Compensation Committee Charter 
Manor Care, Inc.                                            December 2002    


The Compensation Committee is appointed by the Board to discharge the Board’s responsibilities relating to compensation of the company’s executive and other officers. The Committee has overall responsibility for approving and evaluating executive compensation plans, policies and programs of the company.

The Compensation Committee is also responsible for producing an annual report on executive compensation for inclusion in the company’s proxy statement.

Committee Membership

The Compensation Committee shall consist of no fewer than three members. The members of the Compensation Committee shall meet the independence requirements of the New York Stock Exchange. The members of the Compensation Committee shall be appointed by the Board on the recommendation of the Governance Committee. Compensation Committee members may be replaced by the Board.

Committee Authority and Responsibilities

  1. The Compensation Committee shall have the sole authority to retain and terminate any compensation consultant to be used to assist in the evaluation of CEO and other executive compensation and shall have sole authority to approve the consultant’s fees and other retention terms. The Compensation Committee shall also have authority to obtain advice and assistance from internal or external legal, accounting or other advisors.
  2. The Compensation Committee shall annually review and approve corporate goals and objectives relevant to CEO compensation, evaluate the CEO’s performance in light of those goals and objectives, and establish the CEO’s compensation levels based on this evaluation.
  3. The Compensation Committee shall annually review and make awards under incentive-compensation and equity-based plans and approve participation in such programs by executive officers and senior management.
  4. The Compensation Committee shall annually review and approve, for the CEO and the officers of the company, (a) the annual base salary level, (b) the annual incentive awards, (c) the long-term incentive awards, (d) employment agreements, severance arrangements, and change in control agreements/provisions, in each case as, when and if appropriate, and (e) any special or supplemental benefits.
  5. The Compensation Committee shall approve retirement, savings, deferred compensation and similar plans and all perquisites for the CEO and other officers of the company.
  6. The Compensation Committee may form and delegate authority to subcommittees when appropriate.
  7. The Compensation Committee shall make regular reports to the Board.
  8. The Compensation Committee shall review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval. The Compensation Committee shall annually review its own performance.