SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Filed by the Registrantþ | ||
Filed by a Party other than the Registranto | ||
Check the appropriate box: | ||
o Preliminary Proxy Statement | o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
þ Definitive Proxy Statement | ||
o Definitive Additional Materials | ||
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Interstate Hotels & Resorts, Inc.
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TO BE HELD ON JUNE 1, 2006
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
JUNE 1, 2006
ANNUAL MEETING AND VOTING
2. | The ratification of the appointment of KPMG LLP as our independent certified public accountants for 2006; and |
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• | Are present and vote in person at the Annual Meeting, or | |
• | Have completed and submitted a proxy card, or authorized a proxy over the telephone or Internet, prior to the Annual Meeting. |
• By mail: | Registered holders may sign, date and mail the enclosed proxy card. If you are a beneficial stockholder holding your shares through a bank or broker, you must obtain a proxy, executed in your favor, from the bank or broker to be able to vote at the Annual Meeting. | |
• By telephone: | Registered stockholders can call1-800-690-6903. Beneficial stockholders can call the 800 number printed on their voting instruction form. | |
• By Internet: | Both beneficial and registered stockholders can vote their shares via the Internet atwww.proxyvote.com. |
• | FOR the election of the nominated directors; and | |
• | FOR the ratification of the appointment of KPMG LLP as our independent certified public accountants. |
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ELECTION OF DIRECTORS
Name, Principal Occupation | Served as a | |||||||||||
and Business Experience | Director Since | Age | Class | |||||||||
KARIM J. ALIBHAI | 2002 | 41 | II | |||||||||
Mr. Alibhaijoined our board of directors in July 2002. Mr. Alibhai is presently a Principal of the Gencom Group, a hotel development and ownership company, which he rejoined in June 1999. Mr. Alibhai served as President, Chief Operating Officer and a Director of Wyndham International, Inc. from October 1997 through May 1999. Prior to October 1997, Mr. Alibhai served as President and Chief Executive Officer of the Gencom Group. Mr. Alibhai also served on the board of directors of Interstate Hotels Corporation from October 2000 until its merger with us in July 2002. | ||||||||||||
JOSEPH J. FLANNERY | 2002 | 43 | II | |||||||||
Mr. Flanneryjoined our board of directors in July 2002. Mr. Flannery is a Managing Director of Lehman Brothers Inc., an internationally recognized investment bank. Prior to joining Lehman Brothers in 1989, Mr. Flannery held positions with Pannell Kerr Forster and Prudential Life Insurance Company. Mr. Flannery also served on the board of directors of Interstate Hotels Corporation from October 2000 until its merger with us in July 2002. |
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Name, Principal Occupation | Served as a | |||||||||||
and Business Experience | Director Since | Age | Class | |||||||||
LESLIE R. DOGGETT | 1998 | 49 | III | |||||||||
Ms. Doggettjoined our board of directors in October 2001. Ms. Doggett is the President and CEO of the Baltimore Area Convention and Visitors Association. From 2001 until 2003, Ms. Doggett was President and CEO of Doggett Rosemont Consulting, which specialized in business development services for hospitality and tourism-related interests. From April 1996 until 2001, Ms. Doggett was the Deputy Assistant Secretary of Tourism Industries at the United States Department of Commerce. From September 1993 to April 1996, Ms. Doggett was the Deputy Under Secretary of Commerce for the United States Travel and Tourism Administration. From 1990 to 1993, Ms. Doggett was the Director of Tourism for New York City’s Office of the Mayor. Before her tenure in public service, Ms. Doggett worked as a hotel sales executive for 10 years. Ms. Doggett also serves as a member of the board of directors of the International Association of Convention and Visitors Bureaus, Goodwill Industries of the Chesapeake and is a trustee of the Walters Art Museum. | ||||||||||||
THOMAS F. HEWITT | 2002 | 62 | I | |||||||||
Mr. Hewittjoined our board of directors in July 2002 and became our Chief Executive Officer in February 2005. Mr. Hewitt was Chairman and Chief Executive Officer of Interstate Hotels Corporation from March 1999 until July 2002. Mr. Hewitt previously was Chief Operating Officer of Carnival Resorts & Casinos, where he headed all hotel and resort operations. | ||||||||||||
JAMES B. MCCURRY | 1998 | 57 | III | |||||||||
Mr. McCurryhas been a member of our board of directors since 1998. Mr. McCurry is President and Chief Executive Officer of PRG-Schultz International, Inc., a leading provider of recovery audit services. Prior to joining PRG, Mr. McCurry was President of the Printing Division of Kinko’s, a wholly-owned subsidiary of FedEx Corporation. From May 2001 until March 2003, Mr. McCurry was an independent management consultant. From May 2000 until May 2001, Mr. McCurry was chief executive officer of ane-commerce subsidiary of Fleming Companies, Inc. From July 1997 until May 2000, Mr. McCurry was a partner with Bain & Company, an international management consulting firm specializing in corporate strategy. |
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Name, Principal Occupation | Served as a | |||||||||||
and Business Experience | Director Since | Age | Class | |||||||||
JOHN J. RUSSELL, JR. | 2002 | 59 | III | |||||||||
Mr. Russelljoined our board of directors in July 2002. Mr. Russell is Chief Executive Officer of NYLO Hotels, a loft accommodations hospitality company. Prior to joining NYLO Hotels in 2005, Mr. Russell was Chief Executive Officer of Hospitality Artists, LLC, a hospitality consulting business, a partner of Yesawich, Pepperdine, Brown & Russell, an international marketing firm, and the Chairman of the Board of the American Hotel & Lodging Educational Foundation. Prior to serving in these positions, Mr. Russell was Vice Chairman of the Travel Division of Cendant Corporation and President and Chief Executive Officer of Resort Condominiums International LLC, Global Operations. Before that, Mr. Russell served as Chairman and Chief Executive Officer of Cendant’s Hotel Division. From 1995 to 1996, Mr. Russell was Executive Vice President of Franchise Sales for the Century 21 Real Estate Corporation, and from 1992 to 1995, he served as President of Days Inns of America. Mr. Russell also serves as a member of the board of directors of the University of Delaware’s Hotel and Restaurant Program. He also previously served as President of the Hospitality, Sales and Marketing Association International. | ||||||||||||
PAUL W. WHETSELL | 1998 | 55 | I | |||||||||
Mr. Whetsellis the Chairman of our board of directors and has served in this position since August 1998. Mr. Whetsell has also been Chairman of the board of directors and Chief Executive Officer of MeriStar Hospitality Corporation since August 1998. Mr. Whetsell was our Chief Executive Officer from 1998 until October 2003. Prior to August 1998, Mr. Whetsell had been Chairman of the board of directors of CapStar Hotel Company since 1996 and had served as President and Chief Executive Officer of CapStar Hotel Company since its founding in 1987. |
• | The appointment, compensation and oversight of our independent certified public accountants; | |
• | Reviewing with the independent certified public accountants the plans and results of the audit engagement; | |
• | Approving professional services provided by the independent certified public accountants; | |
• | Reviewing the independence of the independent certified public accountants; | |
• | Considering the range of audit and non-audit fees; | |
• | Reviewing the adequacy of our internal accounting controls; and | |
• | Reviewing our quarterly and annual financial statements, including controls over financial reporting. |
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• | nominating all other members of our board of directors; | |
• | recommending membership for board committees; | |
• | reviewing board performance; and | |
• | recommending corporate governance guidelines to our board of directors and management. |
• | the candidate’s judgment; | |
• | the candidate’s skill; | |
• | diversity considerations; |
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• | the candidate’s experience with businesses and other organizations of comparable size; | |
• | the interplay of the candidate’s experience with the experience of other board members; and | |
• | the extent to which the candidate would be a desirable addition to the board and any committees of the board. |
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Names, Positions and | Served as an | |||||||
Offices, and Business Experience | Officer Since | Age | ||||||
CHRISTOPHER L. BENNETT | 1998 | 36 | ||||||
Mr. Bennettis our Senior Vice President and General Counsel. Mr. Bennett has overseen the legal department of Interstate and its predecessors since 1998 and the human resources department since 2004. Mr. Bennett was also Senior Vice President and General Counsel of MeriStar Hospitality Corporation and oversaw its legal department from 1998 until January 2003. Prior to 1998, Mr. Bennett was an associate in New York City with Donovan Leisure Newton & Irvine and Thacher Proffitt & Wood. | ||||||||
H. LEE CURTIS | 2003 | 41 | ||||||
Mr. Curtisbecame the President of our BridgeStreet Corporate Housing Worldwide division in August 2003. Prior to that, Mr. Curtis was Senior Vice President of BridgeStreet Operations from November 2000 to August 2003. Prior to that, Mr. Curtis was Regional Manager for Globe Business Resources in Dallas, Texas from November 1999 to November 2000, and in Detroit, Michigan from June 1998 to November 1999. Mr. Curtis was Regional Director for Village Green in Farmington Hills, Michigan from November 1994 to June 1998. | ||||||||
BRUCE A. RIGGINS | 2006 | 34 | ||||||
Mr. Rigginsbecame our Chief Financial Officer on April 17, 2006. From July 2005 to March 2006 Mr. Riggins was the Chief Financial Officer of Innkeepers USA Trust in Palm Beach, Florida. Prior to that, Mr. Riggins was employed at our Company as Treasurer from September 2004 to July 2005, at MeriStar Hospitality Corporation as Vice President, Strategic Planning and Analysis from January 2003 to September 2004, at our Company as Senior Director of Finance from January 2002 to December 2002 and as Director of Finance from October 1998 to December 2001. |
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Annual Compensation | Long-Term Compensation | |||||||||||||||||||||||||||||||
Other | Restricted | Securities | ||||||||||||||||||||||||||||||
Annual | Stock | Underlying | LTIP | All Other | ||||||||||||||||||||||||||||
Salary | Bonus | Compensation | Awards | Options | Payouts | Compensation | ||||||||||||||||||||||||||
Name and Principal Position | Year | ($) | ($)(7) | ($) | ($) | (#) | ($) | ($) | ||||||||||||||||||||||||
Thomas F. Hewitt(1) | 2005 | 323,077 | 883,654 | (1) | — | 450,000 | (1) | 17,000 | — | 996,103 | (4) | |||||||||||||||||||||
Chief Executive | 2004 | — | — | — | — | — | — | 1,011,153 | (4) | |||||||||||||||||||||||
Officer | 2003 | — | — | — | — | — | — | 926,832 | (4) | |||||||||||||||||||||||
J. William Richardson(2) | 2005 | 370,577 | 402,795 | 69,735 | (5) | 236,000 | (2) | — | — | 2,538 | (6) | |||||||||||||||||||||
Former Chief | 2004 | 313,462 | 165,577 | 79,054 | 291,000 | 100,000 | — | — | ||||||||||||||||||||||||
Financial Officer | 2003 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Paul J. Burke(8) | 2005 | 290,000 | 242,309 | — | — | — | — | 5,127 | (6) | |||||||||||||||||||||||
Former President, Hotels | 2004 | 250,000 | 87,500 | — | 25,001 | — | — | — | ||||||||||||||||||||||||
2003 | 182,212 | 90,000 | — | — | 15,000 | — | — | |||||||||||||||||||||||||
H. Lee Curtis | 2005 | 228,289 | 173,368 | — | — | — | — | 2,595 | (6) | |||||||||||||||||||||||
President, BridgeStreet | 2004 | 225,000 | 15,000 | — | 22,502 | — | — | — | ||||||||||||||||||||||||
2003 | 193,270 | 30,700 | — | — | 20,000 | — | — | |||||||||||||||||||||||||
Christopher L. Bennett | 2005 | 199,270 | 104,118 | — | 94,400 | (3) | — | — | 3,642 | (6) | ||||||||||||||||||||||
SVP & General Counsel | 2004 | 189,827 | 75,931 | — | 18,998 | — | — | — | ||||||||||||||||||||||||
2003 | 175,000 | 28,000 | — | — | — | — | — |
(1) | Mr. Hewitt became our Chief Executive Officer in February 2005. In October 2005, Mr. Hewitt was granted 100,000 shares of restricted stock under our employee incentive plan. The value of the shares on the grant date was $4.50 per share, for an aggregate value of $450,000. These shares vest over three years in equal installments. No dividends have been paid on these shares. The bonus amount includes a one time $500,000 payment made pursuant to Mr. Hewitt’s employment agreement. | |
(2) | Mr. Richardson retired effective April 17, 2006. In April 2005, Mr. Richardson was granted 50,000 shares of restricted stock under our employee incentive plan. The value of the shares on the grant date was $4.72 per share, for an aggregate value of $236,000. These shares vest over one year. No dividends have been paid on these shares. | |
(3) | In April 2005, Mr. Bennett was granted 20,000 shares of restricted stock under our employee incentive plan. The value of the shares on the grant date was $4.72 per share, for an aggregate value of $94,400. These shares vest over three years in equal installments. No dividends have been paid on these shares. | |
(4) | In connection with our 2002 merger with Old Interstate, Mr. Hewitt, who was then Chief Executive Officer of Old Interstate, had a contractual right to a lump sum severance payment which he agreed to receive in the form of monthly payments beginning with the merger date through January 2006. Also included under “All Other Compensation” are Board fees Mr. Hewitt received before rejoining us as Chief Executive Officer in February 2005, and other ancillary benefits he receives, such as life insurance. | |
(5) | Represents payments made for country club membership dues and officer’s life insurance. | |
(6) | The payments represent distributions made for vested company contributions for our Executive Real Estate Fund as well as term life insurance payments. | |
(7) | Bonus amounts represent payments made under each executive officers’ employment agreement, to the extent that the executive is a party to such an agreement. | |
(8) | Mr. Burke resigned effective April 21, 2006. |
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Number of | ||||||||||||||||||||||||
Securities | Percent of Total | Potential Realizable Value at Assumed Annual | ||||||||||||||||||||||
Underlying | Options/SARs | Rates of Stock Appreciation for Option Term(1) | ||||||||||||||||||||||
Options/SARS | Granted to | Exercise Price | ||||||||||||||||||||||
Name | Granted(1) | Employees in 2005 | $/share | Expiration Date | 5%($) | 10%($) | ||||||||||||||||||
Thomas F. Hewitt | 17,000 | 16.7 | % | 4.58 | 4/4/2015 | 126,800 | 201,900 | |||||||||||||||||
J. William Richardson(2) | — | — | — | — | — | — | ||||||||||||||||||
Paul J. Burke(2) | — | — | — | — | — | — | ||||||||||||||||||
H. Lee Curtis | — | — | — | — | — | — | ||||||||||||||||||
Christopher L. Bennett | — | — | — | — | — | — |
(1) | In accordance with the rules of the Securities and Exchange Commission, these amounts are the hypothetical gains or “option spreads” that would exist based on assumed rates of annual compounded stock price appreciation of 5% and 10% from the date the options were granted over the full option term. | |
(2) | Mr. Richardson retired effective April 17, 2006. Mr. Burke resigned effective April 21, 2006. |
Number of Securities | Value of Unexercised | |||||||||||||||||||||||
Underlying Unexercised | in-the-Money Options | |||||||||||||||||||||||
Shares Acquired | Value | Options at Fiscal Year-End | at Fiscal Year-End(1) | |||||||||||||||||||||
Name | on Exercise | Realized | Exercisable | Unexercisable | Exercisable | Unexercisable | ||||||||||||||||||
Thomas F. Hewitt | — | — | — | 17,000 | — | — | ||||||||||||||||||
J. William Richardson(2) | — | — | 100,000 | — | — | — | ||||||||||||||||||
Paul J. Burke(2) | — | — | 10,000 | 5,000 | — | — | ||||||||||||||||||
H. Lee Curtis | — | — | 20,834 | 6,666 | $ | 2,800 | — | |||||||||||||||||
Christopher L. Bennett | — | — | 26,150 | — | $ | 13,100 | — |
(1) | Value of Unexercisedin-the-Money Options is based on a market price of $4.37, which was the closing price on December 31, 2005. | |
(2) | Mr. Richardson retired effective April 17, 2006. Mr. Burke resigned effective April 21, 2006. |
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REPORT ON EXECUTIVE COMPENSATION
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AMONG INTERSTATE HOTELS & RESORTS,
NYSE MARKET INDEX AND PEER GROUP INDEX
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DEC. 31, 2005
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RATIFICATION OF APPOINTMENT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
2005 | 2004 | |||||||
Audit fees | $ | 848,468 | (1) | $ | 865,885 | (1) | ||
Audit-related fees | 71,500 | (2) | 88,262 | (2) | ||||
Tax fees | 15,586 | (3) | 15,389 | (3) | ||||
All other fees | 18,068 | (4) | 157,707 | (5) | ||||
Total fees: | $ | 953,622 | $ | 1,127,243 | ||||
(1) | Audit fees include the audit of the Company’s annual financial statements, the certified public accountants’ review of the Company’s quarterly financial statements, including the certified public accountants’ report on the effectiveness of the Company’s internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002. | |
(2) | Audit-related fees include audits of our employee benefit plans. | |
(3) | Tax fees include tax consultation fees. | |
(4) | All other fees include filing of turnover certificates for a foreign subsidiary. | |
(5) | All other fees include $101,355 for costs related to a contemplated transaction, and fees of $56,352 for services provided to a subsidiary organization. |
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Shares | ||||||||
Beneficially Owned | ||||||||
Name & Address of Beneficial Owner | Number | Percentage | ||||||
Holders of 5% or more of our Common Stock: | ||||||||
Lehman Brothers Holdings Inc.(4) | 3,864,787 | 12.5 | % | |||||
Wellington Management Company, LLP(1) | 2,339,500 | 7.6 | % | |||||
High Rise Capital Advisors, L.L.C.(2) | 1,755,676 | 5.7 | % | |||||
Dimensional Fund Advisors, Inc.(3) | 1,560,679 | 5.0 | % | |||||
Executive Officers and Directors: | ||||||||
Karim J. Alibhai (5)(10) | 907,154 | 2.9 | % | |||||
Christopher L. Bennett(14) | 68,931 | * | ||||||
Paul Burke(15) | 39,933 | * | ||||||
H. Lee Curtis(6) | 38,682 | * | ||||||
Leslie R. Doggett(7) | 18,998 | * | ||||||
Joseph J. Flannery (8)(10) | 3,882,285 | 12.5 | % | |||||
Thomas F. Hewitt(9) | 249,859 | * | ||||||
James B. McCurry(11) | 22,000 | * | ||||||
Raymond C. Mikulich (8)(10) | 3,882,285 | 12.5 | % | |||||
J. William Richardson(12) | 185,902 | * | ||||||
John J. Russell, Jr.(10) | 17,498 | * | ||||||
Paul W. Whetsell(13) | 678,260 | 2.2 | % | |||||
Executive officers and directors as a group (10 persons) | 5,523,369 | 17.8 | % |
* | Represents less than 1% of the class. | |
(1) | Beneficial ownership information is based on the Schedule 13G filed by Wellington Management Company, LLP (located at 75 State Street, Boston, MA 02109), filed on February 14, 2006. | |
(2) | Beneficial ownership information is based on the Schedule 13G filed by High Rise Capital Management, LP (located at 535 Madison Avenue, 26th Floor, New York, NY 10022), filed on February 13, 2006. | |
(3) | Beneficial ownership information is based on the Schedule 13G filed by Dimensional Fund Advisors, Inc. (located at 1299 Ocean Avenue, 11th Floor, Santa Monica, CA 90401), filed on February 6, 2006. | |
(4) | Beneficial ownership information is based on the Schedule 13D/A filed on October 7, 2004. The following entities beneficially own shares covered by this Schedule 13D/A filing: (i) LB Interstate GP, LLC; (ii) LB Interstate LP, LLC; (iii) PAMI, LLC; (iv) Property Asset Management, Inc.; (v) Lehman ALI, Inc.; (vi) Lehman Brothers Holdings Inc..;(vii) DEL-IHC, LLC; (viii) Donald E. Lefton;(ix) SMW-IHC, LLC; (x) Sherwood M. Weiser; (xi) KFP Interstate Associates, LLC; (xii) KFP Interstate, LLC; (xiii) Grosvenor, LC; (xiv) Quadrangle Trust Company (BVI) Limited, as Trustee of the Newlyn Trust; (xv) KFP Holdings, Ltd.; (xvi) Karim Alibhai; (xvii) KFP/LB IHR II, LP; (xviii) KFP/LB IHR GP, LLC; (xix) KA/LB IHR II, LP; (xx) KA/LB IHR GP, LLC; (xxi) CG Ventures/LB IHR II, LP; (xxii) CG Ventures/LB IHR GP, LLC; (xxiii) Haider Alibhai Ukani; (xxiv) SMW/LB IHR II, LP; (xxv) SMW/LB IHR GP, LLC; (xxvi) DEL/LB IHR II, LP; (xxvii) DEL/LB IHR GP, Inc.; (xxviii) PS/LB IHR II, LP; (xxix) PS/LB IHR GP, Inc.; and (xxx) Peter Sibley. |
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(5) | Beneficial ownership of 889,656 shares is based on the Schedule 13D/A filed on October 7, 2004. See Note (4) above. | |
(6) | Includes 16,402 unvested restricted shares and 20,834 options that have not vested. | |
(7) | Beneficial ownership includes 18,998 options that have vested. | |
(8) | Beneficial ownership of 3,864,787 shares is based on the Schedule 13D/A filed on October 7, 2004. See Note (4) above. | |
(9) | Includes 66,667 unvested restricted shares and 5,667 vested options. | |
(10) | Beneficial ownership includes 17,498 options that have vested. | |
(11) | Beneficial ownership includes 22,000 options that have vested. | |
(12) | Includes 100,000 options that have vested. | |
(13) | Includes 325,000 options that have vested. | |
(14) | Includes 33,333 unvested restricted shares and 26,150 options that have vested. | |
(15) | Includes 18,225 unvested restricted shares and 15,000 options that have vested. |
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I. | Purpose |
II. | Organization |
III. | Meetings |
IV. | Authority and Responsibilities |
A-1
• | Be directly responsible for the appointment, compensation and oversight of the work of the independent auditors (including resolution of disagreements between management and the independent auditors regarding financial reporting) for the purpose of preparing its audit report or related work. | |
• | Have the sole authority to review in advance, and grant any appropriate pre-approvals, of (a) all auditing services to be provided by the independent auditors and (b) all non-audit services to be provided by the independent auditors as permitted by Section 10A of the Securities Exchange Act, and in connection therewith to approve all fees and other terms of engagement. The Audit Committee shall also review and approve disclosures required to be included in Securities and Exchange Commission periodic reports filed under Section 13(a) of the Securities Exchange Act with respect to non-audit services. | |
• | Review on an annual basis the performance of the independent auditors. | |
• | Ensure that the independent auditors submit to the Audit Committee on an annual basis a written statement consistent with Independent Standards Board Standard No. 1, discuss with the independent auditors any disclosed relationships or services that may impact the objectivity and independence of the independent auditors and satisfy itself as to the independent auditors’ independence. | |
• | At least annually, obtain and review an annual report from the independent auditors describing (a) the independent auditors’ internal quality control procedures and (b) any material issues raised by the most recent internal quality control review, or peer review, of the independent auditors, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the independent auditors, and any steps taken to deal with any such issues. | |
• | Confirm that the lead audit partner and the audit partner responsible for reviewing the audit, has not performed audit services for the Company for each of the five previous fiscal years. | |
• | Review all reports required to be submitted by the independent auditors to the Audit Committee under Section 10A of the Securities Exchange Act. | |
• | Review, based upon the recommendation of the independent auditors and the chief internal auditor, the scope and plan of the work to be done by the independent auditors. |
• | Review and discuss with management, the internal audit group and the independent auditors the Company’s annual audited financial statements, including disclosures made in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” | |
• | Discuss with the independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61, as amended, relating to the conduct of the audit. | |
• | Recommend to the Board, if appropriate, that the Company’s annual audited financial statements be included in the Company’s annual report onForm 10-K for filing with the Securities and Exchange Commission. | |
• | Prepare the report required by the Securities and Exchange Commission to be included in the Company’s annual proxy statement and any other reports of the Audit Committee required by applicable securities laws or stock exchange listing requirements or rules. |
A-2
• | Review and discuss with management, the internal audit group and the independent auditors the Company’s quarterly financial statements, including disclosures made in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the independent auditors’ review of the quarterly financial statements, prior to submission to stockholders, any governmental body, any stock exchange or the public. |
• | Obtain and review an annual report from management relating to the accounting principles used in the preparation of the Company’s financial statements, including those policies for which management is required to exercise discretion or judgments regarding the implementation thereof. |
• | Periodically review separately with each of management, the independent auditors and the internal audit group (a) any significant disagreement between management and the independent auditors or the internal audit group in connection with the preparation of the financial statements, (b) any difficulties encountered during the course of the audit, including any restrictions on the scope of work or access to required information and (c) management’s response to each. | |
• | Periodically discuss with the independent auditors, without management being present, (a) their judgments about the quality and appropriateness of the Company’s accounting principles and financial disclosure practices as applied in its financial reporting and (b) the completeness and accuracy of the Company’s financial statements. | |
• | Consider and approve, if appropriate, significant changes to the Company’s accounting principles and financial disclosure practices as suggested by the independent auditors, management or the internal audit group. Review with the independent auditors, management and the internal audit group, at appropriate intervals, the extent to which any changes or improvements in accounting or financial practices, as approved by the Audit Committee, have been implemented. | |
• | Review and discuss with management, the internal audit group, the independent auditors and the Company’s in-house and independent counsel, as appropriate, any legal, regulatory or compliance matters that could have a significant impact on the Company’s financial statements, including applicable changes in accounting standards or rules. |
• | Review and discuss with management the Company’s earnings press releases, including the use of “pro forma” or “adjusted” non-GAAP information, as well as financial information and earnings guidance provided to analysts and rating agencies. | |
• | Review and discuss with management all material off-balance sheet transactions, arrangements, obligations (including contingent obligations) and other relationships of the Company with unconsolidated entities or other persons, that may have a material current or future effect on financial condition, changes in financial condition, results of operations, liquidity, capital resources, capital reserves or significant components of revenues or expenses. | |
• | Review and discuss with management the Company’s major risk exposures and the steps management has taken to monitor, control and manage such exposures, including the Company’s risk assessment and risk management guidelines and policies. |
• | Review, based upon the recommendation of the independent auditors and the chief internal auditor, the scope and plan of the work to be done by the internal audit group. |
A-3
• | Review and approve the appointment and replacement of the Company’s chief internal auditor. | |
• | Review on an annual basis the performance of the internal audit group. | |
• | In consultation with the independent auditors and the internal audit group, review the adequacy of the Company’s internal control structure and procedures designed to insure compliance with laws and regulations, and discuss the responsibilities, budget and staffing needs of the internal audit group. | |
• | Establish procedures for (a) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters and (b) the confidential, anonymous submission by employees of the Company of concerns regarding the questionable accounting or auditing matters. | |
• | Review (i) the internal control report prepared by management, including management’s assessment of the effectiveness of the Company’s internal control structure and procedures for financial reporting and (ii) the independent auditors’ attestation, and report, on the assessment made by management. |
• | Review and approve all related-party transactions. | |
• | Review and approve (a) any change or waiver in the Company’s code of ethics for senior financial officers and (b) any disclosure made onForm 8-K regarding such change or waiver. | |
• | Establish a policy addressing the Company’s hiring of employees or former employees of the independent auditors who were engaged on the Company’s account. | |
• | Review and reassess the adequacy of this Charter annually and recommend to the Board any changes deemed appropriate by the Audit Committee. | |
• | Review its own performance annually. | |
• | Report regularly to the Board. | |
• | Perform any other activities consistent with this Charter, the Company’s by-laws and governing law, as the Audit Committee or the Board deems necessary or appropriate. |
V. | Resources |
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• | During the past five years, the Company has not employed the director, and has not employed (except in a non-officer capacity) any of his or her immediate family members.* | |
• | During any twelve-month period within the past five years, neither the director nor any of his or her immediate family members has received more than $60,000† per year in direct compensation from the Company, other than director and committee fees and pension or other forms of deferred compensation (provided such compensation is not contingent in any way on continued service).* | |
• | During the past five years, the director has not been employed (or affiliated with) the Company’s present or former internal or external auditors, nor has any of his or her immediate family members been so employed or affiliated in a professional capacity.* | |
• | During the past five years, neither the director, nor any of his or her immediate family members, has been employed by a company where an executive officer of the Company serves on such company’s compensation (or equivalent) committee.* | |
• | The director does not (directly or indirectly as a partner, shareholder or officer of another company) provide consulting, legal or financial advisory services to the Company or the Company’s present or former auditors.‡ | |
• | During the past five years, the director has not been an employee or executive officer, nor has any of his or her immediate family members been an executive officer, of a company that makes payments to, or receives payments from, the Company for property or services in an amount which, in any fiscal year of such company, exceeds, the greater of $1 million or 1%◊ of such company’s consolidated gross revenues. * | |
• | During the past five years, the director has not had a personal services contract with the Company, its chairman, chief executive officer or other executive officer, or any affiliate of the Company.‡ | |
• | During the past five years, the director has not been an employee, officer or director of a foundation, university or other non-profit organization to which the Company gave directly, or indirectly through the provision of services, more than $100,000 per annum or 1% of the total annual donations received (whichever is less).‡ | |
• | The director does not, either directly or indirectly as a partner, shareholder or officer of another company, own more than 5% of the Company’s common stock.‡ | |
• | The director does not, either directly or indirectly as a partner, shareholder or officer of another company, have material ownership interests in hotel properties that have paid management fees in excess of $1,000,000 to the Company during any twelve-month period within the past three years.‡ | |
• | The director is not an employee, officer or director of a principal lender of the Company.‡ |
* | Section 303A.02(b) of the NYSE Listing Company Manual standards contains a three-year look back. | |
† | The standard in section 303A.02(b)(ii) is $100,000. | |
‡ | Not required by NYSE Section 303A. | |
◊ | The standard in Section 303A.02(b)(v) is 2%. |
B-1
INTERSTATE HOTELS & RESORTS, INC. | ||
4501 NORTH FAIRFAX DRIVE | ||
SUITE 500 | ||
ARLINGTON, VA 22203 |
VOTE BY INTERNET —www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE SHAREHOLDER COMMUNICATIONS
If you would like to reduce the costs incurred by Interstate Hotels & Resorts, Inc. in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access shareholder communications electronically in future years.
VOTE BY PHONE — 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Interstate Hotels & Resorts, Inc., c/o ADP, 51 Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | ISTAT1 KEEP THIS PORTION FOR YOUR RECORDS | |||
DETACH AND RETURN THIS PORTION ONLY |
INTERSTATE HOTELS & RESORTS, INC. | ||||||||||||||||||
The Board of Directors recommends votes “FOR ALL NOMINEES” and “FOR” the ratification of the appointment of KPMG LLP as independent auditors for the Company for the fiscal year ending December 31, 2006, all as more fully set forth in the accompanying Proxy Statement. | ||||||||||||||||||
For All | Withhold For All | For All Except | To withhold authority to vote for any individual nominee, mark “For All Except” and write the nominee’s name on the line below. | |||||||||||||||
Vote on Directors | ||||||||||||||||||
1. | Re-election as directors of the Company (01) Karim J. Alibhai and (02) Joseph J. Flannery to serve three-year terms expiring at the Annual Meeting in 2009 and until their successors are duly elected and qualified. | o | o | o | ||||||||||||||
For | Against | Abstain | ||||||||||
Vote on Proposal | ||||||||||||
2. | Ratification of the appointment of KPMG LLP as independent auditors for the Company for the fiscal year ending December 31, 2006. | o | o | o | ||||||||
Please sign exactly as name appears hereon. Joint owners should each sign. Executors, administrators, trustees, guardians or other fiduciaries should give full title as such. If signing for a corporation or other entity, please sign in full entity name by a duly authorized officer. |
For address changes and/or comments, please check this box and write them on the back where indicated. | o | |||||||||||
Yes | No | |||||||||||
Please indicate if you plan to attend this meeting. | o | o | ||||||||||
HOUSEHOLDING ELECTION - Please indicate if you consent to receive certain future investor communications in a single package per household. | ||||||||||||
o | o |
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |
ARLINGTON, VIRGINIA 22203
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
The undersigned stockholder of Interstate Hotels & Resorts, Inc., a Delaware corporation (the "Company"), hereby appoints Thomas F. Hewitt and Christopher L. Bennett, or either of them, as proxies for the undersigned, with full power of substitution in each of them, to attend the Annual Meeting of Stockholders of the Company to be held at the Company's corporate offices, 4501 N. Fairfax Drive, Arlington, Virginia 22203, on June 1, 2006, at 9:00 a.m., local time, and any adjournment or postponement thereof, to cast on behalf of the undersigned all votes that the undersigned is entitled to cast at such meeting and otherwise to represent the undersigned at the meeting with all powers as if physically present at the meeting. The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and of the accompanying Proxy Statement and revokes any proxy heretofore given with respect to such meeting.
The votes entitled to be cast by the undersigned will be cast as instructed on the reverse side. If this Proxy is executed but no instruction is given, the votes entitled to be cast by the undersigned will be cast for each of the proposals as described in the Proxy Statement and in the discretion of the Proxyholder on any other matter that may properly come before the meeting or any adjournment or postponement thereof. The Board of Directors has no reason to believe that any nominee will be unable to serve if re-elected. In the event any nominee is unable to serve or for good cause will not serve, the proxies may vote for the election of a substitute nominee designated by the Board of Directors.
Address Changes/Comments: | ||||||
SEE REVERSE SIDE | (If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) CONTINUED AND TO BE SIGNED ON REVERSE SIDE | SEE REVERSE SIDE |