Exhibit
10.1


 


July 7, 2010


 


Mr. Kendall
Young


7
Independence Court


Madison,
New Jersey 07940


 


Dear
Kendall:


 


We
are pleased to offer you the position of Executive Vice President at HCP, Inc.  This offer is subject to Board of Directors
and Compensation Committee approval. Your start date will be no later than September 13,
2010.  If you are unable to start by that
date, this offer will be withdrawn. This offer is also contingent upon the
satisfactory completion of a background check and other pre-employment
screenings.   An Authorization and
Disclosure Form is attached for your review and signature. We will notify
you once the pre-employment screenings have been completed.


 


Arrangements
of your employment are as follows:


 


1.               Your base annual
compensation will be $300,000 paid on a semi-monthly basis.  Your position is exempt.


 


2.               Your 2010 bonus will be
payable in cash and, unless you resign or are discharged for misconduct prior
to December 31, 2010, will be $235,000 which is a prorated amount based on
the actual number of days you will have worked during 2010. Thereafter, annual
bonuses are discretionary.   Since
discretionary bonuses are paid both for performance during a year and for
continued active service until the date the bonus is paid, no discretionary
bonus will be paid unless you are still actively employed at the time bonuses
are paid. Bonuses are typically awarded in the first quarter of the year
following the year for which performance is evaluated.


 


3.               Performance and compensation
evaluations are performed on an annual basis.


 


4.               You are eligible for 20 days
of vacation per year, which begin accruing upon employment.   Hours for your initial month will be
pro-rated based upon your start date. 
You will also be eligible to participate in all company programs (e.g.,
indemnification and change in control) generally available to other executive
vice presidents.


 

















 


5.               Upon employment, 18,000
shares of restricted common stock will be awarded to you.  This is a “one-time” grant in the context of
joining HCP.  This stock is subject to a
pro rata five year annual vesting schedule.


 


6.               In the first quarter of
2011, you will be granted a combination of performance based restricted stock
units and stock options with a “value upon grant” of no less than $250,000.  Value upon grant means (i) for
restricted stock units, the closing price of HCP’s common stock on the date of
the grant times the number of shares granted plus (ii) for stock options,
the value as calculated by the Black—Scholes or other similar valuation method
times the number of options granted.  The
equity described in this paragraph is subject to a pro rata five year annual
vesting schedule.


 


7.               On the first of the month
following date of employment (or coincident with the date of employment if such
date is the first business day of the month) you will be eligible to contribute
to the 401(k) Plan and eligible for the following benefits to the extent
provided to regular employees of HCP: medical, dental, vision, life and
disability insurance.  Additionally, on
the first of the month following 90 days of employment, you will be eligible to
participate in the Section 125 Cafeteria Plan’s Health Care &
Dependent Care Flexible Spending Plan. You will become eligible to receive the
company matching contribution for the 40l (k) Plan on the first of the
month following three months of employment.


 


8.               HCP will reimburse you for
actual documented relocation costs as set forth in the attached addendum, but
not to exceed $175,000.  HCP will provide
a reasonable “gross-up” for tax purposes on relocation expenses and such “gross-up”
will not be subject to the $175,000 cap. 
If your employment with HCP terminates for good cause or you resign
within one and a half years of your employment start date, you will be required
to reimburse HCP for your relocation allowance. If not previously utilized,
relocation benefits will expire in their entirety after 18 months from your
start date.


 


You
understand that you will be an employee at will and that you may quit or be
transferred, reassigned, promoted, suspended, demoted and/or discharged at any
time with or without cause and with or without prior notice. No other promises
or representations have been made to you.


 


2

















 


You
represent that by accepting and signing this offer letter and providing
services to HCP, you will not be in breach or violation of any contract or
legal obligation that you may owe to anyone, including any current or former
employer, and you have not and will not now or in the future, by reason of your
employment with HCP breach or violate any contract or legal obligation owed to
anyone, including any current or former employer. If for any reason any of the
foregoing representations are untrue or inaccurate, or become untrue or
inaccurate after your acceptance of this offer letter, then HCP shall have no
further obligations to you.


 


You
will also be required to sign an agreement that any employment dispute will be
subject to arbitration.  Attached is the
agreement for your review.


 


Kendall,
once you have had a chance to review the foregoing, please sign the enclosed
copy of this letter, and return under confidential cover to me.  This offer will expire on July 14, 2010,
if not earlier accepted.


 


	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  Paul Gallagher

  
	
   

  	
  Paul
  Gallagher

  
	
   

  	
  Executive
  Vice President

  
	
   

  	
  Chief
  Investment Officer

  



 


 


I
agree to accept employment with HCP on this basis. I agree that no other
promises or representations have been made to me relating to my employment
other than those set forth in writing above.


 


	
  Accepted
  by:

  	
  /s/
  [ILLEGIBLE]

  	
   

  
	
   

  	
   

  
	
  Dated:

  	
  7/12/2010

  	
   

  
	
   

  	
   

  
	
  Attachments

  	
   

  
				



 


3

















 


Addendum to Offer Letter


Reimbursable Relocation Expenses


 


1.               Movement (packing,
unpacking, transportation and insurance) of household goods and personal
effects.  You may complete your move in 2
shipments provided it is completed within the 18 months from your start date.


 


2.               Transportation of up to two
automobiles.


 


3.               Temporary storage of
household goods and personal effects.


 


4.               To the extent and for the
period after you purchase a primary residence in Southern California, interest
payments and property taxes on your New Jersey residence for up to 12 months
until the earlier of the sale of your New Jersey residence or the date that is
18 months after your start date.  Temporary rental for up to 12 months or
until you acquire a primary residence in California.


 


5.               Commuting (between New
Jersey and Southern California) for 1 one-way trip for your family and up to 4
round-trip flights for you or your wife until the earlier of eighteen months
after your start date or 10 days after the sale of your primary residence.


 


6.               Normal closing costs of
buying and selling primary residences (including broker’s commission, legal,
title, transfer taxes/documentary stamps, survey, recording, notary, credit
report, appraisal and loan origination fees).