SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant x☒ Filed by a Party other than the Registrant ¨☐
Check the appropriate box:
Preliminary Proxy Statement | ||||
Confidential, for Use of the Commission Only (as permitted by Rule14a-6(e)(2)) | ||||
Definitive Proxy Statement | ||||
Definitive Additional Materials | ||||
Soliciting Material Pursuant to | ||||
RED LION HOTELS CORPORATION | ||||
(Name of Registrant as Specified in Its Charter) | ||||
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant) | ||||
Payment of Filing Fee (Check the appropriate box): | ||||
No Fee Required | ||||
Fee computed on table below per Exchange Act Rules14a-6(i)(1) and0-11 |
(1) | Title of each class of securities to which transaction applies:
| |||
| ||||
(2) | Aggregate number of securities to which transaction applies:
| |||
| ||||
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
| |||
| ||||
(4) | Proposed maximum aggregate value of transaction:
| |||
| ||||
(5) | Total fee paid:
| |||
|
Fee paid previously with preliminary materials. | |||||||
Check box if any part of the fee is offset as provided by Exchange Act Rule0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |||||||
(1) | Amount previously paid:
| ||||||
| |||||||
(2) | Form, Schedule or Registration Statement No.:
| ||||||
| |||||||
(3) | Filing Party:
| ||||||
| |||||||
(4) | Date Filed:
| ||||||
|
April 20, 201619, 2019
Dear Shareholder:
You are cordially invited to attend the 20162019 Annual Meeting of Shareholders of Red Lion Hotels Corporation at 9:00 a.m. EDTPDT on Tuesday, May 24, 2016.21, 2019 in Seattle. The meeting will be held at the Hotel RL Baltimore Inner Harbor, 207 E. Redwood St., Baltimore, MD 21202.offices of Davis Wright Tremaine, 920 Fifth Avenue, Suite 3300, Seattle, WA 98104.
The accompanying Notice of 20162019 Annual Meeting of Shareholders and Proxy Statement describe the matters to be presented at the meeting. In addition, management will speak on our developments of the past year and respond to comments and questions of general interest to shareholders.
It is important that your shares be represented and voted whether or not you plan to attend the annual meeting in person. You may vote by completing and mailing the enclosed proxy card or the form forwarded by your bank, broker or other holder of record. Voting by written proxy will ensure your shares are represented at the meeting.
Sincerely, |
Robert G. Wolfe |
Chairman of the Board |
IMPORTANT
A proxy statement and proxy card are enclosed. All shareholders are urged to complete and mail the proxy card promptly. The enclosed envelope for return of the proxy card requires no postage. Any shareholder of record attending the meeting may personally vote on all matters that are considered, in which event the signed proxy will be revoked.
IT IS IMPORTANT THAT YOUR STOCK BE VOTED.
RED LION HOTELS CORPORATION
NOTICE OF 20162019 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 24, 201621, 2019
To the Shareholders of Red Lion Hotels Corporation:
The 20162019 Annual Meeting of Shareholders of Red Lion Hotels Corporation will be held at 9:00 a.m. EDTPDT on Tuesday, May 24, 201621, 2019 at the Hotel RL Baltimore Inner Harbor, 207 E. Redwood St., Baltimore, MD 21202,offices of Davis Wright Tremaine, 920 Fifth Avenue, Suite 3300, Seattle, WA 98104, for the following purposes:
(1) | Election of nine individuals to the Board of Directors; |
(2) | Approval of an amendment to the Company’s 2015 Stock Incentive Plan to increase the number of shares of Common Stock authorized for issuance under the Plan by 1,250,000 shares; |
(3) | Ratification of the selection of BDO USA, LLP as our independent registered public accounting firm for |
2019;
(4) | Advisory(non-binding) vote |
(5) | Transaction of such other business as may properly come before the meeting and any adjournments thereof. |
The foregoing items of business are more fully described in the proxy statement accompanying this notice.
The Board of Directors has fixed March 31, 201629, 2019 as the record date for the meeting. Only shareholders of record at the close of business on that date will be entitled to notice of and to vote at the meeting.
Please submit a proxy as soon as possible so that your shares can be voted at the meeting in accordance with your instructions. For specific instructions on voting, please refer to the proxy card or the information provided by your bank, broker or other holder of record. Even if you vote your proxy, you may still vote in person if you attend the meeting. Please note, however, that if your shares are held of record by a bank, broker or other holder of record and you wish to vote in person at the meeting, you must obtain a proxy issued in your name from the bank, broker or other holder of record.
By Order of the Board of Directors
|
Thomas L. McKeirnan |
Secretary |
Spokane, WashingtonDenver, Colorado
April 20, 201619, 2019
The 20152018 Annual Report of Red Lion Hotels Corporation accompanies this proxy statement.
Important Notice Regarding the Availability of Proxy Materials for the
Shareholder Meeting to Be Held on May 24, 201621, 2019::
The Notice of Meeting, Proxy Statement, Proxy Card and 20152018 Annual Report
are available at http:https://investor.shareholder.com/rlhcorp/annuals-proxies.cfmrlhcorp.gcs-web.com/annual-reports-and-proxies..
TABLE OF CONTENTS
(continued)
ii
RED LION HOTELS CORPORATION
201 West North River Drive,1550 Market Street, Suite 100350
Spokane, Washington 99201Denver, Colorado 80202
20162019 PROXY STATEMENT
INFORMATION CONCERNING VOTING AND SOLICITATION
The enclosed proxy is solicited on behalf of the Board of Directors (the “Board”) of Red Lion Hotels Corporation, a Washington corporation, for use at the 20162019 Annual Meeting of Shareholders to be held at 9:00 a.m. EDTPDT on Tuesday, May 24, 2016,21, 2019, and at any adjournments thereof. The meeting will be held at the Hotel RL Baltimore Inner Harbor, 207 E. Redwood St., Baltimore, MD 21202.offices of Davis Wright Tremaine, 920 Fifth Avenue, Suite 3300, Seattle, WA 98104.
Proxies are solicited to give all shareholders of record an opportunity to vote on matters properly presented at the meeting. This proxy statement and the accompanying proxy card are first being mailed on or about April 20, 201619, 2019 to all shareholders entitled to vote at the meeting.
You are entitled to vote at the meeting if you were a holder of record of our common stock, $.01 par value, at the close of business on March 31, 2016.29, 2019. Your shares may be voted at the meeting only if you are present in person or represented by a valid proxy.
For the ten days prior to the meeting, a list of shareholders entitled to vote at the meeting will be available during ordinary business hours for examination by any shareholder, for any purpose germane to the meeting, at our principal executive office at 201 West North River Drive,1550 Market Street, Suite 100, Spokane, Washington 99201.350, Denver, Colorado 80202. This list will also be available at the meeting.
At the close of business on March 31, 2016,29, 2019, there were 20,131,36324,626,459 shares of our common stock outstanding and entitled to vote. A majority of the outstanding shares of our common stock, present in person or represented by proxy, will constitute a quorum at the meeting.
Proxy Card and Revocation of Proxy
You may vote by completing and mailing the enclosed proxy card. If you sign the proxy card but do not specify how you want your shares to be voted, your shares will be voted by the proxy holders named in the enclosed proxy (i) “FOR”“FOR” election of the nine director nominees named below; (ii) “FOR”“FOR” approval of an amendment to our 2015 Stock Incentive Plan to increase the number of shares authorized for issuance under the plan by 1,250,000 shares; (iii) “FOR” ratification of the selection of BDO USA, LLP as our independent registered public accounting firm for 2016; (iii) “FOR” approval of the 2016 RLHC Executive Officers Bonus Plan;2019; and (iv) “FOR”“FOR” approval, on an advisory basis, of the compensation of our named executive officers. If one or more of the director nominees should become unavailable for election prior to the meeting, an event that currently is not anticipated by the Board, the proxies may be voted in favor of the election of a substitute nominee or nominees proposed by the Board.
The proxy holders named in the enclosed proxy are authorized to vote in their discretion on any other matters that may properly come before the meeting or any adjournments thereof. At the time this proxy statement went to press, management was not aware of any matter that may properly be presented for action at the meeting other
1
than those described in this proxy statement. In addition, no shareholder proposal or director nomination was received on a timely basis, so no such other matters may be brought to a vote at the meeting.
If you vote by proxy, you may revoke that proxy at any time before it is voted at the meeting. Shareholders of record may revoke a proxy by delivering a written notice of revocation or a duly executed proxy bearing a later date to our Secretary at our principal executive office at 201 West North River Drive,1550 Market Street, Suite 100, Spokane, Washington 99201,350, Denver, Colorado 80202, or by attending the meeting and voting in person. Attendance at the meeting will not, by itself, revoke a proxy. If your shares are held in the name of a broker, bank or other holder of record, you may change your vote by submitting new voting instructions to that holder of record. Please note that if your shares are held of record by a broker, bank or other holder of record and you decide to attend the meeting, you may vote at the meeting only if you present a legal proxy issued in your name from that holder of record.
Shareholders of record as of the close of business on March 31, 201629, 2019 are entitled to one vote for each share of our common stock held on all matters to be voted upon at the meeting. You may vote by attending the meeting and voting in person or by completing and mailing the enclosed proxy card or the form forwarded by your bank, broker or other holder of record. If your shares are held by a bank, broker or other holder of record, please refer to the instructions they provide for voting your shares. All shares entitled to vote and represented by properly executed proxies that are received before the polls are closed at the meeting and are not revoked or superseded will be voted at the meeting in accordance with the instructions indicated on those proxies. YOUR VOTE IS IMPORTANT.
All votes will be tabulated by the inspector of election appointed for the meeting, who will separately tabulate affirmative and negative votes, abstentions and brokernon-votes. Shares held by persons attending the meeting but not voting, shares represented by proxies that reflect abstentions on one or more proposals and brokernon-votes will be counted as present for purposes of determining a quorum.
Abstentions on any of the proposals under consideration at the annual meeting will generally not count as votes “cast”. A brokernon-vote occurs when a bank, broker or other holder of record holding shares for a beneficial owner does not receive voting instructions from the beneficial owner and does not have (or elects not to exercise) discretionary authority to vote the shares without such instructions. The effect of abstentions and brokernon-votes on each of the proposals on the agenda for the annual meeting is discussed below in the sections discussing those proposals.
We will bear the expense of preparing, printing and distributing proxy materials to our shareholders. We will also furnish copies of the proxy materials to banks, brokers and other holders of record holding in their names shares of our common stock that are beneficially owned by others, so that the proxy materials can be forwarded to those beneficial owners. We will reimburse these banks, brokers and other holders of record for costs incurred in forwarding the proxy materials to the beneficial owners.
2
ELECTION OF DIRECTORS
Under our Articles of Incorporation andBy-Laws, the Board consists of from three to 13thirteen directors, as determined from time to time by resolution of the Board. The number of directors that currently constitutes the Board is nine.
At the recommendation of the Nominating and Corporate Governance Committee, the Board has nominated all nine of our current directors for election at the annual meeting existing directors Ted Darnall, James P. Evans, Amy E. Humphreys, Joseph B. Megibow, Gregory T. Mount, Bonny W. Simi, Michael Vernon, and Robert G. Wolfe, each to hold office for a term expiring at next year’s annual meeting.
Each share of common stock is entitled to one vote for each of the nine nominees. Cumulative voting is not permitted. With respect to each nominee, shares may be voted “FOR”, “AGAINST” or “ABSTAIN”. Unless otherwise directed, it is the intention of the proxy holders named in the enclosed proxy to vote the proxies received by them “FOR” the election of the nine nominees. If any nominee should become unavailable for election prior to the meeting, an event that currently is not anticipated by the Board, the proxies will be voted in favor of the election of a substitute nominee or nominees proposed by the Board or the number of directors may be reduced accordingly. Each nominee has agreed to serve if elected and the Board has no reason to believe that any nominee will be unable to serve.
We have adopted majority voting procedures for the election of directors in uncontested elections. If a quorum is present, a nominee for election to a position on the Board will be elected as a director if the votes cast for the nominee exceed the votes cast against the nominee. The term of any incumbent director who does not receive a majority of votes cast in an election held under the majority voting standard terminates on the earliest to occur of the following:
90 days after the voting results of the election are determined;
the date on which the Board selects another individual to fill the position; or
the effective date of the director’s resignation.
The following will not be considered votes cast and will not count towards the election of any director nominee:
a share whose ballot is marked as abstain;
a share otherwise present at the meeting but for which there is an abstention;
a share otherwise present at the meeting as to which a shareholder of record gives no authority or direction; and
brokernon-votes.
Because an abstention from voting for a nominee is not treated as a vote cast, it will have no effect on the election of the nominee. Brokers do not have discretionary authority to vote in the election of directors. If a broker holding shares for a beneficial owner does not receive instructions from the beneficial owner on how to vote in the election, the broker will submit anon-vote. Because a brokernon-vote is not treated as a vote cast, it will have no effect on the election of the nominee.
Set forth below is biographical information for each nominee. There are no family relationships among any of the nominees or among any of the nominees and our executive officers.
3
Nominees for Election at the Annual Meeting
Raymond R. BrandstromTed Darnall,age 63, has been a director since November 2009. Since January 2013, he has been an employee of Columbia Pacific Management, Inc.61, a company that has some common ownership with Columbia Pacific Opportunity Fund, LP, one of our major shareholders. From January 2010 until December 2012, Mr. Brandstrom’s primary occupation was as an advisor to Emeritus Corporation. Mr. Brandstrom was one of Emeritus’s founders and served on its board of directors from its inception in 1993 until May 2013. From September 2007 to December 2009, he served as its Executive Vice President—Finance, Secretary and Chief Financial Officer. He had previously served at Emeritus in various capacities, including as its President and Chief Operating Officer. Mr. Brandstrom served as President of Columbia Pacific Group, Inc. and Columbia Pacific Management, Inc. From May 1992 to May 1997, Mr. Brandstrom also served as Vice President and Treasurer of Columbia Winery, a company that is engaged in the production and sale of table wines. Mr. Brandstrom adds outstanding operational and financial acumenappointed to the Board on July 31, 2018.Mr. Darnall is a30-year veteran of the hospitality industry. Since April 2015, he has served as wellCEO of HEI Hotels and Resorts Lodging and Technical Services Company, the company responsible for all of HEI lodging services, management, design, renovation and technical services, and served as the Chief Operating Officer of HEI Hotels and Resorts from October 2006 to April 2015. Prior to joining HEI Hotels and Resorts, Mr. Darnall was with Starwood Hotels and Resorts Worldwide for 10 years where he held various executive positions, including Chief Operating Officer of experience in real estate developmentStarwood Lodging Corporation, President of North America Operations and asmost recently, President of Starwood Real Estate Group. Prior to joining Starwood, Mr. Darnall was with Interstate Hotels and Resorts for over 14 years, reaching the position of Senior Vice President, Operations. Darnall began his hospitality career with Marriott International, where he held a public company director and chief financial officer.number of management positions.
James P. Evans, age 69,72, has been a director since December 2012. Mr. Evans served as our Interim President and Chief Executive Officer from August 2013 to January 2014. From 2011 to 2012, he served as the Chief Executive Officer of Brand USA, the nation’s first public-private global marketing effort to promote the United States as the world’s premier travel destination. He previously served as the Chief Executive Officer of Ardent Hotel Advisors from 2005 to 2011, as Chief Executive Officer of Jenny Craig, Inc. from 2003 to 2005 and as Chief Executive Officer of Best Western International, Inc. from 1998 to 2002. He has also held executive management positions in operations for DoubleTree Hotel Corporation and Hyatt Hotels and Resorts. Mr. Evans brings nearly 40 years of hospitality, hotel and brand management expertise to the Board.
Enrico Marini FicheraAmy E. Humphreys, age 47,52, was appointed to the Board on July 31, 2018. Ms. Humphreys is a financial expert who has served inC-Level roles as both a CEO and CFO, with over 25 years of experience in manufacturing, commodities, global marketing and distribution in the seafood, dairy and petroleum industries. From May 2015 until November 2018, Ms. Humphreys was the Chief Financial Officer of Darigold, one of the largest dairy cooperatives in the United States. Prior to joining Darigold, Ms. Humphreys served as Chief Executive Officer and President of Icicle Seafoods, Inc. from February 2013 to May 2015, as President of Delta Western, Inc. from 2008 until 2013, as Chief Financial Officer of North Star Utilities Group from 2006 to 2008, and served in various executive roles at American Seafoods Group from 1995 to 2006, including as the Vice President of Finance and Vice President of Corporate Development. She is a former C.P.A. in the state of Washington, launching her career at Arthur Anderson.
Joseph B. Megibow, age 50, has been a director since June 2015. The Board appointed himMarch 2017. Mr. Megibow has been at the forefront of the commercial internet ande-commerce since the early 1990s, and brings 25 years of experience in technology and business. He currently serves as a director,board advisor to Joyus, Inc. an online retailer, Clicktale, Ltd., a customer experience platform and Digital Mortar, anin-store analytics platform. Most recently, Mr. Megibow served as President at Joyus. From 2012 to 2015, he served as SVP/Chief Digital Officer at American Eagle Outfitters (AEO), where he had responsibility for the direct businesses, omni-channel technology, digital marketing, analytics, and customer service. Prior to AEO, Mr. Megibow worked for six years at Expedia, Inc. in a series of roles culminating as VP and GM of Expedia.com, where he had responsibility for marketing, merchandising, and operations in the United States. During this time, he launched Expedia’s mobile business and was named Chairman of Mobiata, an Expedia, Inc. company. In 2000, Mr. Megibow was an original employee of TeaLeaf Technology, now an IBM company. He has nominated him for reelectionalso held roles at Ernst & Young Management Consulting and EDS in their Advanced Technology Group. Mr. Megibow was recognized in 2011 as Practitioner of the meeting, as requiredYear by the terms of an Investor Agreement that we entered intoDigital Analytics Association and is now Director Emeritus after serving 4 years on June 15, 2015, with HNA RLH Investments LLC (the “Investor”), a Delaware limited liability company that is a wholly owned, indirect subsidiary of HNA Group Co., Limited (“HNA”), and with its affiliate, HNA Investment Management LLC, a Delaware limited liability company, in connection with the Investor’s purchase on that date of 2,987,343 shares of our common stock from Columbia Pacific Opportunity Fund, LP.
Mr. Marini Fichera has served as the Head of Investments for HNA Group North America LLC, an HNA company, since October 2014. From August 2008 to September 2014, he was the Senior Portfolio Manager and Principal at CHF Investment Management L.P. (“CHF”), a Beijing-based US $250 million growth capital fund. Mr. Marini Fichera has been involved in China since 2005 and has over 15 years of information technology, financial services, media, telecom, consumer & retail, industrials, energy (including clean energy) and infrastructure experience.DAA Board. He has worked on various private equity investments and M&A transactions with a total value greater than $30 billion. Prior to joining CHF, he worked for Deutsche Bank Securities Inc., Morgan Joseph & Co., Capital IQ Inc. (one of the original members that developed Capital IQ Inc.), Warburg Dillon Read (now UBS), and Lazard Frères & Co. Mr. Marini Fichera received an M.B.A. in FinanceMBA from New York University’s Sternthe University of Chicago Booth School of Business and B.S. degreesa BS in MechanicalElectrical Engineering and Mathematics from ColumbiaCornell University.
David J. Johnson, age 69, has been a director since December 2012. Most recently, Mr. Johnson served from 1997 to 2005 as Chairman and Chief Executive Officer of KinderCare Learning Centers, Inc. From 1991 to 1996, Mr. Johnson served as Chairman, President, and Chief Executive Officer of Red Lion Hotels, Inc. Earlier in his career, he served as President, Chief Operating Officer and Director of Dillingham Holdings and President and Chief Executive Officer of Cal Gas Corporation. Mr. Johnson is currently a member of the board of directors of Grand Canyon Education, Inc. Mr. Johnson brings nearly 30 years of executive management experience to the Board along with significant industry expertise and brand experience as the former CEO of Red Lion Hotels, Inc.
Melvin L. Keating,age 69, has been a director since July 2010 and served as Chairman of the Board from May 2013 through May 2015. Since November 2008, Mr. Keating has been a private consultant, providing investment advice and other services to private equity firms. Mr. Keating also serves as a director of API Technologies Corp., where he is Chairman of the Audit Committee and a member of both the Compensation and Nominating/Corporate Governance Committees; Agilysys Inc., where he is Chairman of the Compensation Committee and a member of the Nominating/Corporate Governance Committee; and Modern Systems Inc. (formerly BluePhoenix Solutions Ltd.). Since 2010, Mr. Keating has also served as a director of the following companies: Bitstream Inc., Crown Crafts Inc., InfoLogix, Inc., Integral Systems, Inc. and White Electronic Designs Corp. Mr. Keating holds a B.A. degree from Rutgers University, as well as an M.S. in Accounting and an M.B.A in Finance, both from The Wharton School of the University of Pennsylvania. Mr. Keating’s experience as an executive and as a board member of other public companies, together with his real estate and financial acumen, are of great value in his role as a director of our company.
Gregory T. Mount, age 55,58, has been a director since November 2014. Mr. Mount joined our company as President and Chief Executive Officer in January 2014. From November 2009 to January 2014, he served as President of Richfield Hospitality, Inc., a hotel management company based in Denver, Colorado. From January 2007 to November 2009, he served as a Senior Vice President of Acquisitions at Sage Hospitality Resources,
4
LLC, a hotel management, investment and development company. From 1998 to 2006, Mr. Mount held various senior development and operations positions with Starwood Hotels & Resorts Worldwide, Inc. From 1990 to 1998, he served in several management positions at Interstate Hotels & Resorts, Inc. From 1982 to 1990, he worked in various operational roles at Marriott International, Inc. In early 2011, a staffing services company operated by Mr. Mount’s wife filed a petition for reorganization under federal bankruptcy laws. That case was administratively consolidated with a second reorganization case filed by the Mounts, who had personally guaranteed the commercial loan used to acquire the company. A joint plan of reorganization was confirmed in the fall of 2011, and in 2012 orders were entered finding both cases fully administered and discharging the individual debtors.
R. Carter Pate,age 64, was nominated for election at the 2019 Annual Meeting of Shareholders. Mr. Pate currently serves as Interim Chief Executive Officer at The Providence Service Corporation, a position he has held since November 15, 2017. He is the Founder and Chief Executive Officer of Carter Pate, LLC, a consulting firm he founded in 2014, which serves as a leading resource for Boards of Directors seeking expertise in restructuring management, regulatory compliance, growth and margin strategies and critical business insights to drive consistent results. From 2011 to 2014, Mr. Pate served as the Chief Executive Officer of MV Transportation, Inc. Prior to joining MV, he served in various roles for Pricewaterhousecoopers LLC from 1996 to 2011, including Global and U.S. Managing Partner, Healthcare and Government Price, US Managing Partner, Advisory Line of Service and US Managing Partner, Corporate Restructuring Partner. Mr. Pate has been the Chairman of the Board of BioScrip, Inc. (Nasdaq: BIOS) since 2015 and previously served as its Audit Committee Chair, and is a Director of Advanced Emissions Solutions, Inc. (Nasdaq: ADES) since 2016 where he also serves on the audit committee. Since 2015 he has been a member of the Texas Lieutenant Governor’s Advisory Transportation Committee and a Board Member of the National Association of Corporate Directors. Mr. Pate holds certifications as a Certified Public Accountant in Texas, a Certified Forensic Public Accountant, a Certified Government Financial Manager, a Certified Insolvency Reorganization Accountant, a Certified Turnaround Professional and a Certified Fraud Examiner (inactive). He is aco-author of The Phoenix Effect: Nine Revitalizing Strategies No Company Can Do Without, originally published in 2002 and translated into five languages. Mr. Pate holds a Masters in Accounting and Information Management from the University of Texas at Dallas, and a BS in Accounting from Greensboro College.
Bonny W. Simi,age 57, has been a director since March 2017. Ms. Simi brings more than 25 years of operations, human resources and technology experience to the Board. She is currently President of JetBlue Technology Ventures, the venture capital subsidiary of JetBlue Airways, and Vice President Technology Innovations at JetBlue Airways. From 2011 to 2015, she was Vice President of Talent for the airline, overseeing talent acquisition, performance management, succession planning, people analytics and organizational development. She has been employed at JetBlue Airways since 2003, and has also held operational, leadership and financial roles in Airports, System Operations, Call Center Operations and Flight Operations. Prior to JetBlue, she was an airline pilot at United Airlines from 1990 to 2003. Ms. Simi is also a three time Olympic athlete in the sport of luge (1984, 1988 and 1992), served on the Board of Directors for the U.S. Olympic Committee from 1984 to 1996, and was a network commentator in the 1994, 1998 and 2002 Olympics. She has an undergraduate degree in Communications from Stanford University, a MS in management from the Stanford Graduate School of Business and a MS in Management Science and Engineering from the Stanford Engineering School. She also has a MS in Management and Human Resources from Regis University.
Michael Vernon, age 69,72, has been a director since December 2012. Mr. Vernon served as the Chief Financial Officer of Zulily, Inc. from 2011 to 2012. He served as Chief Financial Officer of Big Fish Games, Inc. from 2009 to 2011, as Chief Financial Officer of Zumobi, Inc. from 2007 to 2008 and as Chief Financial Officer of aQuantive, Inc. from 2000 to 2006. Prior to these roles, Mr. Vernon was the Chief Financial Officer and Chief Operating Officer at Park Plaza International, where he helped the company transform from a franchisor into a manager ofhigh-end hotels. From 1995 to 1997, he was the Chief Financial Officer of Red Lion Hotels, Inc. Mr. Vernon brings more than 25 years of domestic and international experience in corporate finance, M&A, investor communications, and strategic development to the Board.
Alexander Washburn, age 46, is a managing member and co-founder of Columbia Pacific Advisors LLC. He has been involved in all phases of the firm’s development since its founding in 2006 and sits on each of the firm’s investment committees. Prior to founding Columbia Pacific Advisors, Mr. Washburn was a partner and portfolio manager at Summit Capital Management, a Northwest-based multi-strategy investment manager. He is a director of Winemakers Investment Properties, Freehold Corporation, SST Group, and Northeast Wireless Networks. He is also a trustee and member of the Board of Directors of the Seattle Aquarium. Mr. Washburn holds a B.A. from the University of Washington with a concentration in Finance.
5
Robert G. Wolfe, age 59,62, has been a director since December 2012 and has served as Chairman of the Board since May 2015. Mr. Wolfe brings more than 30 years of experience in investment banking, finance and investment management to the Board, including significant executive management and director-level experience. Since 2008, Mr. Wolfe’s primary activity has been to serve as president of Windy Point, LLC, a private investment firm. From 2002 to 2008, he was a partner at Northwest Venture Associates, a venture capital fund that invested exclusively in companies based in the Pacific Northwest (“NWVA”). Northwest Venture Partners III, L.P. (NVP III), one of the venture capital funds managed by NWVA, was a small business investment company administered by the U.S. Small Business Administration (SBA). Mr. Wolfe was an investor in the limited liability company that owned the general partner of NVP III. Due to the recession in 2008 and other factors, the SBA elected to exercise rights that resulted in the assets of NVP III being placed in receivership in June 2009. From 1999 to 2002, Mr. Wolfe was President and Chief Operating Officer of Toronto-based GT Group Telecom, which was Canada’s largest independent local exchange carrier. Mr. Wolfe has significant experience in finance and investment banking, including working at Goldman Sachs from 1987 to 1995. He also serves as a director of Symetra Financial Corporation and Toyota AI Ventures, and was a director of Darigold, Inc. through September 2017. He is also an owner and Managing Member of Phillips Real Estate Services, LLC.
The Board recommends a vote “FOR” each of the nine nominees.
6
Director and Director Nominee Qualifications; Diversity
Our Nominating and Corporate Governance Committee assists the Board in reviewing the business and personal background of each of our directors with respect to our company’s business and business goals. The committee generally considers diversity as one of several factors relating to overall composition when making nominations to our Board. While we do not have a formal policy governing how diversity is considered, the committee generally considers diversity by examining the entire Board membership and, when making nominations to our Board, by reviewing the diversity of the entire Board. The committee construes Board diversity broadly to include many factors. As a result, the committee strives to ensure that our Board is composed of individuals with a variety of different opinions, perspectives, personal, professional and industry experience, backgrounds, skills and expertise.
In addition to the qualities described previously in the individual biographies, the following matrix summarizes the skills and attributes of our director nominees for 20162019 that we believe are essential to our business:
James Evans | Robert Wolfe | |||||||||||||||||||||||||||||||||||||||
Senior leadership/CEO/COO experience | ✓ | ✓ | ||||||||||||||||||||||||||||||||||||||
Business development experience | ✓ | ✓ | ||||||||||||||||||||||||||||||||||||||
Financial expertise/CFO | ✓ | ✓ | ✓ | ✓ | ||||||||||||||||||||||||||||||||||||
Outside public board experience | ✓ | ✓ | ||||||||||||||||||||||||||||||||||||||
Independence | ✓ | |||||||||||||||||||||||||||||||||||||||
| ✓ | ✓ | ||||||||||||||||||||||||||||||||||||||
Hotel and travel industry experience | ✓ | ✓ | ✓ | ✓ | ||||||||||||||||||||||||||||||||||||
Marketing/sales expertise | ✓ | ✓ | ✓ | ✓ | ||||||||||||||||||||||||||||||||||||
Government expertise | ✓ | ✓ | ||||||||||||||||||||||||||||||||||||||
Mergers | ✓ | ✓ | ||||||||||||||||||||||||||||||||||||||
Demonstrated integrity- personal and professional | ✓ | ✓ | ||||||||||||||||||||||||||||||||||||||
Real estate expertise | ✓ | |||||||||||||||||||||||||||||||||||||||
Franchising expertise | ✓ | ✓ | ✓ | ✓ | ||||||||||||||||||||||||||||||||||||
Digital marketing and analytics expertise | ✓ | ✓ | ✓ | |||||||||||||||||||||||||||||||||||||
Technology expertise | ✓ | ✓ | ✓ | ✓ |
We have concluded that all of our director nominees have the skills, experience, knowledge and personal attributes that are necessary to effectively serve on our Board and to contribute to the overall success of our company. We believe that the diverse backgrounds of these nominees will ensure that we have a Board that has a broad range of industry-related knowledge, experience and business acumen.
7
APPROVAL OF AN AMENDMENT TO THE 2015 STOCK INCENTIVE PLAN
The Red Lion Hotels Corporation 2015 Stock Incentive Plan was approved by the shareholders on May 20, 2015, and amended by a First Amendment to 2015 Stock Incentive Plan on February 8, 2017 (the “2015 Plan”). The 2015 Plan permits us to grant stock options, restricted stock, RSUs, performance awards and stock appreciation rights to our employees, consultants and directors. A total of 2,900,000 shares of our common stock are currently authorized for issuance under the 2015 Plan, of which up to 1,000,000 shares are authorized for issuance during any single calendar year pursuant to awards of restricted stock and restricted stock units. As of April 1, 2019 there were 363,785 shares that remained available for issuance pursuant to future awards under the plan.
Subject to shareholder approval, the Board has adopted an amendment (the “Second Amendment”) that will modify the plan to increase the number of shares of common stock authorized for issuance under the plan by 1,250,000 shares to 4,150,000 shares. 650,000 of these new shares will be issued to certain executives in the form ofnon-qualified stock options, with four year performance vesting, as described more fully under thePlan Benefits Table below. The Second Amendment also makes minor amendments to the 2015 Plan to delete language that references certain provisions contained in Section 162(m) of the Internal Revenue Code relating to performance-based compensation which were repealed effective January 1, 2018.
Reasons for Amendment
When adopted, a total of 1,400,000 shares of common stock were allocated to the 2015 Plan. On February 8, 2017, the Board approved, subject to shareholder approval, an amendment to the 2015 Plan to increase the shares available for issuance under the Plan by 1,500,000 shares to 2,900,000. On May 25, 2017, our shareholders approved the First Amendment to the 2015 Plan to increase the number of shares authorized to be issued under the 2015 Plan to 2,900,000. As stated above, there are currently 363,785 shares remaining available for issuance pursuant to future awards under the plan as of April 1, 2019. The Company believes this amount is not sufficient for future grants beyond 2019 in light of our compensation structure and strategy of granting incentive compensation that rewards “pay for performance.”
Our Board believes that the granting of equity awards is a critical component of our executive compensation program. Long-term equity incentives focus our executives on the behaviors within their control that they believe are necessary to ensure our company’s long-term success, as reflected in increases in our stock price over a period of years, and allow us to align the interests of our executives with those of our shareholders. Therefore, it is important that an appropriate number of shares of stock be authorized for issuance under the Plan.
When deciding on the number of shares to be available for awards under the Plan, our Board, along with our Compensation Committee, considered a number of factors, including the number of shares currently available under the Plan, our past share usage (“burn rate”), the number of shares needed for future grants (including the 650,000 options granted conditional upon approval of the Second Amendment by our shareholders), competitive data from relevant peer companies, the dilutive effect of the additional shares, input from our shareholders and the advice of our compensation consultants, Mercer and PayGovernance. As described in CD&A below, Mercer has provided our Compensation Committee with design and goal setting assistance for our long-term incentive compensation programs, including the granting of equity awards. PayGovernance was retained in late 2018 to assist the Compensation Committee with executive compensation matters for 2019, and provided advice regarding the terms and vesting conditions of the 650,000 stock options described below.
Based on our current equity award practices and compensation philosophy, we estimate that the total authorized shares under the Plan after the Second Amendment will be sufficient to provide us with the ability to grant equity awards through 2020. This is only an estimate, and events that are currently unknown to us could cause the shares authorized under our Plan to be used more quickly or more slowly than we estimate. These circumstances
8
include, but are not limited to, the future price of our common stock, payout of performance-based awards in excess of target in the event of superior performance, future hiring activity, and promotions during the next few years.
For these reasons, the Board recommends a vote “FOR” the approval of the amendment to the 2015 Stock Incentive Plan to increase the number of shares of common stock authorized for issuance by 1,250,000 shares to a total of 4,150,000 shares.
A copy of the proposed Second Amendment is attached to this Proxy Statement asAppendix C. The following summarizes the terms of the 2015 Plan, as proposed to be amended by the Second Amendment.
Summary of Terms
Purposes. The purposes of the 2015 Plan are (a) to enable us to obtain and retain the services of the types of employees, consultants and directors who will contribute to our long-term success, and (b) to provide incentives that are linked directly to increases in share value, which will inure to the benefit of all of our shareholders.
Administration. The 2015 Plan will be administered by the Compensation Committee unless the Board delegates administration to a different committee of the Board or decides to administer the 2015 Plan itself.
The 2015 Plan also gives our President and Chief Executive Officer (CEO) the authority to select employees other than executive officers to receive restricted stock units (RSUs) and to determine the number of RSUs that these employees will receive, provided that the number of shares underlying RSUs granted by the CEO in any single calendar year cannot exceed 50,000 shares and all RSUs granted by the CEO must vest in equal annual increments over a period of four years.
Types of Awards. The 2015 Plan provides for the following types of awards: stock options, restricted stock, RSUs, performance awards and stock appreciation rights.
Stock Subject to the 2015 Plan. Subject to adjustment in the event of stock splits, stock dividends and similar events, a maximum of 4,150,000 shares of common stock are authorized for issuance under the 2015 Plan. Subject to such adjustment, during any single calendar year, awards of restricted stock and RSUs may be made with respect to no more than 1,000,000 shares of common stock. Any shares of common stock that are subject to an award that expires or terminates, or that are reacquired pursuant to the forfeiture provisions of any award, will be available for issuance in connection with future grants of awards under the 2015 Plan. If any payment required in connection with an award is satisfied through the tendering or withholding of shares of common stock, those shares of common stock will not revert to and will not become available to be issued again under the Plan. Shares of common stock that are subject to tandem awards will be counted only once.
Eligibility to Receive Awards. Awards may be granted under the 2015 Plan to those officers, directors and employees of our company and its subsidiaries that the plan administrator from time to time selects. Awards may also be made to certain consultants who provide services to our company and its subsidiaries. On March 31, 2019, there were approximately 411 employees, officers, directors and consultants of our company and its subsidiaries who are currently eligible to receive awards under the 2015 Plan. However, it is anticipated that awards under the 2015 Plan would be granted primarily to our executive officers and a limited number of other employees of our company.
Terms and Conditions of Stock Option Grants. Options granted under the 2015 Plan may be “incentive stock options” (as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”)) or “nonqualified stock options.” The exercise price for each option granted under the 2015 Plan will be determined by the plan administrator, but will not be less than 100% of the common stock’s fair market value on the date of grant. For purposes of the 2015 Plan, “fair market value” means the closing selling price for the common stock on the New York Stock Exchange on the date of grant of the option.
9
The exercise price for shares purchased under options must be paid in cash, unless the plan administrator authorizes payment by (a) tendering shares of common stock already owned by the option holder, (b) delivering a copy of instructions to a broker directing the broker to sell the common stock for which the option is exercised and to remit to us the aggregate exercise price of such option, or (c) such other legal consideration as the plan administrator may find acceptable. Options granted under the 2015 Plan may not contain a “reload” feature automatically entitling the holder to receive an additional option upon exercise of the original option.
The option term will be fixed by the plan administrator but, in the case of an incentive stock option, may not be more than ten years. The plan administrator may specify a vesting schedule pursuant to which an option will be exercisable, but if not so specified the option will vest at the rate of 25% per year. The plan administrator may also specify the circumstances under which an option will be exercisable in the event the optionee ceases to provide services to our company or one of its subsidiaries. If not so specified, the portion of an option that is vested and exercisable on the date of termination of services will generally be exercisable for three months after that date, but in no event may an option be exercised after the expiration of its term. An option will not be exercisable following termination of an optionee’s services for cause, as defined in the 2015 Plan.
Incentive stock options will be subject to certain other limitations prescribed by the Code and set forth in the 2015 Plan.
Restricted Awards. The plan administrator may make awards of “restricted stock,” which are actual shares of common stock, or “restricted stock units” or RSUs, which are awards that have a value equal to a specified number of shares of common stock issuable in the future. The plan administrator will determine the terms and conditions of restricted awards. These terms and conditions may change from time to time and need not be identical, but each restricted award will include the substance of each of the following, to the extent applicable:
Purchase Price. The purchase price for the restricted award, if any, which may be stated as cash, property or services.
Consideration. The cash consideration, if any, that must be paid for common stock acquired pursuant to the restricted award.
Vesting. The “restricted period” during which the common stock or the right to acquire the common stock will be forfeited if specified restrictions or conditions for the restricted award are not satisfied.
Termination of Service. What will happen to the restricted award if the participant’s service terminates for any reason (unless otherwise specified, the unvested portion of the restricted award will be forfeited).
Restrictions on Transferability. Any restrictions on transferability to which the restricted award is subject.
Performance Awards. A performance award is an award entitling the recipient to acquire cash, actual shares of common stock or hypothetical common stock units having a value equal to the fair market value of an identical number of shares of common stock upon the attainment of specified performance goals. The plan administrator will determine whether and to whom performance awards will be made, the performance goals applicable under each award, the periods during which performance is to be measured, and all other limitations and conditions applicable to the awarded cash or shares. Performance goals will be based on apre-established objective formula or standard that specifies the manner of determining the amount of cash or the number of shares under the performance award that will be granted or will vest if the performance goal is attained. Performance goals will be determined by the plan administrator and may be based on one or more business criteria that apply to a participant, a business unit or our company and its affiliates. Such business criteria may include, by way of example, revenue, earnings before interest, taxes, depreciation and amortization (EBITDA), funds from operations, funds from operations per share, operating income,pre-tax orafter-tax income, cash available for distribution, cash available for distribution per share, net earnings, earnings per share, return on equity, total
10
shareholder return, return on assets, return on capital, economic value added, share price performance, improvements in our attainment of expense levels, implementing or completion of critical projects, or improvement in cash-flow (before or after tax). The plan administrator will determine the circumstances under which a performance award will be payable if the service of a participant terminates. If not so established, the performance award will automatically terminate upon termination of the participant’s service for any reason.
Stock Appreciation Rights. The plan administrator is authorized to make awards of stock appreciation rights with respect to specified shares of common stock. A stock appreciation right will entitle the holder to receive any increase in the fair market value of the shares subject to the award over their fair market value at the time of grant of the award. The 2015 Plan contains detailed rules designed to prevent stock appreciation rights, if granted, from having adverse tax consequences under Section 409A of the Code.
Transferability. Except as otherwise determined by the plan administrator, no award granted under the 2015 Plan may be assigned or otherwise transferred by the holder other than by will or the laws of descent and distribution and, during the holder’s lifetime, awards may be exercised only by the holder.
Shareholder Rights; Dividends.No participant in the plan receiving an Award shall be deemed to be the holder of, or have any of the rights of a holder with respect to, any shares of Common Stock subject to an Award unless and until such participant has satisfied all requirements for exercise of the Award pursuant to its terms and no adjustment shall be made for any dividends (ordinary or extraordinary, whether in cash, securities or other property) or distributions of other rights for which the record date is prior to the date the Common Stock certificate is issued.
Adjustment of Shares. If any change is made in the common stock subject to the 2015 Plan or subject to any award through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or other transaction not involving the receipt of consideration by our company, then certain changes will be made as specified in the 2015 Plan to the number and/or class of shares available for awards, the number and/or class of shares covered by outstanding awards, the maximum number of shares of common stock with respect to which performance-based awards may be granted to any single participant during any single calendar year; the maximum number of shares of common stock that may be subject to restricted stock or RSUs awarded during any calendar year; and the exercise price of awards in effect prior to such change.
Corporate Transaction. In the event of a change in control (as defined in the 2015 Plan) or any other corporate separation or division, merger or consolidation in which our company is not the surviving entity, or a reverse merger in which our company is the surviving entity but the shares of common stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, the plan administrator is given broad discretion under the 2015 Plan to, among other things, continue outstanding awards with appropriate modifications, substitute new awards for outstanding awards, or cancel outstanding awards in consideration for certain payments.
If there are one or more continuing awards following a change in control, and the service of a participant holding one or more such awards is terminated without cause within a period of one year following the consummation of the change in control, or if the participant voluntarily terminates his or her service for good reason (as defined in the 2015 Plan) during such period, then (a) the vesting and exercisability of all outstanding options held by the participant will accelerate in full; (b) the end of the restricted period for all outstanding restricted awards held by the participant will accelerate, and all restrictions and conditions of the restricted awards will lapse or be deemed satisfied, as the case may be; (c) the vesting of all outstanding performance awards held by the participant will accelerate in full; and (d) all outstanding stock appreciation rights held by the participant will become exercisable in full.
Other Acceleration of Awards. The plan administrator in its discretion may provide, either in the award agreement for an award or by a subsequent determination, for acceleration of the vesting and exercisability of the
11
award at any time, or in the case of a restricted award for acceleration of the end of the restricted period at any time (in which event all restrictions and conditions of the restricted award shall lapse or be deemed satisfied, as the case may be).
Amendment, Termination and Term. The Board may terminate or amend the 2015 Plan, subject to shareholder approval in certain instances, as set forth in the 2015 Plan. If not earlier terminated, the 2015 Plan will automatically terminate on April 6, 2025. The plan administrator may amend the terms of any award outstanding under the 2015 Plan, prospectively or retroactively. The amendment or termination of the 2015 Plan or the amendment of an outstanding award under the 2015 Plan may not, without a participant’s consent, impair the participant’s rights or increase the participant’s obligations under his or her award or create or increase the participant’s federal income tax liability with respect to an award.
Plan Benefits Table
On April 1, 2019, the Compensation Committee of the Board approved the grant ofnon-qualified stock options with performance vesting (“PSOs”) to the following executives, conditional upon shareholder approval of the Second Amendment: A grant of up to 500,000non-qualified stock options to Gregory T. Mount and a grant of up to 150,000 to Thomas L. McKeirnan. The PSOs will vest on May 21, 2023, in the event the executives have achieved prior to such date the specified performance goals described in each executive’s grant agreement. The performance goals are based upon total shareholder return (TSR) measured for the Company as compared to a defined set of Russell 3000 comparison companies in the hotels, resorts and cruise line industries. The comparison companies include: Marriot International, Inc., Carnival Corporation, Royal Caribbean Cruises, Ltd., Hilton Worldwide Holdings, Inc., Norwegian Cruise Line Holdings, Inc., Hyatt Hotels Corporation, Wyndham Hotels & Resorts, Inc., Marriott Vacations Worldwide Corporation, Choice Hotels International, Inc., Wyndham Destinations, Inc., Extended Stay America, Inc., Hilton Grand Vacations, Inc., and Lindblad Expedition Holdings, Inc.
All 500,000 shares granted to Mr. Mount and all 150,000 shares granted to Mr. McKeirnan will vest if the Company’s relative TSR over the four year performance period is at or above the 75th percentile of the comparison group. If the TSR is in the 50th percentile, 520,000 stock options (400,000 to Mount and 120,000 to McKeirnan) will vest, and if the TSR is at the 25th percentile, 260,000 stock options (200,000 to Mount and 60,000 to McKeirnan) will vest, with results between the 25th and 50th and the 50th and 75th percentiles interpolated on a straight line basis. If the TSR is less than the 25th percentile, no options will vest. The PSOs will have a seven year term, and have an exercise price of $8.33 per share, the closing price reported on the New York Stock Exchange on the date of grant.
We are not providing a new plan benefits table for any of the other awards that may be made to executives ornon-executive employees under the 2015 Plan, as amended by the Second Amendment, because all such other awards will be discretionary.
12
The following table shows the grants that will be made from the 2015 Plan if the Second Amendment described herein is approved by shareholders:
Name and Position | Number of Shares Underlying Options (1) | Dollar Value ($) | ||||||
Gregory T. Mount | 500,000 | N/A | ||||||
Thomas L. McKeirnan | 150,000 | N/A | ||||||
Executive Group(2) | 650,000 | |||||||
Non-Executive Director Group (3) | (3 | ) | 70,000 per fiscal year | |||||
Non-Executive Officer Employee Group (2) | — | — |
(1) | The number of shares shown above represents the maximum grant available if the performance objectives for these awards are met or exceeded over the vesting period. The options will be issued on May 21, 2019, the date of the annual meeting, in the event the Second Amendment is approved. |
(2) | Awards granted under the 2015 Plan to our executive officers and other employees are discretionary and are not subject to set benefits or amounts under the terms of the 2015 Plan, and our Board and our Compensation Committee have not granted any other awards under the 2015 Plan conditional upon shareholder approval of Proposal 2, other than the 650,000 PSOs described above. Accordingly, the benefits or amounts that will be received or allocated to our executive officers and other employees under the 2015 are not determinable. |
(3) | Pursuant to ournon-employee director compensation policy, each of our currentnon-employee directors is eligible to receive a quarterly grant of RSUs equal to $17,500 in shares of our common stock, based on the closing market price on the regularly scheduled quarterly payment date, therefore, the number of shares is not determinable at this time. For additional information regarding our compensation policy fornon-employee directors, see the “Director Compensation” section in this Proxy Statement. |
U.S. Federal Income Tax Consequences
The following briefly describes the U.S. federal income tax consequences of the 2015 Plan, as amended by the Second Amendment, generally applicable to our company and to participants who are U.S. citizens.
Stock Options
Nonqualified Stock Options. A participant will not recognize taxable income upon the grant of anon-qualified stock option. Upon the exercise of anon-qualified stock option, a participant will recognize taxable ordinary income equal to the difference between the fair market value of the shares on the date of exercise and the option exercise price. When a participant sells the shares, the participant will have short-term or long-term capital gain or loss, as the case may be, equal to the difference between the amount the participant received from the sale and the tax basis of the shares sold. The tax basis of the shares generally will be equal to the greater of the fair market value of the shares on the exercise date or the option exercise price.
Incentive Stock Options. A participant will not recognize taxable income upon the grant of an incentive stock option. If a participant exercises an incentive stock option during employment or within three months after his or her employment ends (12 months in the case of disability), the participant will not recognize taxable income at the time of exercise (although the participant generally will have taxable income for alternative minimum tax purposes at that time as if the option were anon-qualified stock option). If a participant sells or exchanges the shares after the later of (a) one year from the date the participant exercised the option and (b) two years from the
13
grant date of the option, the participant will recognize long-term capital gain or loss equal to the difference between the amount the participant received in the sale or exchange and the option exercise price. If a participant disposes of the shares before these holding period requirements are satisfied, the disposition will constitute a disqualifying disposition, and the participant generally will recognize taxable ordinary income in the year of disposition equal to the excess, as of the date of exercise of the option, of the fair market value of the shares received over the option exercise price (or, if less, the excess of the amount realized on the sale of the shares over the option exercise price). Additionally, the participant will have long-term or short-term capital gain or loss, as the case may be, equal to the difference between the amount the participant received upon disposition of the shares and the option exercise price increased by the amount of ordinary income, if any, the participant recognized.
With respect to bothnon-qualified stock options and incentive stock options, special rules apply if a participant uses shares already held by the participant to pay the exercise price or if the shares received upon exercise of the option are subject to a substantial risk of forfeiture by the participant.
Restricted Awards. Upon receipt of a stock award that is not subject to restrictions, a participant generally will recognize taxable ordinary income in an amount equal to the excess of the fair market value of the shares at such time over the amount, if any, that the participant pays for the shares. If a participant receives a restricted stock award, the participant generally will recognize taxable ordinary income when the shares cease to be subject to restrictions in an amount equal to the excess of the fair market value of the shares at such time over the amount, if any, that the participant pays for the shares. However, no later than 30 days after a participant receives the restricted stock award, the participant may elect to recognize taxable ordinary income in an amount equal to the fair market value of the shares at the time of receipt. Provided that the election is made in a timely manner, when the restrictions on the shares lapse, the participant will not recognize any additional income. When a participant sells the shares, the participant will have short-term or long-term capital gain or loss, as the case may be, equal to the difference between the amount the participant received from the sale and the tax basis of the shares sold. The tax basis of the shares generally will be equal to the amount, if any, paid by the participant for the shares plus the amount of taxable ordinary income recognized by the participant at the time of grant, in the case of a stock award that is not subject to restrictions, or at the time the restrictions lapsed (or at the time of election, if an election was made by the participant), in the case of a restricted stock award. If the participant forfeits the shares subject to a restricted stock award (e.g., upon the participant’s termination prior to expiration of the restricted period), the participant may not claim a deduction with respect to the income recognized as a result of the election. Any dividends paid with respect to shares of vested restricted stock generally will be taxable as ordinary income to the participant at the time the dividends are received.
A participant who receives RSUs will generally recognize taxable ordinary income only when the shares of common stock associated with those units are issued to the participant. The amount of income will be the excess of the fair market value of the shares at the time of issuance over any amount paid to our company by the participant with respect to the award.
Performance Awards. A participant will generally not recognize taxable income upon the grant of a performance award unless the award results in the deferral of compensation and fails to satisfy the requirements of Section 409A of the Code (see — Code Section 409A). Upon the distribution of cash, shares or other property to a participant pursuant to the terms of a performance award, the participant will recognize taxable ordinary income equal to the excess of the amount of cash or the fair market value of any property transferred to the participant over any amount paid by the participant with respect to the award.
Stock Appreciation Rights. A participant will generally not recognize taxable income upon the grant of a stock appreciation right unless the award results in the deferral of compensation and fails to satisfy the requirements of Section 409A of the Code (see — Code Section 409A). Upon the distribution of cash, shares or other property to a participant upon exercise of the right, the participant will generally recognize taxable ordinary income equal to the amount of cash or the fair market value of any property transferred to the participant upon such exercise.
14
Tax Consequences to our Company. In the foregoing cases, our company generally will be entitled to a deduction at the same time and in the same amount as a participant recognizes ordinary income, subject to the limitations imposed under Section 162(m) of the Code.
Code Section 409A. To the extent that any awards or payments under the 2015 Plan result in the deferral of compensation for purposes of Section 409A of the Code, the design of the 2015 Plan is intended to satisfy the requirements of Code Section 409A with respect to such deferred compensation. In the event, however, that the 2015 Plan fails to meet such requirements with respect to a particular award or payment to a participant, Code Section 409A requires that all of the participant’s deferred compensation under the plan be immediately includible in the participant’s gross income, and, regardless of the circumstances leading to the plan’s failure to meet those requirements, that the participant be subject to a 20% additional tax on this income and an interest penalty at the underpayment rate used by the Internal Revenue Service plus one percent for the period beginning with the date of deferral. In the taxable year that a participant recognizes income on his or her deferred amounts, we will be entitled to a deduction equal to the amount of income recognized by the participant except to the extent that amount, when aggregated with the executive officer’s other compensation for that year that is subject to Section 162(m) of the Code, exceeds $1 million.
Tax Withholding. We may require a participant to pay us the amount of any income, employment or other taxes that we are required to withhold with respect to the grant, vesting, exercise, payment or settlement of any award granted under the 2015 Plan. The plan administrator may, in its discretion and subject to the 2015 Plan and applicable law, permit the participant to satisfy withholding obligations, in whole or in part, by paying cash, by electing to have us withhold shares of common stock (up to the minimum required federal tax withholding rate) or by transferring shares of common stock already owned by the participant and held by the participant for the period necessary to avoid a charge to our earnings for financial accounting purposes. We are authorized to withhold from any award granted under the 2015 Plan or from any cash amounts otherwise due or to become due from us to the participant. We may also deduct from any award any other amounts that the participant owes us. Shares of common stock withheld by us to pay any income, employment or other taxes do not revert to and are not available again for issuance under the Plan.
Equity Compensation Plan Information
The following table provides information as of December 31, 2018 about plans under which equity securities of our company may be issued to employees, directors or consultants.
(a) | (b) | (c) | ||||||||||
Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted- Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) | ||||||||||
Equity Compensation Plans Approved by Security Holders: | ||||||||||||
2006 Stock Incentive Plan (1) | — | $ | — | — | ||||||||
2015 Stock Incentive Plan (2)(3) | 81,130 | $ | 8.20 | 990,854 | ||||||||
2008 Employee Stock Purchase | — | — | 302,075 | |||||||||
|
|
|
| |||||||||
Total | 81,130 | $ | 8.20 | 1,292,929 | ||||||||
|
|
|
|
15
(1) | Excludes 166,445 unvested restricted stock units granted under the 2006 Stock Incentive Plan. |
(2) | Excludes 1,439,857 unvested restricted stock units granted under the 2015 Stock Incentive Plan. |
(3) | Excludes the additional securities that will be available if the proposed Second Amendment to the 2015 Plan is approved. |
Approval Requirements
Each share of common stock is entitled to one vote on Proposal 2 and will be given the option to vote “FOR” or “AGAINST” the proposal or to “ABSTAIN.” Unless otherwise directed, it is the intention of the proxy holders named in the enclosed proxy to vote the proxies received by them “FOR” this proposal.
Proposal 2 will be approved if the number of votes cast in favor of the proposal exceeds the number of votes cast against the proposal. An abstention is a vote cast under current NYSE rules, and, as a result, abstentions will have the effect of a vote “AGAINST” this proposal.
Brokers do not have discretionary authority to vote on Proposal 2. If a broker holding shares for a beneficial owner does not receive instructions from the beneficial owner on how to vote on this proposal, the broker will submit anon-vote. A brokernon-vote is not a vote cast under current NYSE rules, and, as a result, brokernon-votes will have no impact on the outcome of this proposal.
The Board recommends a vote “FOR” the approval of the Amendment to the 2015 Stock Incentive Plan.
16
PROPOSAL 3
RATIFICATION OF SELECTION OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board has selected BDO USA, LLP to serve as our independent registered public accounting firm for 20162019 and has further directed that this selection be submitted for ratification by our shareholders at the annual meeting. BDO USA, LLP has audited our financial statements since 2001. Representatives of the firm are expected to be present at the meeting, will have the opportunity to make a statement if they desire to do so, and are expected to be available to respond to appropriate questions from shareholders.
Shareholder ratification of the selection of BDO USA, LLP as our independent registered public accounting firm is not required by ourBy-Laws or otherwise. However, the Board is submitting the selection of the firm to the shareholders for ratification as a matter of good corporate practice. If the shareholders fail to ratify the selection, the Audit Committee will reconsider whether or not to retain that firm. Even if the selection is ratified, the Audit Committee in its discretion may select a different accounting firm at any time during the year if the Audit Committee determines that such a change would be in our best interests and that of our shareholders.
Each share of common stock is entitled to one vote on the proposal to ratify the selection of BDO USA, LLP and will be given the option to vote “FOR” or “AGAINST” the proposal or to “ABSTAIN.” Unless otherwise directed, it is the intention of the proxy holders named in the enclosed proxy to vote the proxies received by them “FOR” this proposal.
Brokers will have discretionary authority to vote on Proposal 2.3. If a broker holding shares for a beneficial owner does not receive instructions from the beneficial owner on how to vote on this proposal, we anticipate that the broker will vote “FOR” this proposal. Therefore, there should be no brokernon-votes on this proposal.
Proposal 23 will be approved if the number of votes cast in favor of the proposal exceeds the number of votes cast against the proposal. Abstentions from voting will have no impact on the outcome of this proposal.
The Board recommends a vote “FOR” ratification of the selection of BDO USA, LLP.
APPROVAL OF THE 2016 RLHC EXECUTIVE OFFICERS BONUS PLAN17
We are asking our shareholders to approve the 2016 RLHC Executive Officers Bonus Plan, which is intended to increase shareholder value and the success of our company by motivating eligible executives to achieve our financial, strategic and operating objectives in order to be eligible to earn a cash bonus. If the plan is approved by our shareholders, that approval should permit us to receive a full federal income tax deduction for compensation (if any) paid under the plan that qualifies as “performance-based compensation” under Section 162(m) of the Internal Revenue Code of 1986, as amended, or Section 162(m). Our Compensation Committee approved the plan on March 28, 2016, subject to the approval of our shareholders at the annual meeting. Our Board unanimously recommends that our shareholders approve the plan.
Shareholder approval is not required for our company to be able to offer bonuses or other cash incentives to its employees. However, under Section 162(m), our company may not receive a federal income tax deduction for compensation (including bonuses) paid to our President and Chief Executive Officer, or CEO, or any of our next three most highly compensated executive officers other than our chief financial officer) to the extent that any of these persons receives total compensation of more than $1 million in any one year. Notwithstanding that general rule, if the compensation qualifies as “performance-based” under Section 162(m), we may be eligible to receive a full federal income tax deduction for the compensation, even if total compensation to an affected executive otherwise is more than $1 million during a single year. The plan allows us to pay cash incentive compensation that is intended to be performance-based and therefore potentially fully tax deductible for federal income tax purposes under current law. In order for the potential cash compensation to qualify as performance-based, the plan under which the compensation is paid must (among other things) be approved by shareholders. Therefore, we are asking shareholders to approve the 2016 RLHC Executive Officers Bonus Plan at the annual meeting. If shareholders do not approve the plan, it will be terminated. However, if that happens, we may choose to pay bonuses or other incentives outside of the plan, which payments, if any, may not be deductible.
A copy of the 2016 RLHC Executive Officers Bonus Plan is attached to this Proxy Statement as Appendix C. The following summarizes the terms of the plan and does not purport to be fully descriptive. Please refer to Appendix C for more detailed information about the plan. The statements made in this Proxy Statement
regarding the plan should be read in conjunction with and are qualified in their entirety by reference to the complete terms of the plan.
Purpose
The purpose of the 2016 RLHC Executive Officers Bonus Plan is to increase shareholder value and the success of our company by motivating eligible executives to achieve our company’s financial, strategic, and operating objectives. The plan provides executives with the ability to earn cash incentive awards for the achievement of goals relating to the performance of our company, its departments and the individual executives.
Eligibility to Participate
Our CEO together with the individuals who were executive vice presidents of our company at the beginning of 2016 are the only persons eligible to participant in the plan.
Target Bonuses Awards and Performance Goals
The plan provides for potential bonuses for our CEO and our executive vice presidents. The target bonuses under the plan (“Target Bonuses”) are 75% of 2016 base salary for our CEO and 50% of 2016 base salary for each of the other executives.
Bonuses under the plan will be based on the following three performance goals:
Achievement of at least 90% of our 2016 budgeted adjusted earnings before interest, taxes, depreciation and amortization (“Budgeted Adjusted EBITDA”).
Achievement of a departmental goal based on our 2016 earnings per share.
Achievement of an individual goal that has been specified by the Compensation Committee for each executive. The individual goals are based on one or more of the following business criteria: gross operating profit; revenues from group business; RevPar growth; increase in RevPar index; development of tools to measure guest experience; and addition of franchised and managed hotels to our system of hotels.
Actual Awards
To determine bonuses under the plan, the EBITDA goal will be weighted 80% and each of the other two goals will be weighted 10%. No bonus will be payable under the plan unless the ratio (“EBITDA Goal Achievement”) of (i) our actual adjusted EBITDA for 2016, to (ii) Budgeted Adjusted EBITDA exceeds 90%.
If the EBITDA Goal Achievement percentage is 150% or higher, an executive will be entitled to a payout equal to:
twice his Target Bonus (“Maximum Payout”), if the executive achieves both his department and individual goals;
90% of the Maximum Payout, if the executive only achieves one of his department and individual goals; or
80% of the Maximum Payout, if the executive achieves neither his department nor his individual goal.
If the EBITDA Goal Achievement percentage is 100%, an executive will be entitled to a payout equal to:
his Target Bonus, if the executive achieves both his department and individual goals;
90% of his Target Bonus, if the executive only achieves one of his department and individual goals; or
80% of his Target Bonus, if the executive achieves neither his department nor his individual goal.
The plan specifies other payout amounts that will apply if the EBITDA Goal Achievement percentage is between 90% and 100% or between 100% and 150%.
Any payments due under the plan will be made to participants as soon as administratively possible following the end of 2016. A participant must be employed by us at the time of payment in order to receive a payout. All payments under the plan are subject to previous approval by the Compensation Committee. Bonuses otherwise payable under the plan may be deferred, partially paid or withheld in their entirety if the Compensation Committee determines that to be in the best interests of our company.
The plan provides that a participant who receives a bonus under the plan will be required to repay the bonus to the extent required by (i) any “clawback” or recoupment policy adopted by our company to comply with the requirements of any applicable laws, rules or regulations, or (ii) any applicable law, rule or regulation that imposes mandatory recoupment.
The Compensation Committee also may choose to pay bonuses or other compensation to plan participants outside of the 2016 RLHC Executive Officers Bonus Plan on terms established by the Compensation Committee from time to time. Any such bonuses or other compensation may not qualify as performance-based under Section 162(m).
Administration
Our Compensation Committee will administer the 2016 RLHC Executive Officers Bonus Plan with the assistance of our Director of Compensation and Benefits, our Senior Vice President, Human Resources, and our chief financial officer.
Tax Effects of the Plan
The 2016 RLHC Executive Officers Bonus Plan is intended to permit the payment of bonuses that qualify as “performance-based” compensation under Section 162(m). Under Section 162(m), our company may not receive a federal income tax deduction for compensation paid to our CEO, or any of our next three most highly compensated executive officers other than our chief financial officer, to the extent that any of these persons receives more than $1 million in any one year. However, “performance-based” compensation that qualifies under Section 162(m) is exempt from this $1 million limitation. The plan allows us to pay cash incentive compensation that is intended to be performance-based and therefore potentially fully tax deductible on our company’s federal income tax return (subject to future changes in tax laws and other circumstances). We also may choose to pay other or additional compensation outside of the plan that is not intended to qualify as performance-based compensation (and that, therefore, may not be tax deductible for our company). For example, base salaries do not qualify as performance-based compensation and any bonuses paid outside of the plan likely would not qualify as performance-based compensation.
Amendment and Termination of the Plan
The Compensation Committee has the right to cancel, change, modify or interpret any and all provisions of the plan at any time without notice.
Bonuses Paid to Certain Individuals and Groups
Awards, if any, under the plan are determined based on actual future performance. As a result, future actual awards cannot now be determined. The following table sets forth the Target Bonus and Maximum Bonus potentially payable to each of the participants:
2016 RLHC Executive Officers Bonus Plan
Name and Position | Target Bonus ($)(1) | Maximum Bonus ($)(1) | ||||||
Gregory T. Mount | ||||||||
President and Chief Executive Officer | 369,750 | 739,500 | ||||||
William J. Linehan | ||||||||
Executive Vice President, , Chief Marketing Officer | 160,325 | 320,650 | ||||||
Thomas L. McKeirnan | ||||||||
Executive Vice President, General Counsel and Corporate Secretary | 139,637 | 279,273 | ||||||
Harry G. Sladich | ||||||||
Executive Vice President, Hotel Operations and Sales | 127,213 | 254,426 | ||||||
All executive officers, as a group (4 persons) (2) | 796,925 | 1,593,849 | ||||||
Non-Executive Director Group (3) | — | — | ||||||
Non-Executive Officer Employee Group (3) | — | — |
Vote Required
Each share of common stock is entitled to one vote on Proposal 3 and will be given the option to vote “FOR” or “AGAINST” the proposal or to “ABSTAIN.” Unless otherwise directed, it is the intention of the proxy holders named in the enclosed proxy to vote the proxies received by them “FOR” this proposal.
Brokers do not have discretionary authority to vote on Proposal 3. If a broker holding shares for a beneficial owner does not receive instructions from the beneficial owner on how to vote on this proposal, the broker will submit a non-vote.
Proposal 3 will be approved if the number of votes cast in favor of the proposal exceeds the number of votes cast against the proposal. Abstentions from voting and broker non-votes will have no impact on the outcome of this proposal.
The Board recommends a vote “FOR” approval of the 2016 RLHC Executive Officers Bonus Plan.
ADVISORY VOTE ONTO APPROVE EXECUTIVE COMPENSATION
As required by Section 14A of the Securities Exchange Act of 1934, the Board is submitting a separate resolution, to be voted on by shareholders in anon-binding vote, to approve on an advisory basis the executive compensation of our named executive officers. The text of the resolution is as follows:
“RESOLVED, that the shareholders approve, on an advisory basis, the compensation of the named executive officers as disclosed in this proxy statement under the captions “Compensation Discussion and Analysis” and “Executive Compensation”.
As described in this proxy statement under Compensation Discussion and Analysis, our compensation program is designed to focus executives on the achievement of specific annual and long-term goals. We structure the goals to align executives’ interests with those of shareholders by rewarding performance that maintains and improves shareholder value.
The following features of the compensation structure reflect this approach:
Our executive compensation program has both short- and long-term components.
The annual cash incentive component focuses on one or more specific performance goals and allows for discretionary compensation based on performance not otherwise measured by the goals.
Our agreements with executives generally do not contain guarantees for salary increases,non-performance-based bonuses or equity compensation.
The Board believes that the current executive compensation program properly focuses our executives on the achievement of specific annual, long-term and strategic goals. The Board also believes that this program properly aligns the executives’ interests with those of shareholders.
Shareholders are urged to read the Compensation Discussion and Analysis section of this proxy statement, which discusses in greater detail how our compensation program advances the specific goals that we set.
Each share of common stock is entitled to one vote on Proposal 4 and will be given the option to vote “FOR” or “AGAINST” the proposal or to “ABSTAIN.” Unless otherwise directed, it is the intention of the proxy holders named in the enclosed proxy to vote the proxies received by them “FOR” this proposal.
Brokers do not have discretionary authority to vote on Proposal 4. If a broker holding shares for a beneficial owner does not receive instructions from the beneficial owner on how to vote on this proposal, the broker will submit anon-vote.
Proposal 4 will be approved if the number of votes cast in favor of the proposal exceeds the number of votes cast against the proposal. Abstentions from voting and brokernon-votes will have no impact on the outcome of this proposal.
The Board recommends a vote “FOR” the approval, on an advisory basis,
of the compensation of the named executive officers.
Although the advisory vote on Proposal 4 isnon-binding, we expect that the Board and the Compensation Committee will review the results of the vote and, consistent with our record of shareholder engagement, take the outcome of the vote into consideration, along with other relevant factors, in making determinations concerning future executive compensation.
18
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial ownership of our common stock as of March 31, 201615, 2019 by: (i) each of our directors and nominees; (ii) each of our named executive officers; (iii) all of our directors, nominees and executive officers as a group; and (iv) each person known by us to beneficially own more than 5% of our common stock.
Beneficial Owner | Number of Shares Owned(1) | Percentage of Common Stock(1) | ||||||
HNA Investment Management LLC (2) | 3,238,401 | 16.1 | % | |||||
Daniel R. Baty (3) | 3,052,638 | 14.8 | % | |||||
Alexander Washburn (4) | 2,952,638 | 14.4 | % | |||||
Columbia Pacific Opportunity Fund, LP (4) | 2,510,105 | 12.5 | % | |||||
Dimensional Fund Advisors LP (5) | 1,700,160 | 8.4 | % | |||||
Eidelman Virant Capital, Inc. (6) | 1,432,187 | 7.1 | % | |||||
Thomas L. McKeirnan (7) | 110,341 | * | ||||||
Raymond R. Brandstrom | 62,144 | * | ||||||
Melvin L. Keating | 55,790 | * | ||||||
Harry G. Sladich (8) | 38,610 | * | ||||||
James P. Evans | 34,091 | * | ||||||
David J. Johnson | 34,091 | * | ||||||
Michael Vernon | 34,091 | * | ||||||
Robert G. Wolfe | 34,091 | * | ||||||
Gregory T. Mount | 22,252 | * | ||||||
James A. Bell (9) | 15,932 | * | ||||||
William J. Linehan (10) | 15,729 | * | ||||||
Enrico Marini Fichera (11) | 0 | * | ||||||
All directors and executive officers as a group (13 persons)(12) | 3,409,800 | 16.6 | % |
Beneficial Owner | Number of Shares Owned(1) | Percentage of Common Stock(1) | ||||||
Coliseum Capital Management, LLC (2) | 3,663,871 | 14.9 | % | |||||
Dimensional Fund Advisors LP (3) | 2,043,174 | 8.3 | % | |||||
Blackrock, Inc. (4) | 1,331,902 | 5.4 | % | |||||
Ouray Capital Management, LLC (5) | 1,302,522 | 5.3 | % | |||||
Alexander Washburn (6) | 770,782 | 3.1 | % | |||||
Gregory T. Mount (7) | 154,612 | * | ||||||
Robert G. Wolfe | 67,315 | * | ||||||
James P. Evans | 58,345 | * | ||||||
Michael Vernon | 58,345 | * | ||||||
Thomas L. McKeirnan (8) | 53,054 | * | ||||||
Bonny Simi | 18,978 | * | ||||||
Joseph Megibow | 15,888 | * | ||||||
Paul Sacco (9) | 6,603 | * | ||||||
Ted Darnell | 6,217 | * | ||||||
Amy Humphreys | 3,474 | * | ||||||
Nate Troup (10) | 2,449 | * | ||||||
Gary Sims | 30 | * | ||||||
R. Carter Pate | 0 | * | ||||||
All directors and executive officers as a group | 1,330,655 | 5.39 | % |
* | Represents less than 1% of the outstanding common stock. |
(1) | For purposes of this table, a person is deemed to have “beneficial ownership” of shares of common stock if such person has the right to acquire beneficial ownership of such shares within 60 |
(2) | The address for this beneficial owner is |
100,000 shares owned by Mr. Baty individually;
2,510,105 shares held by Columbia Pacific Opportunity Fund, LP (the “Fund”); and
442,533 shares subject to a warrant held by an entity in which Columbia Pacific Real Estate Fund II, LP (the “Real Estate Fund”) holds an indirect ownership interest.
Columbia Pacific Advisors, LLC, of which Mr. Baty, Alexander Washburn and Stanley L. Baty are the managing members, serves as the investment manager of the Fund and the Real Estate Fund.
The address for this beneficial owner is |
19
The address for this beneficial owner is |
(5) | The address for this beneficial owner is 1370 Avenue of the Americas, 24th Floor, New York, NY 10019. The shares shown for this beneficial owner are based solely on the Schedule 13G filed by this beneficial owner on February 13, 2019. |
(6) | The address for this beneficial owner is 1910 Fairview Avenue East, Suite 200, Seattle, Washington, 98102. The shares shown for this beneficial owner are based on the Form 4 filed October 2, 2018. Columbia Pacific Advisors, LLC has the sole power to vote or to direct the vote of, and to dispose of direct the disposition of the following shares: |
500,000 shares held by Columbia Pacific Opportunity Fund, LP (the fund); and
270,782 shares subject to a warrant held by Columbia Pacific Real Estate Fund II, LP
Mr. Alexander B. Washburn is one of the managing members of Columbia Pacific Advisors, LLC which serves as the investment manager of the Fund and the Real Estate Fund.
(7) | Includes |
(8) | Includes 9,613 shares subject to restricted stock units vesting within 60 days after March |
Includes |
Includes |
Includes |
20
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers and directors, and persons who own more than 10% of our common stock (collectively, “Reporting Persons”), to file reports of ownership and changes in ownership of our common stock with the Securities and Exchange Commission. Based solely on our review of the reports filed by the Reporting Persons, and written representations from certain Reporting Persons that no other reports were required for those persons, we believe that, with respect to the year ended December 31, 2015,2018, the Reporting Persons met all applicable Section 16(a) filing requirements, except that, due to aan clerical error, 2,600 sharesa late form 4 was filed on July 20, 2018 with respect to reporting the grant of our commonrestricted stock that were issued in payment of director fees on April 14, 2015 tounits for each of Raymond R. Brandstrom, James P. Evans, David J. Johnson, Melvin L. Keating, Michael Vernonthe following executive officers: Gregory Mount, Douglas Ludwig, William Linehan, Thomas McKeirnan, and Robert G. Wolfe were not reported until Forms 4 were filed for these directors on July 17, 2015.
21
Corporate Governance Documents
The Board has adopted the following corporate governance documents:
Corporate Governance Guidelines;
Code of Business Conduct and Ethics;
Accounting and Audit Complaints and Concerns Procedures;
Statement of Policy with respect to Related Party Transactions; and
Charters for each of its standing committees, which include the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee.
We review each of these corporate governance documents annually and update them as necessary to reflect changes in regulatory requirements and evolving oversight practices. Copies of these documents are available online in the Investor Relations section of our website atwww.redlion.com. We will provide paper copies of these documents to any shareholder upon written request to our Secretary at our principal executive office at 201 West North River Drive,1550 Market Street, Suite 100, Spokane, Washington 99201.350, Denver, Colorado 80202.
The Board has determined that each nominee for election as a director at the annual meeting, other than Gregory T. Mount, our President and Chief Executive Officer, and Alexander Washburn,Ted Darnall, is “independent” within the meaning of applicable listing standards of the New York Stock Exchange (the “NYSE”). Under the NYSE listing standards, a director is considered “independent” if the Board affirmatively determines that he or she has no material relationship with our company, either directly or as a partner, shareholder or officer of an organization that has a relationship with our company. Our Corporate Governance Guidelines contain categorical standards to assist the Board in making determinations of independence. A copy of these categorical standards is included inAppendix A to this proxy statement. The Board has made an affirmative determination that each independent member of the Board satisfies these categorical standards.
Meetings of the Board of Directors
The Board met 13sixteen times in 2015.2018. All directors attended at least 75% of the total number of meetings of the Board and its committees on which they serve.
We encourage all of our directors to attend each annual meeting of shareholders. All of the current directors who were on the Board at the time of the 2015At our 2018 annual meeting of shareholders, 8 out of our 9 directors were in attendance at the meeting in person, and one director attended that meeting.via telephone.
Executive Sessions of the Board
It is our policy that the independent directors meet in executive session without members of management following regularly scheduled meetings of the Board. The Chairman of the Board serves as the presiding director for these executive sessions.
22
Committees of the Board of Directors
We have three committees to assist the Board in fulfilling its responsibilities: the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee. The following table shows the membership of each committee as of March 31, 2016:2019:
| Audit Committee | Compensation Committee | Nominating and Corporate Governance Committee | |||
| ||||||
James P. Evans | Chair | |||||
| ✓ | ✓ | ||||
Joseph B. Megibow | ✓ | ✓ | ||||
Bonny W. Simi | ||||||
| ||||||
Michael Vernon | Chair | ✓ |
Audit Committee
The Audit Committee engages our independent registered public accounting firm, reviews with the firm the plans and results of the audit engagement, approves the audit andnon-audit services provided by the firm, reviews our financial statements, reviews our compliance with laws and regulations, receives and reviews complaints relating to accounting or auditing matters, considers the adequacy of our internal accounting controls, and produces a report for inclusion in our annual proxy statement. The Audit Committee met eightten times in 2015.2018.
The Board has determined that each member of the Audit Committee is financially literate under the current listing standards of the NYSE. The Board also has determined that each member of the Audit Committee qualifies as an “audit committee financial expert” as defined by applicable rules of the Securities and Exchange Commission. All members of the Audit Committee are considered independent because they satisfy the independence requirements for board members prescribed by the NYSE listing standards, including those set forth in Rule10A-3 under the Securities Exchange Act of 1934, as amended.
Compensation Committee
The Compensation Committee discharges the responsibilities of the Board relating to compensation and evaluation of our President and Chief Executive Officer, or CEO, and other executive officers, makes recommendations to the Board regarding the compensation of directors, oversees the administration of our equity incentive plans and produces an annual report on executive compensation for inclusion in our annual proxy statement. The Compensation Committee met sixten times in 2015.2018.
The processes and procedures of the Compensation Committee for considering and determining compensation for our executive officers and directors are as follows:
Compensation for our executive officers is generally determined annually during the first few months of the year.
• | With respect to our CEO, the Compensation Committee generally reviews and approves performance goals for the current year, evaluates his performance in light of the goals established for the prior year, and establishes his compensation based on this evaluation and the facts and circumstances described below inCompensation Discussion and Analysis. As part of the evaluation process, the Compensation Committee solicits input from the CEO and other Board members. Final determinations regarding our CEO’s performance and compensation are made during |