are the current executive officers of the
Company.

Name Age Position
---- --- --------

W. Bruce Lunsford....... 54 Chairman of the Board
Debra A. Cafaro......... 44 Chief Executive Officer, President and Director
T. Richard Riney........ 44 Executive Vice President, General Counsel and
Corporate Secretary
John C. Thompson........ 34 Executive Vice President and Chief Investment
Officer

Mr. Lunsford's and Ms. Cafaro's biographies are set forth above under
"Election of Directors."

T. Richard Riney has served as Executive Vice President, General Counsel and
Secretary of the Company from May 1998 to the present. He served as
Transactions Counsel of Vencor, Inc. from April 1996 to April 1998. From May
1992 to March 1996, Mr. Riney was a partner of Hirn, Reed & Harper, a law firm
based in Louisville, Kentucky, where his areas of concentration were real
estate and corporate finance. Mr. Riney is a member of NAREIT.

John C. Thompson has served as Executive Vice President and Chief Investment
Officer of the Company since January 1, 2002. Mr. Thompson served as Vice
President, Corporate Development of the Company from January 1999 to December
31, 2001. He served as Director of Acquisitions from May 1998 to January 1999.
Mr. Thompson served as Director of Development of Vencor, Inc. from April 1996
to May 1998 and as Development Manager from 1993 to April 1996. Mr. Thompson is
a member of NAREIT.

SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS,
DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of March 30, 2002 (except
as otherwise noted) by (a) each person known to the Company to be the
beneficial owner of more than five percent of the outstanding Common Stock, (b)
each director or director-nominee of the Company, (c) all executive officers of
the Company listed in the Summary Compensation Table below (the "Named
Executive Officers") and (d) all of the Company's directors and executive
officers, as a group.

Common Stock
Beneficially Percent
Name of Beneficial Owner Owned (1)(2) of Class
------------------------ ------------ --------

Walter F. Beran............................................. 168,959(3) *
Debra A. Cafaro............................................. 1,543,753(4) 2.24%
Douglas Crocker, II......................................... 252,391(5) *
Ronald G. Geary............................................. 158,175(6) *
Jay M. Gellert.............................................. 9,216(7) *
Gary W. Loveman............................................. 7,500(8) *
W. Bruce Lunsford........................................... 2,804,906(9) 4.06%
T. Richard Riney............................................ 540,177(10) *
Sheli Z. Rosenberg.......................................... 31,807(11) *
John C. Thompson............................................ 331,435(12) *
--------- -----
All executive officers and directors as a group (10 persons) 5,848,319 8.47%

Cohen & Steers Capital Management, Inc...................... 5,520,915(13) 8.02%
Cramer Rosenthal McGlynn, LLC............................... 5,391,200(14) 7.826%
Franklin Mutual Advisors, LLC............................... 4,929,990(15) 7.2%
Tenet Healthcare Corporation................................ 8,301,067(16) 12.1%

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(*) Less than 1%
(1) Beneficial Ownership of shares for purposes of this Proxy Statement, as
determined in accordance with applicable Securities and Exchange Commission
("Commission") rules, includes shares as to which a person has or shares
voting power and/or investment power. Each named person is deemed to be the
beneficial owner of securities which may be acquired within sixty days of
March 30, 2002 through the exercise of options, warrants or rights, if any,
and such securities are deemed to be outstanding for the purpose of
computing the percentage of the class beneficially owned by such person;
however, any such shares are not deemed to be outstanding for the purpose
of computing the percentage of the class beneficially owned by any other
person.
(2) Except as set forth in the accompanying footnotes, the named persons have
sole voting power and sole investment power over the shares beneficially
owned by them. The number of shares shown does not include the interest of
certain persons in shares held by family members in their own right.
(3) Excludes 1,834 Common Stock share equivalents held by the Company under the
Non-Employee Directors Deferred Compensation Plan (the "Directors Plan"),
which represents deferred directors' fees that were converted into share
equivalents. Includes 25,563 options which are exercisable as of or within
60 days after March 30, 2002.
(4) Includes 943,005 options which are exercisable as of or within 60 days
after March 30, 2002.
(5) Includes 222,750 options which are exercisable as of or within 60 days
after March 30, 2002.
(6) Includes 124,000 options which are exercisable as of or within 60 days
after March 30, 2002.
(7) Includes 7,500 options which are exercisable as of or within 60 days after
March 30, 2002.
(8) Excludes 1,632 shares held in trust for the benefit of his children.
Includes 7,500 options which are exercisable as of or within 60 days after
March 30, 2002.
(9) Excludes 16,365 shares held in trust for the benefit of his children.
Includes 1,142,000 options which are exercisable as of or within 60 days
after March 30, 2002.

(10) Includes 1,300 shares held in Mr. Riney's IRA. Also includes 302,654
options which are exercisable as of or within 60 days after March 30, 2002.
(11) Includes 12,500 options which are exercisable as of or within 60 days
after March 30, 2002.
(12) Includes 1,044 shares held in Mr. Thompson's IRA and 250 shares held in
his spouse's IRA. Includes 185,599 options which are exercisable as of or
within 60 days after March 30, 2002.
(13) As of December 31, 2001, based solely on information contained in a
Schedule 13G/A filed by Cohen & Steers Capital Management, Inc. ("Cohen &
Steers") on February 13, 2002 with the Commission. Cohen & Steers has sole
voting power over 5,272,615 shares and sole dispositive power over
5,520,915 shares. The address of Cohen & Steers is 757 Third Avenue, New
York, NY 10017.
(14) As of December 31, 2001, based solely on information contained in a
Schedule 13G filed by Cramer Rosenthal McGlynn, LLC ("Cramer") on February
11, 2002 with the Commission. Cramer has shared voting power and
dispositive power with respect to these shares. The address of Cramer is
707 Westchester Avenue, White Plains, NY 10604.
(15) As of December 31, 2001, based solely on information contained in a
Schedule 13G/A filed by Franklin Mutual Advisers, LLC ("FMA") on February
13, 2002 with the Commission. According to the Schedule 13G/A, FMA has
sole voting and dispositive power with respect to these shares. The
address of FMA is 51 John F. Kennedy Parkway, Short Hills, NJ 07078.
(16) As of May 1, 1998, based solely on information contained in a Schedule 13D
dated May 8, 1998, filed by Tenet Healthcare Corporation ("Tenet"), NME
Properties Corp. ("PropCorp"), NME Property Holding Co., Inc.
("PropHold"), and NME Properties, Inc. ("PropInc") with the Commission.
PropCorp is a direct subsidiary of Tenet, and PropInc and PropHold are
direct subsidiaries of PropCorp. PropInc may be deemed to be the
beneficial owner with sole voting and dispositive power of 2,690,880
shares of Common Stock owned by it (the "PropInc Shares"). PropHold may be
deemed to be the beneficial owner with sole voting and dispositive power
of 5,610,187 shares of Common Stock owned by it (the "PropHold Shares").
Each of PropCorp and Tenet may be deemed to be the indirect beneficial
owner with sole voting and dispositive power of the PropInc Shares and
PropHold Shares, for an aggregate of 8,301,067 shares of Common Stock.
Tenet has issued its 6% exchangeable subordinated notes due 2005 (the
"Notes") in January 1996. Each $1,000 principal amount of Notes is
exchangeable into 25.9403 shares of Common Stock and an amount in cash
determined according to a formula set forth in the Schedule 13D, which,
according to Tenet's 1998 Annual Report on Form 10-K, equals $239.36,
subject to Tenet's right to pay an amount in cash equal to the market
price of the Common Stock in lieu of such shares. All of the PropInc
Shares and PropHold Shares have been placed in escrow to secure such
exchange right. The address of each of Tenet, PropCorp, PropHold and
PropInc is 3820 State Street, Santa Barbara, California 93105.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers and persons who own more than
10% of the Common Stock to file reports of beneficial ownership and changes in
such ownership with the Commission. Based solely on a review of the copies of
such reports furnished to the Company and on written representations from
certain reporting persons that no Form 5 was required for such person, the
Company believes that during 2001 all officers, directors and persons who own
more than 10% of the Common Stock complied with all applicable Section 16(a)
filing requirements, except as described below.

Mr. Lunsford, an officer and director of the Company, did not report various
transactions in his account with the Vencor, Inc. Retirement Savings Plan (the
"Plan") occurring without knowledge or authority from Mr. Lunsford after May 1,
1998 in which cash dividends received from the Company were used to purchase
additional shares of Common Stock and fees relating to the management of the
Plan were paid through the liquidation of shares of Common Stock in his
account. The acquisitions and dispositions of the Common Stock by the Plan were
directed by the plan administrators and trustees and these transactions were
not consummated at the direction or with the knowledge of Mr. Lunsford. As a
result of these acquisitions and dispositions by the

Plan, since May 1, 1998 the total number of shares of the Common Stock
increased by a net of 1,576 shares bringing the total shares of Common Stock
held by Mr. Lunsford in his account with the Plan to 9,618 on January 16, 2001.
Without instruction or knowledge of Ms. Lunsford, all of the shares of the
Company's common stock held in the Plan, including those held in Mr. Lunsford's
account, were liquidated over a two week period ending May 31, 2001. The
proceeds of these sales were pooled and the average sales price were allocated
to Plan participants. These transactions were reported by Mr. Lunsford on his
Form 5 filed with the Commission for December 31, 2001.

Mr. Thompson, an officer of the Company, did not report beneficial ownership
of 34 shares that had accumulated in his account with the Plan prior to April
of 2000. The 34 shares were acquired at the direction of the plan
administrators and plan trustees. These transactions were not consummated at
the direction or with the knowledge of Mr. Thompson. The 34 shares were
reported by Mr. Thompson on his Form 4 filed with the Commission for January
2002.

Ms. Mary L. Smith, an officer of the Company, failed to file a Form 3
indicating that Ms. Smith is a reporting person for Section 16 beneficial
ownership reporting purposes when she was appointed Principal Accounting
Officer and Controller of the Company on July 20, 2000. These shares were
reported on a Form 3 filed with the Commission on January 9, 2002.

EXECUTIVE COMPENSATION AND OTHER INFORMATION

The following table sets forth the compensation paid by the Company during
each of the Company's last three fiscal years to all individuals serving as
Chief Executive Officer during the last completed fiscal year and each of the
other four most highly compensated executive officers of the Company who were
serving as executive officers at the end of the last completed fiscal year (the
"Named Executive Officers"):

Summary Compensation Table 2001

Long-Term
Annual Compensation Compensation(1)
------------------------------- -----------------------
Restricted Securities
Other Annual Stock Underlying All Other
Salary Bonus Compensation Award(s) Options/SARs Compensation
Name and Principal Position Year ($) ($)(2) ($) ($)(3) (#) ($)
--------------------------- ---- -------- -------- ------------ ---------- ------------ ------------

Debra A. Cafaro................. 2001 $396,846(4) $770,000 $ 1,996(13) $1,120,000 346,297 $ 2,550(15)
Chief Executive 2000 353,103(5) 703,500 23,267(13) 765,000 171,095 2,483(15)
Officer and President 1999 287,757(6) 400,000 16,301(13) 812,500 500,000 1,954(15)
T. Richard Riney................ 2001 218,646(7) 313,500 183(13) 532,000 131,358 316(15)
Executive Vice President 2000 197,308(8) 285,000 191(13) 300,000 65,419 323(15)
General Counsel and Secretary 1999 182,308(9) 212,500 607(13) 130,625 50,000 840(15)
John C. Thompson................ 2001 153,173(10) 225,000 109(13) 308,000 76,050 188(15)
Executive Vice President and 2000 125,083(11) 165,000 96(13) 158,500 35,225 162(15)
Chief Investment Officer 1999 110,481(12) 93,500 346(13) 97,968 25,000 552(15)
W. Bruce Lunsford............... 2001 150,000 -- 41,500(14) 20,000 5,000 162,281(16)
Chairman of the Board 2000 150,000 -- 31,000(14) 80,500 10,000 181,094(16)
1999 150,000 -- -- 261,250 -- 208,381(16)

--------
(1) The amounts for 2001 represent the long-term compensation granted to the
Named Executive Officers during fiscal year 2001, without regard to the
period to which such compensation relates. The amounts for 2000 represent
the long-term compensation granted to the Named Executive Officers during
fiscal year 2000, without regard to the period to which such compensation
relates. The amounts for 1999 represent the long-term compensation granted
to the Named Executive Officers during fiscal year 1999, without regard to
the period to which such compensation relates.

(2) The bonus amounts reflect compensation earned for 1999, 2000 and 2001,
respectively, regardless of when paid.
(3) The amounts shown in the table represent the fair market value on the date
of the grant of shares of restricted stock granted by the Company. The
shares granted in fiscal years 2001 and 2000 vest in three equal annual
installments beginning on the date of the grant. The shares granted in
fiscal year 1999 vested in four equal annual installments beginning on the
first anniversary of the date of the grant, except for the shares granted
to Ms. Cafaro, which vested in eleven equal quarterly installments
commencing on April 1, 1999 through October 1, 2001. Based on the closing
price of $11.50 of the Common Stock on December 31, 2001, the aggregate
value of all restricted securities held by the Named Executive Officers as
of December 31, 2001 is as follows:

Ms. Cafaro $5,713,993.50 (496,869 shares)
Mr. Riney $2,149,131.50 (186,881 shares)
Mr. Thompson $1,247,508.50 (108,479 shares)
Mr. Lunsford $1,110,164.00 (96,536 shares)

Dividends, to the extent declared and paid, will be paid on restricted shares.

(4) Represents base salary payments of $385,000 and a payment of $11,846 for
unused vacation days.
(5) Represents base salary payments of $351,750 and a payment of $1,353 for
unused vacation days.
(6) Represents base salary payments of $274,228 and a payment of $13,529 for
unused vacation days.
(7) Represents base salary payments of $209,000 and a payment of $9,646 for
unused vacation days.
(8) Represents base salary payments of $190,000 and a payment of $7,308 for
unused vacation days.
(9) Represents base salary payments of $175,000 and a payment of $7,308 for
unused vacation days.
(10) Represents base salary payments of $150,000 and a payment of $3,173 for
unused vacation days.
(11) Represents base salary payments of $119,583 and a payment of $5,500 for
unused vacation days.
(12) Represents base salary payments of $106,250 and a payment of $4,231 for
unused vacation days.
(13) Represents reimbursement for the payment of taxes on behalf of the
executive for the respective fiscal year.
(14) Represents payment for Board of Director's fees to Mr. Lunsford.
(15) Represents life insurance premiums paid on behalf of the executive for the
respective fiscal year.
(16) Represents interest forgiveness on Mr. Lunsford's Tax Loan (as defined in
"Certain Relationships and Related Transactions") between December 16,
1998 and December 15, 2001.

OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth information concerning options to purchase
shares of Common Stock granted to the Named Executive Officers during 2001:

Potential Realizable
Number of % of Value at Assumed
Securities Total Options Annual Rates of Stock
Underlying Granted to Exercise Price Appreciation for
Options Employees in Date of Price Per Expiration Option Term (3)
Name Granted 2001 Grant Share (2) Date 5% ($) 10%($)
---- ---------- ------------- -------- --------- ---------- ---------- ----------

Debra A. Cafaro.. 296,297(1) 49.1% 01/22/01 $ 6.7500 01/22/11 $1,258,880 $3,187,187
50,000(1) 8.3% 11/16/01 $12.0600 11/16/11 $ 379,000 $ 961,000
T. Richard Riney. 131,358(1) 21.8% 01/22/01 $ 6.7500 01/22/11 $ 558,272 $1,413,412
John C. Thompson. 76,050(1) 12.6% 01/22/01 $ 6.7500 01/22/11 $ 323,213 $ 818,298
W. Bruce Lunsford 5,000(4) 0.8% 01/01/01 $ 5.8750 01/01/11 $ 18,450 $ 46,800

--------
(1) Options become exercisable in three equal annual installments (with slight
modifications for rounding) beginning on the date of grant. All options
become fully exercisable upon a change in control of the Company.
Additionally, there is an acceleration of rights to exercise options upon
certain instances of termination of employment.

(2) All options were granted at fair market value (the closing price on the New
York Stock Exchange on the date of grant). The exercise price and any tax
withholding obligations related to exercise may be paid by delivery of
shares of Common Stock.
(3) Potential realizable values are reported net of the option exercise price,
but before taxes associated with exercise. These amounts are predicated on
5% and 10% assumed annual rates of appreciation from the Common Stock price
on the date of the grant for ten years (the option terms) in order to
comply with the requirements of the Commission, and do not represent the
Company's expectations as to the annual rate of appreciation. Actual gains,
if any, on stock option exercises are dependent on the future performance
of the Common Stock and overall stock market conditions, as well as the
option holder's continued employment with the Company throughout the
vesting period. The amounts reflected in this table will not necessarily be
achieved.
(4) Options were granted in connection with service as member of the Board of
Directors and not as an Executive Officer of the Company. Options become
exercisable in two equal annual installments beginning on the date of grant.

OPTION EXERCISES AND HOLDINGS

The following table sets forth information with respect to the Named
Executive Officers concerning options exercised during 2001:

Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Shares Options at Fiscal Year End Fiscal Year End(3)
Acquired Value -------------------------- -------------------------
Name on Exercise(1) Realized(2) Exercisable Unexercisable Exercisable Unexercisable
---- -------------- ----------- ----------- ------------- ----------- -------------

W. Bruce Lunsford 10,000 $87,175 1,059,500 92,500 $39,925 $22,675

--------
(1) All of these options were exercised on December 13, 2001.
(2) The value realized was calculated by multiplying the number of shares
acquired by the difference between the option exercise price ($3.3125) and
the closing price of the Company's Common Stock ($12.03) on the exercise
date, December 13, 2001.
(3) Assumes, for all unexercised in-the-money options, the difference between
fair market value as of December 31, 2001 and the exercise price. The
market value of the Common Stock was $11.50 per share as of December 31,
2001, based on the closing price per share on the NYSE.

The following table sets forth information with respect to the Named
Executive Officers concerning options held as of December 31, 2001:

Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Options at Fiscal Year End Fiscal Year End(1)
-------------------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------

Debra A. Cafaro.. 729,497 287,895 $4,536,444 $1,405,356
T. Richard Riney. 182,732 142,545 $ 805,109 $ 712,373
John C. Thompson. 114,251 80,774 $ 434,066 $ 396,319
W. Bruce Lunsford 1,059,500 92,500 $ 39,925 $ 22,675

--------
(1) Assumes, for all unexercised in-the-money options, the difference between
fair market value as of December 31, 2001 and the exercise price. The
market value of the Common Stock was $11.50 per share as of December 31,
2001, based on the closing price per share on the NYSE.

EMPLOYMENT AND OTHER AGREEMENTS

Employment and Severance Agreements: Lunsford, Riney and Thompson

The Company entered into employment agreements with W. Bruce Lunsford and T.
Richard Riney on July 30, 1998. The Company entered into an employment
agreement with John C. Thompson on January 13, 1999. These employment
agreements are for an initial one year term. The term of each agreement is
automatically extended by one additional day for each day following the
effective date of the agreement that the Named Executive Officer remains
employed by the Company until the Company elects to cease such extension by
giving notice to the Named Executive Officer. Upon such notification, the
employment agreements will terminate in one year. The employment agreements
provide base salary and the ability of the Named Executive Officer to be
eligible for bonuses and to participate in the Company's incentive and other
employee benefit plans. The Named Executive Officers may receive increases in
their base salaries from time to time as approved by the Compensation Committee
or the Board of Directors. Under certain circumstances, the employment
agreements also provide for severance payments if the executive is terminated.
The employment agreements of Mr. Riney and Mr. Thompson were amended on
September 30, 1999 to provide for the gross up of any payment or benefits to
which they may be entitled under their employment agreements or any other
agreement for any tax imposed upon them by Section 4999 of the Code or any
similar state or local tax.

If employment is terminated by reason of death or disability, the Named
Executive Officer is entitled to a prorated portion of his target bonus. If the
Named Executive Officer is terminated for "cause" (as defined in the employment
agreements), no additional payments are made under the employment agreements.

If the Named Executive Officer's employment is terminated by the executive
for "good reason" (as defined in the employment agreements) or by the Company
other than for "cause" (collectively, an "Involuntary Termination"), certain
levels of severance payments are provided under the employment agreements. Upon
such a termination, the employment agreement for Mr. Lunsford provides for a
cash payment equal to the prorated portion of his maximum bonus for the year of
termination, if any bonus targets had previously been set, and two times his
base salary and maximum bonus for the year of termination, if any bonus targets
had previously been set. In addition, Mr. Lunsford would be entitled to
coverage under the Company's employee benefit plans for two years, two years of
additional vesting of restricted stock awards and two additional years in which
to exercise stock options. Upon the Involuntary Termination of either of Mr.
Riney or Mr. Thompson, the terminated executive would be entitled to a cash
payment equal to the prorated portion of their maximum bonus for the year of
termination, if any bonus targets had previously been set, and one times their
base salary and maximum bonus for the year of termination, if any bonus targets
had previously been set. In addition, the terminated executive would be
entitled to coverage under the Company's employee benefit plans for one year,
one year of additional vesting of restricted stock awards and one additional
year in which to exercise stock options.

The employment agreement for Mr. Lunsford also provides for a restructuring
of his Tax Loan (as defined) if he is subject to an Involuntary Termination
pursuant to which the Tax Loan would be amended to provide that any payment of
the principal will be made in equal annual installments with a final maturity
date ten years from the date of the Tax Loan. See "Certain Relationships and
Related Transactions" for a description of the Tax Loan. In addition, if Mr.
Lunsford resigns as Chairman at the request of the Board for any reason other
than cause, all amounts owed under the Tax Loan will be forgiven.

The Company entered into Change in Control Severance Agreements with each of
Mr. Lunsford, Mr. Riney and Mr. Thompson. These agreements provide for the
payment of severance benefits under certain circumstances. The severance
benefits become payable at any time within two years of a change in control of
the Company (as defined in the agreements) if: (i) the Company terminates the
employee without cause; (ii) the employee terminates employment with the
Company for "good reason" (as defined in the agreement) or within either of two
30-day periods commencing 30 days after the change in control and one year
after the change in control, respectively. The benefits to be afforded to Mr.
Lunsford include: (i) a cash payment equal to three times base salary, maximum
bonus and performance share award target as of termination of employment; (ii)

continuation of health, life and disability insurance coverage for three years;
(iii) full vesting under the Company's retirement savings plan; and (iv) an
additional payment for any excise taxes he may incur as a result of the change
in control. The benefits to be afforded to Messrs. Riney and Thompson include:
(i) a cash payment equal two times base salary, maximum bonus and performance
share award target as of termination of employment; (ii) continuation of
health, life and disability insurance coverage for two years; (iii) full
vesting under the Company's retirement savings plan; and (iv) an additional
payment for any excise taxes they may incur as a result of the change in
control.

Employment Agreement: Cafaro

Effective March 5, 1999, the Company and Debra A. Cafaro entered into an
employment agreement (the "Cafaro Employment Agreement") pursuant to which Ms.
Cafaro became President, Chief Executive Officer and a director of the Company.
The initial term of the Cafaro Employment Agreement will expire on December 31,
2002. The Cafaro Employment Agreement provides for (i) an initial annual base
salary of $335,000 (with a minimum annual increase of 5% thereafter), (ii) the
eligibility to participate in the Company's bonus program, (iii) a grant of
100,000 restricted shares of Common Stock, and (iv) a grant of options to
purchase 500,000 shares of Common Stock. Such options will be "incentive stock
options" under the Code ("ISOs") to the maximum extent permissible. The per
share exercise price for the ISOs (36,639 options) is $8.1875, the closing
price of the Common Stock on March 5, 1999 (the "Effective Date"). The per
share exercise price for the remaining options (463,361 options) is the lesser
of $8.1875 and the closing price of the Common Stock 120 days after the
Effective Date ($5.00). In addition, Ms. Cafaro will receive a loan sufficient
to cover income taxes payable on the shares of restricted stock, and she is
eligible to participate in the Company's incentive and other benefit plans.

If Ms. Cafaro's employment is terminated (other than "for cause") she will
be entitled to receive a cash payment equal to the sum of three times her base
salary and the highest bonus in the preceding three years or the maximum bonus
for the current year, whichever is higher (the "Maximum Bonus") as of the date
of termination, plus the prorated portion of the Maximum Bonus for the year of
termination. In addition, Ms. Cafaro will be entitled to full vesting of her
shares of restricted stock and stock options and forgiveness of the Cafaro Tax
Loans (as defined below).

In the event of a change of control, Ms. Cafaro will be entitled to a cash
payment equal to 2.99 times the sum of her base salary and Maximum Bonus on the
date of a change of control plus the fair market value of any targeted
restricted shares to be issued in the year the change of control occurs. In
addition, Ms. Cafaro will be entitled to full vesting of her shares of
restricted stock and stock options and forgiveness of the Cafaro Tax Loans.

Pursuant to the Cafaro Employment Agreement, Ms. Cafaro and Mr. Crocker are
entitled to jointly designate a person to be appointed to serve as a director,
subject to the approval of Mr. Lunsford, which approval shall not be
unreasonably withheld (the "Designee"). Ms. Cafaro and Mr. Crocker have not
appointed a Designee to date. Once they have done so, the Board will act to
appoint the Designee as a Director.

COMPENSATION OF DIRECTORS

During 2001, directors not employed by the Company and the Chairman of the
Board received $1,500 for each board meeting they attended, $1,000 for each
committee meeting they attended, $1,500 for each telephonic meeting in which
they participated unless the telephonic meeting was fifteen minutes or less, in
which case they received $750 for such telephonic meeting. In addition,
non-employee directors and the Chairman of the Board received a $7,500 retainer
for each calendar quarter that they served as a director.

During 2001, directors not employed by the Company received options pursuant
to the Company's 2000 Stock Option Plan for Non-Employee Directors (the "2000
Directors Stock Plan"). Under the 2000 Directors Stock Plan, each non-employee
director and the Chairman of the Board was granted an option to purchase 5,000

shares of Common Stock on January 1 of each year, with an exercise price equal
to the fair market value of the Common Stock on the date the option was
granted. Accordingly, the Company issued options with respect to an aggregate
of 20,000 shares to the three persons who were serving as non-employee
directors and the Chairman of the Board on January 1, 2001.

The 2000 Stock Option Plan for Directors also provides for the grant of an
option to purchase 10,000 shares of Common Stock upon the initial election or
appointment of a director, with an exercise price equal to the fair market
value of the Common Stock on the date of grant. Accordingly, the Company issued
10,000 options each to Mr. Rosenberg, Mr. Gellert and Mr. Loveman on January
26, 2001, September 10, 2001 and September 10, 2001, respectively. All options
are exercisable in two equal installments, the first on the date of grant and
the second on the first anniversary of the date of grant.

REPORT OF THE COMPENSATION COMMITTEE

The functions of the Compensation Committee include reviewing and approving
of the Company's executive compensation structure and overall benefits program.
The purpose of the executive compensation program is to establish and maintain
a performance and achievement oriented environment, which aligns the interests
of the Company's executives with the interests of its stockholders. The key
components of the Company's compensation philosophy are base salary, an annual
incentive award and long-term based incentives.

The Company's overall compensation structure is reviewed annually with the
assistance of an expert independent consultant and the use of executive
compensation surveys from the following sectors: (a) healthcare REITS; and (b)
REITS with comparable total capitalization as the Company, regardless of asset
class. The companies surveyed include some, but not all, of the companies
covered in the indices included on the Performance Graph.

Types of Compensation:

1. Base Salary

The Compensation Committee sets base salaries for executive officers. Base
salary increases are provided to executives based on an evaluation of each
executive's performance, the executive's level of responsibility, as well as
the performance of the Company as a whole. The Compensation Committee also
considers the success of the executive officer in developing and executing the
Company's strategic plans, exercising leadership and creating stockholder
value. In addition, the Compensation Committee evaluates the latest survey
information available to confirm appropriate compensation levels. The
Compensation Committee reviews individual base salaries at least annually with
the assistance of an expert independent consultant.

2. Bonus

The Compensation Committee, upon the advice and recommendations of an expert
independent consultant, established a bonus program for 2001 under which the
level of bonus to be paid to the executive officers was dependent upon the
attainment of certain performance objectives by the Company and by the
executive officers. The maximum level performance objectives of the Company and
of each of the executive officers were attained for 2001 and annual cash
bonuses were awarded to the executives for 2001 ranging from 150% to 200% of
base salary.

3. Stock Options and Restricted Stock Awards

The Compensation Committee recognizes that while the bonus program provides
rewards for positive short-term and mid-term performance, the interests of
stockholders are best served by giving key employees the opportunity to
participate in the appreciation of the Common Stock through the grants of stock
options and restricted stock awards. The use of such awards provides a
long-term link between the results achieved for the

Company's stockholders and the reward provided to executive officers. Stock
options and shares of restricted stock are granted to executive officers
primarily based on the officers' actual and potential contribution to the
Company's growth, long-term performance and the practices of other REITs.
Stock-based compensation also provides an effective incentive for management to
create stockholder value over the long-term because the full benefit of the
compensation package cannot be realized unless an appreciation in price of the
Common Stock occurs over a number of years.

Chief Executive Officer's Compensation

Based upon the executive compensation surveys and the strategic
accomplishments of the Company, the Compensation Committee believes that the
salary, bonus, restricted share awards and option grants to Ms. Cafaro, the
Company's Chief Executive Officer and President since March 5, 1999, are fair
and competitive. The Company achieved a number of strategic objectives under
Ms. Cafaro's leadership during 2001, including: (a) the emergence of Kindred,
the Company's primary tenant, from bankruptcy proceedings following several
months of complex and protracted negotiations with Kindred and its major
creditors; (b) increased visibility of the Company in the financial community
and among healthcare REIT investors; (c) lowering the Company's cost of debt
and relieving the Company of certain restrictions under the Company's credit
agreement through the refinancing and prepayment of a substantial portion of
the indebtedness owed by the Company to its senior lenders; (d) expanding and
strengthening the Board of Directors with members who have expertise in the
areas of real estate, healthcare and corporate governance; and (e) the
achievement of exceptional total stockholder return in 2001. The Compensation
Committee determined that compensation for Ms. Cafaro for 2001 was appropriate
and desirable in light of her actual and potential contributions to the Company
and her leadership in the Kindred reorganization negotiations and the Company's
debt restructuring. The assessment of actual and potential contribution was
based on the Compensation Committee's subjective evaluation of Ms. Cafaro's
abilities, skills, efforts and leadership.

Tax Policy

The Omnibus Budget Reconciliation Act of 1993 amended the Code to provide
generally that the compensation paid by publicly held corporations to the chief
executive officer and the four most highly paid senior executive officers in
excess of $1,000,000 per executive will be deductible by the Company only if
paid pursuant to a qualifying performance-based compensation plan approved by
stockholders of the Company. Compensation as defined by the Code includes,
among other things, base salary, incentive compensation and gains on stock
options and restricted stock. It is the Compensation Committee's policy to
maximize the effectiveness of the Company's executive compensation plans. In
that regard, the Compensation Committee intends to maintain flexibility to take
actions that are deemed to be in the best interests of the Company and its
stockholders. Such actions may not always result in executive compensation
qualifying for the maximum possible tax deductibility under the Code. The
Company also believes that substantially all of the compensation paid in 2001
is deductible for federal income tax purposes.

The foregoing report of the Compensation Committee shall not be deemed
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, and shall not
otherwise be deemed filed under such acts except to the extent that the Company
specifically incorporates this information by reference.

COMPENSATION COMMITTEE

Sheli Z. Rosenberg, Chair
Douglas Crocker, II, Member
Gary W. Loveman, Member

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

As of December 31, 2001, the following persons served on the Compensation
Committee: Sheli Z. Rosenberg, Douglas Crocker, II and Gary W. Loveman. Until
his resignation from the Compensation Committee effective May 15, 2001, Ronald
G. Geary served as a member of the Compensation Committee. None of the current
members of the Compensation Committee are, or have been, employees of the
Company. The Company currently leases various properties to Tangram
Rehabilitation Network, Inc. ("Tangram"), a wholly owned subsidiary of Res-Care
of which Mr. Geary is Chairman, President and Chief Executive Officer and of
which Mr. Lunsford is a director. See "Certain Relationships and Related
Transactions--Transactions with Res-Care."

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In May 1998, the Company adopted a policy which provides that any
transaction between the Company and any of its officers, directors or their
affiliates must be approved by the disinterested members of the Board of
Directors and must be on terms no less favorable to the Company than those
available from unaffiliated parties.

Tax Loan

In connection with the 1998 Spin Off, the Company agreed to loan Mr.
Lunsford (former Chief Executive Officer and present Chairman of the Board of
Directors) an amount sufficient to cover his estimated income taxes payable as
a result of the distribution of Vencor common stock (the "Tax Loan"). The Tax
Loan is evidenced by a promissory note which has a term of ten years and bears
interest at 5.77%. Principal on the Tax Loan is scheduled to be repaid in ten
equal annual installments beginning on June 15, 1999. Interest is payable
quarterly; however, any interest payment on the Tax Loan is forgiven if Mr.
Lunsford remains employed in his position with the Company on the date on which
such interest payment is due. Moreover, in the event of a change in control of
the Company, the entire balance of the Tax Loan will be forgiven. The Tax Loan
was based on estimated tax payments required to be made by Mr. Lunsford as a
result of the distribution of Kindred common stock. The principal amounts of
the Tax Loan to Mr. Lunsford was $3,750,000. In connection with the amendment
of his employment agreement at the time of his resignation as President and
Chief Executive Officer in December, 1998, the terms of the Tax Loan were
amended. The Tax Loan will be restructured if he is subject to an Involuntary
Termination, such that any payment of the principal will be made in equal
annual installments with a final maturity date ten years from the date of the
Tax Loan. In addition, if Mr. Lunsford resigns as Chairman at the request of
the Board for any reason other than "cause," all amounts owed under the Tax
Loan will be forgiven. As of December 31, 2001 the outstanding principal
balance of the Tax Loan was $2,625,000. See "Employment and Other Agreements."

Transactions with Res-Care

On October 15, 1998, the Company acquired eight personal care facilities and
related facilities for approximately $7.1 million from Tangram. Tangram is a
wholly owned subsidiary of Res-Care of which Mr. Geary is Chairman, President
and Chief Executive Officer and Mr. Lunsford is a director. See "Compensation
Committee Interlocks and Insider Participation." Res-Care acquired Tangram in a
cash merger on October 15, 1998. The purchase price for the Tangram facilities
was determined by an appraisal conducted by Graham & Associates, Inc., San
Marcos, Texas, a certified General Real Estate Appraiser for the State of
Texas. The Company leases the Tangram facilities to Tangram pursuant to a
Master Lease Agreement which is guaranteed by Res-Care. During 2001, Tangram
paid the Company $779,239 in rent. The Company believes that the terms of the
Master Lease Agreement represent market rates.

Office Lease

Effective March 15, 1999, the Company relocated its principal executive
offices and entered into a lease agreement with Summit II Partners, Limited
(the "Landlord"). On November 29, 2001, the Landlord and the Company amended
the lease agreement to add additional office space (as amended, the "Office
Lease"). The

Office Lease requires the Company to pay annual rent of $110,161 to the
Landlord. Mr. Lunsford owns an indirect equity interest in the Landlord of
approximately 22%. The Company believes that the terms of the Office Lease
represent market rates.

Hospital Sublease

On March 6, 2001, the Company consented to the sublease by Kindred to
Xodiax, LLC ("Xodiax") of approximately 8,352 square feet in a data center
building located on the hospital campus known as Kindred Hospital Louisville.
The Kindred Hospital Louisville campus is owned by the Company and is leased to
Kindred pursuant to the terms of a Master Lease between the Company and
Kindred. The sublease is subject and subordinate to the terms of the Master
Lease. Total annual rent under the sublease is $330,279. Upon the occurrence of
certain events, at the Company's option, Xodiax will pay rent under the
sublease directly to the Company and/or attorn to the Company under the
sublease. Mr. Lunsford is the Chairman of Xodiax and owns an equity interest in
Xodiax of approximately 13.5%.

Cafaro Loans

Under the terms of the Cafaro Employment Agreement, the Company made loans
in the aggregate principal amount of $67,250 to Ms. Cafaro in 1999, and
$184,551 to Ms. Cafaro in 2000 and $593,893 to Ms. Cafaro in 2001 to pay all
federal, state, local and other taxes payable upon the vesting of restricted
stock awards previously granted to her (the "Cafaro Tax Loans"). The principal
amount of all of the Cafaro Tax Loans is payable on March 5, 2009. The Cafaro
Tax Loans bear interest at the lowest applicable federal rate. Interest on the
Cafaro Tax Loans is payable annually out of and only to the extent of dividends
from the vested restricted stock. Ms. Cafaro has paid interest on such Cafaro
Tax Loans through December 31, 2001. Each Cafaro Tax Loan is secured by a
pledge of all of the restricted shares to which such Cafaro Tax Loan relates,
and the Cafaro Tax Loans are otherwise nonrecourse to Ms. Cafaro. The Cafaro
Tax Loans are to be forgiven if there is a change of control of the Company,
Ms. Cafaro's employment with the Company is terminated by the Company for any
reason other than "cause" or by Ms. Cafaro for "good reason" or due to the
death or disability of Ms. Cafaro. In the event either a loan or its
forgiveness results in taxable income to Ms. Cafaro, the Company is required to
pay to Ms. Cafaro an amount sufficient for the payment of all taxes relative to
the loan or its forgiveness.

AUDIT COMMITTEE REPORT TO STOCKHOLDERS

The Audit Committee oversees the Company's financial reporting process on
behalf of the Board of Directors. Management has the primary responsibility for
the financial statements and the reporting process including the systems of
internal controls. In fulfilling its oversight responsibilities, the Audit
Committee reviewed the audited financial statements in the Company's Annual
Report to Stockholders for the year ended December 31, 2001 with management,
including a discussion of the quality, not just the acceptability, of the
accounting principles, the reasonableness of significant judgments, and the
clarity of disclosures in the financial statements.

The Audit Committee reviewed with the independent auditors, who are
responsible for expressing an opinion on the conformity of those audited
financial statements with generally accepted accounting principles, their
judgments as to the quality, not just the acceptability, of the Company's
accounting principles and such other matters as are required to be discussed
with the Audit Committee under generally accepted auditing standards, including
SAS 61 (Statement of Auditing Standards, AU 380--Communication with Audit
Committee). The Company's independent auditors also provided to the Audit
Committee the written disclosures required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees). In addition,
the Audit Committee has discussed with the independent auditors the auditors'
independence from management and the Company including the matters in the
written disclosures required by the Independence Standards Board. The Audit
Committee has also considered the compatibility of non-audit services with the
auditors' independence.

The Audit Committee discussed with the independent auditors the overall
scope and plans for their audit. The Audit Committee meets with the independent
auditors, with and without management present, to discuss the results of their
examination, their evaluations of the Company's internal controls, and the
overall quality of the Company's financial reporting.

The directors who serve on the Audit Committee are all "independent" for
purposes of the New York Stock Exchange listing standards. That is, the Board
has determined that no member of the Audit Committee has a relationship to the
Company that may interfere with such member's independence from the Company and
its management. The Board has adopted a written charter setting out the audit
related functions the Audit Committee is to perform.

In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board (and the Board has approved) that the
audited financial statements be included in the Annual Report to the
stockholders for the year ended December 31, 2001 for filing with the
Commission. The Audit Committee and the Board have also recommended, subject to
shareholder approval, the selection of the Company's independent auditors.

The foregoing report of the Audit Committee shall not be deemed incorporated
by reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, and shall not otherwise be deemed
filed under such Acts except to the extent that the Company specifically
incorporates this information by reference.

AUDIT COMMITTEE
Ronald G. Geary, Chair
Jay M. Gellert, Member
Walter F. Beran, Member

April 3, 2002

PERFORMANCE GRAPH

The following performance graph compares the cumulative total return
(including dividends) to the holders of the Common Stock from May 1, 1998, the
date on which the Company is deemed to have commenced operations, to December
31, 2001, with the cumulative total returns on the New York Stock Exchange
Composite Index (the "NYSE Index"), the NAREIT All REIT Index (the "All REIT
Index") and the Healthcare REIT Index./(1)/ The comparison assumes $100 was
invested on May 1, 1998 in the Company's Common Stock and in each of the
foregoing indices and assumes reinvestment of dividends. The Company has
included the NYSE Index in the performance graph because the Common Stock is
listed on the New York Stock Exchange. The Company has included the other
indices because it believes they are most representative of the industry in
which the Company competes and are therefore particularly relevant to an
assessment of the Company's performance. The figures in the table below are
rounded to the nearest dollar.

May 1, December 31, December 31, December 31, December 31,
1998 1998 1999 2000 2001
------ ------------ ------------ ------------ ------------

The Company................ $100 $ 70 $ 25 $ 39 $ 88
NYSE Index................. $100 $102 $112 $113 $101
All REIT Index............. $100 $ 84 $ 79 $ 99 $115
Healthcare REIT Index /(2)/ $100 $ 90 $ 64 $ 73 $110

[LINE GRAPH COMPARING CUMULATIVE TOTAL RETURN
(INCLUDING DIVIDENDS) OF COMMON STOCK WITH THREE INDICES]
--------
(1) Last year the Company also compared its performance against the Long Term
Care Index ("LTC Index") which was based on the total returns for
investments (including dividends) in the common stock of the following
companies: Beverly Enterprises, Inc., Genesis Health Ventures, Inc., Manor
Care, Inc., Integrated Health Services, Inc., Mariner Post Acute Network,
Inc., Sun Healthcare Group, and Vencor, Inc. (now Kindred Healthcare,
Inc.). The Company has decided not to include the LTC Index this year
because the Company believes that the LTC Index no longer provides an
appropriate basis for comparison.
(2) The Healthcare REIT Index is based on the total return for investments
(including dividends) in the common stock of the following companies:
ElderTrust, Health Care REIT, Inc., Health Care Property Investors, Inc.,
Healthcare Realty, LTC Properties, Inc., National Health Investors, Inc.,
Nationwide Health Properties, Inc., National Health Realty, Inc., Omega
Healthcare Investors Inc., Senior Housing Properties Trust, and Universal
Health Services, Inc. The index is developed by weighting the returns
achieved by each company in the index in proportion to each company's share
of the market value of the entire group's common equity capitalization.

PROPOSAL 2:

RATIFICATION OF INDEPENDENT ACCOUNTANTS

Ernst & Young LLP ("Ernst & Young") audited the Company's financial
statements for the year ended December 31, 2001 and has been the Company's
auditors since May 1998. Fees as charged by Ernst & Young for the year ended
December 31, 2001 were as follows:

(i) Audit Fees. The aggregate fees billed for professional services
rendered by Ernst & Young for the audit of the Company's annual financial
statements for the year ended December 31, 2001 and the reviews of the
financial statements included in the Company's Quarterly Reports on Form
10-Q for such fiscal year were $108,200.

(ii) Financial Information Systems Design and Implementation Fees. Ernst
& Young did not render any professional services to the Company relating to
(a) directly or indirectly operating, or supervising the operation of, the
Company's information system or managing the Company's local area network
and (b) designing and implementing hardware or software systems that
aggregate data underlying the Company's financial statements or that
generate information significant to the Company's financial statements as a
whole.

(iii) All Other Fees. All other fees billed for professional services
rendered by Ernst & Young for the year ended December 31, 2001 were as
follows:

- Accounting Consultations. The aggregate fees billed for professional
services rendered by Ernst & Young for the year ended December 31,
2001 for accounting consultations related to special issues and
transactions were $110,770.

- Tax Consultations. The aggregate fees billed for professional
services rendered by Ernst & Young for the year ended December 31,
2001 for tax consultations related to tax compliance matters and
special issues and transactions were $451,000.

The Audit Committee has determined that the provision of the services
referenced in (ii) and (iii) above by Ernst & Young does not compromise Ernst &
Young's independence and is consistent with its role as the Company's
independent auditors.

The Board of Directors, upon recommendation of the Audit Committee, has
appointed Ernst & Young as the independent accountants of the Company for
fiscal year 2002. Ernst & Young will examine the financial statements of the
Company for fiscal year 2002. If the stockholders do not ratify this
appointment, the Board will consider other independent accountants. One or more
members of Ernst & Young are expected to be present at the Annual Meeting, will
have the opportunity to make a statement if they so desire and are expected to
be available to respond to appropriate questions.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG AS INDEPENDENT ACCOUNTANTS. SHARES OF COMMON STOCK
COVERED BY PROXIES EXECUTED AND RECEIVED IN THE ACCOMPANYING FORM WILL BE VOTED
IN FAVOR OF RATIFICATION, UNLESS OTHERWISE SPECIFIED ON THE PROXY. Ratification
of the appointment of Ernst & Young as independent accountants requires the
affirmative vote of the holders of the majority of the shares represented at
the Annual Meeting, in person or by proxy, and entitled to vote.

STOCKHOLDER PROPOSALS

Any stockholder proposal intended to be presented at the 2003 Annual Meeting
of Stockholders must be received by the Corporate Secretary of the Company by
December 4, 2002 and meet the requirements of the bylaws in order to be
considered for inclusion in the Company's proxy materials for such meeting.

According to the Company's bylaws, a stockholder proposal, including
stockholder recommendations regarding director nominations, must meet certain
requirements described in the bylaws and may only be acted upon at an annual
meeting of stockholders if the stockholder gives notice to the Company of such
proposal in conformity with the requirements of the bylaws (at least 60 but no
more than 90 days before such annual meeting); provided, however, that if the
Company gives less than 70 days notice or prior public disclosure of the date
of the annual meeting, notice by the stockholder must be given to the Company
not later than the tenth day following the earlier of the date on which such
notice of the meeting was mailed or the date on which such public disclosure
was made. The persons appointed as proxies for the 2002 Annual Meeting will
have discretionary voting authority with respect to any stockholder proposal,
including any director nomination, that is submitted to the Company otherwise
than in conformity with such requirements of the Company's bylaws.

OTHER MATTERS

The only matters to be considered at the Annual Meeting or any adjournment
thereof, so far as known to the Board of Directors, are those set forth in the
Notice of Meeting and routine matters incident to the conduct of the Annual
Meeting. However, if any other matters should properly come before the Annual
Meeting or any adjournment thereof, the persons named in the accompanying form
of proxy, or their substitutes, will have discretionary voting authority with
respect to any stockholder proposal that is submitted to the Company otherwise
than in conformity with the requirements of the Company's bylaws.

ADDITIONAL INFORMATION

Copies of the exhibits to the Company's Annual Report and Form 10-K will be
provided to any requesting stockholder, provided that such stockholder agrees
to reimburse the Company for reasonable fees related to providing such
documents.

By Order of the Board of Directors,
/s/ W. BRUCE LUNSFORD
W. Bruce Lunsford
Chairman of the Board

Louisville, Kentucky
April 3, 2002

This Proxy will be voted as directed, but if no direction is indicated for a
given Proposal, the Proxy will be voted FOR that Proposal.

Please mark your votes as [ ]
indicated in this example

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1 and 2.

1. ELECTION OF DIRECTORS: to elect seven (7) directors to terms expiring at the
2003 Annual Meeting of Stockholders:

Debra A. Cafaro Ronald G. Geary W. Bruce Lunsford
Douglas Crocker, II Jay M. Gellert Sheli Z. Rosenberg
Gary W. Loveman

[ ] For all nominees listed (except as marked to the contrary)

[ ] WITHHOLD AUTHORITY to vote on all nominees listed

(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THE NOMINEE'S NAME IN THE LIST ABOVE.) IF THIS PROXY IS EXECUTED
BY THE UNDERSIGNED IN SUCH A MANNER SO AS TO NOT WITHHOLD AUTHORITY TO VOTE FOR
THE ELECTION OF ANY NOMINEE, IT SHALL BE DEEMED TO GRANT SUCH AUTHORITY.

2. DIRECTORS' PROPOSAL: to ratify the selection of Ernst & Young LLP as the
Company's independent auditors for fiscal year 2002:

[ ] FOR [ ] AGAINST [ ] ABSTAIN

PLEASE INDICATE WHETHER YOU WILL ATTEND THE ANNUAL MEETING:

[ ] I expect to attend the Annual Meeting.

[ ] I do not expect to attend the Annual Meeting.

PLEASE COMPLETE, DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING. IF YOU ATTEND
THE MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU HAVE PREVIOUSLY
RETURNED YOUR PROXY.

--------------------------------------------------------------------------------

VENTAS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS ON
MAY 14, 2002

The undersigned hereby appoints Debra A. Cafaro and John C. Thompson and
each of them, proxies with full power of substitution and resubstitution, for
and in the name of the undersigned, to vote all shares of common stock of
Ventas, Inc. (the "Company"), which the undersigned would be entitled to vote if
personally present at the Annual Meeting of Stockholders to be held at 10:00
a.m., local time, on Tuesday, May 14, 2002 at The Olmsted, 3701 Frankfort
Avenue, Louisville, Kentucky, and at any adjournment thereof, upon the matters
described in the accompanying notice of Annual Meeting of Stockholders and Proxy
Statement, receipt of which is hereby acknowledged, and upon any other business
that may properly come before the meeting or any adjournment thereof. Said
proxies are directed to vote on matters described in the Notice of Annual
Meeting and Proxy Statement as follows, and otherwise in their discretion upon
such other business as may properly come before the meeting or any adjournment
thereof.

Dated: , 2002
-----------------------------

-----------------------------------------

-----------------------------------------
Please sign exactly as your name or
names appear hereon. Where more than one
owner is shown above, each should sign.
When signing in a fiduciary or
representative capacity, please give
full title. If this proxy is submitted
by a corporation, it should be executed
in the full corporate name by a duly
authorized officer. If a partnership,
please sign in partnership name by
authorized person.