2013 Proxy Statement



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.    )
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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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)
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EPR PROPERTIES
909 Walnut Street, Suite 200
Kansas City, Missouri 64106
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 15, 2013
To our shareholders:
The 2013 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 15, 2013 at 10:00 a.m. (local time). At the meeting, our shareholders will vote upon:
Proposal 1:
 
The election of Barrett Brady and Peter C. Brown as Class I trustees to serve for a three-year term and the election of Thomas M. Bloch as a Class III trustee to serve the two years remaining of a three-year term;
 
 
Proposal 2:
 
An advisory vote on the compensation of our named executive officers;
 
 
Proposal 3:
 
The approval of amendments to the Company's 2007 Equity Incentive Plan to increase the number of authorized shares issuable under the plan and to increase the cap on the number of awards of restricted shares, restricted share units, performance shares, deferred shares and performance units settled in shares that may be issued under the plan; and
 
 
Proposal 4:
 
The ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2013;
and 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 1, 2013 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 2012 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 2012 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.
Thank you for your support and continued interest in our Company.
BY ORDER OF THE BOARD OF TRUSTEES
Neil E. Sprague
Senior Vice President,
General Counsel and Secretary
Kansas City, Missouri
April 5, 2013




EPR PROPERTIES
909 Walnut Street, Suite 200
Kansas City, Missouri 64106
 
 
 
 
 
 
 
PROXY STATEMENT
 
 
 
 
 
 
 
This proxy statement (this “Proxy Statement”) provides information about the 2013 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 15, 2013, beginning at 10:00 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 5, 2013.


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TABLE OF CONTENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




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 15, 2013. 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

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Our 2012 annual report to shareholders, which includes our Annual Report on Form 10-K for the fiscal year ended December 31, 2012 (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 and the election of Thomas M. Bloch as a Class III trustee to serve the two years remaining of a three-year term (Proposal No. 1);

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The approval, on a non-binding advisory basis, of the compensation of our Named Executive Officers as disclosed in these materials (Proposal No. 2);

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The approval of an amendment to the Company's 2007 Equity Incentive Plan to increase the number of authorized shares issuable under the plan and to increase the cap on the number of awards of restricted shares, restricted share units, performance shares, deferred shares and performance units settled in shares that may be issued under the plan (Proposal No. 3); and

•
The ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2013 (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 and the election of Thomas M. Bloch as a Class III trustee to serve the two years remaining of a three-year term (Proposal No. 1);

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“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 an amendment to the Company's 2007 Equity Incentive Plan to increase the number of authorized shares issuable under the plan and to increase the cap on the number of awards of

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restricted shares, restricted share units, performance shares, deferred shares and performance units settled in shares that may be issued under the plan (Proposal No. 3); and

•
“FOR” the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2013 (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 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:
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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.

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Who is entitled to vote at the meeting?
Holders of record of our common shares at the close of business on March 1, 2013 (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, 46,819,177 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.
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.

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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.

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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.

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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.


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•
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.
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 2013 (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 amendments to the Company's 2007 Equity Incentive 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 Proposals No. 1, No. 2 and No. 3.
How many votes are needed to approve each item?
The affirmative vote of a plurality of our common shares voted at the meeting is required for the election of trustees (Proposal No. 1). This means the two nominees in Class I and the one nominee in Class III receiving the greatest number of votes will be elected. The affirmative vote of a majority of all of our outstanding common shares present or represented by proxy at the Annual Meeting and entitled to vote thereon 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 amendments to the Company's 2007 Equity Incentive Plan (Proposal No. 3); and (iii) ratify the appointment of KPMG LLP as our independent registered public accounting firm for 2013 (Proposal No. 4).

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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. Trustees are elected by a plurality of the votes cast for the election of trustees at the Annual Meeting, with the nominees obtaining the most votes being elected. Because there is no minimum vote required for the election of trustees, abstentions or withhold votes and broker non-votes will be entirely excluded from the vote and will have no effect on its outcome.
Abstentions are counted in determining the total number of our common shares present in person or represented by proxy and entitled to vote thereon with respect to a proposal that requires the affirmative vote of a majority of such common shares and, therefore, will have the same effect as a vote against: (i) 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); (ii) the proposal to approve amendments to the Company's 2007 Equity Incentive Plan (Proposal No. 3); and (iii) the proposal to ratify the appointment of KPMG LLP as our independent registered public accounting firm for 2013 (Proposal No. 4). Broker non-votes are not counted in determining the number of our common shares present in person or represented by proxy and entitled to vote thereon with respect to a proposal that requires the affirmative vote of a majority of such shares and, therefore, will not affect the outcome of the voting on these proposals.
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 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 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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PROPOSAL 1:
ELECTION OF TRUSTEES
The Board of Trustees consists of six 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 2016 annual meeting or until their successors are duly elected and qualified. The Board has also nominated Thomas M. Bloch to serve as a Class III trustee for a term expiring at the 2015 annual meeting or until his successor is duly elected and qualified.
James A. Olson previously informed the Company of his intention to retire from the Board as a Class III trustee effective the morning of, and prior to, the Annual Meeting. The Board appointed Mr. Bloch as a Class III trustee to fill the vacancy that will be created by Mr. Olson's retirement, such appointment being effective immediately following Mr. Olson's retirement. The current term of the Company's Class III trustees is scheduled to expire at the Company's 2015 annual meeting. However, the Company's Declaration of Trust requires the Company to submit any trustee appointed to fill a vacancy by the Board to shareholders for election as a trustee at the next annual meeting following such appointment. Accordingly, the Company is submitting Mr. Bloch's election as a Class III trustee to shareholders at the Annual Meeting. If the Company's shareholders elect Mr. Bloch as a Class III trustee at the Annual Meeting, he will serve the remaining balance of the three-year term which will expire at the 2015 annual meeting.
Messrs. Brady, Brown and Bloch have been nominated upon the recommendation of the nominating/company governance committee, which is comprised 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.
Here is a brief description of the backgrounds and principal occupations of the three 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 (nominated for a term expiring at the 2016 annual meeting)
 
 
Barrett Brady
 
Barrett Brady, 66, retired December 31, 2008 from his position as Senior Vice President of Highwoods Properties, Inc., an 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 received a B.B.A. from Southern Methodist University and an M.B.A. from the University of Missouri. 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 NASDAQ-listed 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. Mr. Brady also serves on the board of directors and compensation committee of MRIGlobal.
Nominee and Trustee since 2004
  
 
 
Peter C. Brown
 
Peter C. Brown, 54, 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., an NYSE-listed and Fortune 500 provider of communications services, and he serves on the board of directors and audit and nominating committees of Cinedigm Digital Cinema Corp., a NASDAQ-listed provider of technology, services and content to entertainment companies. Mr. Brown has previously served on the board of directors of National CineMedia, Inc., Midway Games, Inc., LabOne, Inc. and Protection One, Inc. He currently serves and has served on numerous non-profit and private company boards. Mr. Brown is a graduate of the University of Kansas.
Nominee and Trustee since 2010
  
 
Class II Trustees (serving for a term expiring at the 2014 annual meeting)
 
 
David M. Brain
 
David M. Brain, 56, has served as our President and Chief Executive Officer since October 1999. He served as our Chief Financial Officer from 1997 to 1999 and as our Chief Operating Officer from 1998 to 1999. Mr. Brain acted as a consultant to AMC Entertainment, Inc. in the formation of the Company in 1997. From 1996 until that time he was a Senior Vice President in the investment banking and corporate finance department of George K. Baum & Company, an investment banking firm headquartered in Kansas City, Missouri. Before joining George K. Baum & Company, Mr. Brain was Managing Director of the Corporate Finance Group of KPMG LLP, a practice unit he organized and managed for over 12 years. He received a B.A. in Economics and an M.B.A. from Tulane University, where he was awarded an academic fellowship.
Trustee since 1999
 

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Robert J. Druten
 
Robert J. Druten, 65, 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 on the boards 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, and Kansas City Southern, a NYSE-listed transportation company. Mr. Druten also serves on the nominating committee and as chairman of each of the audit committee and finance committee of Kansas City Southern, and he 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.
Trustee since 1997
 
 
Class III Trustee (serving or nominated for a term expiring at the 2015 annual meeting)
 
 
Jack A. Newman, Jr.
 
Jack A. Newman, Jr., 65, 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. In this capacity, he served as the primary senior executive charged with establishing and overseeing relationships with Cerner Corporation's largest domestic clients. 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. In that capacity, he oversaw the firm's services nationwide in delivering financial analysis, strategy development and merger/acquisition services to health care providers. Mr. Newman is a CPA, has a Bachelor of Arts degree from Benedictine College and a Masters degree in Public Administration from the University of Missouri-Kansas City. He serves on the board of directors of Enterprise Bank and Trust, and he serves on the board of directors and audit and corporate governance and nominating committees of Ferrellgas Partners, L.P., an NYSE-listed distributor of propane and related equipment and supplies.
Trustee since 2009
 
 
 
 
Thomas M. Bloch
 
Thomas M. Bloch, 59, 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 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. He has served in numerous positions at the Academy, including as a teacher and President of the Board. Currently, he is Acting Chairman. Mr. Bloch is also Chairman of the Board of the University of Missouri-Kansas City Trustees. He graduated from Claremont McKenna College in Claremont, California in 1976.
Nominee
 

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 entertainment businesses. The nominating/company governance committee and the Board believe that such experience is 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 identified the knowledge and understanding of the commercial real estate industry of Messrs. Brady and Brain primarily from their 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

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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 managing and operating an urban college preparatory charter school.
Each of Messrs. Brady, Brown and Bloch have consented to serve on the Board of Trustees. If any one of Messrs. Brady, Brown or Bloch 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.
Vote Required
The affirmative vote of a plurality of our common shares voted at the meeting is required for the election of the Class I and Class III trustees. This means the nominees in Class I and Class III receiving the greatest number of votes will be elected.
Recommendation of the Board of Directors
Our Board, upon the recommendation of the nominating/company governance committee, recommends a vote “FOR” the election of Barrett Brady and Peter C. Brown as Class I trustees and the election of Mr. Bloch as a Class III trustee.



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COMPANY GOVERNANCE
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.
Who are our independent trustees and how was that determined?
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. Brain, 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

10



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,

•
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, shall 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 shall be considered independent until three years after the end of the tenancy or such relationship.




11



How often did the Board meet during 2012?
The Board of Trustees met ten times in 2012. No trustee attended less than 90% of the meetings of the Board and committees on which he served. 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.
Do the independent trustees hold regular executive sessions?
The independent trustees meet regularly in separate executive sessions without management. Mr. Druten serves as the presiding trustee at those meetings.
How can shareholders and interested parties communicate directly 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 “Submit Anonymous Information,” 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.
What committees has the Board established?
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, except for Mr. Druten who is not a member of the Audit Committee. 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, compensation and nominating/company governance committees must satisfy the NYSE's independence requirements in addition to certain requirements applicable specifically to the audit and compensation committees. Copies of the committee charters may be obtained at the Company Governance section of our website at www.eprkc.com.
Audit Committee. The audit committee oversees the accounting, auditing and financial reporting processes, policies and practices of the Company. The committee is directly responsible for assisting the Board of Trustees in its oversight of the integrity of our financial statements, our compliance with legal and regulatory requirements, the qualifications and independence of our independent registered public accounting firm, and the performance of management's internal audit function and internal control over financial reporting.
The Board of Trustees has appointed an audit committee consisting of Messrs. Brady, Brown, Olson and Newman. 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 all members of the audit committee 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 Chairman of the audit committee. The committee met five times in 2012.
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

12



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:
•
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 2013 consolidated financial statements and internal control over financial reporting for 2013, subject to shareholder ratification, and has engaged KPMG to perform specific tax return preparation and compliance, tax consulting and tax planning services during 2013. See “Proposal 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. Brady, Druten, Brown, Olson and Newman. 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

13



of corporate and real estate finance, their knowledge of the real estate and/or entertainment industry, 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. Olson serves as Chairman of the nominating/company governance committee. The committee met four times in 2012.
Finance Committee. The Board of Trustees has appointed a finance committee consisting of Messrs. Brady, Druten, Brown, Olson and Newman. 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. Brady serves as Chairman of the finance committee. The committee met four times in 2012.
Compensation Committee. The Board of Trustees has appointed a compensation committee consisting of Messrs. Brady, Druten, Brown, Olson and Newman. 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 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, and (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. The compensation committee may establish sub-committees consisting of one or more members to carry out duties that the compensation committee may assign. Mr. Brown serves as Chairman of the compensation committee. The committee met seven times in 2012.
What is the role of compensation consultants in determining or recommending the amount or form of executive or trustee compensation?
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 2012 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 chairman 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. As required under applicable SEC rules, New Item 407(e)(3)(iv) of Regulation S-K requires 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.

What is our policy regarding 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 but one of our trustees attended the 2012 annual meeting.

14




Family relationships.
No family relationships exist between any of our trustees, nominees or executive officers.
What is the Board's leadership structure and its 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.
How are trustees compensated?
During 2012, each non-employee trustee received:
•
An annual retainer of $30,000, which could be taken in the form of cash or in restricted share units valued at 150% of the cash retainer amount. In 2012, 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 $50,000, 75% in the form of restricted share units and 25% in the form of common share options;

•
$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.

The Chairman of the Board and the Chairmen of the audit, compensation, finance and nominating/company governance committees each received additional annual retainers of $10,000, which could be taken in cash or in restricted share units valued at 150% of the cash retainer amount. In 2012, 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. In 2012, the investment committee chairman received an annual retainer of $10,000 and an additional monthly retainer of $4,000, both taken in cash.

15



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. The options granted to the non-employee trustees were fully vested upon grant but may not be exercised for a period of one year after the grant. The options expire after ten years unless terminated earlier because of a trustee's termination from the Board. All of the restricted share units and options granted to our non-employee trustees during 2012 were issued under our 2007 Equity Incentive Plan.
Effective January 1, 2013, each non-employee trustee will receive as compensation:
•
An annual retainer of $50,000, which can be taken in the form of cash or in restricted share units valued at 150% of the cash retainer amount;

•
On the date of each 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.

The Chairman of the Board will receive an annual retainer of $30,000 and the Chairmen of the audit, compensation, finance and nominating/company governance committees will each receive annual retainers of $15,000, which can be taken in cash or in restricted share units valued at 150% of the cash retainer amount. In addition, the chairman of the investment committee will receive an additional monthly retainer of $2,000 in cash. The Chairman of the investment committee may select, from time to time, one or more other trustees to participate in meetings of the committee and any trustees so selected will receive an additional monthly retainer of $2,000 in cash for any month in which the trustee participated in a meeting.
Employees of the Company or its affiliates who are trustees are not paid any additional compensation for their service on the Board. Therefore, Mr. Brain is not listed in the Trustee Compensation table below.
 
Trustee Compensation for Fiscal 2012
The following table contains information regarding the compensation earned by the non-employee members of the Board of Trustees during 2012:
Name
 
Fees
Earned or
Paid in
Cash (1)
 
Stock
Awards
(2) (3)
 
Option
Awards
(2) (4)
 
Non-Equity
Incentive
Plan
Compensa-
tion
 
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
 
All Other
Compensa-
tion
 
Total
Barrett Brady
 
$
163,000

 
$
57,500

 
$
12,500

 
—

 
—

 
—

 
$
233,000

Robert J. Druten
 
100,000

 
57,500

 
12,500

 
—

 
—

 
—

 
170,000

Peter C. Brown
 
107,000

 
57,500

 
12,500

 
—

 
—

 
—

 
177,000

James A. Olson
 
107,000

 
57,500

 
12,500

 
—

 
—

 
—

 
177,000

Jack A. Newman, Jr.
 
110,000

 
57,500

 
12,500

 
—

 
—

 
—

 
180,000



16



(1)
Amounts include annual retainers for each trustee, additional annual retainers for each trustee serving as Chairman of the Board or as a chairman of committees of the Board, additional monthly retainers for Mr. Brady, who served as chairman 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 2012 in the form of restricted share units with an aggregate grant date fair value per trustee of $60,000. 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, 2012, as filed with the SEC.
(3)
Amounts include: (i) restricted share unit awards granted to each trustee on the date of the Company's 2012 annual meeting of shareholders with an aggregate grant date fair value per award of $37,500; 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, which was $20,000 per trustee in 2012. Nonvested restricted share units held by trustees and outstanding at December 31, 2012 include: (i) Mr. Brady - 2,185; (ii) Mr. Druten - 2,185; (iii) Mr. Brown - 2,185; (iv) Mr. Olson - 2,185; and (v) Mr. Newman - 2,185.
(4)
Amounts include option awards granted to each trustee on the date of the Company's 2012 annual meeting of shareholders with an aggregate grant date fair value per award of $12,500. Unexercised option awards held by trustees and outstanding at December 31, 2012 include: (i) Mr. Brady - 17,557; (ii) Mr. Druten - 30,890; (iii) Mr. Brown - 3,858; (iv) Mr. Olson - 8,858; and (v) Mr. Newman - 7,557.




17



EXECUTIVE OFFICERS
Here are our executive officers and some brief information about their backgrounds.
David M. Brain, 56, is our President and Chief Executive Officer and a member of our Board. His background is described in “Proposal 1: Election of Trustees.”
Gregory K. Silvers, 49, was appointed our Executive Vice President in February 2012. From 1998 until this appointment, he served as our Vice President. Mr. Silvers has also served as our Chief Operating Officer since 2006 and Chief Development Officer since 2001, and he previously served as our Secretary and General Counsel from 1998 until October 2012. From 1994 to 1998, he practiced with the law firm of Stinson Morrison Hecker LLP specializing in real estate law. Mr. Silvers received his J.D. in 1994 from the University of Kansas.
Mark A. Peterson, 49, was appointed our Senior Vice President in February 2012. From 2004 until this appointment, he served as our Vice President. 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 (“AIPC”), 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.
AIPC was the subject of an investigation by the SEC. Based on discussions with the staff of the SEC, Mr. Peterson submitted an Offer of Settlement (the “Offer”) to the SEC with respect to his prior employment at AIPC. The subject matter of the SEC's investigation and the Offer do not relate to Mr. Peterson's service as Chief Financial Officer of the Company. Without admitting or denying any charges that may have been brought against him, Mr. Peterson offered to consent to a cease and desist order. Based upon the Offer, on September 15, 2008, the SEC issued an order (the “Order”) that Mr. Peterson cease and desist from causing any violations of certain of the SEC's reporting requirements, and books and records and internal accounting controls provisions. The Order does not include any finding that Mr. Peterson was complicit in any fraudulent scheme that may have been committed by others at AIPC and no fine or penalty was assessed against Mr. Peterson.
Morgan G. Earnest II, 57, was appointed our 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. (“Capmark,” formerly GMAC Commercial Mortgage Corporation, or “GMACCM”) and was responsible for the co-management of Lending and Originations for both North America and Europe. On October 25, 2009, Capmark filed for bankruptcy. 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.
Neil E. Sprague 58, was appointed our Senior Vice President, Secretary and General Counsel in October 2012. From November 2007 until the time he joined the Company, Mr. Sprague was Associate General Counsel of DineEquity, Inc. (“DineEquity”), a publicly-held corporation and the largest full-service dining chain in the world. At DineEquity, Mr. Sprague most recently served as Brand General Counsel for both Applebee's International, Inc. (“Applebee's”) and for IHOP Corporation (“IHOP”), the two operating subsidiaries of DineEquity. From 2005 until the 2007 merger of Applebee's and IHOP, he was Associate General Counsel of Applebee's. From 1995 to 2005, Mr. Sprague was a partner in the Business Law Division of the law firm of Shook, Hardy & Bacon L.L.P., where he practiced commercial real estate and general business law. Mr. Sprague received a B.S.B.A. in 1976 and a J.D. in 1981, both with honors, from the University of Missouri-Columbia.
Michael L. Hirons, 42, was appointed our Vice President Strategic Planning in February 2012. From 2006 until his appointment 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,

18



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.


19



EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Executive Summary

Our compensation program for our principal executive officer, principal financial officer and the three most highly compensated other executive officers (which we refer to collectively as our “Named Executive Officers”) is designed to attract and retain quality executives, motivating them to achieve and rewarding them for superior performance. Our executive compensation program emphasizes performance-based incentive compensation under our annual incentive program ("Annual Incentive Program") and long-term incentive plan ("Long-Term Incentive Plan") payable primarily through equity grants, a substantial portion of which is considered at risk, and which are administered by the compensation committee of our Board of Trustees (the "Compensation Committee"). The Compensation Committee is responsible for establishing the underlying policies and principles for our compensation program, selecting from among our eligible executives the individuals to whom particular compensation awards will be granted and establishing the terms, conditions and amounts of those awards. No member of our Compensation Committee is eligible to participate in our executive compensation program, but each such member is compensated as a non-employee trustee of our Company as described under the caption “Company Governance - How are trustees compensated?”

Our Company entered 2012 with a strong balance sheet and positioned to grow investment spending across its operating segments. In this regard, we experienced the following highlights that were considered by the Compensation Committee:

•
Completed approximately $298.1 million of investment spending, an increase of 116% over investment spending in 2011, including:
◦
Entertainment investment spending of $121.5 million relating primarily to investments in build-to-suit construction of megaplex theatres and family entertainment centers;
◦
Education investment spending of $81.4 million, relating primarily to investments in build-to-suite construction of public charter schools; and
◦
Recreation investment spending of $83.6 relating primarily to metro ski areas and golf entertainment complexes;
•
Funds From Operations (“FFO”) per share, and FFO, as adjusted, per share, for 2012 increased 12.2% and 7.6%, respectively, as compared to 2011;
•
Launched name change and rebranding signifying the Company's ongoing strategic evolution as an investor in select categories that require unique industry knowledge and offer the potential for stable and attractive returns;
•
Executed public offerings of $350 million of 5.75% Senior Notes and $125.0 million of 6.625% Series F Cumulative Redeemable Preferred Shares;
•
Executed $240.0 million five year unsecured term loan facility with pricing based on a grid related to the Company's senior unsecured credit ratings, which at closing was LIBOR plus 175 basis points;
•
Redeemed 4.6 million shares of 7.375% Series D Cumulative Redeemable Preferred Shares;
•
Maintained our debt to gross assets ratio (total long-term debt to total assets, plus depreciation and amortization) at 41% at December 31, 2012; and
•
Raised the dividend on common shares 7%.
During the first quarter of 2013, equity awards in the form of share options and restricted shares were granted to the Named Executive Officers taking into account 2012 Company performance, each executive's individual performance

20



during 2012, as well as the level of equity grants received for 2011 performance. Based on these factors, Annual Incentive Program bonuses were awarded at 100% of target levels and Long-Term Incentive Plan awards were granted at 130% to 135% of target levels for each Named Executive Officer. Based on the Compensation Committee's assessment, the award values approved for the Named Executive Officers under the Annual Incentive Program were due primarily to the 7.6% growth in FFO as adjusted per share, and awards under the Long-Term Incentive Plan were due primarily to the relative total shareholder return over a three-year period at the 67th percentile level.

The remainder of this Compensation Discussion and Analysis addresses the following topics in greater detail:
•
The philosophy and principles of our executive compensation program;
•
Our compensation setting process;
•
The design and implementation of our compensation program, including:
◦
The determination of base salary for our Named Executive Officers
◦
The determination of annual bonuses under our Annual Incentive Program and the role of equity grants in that program
◦
The determination of equity grants under our Long-Term Incentive Plan;
•
How the Compensation Committee considered the results of the “say-on-pay” shareholder vote held at the latest annual meeting of Shareholders;
•
The compensation of our President and Chief Executive Officer;
•
How the Compensation Committee's policies relate to risk management;
•
The Company's share ownership guidelines; and
•
The manner in which our Company addresses Internal Revenue Code limits on deductibility of compensation.
Compensation philosophy and principles

Our Compensation Committee works with management and our Board of Trustees to ensure that our executive compensation program facilitates the attraction, retention and motivation of our executives to promote our Company's business objectives.

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 share awards and share options, to ensure that executives are focused on providing appropriate dividend levels and building shareholder value by aligning the executive's interests with those of our shareholders.
Elements of compensation provided to our Named Executive Officers include:
•
Base salary;
•
Annual incentive awards;
•
Long-term equity incentive awards;

21



•
Perquisites and other personal benefits;
•
Severance benefits; and
•
Share ownership guidelines.
We have adopted these various elements of compensation to attract and retain quality executives, to provide incentives to maximize certain quantitative performance measures and to align the interests of our executives with those of our shareholders, with the goal of maximizing shareholder value creation. Base salary, perquisites and other benefits are provided to compensate executives competitively relative to the market. Annual incentive awards are designed to primarily reward short-term operational and financial performance. Our Long-Term Incentive Plan awards are designed to encourage the creation of long-term shareholder value and reward long-term performance through a combination of equity grants in the form of nonvested restricted shares and share options, the values of which are primarily tied to the long-term value of the Company's shares, along with a focus on the various performance factors used by the Compensation Committee which accentuate the creation of long-term shareholder value. Severance benefits are designed to provide stability during a potential change in control of our Company by encouraging executives to cooperate with a future process that may be supported by our Board, without being distracted by the possibility of termination or demotion after the change in control.

Our Compensation Committee generally has attempted to set base salaries that approximate the medians provided by a peer group of companies for comparable positions and responsibilities, and to place a relatively higher emphasis on performance-based incentive compensation payable under our Annual Incentive Program and Long-Term Incentive Plan (discussed below under the caption “Compensation program design and implementation”).

Compensation setting process

Our Compensation Committee meets at the beginning of each year to make decisions regarding our Named Executive Officers' compensation. When making these decisions, our Compensation Committee considers the performance of our Company and of each Named Executive Officer, available industry-based compensation information and the actual compensation provided to each Named Executive Officer for each of the last three fiscal years. Based upon the review of this information, together with recommendations provided by our Chief Executive Officer, Mr. Brain, our Compensation Committee sets, for each of the Named Executive Officers, the base salary for the new fiscal year, determines the Annual Incentive Program awards for the most recently completed year and the level of long-term incentive awards under our 2007 Equity Incentive Plan. In addition to the input of the Chief Executive Officer, other Named Executive Officers attend meetings of our Compensation Committee from time to time and provide historical and prospective breakdowns of primary compensation components for each Named Executive Officer, and additional context with respect to Company performance. Our Compensation Committee makes the final determinations on all elements of each Named Executive Officer's compensation.

Our Compensation Committee attempts to provide base salary at competitive levels, based on its 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 Committee to be reasonable and appropriate relative to those provided for similarly situated executive talent.

Our Compensation Committee has not established fixed or formulaic performance targets with respect to incentive compensation under either our Annual Incentive Program or our Long-Term Incentive Plan. However, under each of these programs, our Compensation Committee is guided by identified performance measures to make an initial determination of the respective award. Upon making this determination, the Compensation Committee may adjust the amount determined based on subjective and qualitative considerations of individual performance and the performance of the Company. Our Compensation Committee believes this subjective approach provides it with the flexibility to address changing market conditions, while still permitting the Compensation Committee to consider our Company's performance by annually reviewing the performance measures identified by the Compensation Committee early in each year.

22




Our Compensation Committee determines performance bonuses awarded under our Annual Incentive Program as a percentage of annual base salary. Relevant performance factors are identified at the beginning of each year and are then reviewed at the beginning of the following year, at which time the actual bonus amount is determined. Similarly, awards under our Long-Term Incentive Plan are calculated as a multiple of annual base salary, with relevant performance factors being identified at the beginning of each year and then reviewed at the beginning of the following year, at which time the actual award under our Long-Term Incentive Plan is determined.

Our Compensation Committee has retained FPL Associates L.P. to advise the Compensation Committee with respect to its review of compensation levels for our Named Executive Officers. The Compensation Committee has determined that FPL Associates is independent under our New York Stock Exchange listing requirements. In mid 2010, FPL Associates met with the Compensation Committee and management to reconsider the composition of the peer group used in the Compensation Committee's analysis. At that time, the Compensation Committee asked FPL Associates to review the peer group, particularly in light of changes in the economic environment and its impact on the size, performance and comparability of the Company with the prior group and the desire to maintain a peer group in which the Company is near the median of the total capitalization. In this regard, the Compensation Committee also considered multiple criteria for inclusion in the new peer group, including: company size (measured by market capitalization, total capitalization and number of properties); focus on unique market segments or niches within the commercial real estate industry; diversified real estate portfolio across asset classes; and net-lease operations. Utilizing these criteria, FPL Associates identified a peer group of 12 comparable public REITs, in which the Company's market value of common shares and total capitalization as of July 1, 2010 ranked at the 44th percentile and 55th percentile, respectively. The Compensation Committee reviews this peer group on an annual basis and for 2012 elected to continue using the peer group established in 2010. Based upon this process, the peer group for 2012 consisted of:     
American Campus Communities, Inc.
Home Properties, Inc.
BioMed Realty Trust, Inc.
Lexington Realty Trust
Brandywine Realty Trust
National Retail Properties, Inc.
Corporate Office Properties Trust
Omega Healthcare Investors Inc.
Equity One Inc.
Realty Income Corporation
Highwoods Properties, Inc.
Washington Real Estate Investment Trust
In fall 2011, FPL Associates prepared a benchmarking analysis comparing our executive compensation practices to the compensation practices of the new peer group, using available compensation data for 2010. The benchmarking analysis prepared by FPL Associates included an assessment of base salaries, annual incentives and total annual cash compensation, long-term incentives and total direct compensation. FPL Associates also provided the Compensation Committee with an overview of the public REIT sector and private sector compensation programs for recent years. This analysis generally indicated that, consistent with our compensation philosophy, with respect to 2010 compensation for Named Executive Officers:

•
Base salaries were generally in line with the median market practices when benchmarking by either comparable position and responsibilities or executive ranking within the peer group organizations;
•
Total annual cash compensation (base salary plus annual incentive awards) was generally below market levels falling between the 25th percentile and median marketing practices, notwithstanding the payment of awards under the Annual Incentive Program for 2010 that were largely above target levels;

23



•
Total long-term incentive compensation exceeded the market median but lagged behind the 75th percentile market practices, due to the Compensation Committee's determination to make awards for 2010 at target levels; and
•
Total remuneration for 2010 ranked in line with median market practices.
This information was considered by the Compensation Committee in connection with establishing base salaries for 2012 and the potential awards for 2012 under the Annual Incentive Program and the Long-Term Incentive Plan.

In fall 2012, FPL Associates prepared a benchmarking analysis comparing our executive compensation practices to the compensation practices of the new peer group, using available compensation data for 2011. The analysis prepared by FPL Associates included an assessment of base salaries, annual incentives and total annual cash compensation, long-term incentives and total direct compensation. FPL evaluates our executives in two distinct comparisons, by benchmark and executive ranking. The benchmark approach draws its comparison from positions with a similar role and responsibility, whereas the executive approach ranks the executive in terms of total remuneration to the other Named Executive Officers sorted by pay in descending order. FPL Associates also provided the Compensation Committee with an overview of the public REIT sector and private sector compensation programs for recent years. This analysis generally indicated that, consistent with our compensation philosophy, with respect to 2011 compensation for Named Executive Officers:

•
Base salaries were generally ranked between the median and 75th percentile by benchmark and executive ranking;
•
Total annual cash (base salary plus annual incentive awards) lagged the 25th percentile by benchmark and fell in line with (i.e., was within +/- 10%) of the 25th percentile by executive ranking;
•
Total long-term incentive compensation fell in between the median and 75th percentile of market practices (2011 equity grants were awarded at levels between 120% and 130% of our target);
•
The weighted average total remuneration for our Named Executive Officers fell in line with the 25th percentile by benchmark and the median by executive ranking;
•
The aggregate total remuneration paid to our Named Executive Officers fell in at the 39th percentile when compared to the peer group over a one-year period (2011) and slightly below that of the 38th percentile over a three-year period (2009, 2010 and 2011); and
•
Based on a related analysis comparing total shareholder return, or TSR, over the three-year period and compensation provided to the top five highest paid executives over such time frame, our relative performance exceeded their relative compensation, meaning that we ranked at the 38th percentile for total remuneration, but our three-year performance fell in at the 78th percentile, indicating slightly low compensation for high performance.
This information was considered by the Compensation Committee while determining the 2012 awards under the Annual Incentive Program and Long-Term Incentive Plan to maintain an appropriate level of consistency with the peer group.

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 Named Executive Officer'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 Annual Incentive Program awards and Long-Term Incentive Plan awards that are competitive with those of our peer group). Typically, Long-Term Incentive Plan awards comprise a significant portion of a Named Executive Officer'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. The following table sets forth the amounts of, and the percentages of total

24



compensation represented by, the three principal elements of compensation for each of the Named Executive Officers for 2012 (but does not include severance benefits, perquisites and other personal benefits):
 
  Base Salary       
 Annual Incentive Program 
  Long-Term     Incentive Plan  
 
  Amount  
 % 
    Amount   
 % 
   Amount   
 % 
David M. Brain
$
570,000

18.6
$
570,000

18.6
$
1,923,750

62.8
Gregory K. Silvers
475,000

20.3
427,500

18.2
1,442,813

61.5
Mark A. Peterson
330,000

22.2
264,000

17.8
891,000

60.0
Morgan G. Earnest II
385,000

22.7
308,000

18.2
1,001,000

59.1
Michael L. Hirons
250,000

25.9
175,000

18.1
540,000

56.0

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 Annual Incentive Program and Long-Term Incentive Plan. For 2012, the Compensation Committee determined that an appropriate increase of base salaries for Named Executive Officers should approximate 3%, provided that a more significant increase for Mr. Silvers of 17% was determined appropriate due to the increased role he will have under the Company's organizational structure. In addition, the Compensation Committee believed that Mr. Hirons' significant responsibilities within the small group of executives made comparable benchmarking analysis difficult and understated his value to the Company. Therefore an increase of 8.7% was determined for Mr. Hirons. For 2013, base salaries for the Named Executive Officers increased 2%, except that Mr. Brain and Mr. Peterson received increases of 3% and 5%, respectively, primarily to address benchmarking data that indicated that their base salaries were falling behind median levels.
  
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 several performance factors that it considers in its determination of performance bonuses under our Annual Incentive Program, 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 2012, our Compensation Committee identified two primary quantitative performance factors, each of which constitute 50% of the initial incentive payout determination:

•
Growth in FFO, as adjusted, per share; and
•
Relative one-year total shareholder return.
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 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 2012, the Company achieved 7.6% Growth in FFO, as adjusted, per share, which exceeded the Compensation Committee's maximum performance target.

Relative one-year total shareholder return measures the Company's total shareholder return on a percentile basis to the total shareholder return of the members of our peer group over the same period. For these purposes, total shareholder return on common shares, including dividends and distributions, is measured by volume weighted average price per share for the last 10 trading days of December 2011 compared to the last 10 trading days of December 2012. For 2012,

25



the Company ended at the 21st percentile, which is below the Compensation Committee's minimum performance target of obtaining a 40th percentile ranking among its peer group with respect to total shareholder return.

Achieving the maximum level for Growth in FFO, as adjusted, per share, but failing to achieve the minimum level for relative one-year total shareholder return resulted in an initial determination that awards should be granted at the target level. Upon making this initial determination, the Compensation Committee may increase or reduce the determined amount based on subjective considerations of individual performance for each Named Executive Officer and overall Company performance. The Compensation Committee's evaluation of the individual performance of executive officers is a qualitative approach based upon subjective factors. The evaluation of the Company's overall performance is measured against factors determined by the Compensation Committee in its discretion, which may include the following:

•
Company operations, including revenue, expense control, FFO per share performance, access to capital, debt levels, vacancy levels and resolution thereof, credit quality, acquisition levels, yields and internal rates of return, asset diversification, trading multiples, dividend yields and increases, executive peer evaluations and new initiatives suggested and implemented.
•
Shareholder returns, including absolute returns and comparative returns, as compared with those of other REITs and other stock indices, and a subjective analysis of the relative risk taken by peer companies. The Committee's subjective judgment with respect to awards will be strongly influenced by absolute shareholder returns.
•
REIT compensation levels, including what peer companies are paying for comparable positions and responsibilities, the availability of employment alternatives for the executive officer, the executive officer's value to our Company, the future prospects for the executive officer, the anticipated difficulty of replacing the executive officer and the executive officer's performance relative to that in prior years.
Our Compensation Committee has also considered each year a variety of other factors, some of which are more qualitative in nature, to determine the performance bonuses that will be awarded pursuant to our Annual Incentive Program. Included in the factors the Compensation Committee intends to consider when exercising this discretion is their evaluation of the individual performance of each Named Executive Officer 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 Named Executive Officer, the achievement of these performance factors and the recommendations of our Chief Executive Officer and makes a subjective determination as to the amount of any performance bonuses that are awarded.

In late 2012 and early 2013, our Compensation Committee reviewed our Company's performance and the factors that the Compensation Committee articulated in early 2012, and considered the recommendations the Chief Executive Officer provided to our Compensation Committee for bonuses under our Annual Incentive Program, based on the Company's overall performance as measured against our Company's stated performance factors for 2012 and individual performance for each executive. Our Compensation Committee's evaluation of the individual performance of executive officers is a qualitative approach based upon subjective factors. The Compensation Committee viewed the personal performance of each of the named executive officers, including progress with the Company's strategic planning and organizational changes, as well as our Company's success with maintaining a strong balance sheet and liquidity position.

Our Compensation Committee established for 2012 a minimum, target and maximum level of performance bonus packages that may be paid to each Named Executive Officer under our Annual Incentive Program. The minimum, the target and the maximum stated opportunities are shown below, are subject to the discretion of the Compensation Committee:

26



 
Minimum
Target
Maximum
David M. Brain
50%
100%
200%
Gregory K. Silvers
45%
90%
180%
Mark A. Peterson
40%
80%
160%
Morgan G. Earnest II
40%
80%
160%
Michael L. Hirons
35%
70%
140%

Based upon our Compensation Committee's evaluation of individual performance and the primary performance factors it articulated for 2012 (discussed above), the Compensation Committee established bonuses under our Annual Incentive Program at 100% of target levels established for 2012 for each of the Named Executive Officers. As a result, in January 2013, our Compensation Committee approved the following bonuses under our Annual Incentive Program for our Named Executive Officers for 2012:

 
Percent of Base
 Salary     
Amount
David M. Brain
100%
$
570,000

Gregory K. Silvers
90%
427,500

Mark A. Peterson
80%
264,000

Morgan G. Earnest II
80%
308,000

Michael L. Hirons
70%
175,000


Performance bonuses awarded under our 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 the executive. Our Compensation Committee believes that allowing executives to receive all, or a portion of their annual 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 2012, 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 2012, each of the Named Executive Officers 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 shares awarded under our Annual Incentive Program, nonvested restricted shares were valued using a volume weighted average price based on the 15 trading days prior to and after December 31, 2012 ($46.20).

Long-Term Incentive Plan. Our Compensation Committee may award incentive compensation to our executive officers pursuant to our Long-Term Incentive Plan. Our Compensation Committee's practice is to award long-term incentives annually, with 75% of the value granted in the form of nonvested restricted common shares and the remaining 25% granted in the form of either share options or payment of the difference between the annual premium payable by our Company on term life insurance for the benefit of the executive and the annual premium for the same amount of whole life insurance for that executive plus related income tax (the “Life Insurance Benefit”), or a combination of options and the Life Insurance Benefit, at the election of the executive. However, executives may elect to receive 60% of their annual award in the form of restricted shares and the remaining 40% in the form of share options, the Life Insurance Benefit or a combination of options and the Life Insurance Benefit. Our Compensation Committee believes that providing a portion of the award in the form of share options aligns executive and shareholder interests as share options only increase in value when the share price increases. In addition, offering nonvested restricted shares, which retain value during difficult business climates, enhances our ability to retain the Named Executive Officers. Nonvested restricted common shares and share options issued as payment of Long-Term Incentive Plan 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.

Awards under our Long-Term Incentive Plan are made in the first quarter of each fiscal year, at the same time as bonuses under our Annual Incentive Program are determined. The Named Executive Officers have the opportunity to realize

27



awards (stated as a multiple of annual base salary) under our Long-Term Incentive Plan, which the Compensation Committee has targeted to be between the minimum and the maximum stated below, subject to the discretion of the Compensation Committee:

 
Minimum
Target
Maximum
David M. Brain
1.25
2.50
5.00
Gregory K. Silvers
1.125
2.25
4.50
Mark A. Peterson
1.00
2.00
4.00
Morgan G. Earnest II
1.00
2.00
4.00
Michael L. Hirons
0.80
1.60
3.25

At the beginning of 2012, our Compensation Committee identified one primary quantitative performance factor: relative three-year shareholder return. The Compensation Committee determined minimum, target and maximum levels as follows:

Percentile of Company
VWAP Measured TSR
Award Level
40th Percentile
Minimum
60th Percentile
Target
80th Percentile
Maximum

For 2012 awards, an initial determination of long-term incentive plan awards was calculated based upon the relative total shareholder return over a three-year period ended on December 31, 2012 calculated in the same manner as relative total shareholder return is calculated for the Annual Incentive Program other than the period used for the comparison with the peer group. For the three-year period ended December 31, 2012, the relative total shareholder return was at the 67th percentile, indicating awards at 135% of target level. The Committee retains the subjective discretion to provide for an award based upon other factors on the same basis as applied under the Annual Incentive Program. In applying this discretion, the Committee is strongly influenced by absolute shareholder returns.

Based upon our Compensation Committee's evaluation of individual performance and the primary performance factor it articulated for 2012 (discussed above), the Compensation Committee made awards under the Long-Term Incentive Plan to executive officers of our Company at between 130% and 135% of the target level for each of the Named Executive Officers. Accordingly, our Compensation Committee made the following awards under our Long-Term Incentive Plan to the executive officers of our Company in January 2013 based on 2012 performance:

 
Multiple of
Base Salary
Total Value of
Award
Restricted Shares
Awarded (1)
Options
Awarded (2)
Insurance Premium and Tax Benefit
David M. Brain
3.38
$
1,923,750

30,757
39,681
$
—

Gregory K. Silvers
3.04
1,442,813

23,068
19,566
123,560

Mark A. Peterson
2.70
891,000

14,245
4,449
168,824

Morgan G. Earnest II
2.60
1,001,000

16,004
13,076
91,770

Michael L. Hirons
2.16
540,000

8,634
2,825
100,757

 
 
 
 
 
 
(1)
For purposes of determining the total number of nonvested restricted shares awarded under our Long-Term Incentive Plan, nonvested restricted shares were valued on February 21, 2013, the date the award was granted, using a volume weighted average price based on the last 30 trading days prior to February 21, 2013 ($46.91).
(2)
For purposes of determining the number of options awarded under our Long-Term Incentive Plan, each option to purchase a common share is given the value determined based upon a Black-Scholes value of $12.12 determined (in a manner consistent with the methodology used with respect to its financial statements prepared for the most recently completed fiscal year) on February 21, 2013, the date the award was granted. The exercise

28



price of the option is the closing price of our Company's common shares on the New York Stock Exchange on the date the award was granted ($47.21).

Perquisites and Other Personal Benefits. Our Company offers the following personal benefits and perquisites to the Named Executive Officers:

•
Vehicles. We have acquired vehicles that the Named Executive Officers are entitled to use. Each of those Named Executive Officers is taxed for personal use of the vehicles.
•
Life Insurance. Under our Company's insurance benefit plan, our Company pays the premium for term life insurance for the benefit of each Named Executive Officer. At the election of each Named Executive Officer, a portion of each award under our Long-Term Incentive Plan may be used for the payment of the difference between the annual premium payable by our Company on such term life insurance and the annual premium for the same amount of whole life insurance for that executive plus related income tax.
•
Employment Agreements and Severance Benefits. Each of our Named Executive Officers have entered into employment agreements with the Company. The employment agreements include severance benefits for the Named Executive Officers. 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.
Under the employment agreements, severance benefits are triggered in the event of death, termination due to disability, termination by our Company without cause, or termination by the executive for good reason. The definitions of “cause” and “good reason” are provided below in “Potential Payments Upon Change in Control.” The severance benefits consist of:
•
The sum of the executive's base salary in effect on the date of termination, the value of the annual incentive bonus under our Annual Incentive Program for the most recently completed year, and the value of the most recent long-term incentive award made under our Long-Term Incentive Plan, times a severance multiple (which is three for Messrs. Brain, Silvers, Earnest and Peterson, and two for Mr. Hirons);
•
Continuation of certain health plan benefits for a period of years equal to the severance multiple; and
•
Vesting of all unvested equity awards.
2013 Compensation Program Modifications. As a result of its annual review of the executive compensation program, the Compensation Committee elected to implement several modifications intended to improve the program. Beginning with 2013, the Compensation Committee will no longer utilize relative one-year total shareholder return of the Company compared to the peer group as one of the two primary quantitative performance factors of the Annual Incentive Program. This factor will be replaced with a one-year total shareholder return compared to the one-year performance of the NAREIT Equity REIT Index (UNUS). The Compensation Committee will continue to utilize growth in FFO, as adjusted, per share as the other quantitative performance factor for the Annual Incentive Program.

Similarly, the Compensation Committee will no longer utilize as the sole quantitative performance factor of the Long-Term Incentive Plan relative three-year total shareholder return of the Company compared to the peer group, but will transition to a three-year total shareholder return of the Company compared to three-year performance of the NAREIT Equity REIT Index (UNUS). The transition to this approach will involve using only a one-year period of comparison for 2013, a two-year period of comparison for 2014, and thereafter the full three-year comparison. This approach was

29



taken to avoid using years of performance that were completed and known at the time the new performance factor was adopted.

The Compensation Committee also modified the peer group to reflect developments since the latest changes made in 2010. The peer group will no longer be used for quantitative performance factors, but will be used by the Compensation Committee for compensation benchmarking purposes.

How did the Compensation Committee consider the 2012 advisory vote on executive compensation?

In establishing 2012 compensation, the Compensation Committee considered the shareholder vote in 2011 on the compensation paid to Named Executive Officers in which more than 94% of the shares voted were in favor. The Compensation Committee viewed this vote as supportive of the Company's overall approach to executive compensation.

How was the Company's President and Chief Executive Officer compensated?

Our Company's President and Chief Executive Officer, David M. Brain, was compensated in 2012 pursuant to an employment agreement entered into in 2007. In late 2012 and early 2013, our Compensation Committee conducted a formal evaluation of Mr. Brain and interviewed him regarding his performance and the performance of our Company generally. In establishing Mr. Brain's compensation, our Compensation Committee took into account the compensation of similar officers of REITs with comparable market capitalizations. Mr. Brain's compensation also reflects his overall management of and critical involvement with this historically challenging economic environment, strategic focus of 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 2012, the Compensation Committee established bonuses under the Annual Incentive Program at 100% of the target level and awards under the Long-Term Incentive Plan for Mr. Brain at 135% of his target level.

Mr. Brain received a base salary of $570,000 in 2012 and a bonus under our Annual Incentive Program of $570,000 for 2012. The incentive award paid to Mr. Brain was based on our Company's review of the various factors described above, as well as an evaluation of Mr. Brain's personal performance during 2012. Mr. Brain 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 Long-Term Incentive Plan was made of $1,923,750 in 2012, payable as described above. Based upon its review of the various factors described above, the Compensation Committee believes Mr. Brain's compensation is reasonable and not excessive.

Employee compensation policies relating to risk management

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 longer-term incentives;

•
maximum payout levels for awards under the Annual Incentive Program and Long-Term Incentive Plan are capped;

•
final awards under the Annual Incentive Program and Long-Term Incentive Plan are subject to the discretion of the Compensation Committee, which may consider both quantitative and qualitative factors outside the specified performance factors; and

•
executive officers are subject to share ownership and retention guidelines.

30





Share ownership guidelines

In 2008, the Compensation Committee adopted share ownership guidelines applicable to the Named Executive Officers and trustees of the Company. Prior to September 10, 2012, each of the Named Executive Officers and trustees are required to have acquired common shares or restricted share units having a market value in excess of the following:

•
Trustees, four times their current basic retainer;
•
CEO, five times his current base salary;
•
Chief Operating Officer and Chief Financial Officer, three times their respective current base salaries; and
•
Each other Named Executive Officer, one times current base salary of such officer.

How is the Company addressing Internal Revenue Code limits on deductibility of compensation?

Section 162(m) of the Internal Revenue 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. The statute exempts qualifying performance-based compensation from the deduction limit if stated requirements are met. Our Compensation Committee and our Board of Trustees reserve the authority to award non-deductible compensation in circumstances they consider appropriate.

31



Summary Compensation Table
The following table contains information on the compensation earned by our Chief Executive Officer and Chief Financial Officer and the three other most highly compensated executive officers whose compensation exceeded $100,000 in 2012, which we collectively refer to in this Proxy Statement as our “Named Executive Officers”. For additional information regarding this compensation, refer to the Compensation Discussion and Analysis section of this Proxy Statement.
 
Name and
Principal
Position
 
Year
 
Salary
 
Bonus (1)
 
Share
Awards
(2)(3)
 
Option
Awards
(2)(4)
 
Non-Equity
Incentive
Plan
Compen-
sation
 
Change in
Pension
Value and
Nonqualified
Deferred
Compen-
sation
Earnings
 
All
Other
Compen-
sation
(5)
 
Total
David M. Brain
 
2012
 
$
570,000

 
$
570,000

 
$
1,755,706

 
$
480,938

 
$
—

 
$
—

 
$
29,254

 
$
3,405,898

President and Chief Executive Officer
 
2011
 
555,000

 
416,250

 
1,570,154

 
433,592

 
—

 
—

 
28,730

 
3,003,726

2010
 
546,158

 
680,000

 
1,346,891

 
136,776

 
—

 
—

 
229,832

 
2,939,657

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gregory K. Silvers
 
2012
 
475,000

 
427,500

 
1,316,815

 
237,143

 
—

 
—

 
154,966

 
2,611,424

Executive Vice President, Chief Operating Officer
 
2011
 
407,000

 
260,480

 
961,638

 
154,183

 
—

 
—

 
139,784

 
1,923,085

 
2010
 
394,748

 
395,000

 
780,261

 
86,572

 
—

 
—

 
141,058

 
1,797,639

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mark A. Peterson
 
2012
 
330,000

 
264,000

 
813,143

 
53,926

 
—

 
—

 
198,628

 
1,659,697

Senior Vice President, Chief Financial Officer and Treasurer
 
2011
 
320,000

 
204,800

 
756,062

 
—

 
—

 
—

 
236,968

 
1,517,830

 
2010
 
309,000

 
309,000

 
611,865

 
75,514

 
—

 
—

 
106,301

 
1,411,680

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Morgan G. Earnest II
 
2012
 
385,000

 
308,000

 
919,649

 
158,480

 
—

 
—

 
123,427

 
1,894,556

Senior Vice President and Chief Investment Officer
 
2011
 
375,000

 
225,000

 
819,798

 
136,416

 
—

 
—

 
119,591

 
1,675,805

 
2010
 
370,800

 
240,000

 
668,518

 
93,049

 
—

 
—

 
118,941

 
1,491,308

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Michael L. Hirons
 
2012
 
250,000

 
175,000

 
500,858

 
34,243

 
—

 
—

 
135,445

 
1,095,546

Vice President Strategic Planning
 
2011
 
230,000

 
110,400

 
292,242

 
—

 
—

 
—

 
181,655

 
814,297

2010
 
206,000

 
155,000

 
267,545

 
16,210

 
—

 
—

 
76,592

 
721,347

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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 2012, 2011 and 2010, 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 of the method used in determining the aggregate grant date fair value of the nonvested restricted common shares.
(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, 2012, as filed with the SEC. Share

32



awards granted for 2012 are subject to shareholder approval. See Proposal 3: Amendments to the Company's 2007 Equity Incentive Plan.
(3)
Amounts include: (i) the aggregate grant date fair value of nonvested restricted common shares issued pursuant to the long-term incentive plan; 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 2012, the incremental aggregate grant date fair value of nonvested restricted common shares issued pursuant to the annual incentive program to Messrs. Brain, Silvers, Peterson, Earnest and Hirons was $285,000, $213,750, $132,000, $154,000 and $87,500, respectively.
(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 2012 including amounts relating to personal use of company vehicles, the Company's matching contributions under the Company's 401(k) plan and amounts payable by the Company pursuant to the Company's life insurance plan. See “Long-Term Incentive Plan.”

Name
 
Personal Use of Company Vehicles
 
401(k) Matching Contributions
 
Life Insurance Benefit
 
Total of All Other Compensation
David M. Brain
 
$
6,754

 
$
22,500

 
$
—

 
$
29,254

Gregory K. Silvers
 
14,406

 
17,000

 
123,560

 
154,966

Mark A. Peterson
 
12,804

 
17,000

 
168,824

 
198,628

Morgan G. Earnest II
 
9,157

 
22,500

 
91,770

 
123,427

Michael L. Hirons
 
17,688

 
17,000

 
100,757

 
135,445



33



Grants of Plan-Based Awards in Fiscal 2012
The following table provides information about grants of plan-based awards under equity incentive plans to the Named Executive Officers in 2012. 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
 
David M. Brain
 
2/2/2012
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
36,193

 
$
45.20

 
$
433,592

 
 
2/2/2012
 
—

 
—

 
—

 
—

 
—

 
—

 
43,947

 
—

 
—

 
1,986,404

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gregory K. Silvers
 
2/2/2012
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
12,870

 
45.20

 
154,183

 
 
2/2/2012
 
—

 
—

 
—

 
—

 
—

 
—

 
27,038

 
—

 
—

 
1,222,118

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mark A. Peterson
 
2/2/2012
 
—

 
—

 
—

 
—

 
—

 
—

 
21,258

 
—

 
—

 
960,862

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Morgan G. Earnest II
 
2/2/2012
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
11,387

 
45.20

 
136,416

 
 
2/2/2012
 
—

 
—

 
—

 
—

 
—

 
—

 
23,115

 
—

 
—

 
1,044,798

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Michael L. Hirons
 
2/2/2012
 
—

 
—

 
—

 
—

 
—

 
—

 
8,908

 
—

 
—

 
402,642

 
(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. 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, 2012, as filed with the SEC.



34



Outstanding Equity Awards at 2012 Fiscal Year-End
The following table provides information regarding outstanding awards to the Named Executive Officers that have been granted but not vested or exercised as of December 31, 2012.
 
 
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
David M. Brain (2)
 
40,400

 
—

 
—

 
39.80

 
3/30/2014

 
—

 
—

 
—

 
—

 
 
48,551

 
—

 
—

 
42.01

 
11/16/2015

 
—

 
—

 
—

 
—

 
 
49,144

 
—

 
—

 
42.46

 
1/1/2016

 
—

 
—

 
—

 
—

 
 
45,543

 
—

 
—

 
65.50

 
1/1/2017

 
—

 
—

 
—

 
—

 
 
24,565

 
6,141

 
—

 
47.20

 
1/1/2018

 
—

 
—

 
—

 
—

 
 
105,571

 
35,191

 
—

 
18.18

 
1/1/2019

 
—

 
—

 
—

 
—

 
 
1,226

 
1,224

 
—

 
36.56

 
1/1/2020

 
—

 
—

 
—

 
—

 
 
3,717

 
11,150

 
—

 
45.73

 
1/1/2021

 
—

 
—

 
—

 
—

 
 
—

 
36,193

 
—

 
45.20

 
1/1/2022

 
—

 
—

 
—

 
—

 
 
—

 
—

 
—

 
—

 
—

 
103,913

 
4,791,428

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gregory K. Silvers (3)
 
3,166

 
—

 
—

 
39.80

 
3/30/2014

 
—

 
—

 
—

 
—

 
 
11,753

 
—

 
—

 
42.01

 
11/16/2015

 
—

 
—

 
—

 
—

 
 
6,548

 
—

 
—

 
42.46

 
1/1/2016

 
—

 
—

 
—

 
—

 
 
21,820

 
—

 
—

 
65.50

 
1/1/2017

 
—

 
—

 
—

 
—

 
 
18,474

 
4,618

 
—

 
47.20

 
1/1/2018

 
—

 
—

 
—

 
—

 
 
—

 
15,410

 
—

 
18.18

 
1/1/2019

 
—

 
—

 
—

 
—

 
 
2,398

 
2,397

 
—

 
36.56

 
1/1/2020

 
—

 
—

 
—

 
—

 
 
2,353

 
7,057

 
—

 
45.73

 
1/1/2021

 
—

 
—

 
—

 
—

 
 
—

 
12,870

 
—

 
45.20

 
1/1/2022

 
—

 
—

 
—

 
—

 
 
—

 
—

 
—

 
—

 
—

 
64,262

 
2,963,121

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mark A. Peterson (4)
 
2,167

 
—

 
—

 
42.01

 
11/16/2015

 
—

 
—

 
—

 
—

 
 
219

 
—

 
—

 
42.46

 
1/1/2016

 
—

 
—

 
—

 
—

 
 
9,803

 
—

 
—

 
65.50

 
1/1/2017

 
—

 
—

 
—

 
—

 
 
7,586

 
1,896

 
—

 
47.20

 
1/1/2018

 
—

 
—

 
—

 
—

 
 
—

 
16,950

 
—

 
18.18

 
1/1/2019

 
—

 
—

 
—

 
—

 
 
2,392

 
2,392

 
—

 
36.56

 
1/1/2020

 
—

 
—

 
—

 
—

 
 
2,052

 
6,156

 
—

 
45.73

 
1/1/2021

 
—

 
—

 
—

 
—

 
 
—

 
—

 
—

 
—

 
—

 
48,934

 
2,256,347

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Morgan G. Earnest II (5)
 
15,000

 
—

 
—

 
32.50

 
5/12/2014

 
—

 
—

 
—

 
—

 
 
5,000

 
—

 
—

 
43.75

 
5/11/2015

 
—

 
—

 
—

 
—

 
 
5,000

 
—

 
—

 
41.16

 
5/9/2016

 
—

 
—

 
—

 
—

 
 
2,500

 
—

 
—

 
61.53

 
5/9/2017

 
—

 
—

 
—

 
—

 
 
2,500

 
—

 
—

 
52.72

 
5/7/2018

 
—

 
—

 
—

 
—

 
 
37,500

 
12,500

 
—

 
19.41

 
5/19/2019

 
—

 
—

 
—

 
—

 
 
590

 
590

 
—

 
36.56

 
1/1/2020

 
—

 
—

 
—

 
—

 
 
2,529

 
7,585

 
—

 
45.73

 
1/1/2021

 
—

 
—

 
—

 
—

 
 
—

 
11,387

 
—

 
45.20

 
1/1/2022

 
 
 
 
 
 
 
 
 
 
—

 
—

 
—

 
—

 
—

 
42,192

 
1,945,473

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Michael L. Hirons (6)
 
10,068

 
—

 
—

 
40.55

 
5/1/2016

 
—

 
—

 
—

 
—

 
 
658

 
164

 
—

 
47.20

 
1/1/2018

 
—

 
—

 
—

 
—

 
 
—

 
6,744

 
—

 
18.18

 
1/1/2019

 
—

 
—

 
—

 
—

 
 
124

 
124

 
—

 
36.56

 
1/1/2020

 
—

 
—

 
—

 
—

 
 
441

 
1,321

 
—

 
45.73

 
1/1/2021

 
—

 
—

 
—

 
—

 
 
—

 
—

 
—

 
—

 
—

 
20,961

 
966,512

 
—

 
—


(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, 2012 (the last trading day in the 2012 fiscal year), which was $46.11 per share.
(2)
The unexercisable option awards for Mr. Brain become exercisable according to the following schedule: 54,710 awards vested on January 1, 2013; 13,377 awards will vest on January 1, 2014; 12,764 awards will vest on January 1, 2015; and

35



9,048 awards will vest on January 1, 2016. The restricted common share awards for Mr. Brain granted under the annual incentive plan vest according to the following schedule: 17,870 awards vested on January 1, 2013; 12,172 awards vest on January 1, 2014; and 4,783 awards vest on January 1, 2015. The restricted common share awards for Mr. Brain granted under the long-term incentive plan vest according to the following schedule: 31,084 awards vested on January 1, 2013; 17,668 awards will vest on January 1, 2014; 12,937 awards will vest on January 1, 2015; and 7,399 awards will vest on January 1, 2016.
(3)
The unexercisable option awards for Mr. Silvers become exercisable according to the following schedule: 26,798 awards vested on January 1, 2013; 6,768 awards will vest on January 1, 2014; 5,569 awards will vest on January 1, 2015; and 3,217 awards will vest on January 1, 2016. The restricted common share awards for Mr. Silvers granted under the annual incentive plan vest according to the following schedule: 11,381 awards vested on January 1, 2013; 7,285 awards will vest on January 1, 2014; and 2,993 awards will vest on January 1, 2015. The restricted common share awards for Mr. Silvers granted under the long-term incentive plan vest according to the following schedule: 19,578 awards vested on January 1, 2013; 10,792 awards will vest on January 1, 2014; 7,719 awards will vest on January 1, 2015; and 4,514 awards will vest on January 1, 2016.
(4)
The unexercisable option awards for Mr. Peterson become exercisable according to the following schedule: 22,094 awards vested on January 1, 2013; 3,248 awards will vest on January 1, 2014; and 2,052 awards will vest on January 1, 2015. The restricted common share awards for Mr. Peterson granted under the annual incentive plan vest according to the following schedule: 8,702 awards vested on January 1, 2013; 5,711 awards will vest on January 1, 2014; and 2,353 awards will vest on January 1, 2015. The restricted common share awards for Mr. Peterson granted under the long-term incentive plan vest according to the following schedule: 14,085 awards vested on January 1, 2013; 8,470 awards will vest on January 1, 2014; 6,064 awards will vest on January 1, 2015; and 3,549 awards will vest on January 1, 2016.
(5)
The unexercisable option awards for Mr. Earnest become exercisable according to the following schedule: 5,671 awards vested on January 1, 2013; 12,500 awards will vest on May 19, 2013; 5,670 awards will vest on January 1, 2014; 5,375 awards will vest on January 1, 2015; and 2,846 awards will vest on January 1, 2016. The restricted common share awards for Mr. Earnest granted under the annual incentive plan vest according to the following schedule: 6,945 awards vested on January 1, 2013; 5,194 awards will vest on January 1, 2014; and 2,585 awards will vest on January 1, 2015. The restricted common share awards for Mr. Earnest granted under the long-term incentive plan vest according to the following schedule: 8,390 awards vested on January 1, 2013; 8,390 awards will vest on January 1, 2014; 6,849 awards will vest on January 1, 2015; and 3,839 awards will vest on January 1, 2016.
(6)
The unexercisable option awards for Mr. Hirons become exercisable according to the following schedule: 7,411 awards vested on January 1, 2013; 502 awards will vest on January 1, 2014; and 440 awards will vest on January 1, 2015. The restricted common share awards for Mr. Hirons granted under the annual incentive plan vest according to the following schedule: 4,377 awards vested on January 1, 2013; 2,953 awards will vest on January 1, 2014; and 1,268 awards will vest on January 1, 2015. The restricted common share awards for Mr. Hirons granted under the long-term incentive plan vest according to the following schedule: 5,376 awards vested on January 1, 2013; 3,391 awards will vest on January 1, 2014; 2,321 awards will vest on January 1, 2015; and 1,275 awards will vest on January 1, 2016.

36



Option Exercises and Stock Vested in Fiscal 2012
The following table provides information regarding option exercises by our Named Executive Officers and restricted common shares held by our Named Executive Officers which vested during 2012.
 
 
 
Option Awards
 
Stock Awards
Name
 
Number of  Shares
Acquired
on Exercise
 
Value Realized
on  Exercise (1)
 
Number of  Shares
Acquired
on Vesting (2)
 
Value Realized
on  Vesting (1)
David M. Brain
 
165,638

 
$
3,551,279

 
63,638

 
$
2,781,617

Gregory K. Silvers
 
15,410

 
418,844

 
42,683

 
1,865,674

Mark A. Peterson
 
16,950

 
466,464

 
27,978

 
1,222,918

Morgan G. Earnest II
 
—

 
—

 
8,910

 
389,456

Michael L. Hirons
 
6,475

 
188,590

 
11,101

 
485,225

 
 
 
 
 
 
 
 
 

(1)
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.
(2)
In 2012, Messrs. Brain, Silvers, Peterson, Earnest and Hirons surrendered 27,757, 19,078, 12,262, 3,086, and 5,040 shares, respectively, to pay for tax withholdings.





37



Potential Payments Upon Termination or Change of Control
The following table provides information regarding potential payments upon termination of our Named Executive Officers or a change of control as of December 31, 2012. These payments are provided for in the employment agreements the Company has entered into with each Named Executive Officer, which have been previously filed with the SEC and which are described below.
 
 
 
 
 
 
 
 
 
 
Before Change
in Control
 
After Change in Control
Name
 
Benefit
 
Voluntary
Termination
 
Death
 
Disability
 
Termination
w/o Cause or
for Good
Reason
 
No
Termination
 
Termination
w/o Cause
or for Good
Reason
David M. Brain
 
Cash Severance
 
$
—

 
$
9,478,125

 
$
9,478,125

 
$
9,478,125

 
$
—

 
$
9,478,125

 
 
Health Benefits Continuation (1)
 
—

 
65,187

 
65,187

 
65,187

 
—

 
65,187

 
 
Accelerated Vesting of Options (2)
 
—

 
1,031,746

 
1,031,746

 
1,031,746

 
1,031,746

 
1,031,746

 
 
Accelerated Vesting of Restricted Shares(2)
 
—

 
4,791,428

 
4,791,428

 
4,791,428

 
4,791,428

 
4,791,428

 
 
Excise Tax Gross-up
 
—

 
—

 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gregory K. Silvers
 
Cash Severance
 
—

 
6,523,350

 
6,523,350

 
6,523,350

 
—

 
6,523,350

 
 
Health Benefits Continuation (1)
 
—

 
50,247

 
50,247

 
50,247

 
—

 
50,247

 
 
Accelerated Vesting of Options (2)
 
—

 
467,686

 
467,686

 
467,686

 
467,686

 
467,686

 
 
Accelerated Vesting of Restricted Shares (2)
 
—

 
2,963,121

 
2,963,121

 
2,963,121

 
2,963,121

 
2,963,121

 
 
Excise Tax Gross-up
 
—

 
—

 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mark A. Peterson
 
Cash Severance
 
—

 
4,674,000

 
4,674,000

 
4,674,000

 
—

 
4,674,000

 
 
Health Benefits Continuation (1)
 
—

 
49,279

 
49,279

 
49,279

 
—

 
49,279

 
 
Accelerated Vesting of Options (2)
 
—

 
498,596

 
498,596

 
498,596

 
498,596

 
498,596