UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
<Table>
[ ] 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-12
</Table>
FELCOR LODGING TRUST INCORPORATED
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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)(1) and 0-11.
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[ ] Fee paid previously with preliminary materials.
[ ] 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.
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NOTICE OF ANNUAL MEETING
ON MAY 14, 2002 [FELCOR LODGING TRUST LOGO]
AND PROXY STATEMENT
FELCOR LODGING TRUST INCORPORATED
545 E. John Carpenter Frwy., Suite 1300
Irving, Texas 75062
April 3, 2002
Dear Stockholder:
You are cordially invited to attend our Annual Meeting of Stockholders
on May 14, 2002, in Irving, Texas. The meeting will be held in our corporate
offices located at 545 E. John Carpenter Freeway, Suite 1300, Irving, Texas at
9:00 a.m. Dallas time. At the meeting, you will hear a report on our 2001
results.
This booklet includes the formal notice of the meeting and the Proxy
Statement. The Proxy Statement tells you about the matters to be addressed and
the procedures for voting at the meeting. It also describes how the Board
operates, gives personal information about our officers, continuing directors
and director candidates, and provides other information about the Company.
Your vote is very important Even if you have only a few shares, we want
your shares to be represented at the meeting. I urge you to vote promptly in
order to be certain your shares are represented at the meeting.
I look forward to seeing you at the meeting.
Sincerely,
/s/ LAWRENCE D. ROBINSON
Lawrence D. Robinson
Executive Vice President
General Counsel & Secretary
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OF FELCOR LODGING TRUST INCORPORATED
Time: 9:00 a.m., Central Time
Date: May 14, 2002
Place: Corporate Offices
545 E. John Carpenter Freeway
Suite 1300
Irving, Texas 75062
Purposes: o To elect three Class II directors to three-year terms and
to elect one Class III director to a one-year term;
o To adopt the 2001 Restricted Stock and Stock Option Plan;
and
o To conduct any other business that may properly be raised.
Who may vote: Stockholders of record on March 18, 2002.
Annual Report: A copy of the Annual Report is enclosed.
Date of Mailing: This notice and the accompanying Proxy Statement and Annual
Report are first being mailed to stockholders on or about
April 3, 2002.
Sincerely,
/s/ LAWRENCE D. ROBINSON
Lawrence D. Robinson
Secretary
April 3, 2002
PROXY STATEMENT
FELCOR LODGING TRUST INCORPORATED
ANNUAL MEETING OF STOCKHOLDERS
MAY 14, 2002
<Table>
<Caption>
TABLE OF CONTENTS PAGE
- ----------------- ----
GENERAL INFORMATION...................................................... 1
PROPOSAL 1 - ELECTION OF DIRECTORS....................................... 2
Nominees for Election as Class II Directors......................... 3
Nominee for Election as a Class III Director........................ 4
Continuing Directors ............................................... 4
Director Compensation............................................... 6
Board Committees.................................................... 6
STOCK OWNERSHIP.......................................................... 8
Principal Stockholders.............................................. 8
Security Ownership of Management.................................... 8
MANAGEMENT............................................................... 10
Executive Officers of FelCor........................................ 10
Executive Compensation Tables....................................... 13
Compensation Committee Report....................................... 15
Compensation Committee Interlocks................................... 18
Certain Relationships and Related Transactions...................... 18
Section 16(a) Beneficial Ownership Reporting Compliance............. 19
Report of Audit Committee........................................... 20
INDEPENDENT AUDITORS..................................................... 20
STOCK PERFORMANCE GRAPH.................................................. 21
PROPOSAL 2 - ADOPTION OF 2001 RESTRICTED STOCK AND STOCK OPTION PLAN..... 22
Equity Compensation Plan Information................................ 22
Description of 2001 Plan............................................ 22
ADDITIONAL INFORMATION................................................... 24
</Table>
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of FelCor Lodging Trust Incorporated of proxies to be voted
at the Annual Meeting of Stockholders being held on Tuesday, May 14, 2002, and
at any adjournment of the meeting. The following questions and answers provide
important information about the Annual Meeting and this Proxy Statement.
WHAT AM I VOTING ON?
o The election of three Class II directors, each for a three-year term, and one
Class III director for a one-year term;
o The adoption of the 2001 Restricted Stock and Stock Option Plan, or 2001
Plan, covering an aggregate of 750,000 shares of common stock; and
o Any other matters properly brought before the meeting.
WHO IS ENTITLED TO VOTE?
FelCor stockholders of record at the close of business on March 18, 2002, are
entitled to vote at the meeting. Each stockholder is entitled to cast one vote
for each share of common stock owned.
HOW DO I VOTE?
You may vote in person at the meeting or by proxy. We recommend you vote by
proxy even if you plan to attend the meeting. You can always change your vote at
the meeting. If you have shares held by a broker or other nominee, you may
instruct your broker or nominee to vote your shares by following the
instructions that the broker or nominee provides you. Most brokers offer voting
by mail, telephone and Internet.
HOW DO PROXIES WORK?
The Board of Directors of FelCor is asking for your proxy. Giving your proxy to
the persons named by us, means you authorize them to vote your shares at the
meeting in the manner you direct. You may vote for all, some, or none of our
director candidates and you may vote for, against or abstain from voting on the
adoption of the 2001 Plan.
If you sign and return the enclosed proxy card but do not specify how your
shares are to be voted, your shares will be voted FOR the election of all of our
director candidates and FOR the adoption of the 2001 Plan.
You may receive more than one proxy or voting card depending on how you hold
your shares. Shares registered in your name are covered by one card. If you also
hold shares through a broker or other nominee, you may also get material from
them asking how you want to vote. To be sure that all of your shares are voted,
we encourage you to respond to each request you receive.
HOW DO I REVOKE A PROXY?
You may revoke your proxy before it is voted by submitting a new proxy with a
later date; by voting in person at the meeting; or by notifying FelCor's
Secretary in writing at the address listed under "Questions" on page 25.
WILL MY SHARES BE VOTED IF I DON'T SIGN A PROXY?
If you hold your shares directly in your own name, they will not be voted unless
you provide a proxy. Under certain circumstances, shares which you own that are
held by a broker may be voted even if you do not provide voting instructions to
the broker. Brokerage firms have the authority under the New York Stock Exchange
rules to vote customers' unvoted shares on certain "routine" matters, including
the election of directors and the adoption of the 2001 Plan.
WHAT CONSTITUTES A QUORUM?
In order to carry on the business of the meeting, we must have a quorum. This
means that at least a majority of the outstanding shares eligible to vote must
be represented at the meeting, either by proxy or in person. Shares owned by
FelCor are not voted and do not count for this purpose. On
-1-
the record date, we had 53,042,778 shares of common stock outstanding and
entitled to vote at the meeting.
HOW MANY VOTES ARE NEEDED FOR APPROVAL?
The four director candidates receiving the most "FOR" votes will be elected to
the four seats on the Board to be filled at the meeting. The 2001 Restricted
Stock and Stock Option Plan will be adopted if more votes are cast FOR its
adoption than are cast AGAINST it. Abstentions, withholding authority to vote
for a candidate and broker non-votes (described below) will only reduce the
number of votes a candidate or proposal receives.
A "broker non-vote" occurs when a broker submits a proxy but does not vote for
or against a matter. This will occur when the beneficial owner has not
instructed the broker how to vote and the broker does not have discretionary
authority to vote in the absence of instructions.
WHAT SHOULD I DO IF I WANT TO ATTEND IN PERSON?
Only stockholders of record, their proxy holders, and invited guests may attend
the meeting. If you wish to vote in person and your shares are held by a broker
or nominee, you will need to obtain a proxy from the broker or nominee
authorizing you to vote your shares held in their name.
PROPOSAL 1 - ELECTION OF DIRECTORS
The Board of Directors of FelCor has nominated the four director candidates
named below.
Our Board of Directors oversees the management of the Company on your behalf.
The Board reviews FelCor's long-term strategic plans and exercises direct
decision-making authority on key issues, such as the declaration of dividends,
the selection of the Chief Executive Officer, setting the scope of his authority
to manage the Company's day-to-day operations, and evaluation of his
performance.
All but one of FelCor's directors, assuming the election of our four nominees,
will be Independent Directors. "Independent Directors," as defined in FelCor's
Charter, are not officers or employees of FelCor or any of its affiliates; or
officers, employees or affiliates of any lessee of property from FelCor, any
subsidiary of FelCor, or any partnership that is an affiliate of FelCor.
FelCor's Charter and Bylaws provide for three classes of directors, who serve
staggered three-year terms expiring at the annual meeting of stockholders three
years following their election to a full term. Mr. McChristy, a Class II
director, has notified the Company that he is retiring from the Board and,
therefore, will not stand for re-election at the expiration of his term in 2002.
In addition, Mr. Charles N. Mathewson, a Class III director, has tendered his
resignation from our Board effective at the commencement of the annual
stockholders meeting held in 2002. The FelCor Board of Directors has voted to
reduce the size of our Board from eleven to ten members, by eliminating the seat
currently held by Mr. McChristy, in order to maintain the number of directors in
each class as nearly equal as possible, as required by law. The Board has
nominated for re-election as Class II directors each of the three remaining
persons currently serving as Class II directors, whose terms are expiring at the
2002 annual meeting of stockholders, and has nominated Robert A. Mathewson for
election to fill the vacancy as a Class III director created by the resignation
of his father, Charles N. Mathewson. If elected, each of the persons elected as
a Class II director will serve until the annual meeting of stockholders in 2005,
and Robert A. Mathewson, if elected, will serve until the annual meeting of
stockholders in 2003. Personal information on each of our nominees, and on each
of the other directors who will continue to serve on FelCor's Board following
the annual meeting, is given below.
-2-
The FelCor Board of Directors met eleven times during 2001. On average, FelCor's
directors attended more than 86% of the Board and committee meetings held during
2001. Only Mr. McChristy and Mr. North attended fewer than 75% of the meetings
of the Board and of the Board committees on which each director served.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF EACH OF THE
NOMINEES FOR ELECTION AS CLASS II AND CLASS III DIRECTORS DESCRIBED BELOW.
NOMINEES FOR ELECTION AS CLASS II DIRECTORS (TERMS EXPIRING IN 2005)
THOMAS J. CORCORAN, JR. Mr. Corcoran is the President and Chief Executive
Age 53 Officer of FelCor and has served in that capacity
since its formation in 1994. From 1991 to 1994,
[PHOTO] Mr. Corcoran held the same positions with the
general partner of the partnerships that were
merged into FelCor at its formation. From October
1990 to December 1991, he served as the Chairman,
President and Chief Executive Officer of Fiesta
Foods, Inc., a manufacturer of tortilla chips and
taco shells. From 1979 to 1990, Mr. Corcoran held
various positions with ShowBiz Pizza Time, Inc.
(now CEC Entertainment, Inc.), an operator and
franchisor of family entertainment center/pizza
restaurants, and with Integra -- A Hotel and
Restaurant Company (formerly Brock Hotel
Corporation). He served as the President and Chief
Executive Officer of Integra from 1986 to 1990.
DONALD J. MCNAMARA Mr. McNamara was the Chairman of the Board of
Age 49 Bristol Hotel Company from November 1994 until its
merger into FelCor in July 1998. Since the merger,
[PHOTO] he has served as the Chairman of the Board of
FelCor. Mr. McNamara previously served as a
director of FelCor from July 1994 until November
1997. He is also the Chairman of The Hampstead
Group, LLC, a private equity real estate investment
company. Mr. McNamara also serves as a director of
Omega Healthcare Investors, Inc. and Franklin Covey
Co.
RICHARD C. NORTH Mr. North served as a director of Bristol Hotel
Age 52 Company from 1997 until its merger into FelCor in
July 1998, and has served as a director of FelCor
[PHOTO] since that time. Mr. North has been the Group
Finance Director of Six Continents plc since 1994.
Six Continents plc is the parent of Six Continents
Hotels, Inc., which operates or franchises more
than 3,000 hotels in more than 75 countries under
various brands, including Inter-Continental(R),
Crowne Plaza(R) and Holiday Inn(R). Prior to 1994,
Mr. North served as the Group Finance Director of
The Burton Group.
-3-
NOMINEE FOR ELECTION AS A CLASS III DIRECTOR (TERM EXPIRING IN 2003)
ROBERT A. MATHEWSON Since 1992, Mr. Mathewson has been the President
Age 37 of RGC, Inc., a privately owned real estate
investment company investing primarily in hotels
[PHOTO] and other commercial real estate. RGC, Inc. and its
affiliates have been significant investors in
FelCor and its predecessors since 1993. In
addition, From December 1999 to August 2000, Mr.
Mathewson served as the Vice President of Business
Development for Televoke Inc., an internet
application service provider focusing on web,
wireless and telephony integration. Mr. Mathewson
holds a bachelor's degree in Economics and a
master's degree in Business Administration from the
University of California at Berkley, and a Juris
Doctor degree from the Hastings College of Law.
CONTINUING DIRECTORS
Continuing Class III Directors (Terms Expiring in 2003)
RICHARD S. ELLWOOD Mr. Ellwood, a director of FelCor since its
Age 70 formation in 1994, is the founder and President of
R.S. Ellwood & Co., Inc., a real estate investment
[PHOTO] banking firm which was organized in 1987. Prior to
1987, as an investment banker, Mr. Ellwood was
elected successively in 1963 a vice president of
Morgan Guaranty Trust Company, in 1968 a general
partner of White Weld & Co., in 1978 a managing
director of Warburg Paribas Becker, Incorporated
and in 1984 a managing director and senior banker
of Merrill Lynch Capital Markets. Mr. Ellwood has
extensive experience in hotel financing. He was a
founder of Hotel Investors Trust, a REIT, and
served as a trustee from 1970 until its merger with
another REIT in 1987. He is currently a director of
Apartment Investment and Management Company and
Florida East Coast Industries, Inc.
RICHARD O. JACOBSON Mr. Jacobson has served as a director of FelCor
Age 65 since its formation in 1994 and is the Chairman of
the Board of Jacobson Warehouse Company, Inc., a
[PHOTO] privately held warehouse company with facilities in
53 locations in 19 states, which Mr. Jacobson
founded 35 years ago. He is also Chairman of the
Board of Jacobson Transportation Company, Inc., a
truckload common carrier with authority to operate
in the United States (48 states), Canada and
Mexico. Mr. Jacobson is a member of the boards of
directors of Atrion Corporation, Firstar Bank Des
Moines, N.A. and Heartland Express, Inc.
-4-
Continuing Class I Directors (Terms expiring in 2004)
MELINDA J. BUSH Mrs. Bush was elected as a director of FelCor in
Age 61 May 2000. She was, until September 1996, the
Executive Vice President of Reed Elsevier's Reed
[PHOTO] Travel Group/Hotel & Travel Index, which was
engaged in hotel industry marketing and publishing
activities on a global basis. Since that time, she
has served as the Executive Vice President,
Editorial and Publishing Director of Premier Hotels
& Resorts, www.premierhotels.com, a division of
Advanstar Communications. Mrs. Bush has more than
20 years experience in the hospitality industry,
and is also a director and trustee of the American
Hotel Foundation. She has honorary degrees from
Cornell Hotel School and Johnson & Wales
Universities and carries the CHA (Certified Hotel
Administrator) designation awarded by the industry
to hotel operators and general managers. She was
also named Woman of the Year in Travel by the
Travel Industry of America and is the recipient of
several other industry awards for her achievements
in the industry.
CHARLES A. LEDSINGER, JR. Mr. Ledsinger has served as a director of FelCor
Age 52 since November 1997. Mr. Ledsinger became the
President and Chief Executive Officer of Choice
[PHOTO] Hotels International in August 1998. Prior to that
time, Mr. Ledsinger served as Senior Vice President
and Chief Financial Officer of St. Joe Corporation
from May 1997 until his election as President and
Chief Operating Officer of that corporation in
February 1998. From June 1995 until May 1997, Mr.
Ledsinger was Senior Vice President and Chief
Financial Officer of Harrah's Entertainment, Inc.
For more than three years prior to that, Mr.
Ledsinger served as Senior Vice President and Chief
Financial Officer of The Promus Companies
Incorporated, the former parent of Harrah's
Entertainment, Inc. He is also a director of Choice
Hotels International, TBC Corporation and Friendly
Ice Cream Corporation. He is a member and a past
chairman of the Real Estate Financial Advisory
Council of the American Hotel and Motel
Association.
ROBERT H. LUTZ, JR. Mr. Lutz served as a director of Bristol Hotel
Age 52 Company from December 1995 until its merger into
FelCor in July 1998, and has served as a director
[PHOTO] of FelCor since that time. Mr. Lutz is currently
the President of R.L. Investments, Inc., a private
investment firm. From 1994 through 2000, Mr. Lutz
served as the Chairman and Chief Executive Officer,
and a member of the executive committee, of
Amresco, Inc., a financial services company. From
1991 to 1994, Mr. Lutz served as President and
Chief Operating Officer of Balcor/Allegiance Realty
Group, a subsidiary of the American Express Company
engaged in real estate ownership and management. He
is a Trustee and member of the Executive Committee
of the Urban Land Institute and a past Vice
Chairman of the National Realty Committee.
-5-
MICHAEL D. ROSE Mr. Rose has served as a director of FelCor since
Age 60 July 1998. He served as the Chairman of the Board
of Promus Hotel Corporation from April 1995 through
[PHOTO] December 1997 and, thereafter, as a director until
December 1998. Mr. Rose served as Chairman of the
Board of Harrah's Entertainment Inc. from June 1995
until his retirement as of December 31, 1996. He
also served as Chairman of the Board of The Promus
Companies Incorporated from November 1989 through
June 1995 and as Chief Executive Officer of that
company from November 1989 to April 1994. In May
2001, Mr. Rose was named Chairman of the Board of
Gaylord Entertainment Company, a diversified
entertainment company. Mr. Rose is also a director
of First Tennessee National Corporation, Stein
Mart, Inc. and Darden Restaurants, Inc.
DIRECTOR COMPENSATION
In lieu of cash compensation for their services during 2001, FelCor has issued
to each director, except as described below, that number of shares of FelCor
common stock determined by dividing (i) the sum of $35,000 plus, if a director
attended more than five Board meetings during the year, $1,000 for each
additional meeting attended in person and $500 for each additional telephonic
meeting in which he participated, by (ii) $17.55, the closing price of the
common stock on January 24, 2002, the date the issuance was authorized by the
Board, and rounding to the nearest whole lot of 100 shares. In addition to such
compensation, each director is reimbursed for out-of-pocket expenses incurred in
connection with his or her service on the FelCor Board. No additional
compensation is paid to directors for service on various Board committees.
The number of shares of FelCor common stock issued to each director for his
services during 2001 is set forth below:
<Table>
<Caption>
NAME NUMBER OF SHARES
---- ----------------
Donald J. McNamara 2,200
Melinda J. Bush 2,100
Richard S. Ellwood 2,100
Richard O. Jacobson 2,200
Charles A. Ledsinger, Jr. 2,100
Robert H. Lutz, Jr. 2,100
Charles N. Mathewson 2,100
Thomas A. McChristy 2,100
Michael D. Rose 2,100
</Table>
Mr. North is not permitted by his employer to accept any compensation for his
services as a director of FelCor. Mr. Corcoran, who receives compensation as the
President and Chief Executive Officer of FelCor, did not receive any additional
or separate compensation for his services as a director in 2001.
Director compensation will be determined in a manner similar to that described
above for service during 2002.
BOARD COMMITTEES
The Board appoints committees to help carry out its duties. In particular, Board
committees work on key issues in greater detail than would be practicable at a
full Board meeting. Each committee reviews the results of its meetings with the
full Board. Donald J. McNamara, the Chairman of the Board, is an ex-officio
member of all committees.
The Executive Committee was established to exercise broad powers on behalf of
the Board. In practice, the committee only meets when it is impractical to call
a meeting of the full Board. The Executive Committee is comprised of Donald J.
McNamara (Chairman), Thomas J. Corcoran, Jr., Robert H. Lutz, Jr. and, until his
resignation, Charles N. Mathewson.
The Executive Committee held no meetings and took no action during 2001.
-6-
The Audit Committee oversees audits, accounting, financial reporting, and
internal control matters. The Audit Committee selects the independent public
accountants to audit FelCor's financial statements. The committee consults with
the independent accountants and reviews their audit and other work. The
committee also consults with FelCor's Chief Financial Officer and Chief
Accounting Officer, and reviews FelCor's internal controls and compliance with
policies.
During 2001, the committee met prior to each release of earnings by FelCor to
review the earnings to be reported and to examine any issues relating to the
report of such earnings. The directors serving on the Audit Committee are:
Charles A. Ledsinger, Jr. (Chairman); Richard S. Ellwood; Richard O. Jacobson;
and Richard C. North..
The Audit Committee held six meetings during 2001.
The Compensation Committee determines the compensation to be paid to FelCor's
senior executive officers and advises the Board on the adoption of, and
administers, employee benefit and compensation plans. During 2001, the
Compensation Committee was comprised of Michael D. Rose (Chairman), Melinda J.
Bush, Thomas A. McChristy, and Robert H. Lutz, Jr.
The Compensation Committee held three meetings during 2001.
The Corporate Governance and Nominating Committee recommends to the Board
candidates for election to FelCor's Board of Directors, establishes criteria for
membership on the Board and Board committees, and considers other corporate
governance issues. This committee is comprised of Richard S. Ellwood (Chairman),
Charles A. Ledsinger, Jr. and Michael D. Rose.
The Corporate Governance and Nominating Committee met once during 2001.
The Capital Approval Committee currently consists of three of FelCor's officers,
Thomas J. Corcoran, Jr. (President and Chief Executive Officer), Lawrence D.
Robinson (Executive Vice President, General Counsel and Secretary), and Richard
J. O'Brien, (Executive Vice President and Chief Financial Officer). The Board
has delegated to this committee the authority to approve, and authorize actions
taken in connection with, the acquisition, improvement, disposition or financing
of hotel assets by FelCor within specified limits.
The Capital Approval Committee did not meet or take action during 2001.
-7-
STOCK OWNERSHIP
PRINCIPAL STOCKHOLDERS
The following table shows how much FelCor common stock was beneficially owned on
March 18, 2002, by each person known to FelCor to beneficially own more than 5%
of its common stock.
<Table>
<Caption>
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT OF
OF BENEFICIAL OWNER OWNERSHIP CLASS(1)
------------------- ---------- ----------
Six Continents plc................................................. 10,032,428(2) 16.2%
20 North Audley Street
London, England W1Y1WE
European Investors Inc............................................. 3,138,314(3) 5.9%
717 5th Avenue
New York, New York 10022
David J. Dunn, Trustee............................................. 2,709,877(4) 5.1%
Dunn Family Trust
9255 Towne Centre Drive, Suite 925
San Diego, California 92121
</Table>
- ----------
(1) Based upon 53,042,682 shares outstanding as of March 18, 2002.
(2) Includes 5,713,185 shares issuable upon redemption of FelCor Lodging
Limited Partnership Units held by subsidiaries of Six Continents plc. Six
Continents plc holds sole voting and dispositive power with respect to such
shares.
(3) Based solely upon information contained in its Schedule 13G, dated February
12, 2002, filed on behalf of European Investors Inc., includes 2,379,314
shares held by EII Realty Securities Inc., a wholly-owned subsidiary of
European Investors Inc. In their Schedule 13G, it reports that (a) European
Investors Inc. has sole voting power with respect to 604,600 shares, shared
voting power with respect to 137,200 shares, sole dispositive power with
respect to 673,200 shares and shared dispositive power with respect to
85,800 shares and (b) EII Realty Securities Inc. has sole voting power with
respect to 2,083,014 shares and sole dispositive power with respect to
2,379,314 shares.
(4) Based solely upon information contained in the Schedule 13G/A, dated
February 13, 2002, filed on behalf of the Dunn Family Trust and David J.
Dunn, Trustee, includes 1,231,651 shares held by the Dunn Family Trust, of
which Mr. Dunn is the Trustee, and 1,437,226 shares held by Idanta
Partners, Ltd., of which the Dunn Family Trust is a general partner. Based
upon the Schedule 13G/A, Mr. Dunn has sole voting and dispositive power
with respect to all of these shares.
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows how much FelCor common stock, Series A Preferred Stock
and Series B Preferred Stock was beneficially owned on March 18, 2001, by
certain executive officers named in the Summary Compensation Table on page 13,
each nominee and continuing director, and all directors and executive officers
as a group. Unless otherwise indicated, each person owns directly the number of
shares shown after his or her name in the table below.
-8-
<Table>
<Caption>
AMOUNT AND AMOUNT AND
AMOUNT AND NATURE OF NATURE OF
NATURE OF BENEFICIAL BENEFICIAL
BENEFICIAL PERCENT OWNERSHIP OF PERCENT OWNERSHIP OF PERCENT
NAME OF OWNERSHIP OF OF SERIES A OF SERIES B OF
BENEFICIAL OWNER COMMON STOCK CLASS(1) PREFERRED STOCK CLASS(1) PREFERRED STOCK CLASS(1)
- ---------------- ------------ --------- --------------- ------------ --------------- ---------
Melinda J. Bush .............. 6,300(2) * 0 * 0 *
Thomas J. Corcoran, Jr. ...... 1,134,488(3) 2.1% 3,000 * 800 *
Richard S. Ellwood ........... 18,300(4) * 0 * 0 *
Richard O. Jacobson .......... 45,758 * 0 * 0 *
Charles A. Ledsinger, Jr. .... 7,575 * 0 * 0 *
Robert H. Lutz, Jr. .......... 30,214(5) * 0 * 0 *
Charles N. Mathewson ......... 1,226,108(6) 2.3% 170,000(16) 2.8% 71,600(16) 1.2%
Robert A. Mathewson .......... 1,156,157(7) 2.1% 10,000 * 24,000(17) *
Thomas A. McChristy .......... 163,073(8) * 0 * 0 *
Donald J. McNamara ........... 818,384(9) 1.5% 0 * 1,800 *
Richard C. North ............. 0 * 0 * 0 *
Michael D. Rose .............. 72,025(10) * 0 * 10,000(18) *
Jack Eslick .................. 109,432(11) * 0 * 0 *
June H. McCutchen ............ 84,762(12) * 0 * 0 *
Lawrence D. Robinson ......... 199,813(13) * 0 * 1,306(19) *
Richard J. O'Brien ........... 29,379(14) * 0 * 0 *
All executive officers and
directors as a group
(20 persons) .............. 5,338,538(15) 9.5% 183,000 3.1% 109,723 1.9%
</Table>
- ----------
* Represents less than 1% of the outstanding shares of such class.
(1) Based upon 53,042,778 shares of common stock, 5,980,475 shares of
Series A Preferred Stock and 5,750,000 Depository Shares representing
57,500 shares of Series B Preferred Stock outstanding as of March 18,
2002.
(2) Includes 3,000 shares held by her IRA and 3,300 shares credited to her
account in the FelCor Deferred Compensation Plan.
(3) Includes 503,249 shares that FelCor, Inc. has the right to receive upon
redemption of FelCor Lodging Limited Partnership Units. Mr. Corcoran is
a 50% stockholder and director of FelCor, Inc. and may be deemed to
beneficially own all of the Units owned by FelCor, Inc. Also includes
(i) an aggregate of 105,814 shares issued pursuant to stock grants
which vest over a five-year period from the date of grant at 20%
annually and of which 56,640 shares are fully vested, including 21,440
shares that are held in the FelCor Deferred Compensation Plan, (ii)
473,077 shares issuable pursuant to stock options that are currently
exercisable or exercisable within 60 days, (iii) 2,325 shares issuable
upon conversion of 3,000 shares of Series A Preferred Stock, (iv) 475
shares owned by his spouse, (v) 4,785 shares owned by his children,
(vi) 2,135 shares owned by his IRA, and (vi) 500 shares owned by
Corcoran Investments, L.L.C., a limited liability company wholly-owned
by him.
(4) Includes (i) 2,200 shares held by trusts of which Mr. Ellwood is a
beneficiary and trustee and (ii) 1,500 shares held by R. S. Ellwood &
Co., Inc., of which Mr. Ellwood is the sole stockholder.
(5) Includes (i) 15,414 shares issuable pursuant to currently exercisable
stock options, and (ii) 2,500 shares owned by Mr. Lutz's spouse.
(6) Includes an aggregate of 410,524 shares of common stock issuable upon
redemption of FelCor Lodging Limited Partnership Units held by trusts
for Mr. Mathewson and his spouse. Also includes 131,784 shares issuable
upon conversion of 170,000 shares of Series A Preferred Stock held by
the Charles N. Mathewson Trust.
(7) Includes an aggregate of 1,025,438 shares of common stock issuable upon
redemption of FelCor Lodging Limited Partnership Units, and 118,945
shares of common stock, held by corporations of which Mr. Mathewson is
the President, a director and stockholder. Also includes 7,752 shares
of common stock issuable upon conversion of 10,000 shares of Series A
Preferred Stock.
(8) Includes (i) 111,702 shares held by the T. A. McChristy Living Trust,
(ii) 4,200 shares held by his spouse's trust, (iii) 6,101 shares held
by his spouse's IRA, and (iv) 28,770 shares held by Mr. McChristy's
IRA.
(9) Includes 16,184 shares held by a partnership for the benefit of certain
members of Mr. McNamara's family. Mr. McNamara does not have investment
control over the partnership and disclaims any beneficial ownership of
the shares held by it.
(10) Includes (i) 21,600 shares owned by a trust for which Mr. Rose is the
trustee, (ii) 43,275 shares owned by a corporation controlled by Mr.
Rose, (iii) 750 shares owned by Mr. Rose's spouse, and (iv) 6,400
shares credited to his account in the FelCor Deferred Compensation
Plan.
-9-
(11) Includes (i) 44,507 shares issued pursuant to stock grants, which vest
over a five-year period from the date of grant at 20% annually and of
which 14,600 shares are fully vested, including 12,600 shares that are
held in the FelCor Deferred Compensation Plan, and (ii) 63,925 shares
issuable pursuant to stock options that are currently exercisable or
exercisable within 60 days.
(12) Includes (i) 42,597 shares issued pursuant to stock grants, which vest
over a five-year period from the date of grant at 20% annually and of
which 12,600 shares are fully vested and held in the FelCor Deferred
Compensation Plan, and (ii) 42,165 shares issuable pursuant to
currently exercisable stock options.
(13) Includes (i) 60,379 shares issued pursuant to stock grants, which
shares vest over a five-year period from the date of grant at 20%
annually, of which 27,500 shares are fully vested, including 19,500
shares that are held in the FelCor Deferred Compensation Plan, (ii)
134,623 shares issuable pursuant to stock options that are currently
exercisable or exercisable within 60 days, and (iii) 2,694 shares held
by his IRA.
(14) Represents shares issued pursuant to stock grants, which shares vest
over a five-year period from the date of grant at 20% annually, of
which none are fully vested.
(15) See notes 2 through 14.
(16) Represents shares held by the Charles N. Mathewson Trust.
(17) Represents shares held by a corporation of which Mr. Mathewson is the
President, a director and stockholder.
(18) Represents shares held by a corporation controlled by Mr. Rose.
(19) Represents shares held by his IRA.
MANAGEMENT
EXECUTIVE OFFICERS OF FELCOR
The current executive officers of FelCor, their ages, positions held and tenure
are set forth in the table below.
<Table>
<Caption>
OFFICER
NAME AGE POSITION(s) WITH FELCOR SINCE
- ---- --- ----------------------- -------
Thomas J. Corcoran, Jr........................ 53 President, Chief Executive Officer and Director 1994
Michael A. DeNicola........................... 43 Executive Vice President and Chief Investment 2001
Officer
Richard J. O'Brien............................ 40 Executive Vice President and Chief Financial 2001
Officer
Lawrence D. Robinson.......................... 58 Executive Vice President, General 1996
Counsel and Secretary
Jack Eslick................................... 50 Senior Vice President, Director of 1996
Asset Management
Lester C. Johnson............................. 49 Senior Vice President, Controller and 1995
Principal Accounting Officer
June H. McCutchen............................. 46 Senior Vice President, Director of Design and 1995
Construction
Larry J. Mundy................................ 51 Senior Vice President, Director of 1998
Administration and Business Initiatives
Andrew J. Welch............................... 40 Senior Vice President and Treasurer 1998
</Table>
-10-
Business Experience of Executive Officers
Information concerning the business experience of THOMAS J. CORCORAN, JR. is set
forth above under "Election of Directors-Nominees for Election as Class II
Directors."
MICHAEL A. DENICOLA joined FelCor in December 2001, as its Executive Vice
President and Chief Investment Officer. Mr. DeNicola has more than 20 years
experience in the hospitality industry. Prior to joining FelCor, he was a
Principal and the Head of the Lodging and Leisure Group for Lend Lease Real
Estate Investments. From 1992 to 2000, Mr. DeNicola held a number of leadership
positions with Carlson Hospitality Worldwide including Executive Vice President
of Carlson Vacation Ownership, Senior Vice President of Planning, Mergers and
Acquisitions, and Vice President of Operations. Prior to 1992, he served as
Senior Manager and Director of Hospitality Services for Kenneth Leventhal and
Company and Vice President of Hotel Investments for VMS Realty Partners.
RICHARD J. O'BRIEN began work at FelCor in June 2001, as its Executive Vice
President and Chief Financial Officer. Mr. O'Brien has more than 18 years of
finance experience. Prior to joining FelCor, he was a Managing Director with GE
Capital Real Estate, where in various positions, he was responsible for the
development of strategic alliances and new programs, e-commerce investments and
debt program management. Prior to being promoted to Managing Director in 1998,
he served as the Chief Financial Officer of the Americas business unit of GE
Capital Real Estate. From 1994 to 1996, he served as a Technical Advisor within
GE Capital Corporation's Office of the Controller, working on finance and
accounting issues related to various GE Capital Corporation business units.
Prior to his tenure with GE Capital Corporation, Mr. O'Brien held management
positions with J.P. Morgan Incorporated from 1992 to 1994 and with KPMG Peat
Marwick from 1984 to 1992.
LAWRENCE D. ROBINSON, who has served as Senior Vice President, General Counsel
and Secretary of FelCor since May 1996, was named Executive Vice President ,
General Counsel and Secretary in March 2001. From 1972 to 1989, Mr. Robinson was
a partner in the Kansas City-based law firm of Stinson, Mag & Fizzell, for which
he founded and managed a Dallas, Texas office from 1982 to 1989. From 1989
through April 1996, Mr. Robinson was a partner in the Houston-based law firm of
Bracewell & Patterson, L.L.P., where he served as the managing partner of its
Dallas office until 1992, as the head of that office's corporate and securities
law section and as chairman of its firm-wide hospitality group.
JACK ESLICK joined FelCor in April 1996 as its Vice President, Director of Asset
Management. He was named Senior Vice President, Director of Asset Management in
1998. Mr. Eslick has more than 20 years experience in hotel operations. From
April 1991 until he joined FelCor, Mr. Eslick served as Vice President of
Operations of Promus Hotel Corporation, where he had direct responsibility for
all operations in a region that grew from 14 hotels to 26 hotels. Prior to April
1991, he served in various capacities with Holiday Inns, Inc., including serving
as general manager of various hotels and as a Regional Director of Operations.
LESTER C. JOHNSON, who was named Senior Vice President and Controller in March
2001, joined FelCor in September 1995 as its Vice President and Controller.
Prior to joining FelCor, Mr. Johnson held various positions with Integra -- A
Hotel and Restaurant Company and Show Biz Pizza Time, Inc. (now CEC
Entertainment, Inc.) from 1981 to 1995. He served as the Vice President and
Controller of Integra from 1991 to 1995.
-11-
JUNE H. MCCUTCHEN joined FelCor in October 1995 as Vice President, Director of
Design and Construction, and was named Senior Vice President, Director of Design
and Construction in 1998. Prior to her engagement by FelCor, she was an Account
Executive for Hospitality Restoration & Builders, Inc. From 1992 to 1994 she was
Project Manager for American General Hospitality, Inc. where she managed all
capital improvement work for more than 35 properties. Prior to 1992, Ms.
McCutchen was Project Manager for Hilton Hotels, Inc. from 1987 to 1992, and
prior to 1987, she served as design coordinator and purchasing manager for
Embassy Suites, Inc.
LARRY J. MUNDY joined FelCor in January 1998 as Senior Vice President, Director
of Administration and Business Initiatives, and was named Senior Vice President,
Assistant General Counsel in December 2001. From 1995 until he joined FelCor, he
was Vice President of Franchise Development for Motel 6. From 1987 to 1995, he
was Vice President of Development in the South/Southeast for Hilton Hotels and
prior to 1987 he served as corporate counsel for Residence Inns and Embassy
Suites.
ANDREW J. WELCH joined FelCor in July 1998 as the Company's Vice President and
Treasurer. He was named Senior Vice President and Treasurer in March 2001. Prior
to joining FelCor, Mr. Welch had served as Vice President and Treasurer of
Bristol Hotel Company from August 1997. For 13 years prior to joining Bristol,
Mr. Welch was responsible for originating investment banking and corporate
banking business for Bank of America, N.A., Citibank, N.A. and NationsBank, N.A.
Terms of Office and Relationships
The officers of the Company are elected annually by the Board of Directors at a
meeting held following each annual meeting of stockholders, or as soon
thereafter as necessary and convenient in order to fill vacancies or newly
created offices. Each officer holds office until his successor is duly elected
and qualified or until death, resignation or removal, if earlier. Any officer or
agent elected or appointed by the Board of Directors may be removed by the Board
of Directors whenever in its judgement the best interests of the Company will be
served thereby, but such removal shall be without prejudice to the contractual
rights, if any, of the person so removed.
There are no family relationships among any of the current directors or
executive officers of the Company. As described above under "Election of
Directors," Robert A. Mathewson, a nominee for election as a Class III director,
is the son of Charles N. Mathewson, a Class III director who has tendered his
resignation from our Board effective as of the commencement of the annual
stockholders meeting in 2002. Except as described under "Election of Directors"
above, none of the Company's directors hold directorships in any company with a
class of securities registered pursuant to Section 12 of the Securities Exchange
Act of 1934 (the "Exchange Act") or pursuant to Section 15 (d) of the Exchange
Act or any company registered as an investment company under the Investment
Company Act of 1940.
There are no arrangements or understandings between any nominee for election as
a director or officer and any other person pursuant to which that director was
nominated or officer was selected.
-12-
EXECUTIVE COMPENSATION TABLES
The following tables show the compensation of FelCor's President and the four
other most highly paid executives. See the Compensation Committee Report
beginning on page 15 for an explanation of our compensation philosophy.
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------- ------------------------------
SECURITIES
OTHER ANNUAL RESTRICTED UNDERLYING ALL OTHER
COMPENSATION STOCK OPTIONS/ COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($) AWARDS($)(1) SARS(#) ($)(9)
- --------------------------- --------- --------- --------- ------------ ------------ ------------ ------------
Thomas J. Corcoran, Jr. ........ 2001 412,000 60,000 None 723,850(2) None 15,750
President and Chief 2000 400,000 336,830 None 543,150(3) 25,000 15,750
Executive Officer 1999 325,000 None None None None 15,000
Lawrence D. Robinson ........... 2001 274,459 125,000 None 420,300(4) 25,000 15,750
Executive Vice President, 2000 231,750 228,325 None 417,125(5) None 15,750
General Counsel & Secretary 1999 225,000 40,000 None None None 15,000
Jack Eslick 2001 206,000 50,000 None 373,600(6) 20,000 15,750
Senior Vice President 2000 200,000 172,925 None 417,125(5) None 15,750
Director of Asset 1999 180,000 50,000 None None None 15,000
Management
June H. McCutchen 2001 212,180 50,000 None 373,600(6) 20,000 15,750
Senior Vice President, 2000 206,000 177,725 None 417,125(5) None 15,750
Director of Design and 1999 150,000 62,120 None None None 15,000
Construction
Richard J. O'Brien 2001 175,000(7) 120,000 None 588,500(8) 125,000 106,580
Executive Vice President 2000 None None None None None None
and Chief Financial Officer 1999 None None None None None None
</Table>
- ----------
(1) There were 106,000 shares of restricted stock awarded to the
above-named officers during the 2001 fiscal year. Holders of restricted
stock are entitled to vote and receive dividends on such shares from
the date of grant. The amount reported in this table represents the
market value of the shares awarded on the date of grant, determined by
the closing price of the common stock on such date, without giving
effect to the diminution of value attributable to the restrictions on
such stock. As of December 31, 2001, the aggregate unvested restricted
stock holdings by the named executive officers consisted of 190,380
shares as set forth below, with a then current aggregate market value,
determined in the same manner as of December 31, 2001, of $3,181,250,
as follows: Mr. Corcoran, 58,480 shares ($977,201 in value); Mr.
Robinson, 37,300 shares ($623,283 in value); Mr. Eslick, 34,800 shares
($581,508 in value); Ms. McCutchen, 34,800 shares ($581,508 in value);
and Mr. O'Brien, 25,000 shares ($417,750 in value).
(2) Represents an award of 31,000 shares of restricted stock on March 15,
2001 which becomes vested over a five-year period at the rate of 20%
per year. The value is based upon the closing price of the common stock
on the date of grant of $23.35 per share.
-13-
(3) Represents an award of 30,600 shares of restricted stock on April 3,
2000 which become vested over a five-year period at the rate of 20% per
year. The value is based upon the closing price of the common stock on
the date of grant of $17.75 per share.
(4) Represents an award of 18,000 shares of restricted stock on March 15,
2001 which becomes vested over a five-year period at the rate of 20%
per year. The value is based upon the closing price of the common stock
on the date of grant of $23.35 per share.
(5) Represents an award of 23,500 shares of restricted stock on April 3,
2000 which become vested over a five-year period at the rate of 20% per
year. The value is based upon the closing price of the common stock on
the date of grant of $17.75 per share.
(6) Represents an award of 16,000 shares of restricted stock on March 15,
2001 which becomes vested over a five-year period at the rate of 20%
per year. The value is based upon the closing price of the common stock
on the date of grant of $23.35 per share.
(7) Includes compensation only from the date of commencement of Mr.
O'Brien's employment with FelCor (June 2001).
(8) Represents an award of 25,000 shares of restricted stock on June 4,
2001, which become vested over a five-year period at the rate of 20%
per year. The value is based upon $22.56, the average of the high and
low trading prices of the common stock on the date upon which Mr.
O'Brien accepted employment with the Company.
(9) These amounts represent the Company's contributions to the Company's
employee savings and investment plan in the amount of up to $15,750 to
each executive officer and, in the case of Mr. O'Brien, a moving
allowance of $79,830 paid to him in connection with the commencement of
his employment. The executive officers receive health and disability
insurance benefits which do not exceed 10% of their respective
salaries. These benefits are also made available to other employees of
the Company.
The following table sets forth information regarding the grants of stock options
to the Company's named executive officers during the 2001 fiscal year. The
options were granted pursuant to the Company's 1995 and 1998 Restricted Stock
and Stock Option Plans. The exercise price of each option is equal to the
closing price of the Company's common stock on the New York Stock Exchange on
the date of grant. No stock appreciation rights ("SARs") were granted during the
2001 fiscal year.
OPTION GRANTS IN LAST FISCAL YEAR
<Table>
<Caption>
INDIVIDUAL GRANTS
- ---------------------------------------------------------------------------------------
POTENTIAL REALIZABLE VALUE AT
NUMBER OF PERCENT OF ASSUMED ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION FOR OPTION TERM
UNDERLYING GRANTED TO EXERCISE OR ----------------------------------
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED FISCAL YEAR ($/SHARE) DATE 5% 10%
---- ---------- ------------ ----------- ---------- ------------- ------------
Thomas J. Corcoran, Jr. None 0% N/A N/A N/A N/A
Richard J. O'Brien 100,000(1) 33% $ 22.56 06/04/11 $ 1,419,000 $ 3,595,482
25,000(2) 8% $ 15.62 11/07/11 $ 245,500 $ 622,356
Lawrence D. Robinson 25,000(2) 8% $ 15.62 11/07/11 $ 245,500 $ 622,356
Jack Eslick 20,000(2) 7% $ 15.62 11/07/11 $ 196,400 $ 497,885
June H. McCutchen 20,000(2) 7% $ 15.62 11/07/11 $ 196,400 $ 497,885
</Table>
- ----------
(1) Vests over five years, at the rate of 20% per year, beginning in 2002.
(2) Vests in a single installment on November 7, 2005.
-14-
The unexpired stock options to purchase the Company's common stock held by named
executive officers of the Company at December 31, 2001, are summarized in the
table below.
FISCAL YEAR END OPTION VALUES
<Table>
<Caption>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 2001 DECEMBER 31, 2001(1)
----------------------------- -------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
Thomas J. Corcoran, Jr 434,248 65,705 $ 0 $ 0
Lawrence D. Robinson 123,196 39,066 $ 0 $ 27,250
Jack Eslick 58,081 28,483 $ 0 $ 21,800
June H. McCutchen 36,321 28,483 $ 0 $ 21,800
Richard J. O'Brien 0 125,000 $ 0 $ 27,250
</Table>
- ----------
(1) Based on the difference between the option exercise price for all
outstanding options and the closing sale price for the common stock on the
New York Stock Exchange on December 31, 2001, which was $16.71 per share.
COMPENSATION COMMITTEE REPORT
Compensation Philosophy
The Compensation Committee works with senior management to develop and implement
FelCor's executive compensation philosophy. Historically, FelCor's philosophy on
executive compensation had been to provide a base cash compensation that was at
or below the average of other equity hotel REITs, and to provide additional
incentive compensation in the form of discretionary cash bonuses and grants of
options and restricted stock based on the realization of stated objectives, such
as acquisitions, financings, renovations, improvements in funds from operations
and other similar criteria expected to result in improvements in total
stockholder return.
The Compensation Committee's compensation program for FelCor's executive
officers is based, in part, on the recommendations of a consulting firm that was
engaged in 2000 and in part on the compensation levels of executive officers of
competitive companies identified by the consulting firm. The compensation
program is comprised of a base salary, a cash bonus component and a long-term
incentive element, in the form of grants of restricted stock that vest over a
five-year period at 20% per year. The cash bonus component for all executive
officers is tied, in whole or in part, to corporate EBITDA performance and, for
certain officers, in part to the achievement of specific objectives within their
control. The amount of cash bonuses is determined based upon the attainment of
one of three levels of performance.
FelCor believes that the award of significant incentive compensation in the form
of restricted stock provides management with incentives consistent with the
interests of stockholders. As a result of this philosophy, executive
compensation may be at or below other equity hotel REITs during periods of
average performance and above that of the competitive set during periods of
above average growth or performance. The competitive set that has been used by
the committee to measure performance includes other equity hotel REITs,
particularly those whose capitalization, revenues, assets, market value and
total stockholder returns are most nearly comparable to those of FelCor. Since
REITs do not pay taxes at the corporate level, no policy has been established
with respect to qualifying compensation paid to executive officers under Section
162(m) of the Internal Revenue Code.
-15-
Executive Compensation
During 2001, Mr. Corcoran, FelCor's President and Chief Executive Officer
received a base salary of $412,000 per year. This base cash compensation, like
that paid to other executive officers, is related primarily to competitive
factors and is not tied to FelCor's financial performance or the achievement of
specific goals. The base compensation of FelCor's executive officers was
increased in 2001 over 2000, consistent with inflation.
In addition to base salary, FelCor's executive officers were eligible to receive
cash bonuses based upon their attainment of the performance criteria established
by the committee for 2001. FelCor's performance was substantially below
expectations in 2001, due in part to the terrorist attacks in September 2001 and
their effects upon the nation's economy in general, and upon the lodging
industry in particular. As a result of the decreased performance, substantially
all of the executive officers would have received no cash bonuses, since the
minimum bonus criteria was not met.
The committee took into consideration the extraordinary effect of the September
terrorist attacks on the Company's performance in 2001, as well as the
substantial time and efforts expended by the executive officers in connection
with the attempted merger with MeriStar, which was terminated as a result of the
September attacks and the subsequent decline in the capital markets. The
committee realized that most of the work for the merger had been expended prior
to its termination. As a result of these extraordinary events, the committee
determined that a small cash bonus should be paid to certain executive officers,
even though those officers did not meet the minimum criteria under the
established bonus program. For these reasons, the committee approved year-end
cash bonuses for employees in the aggregate amount of $500,000 for 2001.
It is expected that future cash bonuses, if any, paid to FelCor's executive
officers will be based again upon the attainment by both FelCor and the
individual of performance objectives established by the committee each year. In
this regard, the committee has approved performance criteria for 2002 based upon
performance expectations for FelCor and for certain individual officers in 2002.
FelCor added two new executive officers in 2001: Richard J. O'Brien, who became
FelCor's Executive Vice President and Chief Financial Officer and Michael A.
DeNicola, who became FelCor's Executive Vice President and Chief Investment
Officer. The base compensation for each of Messrs. O'Brien and DeNicola was
recommended by the President and Chief Executive Officer and approved by the
committee in accordance with the guidelines set forth above. In addition, in
connection with their commencement of employment, the committee approved the
grant of certain shares of restricted stock and stock options, as discussed
below.
Other Incentive Compensation
Routine annual awards of an aggregate of 114,000 shares of restricted stock were
made to the executive officers during 2001. These awards were made consistent
with the committee's belief that grants of restricted stock should be a
significant component of compensation for executive officers. Although there is
no generally applicable policy or formula for these or future grants, these
grants were made, and the committee anticipates that future grants will be made,
generally in relation to base salary.
In addition, in connection with the employment of Mr. O'Brien and Mr. DeNicola,
and as an inducement to them to accept such employment, the Compensation
Committee awarded a grant of 25,000 shares of restricted stock to Mr. O'Brien
and of 15,000 to Mr. DeNicola. These shares, as well as the shares awarded to
the other executives, will become vested over a five-year period at the rate of
20% per year. In addition, the committee awarded options to purchase 100,000
shares of common stock to Mr. O'Brien and 50,000 shares to Mr. DeNicola at
exercise prices equal to the fair market value of the FelCor common stock on the
dates of their acceptance and commencement of employment, respectively. These
options will also become vested over a five-year period at the rate of 20% per
year.
-16-
The committee had previously determined that stock options do not provide
meaningful incentives for REIT executives because of the lack of expectation of
substantial price increases for REIT stocks. As a result of the dramatic decline
of the Company's stock price following the September terrorist attacks, however,
the committee believed there existed an opportunity to utilize the grant of
stock options as part of its incentive program. The committee also took into
consideration the fact that outstanding stock options held by executive officers
were generally "out of the money," and that the prior grants of restricted stock
would not be as meaningful given the expectation that the Company would reduce
the dividend payments on its common stock. As a result, the committee granted
options to purchase an aggregate of 150,000 shares of the Company's common stock
in November 2001. Unlike prior grants of stock options, however, these options
were issued with cliff vesting provisions such that none of the options vested
until four years after the date of grant, at which time all of the options vest.
The committee believed this vesting schedule would create greater incentives for
the executive officers receiving these options to remain in FelCor's employ.
Because of the importance of long-term incentive compensation in FelCor's
compensation plan and the limited availability of shares for awards under
existing plans, the committee approved and recommends the adoption of the 2001
Restricted Stock and Stock Option Plan.
Employment Arrangements
FelCor has entered into an employment agreement with Mr. Corcoran that continues
in effect until December 31, 2002 and automatically renews for successive
one-year terms, unless otherwise terminated. Under this agreement, Mr. Corcoran
serves as the President and Chief Executive Officer of FelCor. The agreement
provides that Mr. Corcoran be paid a salary in excess of a stated minimum and
that a comprehensive medical plan be maintained for the benefit of Mr. Corcoran
and his dependents. None of the other officers of FelCor has an employment
agreement. FelCor has entered into change in control and severance agreements
with each of its executive officers and certain other key employees. Each of
these agreements currently extend until December 31, 2002, and will
automatically renew for successive one-year terms, unless terminated. In the
event of a potential change in control, each covered employee agrees to remain
in the employ of FelCor until the earlier of one year following the "potential
change in control" or six months following an actual "change in control."
Following a "change in control," if a covered employee's employment is
terminated by FelCor other than for disability, retirement, or "cause" (or by
the employee for "good reason"), then the employee will be entitled to (i) the
immediate vesting of all stock options, awards of restricted stock and other
benefits previously awarded or credited to his account and (ii) a lump sum
severance payment of between 2.99 and 0.5 times the employee's average total
annual compensation over the past three years. FelCor will be required to
"gross-up" the severance payment to cover excise taxes on the benefits, thereby
providing such benefits to the employee on a net basis, after payment of any
such excise taxes.
FelCor also maintains a 401(k) Plan, health insurance and other benefits
generally available to all employees. FelCor also provides a deferred
compensation plan that is available only to directors and employees making in
excess of $100,000 per year. FelCor makes no matching or other contributions to
this plan, other than the payment of its operating and administrative expenses.
This report has been furnished by the current members of the Compensation
Committee.
----------
Michael D. Rose Thomas A. McChristy
Melinda J. Bush Robert H. Lutz, Jr.
-17-
COMPENSATION COMMITTEE INTERLOCKS
None of the members of the Compensation Committee were officers or employees of
FelCor or had any relationship with the Company requiring disclosure under
regulations promulgated by Securities and Exchange Commission.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
At December 31, 2000, FelCor and its subsidiaries leased a total of 85 hotels
directly to, or to subsidiaries of, DJONT Operations, L.L.C. under Percentage
Leases. Hervey A. Feldman, who served as the Chairman of the Board of FelCor
until July 1998, and Thomas J. Corcoran, Jr., the President, Chief Executive
Officer and a director of FelCor, beneficially owned all of the voting common
equity interests (50% of the common equity interest) in, and served as officers
and managers of, DJONT. The remaining 50% non-voting common equity interest in
DJONT was held by entities owned by the children of Charles N. Mathewson, a
director of FelCor.
Effective January 1, 2001, the Company acquired from the prior owners and
contributed to a newly formed taxable REIT subsidiary all of the equity
interests in DJONT. In consideration for the equity interests in DJONT, the
Operating Partnership issued an aggregate of 416,667 units of limited partner
interest then valued at approximately $10 million. At the time of acquisition,
DJONT had an accumulated shareholders' deficit of approximately $24.5 million.
Mr. Corcoran and Mr. Mathewson, whose personal interests were in conflict with
those of the Company relating to this acquisition, abstained from participation
in the Board of Directors' discussion and vote on this matter.
In May 2000, subsidiaries of Six Continents plc (formerly Bass plc) acquired all
of the outstanding stock of Bristol Hotels & Resorts through a merger. Richard
C. North, a director of FelCor, is the Group Finance Director of Six Continents
plc.
In connection with its acquisition of Bristol Hotels & Resorts in 2000, a
subsidiary of Six Continents plc contributed an aggregate of 5,713,185 shares of
outstanding FelCor common stock held by it to FelCor Lodging Limited Partnership
in exchange for a like number of Units of limited partner interest. If these
Units were to be redeemed for FelCor common stock, Six Continents plc and its
affiliates would own approximately 17.1% of FelCor's common stock. The exchange
by Six Continents of common stock for Units did not affect FelCor's FFO or
earnings per share, although it resulted in the reduction of FelCor's percentage
ownership in FelCor Lodging Limited Partnership from approximately 95% to
approximately 87%.
On January 1, 2001, the Company acquired from subsidiaries of Six Continents
Hotels the leases covering 11 of the Company's hotels and terminated the related
management agreements in exchange for 413,585 units of limited partnership
interest then valued at approximately $10 million, including the cost of
terminating one additional lease in connection with the sale of the related
hotel. The Company acquired the remaining 88 leases held by subsidiaries of Six
Continents Hotels on July 1, 2001. As consideration for the acquisition of these
leases, the Company entered into long-term management agreements with Six
Continents Hotels for these hotels and FelCor issued an aggregate of 100 shares
of common stock to the sellers. Mr. North, because of his position with the
parent of Six Continents Hotels, had interests in conflict with those of FelCor
in these transactions and abstained from participation in the Board of
Directors' discussion and vote on such matters.
Percentage Leases and Management Agreements
The Percentage Leases originally entered into by the Company with DJONT and
Bristol Hotels & Resorts generally had initial terms of five to 15 years and
provided for the payment by the lessees to the FelCor subsidiary owning the
property a minimum base rent or, if greater, rent measured as a percentage of
room or suite revenue and certain other hotel revenues. The lessees were
entitled to all profits from the operation of the hotels leased
-18-
by them, after the payment of rent and the operating, management and certain
other expenses of the hotels. During 2000, DJONT paid approximately $277
million, and Bristol Hotels & Resorts paid approximately $260 million, in lease
rent to the Company. During the first half of 2001, Bristol Hotels & Resorts
paid approximately $115 million to the Company as rent.
The management agreements entered into with Six Continents Hotels in exchange
for the 88 leases acquired on July 1, 2001, generally have initial terms of 12
to 17 years and provide for the payment of a base management fee to Six
Continents Hotels of 2% of the adjusted gross revenues and 5% of the room
revenues of each hotel managed. In addition, Six Continents Hotels may receive,
as an incentive fee, a percentage of hotel profits in excess of specified
returns to FelCor on its investment in the hotels. In the event of the early
termination of one of these management agreements by FelCor, it may be obligated
to pay Six Continents Hotels a replacement management fee and/or liquidated
damages. However, if the early termination occurs as a result of the sale of a
managed hotel, no liquidated damages will be payable by FelCor if it reinvests
the net proceeds of the sale in one or more hotels licensed by Six Continents
Hotels within one year of the date of sale.
Sharing of Offices and Employees
FelCor shares its executive offices and certain employees with DJONT, which was
controlled by Messrs Feldman and Corcoran prior to its acquisition by FelCor on
January 1, 2001, and with FelCor, Inc., another entity controlled by them. Prior
to 2001, DJONT bore, and FelCor, Inc. continues to bear, its share of the costs
thereof, including an allocated portion of the rent, salaries of certain
personnel, office supplies, telephones and depreciation of office furniture,
fixtures and equipment. Any such allocation of shared expenses to FelCor must be
approved by a majority of the Independent Directors of FelCor. During 2000,
FelCor paid approximately $7.5 million (or 89.4% of all allocable expenses)
under this arrangement. During 2001, FelCor, Inc., paid approximately $45,000 of
such expenses and FelCor bore the balance of such expenses. Mr. Corcoran's
salary is paid solely by FelCor and he receives no salary from the other
entities. Mr. Corcoran is the President, Chief Executive Officer and a director
of FelCor and also serves as a director (or manager) and the President of
FelCor, Inc. For a description of Mr. Corcoran's employment agreement and of the
change in control and severance agreements between FelCor and its executive
officers and certain other key employees, please see the discussion under
"Employment Arrangements" in the Compensation Committee Report, beginning on
page 15.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires officers and directors, and persons
who beneficially own more than ten percent (10%) of the Company's stock, to file
initial reports of ownership and reports of changes in ownership with the
Securities and Exchange Commission ("SEC"). Officers, directors and greater than
ten percent (10%) beneficial owners are required by SEC regulations to furnish
the Company with copies of all Section 16(a) forms they file.
Based solely on a review of the copies furnished to FelCor and representations
from the officers and directors, FelCor believes that all Section 16(a) filing
requirements for the year ended December 31, 2001, applicable to its officers,
directors and greater than ten percent (10%) beneficial owners were satisfied,
except that a partnership for the benefit of Mr. McNamara's children sold an
aggregate of 100,000 shares of FelCor common stock on three separate days during
November 2001, which sales were not reported until a Form 5 was filed on March
22, 2002.
Based on written representations from the officers and directors, the Company
believes that all Forms 5 for directors, officers and greater than ten percent
(10%) beneficial owners that have been filed with the SEC are the only Forms 5
required to be filed for the period ended December 31, 2001.
-19-
REPORT OF THE AUDIT COMMITTEE
The Audit Committee is comprised of four directors and operates under a written
charter adopted by the Board of Directors. FelCor considers all members to be
independent as defined by New York Stock Exchange listing standards; however,
Mr. North, as Group Finance Director of Six Continents plc, may be considered to
have a business relationship with FelCor. The Board has determined, in its
business judgment, that such relationship does not interfere with his exercise
of independent judgment.
Management is responsible for the Company's internal controls and the financial
reporting process. PricewaterhouseCoopers LLP, the Company's independent
auditors, are responsible for performing an independent audit of the Company's
consolidated financial statements in accordance with generally accepted auditing
standards. The Audit Committee's responsibility is to monitor and oversee the
financial reporting processes.
In this context, the Audit Committee reviewed and discussed the audited
consolidated financial statements with both management and
PricewaterhouseCoopers LLP. Specifically, the Audit Committee has discussed with
PricewaterhouseCoopers LLP matters required to be discussed by SAS 61, 89 and 90
(Codification of Statements on Auditing Standards, AU Section 380).
The Audit Committee received from PricewaterhouseCoopers LLP the written
disclosures and the letter required by Independence Standards Board Standard No.
1 (Independence Discussions with Audit Committees), and has discussed with
PricewaterhouseCoopers LLP the issue of its independence from the Company.
Based on the Audit Committee's review of the audited consolidated financial
statements and its discussions with management and PricewaterhouseCoopers LLP
noted above, the Audit Committee recommended to the Board of Directors that the
audited consolidated financial statements be included in our Annual Report on
Form 10-K for the year ended December 31, 2000.
This report has been furnished by the current members of the Audit Committee.
----------
Charles A. Ledsinger, Jr. Richard S. Ellwood
Richard O. Jacobson Richard C. North.
INDEPENDENT AUDITORS
The firm of PricewaterhouseCoopers, LLP has served as auditors for FelCor during
2001 and will serve in that capacity for 2002, unless the Board subsequently
determines that a change is desirable. A representative of the auditors is
expected to be at FelCor's 2002 Annual Meeting of Stockholders to respond to
appropriate questions and to make a statement if desired.
Audit Fees
Fees billed by PricewaterhouseCoopers LLP for the audit of the Company's 2001
annual financial statements and the reviews of the quarterly financial
statements included in the Company's Forms 10-Q totaled $249,000.
Financial Information Systems Design and Implementation Fees
No fees were billed by Pricewaterhouse-Coopers LLP for services related to
financial information systems design and implementation during 2001.
All Other Fees
Fees billed by PricewaterhouseCoopers LLP in 2001 for all other services,
consisting primarily of fees for tax related services and fees related to other
SEC filings, totaled $1,296,496.
-20-
Auditor Independence
In determining the independence of PricewaterhouseCoopers LLP, the Audit
Committee considered whether the provision of the non-audit services is
compatible with maintaining PricewaterhouseCoopers LLP's independence.
STOCK PERFORMANCE GRAPH
Annual total returns to FelCor stockholders are shown in the performance graph
appearing below. The graph shows the relative investment performance of FelCor
common stock, the S&P 500, and the NAREIT Equity Index from December 31, 1996,
through December 31, 2001.
[GRAPH]
<Table>
<Caption>
12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
-------- ------- -------- -------- -------- --------
FelCor Lodging Trust 100.0 106.3 74.0 63.7 97.0 75.7
NAREIT Equity Index 100.0 120.3 99.2 94.6 119.6 136.2
S&P 500 Total Return 100.0 133.4 171.5 207.6 188.7 166.2
</Table>
-21-
PROPOSAL 2 - ADOPTION OF 2001 RESTRICTED STOCK AND STOCK OPTION PLAN
The Board of Directors originally approved the 2001 Restricted Stock and Stock
Option Plan, or 2001 Plan, in July 2001 in anticipation of the proposed merger
with MeriStar. As initially approved, the plan provided an aggregate of 1
million shares to assure that adequate resources would be available to provide
incentives to attract and retain executive officers and key employees. Given the
termination of the proposed merger with MeriStar following the events of
September 11, 2001, the Board amended the 2001 Plan to reduce the number of plan
shares from 1 million to 750,000 and to expressly prohibit the repricing of
options issued under the 2001 Plan. As so amended, the Board of Directors has
approved the 2001 Plan and recommends to stockholders that it be adopted at the
2002 Annual Meeting of Stockholders.
The 2001 Plan will be approved by FelCor's stockholders if a quorum is present
at the Annual Meeting of Stockholders and if the number of votes cast for
approval of the 2001 Plan exceeds the number of votes cast against its approval.
The following table provides information regarding the status of FelCor's
existing equity compensation plans at December 31, 2001.
EQUITY COMPENSATION PLAN INFORMATION
<Table>
<Caption>
NUMBER OF SECURITIES TO BE WEIGHTED-AVERAGE NUMBER OF SECURITIES
ISSUED UPON EXERCISE OF EXERCISE PRICE OF REMAINING AVAILABLE FOR
OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, FUTURE ISSUANCE UNDER
PLAN CATEGORY WARRANTS AND RIGHTS WARRANTS AND RIGHTS EQUITY COMPENSATION PLANS
------------- -------------------------- ------------------- -------------------------
Equity compensation plans
approved by security holders ....... 2,037,612 $ 22.86 460,260
Equity compensation plans not
approved by security holders ....... 3,600 $ 19.50 750,000(1)
Total .............................. 2,041,212 $ 22.86 1,210,260
</Table>
- ----------
(1) Being submitted to stockholders for adoption at this meeting.
DESCRIPTION OF 2001 PLAN
The following summarizes some of the more significant aspects of the 2001 Plan.
This summary is not intended to be complete and is subject in all respects to
the terms of the FelCor 2001 Plan, a complete copy of which is attached as
Appendix A to this Proxy Statement. No awards have been made under the FelCor
2001 Plan.
Share Authorization. The 2001 Plan provides for:
(1) the grant of stock options to purchase shares of FelCor common stock; or
(2) the grant of FelCor common stock, which will be restricted shares of stock.
Under the 2001 Plan, an aggregate of 750,000 shares of FelCor common stock are
available for grant.
The 2001 Plan provides that in the event of any subdivision or consolidation of
outstanding shares of FelCor common stock or the declaration of a dividend
payable in shares of FelCor common stock, a capital reorganization or
reclassification, or other similar transaction, the compensation committee may
adjust proportionally:
-22-
(1) the number of shares of FelCor common stock reserved under the 2001
Plan and covered by awards under it;
(2) the exercise or other price in respect of such awards; and
(3) the appropriate fair market value and other price determinations for
such awards.
In the event of a corporate merger, consolidation, reorganization or
liquidation, in which FelCor is not the surviving company, the compensation
committee shall be authorized to issue new options, or to make provisions for
the acceleration of the exercisability of, or lapse of restrictions with respect
to, awards and the termination of unexercised options, in connection with such
transaction.
Purpose and Administration. The Board of Directors has approved the
2001 Plan to provide incentives to attract and retain independent directors,
executive officers and key employees. The 2001 Plan is administered by the
Compensation Committee or, in the case of grants to independent directors, by
the Board of Directors. The Compensation Committee generally has the authority,
within limitations set forth in the 2001 Plan:
(1) to establish rules and regulations concerning the 2001 Plan;
(2) to determine the persons who may be granted options and restricted
shares;
(3) to fix the number of shares of FelCor common stock to be covered by
each option and the number of restricted shares granted; and
(4) to set the terms and provisions of each grant of options or restricted
shares to be granted.
However, the Compensation Committee may not, unless approved by (or subject to
the approval of) stockholders, effect a repricing of all or any of the options
outstanding under the 2001 Plan at any time. In addition, during any calendar
year, the maximum number of shares for which an award may be granted under the
2001 Plan to any person whose compensation is subject to the limitation on
deductibility under Section 162(m) of the code, is 250,000 shares.
Eligibility. Participants in the 2001 Plan may be directors, officers
or employees of FelCor, its subsidiaries, or designated affiliates, as are
selected by the Compensation Committee.
Options. Options granted under the 2001 Plan may be incentive stock
options under Section 422 of the Internal Revenue Code or non-qualified options,
at the discretion of the Compensation Committee, except incentive stock options
will not be granted to employees of any affiliate which is a partnership, or to
independent directors. The 2001 Plan provides that the exercise price of an
option will be fixed by the Compensation Committee on the date of grant; but,
the exercise price of an incentive stock option must be not less than the fair
market value of a share of FelCor common stock on the date of the grant. The
exercise price of each option will be paid in full at the time of exercise in
cash or, to the extent, if any, authorized in the option agreement, or by the
Compensation Committee, by means of tendering shares of FelCor common stock
valued at fair market value on the date of exercise. In the case of an incentive
stock option granted to any person who owns, directly or indirectly, stock
possessing more than 10% of the total combined voting power of all classes of
FelCor capital stock, the option price will not be less than 110% of the fair
market value of a share of FelCor common stock on the date of grant. Each option
must expire within ten years from the date of the grant except that any
incentive stock option granted to a ten percent owner must expire within five
years from the date of the grant. Options granted under the 2001 Plan will not
be incentive stock options to an individual participant to the extent the
aggregate fair market value of the FelCor common stock, determined as of the
date of grant, subject to those options under the 2001 Plan, or under any other
plan maintained by FelCor or a subsidiary which first become exercisable by that
participant in any year, exceeds $100,000.
Restricted Stock Awards. The 2001 Plan also permits the Compensation
Committee to grant restricted shares. Restricted shares will be subject to the
terms and conditions imposed by the Compensation Committee. Except for
-23-
restrictions on transfer set by the Compensation Committee, the participants
have all the rights of a holder of FelCor common stock as to the restricted
shares, including the right to vote the shares and the right to receive any cash
distributions. Except as determined by the Compensation Committee at the time of
grant or otherwise, if an employee is terminated for any reason during the
restriction period, all unvested restricted shares will be forfeited by the
participant.
Termination and Amendment. No options shall be granted and no
restricted shares may be awarded under the 2001 Plan on or after January 24,
2012. The Board of Directors may amend any award previously granted,
prospectively or retroactively. No amendment may impair the rights of any
participant under any award without the consent of that participant, except as
expressly provided in the 2001 Plan or in the award for any amendment made to
cause the plan to qualify for an exemption provided by Rule 16b-3 under the
Exchange Act. The 2001 Plan may be terminated, modified or amended by the Board
of Directors at any time. Any modification or amendment either (1) increasing
the total number of shares which may be issued under options or as restricted
shares (2) extending the term of the 2001 Plan, or (3) materially modifying the
requirements as to eligibility to receive options or restricted shares is
subject to stockholder approval within one year of the adoption of such
amendment. No termination, modification or amendment of the 2001 Plan will
adversely alter or affect the terms of any then outstanding options or
restricted shares without the consent of the holders.
Federal Income Taxes. No income is recognized by a participant in the
2001 Plan at the time an option is granted. If the option is an incentive stock
options, no income will be recognized upon the participant's exercise of the
option. Income is recognized by a participant when he disposes of shares
acquired under an incentive stock option. The exercise of a nonqualified stock
option generally is a taxable event that requires the participant to recognize,
as ordinary income, the difference between the shares' fair market value and the
option price.
A participant will recognize income on account of a restricted share award on
the first day that the shares are either transferable or not subject to a
substantial risk of forfeiture. The amount of income recognized by the
participant is equal to the fair market value of the FelCor common stock for
which the restrictions have lapsed on that date.
The employer, either FelCor or its affiliate, will be entitled to claim a
federal income tax deduction on account of the exercise of a nonqualified option
or the vesting of a stock award. The amount of the deduction is equal to the
ordinary income recognized by the participant. The employer will not be entitled
to a federal income tax deduction on account of the grant or the exercise of an
incentive stock option. The employer may claim a federal income tax deduction on
account of certain dispositions of FelCor common stock acquired upon the
exercise of an incentive stock option.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ADOPTION OF THE 2001 PLAN.
ADDITIONAL INFORMATION
Other Business
FelCor's Board does not intend to bring, and knows of no one intending to bring,
any matter before the annual meeting other than the election of the director
nominees and the adoption of the 2001 Plan. If any other matter is properly
brought before the meeting, the persons named as proxies will vote them in
accordance with the direction of the Board of Directors.
Outstanding Shares
On March 18, 2002, a total of 53,042,778 shares of FelCor common stock was
outstanding. Each outstanding share of common stock is entitled to one vote.
-24-
Annual Report
FelCor's 2001 Annual Report to Stockholders is enclosed with this Proxy
Statement. FelCor's Annual Report to Stockholders, this Proxy Statement and its
Annual Report on Form 10-K may also be viewed on its website at WWW.FELCOR.COM.
WE WILL ALSO SEND YOU A COPY OF FELCOR'S ANNUAL REPORT ON FORM 10-K FOR 2001 IF
REQUESTED IN WRITING SENT TO THE CORPORATE SECRETARY AT THE ADDRESS LISTED UNDER
"QUESTIONS" BELOW.
How We Solicit Proxies
In addition to this mailing, FelCor employees may solicit proxies personally,
electronically, or by telephone. FelCor pays the costs of soliciting the
proxies. We also reimburse brokers and other nominees for their expenses in
sending these materials to you and getting your voting instructions.
Stockholder Proposals for Next Year
The deadline for stockholder proposals eligible for inclusion in next year's
proxy statement is December 7, 2002. All proposals should be submitted in
writing to the Secretary of FelCor at the address listed under "Questions"
below.
Questions
If you have questions or need more information about the annual meeting, you may
write to:
Corporate Secretary
FelCor Lodging Trust Incorporated
545 E. John Carpenter Frwy., Suite 1300
Irving, Texas 75062
You may also or call us at (972) 444-4900 or send us an e-mail at
INFORMATION@FELCOR.COM. We also invite you to visit FelCor's Internet site at
WWW.FELCOR.COM.
-25-
APPENDIX A
FELCOR LODGING TRUST INCORPORATED
2001 RESTRICTED STOCK AND STOCK OPTION PLAN
(AS AMENDED)
FELCOR LODGING TRUST INCORPORATED
2001 RESTRICTED STOCK AND STOCK OPTION PLAN
TABLE OF CONTENTS
<Table>
Section 1. Establishment, Purpose, and Effective Date of Plan.....................1
1.1 Establishment........................................................1
1.2 Purpose..............................................................1
1.3 Effective Date.......................................................1
Section 2. Definitions............................................................1
2.1 Definitions..........................................................1
2.2 Gender and Number....................................................2
Section 3. Eligibility and Participation..........................................3
3.1 Eligibility and Participation........................................3
Section 4. Administration.........................................................3
4.1 Administration.......................................................3
Section 5. Stock Subject to Plan..................................................3
5.1 Number...............................................................3
5.2 Lapsed Awards........................................................3
5.3 Adjustment in Capitalization.........................................3
Section 6. Shareholder Approval and Duration of Plan..............................4
6.1 Shareholder Approval.................................................4
6.2 Duration of Plan.....................................................4
Section 7. Stock Options..........................................................4
7.1 Grant of Options.....................................................4
7.2 Option Agreement.....................................................4
7.3 Option Price.........................................................4
7.4 Duration of Options..................................................5
7.5 Exercise of Options..................................................5
7.6 Payment..............................................................5
7.7 Restrictions on Stock Transferability................................5
</Table>
-i-
<Table>
7.8 Termination of Employment Due to Death or Disability.................5
7.9 Termination of Employment Other than for Death or Disability.........5
7.10 Nontransferability of Options........................................5
7.11 Cancellation.........................................................6
Section 8. Restricted Stock.......................................................6
8.1 Grant of Restricted Stock............................................6
8.2 Transferability......................................................6
8.3 Other Restrictions...................................................6
8.4 Voting Rights........................................................6
8.5 Dividends and Other Distributions....................................6
8.6 Termination of Employment............................................6
Section 9. Rights of Employees....................................................7
9.1 Employment...........................................................7
Section 10. Amendment, Modification and Termination of Plan.......................7
10.1 Amendment, Modification, and Termination of Plan.....................7
Section 11. Miscellaneous Provisions..............................................7
11.1 Tax Withholding......................................................7
11.2 Stock Withholding Elections..........................................7
11.3 Severability.........................................................7
11.4 Notice...............................................................7
Section 12. Indemnification.......................................................8
12.1 Indemnification......................................................8
Section 13. Requirements of Law...................................................8
13.1 Requirements of Law..................................................8
13.2 Governing Law........................................................8
</Table>
-ii-
FELCOR LODGING TRUST INCORPORATED
2001 RESTRICTED STOCK AND STOCK OPTION PLAN
Section 1. Establishment, Purpose, and Effective Date of Plan
1.1 Establishment. FelCor Lodging Trust Incorporated, a Maryland
corporation, hereby establishes the "FELCOR LODGING TRUST INCORPORATED 2001
RESTRICTED STOCK AND STOCK OPTION PLAN" (THE "PLAN") for Independent Directors,
executive officers and key employees. The Plan permits the grant of stock
options and restricted stock as a payout media for payments under the plan.
1.2 Purpose. The purpose of the Plan is to advance the interests of the
Company, by encouraging and providing for the acquisition of an equity interest
in the success of the Company by Independent Directors, executive officers and
key employees, by providing additional incentives and motivation toward superior
performance of the Company, and by enabling the Company to attract and retain
the services of Independent Directors, executive officers and key employees upon
whose judgment, interest, and special effort the successful conduct of its
operations is largely dependent.
1.3 Effective Date. The Plan shall become effective on January 24,
2002, ("Effective Date"), although it is subject to shareholder approval as
provided in Section 6.1.
Section 2. Definitions
2.1 Definitions. Whenever used herein, the following terms shall have
their respective meanings set forth below:
(a) "Award" means, collectively, each Option, or Restricted Stock,
granted under this Plan except that where it shall be appropriate to identify
the specific type of Award, reference shall be made to the specific type of
Award.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means the Compensation Committee of the Board;
provided, however, that for any grant to an Independent Director, the remaining
members of the Board shall serve as the Compensation Committee with respect to
such grant, including, but not limited to, the approval of the grant. The Board,
as a whole, may take any action which the Committee is authorized to take
hereunder.
(e) "Company" means FelCor Lodging Trust Incorporated, a Maryland
corporation.
A-1
(f) "Disability" means an individual who is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or which has lasted,
or can be expected to last, for a continuous period of not less than twelve (12)
months.
(g) "Employee" means an employee (including officers and directors who
are also employees) of the Company or its subsidiaries, affiliates (including
partnerships) or any branch or division thereof.
(h) "Fair Market Value" of a share of Stock means the reported closing
sales price of the Stock on the New York Stock Exchange Composite Tape on that
date, or if no closing price is reported on that date, on the last preceding
date on which such closing price of the Stock was so reported. If the Stock is
not traded on the New York Stock Exchange at the time a determination of its
Fair Market Value is required to be made hereunder, its Fair Market Value shall
be deemed to be equal to the average between the closing bid and asked prices of
the Stock on the most recent date on which the Stock was publicly traded. In the
event the Stock is not publicly traded at the time a determination of its value
is required to be made hereunder, the determination of its Fair Market Value
shall be made by the Committee in such manner as it deems appropriate.
(i) "Independent Director" means a director of the Company who is not
an Employee.
(j) "Option" means the right to purchase Stock at a stated price for a
specified period of time. For purposes of the Plan, an Option may be either (i)
an "incentive stock option" within the meaning of Section 422 of the Code or
(ii) a "nonstatutory stock option."
(k) "Participant" means any Employee or Independent Director designated
by the Committee to participate in the Plan.
(l) "Period of Restriction" means the period during which the transfer
of shares of Restricted Stock is restricted pursuant to Section 8 of the Plan.
(m) "Restricted Stock" means Stock granted to a Participant pursuant to
Section 8 of the Plan.
(n) "Stock" means the common stock of the Company, par value of $.01.
2.2 Gender and Number. Except when otherwise indicated by the context,
words in the masculine gender when used in the Plan shall include the feminine
gender, the singular shall include the plural, and the plural shall include the
singular.
A-2
Section 3. Eligibility and Participation
3.1 Eligibility and Participation. Participants in the Plan shall be
selected by the Committee from among the Independent Directors and Employees
who, in the opinion of the Committee, are in a position to contribute materially
to the Company's continued growth and development and to its long-term financial
success.
Section 4. Administration
4.1 Administration. The Committee shall be responsible for the
administration of the Plan. The Committee, by majority action thereof, is
authorized to interpret the Plan, to prescribe, amend, and rescind rules and
regulations relating to the Plan, to provide for conditions and assurances
deemed necessary or advisable to protect the interests of the Company, and to
make all other determinations necessary or advisable for the administration of
the Plan. Determinations, interpretations, or other actions made or taken by the
Committee pursuant to the provisions of the Plan shall be final and binding and
conclusive for all purposes and upon all persons whomsoever.
Section 5. Stock Subject to Plan
5.1 Number. The total number of shares of Stock subject to Awards under
the Plan may not exceed 750,000, subject to adjustment upon the occurrence of
any of the events indicated in Section 5.3 hereof. The shares to be delivered
under the Plan may consist, in whole or in part, of authorized but unissued
Stock or treasury Stock, not reserved for any other purpose. Without limitation,
no officer of the Company or other person whose compensation may be subject to
the limitations on deductibility under Section 162(m) of the Code shall be
eligible to receive Awards pursuant to this Plan in excess of 250,000 shares of
Common Stock in any fiscal year (the "Section 162(m) Maximum").
5.2 Lapsed Awards. If any Award granted under the Plan terminates,
expires, lapses or is canceled for any reason, any shares of Stock subject to
such Award again shall be available for the grant of an Award hereunder. The
Committee shall not, unless approved by (or subject to the approval of)
shareholders, effect a repricing of all or any of the Options outstanding under
the Plan at any time. Further, except as otherwise provided in Section 7.11
hereof, the Committee shall not, without the consent of the affected Optionee,
have the authority to effect the cancellation or modification of any or all
outstanding Options.
5.3 Adjustment in Capitalization. In the event of any change in the
outstanding shares of Stock that occurs after the Effective Date by reason of a
Stock dividend or split, recapitalization, merger, consolidation, combination,
exchange of shares, or other similar corporate change, the aggregate number of
shares of Stock subject to the Plan and to each Award hereunder, and to the
stated Option price (if any) of each Award, shall be adjusted appropriately by
the Committee or the Board, whose determination shall be conclusive; provided,
however, that fractional shares shall be rounded to the nearest whole share. In
such event, the Committee or the Board also shall have discretion to make
appropriate adjustments in the number and type of shares subject to an Award of
Restricted Stock under the Plan pursuant to the terms of such an Award. In the
event of a merger or consolidation where the Company is not the surviving
corporation, the surviving corporation shall be required to assume the
outstanding Awards which have not been canceled, and the Committee, in its sole
discretion, shall
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adjust the number of shares, and the Option price (if any), so as to neither
reduce or enlarge the rights of the Participant, including, but not limited to,
dividing the shares and the Option price (if any) by the exchange ratio.
Section 6. Shareholder Approval and Duration of Plan
6.1 Shareholder Approval. All Awards granted under this Plan are
subject to, and may not be exercised before, and will be rescinded and become
void in the absence of, the approval of this Plan by a majority of the
shareholders voting thereon at a meeting of shareholders, at which a quorum is
present, held prior to the first anniversary date of the Board meeting held to
approve this Plan.
6.2 Duration of Plan. The Plan shall remain in effect, subject to the
Board's right to earlier terminate pursuant to Section 10 hereof, until all
Stock subject to it shall have been purchased or acquired pursuant to the
provisions hereof. Notwithstanding the foregoing, no Option may be granted under
the Plan on or after the tenth (10th) Anniversary of the Effective Date.
Section 7. Stock Options
7.1 Grant of Options. Subject to the provisions of Sections 5 and 6,
Options may be granted to Participants at any time and from time to time as
shall be determined by the Committee, and for all purposes hereof, the date of
such grant shall be the date on which the Committee takes formal action to grant
an Option, provided that it is followed, as soon as reasonably practicable, by
written notice to the person receiving the Option. The Committee shall have
complete discretion in determining the number of Options granted to each
Participant and the terms and provisions thereof. The Committee may grant any
type of Option to purchase Stock that is permitted by law at the time of grant;
provided, however, that the aggregate Fair Market Value (determined at the time
the Option is granted) of the Stock, with respect to which all incentive stock
options granted under any plan of the Company are exercisable for the first time
by a Participant during any calendar year, may not exceed $100,000. Nothing in
this Section 7 of the Plan shall be deemed to prevent the grant of nonstatutory
stock options in amounts that exceed the maximum established by Section 422 of
the Code.
7.2 Option Agreement. Each Option shall be evidenced by an Option
agreement that shall specify the type of Option granted, the Option price, the
duration of the Option, the number of shares of Stock to which the Option
pertains, and such other provisions as the Committee shall determine.
7.3 Option Price. The Option price of each share of Stock subject to
each Option granted pursuant to this Plan shall be determined by the Committee
at the time the Option is granted and, in the case of incentive stock options,
shall not be less then 100% of the Fair Market Value of a share of Stock on the
date the Option is granted, as determined by the Committee. In the case of
incentive stock options granted to any person who owns, directly or indirectly,
Stock possessing more than ten percent (10%) of the total combined voting power
of all classes of Stock ("Ten Percent Owner"), the Option price shall not be
less than 110% of the Fair Market Value of a share of Stock on the date the
Option is granted. The Option price of each share of Stock subject to a
nonstatutory stock option under this Plan shall be determined by the Committee,
in its sole discretion, prior to granting the Option.
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7.4 Duration of Options. Each Option shall expire at such time as the
Committee shall determine at the time it is granted, provided, however, that no
incentive stock option shall be exercisable later than ten (10) years from the
date of its grant, and no incentive stock option granted to a Ten Percent Owner
shall be exercisable later than five (5) years from the date of its grant.
7.5 Exercise of Options. Options granted under the Plan shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall in each instance approve, which need not be the same for all
Participants. Unless otherwise expressly provided in the Option, no Option may
be exercised within six (6) months after the date of grant. Each Option that is
intended to qualify as an incentive stock option pursuant to Section 422 of the
Code shall comply with the applicable provisions of the Code pertaining to such
Options. Without limitation, the Committee may, in its sole discretion,
accelerate the date on which any Option may be exercised, or on which
restrictions on Restricted Stock shall lapse.
7.6 Payment. The Option price of Stock acquired upon exercise of any
Option, and applicable withholding as described in Sections 11.1 and 11.2, shall
be paid in full on the date of exercise, by certified or cashier's check, by
wire transfer, by money order, through a broker assisted exercise, with Stock
(but with Stock only if expressly permitted by the terms of the Option), or by a
combination of the above. If the Option Price is permitted to be, and is, paid
in whole or in part with Stock, the value of the Stock surrendered shall be its
Fair Market Value on the date surrendered. The proceeds from payment of Option
prices shall be added to the general funds of the Company and shall be used for
general corporate purposes. For purposes of this Section 7.6, "broker assisted
exercise" shall mean a special sale and remittance procedure pursuant to which
the Optionee shall concurrently provide irrevocable written instructions to (a)
a Committee designated brokerage firm to effect the immediate sale of the shares
and remit to the Company, out of the sale proceeds available on the settlement
date, sufficient funds to cover the aggregate Option price plus all applicable
withholding and employment taxes required, and (b) the Committee to deliver the
certificates for the shares directly to such brokerage firm in order to complete
the sale.
7.7 Restrictions on Stock Transferability. The Committee shall impose
such restrictions on any shares of Stock acquired pursuant to the exercise of an
Option under the Plan as it may deem advisable, including, without limitation,
restrictions under applicable federal securities law, under the requirements of
any stock exchange upon which such shares of Stock are then listed, and under
any blue sky or state securities laws applicable to such shares.
7.8 Termination of Employment Due to Death or Disability. Unless
otherwise expressly provided in the Option, if the employment of a Participant
is terminated by reason of death or Disability, the rights under any then
outstanding Option shall terminate upon the first to occur of (i) the expiration
date of the Option or (ii) the first anniversary of such date of termination of
employment.
7.9 Termination of Employment Other than for Death or Disability.
Unless otherwise expressly provided in the Option, if the employment of the
Participant shall terminate for any reason other than death or Disability, the
rights under any then outstanding Option shall terminate upon the first to occur
of (i) the expiration date of the Option or (ii) ninety (90) days after such
date of termination of employment.
7.10 Nontransferability of Options. Unless otherwise expressly provided
in the Option, no Option granted under the Plan may be sold, transferred
pledged, assigned, or otherwise alienated or
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hypothecated, otherwise than by will or by the laws of descent and distribution.
Further, all Options granted to a Participant under the Plan shall be
exercisable during his lifetime only by such Participant.
7.11 Cancellation. Unless otherwise expressly provided in the Option of
reference, in the event of a merger or consolidation where the Company is not
the surviving corporation (or survives only as the 80% or greater owned
subsidiary of another corporation), the Committee, in its sole discretion may
cancel, by giving written notice (a "Cancellation Notice"), effective
immediately prior to the consummation of such transaction, all or any of the
vested portion of any, or all, Options that remain unexercised on such date.
Such Cancellation Notice shall be given a reasonable period of time (but not
less than 15 days) prior to the proposed date of such cancellation, and may be
given either before or after shareholder approval (if any is required) of the
transaction.
Section 8. Restricted Stock
8.1 Grant of Restricted Stock. Subject to the provisions of Sections 5
and 6, the Committee, at any time and from time to time, may grant shares of
Restricted Stock under the Plan to such Participants and in such amounts as it
shall determine. Each grant of Restricted Stock shall be evidenced by a
Restricted Stock agreement. Without limitation, the Committee may accelerate the
date on which restrictions lapse with respect to any Restricted Stock.
8.2 Transferability. Except as provided in Sections 8.6 and 8.7 hereof,
the shares of Restricted Stock granted hereunder may not be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated for such period of
time as shall be determined by the Committee and shall be specified in the
Restricted Stock agreement, or upon earlier satisfaction of other conditions as
specified by the Committee in its sole discretion and set forth in the
Restricted Stock agreement.
8.3 Other Restrictions. The Committee may impose such other
restrictions on any shares of Restricted Stock granted pursuant to the Plan as
it may deem advisable including, without limitation, restrictions under
applicable federal or state securities laws, and may legend the certificates
representing Restricted Stock to give appropriate notice of such restrictions.
8.4 Voting Rights. Participants holding shares of Restricted Stock
granted hereunder may exercise full voting rights with respect to those shares
during the Period of Restriction.
8.5 Dividends and Other Distributions. During the Period of
Restriction, Participants holding shares of Restricted Stock granted hereunder
shall be entitled to receive all cash dividends distributed with respect to
those shares while they are so held.
8.6 Termination of Employment. Unless otherwise expressly provided in
the Restricted Stock agreement, in the event that a Participant terminates his
employment with the Company for any reason during the Period of Restriction
(including death), then any shares of Restricted Stock still subject to
restrictions at the date of such termination automatically shall be forfeited.
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Section 9. Rights of Employees
9.1 Employment. Nothing in the Plan shall interfere with or limit in
any way the right of the Company to terminate any Participant's employment at
any time, nor confer upon any Participant any right to continue in the employ of
the Company.
Section 10. Amendment, Modification and Termination of Plan
10.1 Amendment, Modification, and Termination of Plan. The Board at any
time may terminate, and from time to time may amend or modify the Plan, and may
amend or modify Awards hereunder; provided, however, that no amendment of the
Plan or of any Award hereunder, without approval of the shareholders within one
year after the adoption of such amendment, may (a) increase the aggregate number
of shares of Stock that may be issued under the Plan; (b) extend the term of the
Plan; or (e) materially modify the requirements as to eligibility to receive
Awards under the Plan. No amendment, modification, or termination of the Plan
shall in any manner adversely affect any Award theretofore granted under the
Plan, without the consent of the affected Participant(s).
Section 11. Miscellaneous Provisions
11.1 Tax Withholding. Without limitation, on the date an Award is taken
into a Participant's income, the Company shall have the right to withhold, or to
require a Participant to remit to the Company, an amount sufficient to satisfy
the Company's resulting federal, state, and local withholding and employment tax
requirements with respect to such Award.
11.2 Stock Withholding Elections. With the consent of the Committee, or
as expressly provided under the terms of the Award, a Participant may make an
irrevocable election to (a) have shares of Stock otherwise issuable thereunder
withheld, or (b) tender to the Company shares of Stock then held by the
Participant (whether received pursuant to (i) or (ii) or in any other
transaction) having an aggregate Fair Market Value sufficient to satisfy the
Company's minimum total federal, state and local income and employment tax
withholding obligations associated with the transaction. Such elections, if
available, must be made by a Participant on or prior to the tax date.
11.3 Severability. If any provision of this Plan, or any Award, is held
to be illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining provisions of this Plan or any Award, but such provision
shall be fully severable, and the Plan or Award, as applicable, shall be
construed and enforced as if the illegal or invalid provision had never been
included in the Plan or Award, as applicable.
11.4 Notice. Whenever any notice is required or permitted under this
Plan, such notice must be in writing and personally delivered or sent by mail or
delivery by a nationally recognized courier service. Any notice required or
permitted to be delivered under this Plan shall be deemed to be delivered on the
date on which it is personally delivered, or, if mailed, whether actually
received or not, on the third Business Day after it is deposited in the United
States mail, certified or registered, postage prepaid, addressed to the person
who is to receive it at the address that such person has previously specified in
accordance with this Subsection, or, if by courier, seventy-two (72) hours after
it is sent, addressed as described in this Subsection. The Company or the
Participant may change, at any time and from time to time, by written notice to
the other, the address that it or he had previously specified for receiving
notices; provided further, that a Participant who is not an Employee must file
such written
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notice with the Committee. Until changed in accordance with this Plan, the
Company and the Participant shall be deemed to have specified as its and his
address for receiving notices (i) as to the Company, the principal executive
offices of the Company, and (ii) as to the Participant, (A) where the
Participant is an Employee, the most current address of the Participant set
forth in the Company's employment records, and (B) where Participant is not an
Employee, the address set forth in the most recent notice. Any person entitled
to notice under this Plan may waive such notice. Without limiting the generality
of the forgoing, for all purposes hereof, the address of the Company shall be
the address of the Committee.
Section 12. Indemnification
12.1 Indemnification. Each person who is or shall have been a member of
the Committee or of the Board shall be indemnified and held harmless by the
Company against and from any loss, cost, liability or expense that may be
imposed upon or reasonably incurred by him in connection with or resulting from
any claim, action, suit or proceeding to which he may be a party or in which he
may be involved by reason of any action taken or failure to act under the Plan
made in good faith and against and from any and all amounts paid by him in
settlement thereof, with the Company's approval, or paid by him in satisfaction
of any judgment in any such action, suit or proceeding against him, provided he
shall give the Company an opportunity, at its own expense, to handle and defend
the same before he undertakes to handle and defend it on his own behalf. The
foregoing right of indemnification shall not apply to any acts of willful
misconduct by any member of the Committee or the Board. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification to
which such persons may be entitled under the Company's Charter or Bylaws, as a
matter of law, or otherwise, or any power that the Company may have to indemnify
them or hold them harmless.
Section 13. Requirements of Law
13.1 Requirements of Law. The granting of Awards and the issuance of
shares of Stock upon the exercise of an Option shall be subject to all
applicable laws, rules and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.
13.2 Governing Law. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of Maryland.
FELCOR LODGING TRUST INCORPORATED
By: /s/ LAWRENCE D. ROBINSON
----------------------------------------
Name: Lawrence D. Robinson
Title: Executive Vice President &
General Counsel
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[FELCOR LODGING TRUST LOGO]
FELCOR LODGING
TRUST INCORPORATED
545 E. JOHN CARPENTER
FRWY., SUITE 1300
IRVING, TEXAS 75062
PROXY
FELCOR LODGING TRUST INCORPORATED
545 E. JOHN CARPENTER FREEWAY, SUITE 1300, IRVING, TEXAS 75062
ANNUAL MEETING OF STOCKHOLDERS
MAY 14, 2002
The undersigned hereby appoints Thomas J. Corcoran, Jr. and Lawrence D.
Robinson, or either of them, with full power of substitution in each, proxies
(and if the undersigned is a proxy, substitute proxies) to vote all common stock
of the undersigned in FelCor Lodging Trust Incorporated at the Annual Meeting of
Stockholders to be held at the offices of the corporation, 545 E. John Carpenter
Freeway, Suite 1300, Irving, Texas, at 9:00 a.m., Central Time, on May 14, 2002
and at any adjournments thereof, as specified on the reverse side.
---------------------------------------------------
PLEASE SIGN AND DATE ON REVERSE SIDE OF THIS PROXY
---------------------------------------------------
FELCOR
LODGING
TRUST VOTE BY MAIL
SUNTRUST BANK Mark, sign and date your proxy card and
P.O. BOX 4625 return it in the postage-paid envelope
ATLANTA, GA 30302 we have provided or return it to FelCor
Lodging Trust Incorporated, c/o ADP, 51
Mercedes Way, Edgewood, NY 11717.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: FELCOR KEEP THIS PORTION FOR YOUR RECORDS
- -------------------------------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
===============================================================================================================================
FELCOR LODGING TRUST INCORPORATED
VOTE ON DIRECTORS
1. ELECTION OF THREE CLASS II DIRECTORS AND ONE FOR WITHHOLD FOR ALL To withhold authority to vote, mark "For All Except"
CLASS III DIRECTOR ALL ALL EXCEPT and write the nominee's number on the line below.
Nominees: 01)Thomas J. Corcoran, Jr. (Class II) [ ] [ ] [ ]
02)Donald J. McNamara (Class II) --------------------------------------------------
03)Richard C. North (Class II)
04)Robert A. Mathewson (Class III)
VOTE ON PROPOSAL FOR AGAINST ABSTAIN
2. ADOPTION OF THE 2001 RESTRICTED STOCK AND STOCK OPTION PLAN [ ] [ ] [ ]
3. The proxies (and if the undersigned is a proxy, any substitute proxies) are
authorized to vote upon any other matter that is properly brought before the
meeting in the manner directed by FelCor's Board of Directors.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy will
be voted FOR the election of the nominees for Class II directors and Class III
director and FOR the approval of the 2001 Restricted Stock and the Stock Option
Plan.
Please sign exactly as name appears at right. When
shares are held by joint tenants, both should
sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give
full title as such. If a corporation, please sign
in full corporation name by President or other
authorized officer. If a partnership, please sign in
partnership name by authorized person.
THIS PROXY IS SOLICITED BY THE BOARD OF
DIRECTORS AND THE MATTERS SET FORTH HEREIN WERE
PROPOSED BY FELCOR. IF NO SPECIFICATION IS MADE,
THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2.
- ----------------------------------------- -------------------------------------
Signature [PLEASE SIGN WITHIN BOX] DATE Signature (Joint Owners) DATE
===============================================================================================================================
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