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Item 9A. Controls and Procedures

2023-02-22 compared with 2022-02-15 · 51 added, 54 removed, 159 unchanged (40% of the section changed)

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Other Information

On February 15, 2023, the Compensation Committee (the “Committee”) of the Board of Directors of the Company approved a performance-based cash award (the “Award”) for Lucinda M.

Baier, the Company’s President and Chief Executive Officer.

The Award was issued outside of the Company’s Amended and Restated 2014 Omnibus Incentive Plan (the “Plan”).

The target amount of the Award of $1,806,667 represented approximately 36.1% of her target long-term incentive compensation awarded for 2023, and the remaining approximately 63.9% was awarded in the form of time-based restricted stock units and performance-based restricted stock units under the Plan generally consistent with the prior year, such that 50% of her aggregate 2023 long-term incentive compensation awards consisted of time-based restricted stock units and the remaining 50% of her aggregate 2023 long-term incentive compensation awards consisted of a combination of performance-based restricted stock units and the performance-based cash Award.

With respect to Ms.

Baier's target Award, approximately 65.4% is eligible to vest on February 27, 2026 and approximately 34.6% is eligible to vest on February 27, 2027, such that, in the aggregate, 75% of Ms.

Baier’s target 2023 performance-based restricted stock unit award and performance-based cash Award is eligible to vest on February 27, 2026 and 25% is eligible to vest on February 27, 2027, in each case subject to continued employment and achievement of performance goals established by the Committee.

The portion of the target Award eligible to vest on February 27, 2026 is divided into three equal tranches, each of which are subject to year-over-year same community RevPAR growth for 2023, 2024 and 2025, respectively.

The portion of the target Award eligible to vest on February 27, 2027 is subject to a relative total stockholder return performance goal for the three year period ending December 31, 2025.

Performance below the threshold level of achievement for a performance goal will result in forfeiture of the target cash amount for the applicable portion of the Award, performance at the targeted level of achievement will result in the vesting of 100% of the applicable target cash amount, and performance at or above the target

level of achievement will result in vesting of up to 150% of applicable target cash amount, with vesting percentages to be interpolated between the levels.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

Directors, Executive Officers and Corporate Governance

To the extent not set forth herein, the information required by this item is incorporated by reference from the discussions under the headings "Election of Directors," "Corporate Governance," and "Executive Officers" in our Definitive Proxy Statement for the 2023 Annual Meeting of Stockholders, to be filed with the SEC by May 1, 2023.

Our Board of Directors has adopted a Code of Business Conduct and Ethics that applies to all employees, directors, and officers, including our principal executive officer, our principal financial officer, our principal accounting officer or controller, or persons performing similar functions, as well as a Code of Ethics for Chief Executive and Senior Financial Officers, which applies to our President and Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, and Treasurer, both of which are available on our website at www.brookdale.com/investor.

Any amendment to, or waiver from, a provision of such codes of ethics granted to a principal executive officer, principal financial officer, principal accounting officer or controller, or person performing similar functions, or to any executive officer or director, will be posted on our website.

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Total $ 5,465,190 — $ 7,786,104

(1) The table above includes 106,612 shares issuable pursuant to vested restricted stock units;

3,411,160 shares potentially issuable pursuant to unvested restricted stock units, including 81,676 shares that may be issued for performance achievement in excess of target;

and 73,837 shares that may be issued pursuant to unvested performance-based restricted stock awards for performance achievement in excess of target.

(1) The table above includes 118,316 shares issuable pursuant to vested restricted stock units and 5,346,874 shares potentially issuable pursuant to unvested restricted stock units, including 540,221 shares that may be issued for performance achievement in excess of target.

Pursuant to SEC guidance, the table above excludes an aggregate of 422,542 shares of unvested restricted stock that were outstanding under our 2014 Omnibus Incentive Plan as of December 31, 2022.

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(2) The number of shares remaining available for future issuance under equity compensation plans approved by security holders consists of 7,750,168 shares remaining available for future issuance under our 2014 Omnibus Incentive Plan, excluding those reported in column (a).

Effective December 31, 2021 the Associate Stock Purchase Plan was terminated.

(3) Represents shares remaining available for future issuance under our Director Stock Purchase Plan.

Under the existing compensation program for the members of our Board of Directors, each non-employee director has the opportunity to elect to receive either immediately vested shares or restricted stock units in lieu of up to 50% of his or her quarterly cash compensation.

Any immediately vested shares that are elected to be received will be issued pursuant to the Director Stock Purchase Plan.

Under the 2022 compensation program for the members of our Board of Directors, each non-employee director had the opportunity to elect to receive either immediately vested shares or restricted stock units in lieu of up to 50% of his or her quarterly cash

compensation.

Any immediately vested shares that were elected to be received were able to be issued pursuant to the Director Stock Purchase Plan.

Under the director compensation program, all cash amounts are payable quarterly in arrears, with payments to be made on April 1, July 1, October 1 and January 1.

Any immediately vested shares that a director elects to receive under the Director Stock Purchase Plan will be issued at the same time that cash payments are made.

The number of shares to be issued will be based on the closing price of our common stock on the date of issuance (i.e., April 1, July 1, October 1 and January 1), or if such date is not a trading date, on the previous trading day's closing price.

Fractional amounts will be paid in cash.

Any immediately vested shares that a director elected to receive under the Director Stock Purchase Plan were to be issued at the same time that cash payments are made.

The number of shares to be issued were to be based on the closing price of our common stock on the date of issuance (i.e., April 1, July 1, October 1 and January 1), or if such date is not a trading date, on the previous trading day's closing price.

Fractional amounts were to be paid in cash.

Beginning in 2023, each non-employee director has the opportunity to elect to receive either immediately vested shares (issued pursuant to the Director Stock Purchase Plan) in lieu of up to 50%, or restricted stock units in lieu of up to 100%, of his or her quarterly cash compensation, consistent with the terms previously described.

In addition, beginning with cash compensation to be earned for 2023 service, each non-employee director will have the opportunity to elect to defer up to 100% of his or her quarterly cash compensation pursuant to the Brookdale Senior Living Inc.

Non-Employee Director Deferred Compensation Plan, which became effective December 12, 2022.

The Board of Directors initially reserved 100,000 shares of our common stock for issuance under the Director Stock Purchase Plan.

Certain Relationships and Related Transactions, and Director Independence

The information required by this item regarding director independence is incorporated by reference from the discussion under the heading "Director Independence" in our Definitive Proxy Statement for the 2022 Annual Meeting of Stockholders, to be filed with the SEC by May 2, 2022.

Certain Relationships and Related Transactions

Our Board of Directors has adopted a written Policy and Procedures with Respect to Related Person Transactions (the "Related Person Policy").

Pursuant to the terms of the Related Person Policy, we will enter into or ratify related person transactions only when the Audit Committee determines that the transaction in question is in, or is not inconsistent with, the best interests of the Company and our stockholders.

The Related Person Policy covers all transactions, arrangements or relationships (or any series of similar transactions, arrangements or relationships) in which the Company (including any of its subsidiaries) was, is or will be a participant and the amount involved exceeds $120,000, and in which any Related Person had, has or will have a direct or indirect material interest.

A "Related Person", as defined in the Related Person Policy, means any person who is, or at any time since the beginning of the Company’s last year was, a director or executive officer of the Company or a nominee to become a director of the Company;

any person who is known to be the beneficial owner of more than 5% of any class of the Company’s voting securities;

any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of the director, executive officer, nominee or more than 5% beneficial owner, and any person (other than a tenant or employee) sharing the household of such director, executive officer, nominee or more than 5% beneficial owner;

and any firm, corporation or other entity in which any of the foregoing persons is employed or is a general partner or principal or in a similar position or in which such person has a 5% or greater beneficial ownership interest.

The Related Person Policy also requires Audit Committee pre-approval of proposed charitable contributions, or pledges of charitable contributions, by the Company to a charitable or non-profit organization for which a Related Person is actively involved in fundraising or otherwise serves as a director, trustee or in a similar capacity.

Except as set forth below, since December 31, 2020, there have not been any related person transactions that are required to be disclosed pursuant to Item 404(a) of Regulation S-K.

("Ventas") holds a warrant (the "Warrant") to purchase 16.3 million shares of our common stock at a price per share of $3.00, which is exercisable at Ventas' option at any time and from time to time, in whole or in part, until December 31, 2025.

We issued the Warrant to Ventas in connection with restructuring our lease arrangements with Ventas on July 26, 2020, as further described in "Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations." Since Ventas has the right to acquire such shares of common stock within 60 days, Ventas is deemed to beneficially own more than 5% of our outstanding common stock under Exchange Act rules and is therefore a Related Person.

We have a long-standing community leasing relationship with Ventas, which is currently our largest lessor.

Accordingly, we have several commercial agreements with Ventas that involve amounts greater than $120,000.

With respect to the period beginning January 1, 2021, such agreements included the following.

• We continued to lease 120 communities and perform ancillary obligations under the Amended and Restated Master Lease and Security Agreement dated July 26, 2020, as amended by Amendment No.

1 dated April 15, 2021 and Amendment No.

2 dated July 12, 2021 (the "Master Lease").

Under the Master Lease, for the year ended December 31, 2021, we paid $101.1 million of cash facility lease payments to Ventas, received $21.5 million of lessor reimbursements from Ventas for capital expenditure projects, and we reimbursed $1.1 million to Ventas for payment of real estate and gross receipts taxes on our behalf.

• During the year ended December 31, 2021, we repaid without interest or penalty the $45.0 million promissory note issued to Ventas in connection with restructuring our lease arrangements with Ventas on July 26, 2020.

During the year, we paid $3.2 million of interest on the note.

• We continued to manage eight communities on behalf of Ventas pursuant to management agreements entered into during or prior to 2020, including five agreements entered into in connection with restructuring our lease arrangements with Ventas on July 26, 2020.

The management agreements provide periodic management fee payments to us as a percentage of revenue and reimbursement for costs and expense related to such communities.

During the year ended December 31, 2021, we received approximately $1.7 million of management fees and were reimbursed for approximately $27.6 million of costs and expenses pursuant to such management agreements.

• Ventas and its permitted transferees are entitled to certain customary registration rights with respect to the Warrant pursuant to the Registration Rights Agreement dated as of July 26, 2020, including underwritten offering, piggyback, and additional demand registration rights with respect to the shares underlying the Warrant.

The Audit Committee has reviewed and approved or ratified the foregoing transactions, including the ongoing obligations thereunder.

Principal Accounting Fees and Services

The information required by this item is incorporated by reference from the discussions under the headings "Certain Relationships and Related Transactions" and "Director Independence" in our Definitive Proxy Statement for the 2023 Annual Meeting of Stockholders, to be filed with the SEC by May 1, 2023.

Principal Accountant Fees and Services

The information required by this item is incorporated by reference from the discussion under the heading "Ratification of Appointment of Independent Registered Public Accounting Firm for 2023" in our Definitive Proxy Statement for the 2023 Annual Meeting of Stockholders, to be filed with the SEC by May 1, 2023.

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Notes to Consolidated Financial Statements

Schedule II – Valuation and Qualifying Accounts

All schedules have been omitted because they are not applicable or are not required, or the required information is included in the Consolidated Financial Statements or the notes thereto.

2.1 Securities Purchase Agreement dated as of February 24, 2021, by and among the Company and certain of its subsidiaries and certain subsidiaries of HCA Healthcare, Inc.

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4.4 Form of 2.00% Convertible Senior Notes due 2026 (included in Exhibit 4.3).

4.5 Indenture, dated as of November 21, 2022, between the Company and American Stock Transfer & Trust Company, LLC, as t rustee (incorporated by reference to Exhibit 4.4 to the Company’s Current Report on Form 8-K filed on November 22, 2022 (File No.

4.6 First Supplemental Indenture, dated as of November 21, 2022, between the Company and American Stock Transfer & Trust Company, LLC, as t rustee (incorporated by reference to Exhibit 4.5 to the Company’s Current Report on Form 8-K filed on November 22, 2022 (File No.

4.7 Form of 10.25 % Sen ior Amortizing Note s due 2025 (included in Exhibit 4.

4.8 Purchase Contract Agreement dated as of November 21 , 2022, between the Company and American Stock Transfer & Trust Company, LLC, as p urchase c ontract a gent, as attorney-in-fact for holders of the purchase contracts referred to therein and as trustee under the indenture referred to therein (incorporated by reference to Exhibit 4.

1 to the Company’s Current Report on Form 8-K filed on November 22, 2022 (File No.

4.9 Form of 7.

0 0% Tangible Equity Unit s (included in Exhibit 4.

4.10 Form of Purchase Contract s (included in Exhibit 4.

4.11 Description of the Company’s 7.00% Tangible Equity Units (including Purchase Contracts and Senior Amortizing Notes).

Letter Agreement dated as of July 26, 2020 by and between the Company and Ventas (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed on August 10, 2020 (File No.

12 unchanged sentences

001-32641)).†

Amendment No.

3 dated effective July 15, 2022 to Amended and Restated Master Lease and Security Agreement by and between certain affiliates of the Company as Tenant and certain subsidiaries of Ventas as Landlord (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on November 8, 2022 (File No.

001-32641)).†

10.2 Master Credit Facility Agreement (Senior Housing) dated as of August 31, 2017, by and between Jones Lang LaSalle Multifamily, LLC and the Company's subsidiaries named as borrowers therein (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q filed on November 7, 2017 (File No.

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Amendment No.

2 to Omnibus Incentive Plan effective January 26, 2022.*

10.5 Form of Restricted Share Agreement under the Omnibus Incentive Plan (2018 Time-Vesting Form) (incorporated by reference to Exhibit 10.47 to the Company's Amendment No.

1 to Annual Report on Form 10-K/A filed on April 24, 2018 (File No.

001-32641)).*

10.6 Form of Restricted Share Agreement under the Omnibus Incentive Plan (2018 Cliff-Vesting Form) (incorporated by reference to Exhibit 10.48 to the Company's Amendment No.

1 to Annual Report on Form 10-K/A filed on April 24, 2018 (File No.

001-32641)).*

10.7 Restricted Share Agreement under the Omnibus Incentive Plan dated as of March 5, 2018 by and between the Company and Lucinda M.

Baier (Time-Vesting) (incorporated by reference to Exhibit 10.50 to the Company's Amendment No.

1 to Annual Report on Form 10-K/A filed on April 24, 2018 (File No.

2 to Omnibus Incentive Plan effective January 26, 2022 (incorporated by reference to Exhibit 10.4.3 to the Company’s Annual Report on Form 10-K filed on February 15, 2022 (File No.

001-32641)).*

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001-32641)).*

10.13 Form of Restricted Stock Unit Agreement under the Omnibus Incentive Plan (2022 Time-Based Form for Executive Officers) (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed on May 6, 2022 (File No.

001-32641)).*

10.14 Form of Restricted Stock Unit Agreement under the Omnibus Incentive Plan (2022 Performance-Based Form for Executive Officers) (incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q filed on May 6, 2022 (File No.

001-32641)).*

10.15 Form of Outside Director Restricted Stock Unit Agreement under the Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed on August 9, 2016 (File No.

001-32641)).*

Amended and Restated Tier I Severance Pay Policy dated February 10 , 2022 .*

10.18 Offer Letter Agreement dated as of September 13, 2021 by and between the Company and Kevin Bowman .*

10.16 Amended and Restated Tier I Severance Pay Policy dated February 10, 2022 (incorporated by reference to Exhibit 10.17 to the Company's Annual Report on Form 10-K filed on February 15, 2022 (File No.

001-32641)) .*

10.17 Form of Severance Letter Under Amended and Restated Tier I Severance Pay Policy dated August 6, 2010 (applicable to Todd Kaestner) (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q filed on August 6, 2010 (File No.

001-32641)) .*

10.18 Offer Letter Agreement dated as of September 13, 2021 by and between the Company and Kevin Bowman (incorporated by reference to Exhibit 10.

18 to the Company's Annual Report on Form 10- K filed on February 15 , 20 22 (File No.

001-32641)) .*

10.19 Form of Indemnification Agreement for Directors and Officers (incorporated by reference to Exhibit 10.16 to the Company's Annual Report on Form 10-K filed on February 28, 2011 (File No.

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333-160354)).*

10.21 Non-Employee Director Deferred Compensation Plan dated December 12, 2022.*

21 Subsidiaries of the Registrant.

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Freed Director February 22, 2023

/s/ Rita Johnson-Mills Director February 15, 2022

Rita Johnson-Mills

/s/ Denise W.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures