SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED
BY RULE 14A-6(E)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-12
SONESTA INTERNATIONAL HOTELS CORPORATION
-----------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
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applies:
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applies:
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[LOGO]
200 CLARENDON STREET
BOSTON, MASSACHUSETTS 02116
April 16, 2001
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders to be
held on May 14, 2001, at 9:00 in the morning, notice of which is enclosed. The
Meeting will be held at the Company's Corporate Offices, 200 Clarendon Street,
Boston, Massachusetts. I hope that as many stockholders as possible will attend.
Please date and sign the enclosed Proxy and return it in the accompanying
envelope. This will not prevent you from voting in person at the Meeting if you
so desire, in which case you may revoke your Proxy at that time. By returning
your signed Proxy now, you can be sure that your vote will be counted even if
you are not able to attend the Meeting. If you have received Proxies as both a
Common Stock and Preferred Stock owner, please sign, date and return both
Proxies.
The Annual Report of the Company for 2000 is being forwarded to stockholders
together with this Notice and Proxy Statement; however, any stockholder who
wishes to receive another copy of this report or the Company's Form 10-K may
obtain one, without charge, by writing to the Secretary of the Company at the
above address.
Roger P. Sonnabend
CHAIRMAN OF THE BOARD
[LOGO]
200 CLARENDON STREET
BOSTON, MASSACHUSETTS 02116
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
To the Stockholders of
Sonesta International Hotels Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Sonesta
International Hotels Corporation (the "Company"), will be held at the Company's
Corporate Offices, 200 Clarendon Street, Boston, Massachusetts on May 14, 2001,
at 9:00 a.m., for the following purposes.
MATTER NO.
1. To elect a Board of Directors.
2. To ratify the appointment of Ernst & Young LLP as independent auditors
for the year 2001.
3. To consider and transact such other business as may properly come before
the Meeting or any adjournment or adjournments thereof.
Holders of Preferred and Common Stock are entitled to vote on Matter No. 1
as set forth in the accompanying Proxy Statement; only the holders of Common
Stock may vote on the other matters.
Stockholders of record at the close of business on April 11, 2001 are
entitled to notice of and to vote at the Meeting.
By Order of the Board of Directors,
Peter J. Sonnabend
SECRETARY
Dated: April 16, 2001
PROXY STATEMENT
SOLICITATION OF PROXIES
The accompanying Proxy is solicited by the Board of Directors of the
Company. All shares represented by the accompanying Proxy will be voted in
accordance with the specified choice of the stockholders. In the absence of
directions, the Proxy will be voted for the election of the nominees for
Directors named in this Proxy Statement, and for the ratification of the
appointment of Ernst & Young LLP as independent auditors for the year 2001. The
Proxy may be revoked at any time before it is exercised by notifying the Company
in writing at the address listed on the Notice of Annual Meeting of
Stockholders, Attention--Office of the Secretary; or by voting in person at the
Meeting.
All costs of solicitation of Proxies will be borne by the Company. In
addition to solicitation by mail, the Company's Directors, officers and regular
employees, without additional remuneration, may solicit Proxies by telephone,
telegraph and personal interviews. Brokers, custodians and fiduciaries will be
requested to forward Proxy soliciting material to the owners of stock held in
their names, and the Company will reimburse them for their out-of-pocket and
clerical disbursements in connection therewith. This Proxy Statement and
accompanying Proxy are first being mailed to stockholders on or about April 16,
2001.
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
The outstanding voting securities of the Company as of April 1, 2001
consisted of 3,705,230 shares of Common Stock and 10,672 shares of Preferred
Stock. Only stockholders of record at the close of business on April 11, 2001
will be entitled to vote. Stockholders are entitled to one vote per share. In
connection with the election of Directors, holders of Preferred Stock as a class
elect two Directors and holders of Common Stock as a class elect the remaining
Directors. All stockholders have cumulative voting rights with respect to the
election of Directors, which means that within each class a stockholder's total
vote (number of shares held multiplied by the number of Directors to be elected
by that class) may be cast entirely for one nominee or distributed among two or
more nominees. The Board of Directors is soliciting discretionary authority to
cumulate votes. The vote of the holders of a majority of the Common Stock voting
at the Meeting will be sufficient to take action on matters other than the
election of Directors. Holders of Preferred Stock are not entitled to vote on
any matter other than the election of Directors.
Under SEC rules, boxes and a designated blank space are provided on the
proxy card for shareholders to mark if they wish either to abstain on one or
more of the proposals or to withhold authority to vote for one or more nominees
for Director. In accordance with New York State law, such abstentions are not
counted in determining the votes cast in connection with the selection of
auditors or the election of one or more of the nominees for Director.
5
1. ELECTION OF DIRECTORS
The persons named in the accompanying Proxy, unless otherwise instructed,
intend to vote shares of Common Stock in favor of the election as Directors for
the ensuing year of the Common Stock Nominees named below and to vote shares of
Preferred Stock in favor of the election as Directors for the ensuing year of
the Preferred Stock Nominees named below, and will be entitled to vote
cumulatively in respect of any such nominees. In case any of those named should
become unavailable to serve, it is intended that votes may be cast for a
substitute. The Board of Directors of the Company has no reason to believe the
persons named will be unable or decline to serve if elected.
OWNED BENEFICIALLY AS OF
APRIL 1, 2001(1)
COMMON STOCK NOMINEES -------------------------
SHARES AND SHARES AND
PERCENT OF PERCENT OF
PREFERRED COMMON
NAME, AGE AND PRINCIPAL OCCUPATION STOCK(2) STOCK(3)
---------------------------------- ---------- -----------
George S. Abrams Age 68; Director since May, 1995;
Attorney and Director and Trustee of several organizations................. None 2,570
(Less
than
.1%)
Mr. Abrams has been an attorney with the law firm Winer and Abrams, Bos-
ton, Massachusetts for more than 20 years. He formerly served as General Coun-
sel and Staff Director of the United States Senate Judiciary Subcommittee on
Refugees. Mr. Abrams is a Director of Viacom, Inc., where he is a Chairman of
the Corporate Governance Committee, and of National Amusements, Inc.
Mr. Abrams also serves as a trustee and on the Visiting Committees of a number
of cultural, arts-related and educational institutions, including the Museum of
Fine Arts, in Boston, and Harvard University.
Vernon R. Alden Age: 77; Director since May, 1978;
Director and Trustee of several organizations.............................. None 5,638
(.15%)
Mr. Alden was Chairman of the Board and Executive Committee of The Boston
Company, Inc., a financial services company, from 1969 to 1978. He was Presi-
dent of Ohio University from 1961 to 1969. Mr. Alden is a former Director of
Digital Equipment Corporation, Colgate-Palmolive Company, McGraw-Hill, The Mead
Corporation and Intermet Corporation. He is an Independent General Partner of
three ML-Lee Acquisition Funds and trustee of several cultural and educational
organizations. Mr. Alden is a Chairman of the Japan Society of Boston and the
Honorary Consul General for the Royal Kingdom of Thailand in Boston.
6
OWNED BENEFICIALLY AS OF
APRIL 1, 2001(1)
COMMON STOCK NOMINEES -------------------------
SHARES AND SHARES AND
PERCENT OF PERCENT OF
PREFERRED COMMON
NAME, AGE AND PRINCIPAL OCCUPATION STOCK(2) STOCK(3)
---------------------------------- ---------- -----------
Joseph L. Bower Age: 62; Director since May, 1984;
Donald Kirk David Professor of Business Administration, Harvard Business
School..................................................................... None 400
(Less
than
.1%)
Mr. Bower has been a member of the faculty of the Harvard Business School
since 1963 and has served as Senior Associate Dean for External Relations,
Chairman of the Doctoral Programs, Director of Research, and currently chairs
The General Manager Program. Mr. Bower is a Director of ANIKA Therapeu-
tics, Inc., Brown Shoe Co., Inc., The ML-Lee Acquisition Funds, New America
High Income Fund, and is Vice Chairman of the New England Conservatory of Music
and a trustee of the DeCordova and Dana Museum and Sculpture Park. He has
published extensively on strategy, organization, and the relation of business
and government.
Peter J. Sonnabend (7) Age: 47; Director since May, 1995;
Vice Chairman and Secretary, Sonesta International Hotels Corporation...... 2,000(4) 216,224(6)(8)
(18.7%) (5.8%)
After graduating from Wesleyan University and Boston University School of
Law, Mr. Sonnabend practiced law with the Boston law firm of Winer and Abrams
from 1980 to 1987. In March 1987, he joined the Company as Vice President and
Assistant Secretary, in May 1987 he became Vice President and Secretary, and in
May 1995 was named Vice Chairman. He also represents the Company as General
Counsel. Mr. Sonnabend is a trustee of The Institute of Contemporary Art, in
Boston.
Roger P. Sonnabend (5)(7) Age: 75, Director since May, 1959;
Chairman of the Board and Chief Executive Officer, Sonesta International
Hotels Corporation......................................................... 2,000(4) 332,370(6)
(18.7%) (9.0%)
Mr. Sonnabend, a graduate of the Massachusetts Institute of Technology and
Harvard Business School, became a Vice President of the Company in 1956 after
ten years of hotel managerial experience. Subsequently, he was Executive Vice
President and from 1963 to 1970 was President of the Company. Since June, 1970,
Mr. Sonnabend has been Chairman of the Board and from January 1978 until
November 1983 he also held the office of President. He is involved with many
professional, business, community and educational institutions.
7
OWNED BENEFICIALLY AS OF
APRIL 1, 2001(1)
COMMON STOCK NOMINEES -------------------------
SHARES AND SHARES AND
PERCENT OF PERCENT OF
PREFERRED COMMON
NAME, AGE AND PRINCIPAL OCCUPATION STOCK(2) STOCK(3)
---------------------------------- ---------- -----------
Stephanie Sonnabend (7) Age: 48; Director since January, 1996;
President, Sonesta International Hotels Corporation........................ 2,000(4) 231,750(6)
(18.7%) (6.3%)
Ms. Sonnabend graduated from Harvard-Radcliffe College in 1975 and The
Sloan School of Management, MIT in 1979. She joined the company in 1979 and
held various managerial positions including Vice President of Sales, Vice
President of Marketing, and Executive Vice President. In January 1996, she
became President of the Company. Ms. Sonnabend serves on the Board of Directors
of Century Bancorp and Century Bank and Trust, and the Board of Trustees of New
England Conservatory.
Age: 58; Director since September,
Jean C. Tempel 1995;
Managing Director, First Light Capital..................................... None 10,000
(.27%)
Ms. Tempel is a former Venture Partner at Internet Capital Group and TL
Ventures, investing in early-to mid-stage Boston companies. From 1991 to 1993,
Ms. Tempel was President/COO of Safeguard Scientifics Inc., a Philadelphia-
based NYSE technology company. She was a founding investor, director and
vice-chairman of Cambridge Technology Partners. Earlier, she was Executive Vice
President and COO of The Boston Company. Ms. Tempel is also a trustee of the
Scudder-Kemper family of mutual funds, is on the board of many private technol-
ogy companies, and is a trustee of Connecticut College, Northeastern University
and the United Way of MA Bay.
8
OWNED BENEFICIALLY AS OF
APRIL 1, 2001(1)
PREFERRED STOCK NOMINEES -------------------------
SHARES AND SHARES AND
PERCENT OF PERCENT OF
PREFERRED COMMON
NAME, AGE AND PRINCIPAL OCCUPATION STOCK(2) STOCK(3)
---------------------------------- ---------- -----------
Paul Sonnabend (5) (7) Age: 73; Director since June, 1961;
Chairman of the Executive Committee and Chief Financial Officer, Sonesta
International Hotels Corporation........................................... 2,000(4) 346,584(6)
(18.7%) (9.4%)
Mr. Sonnabend graduated in 1950 from Cornell University School of Hotel
Administration after serving in the U.S. Naval Reserve. He was President of the
Company from 1970 to 1977. In May, 1980, Mr. Sonnabend became Vice Chairman of
the Board, a position he held until November, 1983 when he reassumed the
Presidency of the Company. In January, 1996, in connection with Stephanie
Sonnabend's being named President, Mr. Sonnabend was named Chairman of the
Executive Committee and Chief Financial Officer of the Company. Mr. Sonnabend
is active in many community projects.
Stephen Sonnabend (5) (7) Age: 69; Director since April, 1964;
Senior Vice President, Sonesta International Hotels Corporation............ 2,000(4) 226,748(6)
(18.7%) (6.1%)
Mr. Sonnabend has served as General Manager of the Royal Sonesta Hotel in
Cambridge and the Sonesta Beach Resort in Key Biscayne. In 1970, he became
Senior Vice President of the Company and serves as President of the Sonesta
Beach Resort in Key Biscayne, Florida.
- ---------
(1) Shares are considered beneficially owned for the purposes of this Proxy
Statement if held by the person indicated as beneficial owner, or if such
person, directly or indirectly, through any contract, arrangement,
understanding, relationship, or otherwise has the power to vote, to direct
the voting of and/or to dispose of or to direct the disposition of, such
security, or if the person has the right to acquire beneficial ownership
within sixty (60) days.
(2) As of April 1, 2001 the nominees listed in the table above owned an
aggregate of 2,000 shares of the Company's Preferred Stock, representing
18.7% of that class of equity securities.
(3) As of April 1, 2001 the nominees listed in the table above beneficially
owned an aggregate of 1,372,284 shares of the Company's Common Stock,
representing 37% of that class of equity securities.
9
(4) Constitutes the 2,000 shares of Preferred Stock owned by the Sonnabend
Foundation, a charitable trust established by the Sonnabends. See Note 2 on
page 17.
(5) Roger, Paul and Stephen Sonnabend are brothers.
(6) By virtue of his or her stock ownership interest and position with the
Company, he or she may be deemed to control the Company (or be in common
control with other stockholders of the Company) within the meaning of the
Rules and Regulations of the Securities and Exchange Commission under the
Securities Exchange Act of 1934.
(7) See Note 2 on page 17.
(8) Of these shares, 53,000 are held as a Trustee of trusts for the benefit of
Paul Sonnabend's children and grandchildren.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company's Board of Directors has an Audit Committee consisting of
Messrs. Abrams, Alden and Bower. Mr. Alden serves as Chairman of this Committee,
which meets periodically with the Company's management and independent public
accountants to assure that they are carrying out their responsibilities.
Attached to this Proxy as "Appendix A" is a copy of the Audit Committee Charter
adopted by the Company's Board of Directors in May 2000.
The Company's Board of Directors has an Executive Committee consisting of
Messrs. Bower, Paul Sonnabend, Roger P. Sonnabend, and Ms. Tempel. Mr. Paul
Sonnabend serves as Chairman of this Committee. The Committee has the authority,
except as proscribed by law, to exercise the powers of the Directors in the
management of the business affairs and property of the Company during the
intervals between the meetings of the Board.
The Company's Board of Directors has a Nominating Committee consisting of
Messrs. Bower, Alden, and Peter J. Sonnabend, and Ms. Sonnabend. Mr. Bower
serves as Chairman of this Committee. The functions of this Committee include
consideration of the composition of the Board and recommendation of individuals
for election as Directors of the Company. The Nominating Committee will consider
nominees recommended by security holders provided such nominations are made
pursuant to the Company's By-laws and applicable law.
The Company's Board of Directors has a Compensation Committee consisting of
Messrs. Alden and Bower and Ms. Tempel. Mr. Bower serves as Chairman of this
Committee, which meets periodically to review and consider the appropriateness
of the compensation of the Company's management.
DIRECTORS' ATTENDANCE AND FEES
Directors who are not salaried employees of the Company receive annual
compensation of $12,000, plus an attendance fee of $600 per meeting.
10
During 2000 there were five meetings of the Board of Directors, one meeting
of the Compensation Committee, and two meetings of the Audit Committee. The
Executive Committee did not meet during 2000. Each of the nominees attended at
least 75% of the total number of meetings of the Board of Directors and of the
committees on which such Directors served during 2000.
EXECUTIVE COMPENSATION
Set forth below is the compensation paid and/or accrued by the Company,
including its subsidiaries, for services in all capacities for the last three
completed fiscal years to or for the benefit of the CEO and each of its four
other most highly compensated executive officers whose aggregate cash
compensation exceeded $100,000.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION
---------------------------------------------- --------------------------
RESTRICTED SECURITIES
NAME & PRINCIPAL OTHER ANNUAL STOCK UNDERLYING
POSITION YEAR SALARY BONUS * COMPENSATION AWARD OPTIONS/SAR'S
- ------------------------------ -------- -------- -------- ------------- ---------- -------------
Roger P. Sonnabend 2000 $418,374 $70,737 NONE NONE NONE
Chief Executive Officer 1999 418,374 69,994
1998 418,374 74,722
Paul Sonnabend 2000 396,158 66,978 NONE NONE NONE
Chairman of Exec. Comm. & CFO 1999 396,158 66,277
1998 396,158 70,754
Felix Madera *** 2000 370,000 38,441 NONE NONE NONE
Vice President, International 1999 348,000 60,390
1998 203,500 37,205
Jacqueline Sonnabend 2000 320,000 50,720 NONE NONE NONE
Executive Vice President 1999 275,000 44,650
1998 250,000 28,954
Peter J. Sonnabend 2000 320,000 50,720 NONE NONE NONE
Vice Chairman & Secretary 1999 275,000 44,650
1998 250,000 28,954
Stephanie Sonnabend 2000 320,000 50,720 NONE NONE NONE
President 1999 275,000 44,650
1998 250,000 28,954
LONG TERM COMPENSATION
------------------------
NAME & PRINCIPAL LTIP ** ALL OTHER
POSITION PAYOUTS COMPENSATION
- ------------------------------ -------- -------------
Roger P. Sonnabend NONE NONE
Chief Executive Officer
Paul Sonnabend NONE NONE
Chairman of Exec. Comm. & CFO
Felix Madera *** NONE NONE
Vice President, International
Jacqueline Sonnabend NONE NONE
Executive Vice President
Peter J. Sonnabend NONE NONE
Vice Chairman & Secretary
Stephanie Sonnabend NONE NONE
President
- ---------
* These bonuses were paid under the Company's incentive compensation plan (see
p.12)
** Long Term Incentive Plan
*** A portion of Mr. Madera's compensation is charged to the Company's Corporate
Office, and a portion is charged to Sonesta Beach Resort Key Biscayne. Until
July 1998, when the Company acquired ownership of the Key Biscayne Resort,
only the portion paid by the Company was reflected in the Summary
Compensation Table.
11
AGREEMENTS WITH EXECUTIVES
The Company entered into Restated Employment Agreements with Roger P.
Sonnabend, Paul Sonnabend, and Stephen Sonnabend, effective as of January 1,
1992, and amended and updated in November 1995 (Paul) and March 1996 (Roger,
Stephen), which replaced Restated Employment Agreements dated January 1, 1984,
at annual base salaries of at least $418,374, $396,158, and $280,395,
respectively. The current terms end December 31, 2001, but are automatically
renewed for successive one year terms unless terminated by either party. Upon
the death of any of such executives, the Company has undertaken to continue
payments to their respective "Beneficiary" (as defined in the Agreement) in an
amount equal to fifty percent (50%) of the applicable base salary as of the date
of death, for a period of four years following death. Under separate agreements,
dated December 31, 1991, and amended and updated in November 1995 (Paul) and
March 1996 (Roger, Stephen), the Company has agreed that in the event of the
permanent and total disability of Roger P. Sonnabend, Paul Sonnabend or Stephen
Sonnabend while in the employ of the Company, the Company will continue payments
to such executive in an amount equal to fifty percent (50%) of the applicable
base salary at the date of disability, for a period of four years following the
disability; and if death occurs during disability, for the balance of the
four-year period, to the executive's spouse, estate or other designated
beneficiary.
INCENTIVE COMPENSATION PLAN
The Company has an incentive compensation plan under which pre-tax profit
thresholds are established at the beginning of each year for certain of its
hotels. Once the profit threshold is reached at a hotel, key employees of that
hotel are entitled to receive a bonus equal to 3% of their annual salary, and
10% of any profits in excess of the threshold are shared proportionally by the
same group. Additionally, key employees of each hotel may receive a bonus of up
to two percentage points based on an evaluation of that hotel's performance in
the areas of personal service and hotel physical appearance. The total incentive
bonus paid out during each year is capped at 25% of base salary. Executive
Office key employees, including officers of the Company, are entitled to receive
incentive payments equal to that percentage of their respective salaries which
equals the average (as a percentage of salaries) of all incentive payments made
to certain hotel key employees as a group.
PENSION PLAN
The Company has an I.R.S. qualified defined benefit pension plan which
covers all non-union salaried employees at its Executive Offices and its hotels
in Boston (Cambridge), Key Biscayne and New Orleans. All officers and Directors
who are full-time employees of the Company are covered under this plan. Benefits
under the plan are based on the average compensation for the highest sixty
consecutive months of service during employment, reduced proportionately for
each year of service less than twenty-seven (full service period). The plan
provides for integration with 50% of the primary Social Security benefit,
reduced proportionately for each year of service less than twenty-seven. It
provides for a normal retirement age of 65 and an early retirement age of 55
with five years of service. Benefits become vested at normal retirement age or
upon the completion of five years of service and attaining the age of 21. Thus,
the Company is unable to ascertain the benefits which may accrue to its
Directors and/or officers since the benefits are based on variable factors.
The following table sets forth a range of estimated annual retirement
benefits under the plan upon retirement at age 65.
12
PENSION PLAN TABLE
AVERAGE
ANNUAL COMPENSATION FOR YEARS OF SERVICE
HIGHEST SIXTY ----------------------------------------------------
CONSECUTIVE MONTHS 15 20 25 30* 35*
- ------------------------------------------ -------- -------- -------- -------- --------
$125,000.................................. $29,946 $39,927 $49,909 $53,902 $53,902
$150,000.................................. $36,890 $49,187 $61,483 $66,402 $66,402
$175,000.................................. $43,834 $58,446 $73,057 $78,902 $78,902
$200,000.................................. $50,779 $67,705 $84,631 $91,402 $91,402
$225,000.................................. $57,723 $76,965 $96,206 $103,902 $103,902
$250,000.................................. $64,668 $86,224 $107,780 $116,402 $116,402
$300,000.................................. $78,557 $104,742 $130,928 $135,000 $135,000
$350,000.................................. $92,446 $123,261 $135,000 $135,000 $135,000
$400,000.................................. $106,335 $135,000 $135,000 $135,000 $135,000
$450,000.................................. $120,223 $135,000 $135,000 $135,000 $135,000
$500,000.................................. $134,112 $135,000 $135,000 $135,000 $135,000
- ---------
* The maximum benefit under the Company's Pension Plan is based on 27 years of
service.
The above benefits are calculated on a single-life annuity basis and after
deducting a portion of Social Security benefits, as described above.
For 2000 the maximum benefit allowable under the Employee Retirement Income
Security Act of 1974 is $135,000.
Both Roger and Paul Sonnabend have the maximum number of years of credited
service under the pension plan (27 years). Of the other individuals named in the
Summary Compensation Table on page 11, Jacqueline Sonnabend has 17 years of
credited service, Peter J. Sonnabend has 14 years of credited service, and
Stephanie Sonnabend has 22 years of credited service.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Base salary and the cash incentive bonus program continue to constitute the
primary bases for compensating Company executives. In reviewing, approving and
administering executive compensation, the Compensation Committee, which is
comprised solely of non-management directors, considers several factors,
including job responsibilities, job performance, the compensation paid to
executives holding similar positions in other companies of comparable size and
complexity to the Company, the performance and financial condition of the
Company, factors unique to the Company, and changes in the cost of living.
13
In January 2000, the Compensation Committee met to consider the base
salaries to be paid to the chief executive officer and the executives named in
the Summary Compensation Table for 2000. The Committee noted that the Company's
hotels in Boston (Cambridge), Massachusetts and Key Biscayne, Florida enjoyed
record years in 1999; its leased hotel in New Orleans, Louisiana maintained its
status as a rate and occupancy leader in that competitive city; and its resort
hotel in Anguilla, B.W.I. experienced improved results until Hurricane Lenny
damaged the resort late in the year. During 1999, the Company continued the
renovation of its guestrooms at Royal Sonesta Hotel Boston and continued the
major renovation of Sonesta Beach Resort, in Key Biscayne, Florida, including
upgrading all guestrooms; licensed five new, deluxe posadas, in Peru; and
entered into a master franchise agreement for Italy. Based on these factors, the
Committee, on Management's recommendation, approved base salary increases for
all executive officers of the Company, except the chief executive officer, the
chairman of the executive committee, and senior vice president, who for the
fifth consecutive year received no increase in base salary. The increase in
base salary for Jacqueline, Peter and Stephanie Sonnabend was approximately 9%,
initially, and at year-end was increased another 7.4% in the form of a special
bonus.
The second component of executive compensation relates to annual bonuses
which may be earned by the chief executive officer as well as all other
executive and key officers of the Company under the Company's Incentive
Compensation Plan. The chief executive officer and the other named executive
officers earn bonuses under this plan based on the average (as a percentage of
salaries) of all incentive payments made to certain key hotel employees under
the plan based on performance objectives established by Management and approved
by the Compensation Committee at the beginning of each year for certain of the
Company's hotels. The Company's Incentive Compensation Plan is described in more
detail under "Incentive Compensation Plan" contained elsewhere in this Proxy
Statement.
The Company has not maintained a stock option plan for several years and
none of the executive officers named in the Summary Compensation Table presently
hold any stock options. Stock options have not been deemed a necessary part of
the Company's compensation program due in part to the fact that five of the six
named executive officers are beneficial owners of a significant number of shares
of the Company's capital stock.
Submitted by the Compensation Committee.
Vernon R. Alden, Joseph L. Bower, Chairman, and Jean C. Tempel
PERFORMANCE GRAPH
The following graph compares the annual percentage change in the cumulative
total shareholder return on the Company's Common Stock against the cumulative
total return of the NASDAQ Stock Market (US Companies) and the NASDAQ Hotels and
Motels for the five-year period commencing December 31, 1995 and ending
December 31, 2000.
14
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR
SONESTA INTERNATIONAL HOTELS CORPORATION
Produced on 04/10/2001 including data to 12/29/2000
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
DATE COMPANY MARKET PEER
Index Index Index
12/29/95 100 100 100
1/31/96 126.531 100.5 100.932
2/29/96 130.612 104.333 97.059
3/29/96 132.653 104.681 97.5
4/30/96 136.735 113.35 109.77
5/31/96 138.776 118.551 122.492
6/28/96 141.261 113.21 127.07
7/31/96 151.648 103.14 118.554
8/30/96 164.112 108.926 119.673
9/30/96 176.576 117.248 129.411
10/31/96 179.692 115.944 125.563
11/29/96 165.151 123.132 124.382
12/31/96 168.564 123.027 124.739
1/31/97 164.35 131.756 123.163
2/28/97 165.403 124.464 126.357
3/31/97 165.403 116.348 109.409
4/30/97 155.921 119.975 115.806
5/30/97 155.921 133.563 119.115
6/30/97 157.379 137.67 121.754
7/31/97 158.45 152.174 124.813
8/29/97 171.297 151.946 138.56
9/30/97 173.438 160.951 140.614
10/31/97 195.921 152.565 127.666
11/28/97 256.946 153.371 131.112
12/31/97 242.409 150.682 119.236
1/30/98 259.723 155.455 118.209
2/27/98 242.409 170.062 125.35
3/31/98 246.737 176.348 119.192
4/30/98 242.409 179.329 123.959
5/29/98 203.45 169.362 116.928
6/30/98 214.815 181.198 108.68
7/31/98 267.423 179.076 103.277
8/31/98 240.023 143.576 79.894
9/30/98 234.543 163.494 75.896
10/30/98 232.351 170.677 78.929
11/30/98 243.311 188.03 83.286
12/31/98 239.227 212.459 81.617
1/29/99 228.152 243.297 89.21
2/26/99 203.786 221.509 91.017
3/31/99 177.205 238.271 89.017
4/30/99 174.99 245.946 93.928
5/28/99 194.926 239.134 96.169
6/30/99 227.827 260.65 106.378
7/30/99 303.021 255.95 101.964
8/31/99 286.187 266.773 90.449
9/30/99 231.194 267.138 88.164
10/29/99 237.928 288.544 77.159
11/30/99 270.474 323.638 61.802
12/31/99 287.636 394.821 57.071
1/31/00 286.499 380.208 59.455
2/29/00 280.814 452.483 61.541
3/31/00 295.594 443.166 62.484
4/28/00 295.025 372.76 61.219
5/31/00 341.07 327.793 62.919
6/30/00 318.247 385.309 62.849
7/31/00 327.438 364.433 66.429
8/31/00 358.459 407.492 64.954
9/29/00 372.246 354.535 65.807
10/31/00 353.863 325.33 65.498
11/30/00 342.374 250.817 60.922
12/29/00 314.862 237.368 53.868
Prepared by CRSP (www.crsp.dchicago.edu), Center for Research on Security
Prices, Graduate School of Business, The University of Chicago. Used with
permission. All rights reserved. -C-Copyright 2001
15
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Company's Board of Directors consisted of
Vernon R. Alden, Joseph L. Bower, and Jean C. Tempel throughout 2000.
CERTAIN RELATIONSHIPS/TRANSACTIONS
Mr. George S. Abrams, a Director of the Company, performed legal services
for the Company during 1999, 2000, and 2001.
The Company has purchased artwork for its hotels and executive offices from
Obelisk Gallery, Inc., a corporation owned by Mrs. Roger Sonnabend. Purchases
from January 1, 2000 through March 1, 2001 have totaled $206,178. The Company
believes that the prices paid for such artwork are at least as favorable to the
Company as would have been obtained from unrelated parties.
PRINCIPAL STOCKHOLDERS
The following tables set forth certain information as of April 1, 2001 with
respect to persons known to the Company to be the beneficial owners of more than
5% of the Company's Common Stock and more than 5% of the Company's Preferred
Stock.
COMMON STOCK
NAME AND ADDRESS NUMBER OF SHARES PERCENT
OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) OF CLASS
- ------------------- --------------------- --------
Alan M. Sonnabend (2)....................................... 250,948 6.8%
c/o Sonesta Beach Resort
350 Ocean Drive
Key Biscayne, FL 33149
Jacqueline Sonnabend (2).................................... 214,550 5.8%
200 Clarendon Street
Boston, MA 02116
Paul Sonnabend (2).......................................... 346,584 9.4%
200 Clarendon Street
Boston, MA 02116
Peter J. Sonnabend (2)...................................... 216,224 5.8%
200 Clarendon Street
Boston, MA 02116
Roger P. Sonnabend (2)...................................... 332,370 9.0%
200 Clarendon Street
Boston, MA 02116
Stephanie Sonnabend (2)..................................... 231,750 6.3%
200 Clarendon Street
Boston, MA 02116
16
NAME AND ADDRESS NUMBER OF SHARES PERCENT
OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) OF CLASS
- ------------------- --------------------- --------
Stephen Sonnabend (2)....................................... 226,748 6.1%
200 Clarendon Street
Boston, MA 02116
All executive officers and Directors as a group (17 persons 1,660,438 45%
including those noted above)..............................
- ---------
(1) See note 1 on Page 9.
(2) Until 2001, 2,394,650 shares of the Company's Common Stock were subject to
the Sonnabend Voting Trust Agreement dated August 1, 1984, as amended in
December, 1984. The voting trust terminated on December 31, 2000.
Messrs. Roger, Paul and Stephen Sonnabend were the trustees.
PREFERRED STOCK
NAME AND ADDRESS NUMBER OF SHARES PERCENT
OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) OF CLASS
- ------------------- --------------------- --------
Paul Sonnabend, Stephanie Sonnabend and Peter J. Sonnabend,
as holders of the voting rights in the Sonnabend
Foundation(2)............................................. 2,000 18.7%
All executive officers and Directors as a group (17 persons
including above).......................................... 2,000 18.7%
- ---------
(1) See note 1 on Page 9.
(2) On April 1, 2000 members of the Sonnabend family, including Roger P.
Sonnabend, Paul Sonnabend, Stephanie Sonnabend, Stephen Sonnabend and Peter
J. Sonnabend, owned beneficially 2,000 shares of Preferred Stock, all of
which was owned beneficially by the Sonnabend Foundation, a charitable trust
established by the Sonnabends. Felix Madera, who is referenced in the
Summary Compensation Table on Page 11, is the beneficial owner of 4,000
shares of Common Stock. He owns no shares of Preferred Stock.
17
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The persons named in the accompanying Proxy intend, unless otherwise
instructed, to vote shares of Common Stock for Ernst & Young LLP as independent
auditors for the Company for the year 2001. The appointment of this firm has
been made by the Board of Directors of the Company upon recommendation of its
Audit Committee, subject to stockholder ratification. Until 1979, Arthur
Young & Company, which merged with Ernst & Whinney during 1989 to form Ernst &
Young LLP, had acted as independent auditors for the Company for many years and
was reappointed in 1985.
Ernst & Young LLP is an internationally recognized firm of independent
auditors. This firm has considerable experience in the hotel industry and has
offices in almost all locations in which the Company operates. In the opinion of
the Board of Directors of the Company, Ernst & Young LLP is fully qualified to
act as independent auditors for the Company.
The Audit Committee has previously reviewed and approved the scope of the
annual audit by the Company's independent public accountants. The Committee also
reviews all services and fees at the end of each annual audit. Fees for the last
fiscal year were: annual audit services $133,000, audit related services
$15,000, and non-audit services $30,000.
A representative of Ernst & Young LLP is expected to be present at the
Meeting and will have an opportunity to make a statement and is to be available
to respond to stockholders' questions.
STOCKHOLDER PROPOSALS
Proposals that stockholders intend to present at the next Annual Meeting of
Stockholders must comply with Rule 14a-8 of the Securities and Exchange
Commission issued under the Securities Exchange Act of 1934 and must be received
at the principal executive offices of the Company, 200 Clarendon Street, Boston,
Massachusetts 02116 not later than February 1, 2002.
MISCELLANEOUS
The Board of Directors does not know of any matters, other than those
discussed in this Proxy Statement, which may come before the Meeting. However,
if any other matters are properly presented at the Meeting, it is the intention
of the persons named in the accompanying Proxy to vote, or otherwise act, in
accordance with their judgment on such matters.
By Order of the Board of Directors
PETER J. SONNABEND
SECRETARY
Dated: April 16, 2001
THE BOARD OF DIRECTORS HOPES THAT ALL STOCKHOLDERS WILL ATTEND THE MEETING.
IN THE MEANTIME, YOU ARE REQUESTED TO EXECUTE THE ACCOMPANYING PROXY AND RETURN
IT IN THE ENCLOSED ENVELOPE. STOCKHOLDERS WHO ATTEND THE MEETING MAY VOTE THEIR
STOCK PERSONALLY EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES.
19
APPENDIX A
AUDIT COMMITTEE CHARTER
ORGANIZATION
The Audit Committee of the Board of Directors shall be comprised of at least
three Directors who are independent of Management and the Company. Members of
the Audit Committee shall be considered independent if they have no relationship
to the Company that may interfere with the exercise of their independence from
Management and the Company. All Audit Committee members shall be financially
literate, and at least one member shall have accounting or related financial
management expertise.
STATEMENT OF POLICY
The Audit Committee shall provide assistance to the Directors in fulfilling
their responsibilities to the shareholders, potential shareholders, and the
investment community relating to corporate accounting, reporting practices of
the Company, and the quality and integrity of financial reports of the Company.
In doing so, it is the responsibility of the Audit Committee to maintain free
and open communication between the Directors, the independent auditors, and the
financial management of the Company.
RESPONSIBILITIES
In carrying out its responsibilities, the Audit Committee believes its
policies and procedures should remain flexible, in order to best react to
changing conditions and to ensure to the Directors and shareholders that the
corporate accounting and reporting practices of the Company are in accordance
with all requirements and are of the highest quality.
In carrying out these responsibilities, the Audit Committee will:
- Obtain the full Board of Directors' approval of this Charter and review
and reassess this Charter as conditions dictate.
- Review and recommend to the Directors the independent auditors to be
selected to audit the financial statements of the Company, including its
divisions and subsidiaries.
- Have a clear understanding with the independent auditors that they are
ultimately accountable to the Board of Directors and the Audit Committee,
as the shareholders' representatives, who have the ultimate authority in
deciding to engage, evaluate, and if appropriate, terminate their
services.
- Review and concur with Management's appointment, termination, or
replacement of the officer responsible for directing the Company's
internal audits.
- Meet with the independent auditors and financial management of the Company
to review the scope of the proposed annual audit and quarterly reviews,
the procedures to be utilized, and the adequacy of the independent
auditor's compensation. At the conclusion of each such audit or review,
the Audit Committee will review its findings, including any comments or
recommendations of the independent auditors.
- Review with the independent auditors, the Company's internal audit
function, and financial and accounting personnel, the adequacy and
effectiveness of the accounting and financial controls of the Company, and
elicit any recommendations for the improvement of such internal controls
or particular areas where new or more detailed controls or procedures are
desirable. Particular
21
emphasis should be given to the adequacy of internal controls to expose
any payments, transactions, or procedures that might be deemed illegal or
otherwise improper. Further, the Committee periodically should review
Company policy statements to determine their adherence to the code of
conduct.
- Review reports received from regulators and other legal and regulatory
matters that may have a material effect on the financial statements or
related Company compliance policies.
- Inquire of Management, the person(s) who direct the Company's internal
audit, and the independent auditors about significant risks or exposures
and assess the steps Management has taken to minimize such risks to the
Company.
- Receive prior to each meeting, a summary of findings from completed
internal audits and a progress report on the proposed internal audit plan,
with explanations for any deviations from the original plan.
- Review the quarterly financial statements with financial Management and
the independent auditors prior to the filing of the Form 10-Q (or prior to
the press release of results, if possible) to determine that the
independent auditors do not take exception to the disclosure and content
of the financial statements, and discuss any other matters required to be
communicated to the Committee by the auditors. The Chair of the Committee
may represent the entire Committee for purposes of this review.
- Review the financial statements contained in the Annual Report to
Shareholders with Management and the independent auditors to determine
that the independent auditors are satisfied with the disclosure and
content of the financial statements to be presented to the shareholders.
Review with financial Management and the independent auditors their
judgments about the quality, not just acceptability, of accounting
principles and the clarity of the financial disclosure practices used or
proposed to be used, and particularly, the degree of aggressiveness or
conservatism of the Company's accounting principles and underlying
estimates, and other significant decisions made in preparing the financial
statements.
- Provide sufficient opportunity for the person(s) directing the internal
audit and the independent auditors to meet with the members of the Audit
Committee without members of Management present. Among the items to be
discussed in these meetings are the independent auditors' evaluation of
the Company's financial, accounting, and auditing personnel, and the
cooperation that the independent auditors received during the course of
audit.
- Report the results of the annual audit to the Board of Directors. If
requested by the Board, invite the independent auditors to attend the full
Board of Directors meeting to assist in reporting the results of the
annual audit or to answer other Directors' questions (alternatively, the
other Directors, particularly the other independent Directors, may be
invited to attend the Audit Committee meeting during which the results of
the annual audit are reviewed).
- On an annual basis, obtain from the independent auditors a written
communication delineating alt their relationships and professional
services as required by Financial Standards Board Standard No.1,
Independent Discussions with Audit Committees. In addition, review with
the independent auditors the nature and scope of any disclosed
relationships or professional services and take, or recommend that the
Board of Directors take, appropriate action to ensure the continuing
independence of the auditors.
22
- Review any required report of the Audit Committee in the Annual Report to
Shareholders and/or the Annual Report on Form 10-K disclosing whether or
not the Committee reviewed and discussed with Management and the
independent auditors, as well as discussed within the Committee (without
Management or the independent auditors present), the financial statements
and the quality of accounting principles and significant judgments
affecting the financial statements. In addition, disclose the Committee's
conclusion on the fairness of presentation of the financial statements in
conformity with GAAP based on those discussions.
- Submit the minutes of all meetings of the Audit Committee to, or discuss
the matters discussed at each Committee meeting with, the Board of
Directors.
- Investigate any matter brought to its attention within the scope of its
duties, with the power to retain outside counsel for this purpose if, in
its judgment, that is appropriate.
- Review the Company's disclosure in the Proxy Statement for its Annual
Meeting of Shareholders that describes that the Committee has satisfied
its responsibilities under this Charter for the prior year. In addition,
include a copy of this Charter in the Annual Report to Shareholders or the
Proxy Statement at least triennially or the year after any significant
amendment to the Charter.
23
==============================================================================
PREFERRED PROXY
SONESTA INTERNATIONAL HOTELS CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS -- MAY 14, 2001
SONESTA INTERNATIONAL HOTELS CORPORATION
200 CLARENDON STREET, BOSTON, MASSACHUSETTS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of SONESTA INTERNATIONAL HOTELS CORPORATION,
a New York corporation, hereby constitutes and appoints BOY A.J. VAN RIEL and
PETER J. SONNABEND and each of them, the true and lawful attorneys and
proxies of the undersigned with power of substitution in each of them and
their respective substitute(s), for and in the name of the undersigned to
vote the 5% CUMULATIVE PREFERRED STOCK which the undersigned is entitled to
vote at the Annual Meeting of Stockholders of Sonesta International Hotels
Corporation, to be held on May 14, 2001 at 9:00 A.M., and at any
adjournment(s) thereof, to the same extent and with all powers which the
undersigned would possess if personally present. A majority of such attorneys
and proxies or their substitute(s), or if only one be present and acting at
such meeting, then that one, shall have and may exercise all of the powers of
all of said attorneys and proxies. The undersigned hereby acknowledges
receipt of the Notice of Annual Meeting of Stockholders and the Proxy
Statement furnished therewith, each dated April 16, 2001.
(CONTINUED AND TO BE SIGNED ON THE OTHER SIDE)
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
SONESTA INTERNATIONAL HOTELS CORPORATION
PREFERRED STOCK
MAY 14, 2001
[down arrow] Please Detach and Mail in the Envelope Provided [down arrow]
Please mark your
|X| votes as in this
example.
FOR all nominees WITHHOLD
listed at right AUTHORITY
(except as marked to to vote for nominees
the contrary) listed at right
1. ELECTION | | | | NOMINEES: P. Sonnabend
OF S. Sonnabend
DIRECTORS.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the line provided below.)
________________________________________
2. Upon such other business as may properly come before the meeting or any
adjournment(s) thereof.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR PROPOSAL 1.
PLEASE DATE, SIGN AND MAIL THIS PROXY PROMPTLY.
Signature(s)______________________________________________ DATE: _______, 2001
NOTE: Please sign exactly as your name or names appear hereon. Joint owners
should sign personally. Corporate proxies should be signed by authorized
officer, and have seal affixed and attached.
COMMON PROXY
SONESTA INTERNATIONAL HOTELS CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS -- MAY 14, 2001
SONESTA INTERNATIONAL HOTELS CORPORATION
200 CLARENDON STREET, BOSTON, MASSACHUSETTS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of SONESTA INTERNATIONAL HOTELS CORPORATION,
a New York corporation, hereby constitutes and appoints BOY A.J. VAN RIEL and
PETER J. SONNABEND and each of them, the true and lawful attorneys and
proxies of the undersigned with power of substitution in each of them and
their respective substitute(s), for and in the name of the undersigned to
vote the COMMON STOCK which the undersigned is entitled to vote at the Annual
Meeting of Stockholders of Sonesta International Hotels Corporation, to be
held on May 14, 2001 at 9:00 A.M., and at any adjournment(s) thereof, to the
same extent and with all powers which the undersigned would possess if
personally present. A majority of such attorneys and proxies or their
substitute(s), or if only one be present and acting at such meeting, then
that one, shall have and may exercise all of the powers of all of said
attorneys and proxies. The undersigned hereby acknowledges receipt of the
Notice of Annual Meeting of Stockholders and the Proxy Statement furnished
therewith, each dated April 16, 2001.
(CONTINUED AND TO BE SIGNED ON THE OTHER SIDE)
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
SONESTA INTERNATIONAL HOTELS CORPORATION
COMMON STOCK
MAY 14, 2001
[down arrow] Please Detach and Mail in the Envelope Provided [down arrow]
Please mark your
|X| votes as in this
example.
FOR all nominees WITHHOLD
listed at right AUTHORITY
(except as marked to to vote for nominees
the contrary) listed at right
1. ELECTION | | | | NOMINEES: G. Abrams
OF V. Alden
DIRECTORS. J. Bower
P.J. Sonnabend
R. Sonnabend
S. Sonnabend
J. Tempel
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the line provided below.)
________________________________________
FOR AGAINST ABSTAIN
2. Ratification of Ernst & Young LLP as
independent accountants of the Company for | | | | | |
the year 2001.
3. Upon such other business as may properly come before the meeting or any
adjournment(s) thereof.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR PROPOSALS NO. 1 AND
NO. 2.
PLEASE DATE, SIGN AND MAIL THIS PROXY PROMPTLY.
Signature(s)______________________________________________ DATE: _______, 2001
NOTE: Please sign exactly as your name or names appear hereon. Joint owners
should sign personally. Corporate proxies should be signed by authorized
officer, and have seal affixed and attested.