SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _____ to _____
Commission file number 1-14331
MERISTAR HOTELS & RESORTS, INC.
(Exact name of registrant as specified in its charter)
Delaware 52-2101815
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1010 Wisconsin Avenue, N.W.
Washington, D.C. 20007
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (202) 965-4455
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
------------------- -----------------------------------------
Comon Stock, $0.01 par value NEW YORK STOCK EXCHANGE
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all
documents and reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period than the Registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. YES X NO
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment of this Form 10-K. [ ]
Based upon the average sale price at April 29, 2002, the aggregate
market value of the voting stock held by nonaffiliates of the registrant was
$32,717,726.
The number of shares of the registrant's common stock outstanding as of
April 29, 2002 was 37,188,574.
Documents incorporated by reference: None
EXPLANATORY NOTE
The sole purpose of this Form 10-K/A is to amend the Form 10-K filed
on March 8, 2002 to include information set forth in Part III hereof which
formerly had been contemplated to be incorporated by reference from the
Company's definitive Proxy Statement to be filed with the Securities and
Exchange Commission. The Company has not yet determined a date for the annual
meeting of shareholders.
PART III
ITEM 10. Directors and Executive Officers of the Registrant
DIRECTORS OF THE REGISTRANT
Directors up for election at the 2002 Annual Meeting for three-year terms
expiring at the Annual Meeting in 2005.
Name, Principal Occupation Served as a
- -------------------------- -----------
and Business Experience Director Since Age Class
- ----------------------- -------------- --- -----
S. KIRK KINSELL 1998 47 II
S. Kirk Kinsell has been a director of the Company since
August 1998. Mr. Kinsell is currently President and CEO of
Micell Technologies in Raleigh, North Carolina. Mr. Kinsell
was the President and Chief Operating Officer of Apple South,
Inc. from 1997 until November 1998. Prior to joining Apple
South, Mr. Kinsell served as President of the Franchise
Division of ITT Sheraton and its Four Point Hotels from 1995
to 1997. Immediately prior to joining ITT Sheraton, Mr.
Kinsell worked in various positions with Holiday Inn
Worldwide, from 1988 to 1995, culminating with senior vice
president in its Franchise division.
JAMES B. McCURRY 1998 53 II
James B. McCurry has been a director of the Company since
August 1998. Mr. McCurry is a management consultant. From May
2000 until May 2001, Mr. McCurry was Chief Executive Officer
of an e-commerce subsidiary of Fleming Companies, Inc. From
July 1997 until May 2000, Mr. McCurry was a Partner at Bain &
Company, an international management consulting firm
specializing in corporate strategy.
J. TAYLOR CRANDALL 2002 45 II
J. Taylor Crandall has been a director of the Company
since January 2002. Mr. Crandall is presently the Managing
Partner of Oak Hill Capital Management, Inc. and also serves
on the Board of Advisors of Oak Hill Strategic Partners, L.P.
Mr. Crandall first joined Keystone, Inc. in 1986 as Chief
Financial Officer; he currently serves as Chief Operating
Officer. Prior to his affiliation with Keystone, Mr.
Crandall was a Vice President with the First National Bank of
Boston. Mr. Crandall is also a director of MeriStar
Hospitality Corporation, Washington Mutual, Inc., Sunterra
Corporation, US Oncology, Inc., Broadwing, Inc. and American
Skiing Company.
Directors up for election at the 2002 Annual Meeting for
two-year terms expiring at the Annual Meeting in 2004.
LESLIE R. DOGGETT 2001 45 I
Leslie R. Doggett has been a director of the Company
since December 2001. Currently, Ms. Doggett is a consultant
on tourism development with the International Association of
Convention and Visitor Bureaus and the National Congress for
Community Economic Development. From September 1993 until
2001, Ms. Doggett was the Deputy Assistant Secretary of
Tourism Industries at the International Trade
Administration. From April 1996 to January 2001, Ms. Doggett
was the Deputy Under Secretary of Commerce for the United
States Travel and Tourism Administration. From September
1993 to April 1996, Ms. Doggett was the Director of Tourism
for New York City's Office of the Mayor. Prior to that she
worked as a hotel sales executive for 10 years.
JOHN EMERY 2000 38 I
John Emery has been a director of the Company since December
2001. Mr. Emery has served as President and Chief Operating
Officer of the Company since September 2001. From April 2000 until
that time, he was Chief Investment Officer of the Company. He was
elected a director of MeriStar Hospitality Corporation in May
2001, and since September 2001, he has served as the President and
Chief Operating Officer of MeriStar Hospitality. From April 2000
until that time, he was Chief Operating Officer of MeriStar
Hospitality. From August 1998 to April 2000, Mr. Emery was Chief
Financial Officer of MeriStar Hospitality. From June 1997 until
August 1998, Mr. Emery served as Chief Financial Officer and
Secretary of CapStar Hotel Company, a predecessor of the Company.
From March 1996 to June 1997, Mr. Emery served as Treasurer of
CapStar. Prior to that, from January 1987 to September 1995, he
worked for Deloitte & Touche LLP in various capacities,
culminating in Senior Manager for the
hotel and real estate industries.
Directors Whose Terms Do Not Expire at the 2002 Annual Meeting
KENT R. HANCE 1998 59 III
Kent R. Hance has been a director of the Company since August
1998, and his current term as a Class III director expires at the
Annual Meeting in 2003. Since 1994, Mr. Hance has been a law
partner in the firm Hance, Scarborough & Wright, L.L.P., in
Austin, Texas, and from 1991 to 1994, he was a law partner in the
firm of Hance and Gamble. From 1985 to 1987, Mr. Hance was a law
partner with Boyd, Viegal and Hance. Mr. Hance also served as a
member of the Texas Railroad Commission from 1987 until 1991 and
as its Chairman from 1989 until 1990. From 1979 to 1985, Mr. Hance
served as a member of the United States Congress. In addition, Mr.
Hance served as a State Senator in the State of Texas from 1975 to
1979 and was a professor of business law at Texas Tech University
from 1969 to 1973.
STEVEN D. JORNS 1998 53 I
Steven D. Jorns has been Vice Chairman of the Board of
Directors since August 1998, and his current term as a
Class I director expires at the Annual Meeting in 2004.
Mr. Jorns has also been Vice Chairman of the Board of
Directors of MeriStar Hospitality Corporation since August
1998. Mr. Jorns was Chief Operating Officer of the Company
from August 1998 until January 1999. From April 1996 to
August 1998, Mr. Jorns was the Chairman of the Board of
Directors, Chief Executive Officer and President of
American General Hospitality Corporation. Mr. Jorns was
also the founder of American General Hospitality, Inc., a
predecessor of the Company, and had served since its
formation in 1981 until August 1998 as its Chairman of the
Board of Directors, Chief Executive Officer and President.
PAUL W. WHETSELL 1998 51 III
Paul W. Whetsell has been Chairman of the Board of Directors
and Chief Executive Officer of the Company since August 1998, and
his current term as a Class III director expires at the Annual
Meeting in 2003. Mr. Whetsell has also been Chairman of the Board
of Directors and Chief Executive Officer of MeriStar Hospitality
since August 1998. Prior to August 1998, Mr. Whetsell had been
Chairman of the Board of Directors of CapStar Hotel Company, a
predecessor of the Company, since 1996 and had served as President
and Chief Executive Officer of CapStar since its founding in 1987.
JAMES R. WORMS 1998 56 III
James R. Worms has been a director of the Company since
August 1998, and his current term as a Class III
director expires at the Annual Meeting in 2003. Mr. Worms
has served since August 1995 as a Managing
Director of William E. Simon & Sons L.L.C., a private
investment firm and merchant bank, and President of
William E. Simon & Sons Realty, through which the firm
conducts its real estate activities. Prior to joining
William E. Simon & Sons, Mr. Worms was employed in various
capacities since March 1987 by Salomon
Brothers Inc, an international investment banking firm,
culminating with Managing Director. Mr. Worms is also
a director of MeriStar Hospitality Corporation.
Independent Director Compensation
Independent Directors of the Company are compensated pursuant to the
MeriStar Hotels & Resorts, Inc. Non-Employee Directors Incentive Plan (the
"Directors Plan"). Independent Directors of the Company will be paid an annual
fee of $20,000. In addition, each Independent Director will be paid $1,250 for
attendance at each meeting of the Board of Directors; $1,000 for attendance at
each meeting of a committee of the Board of Directors of which such director is
a member and $500 for each telephonic meeting of the Board of Directors or a
committee thereof of which such director is a member. Directors who are
employees of the Company will not receive any fees for their service on
the Board of Directors or a committee thereof. The Company will reimburse
directors for their out-of-pocket expenses in connection with their service on
the Board of Directors.
Options
Pursuant to the Directors Plan, each Independent Director is awarded an
option to purchase 7,500 shares of Common Stock upon initial commencement of
service as a director, whether by appointment or election. Thereafter, each
Independent Director will be granted an option to purchase 5,000 shares of
Common Stock on the first business day following the Company's annual meeting of
stockholders. The exercise price of option grants will be 100% of the fair
market value of the Common Stock on the date of grant, and options will vest in
three annual installments. The exercise price may be paid in cash, cash
equivalents acceptable to the Compensation Committee, Common Stock or a
combination thereof. Options granted under the Directors Plan, once vested, are
exercisable for ten years from the date of grant. Upon termination of service as
a director, options which have not vested are forfeited and vested options may
be exercised until they expire. All options accelerate upon a change in control
of the Company.
The Directors' Plan
The purpose of the Company's Directors' Plan is to attract experienced
and knowledgeable persons to serve as outside directors to the Company.
Share Authorization
A maximum of 500,000 shares of Common Stock may be issued under the
Directors Plan. The share limitation and terms of outstanding awards will be
adjusted, as the Compensation Committee deems appropriate, in the event of a
stock dividend, stock split, combination, reclassification, recapitalization or
other similar event.
Eligibility
The Directors Plan provides for awards to be granted to each
Independent Director.
Amendment and Termination
The Directors Plan provides that the Board of Directors may amend or
terminate the Directors Plan at any time. An amendment will not become effective
without stockholder approval if the amendment (i) materially increases the
number of shares that may be issued under the Directors Plan or (ii) stockholder
approval would be required for compliance with stock exchange rules. No options
may be granted under the Directors Plan after December 31, 2008.
Certain Federal Income Tax Consequences
Generally, an eligible director does not recognize any taxable income,
and the Company is not entitled to a deduction upon the grant of an option. Upon
the exercise of an option, the eligible director recognizes ordinary income
equal to the excess of the fair market value of the shares acquired over the
option exercise price, if any. The director will then take a basis in such
shares equal to their fair market value at the time of option exercise, and any
gain or loss subsequently recognized upon a sale or exchange of such shares will
be treated as capital gain or loss to such director. Special rules may apply as
a result of Section 16 of the Securities Exchange Act of 1934, as amended. The
Company is generally entitled to a deduction equal to the compensation taxable
to the eligible director as ordinary income. Eligible directors may be subject
to backup withholding requirements for federal income tax. Options are generally
non-transferable. However, the Directors Plan authorizes the granting of options
that are transferable to Permitted Family Members.
The transfer of an option to a Permitted Family Member will have no
immediate tax consequences to the Company, the director or the Permitted Family
Member. Upon the subsequent exercise of the transferred option by the Permitted
Family Member, the director will realize ordinary income in an amount measured
by the difference between the option exercise price and the fair market value of
the shares on the date of exercise, and the employer will be entitled to a
deduction in the same amount. Any difference between such fair market value and
the price at which the
Permitted Family Member may subsequently sell such shares will be treated as
capital gain or loss to the Permitted Family Member, long-term or short-term
depending on the length of time the shares have been held by the Permitted
Family Member.
Common Stock in Lieu of Fees
Independent Directors may elect to receive all or a portion of their annual
retainer in shares of Common Stock rather than cash. Unless an Independent
Director elects otherwise, fees paid in stock will be paid at the same time as
fees paid in cash.
THE EXECUTIVE OFFICERS
Messrs. Whetsell and Emery are executive officers of the Company, and their
biographical information is set forth under Item 10. The names, positions,
business experience, terms of office and ages of the other executive officers of
the Company are as follows:
Names, Positions and Served as an
- -------------------- ------------
Offices, and Business Experience Officer Since Age
- -------------------------------- ------------- ---
JAMES A. CALDER 1998 39
James A. Calder has served as Chief Financial Officer of the
Company since August 1998. Mr. Calder is currently also Chief
Accounting Officer of MeriStar Hospitality Corporation. From
September 1997 until August 1998, Mr. Calder served as Senior Vice
President of Finance of CapStar Hotel Company. From May 1995 to
September 1997, Mr. Calder served as Senior Vice President and
Corporate Controller of ICF Kaiser International, Inc. Prior to
that, from July 1984 to May 1995, Mr. Calder worked for Deloitte &
Touche LLP in various capacities, culminating with Senior Manager
for the real estate industry. Mr. Calder is a Certified Public
Accountant.
ROBERT MORSE 2001 46
Robert Morse has served as President - Hotels & Resorts since
October 2001. From April 2000 until October 2001, Mr. Morse was
President, the Americas and Executive Director of Millennium and
Copthorne Hotels plc. From July 1999 to April 2000, Mr. Morse was
Executive Vice President of Operations with the Company. He also
served as President of the Homestead Village extended stay
brand from 1997 to 1999, President of the franchise division of
ITT Sheraton Corp. and President of Four Points Hotels by Sheraton
from 1996 to 1997 and Senior Vice President of Sheraton's North
America Division from 1989 until 1996. Mr. Morse is a trustee of
the American Hotel & Lodging Educational Institute and an advisory
board member of the University of Massachusetts Hotel, Restaurant
and Travel Administration Department.
BRUCE G. WILES 2001 50
Bruce G. Wiles has been Chief Investment Officer of the Company since
October 2001. Mr. Wiles is currently a director and Chief Investment Officer of
MeriStar Hospitality Corporation. Mr. Wiles was President of MeriStar
Hospitality Corporation from August 1998 until September 2001. Mr. Wiles was
Executive Vice President of American General Hospitality Corporation from April
1996 until August 1998. From 1989 to August 1998, Mr. Wiles served as Executive
Vice President of American General Hospitality, Inc., a predecessor of the
Company, where he was responsible for acquisition and development activities.
ITEM 11: EXECUTIVE COMPENSATION
The following table sets forth all compensation paid by the Company
during 2001 with respect to the Chief Executive Officer and its other most
highly compensated executive officers (the "Named Executive Officers").
Long-Term Compensation
----------------------
Restricted Securities
---------- ----------
Stock Underlying All Other
----- ---------- ---------
Annual Compensation Awards Options Compensation
------------------- ------ ------- ------------
Other Annual
------------
Name And Principal Year Salary Bonus Compensation
------------------ ---- ------ ----- ------------
Position
--------
Paul W. Whetsell (3) ... 2001 $190,000 -- 79,855 -- 500,000 --
Chief Executive 2000 190,000 -- 23,044 -- -- --
Officer and Chairman 1999 190,000 163,500 -- -- 125,000 --
of the Board
John Emery (3) ......... 2001 141,154 -- 8,454 -- 350,000 --
President, Chief 2000 90,000 29,700 -- -- -- --
Operating Officer 1999 -- -- -- -- -- --
James A. Calder (3) .... 2001 200,000 -- 93,082 -- 50,000 --
Chief Financial 2000 200,000 87,300 107,726 -- -- 543,125(2)
Officer 1999 200,000 128,000 -- --(1) 75,000(1) 143,925(1)
David McCaslin (4) ..... 2001 228,462 149,000 192,507 -- -- 308,372
Former President 2000 300,000 140,740 217,613 -- -- 1,086,250(2)
1999 300,000 219,000 2,813 --(1) 100,000 287,850(1)
Thomas Vincent ......... 2001 220,000 -- -- -- 20,000 --
President, 2000 92,231 33,900 -- -- 40,000 --
BridgeStreet 1999 -- -- -- -- -- --
(1) On February 4, 1999, prior to Mr. Calder becoming an officer of MeriStar
Hospitality Corporation, the Company's Compensation Committee approved the
grant by MeriStar Hospitality Corporation to (i) Mr. Calder of options to
purchase 75,000 shares of MeriStar Hospitality Common Stock at $19.19 per
share, which vest over three years, and 7,500 restricted shares of MeriStar
Hospitality Common Stock, which vest over five years, pursuant to the
MeriStar Hospitality Incentive Plan and (ii) Mr. McCaslin of options to
purchase 150,000 shares of MeriStar Hospitality common stock at $19.19 per
share, which vest over three years, and 15,000 restricted shares of
MeriStar Hospitality common stock, which vest over five years, pursuant to
the MeriStar Hospitality Incentive Plan.
(2) In December 1999, prior to Mr. Calder becoming an Officer of MeriStar
Hospitality Corporation, the Company's Compensation Committee approved the
grant by MeriStar Hospitality of MeriStar Hospitality Common Stock
and other equity compensation to Messrs. Calder and McCaslin (the
"Restricted Equity Award"). The Restricted Equity Award is satisfied by
issuing a combination of MeriStar Hospitality Common Stock, which is
subject to a three-year vesting period beginning March 31, 2000 (the
"Restricted Stock"), and a new class of partnership units ("POPs") in the
subsidiary operating partnership of MeriStar Hospitality, which is subject
to the satisfaction of certain performance criteria. The stock portion of
the Restricted Equity Award is valued based on the closing price per share
of the MeriStar Hospitality Common Stock on the date of grant. Pursuant to
the Restricted Equity Award, Mr. Calder received options to purchase
25,000 shares of MeriStar Hospitality Common Stock at $14.88 per share,
31,250 shares of Restricted Stock on March 31, 2000, and 31,250 POPs on
March 29, 2000. Mr. McCaslin received options to purchase 50,000 shares of
MeriStar Hospitality Corporation at $14.88 per share and 125,000 shares of
common stock and other equity compensation as follows (i) 62,500 shares of
Restricted Stock on March 31, 2000 and (ii) 62,500 POPs on March 29, 2000.
(3) Messrs. Whetsell, Emery and Calder are also officers of MeriStar
Hospitality Corporation and are eligible to participate in the MeriStar
Hospitality Corporation Incentive Plan. In addition, Messrs. Whetsell and
Emery have employment agreements with MeriStar Hospitality Corporation.
(4) Mr. McCaslin was formerly the President of the Company until his
resignation on November 2, 2001.
Stock Option Grants
Messrs. Whetsell, Emery, Calder, McCaslin and Vincent were granted the
following options during 2001.
Number of Shares Percent of Potential Realizable
Underlying Total Options Value as Assumed
Options Granted to Exercise Annual Rates of Stock
Granted(1) Employees in Price Expiration Price Appreciation for
2001 ($/share) Date Option Term(2)
------------------------------------------------------------------------------------------
5%($) 10%($)
Paul Whetsell 500,000 27.3% $ 0.69 12/11/11 $ 216,969 $ 549,841
John Emery 350,000 19.1% $ 0.56 10/23/11 $ 123,263 $ 312,374
James A. Calder 50,000 2.7% $ 0.69 12/11/11 $ 21,697 $ 54,984
David McCaslin - - - - - -
Thomas Vincent 20,000 1.1% $ 0.69 12/11/11 $ 8,679 $ 21,994
(1) All options granted vest ratably over 3 years.
(2) In accordance with rules of the Securities and Exchange Commission,
these amounts are the hypothetical gains or "options spreads" that
would exist for the respective options based on assumed rates of annual
compound stock price appreciation of 5% and 10% from the date the
options were granted over the full option term
THE EMPLOYEE INCENTIVE PLAN
The purpose of the MeriStar Hotels & Resorts, Inc. Incentive Plan (the
"Incentive Plan") is to (i) attract and retain employees and other service
providers with ability and initiative, (ii) provide incentives to those deemed
important to the success of the Company and related entities, and (iii) align
the interests of these individuals with the interests of the Company and its
stockholders through opportunities for increased stock ownership.
Administration
The Incentive Plan is administered by the Compensation Committee. The
Compensation Committee may delegate its authority to administer the Incentive
Plan. The Compensation Committee may not, however, delegate its authority with
respect to grants and awards to individuals subject to Section 16 of the
Securities Exchange Act of 1934, as amended. As used in this summary, the term
"Administrator" means the Compensation Committee or its delegate, as
appropriate.
Eligibility
Each employee of the Company or of an affiliate of the Company or any
other person whose efforts contribute to the Company's performance, excluding an
employee who is a member of the Board of Directors, is eligible to
participate in the Incentive Plan ("Participants"). The Administrator may, from
time to time, grant stock options, stock awards, incentive awards, or
performance shares to Participants.
Options
Options granted under the Incentive Plan may be incentive stock options
("ISOs") or nonqualified stock options. An option entitles a Participant to
purchase shares of Common Stock from the Company at the option price. The option
price may be paid in cash, with a cash equivalent, with shares of Common Stock,
or with a combination of cash and Common Stock. The option price will be fixed
by the Administrator at the time the option is granted, but the price cannot be
less than 100% for existing employees (85% in connection with the hiring of new
employees) of the share's fair market value on the date of grant; provided,
however, no more than 10% of the shares under the Incentive Plan will be granted
at less than 100% of fair market value. The exercise price of an ISO may not be
less than 100% of the share's fair market value on the date of grant (110% of
the fair market value in the case of an ISO granted to a 10% stockholder of the
Company). Options may be exercised at such times and subject to such conditions
as may be prescribed by the Administrator but the maximum term of an option is
ten years in the case of an ISO or five years in the case of an ISO granted to a
10% stockholder.
ISOs may only be granted to employees; however, no employee may be
granted ISOs (under the Incentive Plan or any other plan of the Company) that
are first exercisable in a calendar year for Common Stock having an aggregate
fair market value (determined as of the date the option is granted) exceeding
$100,000. In addition, no Participant may be granted options in any calendar
year for more than 750,000 shares of Common Stock.
Stock Awards
Participants also may be awarded shares of Common Stock pursuant to a
stock award. A Participant's rights in a stock award will be nontransferable or
forfeitable or both unless certain conditions prescribed by the Administrator
are satisfied. These conditions may include, for example, a requirement that the
Participant continue employment with the Company for a specified period or that
the Company or the Participant achieve stated, performance-related objectives.
The objectives may be stated with reference to the fair market value of the
Common Stock or the Company's, a subsidiary's, or an operating unit's return on
equity, earnings per share, total earnings, earnings growth, return on capital,
funds from operations or return on assets or other acceptable performance
criteria. A stock award, no portion of which is immediately vested and
nonforfeitable, will be restricted, in whole or in part, for a period of at
least three years; provided, however, that the period will be at least one year
in the case of a stock award that is subject to objectives based on one or more
of the foregoing performance criteria. The maximum number of stock awards that
may be granted to an individual in any calendar year cannot exceed 50,000 shares
of Common Stock and no more than 30% of the shares available under the Incentive
Plan may be issued in the form of stock awards.
Incentive Awards
Incentive awards also may be granted under the Incentive Plan. An
incentive award is an opportunity to earn a bonus, payable in cash, upon
attainment of stated performance objectives. The objectives may be stated with
reference to the fair market value of the Common Stock or on the Company's, a
subsidiary's, or an operating unit's return on equity, earnings per share, total
earnings, earnings growth, return on capital, funds from operations or return on
assets or other acceptable performance criteria. The period in which performance
will be measured will be at least one year. No Participant may receive an
incentive award payment in any calendar year that exceeds the lesser of (i) 100%
of the Participant's base salary (prior to any salary reduction or deferral
election) as of the date of grant of the incentive award or (ii) $250,000.
Performance Share Awards
The Incentive Plan also provides for the award of performance shares. A
performance share award entitles the Participant to receive a payment equal to
the fair market value of a specified number of shares of Common Stock if certain
standards are met. The Administrator will prescribe the requirements that must
be satisfied before a performance share award is earned. These conditions may
include, for example, a requirement that the Participant continue employment
with the Company for a specified period or that the Company or the Participant
achieve stated, performance-related objectives. The objectives may be stated
with reference to the fair market value of the Common
Stock or on the Company's, a subsidiary's, or an operating unit's return on
equity, earnings per share, total earnings, earnings growth, return on capital,
funds from operations or return on assets or other acceptable performance
criteria. To the extent that performance shares are earned, the obligation may
be settled in cash, in Common Stock, or by a combination of the two. No
Participant may be granted performance shares for more than 12,500 shares of
Common Stock in any calendar year.
Transferability
Awards granted under the Incentive Plan are generally nontransferable.
The Compensation Committee may, however, grant awards other than ISOs, which are
transferable to Permitted Family Members.
Share Authorization
In no event may the total number of shares of Common Stock covered by
outstanding ISOs granted under the Incentive Plan, plus the number of shares of
Common Stock issued pursuant to the exercise of ISOs, whenever granted under the
Incentive Plan, exceed fifteen (15%) percent of the number of shares of Common
Stock. All awards made under the Incentive Plan will be evidenced by written
agreements between the Company and the Participant. The share limitation and the
terms of outstanding awards will be adjusted, as the Compensation Committee
deems appropriate, in the event of a stock dividend, stock split, combination,
reclassification, recapitalization or other similar event. As of April 26, 2002,
the closing price of a share of Common Stock on the New York Stock Exchange was
$1.09.
Termination and Amendment
No option or stock award may be granted and no performance shares may
be awarded under the Incentive Plan more than ten years after the earlier of the
date that the Incentive Plan is adopted by the Board of Directors or the date
that it is approved by the Company's stockholders. The Board of Directors may
amend or terminate the Incentive Plan at any time, but, except as set forth in
the immediately preceding paragraph, an amendment will not become effective
without stockholder approval if the amendment materially (i) increases the
number of shares of Common Stock that may be issued under the Incentive Plan
(other than an adjustment as described above), (ii) changes the eligibility
requirements, or (iii) increases the benefits that may be provided under the
Incentive Plan.
STOCK PURCHASE PLAN
Each employee of the Company customarily employed at least 20 hours or
more per week by the Company or an affiliate (as defined in the Company's stock
purchase plan (the "Stock Purchase Plan")), other than an employee who owns
beneficially 5% or more of the outstanding Common Stock, is eligible to
participate in the Stock Purchase Plan. Under the Stock Purchase Plan,
participating employees may elect to authorize the Company to withhold a minimum
of $200 per quarter and a maximum of 8% or $25,000 (whichever is less) of the
participating employee's base pay, which amounts will be used to purchase Common
Stock from the Company on a monthly basis. The purchase price of Common Stock
will equal a designated percentage from 85% to 100% of the closing sales price
for Common Stock as reported on the Composite Transactions Tape of the NYSE
(except as described below) on the first trading day of the month or on the last
trading day of the month, whichever is less. The designated percentage will be
established annually by the Compensation Committee which is responsible for the
administration of the Stock Purchase Plan.
Common Stock purchased under the Stock Purchase Plan is held in
custodial accounts until sold or distributed at the participant's request. The
custodian may charge a fee for the execution of any such sale or for the
delivery of share certificates. The participant may not elect to purchase stock
under the Stock Purchase Plan for three months after a withdrawal or sale of
Common Stock under the Stock Purchase Plan. Shares purchased under the Stock
Purchase Plan may not be sold for six months after their purchase. Any cash
dividends paid on Common Stock held in a participant's account will be
reinvested in additional Common Stock (at 100% of fair market value). Non-cash
distributions on Common Stock held in a participant's account will be
distributed to the participant.
The Company has reserved 1,500,000 shares of Common Stock for issuance
under the Stock Purchase Plan. Such shares may be from authorized and unissued
shares, treasury shares or a combination thereof. The Stock Purchase Plan will
remain in effect until terminated by the Board, or until all shares authorized
for issuance thereunder have been
issued. The Stock Purchase Plan may be amended from time to time by the Board.
No amendment will increase the aggregate number of shares of Common Stock that
may be issued and sold under the Stock Purchase Plan (except for authorizations
pursuant to the anti-dilution provisions of the Stock Purchase Plan) without
further approval by the Company's shareholders. The Company suspended the Stock
Purchase Plan in December 2000 and instructed the custodian to distribute to
participants their Common Stock purchased under the Stock Purchase Plan in 2001.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with Paul W.
Whetsell dated as of November 1, 2001, John Emery dated as of April 1, 2000 (as
amended as of October 1, 2001), Robert Morse dated as of November 1, 2001, James
A. Calder dated as of August 3, 1998, and Thomas Vincent dated as of July 16,
2000. Mr. Whetsell's agreement is for an initial term of three and one-half
years, and the other agreements are for an initial term of three years. All
agreements except for Mr. Vincent's automatically renew on a year-to-year basis
thereafter unless terminated in accordance with their terms. Certain material
terms of these agreements are as follows:
Base Salary
Mr. Whetsell receives a base salary of $190,000 per year (Mr. Whetsell
will receive a base salary of $285,000 per year as an employee of MeriStar
Hospitality Corporation). Mr. Emery receives a base salary of $230,000 per year
(Mr. Emery will receive a base salary of $230,000 per year as an employee of
MeriStar Hospitality Corporation), Mr. Calder receives a base salary of $200,000
per year, Mr. Morse receives a base salary of $425,000 per year, and Mr. Vincent
receives a base salary of $220,000 per year
Annual Incentive Bonus
Each executive is eligible to receive an annual incentive bonus at the
following targeted amounts of base salary:
Maximum
-------
Threshold Bonus
--------- -----
Target Target Amount
------ ------ ------
Paul W. Whetsell ....... 25% 125.0% 150.0%
John Emery ............. 25% 112.5% 137.5%
Robert Morse ........... 25% 100.0% 125.0%
James A. Calder ........ 25% 85% 100.0%
Thomas Vincent ......... n/a n/a 66.0%
The amount of the annual bonus is based on the achievement of
predefined operating or performance goals and other criteria to be established
by the Compensation Committee of the Board of Directors.
Long-Term Incentives
Each executive is eligible to participate in the Incentive Plan. Awards
are made in the discretion of the Compensation Committee.
Certain Severance Benefits
If, at any time during the term of their respective employment
agreements or any automatic renewal period, the employment of Messrs. Whetsell,
Emery, Morse, Vincent or Calder is terminated, he shall be entitled to receive
the benefits described below.
Termination by the Company Without Cause or by the Executive for Good
Reason. If either Mr. Whetsell or Mr. Emery is terminated without cause or
voluntarily terminates for "good reason," he will be entitled to a lump sum
payment equal to the product of (x) the sum of (A) his total then annual base
salary and (B) the amount of his bonus for the preceding year, or if the term of
the employment agreement is terminated in its initial year his target bonus for
such year multiplied by (y) the greater of (A) two and one-half in the case of
Mr. Whetsell, and two in the case of Mr. Emery, and (B) a fraction, the
numerator of which is the number of days remaining in the term of the employment
agreements, without further extension, and the denominator of which is 365. In
addition, all of his options and restricted stock will immediately vest and
become exercisable for a period of one year thereafter and shares of restricted
stock previously granted to the executive will become free from all contractual
restrictions, effective as of the termination date. In addition, the Company
will continue in effect certain benefits under the employment agreement,
including, but not limited to, health insurance plans, or their equivalent for a
period equal to the greater of two and one-half years in the case of
Mr. Whetsell, or two years in the case of Mr. Emery, or the remaining term of
the employment agreement, without further extension, or the date on which he
obtains health insurance from a subsequent employer.
If either Mr. Morse or Mr. Calder is terminated without cause or
voluntarily terminates for "good reason", he will receive (i) a lump sum payment
equal to one times their then annual base salary, (ii) the amount of his bonus
for the preceding year, (iii) immediate vesting and exercisability of all
unvested stock options and restricted stock awards and (iv) the continuance of
certain benefits under his employment agreement, but only until the earlier of
(x) one year from the end of the term of his employment agreements or (y) the
date on which the executive obtains health insurance coverage from a subsequent
employer. If Mr. Vincent is terminated without cause, he will receive (i) a lump
sum payment equal to the lesser of his annual salary or the salary for the
remainder of the term of his agreement, and (ii) immediate vesting and
exercisability of all stock options through the date of his termination and for
12 months thereafter.
Termination Due to Death or Disability. Upon his termination due to
death or disability, each executive or his estate will receive a lump sum
payment equal to the executive's base salary, plus the pro rata portion of his
bonus for the fiscal year in question. In addition, Messrs. Emery, Whetsell,
Morse and Calder will receive (i) payment for one year of any other compensation
due the executive pursuant to his employment contract, (ii) any unvested portion
of such executive's stock options and restricted stock will vest immediately and
become exercisable for one year thereafter, and (iii) shares of restricted stock
previously granted shall become free from all contractual restrictions.
Voluntary Termination or Termination for Cause. If Messrs. Whetsell,
Emery, Morse or Calder are terminated other than for "good reason" or if any
executive is terminated "for cause" by the Company, the executive will receive
any accrued and unpaid base salary through the termination date. Any unvested
options will terminate immediately, and any vested options held by the executive
will expire ninety (90) days after the termination date.
Termination Following a Change in Control. If (1) Mr. Whetsell or
Mr. Emery is terminated without cause within 24 months following a "Change in
Control," (2) Mr. Whetsell or Mr. Emery terminates with "good reason" within 24
months in the case of Mr. Emery, or within six months in the case of
Mr. Whetsell, following a Change of Control; (3) Mr. Whetsell's title or
responsibilities change during the two year period following the Change of
Control and Mr. Whetsell within six months following such change terminates the
agreement; or (4) Mr. Whetsell's employment by MeriStar Hospitality Corporation
is terminated and the Company does not agree to pay Mr. Whetsell the equivalent
of his then-current salary with MeriStar Hospitality Corporation, he will
receive the following benefits: (i) a lump sum payment equal to the product of
(x) the sum of (A) his then annual base salary and (B) the amount of his bonus
for the preceding year or if the term of the employment agreement is terminated
in its initial year his target bonus for such year multiplied by (y) the greater
of (A) in the case of Mr. Whetsell, three and one-half and in the case of
Mr. Emery, three, and (B) a fraction the numerator of which is the number of
days remaining in the term of the employment agreement, without further
extension, and the denominator of which is 365; (ii) all unvested stock options
held by the executive will immediately vest and be exercisable for the period of
one year thereafter and shares of restricted stock previously granted to the
executive will become free from all contractual restrictions; and (iii) the
continuance of health insurance plans, or their equivalent for a period equal to
the greater of two(2) years in the case of Mr. Emery or two and one-half (2 1/2)
years in the case of Mr. Whetsell, or the remaining term of the employment
agreement, without further extension. In the case of Mr. Morse or Mr. Calder, he
would be entitled to the same type of benefits provided the termination occurred
within 18 months of the Change in Control, except his lump sum payment will only
be two times the sum of his then annual base salary plus bonus.
Change in Control Payments. In the case of Messrs. Whetsell or Emery,
in the event that any accelerated vesting of the executive's rights with respect
to stock options, restricted stock or any other payment, benefit or compensation
results in the imposition of an excise tax payable by the executive under
the Internal Revenue Code, the Company will make a cash payment to the
executive in the amount of such excise tax (the "Excise Tax Payment") and shall
also make a cash payment to the executive in an amount equal to the total of
federal, state and local income and excise taxes for which the executive may be
liable on account of such Excise Tax Payment.
Termination due to non-renewal of Employment Agreement. If Mr. Morse's
employment agreement is not renewed at the end of the term, he will receive (i)
a lump sum payment equal to one times his then annual base salary, (ii) the
amount of his bonus for the preceding year, (iii) immediate vesting and
exercisability of all unvested stock options and restricted stock awards for one
year after termination, and (iv) the continuance of health benefits under his
employment agreement, but only until the earlier of (x) one year from the end of
the term of his employment agreement, or (y) the date on which he obtains health
insurance coverage from a subsequent employer.
Non-solicitation. Mr. Whetsell, Mr. Morse and Mr. Vincent may not,
during his employment and for a period of (i) in the case of Mr. Whetsell and
Mr. Vincent, twenty-four months or (ii) in the case of Mr. Morse, twelve months
thereafter, solicit, raid, entice or induce any person that then is or at any
time during the twelve-month period prior to the end of his agreement, who was
an employee of a Company Affiliate (other than a person whose employment has
been terminated) to become employed by any person, firm or corporation. In
addition, Mr. Vincent may not, for a period of 24 months after termination,
compete within 50 miles of the geographic area in which the Company conducts
business.
Item 12: Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the
beneficial ownership of Common Stock as of May 1, 2001 by (i) all persons known
by the Company to own beneficially more than 5% of the Common Stock, (ii) each
director who is a stockholder, (iii) each of the Named Executive Officers, and
(iv) all directors and executive officers as a group.
Name & Address of Beneficial Owner Shares Beneficially
---------------------------------- -------------------
Owned
-----
Number Percentage
------ ----------
Keystone, Inc. (1) 6,511,629 17.5%
Wellington Management Company, LLP (2) 4,921,400 13.2
FMR Corp. (3) 3,115,700 8.4
State of Wisconsin Investment Board. (4) 2,725,200 7.3
First Capital Alliance, LLP (5) 2,576,949 6.9
James A. Calder (6) 135,264 *
Kent R. Hance (7) 32,951 *
Steven D. Jorns (8) 1,328,931 3.6
S. Kirk Kinsell (7) 12,501 *
James B McCurry (7) 12,501 *
John Emery (9) 281,667 *
Robert Morse -0- *
Paul W. Whetsell (10). 866,652 2.3
James R. Worms (7) 52,738 *
Leslie Doggett 0 *
J. Taylor Crandall (11) 1,281,052 3.4
Executive officers and directors as a group (11 persons) 4,004,257 10.7
* Represents less than 1% of the class.
(1) Beneficial ownership information is based on the Schedule 13D/A filed by
Keystone, Inc., Oak Hill Capital Partners, L.P., Oak Hill Capital
Management Partners, L.P., Cherwell Investors, Inc., Group 31, Inc., MHX
Investors, L.P., Arbor REIT, L.P., FW Hospitality, L.P., Capital
Partnership, J. Taylor Crandall and Robert M. Bass (all located at 201 Main
Street, Suite 3100, Fort Worth, Texas 76012) and MC Investment Corporation,
Penobscot Partners, L.P., and PTJ Merchant Banking Partners, L.P. (all
located at 65 E. 55th Street, New York, New York 10022), filed on April 27,
1999 and amended on January 19, 2000 and December 19, 2000.
(2) Beneficial ownership information is based on the Schedule 13G/A filed by
Wellington Management Company, LLP (located at 75 State Street, Boston
Massachusetts 02109), filed on February 12, 2002.
(3) Beneficial ownership information is based on a Schedule 13G/A jointly filed
by Edward C. Johnson, Abigail P. Johnson and Fidelity Management & Research
Company (all located at 82 Devonshire Street, Boston, Massachusetts 02109)
dated February 14, 2002.
(4) Beneficial ownership information is based on the Schedule 13G filed by
State of Wisconsin Investment Board (located at P.O. Box 7482, Madison,
Wisconsin 53707), filed on February 12, 2002.
(5) Beneficial ownership information is based on Schedule 13G filed by First
Capital Alliance Limited Partnership, First Capital Alliance, LLC, Richard
Newman and Henry Chu (all located at 440 S. LaSalle Street, Suite 1614,
Chicago, Illinois 60605) dated January 22, 2002.
(6) Includes 125,000 shares of Common Stock subject to vested options.
(7) Includes 12,500 shares of common stock subject to vested options.
(8) Includes 255,001 shares of common stock subject to vested options.
(9) Includes 191,667 shares of common stock subject to vested options.
(10) Includes 333,333 shares of Common Stock subject to vested options.
(11) Includes 61,912 shares held by Cherwell Investors, Inc. ("Cherwell"),
764,067 shares held by FW Hospitality, L.P. ("FW Hospitality"), 204,514
shares held by PTJ Merchant Banking Partners, L.P. ("PTJ Merchant") and
4,067 shares held by Group 31, Inc. Mr. Crandall is the President and sole
shareholder of Group 31, Inc., and the President and sole shareholder of
PTJ, Inc., which is the sole general partner of PTJ Merchant; the sole
member of Group III 31, LLC, the general partner of FW Hospitality, L.P Mr.
Crandall is also the President and sole stockholder of Acadia MGP., which
is the managing general partner of Acadia FW Partners, L.P., which is the
sole stockholder of Cherwell.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires directors and executive
officers of the Company, and persons who own more than 10% of the issued and
outstanding shares of Common Stock, to file reports of beneficial ownership and
changes in beneficial ownership with the Securities and Exchange Commission.
Directors, executive officers and greater than 10% stockholders are required by
SEC regulation to furnish the Company copies of all Section 16(a) forms they
file.
Based on a review of the copies of the forms furnished to the Company
or representations by reporting persons, all of the filing requirements
applicable to its officers, directors and greater than 10% stockholders were met
for fiscal year 2001 except for Form 4s filed on October 10, 2001 and February
6, 2002 by certain officers and directors of the Company.
Item 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Stock Ownership
J. Taylor Crandall, a director of the Company, is a principal
stockholder of Oak Hill Capital Partners, L.P. which is an affiliate of
Keystone, Inc., a principal stockholder of the Company. See "Principal
Stockholders."
Relationships among Officers and Directors
Messrs Whetsell and Emery are executive officers, directors and
stockholders of MeriStar Hospitality Corporation, the owner of 112 of the hotels
that Company manages. Mr. Jorns is a director and stockholder of MeriStar
Hospitality. Mr. Wiles is a director, an executive and a stockholder of MeriStar
Hospitality. Mr. Calder is an executive and stockholder of MeriStar Hospitality.
In fiscal 2001, the Company received an aggregate of $26.3 million in management
fees from MeriStar Hospitality. MeriStar Hospitality has a revolving credit
agreement with the Company under which MeriStar Hospitality may lend to the
Company up to $50 million for general corporate purposes. The Company also owes
MeriStar Hospitality $13.1 million pursuant to a Term Note.
Mr. Jorns is a director, Vice-Chairman and Stockholder of the Company.
On August 3, 1998, the Company entered into an employment agreement with Mr.
Jorns for a term of 5 years, expiring on August 3, 2003. After the initial term,
Mr. Jorn's agreement renews automatically on a year-to-year basis. Mr. Jorns
receives a base salary of $90,000 per year. The termination and severance
provisions in Mr. Jorns' agreement are similar to those in Mr. Whetsell's
agreement. Mr. Jorns is also the Vice Chairman of MeriStar Hospitality
Corporation and receives a base salary of $135,000 from that company.
Purchase of Promissory Notes
A partnership indirectly controlled by Mr. Whetsell sold promissory
notes due from the owners of two properties managed by the Company to the
Company on March 11, 1999 in exchange for $343,650 which represented the current
balance due under such promissory notes. Both promissory notes have been paid in
full.
Sale of Partnership Units
On December 31, 1999, the Company sold three partnership units in a
partnership which owns a hotel managed by the Company to a partnership
indirectly controlled by Mr. Whetsell. The three units were sold for $145,500
which was the fair market value of the units at the time of sale. On December
31, 2001, the Company repurchased the three partnership units from the
partnership indirectly controlled by Mr. Whetsell, in connection with the
partnerships liquidation, for $117,215 which was the fair market value of the
units as of that date.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, MeriStar Hotels & Resorts, Inc. has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
MERISTAR HOTELS & RESORTS, INC.
By:/s/ PAUL W. WHETSELL
-----------------------
Paul W. Whetsell
Chief Executive Officer and
Chairman of the Board
Dated: April 29, 2002
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Paul W. Whetsell and Christopher L. Bennett, such
person's true and lawful attorneys-in-fact and agents, with full power of
substitution and revocation, for such person and in such person's name, place
and stead, in any and all capacities to sign any and all amendments (including
post-effective amendments) to this report filed pursuant to the requirements of
Section 13 or 15(d) of the Securities Exchange Act of 1934, and to file the same
with all exhibits thereto, and the other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and things requisite and necessary to be done, as fully to all intents
and purposes as such person might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
and the foregoing Power of Attorney have been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
Chief Executive Officer and April 29, 2002
/s/ PAUL W. WHETSELL Chairman of the Board of
- -------------------- Directors (Principal
Paul W. Whetsell Executive Officer)
/S/ STEVEN D. JORNS Vice Chairman of the Board of April 29, 2002
- ------------------- Directors
Steven D. Jorns
/s/ JOHN EMERY President, Chief Operating April 29, 2002
- -------------- Officer and Director
John Emery
/s/ JAMES A. CALDER Chief Financial Officer April 29, 2002
- ------------------- (Principal Financial and
James A. Calder Accounting Officer)
/s/ J. TAYLOR CRANDALL Director April 29, 2002
- ----------------------
J. Taylor Crandall
/s/ LESLIE R. DOGGETT Director April 29, 2002
- ---------------------
Leslie R. Doggett
/s/ KENT R. HANCE Director April 29, 2002
- -----------------
Kent R. Hance
/s/ S. KIRK KINSELL Director April 29, 2002
- -------------------
S. Kirk Kinsell
/s/ JAMES MCCURRY Director April 29, 2002
- -----------------
James McCurry
/s/ JAMES R. WORMS Director April 29, 2002
- ------------------
James R. Worms