SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
JOHN Q. HAMMONS HOTELS, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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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.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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4) Date Filed:
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JOHN Q. HAMMONS HOTELS, INC.
300 JOHN Q. HAMMONS PARKWAY
SPRINGFIELD, MISSOURI 65806
(417) 864-4300
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 11, 2004
TO THE SHAREHOLDERS OF
JOHN Q. HAMMONS HOTELS, INC.
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders (the
"annual meeting") of John Q. Hammons Hotels, Inc. (the "Company") will be held
on Tuesday, May 11, 2004, at 9:00 a.m., local time, at the University Plaza
Hotel, 333 John Q. Hammons Parkway, Springfield, Missouri for the following
purposes:
1. Election of Directors. To elect two directors, each for a three-year
term (Proposal One);
2. Ratification of Appointment of Auditors. To ratify the appointment by
the board of directors of the firm of Deloitte & Touche LLP as independent
auditors of the Company for the fiscal year ending December 31, 2004 (Proposal
Two); and
3. Other Business. To transact such other business as may properly come
before the meeting or any adjournments thereof.
The board of directors of the Company has fixed the close of business on
March 25, 2004, as the record date for the determination of shareholders
entitled to notice of and to vote at the annual meeting. Only shareholders of
record at the close of business on that date will be entitled to notice of and
to vote at the annual meeting or any adjournments or postponements thereof.
Sincerely,
John Q. Hammons
Chairman of the Board
Springfield, Missouri
April 8, 2004
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR NOT YOU
PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH REQUIRES
NO POSTAGE IF MAILED IN THE UNITED STATES.
JOHN Q. HAMMONS HOTELS, INC.
300 JOHN Q. HAMMONS PARKWAY
SPRINGFIELD, MISSOURI 65806
(417) 864-4300
PROXY STATEMENT
FOR
ANNUAL MEETING OF JOHN Q. HAMMONS HOTELS, INC. SHAREHOLDERS
TO BE HELD ON MAY 11, 2004
INTRODUCTION
In this Proxy Statement, when we use the term "Company," we mean (i) John
Q. Hammons Hotels, Inc., a Delaware corporation, (ii) John Q. Hammons Hotels,
L.P., a Delaware limited partnership of which John Q. Hammons Hotels, Inc. is
the sole general partner, and (iii) Hammons, Inc., a Missouri corporation, as
predecessor general partner, collectively, or, as the context may require, John
Q. Hammons Hotels, Inc. only. When we use the term "Partnership" we mean John Q.
Hammons Hotels, L.P., a Delaware limited partnership.
GENERAL
We are sending this Proxy Statement to our shareholders as part of the
solicitation of proxies by the board of directors for use at our annual meeting
of shareholders. The meeting will be held at the University Plaza Hotel, 333
John Q. Hammons Parkway, Springfield, Missouri at 9:00 a.m. local time on May
11, 2004. At the annual meeting, you will be asked to elect two (2) members of
the board of directors (Proposal One), to ratify the appointment by the board of
directors of the firm of Deloitte & Touche LLP as the Company's independent
auditors for the fiscal year ending December 31, 2004 (Proposal Two), and to
transact such other business as may properly come before the meeting. We are
first mailing this Proxy Statement, together with the enclosed proxy card, to
shareholders on or about April 8, 2004.
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
The close of business on March 25, 2004, is the record date for
determination of the shareholders entitled to vote at the annual meeting. This
means that only holders of record of shares of our common stock at the close of
business on that date may vote at the annual meeting. Each share of class A
common stock has one vote and each share of class B common stock has 50 votes.
Based on the number of annual reports requested by brokers, we estimate that we
have approximately 1,100 beneficial owners of our class A common stock. On the
record date, we had approximately 250 holders of record of the 4,834,129 shares
of class A common stock outstanding. One person holds all 294,100 shares of
class B common stock outstanding. Holders of at least a majority of the total
number of outstanding shares of common stock entitled to vote must be present
(in person or by proxy) at the annual meeting to constitute a quorum. Inspectors
of election appointed by the board of directors will tabulate shareholders'
votes. Abstentions and broker non-votes will be treated as shares that are
present and entitled to vote for purposes of determining a quorum at the annual
meeting, but will not be counted as votes cast for or against any matter
presented at the annual meeting.
If you properly execute and return the enclosed proxy in time to be voted
at the annual meeting, your shares will be voted in accordance with the
instructions you mark on the proxy. Executed but unmarked proxies will be voted
FOR the election of the two (2) nominees for election to the board of directors
and FOR the ratification of the appointment of Deloitte & Touche LLP as our
independent auditors for the fiscal year ending December 31, 2004. We do not
know of any other matters that are to come before our annual meeting. If any
other matters are properly brought before the annual meeting, the persons named
in the proxy will vote the shares represented by such proxy as determined by a
majority of the board of directors.
Your presence at the annual meeting will not automatically revoke your
proxy. You may, however, revoke your proxy at any time before it is exercised by
filing a written notice of revocation with, or by delivering a duly executed
proxy bearing a later date, to Debra Mallonee Shantz, General Counsel, John Q.
Hammons Hotels, Inc., 300 John Q. Hammons Parkway, Suite 900, Springfield,
Missouri 65806, or by appearing at the annual meeting and voting in person.
The Company will pay the cost of soliciting proxies. Our directors,
officers and employees may assist in the solicitation of proxies by mail,
telephone, telegraph, facsimile and personal interview without additional
compensation. We also will request persons, firms and companies holding shares
in their names or in the name of their nominees, which are beneficially owned by
others, to send proxy materials to and obtain proxies from such beneficial
owners. We will reimburse such persons for their reasonable expenses they incur.
A copy of our annual report to stockholders for the fiscal year ended
January 2, 2004 accompanies this Proxy Statement. WE ARE REQUIRED TO FILE AN
ANNUAL REPORT FOR OUR FISCAL YEAR ENDED JANUARY 2, 2004 ON FORM 10-K WITH THE
SECURITIES AND EXCHANGE COMMISSION (THE "SEC"). YOU MAY OBTAIN, FREE OF CHARGE,
A COPY OF THE FORM 10-K (WITHOUT EXHIBITS) BY WRITING TO INVESTOR RELATIONS,
JOHN Q. HAMMONS HOTELS, INC., 300 JOHN Q. HAMMONS PARKWAY, SUITE 900,
SPRINGFIELD, MISSOURI 65806.
We will have a list of shareholders of record entitled to vote at our
annual meeting available for inspection by any shareholder for any purpose
germane to the meeting during ordinary business hours for 10 days prior to the
meeting at our office at 300 John Q. Hammons Parkway, Suite 900, Springfield,
Missouri 65806.
ELECTION OF DIRECTORS
(PROPOSAL ONE)
At our annual meeting, two (2) directors will be elected, each for a
three-year term. Unless you specify otherwise on your proxy, the persons named
in the proxy plan to vote the shares represented by your properly executed proxy
for the election as directors of the two persons named as nominees. We believe
the nominees will stand for election and will serve if elected as directors. If
any director nominee fails to stand for election or is unable to accept
election, the proxies will be voted for the election of such other person as the
board of directors may recommend.
Under our Bylaws, the board of directors currently is comprised of eight
(8) persons, divided into three classes. The term of office of only one class of
directors expires in each year, and their successors are elected for terms of
three years. There is no cumulative voting for election of directors. The two
(2) nominees receiving the greatest number of votes cast for the election of
directors at the annual meeting will become directors.
INFORMATION AS TO NOMINEES AND CONTINUING DIRECTORS
We list below the board of directors' nominees for election as directors
and those directors who will continue to serve after the annual meeting. We also
provide certain other information about each person's age, principal occupation
or employment during the past five years, the periods during which they have
served as directors and positions they currently hold with us.
Director Expiration
Age Since of Term Position(s) Held with Company
--- ----- ------- -----------------------------
NOMINEES FOR 3-YEAR TERM
Donald H. Dempsey 59 1999 2004 Director
John E. Lopez-Ona 46 1996 2004 Director
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CONTINUING DIRECTORS
Jacqueline A. Dowdy 60 1994 2005 Director and Secretary
David C. Sullivan 64 1999 2005 Director
Daniel L. Earley 61 1994 2006 Director
John Q. Hammons 85 1994 2006 Director, Chairman and Chief Executive
Officer
James F. Moore 61 1995 2006 Director
William J. Hart 63 1994 2005 Director
Jacqueline A. Dowdy has been the Secretary and director of the Company
since 1994. She has been active in Mr. Hammons' hotel operations since 1981. She
is an officer and director of several affiliates of the Company.
William J. Hart has been a director of the Company since 1994. He is a
member of the law firm of Husch & Eppenberger, LLC, formerly Farrington &
Curtis, P.C., a position he has held since 1970. Mr. Hart's firm performs legal
services on a regular basis for the Company and personally for Mr. Hammons.
David C. Sullivan became a director of the Company in May 1999. From
December 1997 until May 2000, Mr. Sullivan served as Chairman, Chief Executive
Officer and a director of ResortQuest International, a company listed on the New
York Stock Exchange that provides vacation rental and property management
services. From April 1995 to December 1997, Mr. Sullivan was Executive Vice
President and Chief Operating Officer of Promus Hotel Corporation, a publicly
traded hotel franchisor, manager and owner of hotels whose brands include
Hampton Inn, Homewood Suites and Embassy Suites. From 1993 to 1995, Mr. Sullivan
was the Executive Vice President and Chief Operating Officer of the Hotel
Division of The Promus Companies Incorporated or PCI. He was the Senior Vice
President of Development and Operations of the Hampton Inn/Homewood Suites
Division of PCI from 1991 to 1993. From 1990 to 1991, Mr. Sullivan was the Vice
President of Development of the Hampton Inn Hotel Division of PCI. Mr. Sullivan
serves on the board of directors of Winston Hotels, Inc.
Donald H. Dempsey became a director of the Company in August 1999. From
July 1998 until January 2004, Mr. Dempsey served as Executive Vice President,
Secretary, Treasurer, Chief Financial Officer and Director of Equity Inns, Inc.
Equity Inns, Inc., is a large lodging real estate investment trust headquartered
in Germantown, Tennessee. Mr. Dempsey has more than 30 years' experience in
corporate and financial management within the hotel industry. Before he joined
Equity Inns in July 1998, Mr. Dempsey served as Executive Vice President and
Chief Financial Officer of Choice Hotels International, Inc., a publicly traded
hotel franchisor. From April 1995 to December 1997, Mr. Dempsey served as Senior
Vice President and Chief Financial Officer of Promus Hotel Corporation. From
October 1993 to April 1995, he served as Senior Vice President of Finance and
Administration of the Hotel Division of The Promus Companies Incorporated, and
from December 1991 to October 1993, as Vice President, Finance, of the Hampton
Inn/Homewood Suites Hotel Division of The Promus Companies Incorporated. Mr.
Dempsey served in various other senior financial and development officer
positions with the Hotel Division of The Promus Companies Incorporated and its
predecessor companies from 1983 to 1991. From 1969 to 1983, Mr. Dempsey held
various corporate and division financial management and administrative positions
with Holiday Inns, Inc.
Daniel L. Earley has been a director of the Company since 1994. Since
1985, Mr. Earley has been President, Chief Executive Officer and a director of
First Clermont Bank, a community bank located in Milford, Ohio, which is owned
by Mr. Hammons.
John Q. Hammons is Chairman, Chief Executive Officer, a director and
founder of the Company. Mr. Hammons has been actively engaged in the
acquisition, development and management of hotel properties since 1959. From
1959 through 1969, Mr. Hammons and a business partner developed 34 Holiday Inn
franchises, 23 of which were sold in 1969 to Holiday Inns, Inc. Since 1969, Mr.
Hammons has developed 110 hotels on a nationwide
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basis, primarily under the Holiday Inn and Embassy Suites Hotels tradenames. Mr.
Hammons is the controlling shareholder of the Company. See "Security Ownership
of Management."
John E. Lopez-Ona became a director of the Company in May 1996. He was a
managing director of Kidder Peabody & Company, Inc., an investment banking firm,
from March 1990 through March 1995. Since June 1995, Mr. Lopez-Ona has been the
President of Anvil Capital, Inc., a firm he owns, which specializes in principal
investment. Since 1998, Mr. Lopez-Ona has been the Chairman and CEO of Six Sigma
Qualtec, a premier training, consulting and technology solutions company for
performance improvement methodologies.
James F. Moore became a director of the Company in May 1995. Mr. Moore is
Managing Partner, American Products LLC, a privately owned manufacturing company
serving the telecommunications industry located in Strafford, Missouri. From
1987 until 2000, he served as Chairman, Chief Executive Officer and a director
of Champion Products, Incorporated, the predecessor company to American Products
LLC. Prior to 1987, Mr. Moore served as President of the Manufacturing Division
of Service Corporation International, a company listed on the New York Stock
Exchange.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THE ELECTION OF ITS NOMINEES AS DIRECTORS.
DIRECTOR COMPENSATION
For 2003, each non-employee director received:
- $1,000 for each regular board meeting attended and $500 for each
regular committee meeting attended ($750 per meeting for the
committee chair),
- a cash payment of $10,000 (other than Mr. Earley, who declined the
cash payment),
- 2,105 shares of class A common stock with a fair market value equal
to $10,000 on the date of payment (other than Mr. Earley, who
declined the share grant), and
- an option to purchase 10,000 shares of the Company's class A common
stock at a per share exercise price of $4.75, exercisable in four
equal annual installments, beginning May 14, 2004, and expiring May
13, 2013.
The stock and options were issued pursuant to the 1999 Non-Employee
Director Stock and Stock Option Plan. Employee directors are not compensated for
their services as directors or committee members.
CORPORATE GOVERNANCE AND OTHER MATTERS
DIRECTOR INDEPENDENCE. The board of directors has determined that five of
its current directors, John E. Lopez-Ona, James F. Moore, David C. Sullivan,
Donald H. Dempsey and William J. Hart, are "independent" within the meaning of
the American Stock Exchange listing standards. This determination has been made
based on written responses provided by each of the directors in a questionnaire
regarding relationships and possible conflicts of interest. Mr. Hart and his law
firm provide services to the Company, Mr. Hammons and certain of his affiliates.
The board of directors has determined that this legal representation of Mr.
Hammons and the Company does not impair Mr. Hart's independence because the duty
of Mr. Hart and his firm as counsel to the Company is to the Company in its
entirety, including all of the shareholders, and not to Mr. Hammons. In the
event of a conflict between Mr. Hammons and the Company, Mr. Hart and his firm
could not represent either party. In addition, the board considered Mr. Hart's
fiduciary duties as a director, and his past performance on the board, and
concluded that Mr. Hart had demonstrated an independence of thought and a
commitment to the best interest of all shareholders.
SELECTION OF NOMINEES AND NOMINATIONS BY SHAREHOLDERS. In March of 2004,
the board of directors established a nominating committee composed of three
independent directors (as defined in the American Stock Exchange listing
standards) to select nominees for election as directors. The board also
committed to adopting a
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nominating committee charter governing the nomination process, which will be
posted on our website at WWW.JQHHOTELS.COM/COMMITTEECHARTERS when it is adopted.
The nominating committee considers director candidates recommended by any
shareholder in writing. A shareholder's written recommendation must be received
by the committee in a timely manner, but no later than 90 days before the annual
meeting, and contain the name of the candidate, a detailed description of his or
her experience and qualifications and any other information that may assist the
nominating committee in its evaluation of the candidate. The recommendation
should be addressed to the Nominating Committee of the Board of Directors c/o
Chief Financial Officer, John Q. Hammons Hotels, Inc., 300 John Q. Hammons
Parkway, Suite 900, Springfield, Missouri 65806.
The nominating committee uses the same process to review and evaluate all
potential director nominees, regardless of who recommends the candidate, and
considers the candidate's qualifications in light of the criteria established
for board members, as well as any special skills the committee believes are
appropriate, in light of the credentials of the other directors. The Company has
never used a director search firm to locate potential board nominees in the
past, although the nominating committee is free to do so in the future if it so
chooses.
Criteria and minimum qualifications for new board members include a high
level of integrity and ability, independence from the Company and management
under the criteria established by the American Stock Exchange listing standards
and operating company experience as a member of senior management (operational
or financial). The nominating committee also seeks individuals with the time and
commitment necessary to perform the duties of a board member, hospitality
industry experience or knowledge, and other special skills that complement or
supplement the skill sets of current directors.
In addition to recommending potential nominees to the board, our Bylaws
permit shareholders to nominate persons directly for directors if the
nominations are made in a timely written notice. We must receive the notice at
our principal executive offices not less than 120 days and not more than 180
days before the meeting date (if at least 130 days' notice or prior public
disclosure of the annual meeting date is made). If less than 130 days' notice or
public disclosure of the meeting date is given to shareholders, we must receive
notice not later than the close of business on the 10th day following the day on
which such notice of the annual meeting date was mailed or such public
disclosure was made. A shareholder's notice of nomination must include certain
information (specified in Section 3.5 of our Bylaws) concerning each proposed
nominee and the nominating shareholder. We have not received any nominations for
directors from shareholders for the 2004 annual meeting.
DIRECT COMMUNICATIONS WITH THE BOARD OF DIRECTORS. Our board of directors
has established the following methods for shareholders to communicate directly
with the board of directors or any of its members:
- By Mail. Letters may be addressed to the board of directors or to an
individual board member as follows:
The Board of Directors (or name of individual director)
c/o Office of the Chief Financial Officer
John Q. Hammons Hotels, Inc.
300 John Q. Hammons Parkway, Suite 900
Springfield, Missouri 65806
The Chief Financial Officer will forward (unopened) any
correspondence addressed as set forth directly to the named board member,
or if addressed to the entire board of directors, to the chair of the
audit committee.
- By Telephone. The Company has established a safe and confidential
process for reporting, investigating and resolving employee and
other third party concerns related to accounting, auditing and
similar matters under the Sarbanes-Oxley Act of 2002. Shareholders
may also use this Report Line to communicate with one or more of the
Company's directors. The Report Line is operated by an independent,
third party service. In the United States, the Report Line can be
reached by dialing toll-free 1-888-337-7507.
5
BOARD COMMITTEES. Three of our four board committees operates under a
charter adopted by the board of directors. Those charters are posted on our
website at WWW.JQHHOTELS.COM/COMMITTEECHARTERS, and the charter for the
nominating committee will be posted on that site when adopted. In addition, our
current audit committee charter is attached as appendix A to this proxy
statement.
The audit committee is composed of Messrs. Moore, Dempsey and Lopez-Ona.
During the fiscal year ended January 2, 2004, they met six times. The audit
committee reviews the scope and results of the independent annual audit. The
audit committee also reviews the scope and results of audits performed by the
Company's internal auditors. The board of directors has determined that all
three members of the audit committee are "independent," as such term is defined
by the American Stock Exchange listing standards. In addition, Donald H. Dempsey
and John E. Lopez-Ona are both "audit committee financial experts," as defined
by SEC rules. The board determined that Mr. Lopez-Ona qualifies as an audit
committee financial expert on the basis of his relevant experience, and
determined that he has demonstrated the required attributes of an audit
committee financial expert during his five-year tenure on our audit committee.
In addition to his undergraduate degree in accounting and his graduate degree
(MBA), Mr. Lopez-Ona spent five years at a Fortune 100 conglomerate conducting
operation audits and ten years with large New York-based investment banks
managing transactions involving large public and private companies.
The members of the finance committee are Messrs. Earley, Dempsey, Sullivan
and Mrs. Dowdy. The finance committee oversees the Company's finance, accounting
and development activities, and reviews and makes recommendations to the board
concerning all real property acquisitions of $1,000,000 or more, agreements with
annual obligations of $250,000 or more, financings of $1,000,000 or more, any
agreement or arrangements with Company insiders, sales or purchases of hotels or
associated properties, the Company's annual budget and the refinancing of the
Company's bonds and bank debt. After finance committee review, board policy
provides that all such corporate commitments must be reviewed and approved by
the board. During the fiscal year ended January 2, 2004, the finance committee
held four meetings.
The compensation committee establishes the compensation for our CEO and
our executive officers, and also reviews employee compensation and makes
recommendations to the board regarding changes in compensation. The committee
administers our stock option plan and makes option grants. During the fiscal
year ended January 2, 2004, the compensation committee held three meetings. The
members of the compensation committee are Messrs. Hart, Moore and Sullivan. The
board of directors has determined that all three members of the compensation
committee are "independent," as such term is defined by the American Stock
Exchange listing standards.
In March of 2004, the board established a nominating committee, composed
of Messrs. Hart, Moore and Sullivan. That committee selected the nominees for
re-election at the 2004 annual meeting of shareholders.
MEETINGS OF THE BOARD OF DIRECTORS AND THE SHAREHOLDERS. As a policy of
the board of directors, all directors are expected to attend all board and
relevant committee meetings, as well as our annual shareholder meeting, if
possible. All of our directors attended the 2003 annual shareholders meeting.
During the fiscal year ended January 2, 2004, our board of directors held
four meetings. Each director attended all board meetings, except for Mr. Hammons
who attended three of the four board meetings and Mr. Lopez-Ona who attended two
of the four board meetings, and each director attended all meetings of each
standing committee of which he or she was a member, except for Mr. Lopez-Ona who
attended four of the six audit committee meetings.
CODE OF ETHICS. We have adopted a code of ethics that applies to all of
our directors, officers and employees, including our chief executive officer,
principal financial officer and principal accounting officer. Our code of ethics
is posted on our Internet website at WWW.JQHHOTELS.COM/CODEOFETHICS. We intend
to post any amendments to or waivers from our code of ethics, which must be
approved by the board of directors on our Internet website at
WWW.JQHHOTELS.COM/AMENDMENTS. You also may obtain, free of charge, a copy of our
code of ethics by writing to Investor Relations, John Q. Hammons Hotels, Inc.,
300 John Q. Hammons Parkway, Suite 900, Springfield, Missouri 65806.
6
MANAGEMENT
The following is a biographical summary of the experience of our executive
officers and other key officers.
John Q. Hammons, age 85, is the Chairman, Chief Executive Officer, a
director and founder of the Company. Mr. Hammons has been actively engaged in
the development, management and acquisition of hotel properties since 1959. From
1959 through 1969, Mr. Hammons and a business partner developed 34 Holiday Inn
franchises, 23 of which were sold in 1969 to Holiday Inns, Inc. Since 1969, Mr.
Hammons has developed over 110 hotels on a nationwide basis, primarily under the
Holiday Inn and Embassy Suites Hotels trade names.
Lou Weckstein, age 67, is President of the Company. Prior to joining the
Company in September 2001, Mr. Weckstein served for ten years as Senior Vice
President, Hotel Operations, for Windsor Capital Group, a Los Angeles-based
hotel management and development company. Prior to Windsor Capital Group, Mr.
Weckstein served eight years as Vice President of Operations for Embassy Suites,
Inc. Over his career, Mr. Weckstein spent numerous years as Vice
President-Operations for Ramada Inns, Inc. and Vice President-Operations for
Sheraton Inns, Inc. He began his career in the hospitality industry as a hotel
manager in Cleveland, Ohio.
Paul E. Muellner, age 47, is Executive Vice President and Chief Financial
Officer of the Company. He has been the Chief Financial Officer of the Company
since 2000 and an Executive Vice President since 2003. From 1998 through 2000,
Mr. Muellner served as our Vice President and Corporate Controller. Prior to
joining the Company in June of 1998, Mr. Muellner was Vice President of Finance
for Carnival Hotels. He also served as Operations Controller at Omni Hotels as
well as positions with Red Lion Inns and Marriott Corporation.
Debra M. Shantz, age 40, is Senior Vice President and General Counsel of
the Company. She joined the Company in May 1995 as general counsel. Prior
thereto, Ms. Shantz was a partner of Farrington & Curtis, P.C. (now Husch &
Eppenberger, LLC), a law firm which serves as primary outside counsel for us and
Mr. Hammons, where she practiced primarily in the area of real estate law. Ms.
Shantz had been with that firm since 1988.
William A. Mead, age 50, is Regional Vice President, Eastern Region, of
the Company. He joined the Company in that capacity in 1994 from Davidson
Hotels, where he had been a general manager.
Pat A. Shivers, age 52, has served as Senior Vice President and Corporate
Controller of the Company since 2001. Prior to that, he served as Senior Vice
President of Administration and Control. He has been active in Mr. Hammons'
hotel operations since 1985. Prior thereto, he had served as Vice President of
Product Management in Winegardner & Hammons, Inc., a hotel management company.
Steven E. Minton, age 52, has served as Senior Vice President,
Architecture, of the Company since 1993. He joined the Company as a corporate
architect in 1985. Prior to that time, Mr. Minton was a project manager with the
firm of Pellham and Phillips working on various John Q. Hammons projects.
Jacqueline A. Dowdy, age 60, has been the Secretary and a director of the
Company since 1989. She has been active in Mr. Hammons' hotel operations since
1981. She is an officer of several affiliates of the Company. We describe these
affiliations under "Certain Relationships and Related Transactions."
L. Scott Tarwater, age 55, has been Senior Vice President of Sales and
Marketing of the Company since March of 2004. He joined the Company as Vice
President of Sales and Marketing in September 2000 from Windsor Capital Group,
in Los Angeles, California, where he served as Senior Vice President, Sales and
Marketing, for ten years. Prior to that time, Mr. Tarwater served as Senior
Director, Sales and Marketing, for Embassy Suites, Inc., Irving, Texas.
John D. Fulton, age 53, is Vice President, Interior Design, of the
Company. He joined the Company in 1989 from Integra/Brock Hotel Corporation,
Dallas, Texas, where he had been Director of Design and Purchasing for ten
years.
Kent S. Foster, age 44, is Vice President, Human Resources, of the
Company. He joined the Company in 1999 from Dayco Products, Inc. in Michigan
where he served as Director and Manager, Human Resources. Prior
7
thereto, Mr. Foster served as Assistant Vice President and Director, Human
Resources, for Great Southern Savings & Loan Association, Springfield, Missouri.
William T. George, Jr., age 52, is Vice President, Capital Planning and
Asset Management, of the Company. He joined the Company in 1994 from Promus
Hotel Corporation, where he had been Director of Capital Refurbishment.
EXECUTIVE COMPENSATION
CASH COMPENSATION
The following table sets forth the salary compensation, cash bonus and
certain other forms of compensation paid for services rendered in all capacities
during the 2003, 2002 and 2001 fiscal years to the Chief Executive Officer of
the Company and the four other most highly compensated executive officers of the
Company serving at the end of the 2003 fiscal year (the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION AWARDS
----------------------- ---------------------------------
ALL OTHER
NAME AND PRINCIPAL POSITIONS FISCAL YEAR SALARY ($) BONUS ($) COMPENSATION ($)(a) SECURITIES UNDERLYING OPTIONS (#)
- ---------------------------- ----------- ---------- --------- ------------------- ---------------------------------
John Q. Hammons 2003 359,000 200,130 - 35,000(d)
Chairman of the Board and 2002 342,500 120,000 - -
Chief Executive Officer 2001 315,000 110,000 - -
Louis Weckstein(b) 2003 330,381 184,972 6,603 20,000(d)
President 2002 309,131 105,600 3,338 -
2001 88,300 31,090 - 100,000(e)
Paul E. Muellner 2003 202,545 99,078 3,088 25,000(d)
Executive Vice President and 2002 177,545 79,000(f) 3,570 -
Chief Financial Officer 2001 165,000 44,000 3,225 -
Debra M. Shantz 2003 166,717 72,757 3,238 15,000(d)
Senior Vice President and 2002 160,839 66,500(g) 3,668 -
General Counsel 2001 153,100 44,000 3,047 -
William A. Mead(c) 2003 166,600 40,000 2,469 15,000(d)
Regional Vice President 2002 162,891 63,386 3,062 -
Eastern Region 2001 160,000 40,000 3,000 -
(a) Matching contributions to 401(k) Plan.
(b) Joined the Company September 17, 2001. Salary does not include $270,000,
$267,083 and $62,500 paid personally by Mr. Hammons in 2003, 2002 and
2001, respectively. Bonuses do not include $100,000 paid by Mr. Hammons
for 2002 in five equal monthly installments beginning March 1, 2003.
(c) Salary does not include $65,000, $65,000 and $65,000 paid personally by
Mr. Hammons, in 2003, 2002 and 2001, respectively.
(d) Comprised of options with an exercise price of $4.75 per share.
(e) Comprised of options with an exercise price of $5.15 per share.
(f) Includes a special one-time bonus of $25,000 for work related to
refinancing the Company's bonds.
(g) Includes a special one-time bonus of $17,500 for work related to
refinancing the Company's bonds.
8
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information regarding each stock option
granted during fiscal year 2003 to each of the named executive officers.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE AT ASSUMED
RATES OF STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM (b)(c)
--------------------------------------------------------------------------- -----------------------
% OF TOTAL OPTIONS
NUMBER OF GRANTED TO
SECURITIES UNDERLYING EMPLOYEES IN EXERCISE PRICE EXPIRATION
NAME OPTIONS GRANTED (#)(a) FISCAL YEAR ($/SHARE) DATE 5%($) 10%($)
---- ---------------------- ------------------ -------------- ----------- ---------- ----------
John Q. Hammons 35,000 7.4% $4.75 5/13/2013 $ 104,554 $ 264,960
Louis Weckstein 20,000 4.2% $4.75 5/13/2013 $ 59,745 $ 151,406
Paul E. Muellner 25,000 5.3% $4.75 5/13/2013 $ 74,681 $ 189,257
Debra M. Shantz 15,000 3.2% $4.75 5/13/2013 $ 44,809 $ 113,554
William A. Mead 15,000 3.2% $4.75 5/13/2013 $ 44,809 $ 113,554
All Other Employees 364,250 76.7% $4.75 5/13/2013 $1,088,106 $2,757,473
(a) Awarded on May 14, 2003.
(b) No gain to the optionees is possible without appreciation in the stock
price which will benefit all shareholders commensurately. The dollar
amounts under these columns are in result of calculations at the 5% and
10% assumption rates set by the SEC and therefore are not intended to
forecast possible future appreciation of the Company's stock price or to
establish any present value of the options.
(c) Realizable values are computed based on the number of options granted in
2003 and still outstanding at year-end.
FISCAL YEAR-END OPTION VALUES
The following table includes the number of shares covered by both
exercisable and unexercisable stock options as of January 2, 2004 and the values
of "in-the-money" options, which represent the positive spread between the
exercise price of any such option and the fiscal year-end value of the common
stock.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS (1)(2)
ACQUIRED ON VALUE ------------------------------ -----------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ --------- ----------- ------------- ----------- -------------
John Q. Hammons - - 275,000 60,000 $142,500 $122,750
Louis Weckstein - - 50,000 70,000 $87,500 $130,500
Paul E. Muellner - - 32,500 32,500 $42,750 $68,000
Debra M. Shantz - - 92,500 22,500 $42,750 $46,500
William A. Mead - - 55,000 20,000 $28,500 $41,750
(1) Calculated based upon the excess of the closing price of the Company's
class A common stock as reported on the American Stock Exchange on January
2, 2004, over the exercise price per share of the stock options ($4.75 for
the options granted in 2003, $5.15 for the options granted in 2001 and
$5.00 for the options granted in
9
2000). Does not include the stock options granted in 1998, as the exercise
price per share of those stock options ($7.375) is greater than the $6.90
closing price on January 2, 2004, and so these options are not "in the
money."
(2) All of the 1998 options are currently exercisable, seventy-five percent of
the 2000 options are currently exercisable, fifty percent of the 2001
options are currently exercisable and none of the 2003 options are
currently exercisable.
401(K) PLAN
Effective January 1, 1996, we adopted a contributory retirement plan (the
"401(k) Plan") for our employees that currently requires employees to be 21
years of age and have at least 6 months of service to participate. The 401(k)
Plan is designed to provide tax-deferred income to employees in accordance with
the provisions of Section 401(k) of the Internal Revenue Code of 1986. The
401(k) Plan provides that we will make a matching contribution to each
participant's account equal to 50% of such participant's eligible contributions
up to a maximum of 3% of such participant's annual compensation.
On March 25, 2004, the 401(k) Plan held 144,965 shares of the class A
common stock. The administrator has instructed us that he will vote all shares
held in the 401(k) Plan "FOR" the director nominees listed in Proposal One and
"FOR" Proposal Two.
EMPLOYMENT AGREEMENTS
We entered into an employment agreement with Lou Weckstein, our President,
effective September 17, 2001. Mr. Weckstein's base salary under the agreement is
$300,000 per year, with such annual increases in compensation as may be
determined by the compensation committee of the Company. He also may participate
in incentive or supplemental compensation plans for which he is eligible. The
compensation committee of the Company may award him a cash bonus based upon the
bonus plan for our other executive officers. Either party may terminate the
agreement at any time. Mr. Hammons and Mr. Weckstein also have a verbal
agreement, under which Mr. Hammons has agreed to pay to Mr. Weckstein, for
services he performs unrelated to our business, the difference between his
annual salary from the Company and $600,000, up to a maximum of $270,000 per
year.
We entered into an employment agreement with Paul Muellner, our Chief
Financial Officer, on December 1, 2003. This agreement entitles Mr. Muellner to
an annual base salary of $210,000 and other benefits generally available to the
Company's executive officers, including participation in incentive or
supplemental compensation plans for which he is eligible. The compensation
committee of the Company may award him a cash bonus based upon the bonus plan
for our other executive officers and stock options pursuant to the Company's
1994 Stock Option Plan. In the event Mr. Muellner is terminated without cause or
there is a change-in-control of the Company, the Company will continue to pay
his base salary and COBRA payments for a period of one year, in addition to an
annual bonus award pursuant to the executive bonus plan. Either party may
terminate the agreement at any time.
We entered into an employment agreement with Debra M. Shantz, dated as of
May 1, 1995, and amended on October 31, 1997 and November 1, 2001. Under the
agreement, Ms. Shantz's annual base salary is $155,000, plus a discretionary
bonus, with such annual increases in compensation as may be determined by the
compensation committee of the Company. The agreement runs until May 1, 2004, and
renews automatically thereafter from year to year, unless she or the Company
terminates her employment at the end of the Renewal Term by giving not less than
six months prior written notice. If the Company terminates Ms. Shantz's
employment without cause, she receives two years of her base salary and any
vested deferred compensation, as well as six months of benefits under the
Company's benefit plans. In the event there is a change-in-control of the
Company, Ms. Shantz may terminate the agreement, and the Company will pay her 12
times her monthly salary and an amount equal to her bonus for the prior fiscal
year.
We entered into an employment agreement with William A. Mead, one of our
regional vice-presidents, as of January 25, 2000, that became effective on April
1, 2000. Mr. Mead's annual base salary under the agreement is $160,000, plus a
guaranteed bonus of at least $40,000 each year. He also may participate in our
available savings, retirement and other benefit plans. This agreement expires on
March 31, 2005. In addition, as of January 27, 2000, Mr. Hammons and Mr. Mead
entered into an agreement that provides that in exchange for Mr. Mead's services
in
10
selecting markets for various hotel projects for Mr. Hammons personally, Mr.
Hammons will pay Mr. Mead an additional $65,000 per year, in equal monthly
installments, during the term of his employment agreement with the Company. That
agreement also became effective on April 1, 2000, and provides that Mr. Mead
will have the opportunity to acquire a 25% interest in up to three Residence Inn
hotel projects, with a substantial portion of Mr. Mead's investment to be
financed.
Notwithstanding anything to the contrary set forth in any of the Company's
filings under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, that might incorporate other filings with the
Securities and Exchange Commission ("SEC"), including this Proxy Statement, in
whole or in part, the following Report of the compensation committee and
Comparative Company Performance Graph shall not be incorporated by reference
into any such filings.
REPORT OF THE COMPENSATION COMMITTEE
The Company's executive compensation program provides competitive levels
of compensation designed to integrate pay with the Company's annual and long
term performance goals. Underlying this objective are the following concepts:
supporting an individual pay-for-performance policy that differentiates
compensation levels based on corporate and individual performance; motivating
key senior officers to achieve strategic business objectives and rewarding them
for that achievement; providing compensation opportunities which are competitive
to those offered in the marketplace, thus allowing the Company to compete for
and retain talented executives who are critical to the Company's long term
success; and aligning the interest of executives with the long term interest of
the Company's shareholders.
In the interest of balancing all key shareholder interests, the
compensation committee believes that the compensation of the Chief Executive
Officer of the Company, along with the compensation of other executive officers,
should be comprised of a combination of base pay, short-term annual incentive
bonus and long-term stock options. While these elements are balanced in total in
comparison to other comparable organizations, the compensation committee
believes that potential compensation in the form of performance-related variable
compensation should be emphasized. Variable compensation is both short-term and
long-term based.
At the beginning of each fiscal year, the Company establishes a budget and
a series of individual performance goals for the following year. The total
compensation packages for executive officers are primarily based on the
Company's achievement of a targeted EBITDA and, for executive officers other
than the Chief Executive Officer, the accomplishment of the executive officer's
individual performance goals. The resulting total package has been designed to
reward officers for the creation of long-term shareholder value.
Base Salary. In determining the appropriate amount of fixed base pay for
executive officers for our 2003 fiscal year, the compensation committee compared
the officers' base salaries with those paid to other executives in the hotel
industry, taking into account the size of the Company and other relevant
factors.
Incentive Bonus. The bonus component paid to executive officers is based
upon fulfillment of the EBITDA target and individual goals. Full bonus payouts
to officers will be made only if the Company's EBITDA target and individual
performance goals are exceeded. There are also certain discretionary bonuses
paid when deemed appropriate by the compensation committee.
Stock Options. To encourage growth and shareholder value, stock options
are granted under the Company's option plan to officers and other key employees
who are in a position to make substantial contributions to the long-term success
of the Company. The compensation committee believes that the grant of options
focuses attention on managing the Company from the perspective of an owner with
an equity stake in the business.
2003 CEO Compensation. In devising an appropriate compensation package for
John Q. Hammons, our Chairman of the Board and Chief Executive Officer, for our
2003 fiscal year, the compensation committee set Mr. Hammons' cash compensation
significantly below the compensation paid to similarly situated CEO's of other
hotel management companies. The committee also gave consideration to the amount
of time Mr. Hammons expended on projects that were not directly related to the
benefit of the Company. Effective April 1, 2003, the compensation committee
established Mr. Hammons' base salary at $362,000, and for 2004 will remain at
that level.
11
Historically, Mr. Hammons' compensation package has been well below
compensation level for chief executive officers of comparable companies, and so
has not been related directly to the Company's performance. As his total
compensation increases, the Company's performance will become an increasingly
important factor in determining his compensation especially as his compensation
approaches the median level of compensation paid to similarly situated
executives of comparable companies.
2003 Compensation Committee
William J. Hart, Chairman
David C. Sullivan
James F. Moore
12
COMPARATIVE COMPANY PERFORMANCE
The following table sets forth comparative information regarding the
Company's cumulative shareholder return on its class A common stock from January
1, 1999 (the last trading day before the beginning of the Company's fifth
preceding fiscal year) to January 2, 2004. Total shareholder return is measured
by dividing (i) the sum of the total dividends (assuming dividend reinvestment)
for the measurement period, if any, and the difference between the Company's
share price at the end and beginning of the measurement period by (ii) the
Company's share price at the beginning of the measurement period. The Company's
cumulative shareholder return is based on an investment of $100 on January 1,
1999 and is compared to the cumulative total return on the S&P 500 Index and the
Lodging Peer Group. The graph displayed below is presented in accordance with
SEC requirements. Shareholders are cautioned against drawing any conclusions
from the data contained therein, as past results are not necessarily indicative
of future performance. These graphs in no way reflect the Company's forecast of
future financial performance.
COMPARE CUMULATIVE TOTAL RETURN
AMONG JOHN Q. HAMMONS HOTELS, INC.,
S&P 500 INDEX AND PEER GROUP INDEX
[LINE GRAPH]
1/01/99 12/31/99 12/29/00 12/28/01 1/03/03 1/02/04
JOHN Q. HAMMONS HOTELS, INC. 100.00 105.08 164.42 155.93 147.25 187.12
PEER GROUP INDEX 100.00 72.94 116.36 91.71 79.37 99.21
S&P 500 INDEX 100.00 121.04 110.02 96.95 75.52 97.18
ASSUMES $100 INVESTED ON JAN. 01, 1999
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING JAN. 02, 2004
The peer group consists of Felcor Lodging Trust, Inc., Host Marriott Corp. and
Prime Hospitality Corp.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The compensation committee for the fiscal year ended January 2, 2004 was
comprised of three directors, Messrs. Sullivan, Moore and Hart.
Mr. Hart is a non-employee director of the Company and is a member of the
law firm of Husch & Eppenberger, LLC, which performs legal services on a regular
basis for the Company and personally for Mr. Hammons. The Company paid such firm
approximately $231,300 in legal fees during the fiscal year ended January 2,
2004.
13
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Hammons and Anvil Capital, an investment and consulting firm owned by
Mr. Lopez-Ona, one of our directors, have formed a limited liability company
through which they have invested in securities of one or more companies in
industries unrelated to the Company's business.
Mr. Hammons controls the Partnership through his control of the Company,
the sole general partner of the Partnership. His equity interest in the Company
(based on his beneficial ownership of 269,100 shares of class A common stock,
all 294,100 shares of class B common stock and all 16,043,900 limited
partnership units of the Partnership, or the LP Units) is 79%. There are
significant potential conflicts of interests between Mr. Hammons as a limited
partner of the Partnership, and the holders of class A common stock, which
conflicts may be resolved in favor of Mr. Hammons.
Holders of LP Units have the right to require the redemption of their LP
Units. This redemption right will be satisfied, at the sole option of the
Company, by the payment of the then cash equivalent thereof or by the issuance
of shares of class A common stock on a one-for-one basis. Mr. Hammons
beneficially owns all 16,043,900 LP Units. If Mr. Hammons, as a holder of LP
Units, requires the Partnership to redeem LP Units, the non-employee directors
of the Company would decide, consistent with their fiduciary duties as to the
best interests of the Company, whether to redeem the LP Units for cash or for
shares of class A common stock. Mr. Hammons would not vote or otherwise
participate in the decision of the non-employee directors. Mr. Hammons has
informed the Company that he has no current plan to require the Partnership to
redeem his LP Units.
During 2003, the Company provided management services to twelve hotels not
owned by the Company (the "Managed Hotels") pursuant to management contracts
(the "Management Contracts"). Eleven of the Managed Hotels are owned by Mr.
Hammons and one is owned 50% by an entity controlled by Mr. Hammons and 50% by
Jacqueline A. Dowdy, the secretary and a director of the Company. Management
fees of 3% to 4% of gross revenues were paid to the Company by the Managed
Hotels in the aggregate amount of $2,571,624 in the fiscal year ended January 2,
2004. In addition to the management fees paid by the Managed Hotels to the
Partnership in that year, the Managed Hotels reimbursed the Company for a
portion of the salaries paid by the Company to its regional vice presidents,
whose duties include management services related to the Managed Hotels, and for
certain marketing and other expenses allocated to the Managed Hotels. Such
reimbursed services and expenses aggregated $365,139 in the fiscal year ended
January 2, 2004. The Management Contracts have 20-year terms and automatically
extend for four periods of five years, unless otherwise canceled.
We currently have no hotels under construction and no plans to develop new
hotels for the foreseeable future. During 2000, we entered into a five-year
management contract with John Q. Hammons whereby we will provide internal
administrative, architectural design, purchasing and legal services to Mr.
Hammons in conjunction with the development of hotels in an amount not to exceed
1.5% of the total development costs of any single hotel. In exchange, we have
the opportunity to manage the hotel upon opening and a right of first refusal to
purchase the hotel in the event it is offered for sale. During fiscal year 2003,
2002, 2001 and 2000, the Company paid approximately $327,800, $326,000, $487,000
and $1,455,000, respectively, of additional costs in accordance with the
management contract. These costs will be amortized over a five-year contract
period. Amortization for these costs commence upon the opening of the hotels.
The Partnership holds an option from Mr. Hammons or persons or entities
controlled by him to purchase the Managed Hotels, until February 2009. If an
option is exercised, the purchase price is based on a percentage of the fair
market value of the Managed Hotel as determined by an appraisal firm of national
standing. One hotel owned by the Company and three Managed Hotels are located in
Springfield, Missouri. These hotels potentially compete with one another for
customers. We believe that these hotels do not significantly compete with one
another due to their respective locations and attributes.
Mr. Hammons has a 45% ownership interest in Winegardner & Hammons, Inc.,
or WHI. All of the hotels we own or manage have contracted with WHI to provide
accounting and other administrative services. The accounting and administrative
charges expensed by the hotels we own were approximately $1,615,000 in the
fiscal year ended January 2, 2004. The fee may increase if the number of hotels
for which WHI performs accounting and administrative services drops below 55
hotels. The existing accounting service agreement expires in June 2005.
14
We lease space in the John Q. Hammons Building for our headquarters from a
Missouri company, of which Mr. Hammons owns 50% and the remaining 50% is
collectively held by other employees, including Jacqueline A. Dowdy, the
secretary and a director, who is a 9.5% owner. Pursuant to four lease
agreements, expiring December 31, 2004, we paid monthly rental payments of
approximately $21,100 in 2003. We made aggregate annual lease payments to that
Missouri company of approximately $253,400 in 2003.
We also lease the real estate for the Chateau on the Lake Resort, opened
in mid-1997, in Branson, Missouri, from Mr. Hammons. Annual rent is based on the
greater of a percentage of adjusted gross revenues from room sales and food and
beverage sales on the property or $150,000. Rent expense was approximately
$233,000 in 2003. The lease term is 50 years, with an option to renew for an
additional 10 years. We also have an option to purchase the land after March 1,
2018, at the greater of $3,000,000 or the current appraised value. In addition,
in 2003 we acquired the land for two operating hotel properties that we formerly
leased from Mr. Hammons in exchange for certain undeveloped land that we owned,
recognizing no gain or loss on the exchange.
To supplement our self-insurance programs, we provide property, auto,
commercial liability, workers' compensation and medical insurance to the hotels,
including hotels owned by the Partnership and Mr. Hammons, under blanket
commercial policies we purchase. In addition, we provide umbrella and crime
insurance to all such hotels under blanket commercial policies we purchase.
Generally, we allocate expenses to each hotel (including those owned by Mr.
Hammons) based upon factors similar to those used by the insurance provider to
compute the aggregate group policy expense.
Certain of our employees provide some administrative and other services
for Mr. Hammons' outside business interests. Management does not believe that,
historically, the amount of such services has been material, but has implemented
a cost-allocation system in 2002. Pursuant to the cost-allocation system, Mr.
Hammons pays the Company 30% of all costs related to such services as well as
the internal development costs discussed above, and maintains a deposit with the
Company, which was $50,700 as of January 2, 2004, to cover these expenses.
Mr. Hammons also owns trade centers adjacent to two of the Owned Hotels
(the "JQH Trade Centers"). We lease the convention space in the JQH Trade Center
located in Portland, Oregon, from Mr. Hammons pursuant to a lease expiring in
2004, requiring annual payments of approximately $300,000. With respect to the
other JQH Trade Center, located in Joplin, MO, we make nominal annual lease
payments to Mr. Hammons pursuant to a lease expiring in 2014. We have assumed
responsibility for all operating expenses of the JQH Trade Centers.
Mr. Hammons owns parcels of undeveloped land throughout the United States.
Although there are no current plans to do so, we may purchase or lease one or
more of these parcels in the future in order to develop hotels. Since Mr.
Hammons controls the Company, such transactions would not be arms-length
transactions but will be subject to restrictions contained in the indentures
relating to the Partnership's outstanding mortgage notes due in 2012.
We receive no management fee or similar compensation in connection with
our management of the Partnership. We receive the following remuneration from
the Partnership: (i) distributions, if any, in respect of our equity interest in
the Partnership; and (ii) reimbursement for all direct and indirect costs and
expenses we incur for or on behalf of the Partnership and all other expenses
necessary or appropriate to the conduct of the business of, and allocable to,
the Partnership.
Mr. Hammons has a written agreement with William A. Mead, one of our
regional vice presidents, to pay Mr. Mead $65,000 per year for five years,
ending March 31, 2005, in exchange for services he provides unrelated to our
business, and to allow Mr. Mead to invest in 25% of up to three proposed new
hotels. Mr. Hammons also has a verbal agreement with Lou Weckstein, our
president, to supplement Mr. Weckstein's salary from the Company by up to
$270,000 per year during his employment for services he provides unrelated to
our business. We describe these arrangements in more detail under the caption
"Employment Agreements" above.
15
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information as of February 27,
2004, with respect to our class A common stock and class B common stock owned by
(1) each director and director nominee, (2) the named executive officers in the
Summary Compensation Table and (3) all of our directors, director nominees and
executive officers as a group. In accordance with the rules promulgated by the
SEC, such ownership includes shares presently owned, as well as shares that the
named person has the right to acquire within 60 days of February 27, 2004,
including shares that the named person has the right to acquire through the
exercise of any option or warrant.
The number of shares of class A common stock shown in the table gives
effect to the conversion of all 294,100 shares of class B common stock into an
equal number of shares of class A common stock and also gives effect to the
redemption of all 16,043,900 LP Units of the Partnership for shares of class A
common stock on a one-for-one basis.
Except as indicated in the footnotes, all shares set forth in the table
are owned directly, and the indicated person has sole voting and investment
power with respect to all shares shown as beneficially owned by such person.
NAME AND ADDRESS OF SHARES OF CLASS A COMMON STOCK SHARES OF CLASS B COMMON STOCK
BENEFICIAL OWNER (a) NUMBER OF SHARES PERCENTAGE NUMBER OF SHARES PERCENTAGE
- -------------------- ---------------- ---------- ---------------- ----------
Executive Officers and Directors:
John Q. Hammons 16,882,100(b) 78.8% 294,100 100%
Jacqueline A. Dowdy 89,009(c) *
Donald H. Dempsey 24,378(d) *
Daniel L. Earley 27,000(e) *
William J. Hart 35,458(e) *
John E. Lopez-Ona 41,558(e) *
Debra M. Shantz 93,000(g) *
William A. Mead 55,000(f) *
James F. Moore 36,258(e) *
Paul E. Muellner 32,500(f) *
David C. Sullivan 35,958(e) *
Louis Weckstein 50,700(h) *
All executive officers and directors, as a 17,402,919(b)
group (12) (c)(d)(e)(f)(g)(h) 79.6% 294,100 100%
* Less than 1%
(a) The address of each of the executive officers and directors of the Company
is 300 John Q. Hammons Parkway, Suite 900, Springfield, Missouri 65806.
(b) Includes 269,100 outstanding shares of class A common stock. Also includes
294,100 shares of class B common stock convertible into class A common
stock on a share-for-share basis at any time and which will be
automatically converted into class A common stock upon the occurrence of
certain events. Prior to conversion of the class B common stock and
without giving effect to the redemption of the LP Units, the class B
common stock (which has 50 votes per share) represents 75.4% of the
combined voting power of both classes of the Company's outstanding Company
common stock. Also includes 16,043,900 LP Units of the Partnership
redeemable, at the sole option of the Company, by payment of the then cash
equivalent of such LP Units or by the issuance of shares of class A common
stock on a one-for-one basis. Remaining LP Units are owned for Mr.
Hammons' benefit through Hammons, Inc., of which the John Q. Hammons
Revocable Trust dated December 28, 1989, as amended and restated, is the
sole shareholder. Also includes exercisable options to purchase 275,000
shares.
(c) Includes approximately 1,509 shares allocated to 401(k) Plan account as of
the end of 2003, and exercisable options to purchase 57,500 shares.
16
(d) Includes exercisable options to purchase 15,000 shares.
(e) Includes exercisable options to purchase 25,000 shares.
(f) Exercisable options.
(g) Includes exercisable options to purchase 92,500 shares.
(h) Includes exercisable options to purchase 50,000 shares.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
We list below information, as of January 2, 2004, with respect to each
person we believe to be the beneficial owner of more than 5% of the outstanding
class A common stock. This information is based solely on beneficial ownership
information contained in the most recent Schedule 13D or 13G filed on behalf of
such person with the SEC. The percentages shown are based on the outstanding
shares of class A common stock (and do not give effect to the conversion of any
of the 294,100 shares of class B common stock into an equal number of shares of
class A common stock or to the redemption of any of the 16,043,900 LP Units for
shares of class A common stock).
PERCENT OF CLASS A
NAME AND ADDRESS OF AMOUNT AND NATURE OF COMMON STOCK
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OUTSTANDING
- ----------------------- -------------------- ------------------
James M. Clark, Jr. 556,900 (a) 11.6%
52 Vanderbilt Ave.
New York, NY 10017
First Manhattan Co. 683,357 (b) 14.2%
437 Madison Avenue
New York, NY 10022
(a) Based on Schedule 13D dated May 2, 1999. According to the Schedule 13D,
Mr. Clark has sole voting and dispositive power as to 519,000 shares and
shared voting and dispositive power as to 37,900 shares (held in family
trusts and a charitable foundation). The filing was also made on behalf of
Susanna L. Porter. Ms. Porter has sole voting and dispositive power as to
11,000 shares.
(b) Based on Schedule 13G dated February 12, 2004. According to the Schedule
13G, includes 78,350 shares owned by family members of Senior Managing
Directors of First Manhattan Co. ("FMC"). FMC disclaims dispositive powers
as to 16,700 of such shares and beneficial ownership as to 62,650 of such
shares. FMC has sole voting and dispositive power as to 7,200 shares,
shared voting power as to 650,307 shares and shared dispositive power as
to 676,157 shares.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
our directors and officers to file with the SEC initial reports of ownership of
our securities and to file subsequent reports when their ownership changes.
Based on a review of reports submitted to us, we believe that all Section 16(a)
filing requirements applicable to our directors and officers during the fiscal
year ended January 2, 2004, were complied with on a timely basis.
17
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(PROPOSAL TWO)
On June 24, 2002, upon the recommendation of the audit committee, the
board of directors dismissed Arthur Andersen LLP as our independent auditors and
selected Deloitte & Touche LLP to serve as our independent auditors for the
fiscal year ending January 3, 2003.
Arthur Andersen LLP's report on the financial statements of the Company
for the fiscal year ended December 28, 2001 did not contain an adverse opinion
or disclaimer of opinion, nor were they qualified or modified as to uncertainty,
audit scope or accounting principles. During the fiscal year ended December 28,
2001, and through June 24, 2002, there were no disagreements with Arthur
Andersen LLP on any matter of accounting principle or practice, financial
statement disclosure, or auditing scope or procedure which, if not resolved to
Arthur Andersen LLP's satisfaction, would have caused Arthur Andersen LLP to
make reference to the subject matter in connection with its report on the
Company's financial statement for such years, and there were no reportable
events as defined in Item 304(a)(1)(v) of Regulation S-K. The Company provided
Arthur Andersen LLP with a copy of the foregoing disclosures and has authorized
Arthur Andersen LLP to respond fully to the inquiries of Deloitte & Touche LLP.
During the year ended December 28, 2001, and through June 24, 2002, the
Company did not consult Deloitte & Touche LLP with respect to the application of
accounting principles to a specified transaction, either completed or proposed,
or the type of audit opinion that might be rendered on the Company's financial
statements, or any other matters or reportable events as set forth in Items
304(a)(2)(i) and (ii) of Regulation S-K.
The board of directors has appointed the firm of Deloitte & Touche LLP to
act as our independent auditors for the fiscal year ending December 31, 2004,
subject to ratification of such appointment by shareholders. Representatives of
Deloitte & Touche LLP will be present at the annual meeting, will have the
opportunity to make a statement if they so desire, and will be available to
respond to appropriate questions.
The affirmative vote of the holders of a majority of the shares
represented and entitled to vote at the annual meeting will be required to
ratify the selection of Deloitte & Touche LLP as our independent public
accountants for the fiscal year ending December 31, 2004. Abstentions will be
counted toward the tabulation of votes cast on proposals presented to the
shareholders and will have the same effect as negative votes. Broker non-votes
are counted towards a quorum, but are not counted for any purpose in determining
whether this matter has been approved.
Shareholder ratification of the selection of Deloitte & Touche LLP as our
independent public accountants is not required by our Bylaws or other applicable
legal requirement. However, the board is submitting the selection of Deloitte &
Touche LLP to you for ratification as a matter of good corporate practice. If
shareholders fail to ratify the selection, the audit committee and the board
will reconsider whether or not to retain that firm. Even if the selection is
ratified, the board, at its discretion, may direct the appointment of a
different independent accounting firm at any time during the year if it
determines that such a change would be in the best interests of the Company and
its shareholders.
FEES BILLED TO COMPANY BY DELOITTE & TOUCHE LLP FOR FISCAL 2002 AND 2003
Deloitte & Touche LLP was our independent auditor for 2003. A summary of
the fees Deloitte & Touche LLP billed us for fiscal 2002 and fiscal 2003
follows:
Nature of Service 2002 2003
----------------- ---- ----
Audit Fees (a)......................................... $ 232,403 $ 290,068
Audit-Related Fees (b).. .............................. $ 0 $ 91,910
Tax Fees............................................... $ 0 $ 0
All Other Fees......................................... $ 0 $ 0
18
(a) The "Audit Fees" represent fees for professional services for the audit of
our annual financial statements, the review of financial statements
included in our quarterly financial statements and audit services provided
in connection with other statutory or regulatory fees.
(b) The "Audit-Related Fees" consist of fees for assurance and related
services that were reasonably related to the performance of the audit or
review of our financial statements and are not reported under "Audit
Fees." These services included Sarbanes-Oxley Act services, audit of our
401(k) Plan and the audit of other financial elements of individual
hotels. The Audit Committee pre-approved 100% of the "Audit - Related
Fees" in 2002 and 2003.
The audit committee determined that the provision of the services
described above is compatible with maintaining the independence of Deloitte &
Touche LLP.
The audit committee's policy is to pre-approve all audit and permissible
non-audit services provided by the independent auditors. The audit committee
will generally pre-approve a list of specific services and categories of
services, including audit, audit-related and other services, for the upcoming or
current fiscal year, subject to a specified cost level. Any service that is not
included in the approved list of services must be separately pre-approved by the
audit committee. In addition, all audit and permissible non-audit services in
excess of the pre-approved cost level, whether or not such services are included
on the pre-approved list of services, must be separately pre-approved by the
audit committee chair. Also, all permissible non-audit services must be
separately pre-approved by the audit committee chair if the aggregate fees for
such services exceed 5% of the total fees paid to the independent auditor for
the current fiscal year.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THE RATIFICATION OF THE SELECTION OF OUR INDEPENDENT AUDITORS.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The audit committee of the board of directors serves as the representative
of the board for general oversight of financial accounting and reporting
process, system of internal control and audit our process. The audit committee
operates under a written charter which was adopted by the board of directors and
is attached as Appendix A to this proxy statement. Our management has primary
responsibility for preparing our financial statements and our financial
reporting process. Our independent accountants, Deloitte & Touche LLP, are
responsible for expressing an opinion on the conformity of our financial
statements to accounting principles generally accepted in the United States.
In this context, the audit committee reports as follows:
1. The audit committee has reviewed and discussed the audited financial
statements with Deloitte & Touche LLP and Company management.
2. The audit committee has discussed with the independent accountants the
matters required to be discussed by SAS 61 (Codification of Statements on
Auditing Standard, AU 380), SAS 99 (Consideration of Fraud in a Financial
Statement Audit).
3. The audit committee has received the written disclosures and the letter
from the independent accountants required by Independence Standards Board
Standard No. 1 (Independence Standards Board Standards No. 1, Independence
Discussions with Audit Committees) and has discussed with the independent
accountants the independent accountants' independence.
4. Based on the review and discussion referred to in paragraphs (1)
through (3) above, the audit committee recommended to the board of directors,
and the board has approved, that the audited financial statements be included in
our annual report on Form 10-K for the fiscal year ended January 2, 2004, for
filing with the Securities and Exchange Commission.
19
Each of the members of the audit committee is independent as defined under
the listing standards of the American Stock Exchange.
The undersigned members of the audit committee have submitted this Report:
Donald H. Dempsey, Chairman
John E. Lopez-Ona
James F. Moore
Dated: March 9, 2004.
DATE FOR SUBMISSION OF SHAREHOLDER PROPOSALS
In order for a shareholder proposal to be considered for inclusion in our
Proxy Statement for next year's annual meeting, we must receive the written
proposal no later than December 9, 2004 at our principal executive offices. Such
proposals also must comply with Securities and Exchange Commission regulations
regarding the inclusion of shareholder proposals in Company-sponsored proxy
materials. Similarly, in order for a shareholder proposal to be raised from the
floor during next year's annual meeting, we must receive written notice no later
than 120 days and no more than 180 days before the meeting date, and the
proposal must contain such information as required under our Bylaws.
You may contact our Corporate Secretary at our headquarters for a copy of
the relevant Bylaw provisions regarding the requirements for making shareholder
proposals.
OTHER MATTERS
As of the date of this Proxy Statement, we do not expect any other matters
to be presented for action by the shareholders at the 2004 annual meeting. If
you grant a proxy, the persons named as proxy holders will have the discretion
to vote your shares on any additional matters properly presented for a vote at
the meeting. If, for any unforeseen reason, a nominee is not available as a
candidate for director, the persons named as proxy holders will vote your proxy
for such other candidate or candidates as may be nominated by the board of
directors. If, however, any other matters not now known are properly brought
before the meeting, the persons named in the accompanying proxy will vote such
proxy in accordance with the determination of a majority of the board of
directors.
20
APPENDIX A
JOHN Q. HAMMONS HOTELS, INC.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
The following shall constitute the Charter of the Audit Committee of the Board
of Directors of John Q. Hammons Hotels, Inc. (the "Corporation"), a corporation
incorporated under the laws of the State of Delaware:
I. PURPOSE
A. The primary function of the Audit Committee is to assist the Board
of Directors of the Corporation in fulfilling certain of the Board's
oversight responsibilities to the Corporation's shareholders,
specifically, by reviewing: the financial reports and other
financial information provided by the Corporation to any
governmental body or the public; the Corporation's system of
internal controls regarding finance, accounting, legal compliance
and ethics that management and the Board have established; and the
Corporation's auditing, accounting and financial reporting
processes. Consistent with this function, the Audit Committee should
encourage continuous improvement of, and should foster adherence to,
the Corporation's policies, procedures and practices at all levels.
Additionally, the Corporation's Internal Audit Department and
independent accountants shall be ultimately accountable to the Audit
Committee and the Board.
B. The Audit Committee shall primarily fulfill these responsibilities
by carrying out the activities enumerated in Section IV of this
Charter.
II. MEMBERSHIP
A. The Audit Committee shall be comprised of three (3) or more
directors appointed by the Board, each of whom shall be considered
an "independent director" in accordance with the definition
contained in the Rules of the American Stock Exchange ("AMEX"). All
members of the Audit Committee shall be financially literate in
accordance with the AMEX standards, and at least one (1) member of
the Audit Committee shall have accounting or related financial
management expertise, to meet the definition of "audit committee
financial expert" under applicable Securities and Exchange
Commission rules. The Committee shall set guidelines for Audit
Committee education and orientation to assure understanding of the
business and the environment in which the Company operates.
B. Audit Committee members shall be appointed by the Board for one-year
terms or until their successors are duly elected and qualified, and
may be re-appointed by the Board for additional one-year terms at
the discretion of the Board. The Board shall annually appoint a
Chairperson of the Audit Committee.
C. A majority of the Audit Committee shall constitute a quorum for the
taking of any action by the Audit Committee.
III. MEETINGS
The Audit Committee shall meet on at least a quarterly basis and or more
frequently as circumstances may dictate. The Audit Committee shall meet at least
annually with management of the Corporation, the Chief Financial Officer, and
the Corporation's independent accountants in separate executive sessions to
discuss any matters that the Audit Committee or each of these groups believe
should be discussed privately.
IV. RESPONSIBILITIES
A. Document/Report Review
(1) As part of an on-going self-assessment process, review and
update this Charter periodically, and at least annually, or as
conditions may dictate. This Charter shall be approved
annually by the Board.
(2) Review the Corporation's annual financial statements and any
reports or other financial information submitted publicly,
including any certification, report, opinion or review
rendered by the independent accountants of the Corporation.
(3) Prepare the annual Audit Committee report for the
Corporation's proxy statement in accordance with applicable
Securities and Exchange Commission regulations.
(4) For the Chairperson of the Audit Committee, review and discuss
with financial management and the independent accountants of
the Corporation, the quarterly financial results of the
Corporation and any corresponding accounting, reporting or
disclosure issues prior to the filing of the Corporation's
Quarterly Report on Form l0-Q.
B. Independent Accountants/Internal Audit
(1) Select the independent accountants, considering their
independence and effectiveness, and pre-approve the audit fees
and other compensation to be paid to the independent
accountants, as well as any permitted non-audit services and
fees. On an annual basis, the Audit Committee should review
and discuss with the independent accountants all significant
relationships the independent accountants have with the
Corporation to determine the independent accountants'
independence. Such relationships shall be delineated in a
formal written statement to the Audit Committee to be prepared
by the independent accountants.
(2) Review and approve the scope of the independent accountants'
audit and engagement letter, Internal Audit Charter, and
delineation of responsibilities between the Internal Audit
Department and the independent accountants.
(3) Review the performance of the independent accountants and
discharge the independent accountants when circumstances
warrant.
(4) Periodically consult with the independent accountants out of
the presence of management of the Corporation, regarding
management support, internal controls, and the fullness and
accuracy of the Corporation's financial statement.
(5) Review and approve the Internal Audit annual program including
its objectives, coverage of areas with high risk and staffing
requirements.
(6) Periodically review Internal Audit reports and the status of
corrective actions.
(7) Carry out all other responsibilities as required under Rule
10A-3(b) under the Securities Exchange Act of 1934.
C. Financial/Reporting Process
(1) In consultation with the independent accountants, review the
integrity of the Corporation's financial reporting processes,
both internal and external. In support of this review,
periodically discuss with management the financial reporting
controls over key business processes of the Corporation.
A-2
(2) Consider the independent accountants' judgment about the
quality and appropriateness of the Corporation's accounting
principles and policies and changes to such principles and
policies as applied in its financial reporting.
(3) Assess the process for establishing key estimates and reserves
within the financial statements and consider the independent
accountants' judgments about the appropriateness of such
processes.
(4) Consider the independent accountants' judgment about the
appropriateness of the accounting principles and disclosure
practices adopted by management in connection with new
transactions or events.
(5) Establish a process to receive and deal with complaints
relating to accounting, internal accounting controls or
auditing matters, and to provide for anonymity for employees
making any such report.
D. Process Improvement
(1) Establish regular reporting to the Audit Committee of
significant judgments made in management's preparation of the
Corporation's financial statements.
(2) Following completion of the annual audit, review separately
with each of management and the independent accountants any
difficulties encountered during the course of the audit,
including any restrictions on the scope of work or access to
required information.
(3) Review any significant disagreements among management and the
independent accountants in connection with preparation of the
Corporation's financial statements.
(4) Review the adequacy of the Corporation's internal control
structure and the status of past recommendations from the
independent accountants and Internal Audit staff.
E. Ethical and Legal Compliance and Risk Management
(1) Establish, review, monitor compliance and update periodically
a Code of Ethical Conduct.
(2) Periodically review the Corporation's policies and procedures
for review of officers' expenses.
(3) Review the status of tax returns and compliance with laws and
regulations.
(4) Review the terms, conditions, fairness and arrangements
involving any related-party or potential conflict-of-interest
transactions.
(5) Review, with the Corporation's secretary, legal compliance
matters, including corporate securities trading practices.
(6) Review, with the Corporation's secretary, any legal matters
that could have a significant impact on the Corporation's
financial statements.
(7) Review the adequacy of the Corporation's risk management
program and insurance coverage.
(8) Review the audit results and reports of governmental and
regulatory agencies.
(9) Perform any other activities consistent with this Charter, the
Corporation's By-laws and governing law, as the Audit
Committee or the Board deems necessary or appropriate.
A-3
V. ADMINISTRATION
A. The Audit Committee shall have prompt and unrestricted access to all
financial and operating information relevant to the Corporation's
business. The Audit Committee shall have ready access to the
Corporation's legal counsel and to the independent accountants, and
shall be provided from time to time with staff assistance from
within the Corporation as requested.
B. The Audit Committee is empowered to employ its own legal counsel,
accountants or other experts, at the Corporation's expense, to deal
with specific problems or issues that arise in the course of
carrying out its duties and responsibilities, and shall have funding
from the Corporation adequate to carry out its responsibilities.
C. The Audit Committee's Chairperson shall report the Audit Committee's
findings to the Board of Directors on a regular basis.
A-4
JOHN Q. HAMMONS HOTELS, INC.
THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS
The undersigned shareholder of John Q. Hammons Hotels, Inc. hereby
appoints Paul E. Muellner and Debra M. Shantz, or either of them, as proxies
to cast all votes which the undersigned shareholder is entitled to cast at
the annual meeting of shareholders to be held on Tuesday, May 11, 2004, at
9:00 a.m., local time, at the University Plaza Hotel, 333 John Q. Hammons
Parkway, Springfield, Missouri, and at any adjournments or postponements
thereof, upon the following matters. The undersigned shareholder hereby
revokes any proxy or proxies heretofore given.
This proxy will be voted as directed by the undersigned shareholder.
UNLESS CONTRARY DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF THE NOMINEES LISTED IN PROPOSAL 1, AND FOR PROPOSAL 2, AND IN
ACCORDANCE WITH THE DETERMINATION OF A MAJORITY OF THE BOARD OF DIRECTORS AS
TO OTHER MATTERS. The undersigned shareholder may revoke this proxy at any
time before it is voted by delivering to the General Counsel of the Company
either a written revocation of the proxy or a duly executed proxy bearing a
later date, or by appearing at the annual meeting and voting in person. The
undersigned shareholder hereby acknowledges receipt of the Notice of Annual
Meeting and Proxy Statement.
(continued and to be signed and dated on reverse side)
1. Election of Directors for Three-Year Terms.
FOR WITHHOLD
Donald H. Dempsey [ ] [ ]
John E. Lopez-Ona [ ] [ ]
2. Ratification of appointment of Deloitte & Touche LLP as independent
auditors.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. At their discretion, the proxies, or either of them, are authorized to vote
upon such other business as may properly come before the meeting, or any
adjournments or postponements thereof.
If you receive more than one proxy card, please sign and return ALL cards
in the accompanying envelope.
Date:
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Signature of Shareholder or Authorized Representative
Please date and sign exactly as name appears hereon. Each executor,
administrator, trustee, guardian, attorney-in-fact and other fiduciary should
sign and indicate his or her full title. Only one signature is required in the
case of stock ownership in the name of two or more persons, but all should sign
if possible.