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 | ||
o Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12 |
Interstate Hotels & Resorts, Inc.
Payment of Filing Fee (Check the appropriate box):
þ No fee required.
o Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(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 Rule 0-11 (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:
o | Fee paid previously with preliminary materials. | |
o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(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:
1. | To ratify the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2009; | |
2. | To electand/or re-elect three members of our board of directors to serve terms of three (3) years expiring on the date of the Annual Meeting in 2012, or until his respective successor is duly elected and qualified; and | |
3. | To transact such other business as may properly be presented at the Annual Meeting. |
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RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | ||||
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ELECTION OF DIRECTORS | ||||
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FOR
ANNUAL MEETING OF STOCKHOLDERS
INTERSTATE HOTELS & RESORTS, INC.
TO BE HELD ON
JUNE 17, 2009
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1. | The ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the 2009 fiscal year; |
• | Are physically present to vote 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. |
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• | FOR the ratification of the appointment of KPMG LLP as our independent registered public accounting firm; and | |
• | FOR the election of all the nominated directors. |
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RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
2008 | 2007 | |||||||
Audit fees(1) | $ | 550,000 | $ | 737,426 | ||||
Audit-related fees(2) | 242,700 | 57,000 | ||||||
All other fees(3) | — | 8,500 | ||||||
Total fees: | $ | 792,700 | $ | 802,926 | ||||
(1) | Principally, these audit fees represent fees for the audit of our annual consolidated financial statements, the audit of the effectiveness of our internal controls over financial reporting pursuant to section 404 of the Sarbanes-Oxley Act of 2002, the auditor’s review of our quarterly financial statements, and services provided in connection with our regulatory filings. | |
(2) | Fees for statutory audits of our employee benefit plans in both years. In addition, in 2008 we incurred audit fees of $27,500 for a stand alone hotel audit and $125,000 for audits related to hotel acquisitions. | |
(3) | For 2007, all other fees include services provided in connection with the filing of our registration statement onForm S-8. |
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ELECTION OF DIRECTORS
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Name, Principal Occupation | Served as a | |||||||||||
and Business Experience | Director Since | Age | Class | |||||||||
RONALD W. ALLEN | 2006 | 67 | II | |||||||||
Mr. Allenjoined our board of directors in August 2006. Mr. Allen is an advisory director of Delta Air Lines, Inc., a major U.S. air transportation company, and has held this position since July 1997. Mr. Allen retired as Delta’s Chairman of the Board, President and Chief Executive Officer in July 1997, and had been its Chairman of the Board and Chief Executive Officer since 1987. He is a director of TheCoca-Cola Company, Aaron Rents, Inc., Air Castle Limited and Guided Therapeutics, Inc. | ||||||||||||
H. ERIC BOLTON | 2007 | 52 | II | |||||||||
Mr. Boltonjoined our board of directors in May 2007. Mr. Bolton is the Chairman of the Board of Directors, President and Chief Executive Officer ofMid-America Apartment Communities, Inc., a publicly traded real estate investment trust. Mr. Bolton joinedMid-America in 1994 and was named its President in December 1996. Mr. Bolton assumed the position of Chief Executive Officer ofMid-America in October 2001 and became its Chairman of the Board in September 2002. Prior to joiningMid-America, Mr. Bolton was associated with Trammell Crow Company, a large diversified real estate management company, as Executive Vice President and Chief Financial Officer of Trammell Crow Asset Management. Prior to Trammell, Mr. Bolton held senior financial officer and accounting positions with First Gibralter Savings and Loan. | ||||||||||||
CHRISTOPHER S. SHACKELTON | 2009 | 29 | II | |||||||||
Mr. Shackeltonjoined our board of directors on February 12, 2009, following his election by our board of directors. Mr. Shackelton is a managing partner and co-founder of Coliseum Capital Management, LLC. Coliseum is a private investment partnership and it is currently Interstate’s largest stockholder. Prior to founding Coliseum, Mr. Shackelton was an analyst at Watershed Asset Management from 2003 through 2005. Earlier in his career, Mr. Shackelton worked in the investment banking division of Morgan Stanley & Co. Mr. Shackelton is a member of the board of directors of Rural/Metro Corp. and serves as a trustee for the Walter Johnson Foundation. |
Name, Principal Occupation | Served as a | |||||||||||
and Business Experience | Director Since | Age | Class | |||||||||
JAMES F. DANNHAUSER | 2006 | 56 | I | |||||||||
Mr. Dannhauserjoined our board of directors in May 2006. Mr. Dannhauser was the Chief Financial Officer of Six Flags (NYSE: PKS), an owner and operator of theme and water parks, from October 1995 to April 2006. He was also a member of the board of directors of Six Flags from December 1992 to December 2005. From 1990 through June 1996, Mr. Dannhauser was a managing director of Lepercq, de Neuflize & Co. Incorporated, an investment banking firm. Mr. Dannhauser is a member of the board of directors of Lepercq. Mr. Dannhauser was a director of MeriStar Hospitality Corporation, which owned 45 hotels managed by the Company, until May 2006 when it was acquired by an affiliate of the Blackstone Group. Mr. Dannhauser was a Senior Advisor with Providence Equity from October 2006 to January 2008. |
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Name, Principal Occupation | Served as a | |||||||||||
and Business Experience | Director Since | Age | Class | |||||||||
LESLIE R. DOGGETT | 2001 | 52 | III | |||||||||
Ms. Doggettjoined our board of directors in October 2001. Since 2001, Ms. Doggett has been President and CEO of Doggett Rosemont Consulting, which specializes in business development services for hospitality and tourism-related interests. Ms. Doggett was the President and CEO of the Baltimore Area Convention and Visitor Association from 2003 to 2006. 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 ten years. | ||||||||||||
THOMAS F. HEWITT | 2002 | 65 | I | |||||||||
Mr. Hewittjoined our board of directors in July 2002 and became our Chief Executive Officer in February 2005 and the Chairman of our board of directors on March 31, 2009. Mr. Hewitt was Chairman and Chief Executive Officer of Interstate Hotels Corporation from March 1999 until July 2002 when it merged with us. Mr. Hewitt previously was Chief Operating Officer of Carnival Resorts & Casinos, where he headed all hotel and resort operations. | ||||||||||||
JAMES B. MCCURRY | 1998 | 60 | III | |||||||||
Mr. McCurryjoined our board of directors in 1998. Mr. McCurry is the President and Chief Executive Officer of Pediatric Services of America, Inc., a leading supplier of pediatric home care services. Prior to joining PSA in December 2008, Mr. McCurry was the Chairman, President and Chief Executive Officer of PRG-Schultz International, Inc. Before 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. | ||||||||||||
JOHN J. RUSSELL, JR. | 2002 | 62 | III | |||||||||
Mr. Russelljoined our board of directors in July 2002. Mr. Russell is Chief Executive Officer of NYLO Hotels, a loft accommodations hospitality company. Before he joined 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. Mr. Russell also previously served as President of Hospitality, Sales and Marketing Association International. |
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• | The appointment, compensation and oversight of our independent registered public accounting firm; | |
• | Reviewing with the independent registered public accounting firm the plans and results of the audit engagement; | |
• | Approving professional services provided by the independent registered public accounting firm; | |
• | Reviewing the independence of the independent registered public accounting firm; | |
• | 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 internal controls over financial reporting. |
• | nominating all other members of our board of directors; | |
• | recommending membership for board committees; |
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• | 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; | |
• | 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 | 39 | ||||||
Mr. Bennettis our Executive Vice President, General Counsel and Secretary. Prior to becoming Executive Vice President in May 2006, Mr. Bennett had been Senior Vice President, General Counsel and Secretary of the Company since 2001. Mr. Bennett has overseen the legal department of Interstate and its predecessors since 1998 and the human resources department since 2004. Mr. Bennett also oversees the Company’s joint ventures in India and Mexico. 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 with the law firms Donovan Leisure Newton & Irvine and Thacher Proffitt & Wood in New York. | ||||||||
SAMUEL E. KNIGHTON | 2002 | 55 | ||||||
Mr. Knightonis our President of Hotel Operations. Mr. Knighton is responsible for overseeing the day-to-day operations of our hotels in the United States, Canada and Mexico. Mr. Knighton previously was Executive Vice President of the Company’s joint venture portfolio. Prior to that, Mr. Knighton was Executive Vice President of Operations for our Crossroads division, which encompassed approximately 110 hotels in the select-service, extended-stay, and mid-market segments. Prior to joining Interstate Hotels Corporation, a predecessor company, in 1990, Mr. Knighton was Vice President of Operations for Radisson Hotels. Mr. Knighton has also worked for Hyatt Hotels Corporation. | ||||||||
DENIS S. MCCARTHY | 2004 | 40 | ||||||
Mr. McCarthyis our Chief Accounting Officer. Mr. McCarthy was Senior Vice President and Corporate Controller until his promotion to Chief Accounting Officer in April 2007. Mr. McCarthy joined our Company in November 2004 from Host Hotels Corporation, formerly Host Marriott, where he served in numerous positions culminating in director of financial reporting. Prior to joining Host, Mr. McCarthy, a CPA, was an auditor for the public accounting firm of PricewaterhouseCoopers, LLC, formally Coopers & Lybrand. | ||||||||
LESLIE NG | 2005 | 50 | ||||||
Mr. Ngis our Chief Investment Officer. Mr. Ng is responsible for all acquisition activity and investments, as well as managing joint venture relationships and identifying new management opportunities. Prior to joining Interstate in September 2005, Mr. Ng was Senior Managing Director for the national hospitality group at Cushman & Wakefield. Previously, Mr. Ng was Senior Vice President of Mergers and Acquisitions for Wyndham International and its predecessor, Patriot American Hospitality. Mr. Ng joined Wyndham/Patriot through his previous position as Senior Vice President of Development for Carnival Hotels. Earlier in his career, Mr. Ng served as a vice president for Tobishima Associates Ltd., a multinational real estate investment and development subsidiary of a Tokyo Stock Exchange-listed company, where he was responsible for acquisitions and asset management. | ||||||||
BRUCE A. RIGGINS | 2006 | 37 | ||||||
Mr. Rigginsbecame our Chief Financial Officer in April 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 as our Treasurer from September 2004 to July 2005, at MeriStar Hospitality Corporation as Vice President, Strategic Planning and Analysis from January 2003 to September 2004, as our Senior Director of Finance from January 2002 to December 2003 and as our Director of Finance from October 1998 to December 2001. Mr. Riggins began his career with Deloitte and Touche LLP. |
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REPORT ON EXECUTIVE COMPENSATION
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Compensation Element | Compensation Objectives Attempted to be Achieved | |
Base Salary | • Attract and retain qualified executives | |
Bonus Compensation | • Motivate performance to achieve specific company strategies and operating objectives | |
• Attract and retain qualified executives | ||
Perquisites (primarily life insurance) | • Attract and retain qualified executives | |
Equity-Based Compensation (currently restricted stock) | • Align long-term interests of our Named Officers with those of our stockholders | |
• Motivate performance to achieve specific company strategies and operating objectives | ||
• Attract and retain qualified executives | ||
Retirement Benefits (401(k) and non-qualified deferred compensation plan) | • Attract and retain qualified executives | |
Severance and Other Benefits Upon Termination of Employment | • Attract and retain qualified executives |
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Performance Thresholds for | ||||||||||||||||||||
Modified Adjusted EBITDA, Modified Adjusted Diluted | ||||||||||||||||||||
EPS and Individual Performance (% of budget) | ||||||||||||||||||||
Named Officer and percentage of base salary | 90 | % | 100 | % | 110 | % | 120 | % | 130 | % | ||||||||||
Thomas F. Hewitt | 38 | % | 75 | % | 110 | % | 125 | % | 150 | % | ||||||||||
Bruce A. Riggins | 38 | % | 75 | % | 90 | % | 110 | % | 125 | % | ||||||||||
Samuel E. Knighton | 35 | % | 65 | % | 80 | % | 95 | % | 115 | % | ||||||||||
Leslie Ng | 25 | % | 50 | % | 65 | % | 80 | % | 100 | % | ||||||||||
Christopher L. Bennett | 25 | % | 50 | % | 65 | % | 80 | % | 100 | % |
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Reconciliations of the Non-GAAP Financial Measures | ||||
(Unaudited, in thousands except per share amounts) | ||||
Year Ended | ||||
December 31, | ||||
2008 | ||||
Net (loss) income | $ | (18,023 | ) | |
Adjustments: | ||||
Depreciation and amortization | 18,322 | |||
Interest expense, net | 13,485 | |||
Depreciation and amortization from unconsolidated entities | 3,620 | |||
Interest expense, net from unconsolidated entities | 3,843 | |||
Discontinued operations, net | — | |||
Income tax expense | 12,281 | |||
EBITDA | 33,528 | |||
Asset impairments and write-offs | 12,842 | |||
Investment in unconsolidated entities impairments | 4,069 | |||
Foreign currency loss from unconsolidated entities | 671 | |||
Equity interest in the sale of unconsolidated entities | (2,392 | ) | ||
Severance | — | |||
Minority interest (benefit) expense | (29 | ) | ||
Adjusted EBITDA | $ | 48,689 | ||
Items excluded for bonus calculation: | ||||
Bonus expense, termination fees for properties sold by Blackstone, and EBITDA from joint ventures | (9,282 | ) | ||
Modified Adjusted EBITDA | $ | 39,407 | ||
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Reconciliations of the Non-GAAP Financial Measures (cont.) | ||||
(Unaudited, in thousands except per share amounts) | ||||
Year Ended | ||||
December 31, | ||||
2008 | ||||
Net (loss) income | $ | (18,023 | ) | |
Adjustments: | ||||
Asset impairments and write-offs | 12,842 | |||
Investment in unconsolidated entities impairments | 4,069 | |||
Foreign currency loss from unconsolidated entities | 671 | |||
Equity interest in the sale of unconsolidated entities | (2,392 | ) | ||
Severance | — | |||
Discontinued operations, net | — | |||
Deferred financing costs write-off | — | |||
Minority interest adjustment | (76 | ) | ||
Income tax rate adjustment | 9,279 | |||
Adjusted net (loss) income | $ | 6,370 | ||
Items excluded for bonus calculation: | ||||
Bonus expense; termination fees for properties sold by Blackstone for which management contracts were not retained with the new owner; the additional amortization expense for the intangible assets related to the Blackstone management contracts when the remaining useful lives of those assets was shortened to four years; and income tax expense | 1,120 | |||
Modified Adjusted net income | $ | 7,490 | ||
Modified Adjusted diluted earnings per share | $ | 0.24 | ||
Weighted average number of diluted shares outstanding (in thousands) : | 31,802 |
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Performance Thresholds for | ||||||||||||
Modified Adjusted EBITDA, Modified Adjusted | ||||||||||||
Diluted EPS and Individual | ||||||||||||
Performance (% of budget) | ||||||||||||
Named Officer and percentage of base salary | 90 | % | 100 | % | 130 | % | ||||||
Thomas F. Hewitt | 95 | % | 125 | % | 156 | % | ||||||
Bruce A. Riggins | 85 | % | 110 | % | 138 | % | ||||||
Samuel E. Knighton | 85 | % | 100 | % | 121 | % | ||||||
Leslie Ng | 70 | % | 85 | % | 106 | % | ||||||
Christopher L. Bennett | 70 | % | 85 | % | 106 | % |
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Change in | ||||||||||||||||||||||||||||||||
Pension | ||||||||||||||||||||||||||||||||
Value and | ||||||||||||||||||||||||||||||||
Nonqualified | ||||||||||||||||||||||||||||||||
Non-Equity | Deferred | |||||||||||||||||||||||||||||||
Stock | Option | Incentive Plan | Compensation | All Other | ||||||||||||||||||||||||||||
Salary | Awards | Awards | Compensation(1) | Earnings | Compensation | Total | ||||||||||||||||||||||||||
Name and Principal Position | Year | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ||||||||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | ||||||||||||||||||||||||
Thomas F. Hewitt, | 2008 | 500,000 | 524,937 | — | 125,000 | — | 40,022 | (2) | 1,189,959 | |||||||||||||||||||||||
Chief Executive Officer | 2007 | 496,154 | 376,995 | — | 670,833 | — | 63,456 | (2) | 1,607,438 | |||||||||||||||||||||||
2006 | 400,000 | 253,625 | 5,612 | 500,000 | — | 104,194 | (2) | 1,263,431 | ||||||||||||||||||||||||
Bruce A. Riggins, | 2008 | 374,071 | 257,119 | — | 93,518 | — | 23,231 | (3) | 747,939 | |||||||||||||||||||||||
Chief Financial Officer | 2007 | 332,125 | 132,689 | — | 378,623 | — | 14,512 | (3) | 857,949 | |||||||||||||||||||||||
2006 | 225,000 | 188,070 | — | 357,500 | 452 | (3) | 180,190 | (3) | 951,212 | |||||||||||||||||||||||
Leslie Ng, | 2008 | 304,017 | 176,783 | 37,678 | 50,896 | — | 533,951 | (4) | 1,103,325 | |||||||||||||||||||||||
Chief Investment Officer | 2007 | 295,495 | 103,455 | 59,559 | 244,670 | — | 389,084 | (4) | 1,092,263 | |||||||||||||||||||||||
2006 | 288,037 | 134,074 | 38,072 | 230,430 | — | 170,002 | (4) | 860,615 | ||||||||||||||||||||||||
Samuel E. Knighton, | 2008 | 349,529 | 207,822 | — | 75,731 | — | 9,725 | (5) | 642,807 | |||||||||||||||||||||||
President of Hotel | 2007 | 327,015 | 107,870 | — | 272,513 | — | 690 | (5) | 708,088 | |||||||||||||||||||||||
Operations | 2006 | 306,577 | 51,387 | — | 245,261 | — | — | 603,225 | ||||||||||||||||||||||||
Christopher L. Bennett, | 2008 | 295,000 | 163,286 | — | 49,167 | — | 13,564 | (6) | 521,017 | |||||||||||||||||||||||
Executive Vice President & | 2007 | 280,974 | 103,923 | — | 237,891 | 1,136 | (6) | 5,173 | (6) | 629,097 | ||||||||||||||||||||||
General Counsel | 2006 | 246,277 | 65,193 | — | 135,452 | 8,131 | (6) | 10,121 | (6) | 465,174 |
(1) | This column reports all amounts earned under the Non-Equity Incentive Plan for services performed during the fiscal year, whether paid or deferred. | |
(2) | The Other Compensation amount reported for 2008 includes: (i) $28,022 of life insurance premiums paid on behalf of Mr. Hewitt by us and (ii) $12,000 of car allowance. The Other Compensation amount reported for 2007 includes: (i) $25,533 of life insurance premiums paid on behalf of Mr. Hewitt by us (ii) $36,000 of car allowance; and (iii) retroactive pay for 2006. The Other Compensation amount reported for 2006 includes: (i) $75,750 in severance payments to Mr. Hewitt. (In connection with our 2002 merger with Interstate Hotels Corporation, Mr. Hewitt, who was then Chairman and Chief Executive Officer of Interstate Hotels Corporation, had a contractual right to a lump sum severance payment from Interstate Hotels Corporation which he agreed to receive in the form of monthly payments beginning with the merger date through January 2006); and (ii) $28,444 of life insurance premiums paid on behalf of Mr. Hewitt by us. | |
(3) | The Other Compensation amount reported for 2008 includes: (i) $7,928 of life insurance premiums paid on behalf of Mr. Riggins by us; and (ii) $15,303 of our matching contributions into our retirement plans. The Other Compensation amount reported for 2007 includes: (i) $7,762 of life insurance premiums paid on behalf of Mr. Riggins by us; and (iii) $6,750 of our matching contributions into our retirement plans. The Other Compensation amount reported for 2006 includes: (i) $164,034 of relocation expenses incurred as a result of our decision to relocate Mr. Riggins from Florida to Virginia in 2006, after assuming his role as Chief Financial Officer; (ii) life insurance premiums paid on behalf of Mr. Riggins by us; and (iii) matching contributions into our retirement plans. Mr. Riggins participates in a non-qualified deferred compensation plan. During 2006, his investments gained above market earnings of $452. | |
(4) | The Other Compensation amount reported for 2008 includes (i) $531,877 of development commissions; (ii) life insurance premiums paid on behalf of Mr. Ng by us; and (iii) retroactive pay for 2007. The Other Compensation amount reported for 2007 includes (i) $388,634 of development commissions and (ii) $450 for life insurance premiums paid on behalf of Mr. Ng by us. The Other Compensation amount reported for 2006 includes (i) $169,552 for development commissions and (ii) life insurance premiums paid on behalf of Mr. Ng by us. | |
(5) | The Other Compensation amounts reported for 2008 and 2007 include life insurance premiums paid on behalf of Mr. Knighton by us and our matching contributions into our retirement plans. | |
(6) | The Other Compensation amounts reported includes life insurance premiums paid on behalf of Mr. Bennett by us and our matching contribution into our retirement plans. Mr. Bennett participates in a non-qualified deferred |
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compensation plan. During 2007 and 2006 his investments gained above market earnings of $1,136 and $8,131, respectively. |
All Other | All Other | |||||||||||||||||||||||||||||||||||||||||||
Stock | Option | |||||||||||||||||||||||||||||||||||||||||||
Awards: | Awards: | |||||||||||||||||||||||||||||||||||||||||||
Estimated Possible Payouts | Estimated Possible Payouts | Number of | Number of | |||||||||||||||||||||||||||||||||||||||||
Under Non-Equity Incentive | Equity Incentive | Shares of | Securities | Exercise | Grant Date | |||||||||||||||||||||||||||||||||||||||
Plan Awards | Plan Awards | Stock or | Underlying | or Base Price of | Fair Value of | |||||||||||||||||||||||||||||||||||||||
Grant | Threshold | Target | Maximum | Threshold | Target | Maximum | Units | Options | Option of Awards | Stock and | ||||||||||||||||||||||||||||||||||
Name | Date | ($) | ($) | ($) | (#) | (#) | (#) | (#) | (#) | ($/Sh) | Option Awards | |||||||||||||||||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (f) | (g) | (h) | (i) | |||||||||||||||||||||||||||||||||
Thomas F. Hewitt | — | — | 375,000 | 750,000 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
2/28/2008 | — | — | — | — | 147,406 | 183,962 | 172,995 | (1) | — | — | $ | 858,055 | ||||||||||||||||||||||||||||||||
Bruce A. Riggins | — | — | 280,553 | 467,589 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
2/28/2008 | — | — | — | — | 86,846 | 108,952 | 102,320 | — | — | $ | 507,507 | |||||||||||||||||||||||||||||||||
Leslie Ng | — | — | 152,009 | 304,017 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
2/28/2008 | — | — | — | — | 59,707 | 74,458 | 70,032 | — | — | $ | 347,359 | |||||||||||||||||||||||||||||||||
Samuel E. Knighton | — | — | 227,194 | 401,958 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
2/28/2008 | — | — | — | — | 77,736 | 94,060 | 89,163 | — | — | $ | 442,248 | |||||||||||||||||||||||||||||||||
Christopher L. Bennett | — | — | 147,500 | 295,000 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
2/28/2008 | — | — | — | — | 59,139 | 73,750 | 69,367 | — | — | $ | 344,060 |
(1) | On February 28, 2008, Mr. Hewitt was granted 172,995 shares of restricted stock that will vest in three annual installments beginning on the date of the grant. |
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Option Awards | Stock Awards | |||||||||||||||||||||||||||||||
Market | ||||||||||||||||||||||||||||||||
Number of | Number of | Number of | Value of | |||||||||||||||||||||||||||||
Securities | Securities | Shares or | Shares or | |||||||||||||||||||||||||||||
Underlying | Underlying | Units of | Units of | |||||||||||||||||||||||||||||
Unexercised | Unexercised | Option | Stock That | Stock That | ||||||||||||||||||||||||||||
Options | Options | Exercise | Option | Vesting Date | Have Not | Have Not | Vesting Date of | |||||||||||||||||||||||||
(#) | (#) | Price | Expiration | of Option | Vested | Vested | Restricted Stock | |||||||||||||||||||||||||
Name | Exercisable | Unexercisable | ($) | Date | Award | (#) | ($) | Awards | ||||||||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | ||||||||||||||||||||||||
Thomas F. Hewitt | 17,000 | — | $ | 4.58 | 4/4/2015 | — | — | — | — | |||||||||||||||||||||||
— | — | — | — | — | 20,000 | $ | 13,800 | 4/25/2009 | ||||||||||||||||||||||||
— | — | — | — | — | 56,667 | (1) | $ | 39,100 | 4/12/2010 | |||||||||||||||||||||||
— | — | — | — | — | 172,995 | (1) | $ | 119,367 | 2/28/2011 | |||||||||||||||||||||||
Bruce A. Riggins | — | — | — | — | — | 13,334 | $ | 9,200 | 4/17/2009 | |||||||||||||||||||||||
— | — | — | — | — | 37,500 | (1) | $ | 25,875 | 3/26/2011 | |||||||||||||||||||||||
— | — | — | — | — | 102,320 | (1) | $ | 70,601 | 2/28/2012 | |||||||||||||||||||||||
Leslie Ng | 25,000 | — | $ | 4.65 | 9/26/2015 | — | — | — | — | |||||||||||||||||||||||
16,667 | 8,333 | $ | 5.48 | 4/3/2016 | — | — | — | — | ||||||||||||||||||||||||
8,333 | 16,667 | $ | 6.23 | 3/26/2017 | — | — | — | — | ||||||||||||||||||||||||
— | — | — | — | — | 6,667 | $ | 4,600 | 4/1/2009 | ||||||||||||||||||||||||
— | — | — | — | — | 22,500 | (1) | $ | 15,525 | 3/26/2011 | |||||||||||||||||||||||
— | — | — | — | — | 70,032 | (1) | $ | 48,322 | 2/28/2012 | |||||||||||||||||||||||
Samuel E. Knighton | — | — | — | — | — | 2,667 | $ | 1,840 | 4/1/2009 | |||||||||||||||||||||||
— | — | — | — | — | 9,000 | $ | 6,210 | 6/8/2009 | ||||||||||||||||||||||||
— | — | — | — | — | 15,000 | (1) | $ | 10,350 | 3/26/2011 | |||||||||||||||||||||||
— | — | — | — | — | 89,163 | (1) | $ | 61,522 | 2/28/2012 | |||||||||||||||||||||||
Christopher L. Bennett | 1,000 | — | $ | 15.95 | 2/4/2009 | — | — | — | — | |||||||||||||||||||||||
— | — | — | — | — | 6,667 | $ | 4,600 | 4/1/2009 | ||||||||||||||||||||||||
— | — | — | — | — | 22,500 | (1) | $ | 15,525 | 3/26/2011 | |||||||||||||||||||||||
— | — | — | — | — | 69,367 | (1) | $ | 47,863 | 2/28/2012 |
(1) | Stock options and restricted stock granted under the 2007 Equity Award Plan vest in four annual installments beginning on the date of the grant (except for restricted stock grants to Mr. Hewitt which vest over three years pursuant to the terms of his employment agreement) and have a term of 10 years. |
31
Option Awards | Stock Awards | |||||||||||||||
Number of Shares | Value Realized | Number of Shares | Value Realized | |||||||||||||
Name | Acquired on Exercise (#) | on Exercise ($) | Acquired on Vesting (#) | on Vesting ($) | ||||||||||||
(a) | (b) | (c) | (d) | (e) | ||||||||||||
Thomas F. Hewitt | — | — | 33,333 | $ | 144,999 | |||||||||||
20,000 | $ | 80,400 | ||||||||||||||
28,333 | $ | 127,215 | ||||||||||||||
Bruce A. Riggins | — | — | 13,333 | $ | 56,932 | |||||||||||
12,500 | $ | 63,125 | ||||||||||||||
Leslie Ng | — | — | 6,667 | $ | 13,601 | |||||||||||
6,667 | $ | 32,668 | ||||||||||||||
7,500 | $ | 37,875 | ||||||||||||||
Samuel E. Knighton | — | — | 2,667 | $ | 13,068 | |||||||||||
9,000 | $ | 30,960 | ||||||||||||||
5,000 | $ | 25,250 | ||||||||||||||
Christopher L. Bennett | — | — | 6,667 | $ | 32,668 | |||||||||||
6,667 | $ | 32,668 | ||||||||||||||
7,500 | $ | 37,875 |
32
2008 | ||||
Fund Name (Ticker) | Return | |||
JP Morgan Money Market (VPMXX) | 2.65 | % | ||
PIMCO Low Duration Admin (PLDAX) | (1.47 | )% | ||
PIMCO Total Return Admin (PTRAX) | 4.60 | % | ||
T. Rowe Price Equity Income Shs (PRFDX) | (35.75 | )% | ||
Vanguard 500 Index Inv (VFINX) | (37.02 | )% | ||
Artisan Mid Cap Inv (ARTMX) | (44.13 | )% | ||
AIM Small Cap Growth A (GTSAX) | (38.77 | )% | ||
Putnam VT International Equity Class A (POVSX) | (44.84 | )% |
Executive | Registrant | Aggregate | Aggregate | Aggregate | ||||||||||||||||
Contributions in Last | Contributions in Last | Earnings in Last | Withdrawals / | Balance at Last | ||||||||||||||||
Name | Fiscal Year ($) | Fiscal Year ($) | Fiscal Year ($) | Distributions ($) | Fiscal Year-End ($) | |||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | |||||||||||||||
Thomas F. Hewitt | — | — | — | — | — | |||||||||||||||
Bruce A. Riggins(1) | 14,963 | 8,246 | (15,580 | ) | — | 34,322 | ||||||||||||||
Leslie Ng | — | — | — | — | — | |||||||||||||||
Samuel E. Knighton(2) | 24,467 | — | (5,523 | ) | — | 18,944 | ||||||||||||||
Christopher L. Bennett(3) | 11,800 | 6,336 | (12,821 | ) | 10,997 | 23,052 | ||||||||||||||
Thomas F. Hewitt | — | — | — | — | — |
(1) | Mr. Riggins’ balance includes a beginning balance from previous years’ activities, deferrals from his base salary and investment (losses) earnings on the deferral balance. | |
(2) | Mr. Knighton’s balance includes a deferrals from his base salary and investment (losses) earnings on the deferral balance. | |
(3) | Mr. Bennett’s balance includes a beginning balance from previous years’ activities, deferrals from his base salary and investment (losses) earnings on the deferral balance, less a distribution of $10,997 in accordance with his election prior to the date Mr. Bennett began the deferrals. |
33
34
Acceleration and | ||||||||||||||||
Continuation of | ||||||||||||||||
Continuation of | Equity Awards | |||||||||||||||
Cash | Medical/Welfare | (Unamortized | Total | |||||||||||||
Severance | Benefits | Expense as of | Termination | |||||||||||||
Payment | (Present Value) | 12/31/08) | Benefits | |||||||||||||
Name/Scenario | ($) | ($) | ($) | ($) | ||||||||||||
(a) | (b) | (c) | (d) | (e) | ||||||||||||
Thomas F. Hewitt | ||||||||||||||||
- Voluntary retirement | — | — | — | — | ||||||||||||
- Termination for cause | — | — | — | — | ||||||||||||
- Death or disability | 625,000 | 9,803 | 857,500 | 1,492,303 | ||||||||||||
- Termination without cause or for good reason | 1,250,000 | 14,705 | 857,500 | 2,122,205 | ||||||||||||
- Change in control | 1,250,000 | 14,705 | 857,500 | 2,122,205 | ||||||||||||
Bruce A. Riggins | ||||||||||||||||
- Voluntary retirement | — | — | — | — | ||||||||||||
- Termination for cause | — | — | — | — | ||||||||||||
- Death or disability | 428,268 | 14,345 | 596,029 | 1,038,642 | ||||||||||||
- Termination without cause or for good reason | 428,268 | 21,518 | 596,029 | 1,045,815 | ||||||||||||
- Change in control(1) | 856,536 | 21,518 | 596,029 | 1,474,083 | ||||||||||||
Leslie Ng | ||||||||||||||||
- Voluntary retirement | — | — | — | — | ||||||||||||
- Termination for cause | — | — | — | — | ||||||||||||
- Death or disability | 380,896 | 13,346 | 403,067 | 797,309 | ||||||||||||
- Termination without cause or for good reason(2) | 571,344 | 20,019 | 403,067 | 994,430 | ||||||||||||
- Change in control(1) | 761,792 | 20,019 | 403,067 | 1,184,878 | ||||||||||||
Samuel E. Knighton | ||||||||||||||||
- Voluntary retirement | — | — | — | — | ||||||||||||
- Termination for cause | — | — | — | — | ||||||||||||
- Death or disability | 405,331 | 14,978 | 451,509 | 871,818 | ||||||||||||
- Termination without cause or for good reason | 405,331 | 22,467 | 451,509 | 879,307 | ||||||||||||
- Change in control(1) | 810,662 | 22,467 | 451,509 | 1,284,638 | ||||||||||||
Christopher L. Bennett | ||||||||||||||||
- Voluntary retirement | — | — | — | — | ||||||||||||
- Termination for cause | — | — | — | — | ||||||||||||
- Death or disability | 344,167 | 12,315 | 385,291 | 741,773 | ||||||||||||
- Termination without cause or for good reason | 344,167 | 18,473 | 385,291 | 747,931 | ||||||||||||
- Change in control(1) | 688,334 | 18,473 | 385,291 | 1,092,098 |
(1) | As stated in the Named Officer’s respective employment agreement, the Company would have elected, as of December 31, 2008, to reduce the total compensation awarded to the Named Officer upon a change in control to the nearest amount allowable and deductible so as not to trigger an excise tax payable by the Named Officer or a loss of a deduction otherwise permitted by the Company under Section 280G and Section 4999 of the Internal Revenue Code. | |
(2) | As stated in Leslie Ng’s employment agreement, if his employment is terminated by us without cause or if the Named Officer terminates the employment for good reason, we would pay him a lump sum equal to the product of one and one-half (1.5) times the sum of (A) his annual base salary and (B) the amount of his bonus for the preceding calendar year. |
35
36
Change | ||||||||||||||||||||||||||||
in Pension | ||||||||||||||||||||||||||||
Value and | ||||||||||||||||||||||||||||
Nonqualified | ||||||||||||||||||||||||||||
Non-Equity | Deferred | |||||||||||||||||||||||||||
Fees Earned or | Stock | Option | Incentive Plan | Compensation | All Other | |||||||||||||||||||||||
Paid in Cash | Awards | Awards | Compensation | Earnings | Compensation | Total | ||||||||||||||||||||||
Name | ($) | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | |||||||||||||||||||||
Paul W. Whetsell(1) | 79,000 | 6,036 | 2,735 | — | — | — | 87,771 | |||||||||||||||||||||
Karim J. Alibhai(2) | 11,000 | — | — | — | — | — | 11,000 | |||||||||||||||||||||
Ronald W. Allen | 48,208 | 6,036 | 10,449 | — | — | — | 64,693 | |||||||||||||||||||||
H. Eric Bolton | 46,500 | 6,036 | 7,355 | — | — | — | 59,891 | |||||||||||||||||||||
James F. Dannhauser | 54,400 | 6,036 | 5,342 | — | — | — | 65,878 | |||||||||||||||||||||
Leslie R. Doggett | 45,750 | 6,036 | 2,594 | — | — | — | 54,380 | |||||||||||||||||||||
James B. McCurry | 63,000 | 6,036 | 2,594 | — | — | — | 71,630 | |||||||||||||||||||||
John J. Russell, Jr. | 52,000 | 6,036 | 2,594 | — | — | — | 60,630 |
(1) | Mr. Whetsell resigned from our board of directors on March 31, 2009. | |
(2) | Mr. Alibhai resigned from our board of directors on April 9, 2008. |
37
Grant Date Fair | Securities Underlying | Securities Underlying | ||||||||||||||
Value of Option | Unexercised Options | Unexercised Options | ||||||||||||||
Name | Award | (#) | (#) | |||||||||||||
(a) | Grant Date | ($) | Exercisable | Unexercisable | ||||||||||||
Paul W. Whetsell(1) | 6/3/05 | $ | 8,315 | 5,000 | — | |||||||||||
6/2/06 | $ | 11,308 | 3,333 | 1,667 | ||||||||||||
Karim J. Alibhai(2) | 8/1/02 | $ | 11,625 | 7,500 | — | |||||||||||
6/11/03 | $ | 7,647 | 5,000 | — | ||||||||||||
5/28/04 | $ | 8,613 | 5,000 | — | ||||||||||||
6/3/05 | $ | 4,607 | 3,333 | — | ||||||||||||
6/2/06 | $ | 3,313 | 1,667 | — | ||||||||||||
Ronald W. Allen | 8/24/06 | $ | 46,237 | 5,000 | 2,500 | |||||||||||
H. Eric Bolton | 5/4/07 | $ | 18,763 | 2,500 | 5,000 | |||||||||||
James F. Dannhauser | 5/22/06 | $ | 16,535 | 5,000 | 2,500 | |||||||||||
6/2/06 | $ | 11,308 | 3,333 | 1,667 | ||||||||||||
Leslie R. Doggett | 10/23/01 | $ | 2,325 | 1,500 | — | |||||||||||
8/1/02 | $ | 11,625 | 7,500 | — | ||||||||||||
6/11/03 | $ | 7,647 | 5,000 | — | ||||||||||||
5/28/04 | $ | 8,613 | 5,000 | — | ||||||||||||
6/3/05 | $ | 7,374 | 5,000 | — | ||||||||||||
6/2/06 | $ | 11,308 | 3,333 | 1,667 | ||||||||||||
James B. McCurry | 5/11/99 | $ | 1,550 | 1,000 | — | |||||||||||
5/18/00 | $ | 1,550 | 1,000 | — | ||||||||||||
6/14/01 | $ | 1,550 | 1,000 | — | ||||||||||||
8/1/02 | $ | 11,625 | 7,500 | — | ||||||||||||
6/11/03 | $ | 7,647 | 5,000 | — | ||||||||||||
5/28/04 | $ | 8,613 | 5,000 | — | ||||||||||||
6/3/05 | $ | 7,374 | 5,000 | — | ||||||||||||
6/2/06 | $ | 11,308 | 3,333 | 1,667 | ||||||||||||
John J. Russell, Jr. | 8/1/02 | $ | 11,625 | 7,500 | — | |||||||||||
6/11/03 | $ | 7,647 | 5,000 | — | ||||||||||||
5/28/04 | $ | 8,613 | 5,000 | — | ||||||||||||
6/3/05 | $ | 7,374 | 5,000 | — | ||||||||||||
6/2/06 | $ | 11,308 | 3,333 | 1,667 |
(1) | Mr. Whetsell resigned from our board of directors on March 31, 2009. | |
(2) | Mr. Alibhai resigned from our board of directors on April 9, 2008. |
38
H. Eric Bolton
John J. Russell, Jr.
Christopher S. Shackelton
39
40
Shares | ||||||||
Beneficially Owned | ||||||||
Name & Address of Beneficial Owner | Number | Percentage | ||||||
Holders of 5% or more of our Common Stock: | ||||||||
Coliseum Capital Management, LLC, Coliseum Capital, LLC, Coliseum Capital Partners, LP, Adam Gray and Christopher Shackelton(1) | 3,740,743 | 11.17 | % | |||||
Renaissance Technologies LLC and James H. Simons(2) | 2,362,400 | 7.06 | % | |||||
Horacio Rozenblum(3) | 2,220,624 | 6.63 | % | |||||
Keeley Asset Management Corp. and Keeley Small Cap Value Fund, a series of Keeley Funds, Inc.(4) | 2,229,000 | 6.66 | % | |||||
TLG Partners, LP, TLP Capital Investment, LLC and Timothy Griffith(5) | 2,036,700 | 6.08 | % | |||||
Dimensional Fund Advisors LP(6) | 2,043,872 | 6.10 | % | |||||
DUMAC, LLC, Blackwell Partners, LLC, Duke University and The Duke Endowment(7) | 1,671,000 | 4.99 | % | |||||
Executive Officers and Directors: | ||||||||
Ronald W. Allen(8) | 21,692 | * | ||||||
Christopher L. Bennett(9) | 173,059 | * | ||||||
H. Eric Bolton(10) | 11,692 | * | ||||||
James F. Dannhauser(11) | 19,192 | * | ||||||
Leslie R. Doggett(12) | 35,692 | * | ||||||
Thomas F. Hewitt(13) | 615,814 | 1.84 | % | |||||
Samuel E. Knighton(14) | 175,006 | * | ||||||
Denis S. McCarthy(15) | 81,756 | * | ||||||
James B. McCurry(16) | 37,192 | * | ||||||
Leslie Ng(17) | 382,316 | 1.14 | % | |||||
Bruce A. Riggins(18) | 286,796 | * | ||||||
John J. Russell, Jr.(19) | 34,192 | * | ||||||
Christopher S. Shackelton(1) | 3,740,743 | 11.17 | % | |||||
Executive officers and directors as a group (13 persons) | 5,615,142 | 16.77 | % | |||||
* | Represents less than 1% of the class. | |
(1) | Beneficial ownership information is based on the Schedule 13D filed by Coliseum Capital Management, LLC, Coliseum Capital, LLC, Coliseum Capital Partners, LP, Adam Gray and Christopher Shackelton (located at 825 Third Avenue, 36th Floor, New York, NY 10022) on February 17, 2009. | |
(2) | Beneficial ownership information is based on the Schedule 13G/A filed by Renaissance Technologies LLC and James H. Simons (located at 800 Third Avenue, New York, NY 10022) on February 13, 2009. | |
(3) | Beneficial ownership information is based on the Schedule 13G filed by Horacio Rozenblum (located at San Martin 140, 4th Floor, Buenos Aires, Argentina 1004) on March 20, 2009. | |
(4) | Beneficial ownership information is based on the Schedule 13G/A filed by Keeley Asset Management Corp. and Keeley Small Cap Value Fund, a series of Keeley Funds, Inc. (located at 401 LaSalle Street, Chicago, IL 60605) on February 13, 2009. Keeley Asset Management Corp. and Keeley Small Cap Value Fund share |
41
beneficial ownership over the same 2,225,000 shares, and Keeley Asset Management Corp. beneficially owns an additional 4,000 shares. | ||
(5) | Beneficial ownership information is based on the Schedule 13G filed by TLG Partners, LP, TLP Capital Investment, LLC and Timothy Griffith (located at 4131 North Central Expressway, Suite 800, Dallas, TX 75204) on February 12, 2009. TLG Partners, LP, TLP Capital Investment, LLC and Timothy Griffith share beneficial ownership over the same 2,036,700 shares, and Timothy Griffith beneficially owns an additional 29,750 shares. | |
(6) | Beneficial ownership information is based on the Schedule 13G/A filed by Dimensional Fund Advisors LP (located at Palisades West, Building One, 6300 Bee Cave Road, Austin, TX 78746) on February 5, 2009. | |
(7) | Beneficial ownership information is based on the Schedule 13G filed by DUMAC, LLC, Blackwell Partners, LLC, Duke University and The Duke Endowment (located at 406 Blackwell Street, Suite 300, Durham, NC 27701) on January 26, 2009. | |
(8) | Beneficial ownership includes 5,000 vested options and 6,061 shares of unvested restricted stock. | |
(9) | Beneficial ownership includes 114,867 shares of unvested restricted stock. | |
(10) | Beneficial ownership includes 5,000 vested options and 6,061 shares of unvested restricted stock. | |
(11) | Beneficial ownership includes 12,500 vested options and 6,061 shares of unvested restricted stock. | |
(12) | Beneficial ownership includes 29,000 vested options and 6,061 shares of unvested restricted stock. | |
(13) | Beneficial ownership includes 17,000 vested options and 282,911 shares of unvested restricted stock. | |
(14) | Beneficial ownership includes 152,650 shares of unvested restricted stock. | |
(15) | Beneficial ownership includes 65,767 shares of unvested restricted stock. | |
(16) | Beneficial ownership includes 30,500 vested options and 6,061 shares of unvested restricted stock. | |
(17) | Beneficial ownership includes 66,667 vested options and 124,285 shares of unvested restricted stock. This amount does not include the 25,000 shares indirectly held by Blue Cougar Investments, LLC, of which Mr. Ng beneficially owns 50%, and as disclosed in the Form 4 filed by Mr. Ng on May 21, 2008. | |
(18) | Beneficial ownership includes 180,443 shares of unvested restricted stock. | |
(19) | Beneficial ownership includes 27,500 vested options and 6,061 shares of unvested restricted stock. |
42
Secretary
43
I. | Purpose |
II. | Organization |
IV. | Authority and Responsibilities |
A-1
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. | |
2. | 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. | |
3. | Review on an annual basis the performance of the independent auditors. | |
4. | 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. | |
5. | 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. | |
6. | 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. | |
7. | Review all reports required to be submitted by the independent auditors to the Audit Committee under Section 10A of the Securities Exchange Act. | |
8. | 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. |
9. | 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.” | |
10. | 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. | |
11. | 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. | |
12. | 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
13. | 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. |
14. | 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. |
15. | 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. | |
16. | 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. | |
17. | 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. | |
18. | 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. |
19. | 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. | |
20. | 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. | |
21. | 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. |
22. | 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
23. | Review and approve the appointment and replacement of the Company’s chief internal auditor. | |
24. | Review on an annual basis the performance of the internal audit group. | |
25. | 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. | |
26. | 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. | |
27. | 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. |
28. | Review and approve all related-party transactions. | |
29. | 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. | |
30. | 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. 31. Review and reassess the adequacy of this Charter annually and recommend to the Board any changes deemed appropriate by the Audit Committee. | |
32. | Review its own performance annually. | |
33. | Report regularly to the Board. | |
34. | 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 three 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 three years, neither the director nor any of his or her immediate family members has received more than $100,000 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 three 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 three 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 three 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 2% of such company’s consolidated gross revenues. | |
• | During the past three 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 three 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 2% 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.‡ |
‡ | Not required by NYSE Section 303A. |
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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 STOCKHOLDER 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 stockholder 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 Broadridge, 51 Mercedes Way, Edgewood, NY 11717.TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: M13297-P79847 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY INTERSTATE HOTELS & RESORTS, INC. The Board of Directors recommends votes “FOR” the ratification of KPMG LLP as the independent registered public accounting firm for the Company for the fiscal year ending December 31, 2009, and “FOR” all director nominees, all as more fully set forth in the accompanying Proxy Statement. 1. Ratification of the appointment of KPMG LLP as the independent registered public accounting firm 2. for the Company for the fiscal year ending December 31, 2009. For Against Abstain 0 0 0 2. Election/re-election as directors of the Company to serve three-year terms expiring at the Annual Meeting in 2012 or until their successors are duly elected and qualified. For Against Abstain 2a. Ronald W. Allen 0 0 0 2b. H. Eric Bolton 0 0 0 2c. Christopher S. Shackelton 0 0 0 Please sign exactly as the 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. 0 For address changes and/or comments, please check this box and write them on the back where indicated. Please indicate if you plan to attend the Annual Meeting of Stockholders on June 17, 2009. 0 0 Yes NoSignature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com. M13298-P79847 PROXY INTERSTATE HOTELS & RESORTS, INC. 4501 N. FAIRFAX DRIVE 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, located at 4501 N. Fairfax Drive, Suite 500, Arlington, Virginia, 22203, on June 17, 2009, at 10:00 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 All” the director nominees and “FOR” the proposal 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 elected or re-elected. In the event any director 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. PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY CARD PROMPT LY. YOU M AY USE THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. 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 |