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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 Rule 14a-11(c) or Rule 14a-12
INTERSTATE HOTELS COMPANY
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(Name of Registrant as Specified In Its Charter)
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(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.
(1) Title of each class of securities to which transaction applies:
Common Stock
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act rule 0-11:
(4) Proposed maximum aggregate value of transaction:
/ / Check box if any part of the fee is offset as provided by Exchange Act rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number
or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement number:
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(4) Date filed:
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INTERSTATE HOTELS COMPANY
Foster Plaza Ten
680 Andersen Drive
Pittsburgh, Pennsylvania 15220
March 27, 1997
To the Shareholders:
You are cordially invited to attend the 1997 Annual Meeting of Shareholders
of Interstate Hotels Company to be held on Wednesday, May 21, 1997 at 10:30
a.m., Eastern Time, at the Pittsburgh Airport Marriott Hotel located at Parkway
West--Montour Run Exit, 100 Aten Road, Coraopolis, Pennsylvania. The official
Notice of Meeting, Proxy Statement and form of proxy are enclosed with this
letter. The matters listed in the Notice of Meeting are described in the
attached Proxy Statement.
The vote of every shareholder is important and your cooperation in
completing, signing and returning your proxy promptly will be appreciated.
We hope to see you at the Annual Meeting.
Sincerely,
/s/ MILTON FINE
MILTON FINE
Chairman of the Board
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AND
RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
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INTERSTATE HOTELS COMPANY
Foster Plaza Ten
680 Andersen Drive
Pittsburgh, Pennsylvania 15220
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
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To the Shareholders:
Notice is hereby given that the 1997 Annual Meeting of Shareholders of
Interstate Hotels Company will be held at 10:30 a.m., Eastern Time, on
Wednesday, May 21, 1997, at the Pittsburgh Airport Marriott Hotel located at
Parkway West--Montour Run Exit, 100 Aten Road, Coraopolis, Pennsylvania for the
following purposes, all as more fully described in the attached Proxy Statement:
1. To elect six members of the Board of Directors;
2. To ratify the appointment of Coopers & Lybrand L.L.P. as the independent
accountants to audit the financial statements of Interstate Hotels
Company; and
3. To act upon such other business as may properly come before the Annual
Meeting or any postponements or adjournments thereof.
Shareholders of record at the close of business on March 14, 1997 are
entitled to vote at the Annual Meeting or any postponements or adjournments
thereof.
MARVIN I. DROZ
Secretary
March 27, 1997
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT
PROMPTLY IN THE ACCOMPANYING ENVELOPE, WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES.
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INTERSTATE HOTELS COMPANY
Foster Plaza Ten
680 Andersen Drive
Pittsburgh, Pennsylvania 15220
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 21, 1997
GENERAL
This Proxy Statement is furnished in connection with the solicitation by
and on behalf of the Board of Directors (the "Board") of Interstate Hotels
Company (the "Company") of proxies for use at the Annual Meeting of Shareholders
of the Company to be held at 10:30 a.m., Eastern Time, on Wednesday, May 21,
1997, at the Pittsburgh Airport Marriott Hotel located at Parkway West--Montour
Run Exit, 100 Aten Road, Coraopolis, Pennsylvania (including any postponements
or adjournments thereof, the "Annual Meeting") for the purposes set forth in the
accompanying Notice of Meeting. This Proxy Statement, the accompanying form of
proxy and the Company's 1996 Annual Report to Shareholders are being mailed to
shareholders on or about March 27, 1997.
The holders of record of shares of Common Stock of the Company at the close
of business on March 14, 1997 (the "Record Date") are entitled to receive notice
of, and to vote such shares at, the Annual Meeting. As of the Record Date, there
were 35,324,968 shares of Common Stock outstanding. Holders of such shares as of
the Record Date are entitled to one vote per share on each matter to be
considered at the Annual Meeting.
The holders of a majority of the outstanding shares of Common Stock as of
the Record Date will constitute a quorum for the transaction of business at the
Annual Meeting. Abstentions and broker non-votes will be included in determining
the number of shares present or represented at the Annual Meeting for purposes
of determining whether a quorum exists. However, abstentions and broker
non-votes with respect to any matter brought to a vote at the Annual Meeting
will be treated as shares not voted for purposes of determining whether the
requisite vote has been obtained. Because the affirmative vote of the holders of
a majority (or, in the case of the election of any nominee as a director, a
plurality) of the shares of Common Stock represented at the Annual Meeting and
actually voted is required for the approval of any matter brought to a vote at
the Annual Meeting, abstentions and broker non-votes will have no effect on the
outcome of the vote on any such matter. If the persons present or represented by
proxy at the Annual Meeting constitute the holders of less than a majority of
the outstanding shares of Common Stock as of the Record Date, the Annual Meeting
may be adjourned to a subsequent date for the purpose of obtaining a quorum.
All shares of Common Stock represented at the Annual Meeting by properly
executed proxies received prior to or at the Annual Meeting, unless such proxies
previously have been revoked, will be voted at the Annual Meeting in accordance
with the instructions on the proxies. If no instructions are indicated, such
shares will be voted in accordance with the recommendations of the Board as set
forth herein.
A proxy may be revoked by filing with the Secretary of the Company, prior
to the exercise of the proxy, either a written instrument revoking the proxy or
an executed subsequent proxy or by voting in person at the Annual Meeting.
Attendance at the Annual Meeting will not, in itself, constitute revocation of a
proxy.
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ELECTION OF DIRECTORS
The Board has nominated Milton Fine, David J. Fine, R. Michael McCullough,
W. Thomas Parrington, Jr., Thomas J. Saylak and Steven J. Smith, each of whom is
currently a member of the Board, for election as directors. If elected, such
nominees will serve for a one-year term to expire at the Company's 1998 Annual
Meeting of Shareholders, or until their successors are duly elected and
qualified.
The Board has no reason to believe that any of the nominees will not serve
if elected, but if any nominee should subsequently become unavailable to serve
as a director, the persons named as proxies may, in their discretion, vote for a
substitute nominee designated by the Board or, alternatively, the Board may
reduce the number of directors to be elected at the Annual Meeting. Michael J.
Aranson, a member of the Board, died shortly before the date of this Proxy
Statement. The Board is currently considering candidates to fill the vacancy
created by Mr. Aranson's death and, upon selection of a qualified candidate,
will appoint such candidate to the Board to serve until the next annual meeting.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE ELECTION OF THE
NOMINEES. PROXIES SOLICITED BY THE BOARD WILL BE SO VOTED EXCEPT WHERE AUTHORITY
HAS BEEN WITHHELD.
NOMINEES FOR ELECTION AS DIRECTORS
MILTON FINE
Milton Fine, age 70, co-founded the Company in 1961 and is currently
Chairman of the Board. Mr. Fine served as the Company's Chief Executive Officer
through March 1996. He is a life trustee of the Carnegie Institute and Chairman
of the Board of the Carnegie Museum of Art. He is also a member of the Board of
Trustees of the University of Pittsburgh and a member of the Board of Directors
of the Andy Warhol Museum in Pittsburgh, Pennsylvania.
DAVID J. FINE
David J. Fine, age 33, has been a Director of the Company since 1991. Mr.
Fine is an attorney specializing in the areas of real estate finance and
property acquisition, development and disposition. From 1991 to 1996, Mr. Fine
was an attorney with Eckert, Seamans, Cherin & Mellott, and from 1990 to 1991 he
was an attorney with Gaston and Snow. David J. Fine is the son of Milton Fine.
R. MICHAEL MCCULLOUGH
R. Michael McCullough, age 58, has been a Director of the Company since
1991. Mr. McCullough is Senior Chairman (retired) of Booz, Allen & Hamilton,
Inc., an international management and technology consulting firm.
W. THOMAS PARRINGTON, JR.
W. Thomas Parrington, Jr., age 52, has been with the Company since 1981,
serving as Chief Executive Officer since April 1996, President and Director
since 1994 and as Chief Financial Officer prior thereto.
THOMAS J. SAYLAK
Thomas J. Saylak, age 36, has been a Director of the Company since December
1995. Mr. Saylak is a Senior Managing Director of The Blackstone Group. Prior to
joining Blackstone in 1993, Mr. Saylak was a principal in Trammell Crow
Ventures, the real estate investment, banking and investment management unit of
Trammell Crow Company, from 1987 to 1993.
STEVEN J. SMITH
Steven J. Smith, age 56, has been a Director of the Company since 1991 and
has been a management consultant since 1989.
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EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
J. WILLIAM RICHARDSON
J. William Richardson, age 49, has served as the Company's Executive Vice
President, Finance and Administration and Chief Financial Officer since 1994.
Mr. Richardson previously served as Controller and Treasurer of the Company
since 1988.
ROBERT L. FROMAN
Robert L. Froman, age 50, has been with the Company since 1984, serving as
Executive Vice President, Development since 1986.
THOMAS D. REESE
Thomas D. Reese, age 51, has served as Executive Vice President, Operations
since joining the Company in October 1996. Prior to joining the Company, Mr.
Reese was Vice President of Marriott Hotels, Resorts and Suites from August 1992
to October 1996 and general manager of the New York Marriott Marquis Hotel prior
thereto.
MARVIN I. DROZ
Marvin I. Droz, age 42, has served as Senior Vice President and General
Counsel since joining the Company in 1990.
ATTENDANCE AT MEETINGS
The Board held six meetings during 1996. No director attended fewer than
75% of the total number of meetings of the Board and Board committees on which
such director served.
COMMITTEES OF THE BOARD
The Board has established two directorate committees--a compensation
committee (the "Compensation Committee") and an audit review committee (the
"Audit Review Committee").
Compensation Committee. The Compensation Committee reviews executive
salaries, administers the bonus, incentive compensation and stock option plans
of the Company and approves the salaries and other benefits of the executive
officers of the Company. In addition, the Compensation Committee consults with
the Company's management regarding pension and other benefit plans and the
compensation policies and practices of the Company. The Compensation Committee
was formed in June 1996 in connection with the Company's initial public offering
(the "IPO") and is composed of R. Michael McCullough (Chairman) and Steven J.
Smith, who are not employed by the Company or any of its affiliates
("Non-Employee Directors") and are not eligible to receive options or other
rights under any employee stock or other benefit plan (other than plans in which
only directors may participate). Before June 1996, decisions regarding the
compensation of officers were made by the Board. The Compensation Committee held
two meetings during 1996.
Audit Review Committee. The Audit Review Committee reviews the professional
services provided by the Company's independent accountants and the independence
of such accountants from the management of the Company. The Audit Review
Committee also reviews the scope of the audit by the Company's independent
accountants, the annual financial statements of the Company, the Company's
system of internal accounting controls and such other matters with respect to
the accounting, auditing and financial reporting practices and procedures of the
Company as it finds appropriate or as are brought to its attention, and meets
from time to time with members of the Company's internal audit staff. The Audit
Review Committee was formed in June 1996 in connection with the IPO and is
required to consist solely of Non-Employee Directors. The current members of the
Audit Review Committee are Thomas J. Saylak and Steven J. Smith (Chairman). The
Audit Review Committee held two meetings during 1996.
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DIRECTOR NOMINATION PROCEDURES
Nominations for election of directors by the shareholders may be made by
the Board or by any shareholder entitled to vote in the election of directors
generally. The Company's Bylaws require that a shareholder intending to nominate
candidates for election as directors deliver written notice thereof to the
Secretary of the Company not later than 60 days in advance of the annual meeting
of shareholders; provided, however, that in the event that the date of the
meeting is not publicly announced by the Company by inclusion in a report filed
with the Securities and Exchange Commission (the "SEC") or furnished to
shareholders, or by mail, press release or otherwise more than 75 days prior to
the annual meeting, notice by the shareholder to be timely must be delivered to
the Secretary of the Company not later than the close of business on the tenth
day following the day on which public announcement of the date of the annual
meeting was so communicated. The Company's Bylaws further require that the
notice by the shareholder set forth certain information concerning such
shareholder and the shareholder's nominees, including their names and addresses,
a representation that the shareholder is entitled to vote at such annual meeting
and intends to appear in person or by proxy at the annual meeting to nominate
the person or persons specified in the notice, the class and number of shares of
the Company's stock owned beneficially and of record by such shareholder, a
description of all arrangements or understandings between the shareholder and
each nominee, such other information regarding each nominee as would be required
to be included in a proxy statement soliciting proxies for the election of the
nominees of such shareholder and the consent of each nominee to serve as a
director of the Company if so elected. The chairman of the meeting may refuse to
acknowledge the nomination of any person not made in compliance with these
requirements.
DIRECTOR COMPENSATION
Directors who are Non-Employee Directors are paid an annual retainer of
$15,000 plus $750 for each Board meeting or working session attended. In
addition, members of each directorate committee are paid $500 ($650 in the case
of the committee chairman) for each committee meeting attended on days on which
the Board does not also meet. Non-Employee Directors are also entitled under the
Company's Stock Option Plan for Non-Employee Directors to receive, at the time
such person becomes a director, an option to purchase 5,000 shares of Common
Stock at an exercise price per share equal to the market value of a share of
Common Stock on such date and, annually, an option to purchase 5,000 shares of
Common Stock at an exercise price equal to the market value of a share of Common
Stock on the date of the annual meeting of shareholders.
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding the
compensation paid to Milton Fine, who served as Chief Executive Officer through
March 1996 but is presently Chairman of the Board, and each of the four other
most highly compensated executive officers of the Company (including W. Thomas
Parrington, Jr., the current Chief Executive Officer) in 1996 (collectively, the
"Named Executive Officers").
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SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
-----------------------
ANNUAL COMPENSATION SECURITIES
-------------------- UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS PAYOUTS COMPENSATION
- --------------------------- ---- -------- -------- ---------- ------- ------------
Milton Fine (1)............ 1996 $167,583 $ -- 185,000(2) $18,850(3) $ 50,000(4)
Chairman of the Board 1995 159,896 -- -- -- 50,000(4)
W. Thomas Parrington,
Jr....................... 1996 340,205 404,680 240,000(2) 81,241(6) 126,292(7)
President and Chief 1995 313,781 378,000 227,906(8) 37,400(9) 18,000(4)
Executive Officer (5)
J. William Richardson...... 1996 236,960 281,173 123,750(2) 77,254(10) 71,000(11)
Executive Vice President, 1995 216,608 259,929 136,744(8) 46,800(9) 15,000(4)
Finance and
Administration and Chief
Financial Officer
Robert L. Froman........... 1996 235,444 267,343 87,500(2) 30,222(3) 16,666(12)
Executive Vice President, 1995 225,163 181,666 136,744(8) -- 16,666(12)
Development
Marvin I. Droz............. 1996 194,888 250,632 77,500(2) 24,985(3) --
Senior Vice President and 1995 174,720 200,928 91,163(8) -- --
General Counsel
- ---------
(1) Mr. Fine was Chief Executive Officer during the period from January 1, 1995
through March 31, 1996.
(2) Consists of shares underlying options granted under the Company's 1996
Equity Incentive Plan (the "Equity Incentive Plan"), with exercise prices
ranging from $21.00 per share to $25.00 per share.
(3) Consists entirely of compensation under the Company's Executive Retirement
Plan (the "ERP").
(4) Consists entirely of compensation for services as a director of the
Company's subsidiary, Northridge Insurance Company ("Northridge").
(5) Mr. Parrington was President and Chief Operating Officer during the period
from January 1, 1995 through March 31, 1996.
(6) Consists of $43,841 of compensation under the ERP and $37,400 of
compensation under the Company's Supplemental Deferred Compensation Plan
(the "SDCP").
(7) Consists of $18,000 of compensation for services as a director of
Northridge and amortization of loan forgiveness in the amount of $108,292.
(8) Gives effect to the ratio applied to the exchange of shares of common stock
of the Company's predecessor, Interstate Hotels Corporation ("IHC"), for
Common Stock of the Company in the Organization (as defined in "--Certain
Relationships and Related Transactions.") All of these options were
canceled prior to and in anticipation of the IPO, with resulting
compensation as follows: Mr. Fine--$0; Mr. Parrington--$2,574,165; Mr.
Richardson--$1,443,054; Mr. Froman--$1,596,787; Mr. Droz--$848,107.
(9) Consists entirely of compensation under the SDCP.
(10) Consists of $30,454 of compensation under the ERP and $46,800 of
compensation under the SDCP.
(11) Consists of $15,000 of compensation for services as a director of
Northridge and amortization of loan forgiveness in the amount of $56,000.
(12) Consists entirely of amortization of loan forgiveness.
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1996 STOCK OPTION GRANTS
The following table sets forth certain information with respect to options
granted to the Named Executive Officers during 1996.
OPTION GRANTS IN FISCAL YEAR 1996
POTENTIAL REALIZABLE
VALUE AT
ASSUMED ANNUAL RATES
NUMBER OF OF STOCK
SECURITIES % OF TOTAL PRICE APPRECIATION
UNDERLYING OPTIONS GRANTED FOR OPTION TERM
OPTIONS TO EMPLOYEES EXERCISE OR EXPIRATION ------------------------
NAME GRANTED IN 1996 BASE PRICE DATE 5% 10%
- ------------------------- ---------- --------------- ----------- ---------- ---------- ----------
Milton Fine.............. 150,000 9.5% $ 21.00 2006 $1,981,018 $5,020,289
35,000 2.2 25.00 2006 550,283 1,394,525
W. Thomas Parrington,
Jr..................... 200,000 12.7 21.00 2006 2,641,357 6,693,718
40,000 2.5 25.00 2006 628,895 1,593,742
J. William Richardson.... 93,750 5.9 21.00 2006 1,238,136 3,137,680
30,000 1.9 25.00 2006 471,671 1,195,307
Robert L. Froman......... 62,500 4.0 21.00 2006 825,424 2,091,787
25,000 1.6 25.00 2006 393,059 996,089
Marvin I. Droz........... 62,500 4.0 21.00 2006 825,424 2,091,787
15,000 1.0 25.00 2006 235,835 597,653
The following table sets forth information regarding the values of the
options held by the Named Executive Officers at December 31, 1996.
OPTION VALUES AT DECEMBER 31, 1996
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
NAME DECEMBER 31, 1996 (1) AT DECEMBER 31, 1996 (1)
- ----------------------------------------------------- ---------------------- ------------------------
Milton Fine.......................................... 185,000 $1,201,250
W. Thomas Parrington, Jr............................. 240,000 1,580,000
J. William Richardson................................ 123,750 777,188
Robert L. Froman..................................... 87,500 534,375
Marvin I. Droz....................................... 77,500 501,875
- ---------
(1) All options held by the Named Executive Officers at December 31, 1996 were
unexercisable.
Outstanding Options. Pursuant to the Equity Incentive Plan, the Company has
granted stock options to purchase an aggregate of 1,576,750 shares of Common
Stock at exercise prices ranging from $21.00 to $26.75 per share. Each of the
options has a ten-year term and becomes exercisable as to one-third of the
shares covered thereby on each of the first three anniversaries of the date of
grant so long as the holder thereof remains a full-time employee of the Company,
except that the options become immediately exercisable in the event of the
holder's death, disability or termination of employment by the Company for any
reason other than cause (as defined) or in the event that any person or group
(other than the Fine Family Shareholders (as defined in "--Certain Relationships
and Related Transactions")) becomes the beneficial owner of more than 30% of the
outstanding shares of capital stock of the Company entitled generally to vote in
the election of directors and, within 12 months after such acquisition, there is
a change in a majority of the members of the Board. Unexercised options
terminate 30 calendar days after the holder's termination of employment by the
Company, except that such period is 180 days in the event of disability and 360
days in the event of death.
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COMPENSATION PLANS AND ARRANGEMENTS
Management Bonus Plan. The Company has established a Management Bonus Plan
under which all key management employees, including the Named Executive
Officers, are eligible to receive bonuses based upon achievement of specified
targets and goals for the Company and the individual employee. Bonus awards may
not exceed 50% to 120% of the executive's annual base salary and 20% of each
executive's bonus award may, at the discretion of the Compensation Committee, be
paid in the form of shares of Common Stock, which will be subject to certain
restrictions and forfeiture provisions. The Management Bonus Plan is
administered by the Compensation Committee.
Executive Loans. In 1996, the Company loaned $2.0 million and $1.0 million
to Messrs. Parrington and Richardson, respectively (the "Executive Loans"). The
Executive Loans are fully recourse to the borrowers thereunder, mature on June
30, 2006 and bear interest at the adjusted federal rate. If the executive's
employment is terminated by the Company for cause or by the executive for any
reason other than death, disability or circumstances that would entitle the
executive to benefits under his or her change-in-control agreement (described
below), then the executive's loan would become due and payable in three equal
annual installments commencing with the first anniversary of the date of such
termination. If the executive's employment is terminated for any other reason,
the loan plus accrued interest would be forgiven. If the executive remains
employed by the Company, one-tenth of the principal amount of such executive's
loan plus the interest for that year will be forgiven on June 30, 1997 and each
of the next nine anniversaries thereof. See "--Certain Relationships and Related
Transactions--Transactions with Officers and Directors" for a discussion of
certain other loans by the Company.
Deferred Compensation Agreements. In connection with the termination of
certain prior benefit arrangements, each of Messrs. Parrington and Richardson
entered into a deferred compensation agreement with the Company under the
Company's SDCP. Pursuant to the deferred compensation agreements, $561,000 and
$702,000 has been deposited into a grantor trust established by the Company for
the benefit of, respectively, Messrs. Parrington and Richardson. Such amounts
plus accumulated earnings will be paid out in ten semi-annual payments beginning
at the earlier of the date of approved retirement from the Company or the
attainment of age 60, provided that the beneficiary thereof performs consulting
services to the Company and does not engage in any competitive activity.
Executive Retirement Plan. Each of the General Managers of the Company's
hotels who are employees of the Company and other employees of the Company
holding job classifications of Vice President or above, including the Named
Executive Officers (collectively, the "Participants"), is eligible to
participate in the Company's ERP. The ERP is intended to be a non-qualified and
unfunded plan maintained primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated employees.
Actual participation in the ERP is determined by the ERP's administrative
committee, which is appointed by the Board.
The Company annually contributes 8% of the Participant's base salary to the
ERP and may make discretionary contributions of up to an additional 5% of the
Participant's base salary. These discretionary contributions are based on the
Company's net increase in earnings per share in a given year. In addition,
Participants are eligible to designate a portion (specified annually by the
Board or the Compensation Committee) of their cash bonus to be contributed to
the ERP.
The funds contributed by the Company or Participants are held in a grantor
trust established by the Company. Unless the administrative committee determines
that the amounts contributed to the ERP on behalf of a Participant ("Plan
Benefits") are payable earlier, in general a Participant receives his ERP Plan
Benefits one year after his retirement or termination of employment.
Stock Purchase Plan. Each eligible full-time employee of the Company,
including the Named Executive Officers, may participate in the Company's
employee stock purchase plan (the "Stock Purchase Plan"). Under the Stock
Purchase Plan, participating employees may elect to authorize the Company to
withhold a maximum of 8% of the participating employee's salary, which amounts
will be held in the participating employee's account and used to purchase Common
Stock on a semi-annual basis at a price equal to a
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designated percentage from 85% to 100% of the average closing sale price for
Common Stock as reported on the Composite Transactions Tape of the New York
Stock Exchange, on either the offer date or the purchase date, whichever price
is lower.
Equity Incentive Plan. The Company's Equity Incentive Plan is designed to
attract and retain qualified officers and other key employees of the Company.
The Equity Incentive Plan authorizes the grant of options to purchase shares of
Common Stock, stock appreciation rights, restricted shares, deferred shares,
performance shares and performance units. The Compensation Committee administers
the Equity Incentive Plan and determines to whom awards under the plan are to be
granted and the terms and conditions of such awards, including the number of
shares and the period of exercisability thereof. Officers, including officers
who are members of the Board, and other key employees of and consultants to the
Company and its subsidiaries may be selected by the Compensation Committee to
receive benefits under the Equity Incentive Plan.
EMPLOYMENT AND CHANGE-IN-CONTROL AGREEMENTS
Each of the Named Executive Officers is a party to an employment agreement
with the Company. Pursuant to the employment agreements, in the event that the
Named Executive Officer party thereto is terminated by the Company without cause
(as defined), the Named Executive Officer is entitled to the greater of (i) the
Named Executive Officer's salary and bonus for the prior fiscal year or (ii) the
monthly payments which the Named Executive Officer is entitled to under the
executive's employment agreement for the remainder of the term of the agreement,
plus the continuation of health and other welfare benefits for the greater of
one year or the remainder of the term of the agreement. Each of the employment
agreements with the Named Executive Officers has a term that ends on April 30,
1999, but will automatically be renewed for successive one-year terms until
either party gives notice to the other of his or its intention to terminate the
agreement. In addition, each of the Named Executive Officers is a party to a
change-in-control agreement that provides for the payment of such severance
benefits and the provision of such health and other benefits if the Named
Executive Officer's employment is terminated by the Company, or by the
executive, following a change in control (as defined), except that the severance
benefits payable thereunder are based upon three times the highest salary and
bonus that the executive received during any of the three years preceding the
year in which the change in control occurred and are reduced dollar-for-dollar
for salary and bonus payments made by the Company during any period of
continuation of employment following the change in control. In addition, the
amounts payable under the change-in-control agreements are increased to
compensate the Named Executive Officer for any excise tax payable by the Company
pursuant to Section 280G of the Internal Revenue Code of 1986, as amended. The
Named Executive Officers are not obligated under the employment agreements or
the change-in-control agreements to mitigate damages by seeking alternative
employment; however, the Company's obligations to provide health and other
welfare benefits thereunder terminates if the Named Executive Officer obtains
other full-time employment within three years of such termination. Each Named
Executive Officer's employment agreement will terminate without further action
immediately prior to the payment of any severance benefits under the Named
Executive Officer's change-in-control agreement. The employment agreements and
the change-in-control agreements include provisions prohibiting the Named
Executive Officers from engaging in any competitive activity (as defined) for
two years after termination of employment and providing for the payment of legal
fees and expenses incurred in enforcing or defending such agreements.
All of the foregoing plans and agreements were approved by the Company's
shareholders and the Board prior to the IPO.
REPORT ON EXECUTIVE COMPENSATION
Compensation of the Company's executives is performance-based, with the
majority of the compensation at risk in order to link compensation to corporate
performance and shareholder interests while instilling ownership thinking. The
compensation package is comprised of three major components: base salary, annual
bonus and long-term incentives in the form of equity rights.
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An executive's base salary is determined by taking into consideration the
executive's performance, individual job responsibilities, previous experience
and mastery of the business, position in the current salary range designated for
his or her job and, where appropriate, potential for advancement. Salary ranges
are set based on external market data and internal factors. The market data is
obtained from a hospitality industry survey utilizing information from similar
hospitality companies. The midpoints of the Company's ranges were set in
relation to the median of the survey data to ensure the executive base salaries
are competitive but not leading the industry.
Increases in base salaries for key executives are reviewed and rewarded
when appropriate in January of each year based on their performance in the prior
year. Mr. Parrington's merit increase in 1997 was 7.9% in recognition of his
contribution to the Company's IPO and other accomplishments during 1996. Mr.
Fine's base salary for 1997 was increased to $513,000 in recognition of his
increased responsibilities as a result of the growth of the Company since the
IPO.
Annual bonuses are awarded based on criteria established pursuant to the
Company's Management Bonus Plan, which was created to provide at-risk incentive
pay which would lead the market as a percent of base salary when the Company
meets its performance objectives, thereby moving total cash compensation for the
Company's executive management to a more competitive position compared to other
hospitality companies in circumstances in which the Company is performing well.
The Management Bonus Plan establishes two sets of criteria: one for
executives with Company-wide responsibilities and one for those with
division/department responsibilities. Executives with Company-wide
responsibilities may receive a bonus of up to 90% of their base salary if
certain performance criteria are achieved by the Company and up to an additional
30% of base salary for achievement of individual performance objectives.
Executives with division/department responsibilities may receive bonuses of up
to 60% and 30%, respectively, of their base salary based on similar criteria and
up to an additional 30% of base salary if the division/department performance
objectives are achieved. Mr. Parrington earned the maximum award of $404,680 for
the performance period ended December 31, 1996: $303,510 based on a percent of
adjusted EBITDA and an individual performance award of $101,170.
Long-term incentives are awarded pursuant to the Equity Incentive Plan
through grants of restricted stock and stock options. Both the restricted stock
and the stock options vest over a three-year period from the date of grant. The
stock options have a ten-year term. At the time of the IPO, Mr. Parrington was
granted an option to purchase 200,000 shares of Common Stock at an exercise
price of $21.00 per share. Mr. Parrington was granted a second stock option to
purchase 40,000 shares at an exercise price of $25.00 per share in conjunction
with the Company's public offering in December 1996.
Certain prior benefits were terminated in connection with the Company's
IPO. Consequently, a one-time deferred compensation arrangement was entered into
with both Messrs. Parrington and Richardson in the amounts of $561,000 and
$702,000, respectively. See "--Compensation Plans and Arrangements--Deferred
Compensation Agreements" for a description of these amounts and "--Compensation
Plans and Arrangements--Executive Loans" for a discussion of certain loans made
to Messrs. Parrington and Richardson.
The Compensation Committee believes that the Company's compensation
policies and practices are consistent with the Company's goal of building
shareholder value, and the Compensation Committee intends to administer those
policies consistent with that goal.
Respectfully submitted,
R. Michael McCullough, Chairman
Steven J. Smith
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee was formed in June 1996 and currently is
composed of R. Michael McCullough (Chairman) and Steven J. Smith. Prior thereto,
decisions regarding the compensation of officers were made by the Board.
STOCK PERFORMANCE
The following graph compares the cumulative total shareholder return on the
Company's Common Stock with the Standard & Poor's 500 Stock Index and the
Lodging-Hotels 500 Index from the date trading of the Common Stock on the New
York stock exchange commenced through December 31, 1996, assuming an initial
investment of $100.00 and the reinvestment of all dividends.
COMPARISON OF CUMULATIVE TOTAL RETURNS
AMONG INTERSTATE HOTELS COMPANY, THE S&P 500 INDEX AND THE LODGING-HOTELS 500
MEASUREMENT PERIOD INTERSTATE HO- LODGING - HO-
(FISCAL YEAR COVERED) TELS COMPANY S&P 500 INDEX TELS 500
JUNE 20, 1996 100 100 100
DECEMBER 31, 1996 134.52 113.12 88.2
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information regarding the beneficial
ownership of Common Stock as of the Record Date by (i) each person known by the
Company to own beneficially more than 5% of the Common Stock, (ii) each director
and Named Executive Officer of the Company, and (iii) all directors and
executive officers of the Company as a group. Unless indicated otherwise, the
address for each of the persons named in the table is Foster Plaza Ten, 680
Andersen Drive, Pittsburgh, Pennsylvania 15220. For purposes of
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the table, a person or group of persons is deemed to have "beneficial ownership"
of any shares as of a given date which such person has the right to acquire
within 60 days after such date.
PERCENTAGE
NUMBER OF OF
SHARES OWNED SHARES OWNED
------------ ------------
Milton Fine (1).................................................... 6,218,640 17.6%
Fine Family Trusts (2)............................................. 12,782,940 36.2
Blackstone (3)..................................................... 2,528,571 7.2
David J. Fine (4).................................................. 6,571,800 18.6
W. Thomas Parrington, Jr. (5)...................................... 307,160 *
J. William Richardson (6).......................................... 170,403 *
Robert L. Froman................................................... 196,072 *
Marvin I. Droz (7)................................................. 100,454 *
R. Michael McCullough (8).......................................... 10,000 *
Thomas J. Saylak................................................... -- --
Steven J. Smith.................................................... 4,300 *
Trust Leasing, Inc. and Trust Management, Inc. (9)................. 1,957,895 5.5
The Prudential Insurance Company of America (10)................... 2,735,200 7.7
All directors and executive officers as a group (10 persons)
(11)............................................................. 13,588,829 38.5
- ---------
* Less than 1%.
(1) Includes 5,000 shares owned by Milton Fine's wife, 2,500 shares owned by
Milton Fine's wife in trust for her children and 6,211,140 of the
12,782,940 shares beneficially owned by the Fine Family Trusts as to which
Milton Fine is trustee. Milton Fine disclaims beneficial ownership of all
of such shares.
(2) The "Fine Family Trusts" are comprised of five trusts: one of which Milton
Fine is the trustee and four of which David J. Fine is the trustee.
(3) As reported in a Schedule 13D filed with the SEC on July 3, 1996.
Blackstone's address is 345 Park Avenue, New York, New York 10154.
(4) David J. Fine may be deemed to beneficially own 6,571,800 of the 12,782,940
shares beneficially owned by the Fine Family Trusts as to which David J.
Fine is trustee. David J. Fine disclaims beneficial ownership of such
shares.
(5) Includes 3,000 shares owned by Mr. Parrington's daughters. Mr. Parrington
disclaims beneficial ownership of such shares.
(6) Includes 200 shares owned by Mr. Richardson's daughters. Mr. Richardson
disclaims beneficial ownership of such shares.
(7) Includes 17,000 shares owned by Mr. Droz's wife. Mr. Droz disclaims
beneficial ownership of such shares.
(8) All of the shares shown in the table to be beneficially owned by Mr.
McCullough are owned by Mr. McCullough's wife. Mr. McCullough disclaims
beneficial ownership of such shares.
(9) These shares are owned of record by Crossroads/Memphis Partnership, L.P.,
in which the Company owns a 50% general and limited partnership interest
and Trust Leasing, Inc. ("Trust Leasing") and Trust Management, Inc.
("Trust Management") own a 50% limited partnership interest. Trust Leasing
and Trust Management have the right to exchange their partnership interest
at any time for the shares. The address of Trust Leasing, Inc. and Trust
Management, Inc. is 4735 Spottswood #102, Memphis, Tennessee 38117.
(10) As reported in a Schedule 13G filed with the SEC on February 3, 1997. The
address of The Prudential Insurance Company of America is 751 Broad Street,
Newark, New Jersey 07102-3777.
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(11) Includes 10,000 shares that are subject to certain risks of forfeiture
under the Equity Incentive Plan. Does not include 5,000 shares held by
Michael J. Aranson, a member of the Board, as of the Record Date. Mr.
Aranson died shortly before the date of this Proxy Statement.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Organization and Initial Public Offering. The Company consummated its
IPO of its Common Stock on June 25, 1996. Prior to consummation of the IPO,
individuals and entities affiliated with Milton Fine (the "Fine Family
Shareholders") owned all of the voting stock and approximately 92% of the
non-voting stock of the Company's predecessor, IHC, with the remaining
approximately 8% of the non-voting stock of IHC owned by certain of IHC's
officers (excluding Milton Fine). In addition, the Fine Family Shareholders
owned direct and indirect interests in certain of the subsidiaries and
affiliated companies of IHC. The Fine Family Shareholders and certain officers
(excluding Milton Fine) and former employees of IHC also owned interests in
partnerships among affiliates of IHC and affiliates of Blackstone Real Estate
Advisors L.P. (collectively, "Blackstone"), which owned 14 hotels. Prior to the
consummation of the IPO, all of the foregoing interests were contributed to the
Company in exchange for Common Stock of the Company. In addition, prior to the
consummation of the IPO, the Company and its affiliates effected the following
transactions (collectively with the foregoing transactions, the "Organization"):
(i) all of the outstanding shares of common stock of IHC were contributed to the
Company by the Fine Family Shareholders in exchange for Common Stock of the
Company and (ii) the Company issued shares of Common Stock to certain officers
and employees of the Company in exchange for restricted stock of IHC previously
issued to them. The Company issued 13,689,929 shares of Common Stock in the
Organization. In addition, the Company entered into a registration rights
agreement with each of the existing shareholders of the Company prior to the IPO
(collectively, the "Original Shareholders") pursuant to which the Original
Shareholders were granted demand and piggyback registration rights.
In March 1994, Milton Fine, as trustee, and certain officers and former
employees of IHC formed a partnership ("IHC/Interstone") which in turn formed a
series of partnerships (collectively, "Interstone I") with Blackstone to pursue
acquisitions of hotel properties. Interstone I acquired title to seven hotels
and a controlling interest in another hotel. IHC/Interstone contributed all of
its interests in Interstone I to the Company prior to consummation of the IPO,
and the Company purchased the equity interests of Blackstone in Interstone I in
connection with the IPO.
Following the completion of the Interstone I investment program, in
December 1995 IHC, the Fine Family Shareholders and certain officers of IHC
formed a partnership ("IHC/Interstone II"), which in turn formed another series
of partnerships with Blackstone (collectively, "Interstone II") to acquire a 75%
interest in a portfolio of six hotels owned by an institutional investor. The
Fine Family Shareholders and the officers of IHC contributed all of their
interests in Interstone II to the Company prior to consummation of the IPO and
the Company purchased the interest of Blackstone in Interstone II in connection
with the IPO.
In connection with the formation of Interstone II, IHC and Blackstone
entered into an Option Agreement (the "Option Agreement") pursuant to which IHC
granted to Blackstone an option (the "Blackstone Option") to purchase a 20%
equity interest in a new company to be formed upon exercise of the Blackstone
Option. In connection with the IPO, Blackstone, upon exercise of the Blackstone
Option for 2,133,333 shares of Common Stock, paid the Company the $23.3 million
exercise price. Blackstone received $44.8 million of Common Stock based on the
IPO price and the Company paid one of the Blackstone entities a $233,000
arrangement fee for services in negotiating and arranging the Blackstone Option.
Simultaneously with the completion of the Interstone II investment program,
in December 1995, IHC/ Interstone II and Blackstone formed a third series of
partnerships (collectively, "Interstone III") to acquire additional hotel
properties. IHC/Interstone II committed up to $30.6 million for a 51% interest
therein and Blackstone has committed up to $29.4 million for a 49% interest
therein. The capital commitments expire on December 31, 1997, and no
acquisitions have been made by Interstone III as of the date of this Proxy
Statement. IHC/Interstone II contributed all of its interests in Interstone III
to the Company in connection with the IPO.
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In March 1996, the Company entered into an Agreement of Purchase and Sale
(the "Acquisition Agreement") to acquire all of Blackstone's interests in
Interstone I (excluding one Interstone I hotel, the Fort Magruder Inn and
Conference Center) and Interstone II (collectively, the "Acquisition") for a
cash purchase price of approximately $125 million. Closing of the Acquisition
occurred immediately following the consummation of the IPO. In connection with
the execution of the Acquisition Agreement, the Company also entered into a
Contribution Agreement (the "Blackstone Contribution Agreement") with certain
affiliates of the Company and Blackstone pursuant to which such affiliates
agreed to contribute to the Company their interests in the partnership (the
"Fort Magruder Partnership") that owned the Fort Magruder Inn and Conference
Center in consideration of the issuance of $8.3 million of Common Stock at the
IPO price (the "Contribution"). Closing of the Contribution occurred immediately
prior to the closing of the Acquisition.
Pursuant to the Blackstone Contribution Agreement, the Company, Blackstone
and the Fine Family Shareholders executed a stockholders agreement (the
"Interstone Stockholders Agreement") at the closing of the Acquisition and
Contribution. Under the Interstone Stockholders Agreement, among other things,
(i) Blackstone was granted tag-along rights with respect to certain shares of
Common Stock by the Fine Family Shareholders, (ii) Blackstone granted to the
Fine Family Shareholders a right of first offer with respect to certain sales of
shares of Common Stock by Blackstone, (iii) Blackstone was granted demand and
piggyback registration rights, (iv) the Fine Family Shareholders agreed to vote
their shares of Common Stock for a director designee of Blackstone, and (v)
Blackstone agreed to vote its shares of Common Stock for the election of the
director candidates nominated by the Board.
Transactions with Fine Family Shareholders. During 1996, the Company earned
revenues in the aggregate amount of $7.4 million for management services
provided to 11 hotels in which the Fine Family Shareholders had an ownership
interest. Accounts receivable of $0.3 million were due from these hotels at
December 31, 1996.
During 1996 prior to the IPO, the Company advanced funds from time to time
to the Fine Family Shareholders and received repayments of a portion of such
advances. There were no advances outstanding at December 31, 1996. In March
1996, the Company's predecessor (an S corporation) made a tax distribution to
the Fine Family Shareholders in the aggregate amount of $30 million, in the form
of notes payable. The notes were repaid with the proceeds from IPO.
Certain of the Fine Family Shareholders own minority interests in 11 hotels
that are managed but not owned by the Company. Except for one management
agreement pursuant to which the Company waived its management fee for a period
ending no later than November 30, 1998, the Company believes that the terms on
which these hotels are managed are at least as favorable to the Company as those
it could have obtained from unaffiliated persons. The Fine Family Shareholders
have granted to the Company a right of first offer and a right of first refusal
in connection with any proposed transfer of their interests (subject to certain
permitted transfers) in these hotels in consideration of the Company's agreeing
to continue to provide at no cost to the Fine Family Shareholders certain
accounting and administrative services of the type which the Company is
currently providing to the Fine Family Shareholders in connection therewith.
Transactions with Officers and Directors. The Company has made loans from
time to time to its senior executives, including each of the Named Executive
Officers other than Milton Fine. The maximum amount of such loans to any such
executive was $2,000,000 during 1996. Such loans are payable upon demand and, in
general, do not bear interest until such demand is made. See "--Compensation
Plans and Arrangements--Executive Loans" for a description of loans from the
Company to Messrs. Parrington and Richardson. The loans made to Messrs.
Parrington and Richardson are forgiven over time provided certain conditions are
satisfied.
In December 1996, the Company acquired a 1% general partnership interest
and 96.1% limited partnership interest in Marriott's Reach Resort for a total,
including estimated capital expenditures for anticipated renovations and closing
costs, of approximately $31.5 million. Prior to the acquisition by the Company,
Milton Fine beneficially owned a 1% general partnership interest and David J.
Fine, as trustee of certain of the Fine Family Trusts, owned a 25% limited
partnership interest in the entity that owned Marriott's Reach Resort. In
addition, Milton Fine, W. Thomas Parrington, Jr., J. William Richardson, Robert
L.
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Froman and Marvin I. Droz together owned a 3.3% limited partnership interest in
that entity. Giving effect to the acquisition, Milton Fine beneficially owned a
1.4% limited partnership interest in that entity.
SECTION 16(A) BENEFICIAL OWNERSHIP COMPLIANCE
Based solely on a review of copies of reports furnished to the Company and
written representations signed by all directors and executive officers that no
other reports were required with respect to their beneficial ownership of Common
Stock during 1996, the Company believes that the directors and executive
officers and all beneficial owners of more than 10% of the Common Stock
outstanding complied with all applicable filing requirements under Section 16(a)
of the Securities Exchange Act of 1934, as amended, with respect to their
beneficial ownership of Common Stock during 1996 except that a Form 5 for Mr.
McCullough was filed five business days late.
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board, upon the recommendation of the Audit Review Committee, has
appointed the firm of Coopers & Lybrand L.L.P. independent accountants to audit
the books, records and accounts of the Company, subject to ratification of such
appointment by the Company's shareholders. Representatives of Coopers & Lybrand
L.L.P. are expected to be present at the Annual Meeting and will have the
opportunity to make a statement if they desire to do so. It is also expected
that they will be available to respond to appropriate questions.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" SUCH RATIFICATION.
PROXIES SOLICITED BY THE BOARD WILL BE SO VOTED UNLESS SHAREHOLDERS SPECIFY IN
THEIR PROXIES A CONTRARY CHOICE.
MISCELLANEOUS
OTHER MATTERS
The Board knows of no business to be presented for consideration at the
Annual Meeting other than that described herein. If any other matters properly
come before the Annual Meeting, however, the named proxies will vote on such
matters according to their best judgment.
SHAREHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING
Any proposal of a shareholder intended to be presented at the Company's
1998 Annual Meeting of Shareholders must be received in writing by the Secretary
of the Company by November 26, 1997 for inclusion in the Company's proxy, notice
of meeting and proxy statement relating to the 1998 Annual Meeting.
COST OF SOLICITATION
The cost of preparing, printing and mailing these proxy materials will be
borne by the Company. In addition to the solicitation of proxies by the use of
the mails, regular employees of the Company may solicit proxies on behalf of the
Board in person or by telephone. The Company will also reimburse brokerage
houses and other nominees for their expenses in forwarding proxy materials to
beneficial owners of the Common Stock.
PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD
AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
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INTERSTATE HOTELS COMPANY
Foster Plaza Ten
680 Andersen Drive
Pittsburgh, Pennsylvania 15220
PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR
THE ANNUAL MEETING OF SHAREHOLDERS, MAY 21, 1997
The undersigned hereby appoints J. WILLIAM RICHARDSON and MARVIN I. DROZ,
and each of them, with full power of substitution and resubstitution, proxies
of the undersigned to represent and to vote all shares of stock of Interstate
Hotels Company which the undersigned is entitled to vote at the Annual Meeting
of Shareholders to be held at the Pittsburgh Airport Marriott, Parkway
West-Montour Run Exit, 100 Aten Road, Coraopolis, Pennsylvania on Wednesday,
May 21, 1997, at 10:30 a.m., Eastern Time, or at any postponements or
adjournments thereof, upon all matters as set forth in the Notice of Annual
Meeting and Proxy Statement, receipt of which is hereby acknowledged.
(Continued, and to be signed and dated, on reverse side)
FOLD AND DETACH HERE
INTERSTATE HOTELS COMPANY
Foster Plaza Ten
680 Andersen Drive
Pittsburgh, Pennsylvania 15220
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders:
Notice is hereby given that the 1997 Annual Meeting of Shareholders of
Interstate Hotels Company will be held at 10:30 a.m., Eastern Time, on
Wednesday, May 21, 1997, at the Pittsburgh Airport Marriott Hotel located at
Parkway West-Montour Run Exit, 100 Aten Road, Coraopolis, Pennsylvania for the
following purposes, all as more fully described in the attached Proxy
Statement:
1. To elect six members of the Board of Directors;
2. To ratify the appointment of Coopers & Lybrand L.L.P. as the
independent accountants to audit the financial statements of
Interstate Hotels Company; and
3. To act upon such other business as may properly come before the
Annual Meeting or any postponements or adjournments thereof.
Shareholders of record at the close of business on March 14, 1997 are
entitled to vote at the Annual Meeting or any postponements or adjournments
thereof.
/s/ MARVIN I. DROZ
-----------------------------
Marvin I. Droz
Secretary
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE COMPLETE THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
19
Please mark
your vote as [ X ]
indicated in
this example
PLEASE CHECK THIS BOX
IF YOU PLAN TO ATTEND [ ]
THE ANNUAL MEETING
1. ELECTION OF DIRECTORS Nominees: Milton Fine, David J. Fine, R. Michael
McCullough, W. Thomas Parrington, Jr., Thomas J. Saylak and Steven J. Smith.
FOR all nominees WITHHOLD AUTHORITY
listed above (except to vote for
as marked to the all nominees
contrary below) listed above
[ ] [ ]
If you wish to withhold authority to vote for any individual nominee, you
may write that nominee's name in the space provided below.
--------------------------------------------------------------------------
The Board of Directors recommends a vote FOR the election of all nominees
listed above as directors.
2. RATIFICATION OF THE APPOINTMENT OF COOPERS & LYBRAND L.L.P. AS INDEPENDENT
ACCOUNTS.
The Board of Directors recommends a vote FOR the ratification of the
appointment of Coopers & Lybrand L.L.P.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY POSTPONEMENTS OR
ADJOURNMENTS THEREOF.
THIS PROXY WILL BE VOTED AS DIRECTED ABOVE, OR IF RETURNED EXECUTED WITH NO
DIRECTION GIVEN, WILL BE VOTED FOR THE ELECTION OF THE NOMINEES LISTED ABOVE
AND FOR RATIFICATION OF THE APPOINTMENT OF COOPERS & LYBRAND L.L.P. AS
INDEPENDENT ACCOUNTANTS.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
THIS PROXY SHOULD BE SIGNED EXACTLY AS NAME APPEARS HEREON.
Executors, administrators, trustees, attorneys, etc., should give full title as
such. If the signer is a corporation, partnership or limited liability company,
please sign full corporate, partnership or limited liability company name by
duly authorized person.
Signature of Shareholder Dated: , 1997
------------------------------- --------
FOLD AND DETACH HERE
Annual Meeting
of
Shareholders
of
INTERSTATE HOTELS
May 21, 1997
at
Pittsburgh Airport Marriott
Parkway West-Montour Run Exit
100 Aten Road, Coraopolis, Pennsylvania
beginning at 10:30 a.m.