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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
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
RFS HOTEL INVESTORS, INC.
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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.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
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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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
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[ ] 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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(4) Date Filed:
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RFS HOTEL INVESTORS, INC.
850 RIDGE LAKE BOULEVARD, SUITE 220
MEMPHIS, TN 38120
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NOTICE OF ANNUAL MEETING
ON MAY 3, 2001
AND PROXY STATEMENT
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Dear Stockholder:
We invite you to attend our annual meeting of stockholders on May 3, 2001
at 9:00 a.m. at the Company's headquarters in Memphis, Tennessee. At the
meeting, you will hear a report on our operations and have a chance to meet a
number of the directors and officers of the Company.
This booklet includes the formal notice of the meeting and the Proxy
Statement. The Proxy Statement tells you about the agenda and procedures for the
meeting. It also describes how the Board operates, gives personal information
about our director candidates, and provides other information about the Company.
Even if you have only a few shares, we want your shares to be represented
at the meeting. I urge you to complete, sign, date, and return your proxy card
promptly in the enclosed envelope, even if you plan to attend the meeting.
Sincerely,
/s/ ROBERT M. SOLMSON
Robert M. Solmson
Chairman of the Board and
Chief Executive Officer
March 22, 2001
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RFS HOTEL INVESTORS, INC.
TABLE OF CONTENTS
PAGE
----
GENERAL INFORMATION......................................... 2
ELECTION OF DIRECTORS....................................... 3
Director Compensation..................................... 5
Board Committees.......................................... 5
Executive Officers of RFS................................. 7
Director and Officer Stock Ownership...................... 8
Principal Stockholders.................................... 9
Report of the Audit Committee............................. 9
Compensation Committee Report on Executive Compensation... 11
Executive Compensation Tables............................. 14
Section 16(a) Beneficial Ownership Reporting Compliance... 16
Stock Performance Graph................................... 17
ADDITIONAL INFORMATION...................................... 18
Exhibit A, Audit Committee Charter *
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* Filed herewith
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OF RFS HOTEL INVESTORS, INC.
TIME: 9:00 A.M., Central Time
DATE: May 3, 2001
PLACE: RFS Hotel Investors, Inc. Corporate Office
850 Ridge Lake Boulevard, Suite 220
Memphis, Tennessee 38120
PURPOSE: - To elect three directors
- To conduct other business that may properly be raised.
Only stockholders of record on March 15, 2001 may vote at the meeting.
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, SIGN, DATE, AND RETURN YOUR PROXY
CARD PROMPTLY IN THE ENCLOSED ENVELOPE.
Sincerely,
/s/ Kevin M. Luebbers
Kevin M. Luebbers
Executive Vice President & Secretary
March 22, 2001
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GENERAL INFORMATION
WHO MAY VOTE
RFS Common Stockholders of record on March 15, 2001, may vote at the
meeting.
HOW TO 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.
HOW PROXIES WORK
The Board of Directors of RFS 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.
If you sign and return the enclosed proxy card but do not specify how to
vote, you shares will be voted FOR the election of all of our director
candidates.
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 someone else, such as a stockbroker, you may also get
material from them asking how you want to vote. We encourage you to respond to
all such requests. The Company bears all expenses associated with this proxy.
REVOKING 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 RFS's
Secretary in writing at the address under "Questions".
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.
VOTES NEEDED
The director candidates receiving more votes for than against will be
elected to the three seats on the Board to be filled at the meeting. Abstentions
count for quorum purposes but not for voting purposes.
BROKER NON-VOTES
No specific provisions of Tennessee law or our charter or bylaws address
broker non-votes. Under New York Stock Exchange Rules, if a broker holds your
shares as a nominee, the broker must vote those shares according to your
specific instructions, and, if the broker doesn't receive your instructions, the
broker may vote your shares on routine matters such as the election of our
directors. To ensure that your shares are voted at the meeting in accordance
with your instructions, we encourage you to provide instructions to your
brokerage firm by voting your proxy. If you don't vote your shares, your
brokerage firm may either: (i) vote your shares on the
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routine election of directors, or (ii) leave your shares unvoted. Broker
non-votes will not be counted as votes cast, but will be counted for the purpose
of determining the existence of a quorum.
ATTENDING IN PERSON
Only stockholders as of March 15, 2001, their proxy holders, and invited
guests may attend the meeting. If you wish to vote in person and your shares are
held by a stockbroker, you will need to obtain a proxy from the stockbroker
authorizing you to vote your shares held in the stockbroker's name.
ELECTION OF DIRECTORS
The Board of Directors of RFS has nominated the three director candidates
named below.
The Board of Directors oversees the management of the Company on your
behalf. The Board reviews RFS's long-term strategic plans and exercises direct
decision-making authority on key issues, such as the declaration of dividends.
Just as important, the Board chooses the Chief Executive Officer, sets the scope
of his authority to manage the Company's day-to-day operations, and evaluates
his performance.
RFS's Charter requires that a majority of the Company's directors be
Independent Directors. Six of RFS's eight directors are Independent Directors.
"Independent Directors" are not officers or employees of RFS or any of its
affiliates; or officers, employees or affiliates of any lessee of property from
RFS, any subsidiary of RFS, or any partnership that is an affiliate of RFS.
RFS'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.
The RFS Board has nominated for reelection each of the three persons
currently serving as Class I directors, whose terms are expiring at the 2001
annual meeting of stockholders. If elected, each of these persons will serve
until the annual meeting of stockholders in 2004. Personal information on each
of our nominees, and on each of the other directors who will continue to serve
on RFS's Board following the annual meeting, is given below.
The RFS Board of Directors met six times during 2000. In 2000, Messrs.
Solmson, Churchey, Campbell, Stokes, Starnes, Forsdick, Reiss and Jenkins each
attended more than 75% of the aggregate number of applicable meetings of the
Board of Directors. Messr. Forsdick attended four of six meetings of the Board
of Directors.
If a director nominee becomes unavailable to serve before the election,
your proxy card authorizes the named proxies to vote for a replacement nominee
if the Board names one.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF EACH OF
THE FOLLOWING NOMINEES FOR CLASS I DIRECTORS:
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NOMINEES FOR ELECTION AS CLASS I DIRECTORS
(TERMS EXPIRING IN 2004)
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BRUCE E. CAMPBELL, JR., age 69, is Chairman of the Executive Committee of the
Board of Directors of National Commerce Bancorporation, a national bank holding
company. Mr. Campbell has held that position since 1993. Prior to 1993, Mr.
Campbell was Chairman and Chief Executive Officer of National Commerce
Bancorporation, positions he held since 1977. During such period, Mr. Campbell
was also Chairman and Chief Executive Officer of National Bank of Commerce,
Memphis, Tennessee, a wholly owned national banking subsidiary of National
Commerce Bancorporation. He has been a director of RFS since 1993.
Committees: Audit, Compensation (Chairman)
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H. LANCE FORSDICK, SR., age 61, was Chairman of the Board of RFS, Inc., lessee
of the Company's hotels, from 1974 until February 1996, when RFS, Inc. was
acquired by Doubletree Corporation. Prior to 1974, Mr. Forsdick held various
positions in the real estate and hotel development and management business. He
has been a director of RFS since 1993.
Committees: None
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RANDY L. CHURCHEY, age 40, has served as President and Chief Operating Officer
of RFS since November 1999. From 1997 to 1999, he served as Senior Vice
President and Chief Financial Officer of FelCor Lodging Trust, Inc., a hotel
real estate investment trust. For approximately 15 years prior to joining
FelCor, Mr. Churchey held various positions with Coopers & Lybrand, L.L.P., most
recently serving as the Chairman of the Hospitality and Real Estate Practice of
that firm for the Southwestern United States.
Committees: None
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INCUMBENT DIRECTORS -- CLASS III
(TERMS EXPIRING IN 2002)
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ROBERT M. SOLMSON, age 53, is Chairman and Chief Executive Officer of RFS. He
has been Chairman and Chief Executive Officer and a Board member since the
Company's formation in 1993 and President from 1993 to February 1996 and from
February 1998 to October 1998. He is also a director of Independent Bank and
Morgan Keegan and Company, Inc.
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R. LEE JENKINS, age 70, was President of Plough, Inc. and Executive Vice
President-Consumer Operations of Schering-Plough Corporation from 1976 through
1989. He is a director of National Commerce Bancorporation and has been a
director of RFS since 1996.
Committees: Compensation
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INCUMBENT DIRECTORS -- CLASS II
(TERMS EXPIRING IN 2003)
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MICHAEL S. STARNES, age 55, is Chairman of the Board, President and Chief
Executive Officer of MS Carriers, Inc., a truckload carrier in Memphis,
Tennessee, positions he has held since 1986. He had been a director of RFS since
1993.
Committees: Compensation
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JOHN W. STOKES, JR., age 62, is Vice Chairman of Morgan Keegan and Company,
Inc., an investment firm in Memphis, TN, a position he has held since 1983. He
has been an employee and director of Morgan Keegan since 1970. He is also a
director of Morgan Keegan and Company, Inc. and O'Charley's, Inc. He has been a
director of RFS since 1993.
Committees: Audit
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RICHARD REISS, JR., age 57, is the founder and chairman of Georgica Advisors
LLC, a New York based investment firm with public and private investments in the
communications, media and entertainment industries, a position he has held since
January 1997. From 1978 to 1998, Mr. Reiss served as managing partner of
Cumberland Associates and its three investment funds. From 1970 to 1977, Mr.
Reiss was the director of research at Shearson Hayden Stone, a predecessor
company of Salomon Smith Barney. He also is as a director of Grey Advertising,
the Lazard Funds, Inc., O'Charley's, and is a trustee of the Manhattan
Institute.
Committees: Audit
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DIRECTOR COMPENSATION
Each director, who is not an employee of RFS, has received 12,500
restricted shares of Common Stock, except H. Lance Forsdick, who has received
7,500 shares, and Richard Reiss, who has received 10,000 shares, subject to
certain restrictions on transfer prior to vesting, and options to acquire 25,000
shares of Common Stock. Each non-employee director's rights in 10,000 and 2,500
shares of such restricted Common Stock vest at the rates of 20% and 33 1/3%,
respectively, per year of service, beginning one year after the date of grant.
Each director is entitled to vote and receive dividends declared with respect to
the restricted shares of such Common Stock prior to vesting. The options vest at
the rate of 20% per year. Any unvested restricted shares or options at the time
a non-employee director ceases to be a director will be forfeited. In addition,
the Company reimburses directors for their out-of-pocket expenses in connection
with their service on the Board of Directors. The Directors do not receive
annual or per meeting cash compensation.
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. Robert M. Solmson, the Chairman of the Board and Chief Executive
Officer is an ex-officio member of all committees.
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AUDIT COMMITTEE
The Board of Directors has established an Audit Committee, which currently
consists of Messrs. Campbell, Reiss and Stokes. The Audit Committee makes
recommendations concerning the engagement of independent public accountants,
reviews with the independent public accountants, the plans and results of the
audit engagement, approves professional services provided by the independent
public accountants, reviews the independence of the independent public
accountants, considers the range of audit and non-audit fees and reviews the
adequacy of the Company's internal accounting controls. The Audit Committee met
twice in 2000, with all members in attendance at both meetings. The Audit
Committee began meeting quarterly, before the release of the Company's quarterly
earnings to the public, in the third quarter of 2000.
COMPENSATION COMMITTEE
The Board of Directors has established a Compensation Committee, which
currently consists of Messrs. Campbell, Jenkins and Starnes. Mr. Solmson and Mr.
Churchey act as a special non-board compensation committee for the purpose of
awarding compensation and benefits to Independent Directors. The Compensation
Committee determines compensation for the Company's executive officers and
administers the Plan as it relates to executive officers and key employees. The
Compensation Committee met five times in 2000, and all members were present.
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EXECUTIVE OFFICERS OF RFS
The current executive officers of RFS, their ages, positions held and
tenure is as follows:
NAME AGE POSITION(S) WITH RFS OFFICER SINCE
- ---- --- --------------------------------- -------------
Robert M. Solmson................ 53 Chairman of the Board and Chief 1993
Executive Officer
Randy L. Churchey................ 40 President and Chief Operating 1999
Officer
Kevin M. Luebbers................ 34 Executive Vice President and 2000
Chief Financial Officer
Angie Mock....................... 37 Executive Vice President, Asset 1996
Management
Herb W. Cummings................. 58 Vice President, Renovation and 1999
Design
Craig Hofer...................... 41 President, Centrafuse, a wholly 1995
owned subsidiary of RFS
BUSINESS EXPERIENCE OF EXECUTIVE OFFICERS
Information concerning the business experience of Mr. Solmson and Mr.
Churchey is set forth under "Election of Directors".
Kevin M. Luebbers is Executive Vice President and Chief Financial Officer
of RFS. Prior to joining RFS in July 2000, Mr. Luebbers was Senior Vice
President -- Planning and Investment Analysis, for Hilton Hotels Corporation.
Prior to joining Hilton, he held various positions with the Prudential Realty
Group, a division of the Prudential Insurance Company of America, where he
specialized in hotel asset management.
Angie Mock joined RFS in 1996 as Vice President Asset Management and was
promoted to Executive Vice President Asset Management in 1999. Prior to joining
RFS, Ms. Mock held numerous marketing and finance positions with Harrah's
Entertainment and Promus Hotel Corporation including Director of Market Planning
and Research, Director of Strategic Planning, and Director of Internal Audit.
Effective January 1, 2001, Ms. Mock resigned her position to become the Chief
Executive Officer of Flagstone Hospitality Management Company, which manages 52
of RFS's properties.
Herb W. Cummings has served as Vice President Renovation and Design of RFS
since October 1999. Previously, he was senior project manager and Vice President
of Construction with Bristol Hotels and Resorts and held various similar
positions with Davidson Hotel Company and United Inns, Inc.
Craig Hofer has served as President of Centrafuse, a wholly owned RFS
subsidiary engaged in the sale of accounting services over the Internet, since
November 1999. Since July 1995, he has held various positions with RFS, most
recently Vice President of Financial Planning and Chief Information Officer.
The executive officers of RFS are elected annually by the RFS Board. Any
officer or agent of RFS may be removed by the RFS Board, but such removal will
not prejudice any contractual rights of the person removed.
There are no family relationships among the executive officers. There are
no arrangements or understandings between any officer and any other person
pursuant to which that officer was selected.
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DIRECTOR AND OFFICER STOCK OWNERSHIP
The following table shows how much RFS Common Stock was beneficially owned
on March 15, 2001, by each executive officer, each non-employee director and
nominee, and all directors and executive officers, as a group. Unless otherwise
indicated, each person owns directly the shares shown after his name in the
following table:
AMOUNT AND
NATURE OF
BENEFICIAL
OWNERSHIP OF PERCENT OF
NAME OF BENEFICIAL OWNER COMMON STOCK CLASS
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Robert M. Solmson (1)....................................... 932,158 3.3%
Randy L. Churchey (2)....................................... 161,333 *
Kevin M. Luebbers (3)....................................... 91,000 *
Angie Mock (4).............................................. 96,817 *
Bruce E. Campbell, Jr. (5).................................. 95,000 *
H. Lance Forsdick, Sr. (5)(6)............................... 539,500 2.2%
Michael S. Starnes (5)...................................... 104,100 *
John W. Stokes, Jr. (5)..................................... 100,980 *
R. Lee Jenkins (5)(7)....................................... 72,500 *
Richard Reiss, Jr. (8)...................................... 38,500 *
All Directors and Executive Officers as a Group (11 persons)
(1)(2)(3)(4)(5)(6)(7)(8).................................. 2,231,888 8.2%
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* Represents less than 1% of the outstanding Common Stock.
(1) Includes 7,086 shares issuable to a trust of which Mr. Solmson's children
are beneficiaries and over which Mr. Solmson has sole investment and voting
power, upon the exercise of rights to redeem units of partnership interest
in RFS Partnership, L.P. for shares of Common Stock (the "Redemption
Rights"). Also includes (i) 11,500 shares owned by trusts for the benefit of
his children, (ii) 15,500 shares owned by his children, (iii) 10,000 shares
owned by his wife, (iv) 24,000 shares of restricted Common Stock of which
16,000 are vested and 8,000 vest in October 2001 and (v) 75,000 shares of
restricted Common Stock which vest at a rate of 12,500 shares in each of
January 2002, 2003 and 50,000 shares in 2004, (vi) 311,666 shares issuable
pursuant to exercisable stock options. Prior to vesting, Mr. Solmson is
entitled to vote and receive distributions with respect to unvested shares
of restricted Common Stock.
(2) Includes 25,000 shares of restricted Common Stock of which 8,333 are vested
and 16,000 shares that vest at a rate of 8,333 shares in November 2001 and
8,334 shares in November 2002. Also includes (i) 100,000 shares of
restricted Common Stock, which will vest at a rate of 10,000 shares in each
of January 2002, 2003, 2004 and 2005, and 60,000 shares in 2006 and (ii)
33,333 shares issuable pursuant to exercisable stock options. Prior to
vesting Mr. Churchey is entitled to vote and receive distributions with
respect to unvested shares of restricted Common Stock.
(3) Includes 12,000 shares of restricted Common Stock that vest at a rate of
4,000 shares in each of July 2001, 2002 and 2003. Also includes 75,000
shares of restricted Common Stock, which vest at a rate of 7,500 shares in
each of January 2002, 2003, 2004 and 2005, and 45,000 shares in 2006. Prior
to vesting, Mr. Luebbers is entitled to vote and receive distributions with
respect to unvested shares of restricted Common Stock.
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(4) Includes 14,000 shares of restricted Common Stock, which vested in January
2001, and 76,667 shares issuable pursuant to exercisable stock options.
Prior to vesting, Ms. Mock is entitled to vote and receive distribution with
respect to unvested shares of restricted Common Stock.
(5) Includes 834 shares of restricted Common Stock that vest in October 2001.
Prior to vesting, each director is entitled to vote and receive
distributions with respect to unvested shares. Includes 10,000 shares owned
by Mr. Campbell's wife and 5,000 shares owned by Mr. Stokes' wife.
(6) Includes 20,573 shares issuable to Mr. Forsdick upon exercise of his
Redemption Rights.
(7) Includes 2,000 shares of restricted Common Stock that vest in September 2001
and 10,000 shares issuable pursuant to exercisable stock options. Prior to
vesting, Mr. Jenkins is entitled to vote and receive distributions with
respect to unvested shares of restricted Common Stock.
(8) Includes 8,000 shares of restricted Common Stock that vest at a rate of
2,000 shares in each October through 2004. Prior to vesting, Mr. Reiss is
entitled to vote and receive distributions with respect to unvested shares
of restricted Common Stock.
PRINCIPAL STOCKHOLDERS
The following table shows how much RFS Common Stock was beneficially owned
on March 15, 2001, by each person known to RFS to beneficially own more than 5%
of its Common Stock.
COMMON STOCK SERIES B PREFERRED STOCK (3)
--------------------------------- ---------------------------------
NAME AND ADDRESS OF NATURE OF BENEFICIAL PERCENT OF NATURE OF BENEFICIAL PERCENT OF
BENEFICIAL OWNER OWNERSHIP CLASS (1) OWNERSHIP CLASS (1)
- ------------------- -------------------- ---------- -------------------- ----------
Snyder Capital Management, L.P........... 1,564,700(2) 6.3% -- --
350 California Street, Ste 1460
San Francisco, CA 94104
Bank of America Mortgage
Capital Corporation.................... 250,000 100%
100 North Tryon Street
Charlotte, NC 23255
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(1) Based on shares outstanding on March 15, 2001.
(2) Based solely upon information contained in Amendment No. 6 Schedule 13G
dated February 15, 2001 and filed with the SEC in February 2001, Snyder
Capital Management, Inc. reported that it has shared voting power with
respect to 1,414,500 shares of Common Stock and shared dispositive power
with respect to 1,564,700 shares of Common Stock.
(3) Holders of the Series B Preferred Stock do not have voting rights unless RFS
is in arrears for two or more quarterly periods (whether or not consecutive)
at which point the holders of such shares are entitled to vote for the
election of two additional directors of the Corporation.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee is composed of three independent directors who meet the
independence requirements of the NYSE for membership on audit committees as
required under Item 306 of Regulation S-K and the Audit Committee provides
assistance to the Corporation's directors in fulfilling their responsibility to
the shareholders, potential shareholders, and investment community relating to
corporate accounting, reporting practices of the Corporation, and the quality
and integrity of the financial reports of the Corporation. In so doing, it is
the responsibility of the Audit Committee to maintain free and open means of
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communication between the directors, the independent auditors and the financial
management of the Corporation. In October 2000, the Board of Directors approved
a new Audit Committee Charter. A copy of this charter is included as Exhibit A
to this proxy statement. We have met with the Company's independent auditors and
management to discuss the duties and responsibilities imposed by the charter and
to coordinate implementation of the charter.
Management has the primary responsibility for our Company's financial
statements and the reporting process, including the systems of internal
controls. The independent auditors are responsible for performing an independent
audit of our Company's financial statements in accordance with generally
accepted accounting principles. In fulfilling our oversight responsibilities,
our audit committee has reviewed the audited financial statements to be included
in the Annual Report on Form 10-K with management and with
PricewaterhouseCoopers LLP ("PricewaterhouseCoopers"), our Company's independent
auditors, including discussion of the quality, not just the acceptability, of
the accounting principles, the reasonableness of significant judgments, and the
clarity of disclosures in the financial statements.
Our audit committee reviewed and discussed with the independent auditors
their judgments as to the quality of the Company's accounting principles and the
matters required to be discussed by Statement on Auditing Standards No. 61
(Codification of Statements on Accounting Standards).
In addition, our audit committee has received the written disclosures and
the letter from PricewaterhouseCoopers required by the Independence Standards
Board Standard No. 1 (Independence Discussions with Audit Committees) of the
American Institute of Certified Public Accountants. We have considered the
non-audit services provided by PricewaterhouseCoopers during the year and
believe that the services do not in any way impair their independence.
Based on the reviews and discussions referred to above, we recommended to
the Board, and the Board has approved, that the audited financial statements be
included in the Annual Report on Form 10-K for the year ended December 31, 2000,
for filing with the Securities and Exchange Commission. We recommended, and the
Board approved, the selection of PricewaterhouseCoopers, as the Company's
independent auditors for the fiscal year ending December 31, 2001.
This report has been furnished by members of the Audit Committee.
Audit Committee
Bruce E. Campbell (Chairman)
John W. Stokes, Jr.
Richard Reiss, Jr.
March 20, 2001
The foregoing report should not be deemed incorporated by reference by any
general statement incorporating by reference this proxy statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent that the company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
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COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Compensation Philosophy
The Compensation Committee is responsible for setting and administering
compensation policies, fixing salaries, awarding performance bonuses and
determining awards of restricted stock and grants of stock options under the
Plan to officers and key employees. The Compensation Committee of the Board of
Directors is comprised of Messrs. Campbell, Jenkins and Starnes, each of whom is
an Independent Director of the Company.
The Compensation Committee believes incentive compensation should provide a
meaningful portion of the Executive's total compensation. In addition to the
annual base cash compensation for 2001, each of the officers and key employees
will be entitled to a cash bonus at the discretion of the Compensation
Committee. It is expected that any cash bonus will be based upon performance
criteria including competitive factors. In addition, each of the officers and
key employees may be provided other incentive compensation, including, but not
limited to, grants of stock options and shares of restricted Common Stock, in
accordance with rules and criteria established by the Compensation Committee of
the Company.
Executive Compensation
The Compensation Committee approved the 2001 annual base cash compensation
for each of the officers and key employees as follows:
2001 ANNUAL BASE
CASH COMPENSATION
-----------------
Robert M. Solmson........................................... $285,000
Randy L. Churchey........................................... $275,000
Kevin M. Luebbers........................................... $210,000
Craig Hofer................................................. $156,000
Herb W. Cummings............................................ $126,000
Other Incentive Compensation
The Compensation Committee believes that grants of restricted Common Stock
and options should reward officers and key employees for sustaining increases in
shareholder value over an extended period, consequently, the restricted Common
Stock and options become exercisable at a rate of 20% to 33 1/3% per year and
expire if the officers and key employees leave RFS voluntarily or are discharged
for cause.
On January 1, 2001, the Compensation Committee approved the grant of
75,000, 100,000 and 75,000 shares of restricted Common Stock to Messrs. Solmson,
Churchey and Luebbers, respectively. The restricted Common Stock vests over
three to five years and is subject to the satisfaction of certain performance
criteria. Information concerning the vesting of the restricted Common Stock is
set forth under "Director and Officer Stock Ownership."
In 1999 and 2000, the Compensation Committee approved the grant of 41,000
and 14,000 shares of restricted Common Stock to officers and key employees,
respectively. Also in 1999 and 2000, respectively, the Compensation Committee
approved the grant of 600,000 and 50,000 options to acquire Common Stock to
officers and key employees, respectively, at an exercise price equal to the
closing price of the Common Stock on The New York Stock Exchange on the date of
grant.
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EMPLOYMENT AGREEMENTS
Messrs. Solmson, Churchey, Luebbers and Hofer entered into employment
agreements (the "Employment Agreements") with RFS. Each Employment Agreement
provides for a three-year term which is renewed for a new three-year term at the
end of each year. Effective January 1, 2001, Ms. Mock resigned her position to
become the Chief Executive Officer of Flagstone Hospitality Management Company,
which manages 52 of RFS's properties.
Under the Employment Agreements, in 2001 Messrs. Solmson, Churchey,
Luebbers and Hofer will receive base salaries in the amounts of $285,000,
$275,000, $210,000 and $156,000 respectively. In addition, the Employment
Agreements provide that each is entitled to a cash bonus payable on or before
April 1, 2002 at the discretion of the Compensation Committee. In addition, each
may receive other incentive compensation, including but not limited to, grants
of stock options and shares of restricted Common Stock.
Under each Employment Agreement, termination without cause or for death or
disability requires a payment to the officers of their annual base salary for
the remainder of the three-year term. In the event of voluntary termination or
termination with cause, the officer will remain subject to the noncompete clause
in the Employment Agreement (described below). Termination with cause includes
the officer's conviction of a crime involving some act of dishonesty or moral
turpitude, theft or embezzlement or malicious infliction of damage to the
Company's property or business opportunity, material and intentional breach of
the noncompete covenant, continuous neglect of duties or refusal to follow
unambiguous duly adopted written direction of the Board of the Company or abuse
of alcohol, drugs or other substances.
Each Employment Agreement terminates upon the death or disability of the
officer, and the officer is entitled to certain benefits in the event of a
termination resulting from disability. Each Employment Agreement provides that,
in the event of a termination of the officer's employment for cause or the
officer's voluntary termination, the officer may not own any interest in a hotel
property other than properties owned by the Company or manage or in any other
capacity engage in the acquisition, development, operation or management of any
hotel property located within 20 miles of any hotel property owned by the
Company at the time of termination for a period of two years.
Under each Employment Agreement, in the event of the Company's termination
of an officer's employment or the officer's resignation for good reason ("Good
Reason"), as defined below, following a change in control of the Company, as
defined below ("Change of Control"), the officer will be entitled to a cash
amount equal to the sum of: (i) three times the officer's annual base salary for
the year in which the change of control occurs, and, (ii) the average cash bonus
for the fiscal year in which the Change of Control occurs and the two preceding
fiscal years. In addition, if the excise tax on "excess parachute payments", as
defined in section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"), will be imposed on the officer under Code section 4999 as a result of a
Change of Control payment or any other payment, benefit or compensation which
the officer receives or has the right to receive from the Company or any of
their affiliates, the Company will indemnify the officer and hold him harmless
against all claims, losses, damages, penalties, expenses and excise taxes. In
addition, any unvested stock options or restricted stock granted to the officer
under the Plan will vest and become immediately exercisable upon a Change of
Control.
A Change of Control is generally defined in the Employment Agreements to
mean (i) the acquisition by any person of securities representing 50% or more of
the Company's outstanding voting securities, (ii) a change in the majority of
the Board of Directors of the Company, unless the change is previously approved
by at least 80% of the members of the Board of Directors of the Company, (iii)
the merger of the Company with another corporation where immediately after such
merger, the persons holding a majority of the combined
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voting power of the then-outstanding securities of the Company prior to the
merger hold less than a majority of the combined voting power of such company,
(iv) the sale by the Company of all or substantially all of its assets to
another corporation or person where immediately after such sale, the persons
holding a majority of the combined voting power of the Company, (v) the sale or
transfer by the Company to a non-affiliated business of the operations or assets
that generated at least two-thirds of the consolidated revenues of the Company
and its subsidiaries for the prior four quarters and (vi) the filing of a Form
8-K by the Company with the SEC disclosing that a change in control has
occurred. For purposes of the Employment Agreements, "Good Reason" is generally
defined as (i) a change in the officer's status, position or responsibilities
that does not represent a promotion, (ii) a reduction in the officer's base
salary or bonus, (iii) a required relocation to a location more than thirty
miles away from the Company's principal executive offices, (iv) failure to
continue to provide benefits to the officer substantially similar to material
benefits enjoyed by material breach of the Employment Agreement by the Company
and (v) the failure of the Company to assume the Employment Agreement following
the Change of Control.
RFS also maintains a 401(k) Plan, health insurance and other benefits
generally available to all employees. In 1999, RFS adopted a deferred
compensation plan that is available only to directors, officers and key
employees. RFS 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.
Bruce E. Campbell, Jr. (Chairman)
R. Lee Jenkins
Michael S. Starnes
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EXECUTIVE COMPENSATION TABLES
The following tables show the compensation of RFS's Chief Executive Officer
and the five other most highly paid executives. See the Compensation Committee
Report for an explanation of our compensation philosophy.
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
ANNUAL -----------------------------
COMPENSATION RESTRICTED SECURITIES
---------------------- STOCK UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS AWARDS (5)($) OPTIONS(#)
- --------------------------- ---- -------- -------- ------------- ----------
Robert M. Solmson 2000 $285,000 $195,000
Chairman of the Board 1999 250,000 10,000 100,000
and Chief Executive Officer 1998 231,750 124,463 $285,000(8) 50,000
Randy L. Churchey 2000(1) $235,415 $187,500
President and Chief 1999(1) 37,500 80,000 $298,438(7) 100,000
Operating Officer
Kevin M. Luebbers 2000(2) $ 95,000 $ 71,250 $132,750(6) 50,000
Executive Vice President
and Chief Financial Officer
Michael J. Pascal 2000(3) $100,000 $281,313
Former Executive Vice 1999 185,000 10,000 75,000
President and Chief 1998 169,950 109,812 $285,000(8) 40,000
Financial Officer
Angie Mock 2000 $175,000 $131,250
Executive Vice President 1999 150,000 10,000 $ 67,500(7) 75,000
Asset Management 1998 110,000 30,000 106,875(8) 25,000
Herb Cummings 2000 $120,000 $ 90,000
Vice President 1999(4) $ 30,000 $ 2,500 25,000
Renovation and Design
Craig Hofer 2000 $150,000 $ 15,000
President, Centrafuse 1999 120,000 7,500 65,000(9)
1998 107,500 20,000 $ 89,063(8) 40,000
- ---------------
(1) On July 26, 2000, Mr. Churchey's annual salary was increased to $250,000
from $225,000. Mr. Churchey's 1999 compensation is for the period November
1, 1999 (date of hire) to December 31, 1999.
(2) For the period July 1, 2000 (date of hire) to December 31, 2000.
(3) For the period January 1, 2000 to June 30, 2000 (date of resignation).
(4) For the period October 1, 1999 (date of hire) to December 31, 1999.
(5) At December 31, 2000, an aggregate of 138,500 shares of restricted Common
Stock subject to vesting were held by the named officers, with an aggregate
value of all vested and unvested restricted Common Stock at such date (based
on the closing market price of the Common Stock at December 31, 2000 of
$13.0625) of $1,849,155 as follows: Mr. Solmson, 74,000 shares valued at
$966,625; Mr. Churchey, 25,000 shares valued at $326,563; Mr. Luebbers,
12,000 shares valued at $156,750, Ms. Mock, 20,000
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shares valued at $261,250 and Mr. Hofer, 7,500 shares valued at $97,967.
Prior to vesting, the recipients are entitled to vote and receive
distributions with respect to unvested shares of restricted Common Stock.
(6) In 2000, 12,000 shares of restricted Common Stock were granted to Mr.
Luebbers, subject to vesting at a rate of 33 1/3% per year starting in each
of July 2001, 2002, 2003. The value is based on the closing market price of
the Common Stock on the date granted of $11.0625.
(7) In 1999, 25,000 and 6,000 shares of restricted Common Stock were granted to
Mr. Churchey and Ms. Mock respectively, subject to vesting at a rate of
33 1/3% per year starting in November 2000 and September 2000, respectively.
The value is based on the closing market price of the Common Stock on the
date granted of $11.9375 and $11.25, respectively.
(8) In 1998, 24,000, 9,000 and 7,500, shares of restricted Common Stock were
granted to Messrs. Solmson, Ms. Mock and Mr. Hofer respectively, subject to
vesting at a rate of 33 1/3% per year starting in October 1999. The value is
based on the closing market price of the Common Stock on the date granted
such date of $11.875.
(9) See "Option Grants" below.
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.
OPTION GRANTS IN 2000
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
------------------------- AT ASSUMED ANNUAL RATES
NUMBER OF % OF TOTAL OF STOCK PRICE
SHARES OPTIONS APPRECIATION FOR OPTION
UNDERLYING GRANTED TO EXERCISE TERM(2)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION --------------------------
GRANTED FISCAL YEAR SHARE(1) DATE 5% 10%
---------- ------------ --------- ---------- ---------- ----------
Kevin M. Luebbers.............. 50,000 100% $11.0625 7/1/10 348,000 881,500
- ---------------
(1) The exercise price per share is the closing price for the Common Stock on
the New York Stock Exchange on the effective date of grant.
(2) Represents potential realizable value at assumed annual rates of stock price
appreciation over the exercise price for the options for the option term.
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The unexpired stock options to purchase the Company's Common Stock held by
the named executive officers at December 31, 2000 are as follows:
FISCAL YEAR END OPTION VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 2000 DECEMBER 31, 2000(1)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
Robert M. Solmson........................ 311,666 83,334 $60,416 $ 61,459
Randy L. Churchey........................ 33,333 66,667 60,417 120,833
Kevin M. Luebbers........................ -- 50,000 -- 100,000
Angie Mock............................... 76,667 73,333 45,313 60,937
Herb W. Cummings......................... 8,333 16,667 13,021 26,042
Craig Hofer.............................. 42,999 52,001 55,020 81,542
- ---------------
(1) Based on the difference between the option exercise price and the closing
sales prices for the Common Stock on the New York Stock Exchange on December
31, 2000, which was $13.0625 per share.
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 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 the Company and
representations from the officers and directors, the Company believes that all
section 16(a) filing requirements for the year ended December 31, 2000
applicable to its officers, directors and greater than ten percent (10%)
beneficial owners were satisfied.
Based on representations from the officers and directors, the Company
believes that no other Form 5 for directors, officers and greater than ten
percent (10%) beneficial owners were required to be filed with the SEC for the
period ended December 31, 2000.
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STOCK PERFORMANCE GRAPH
Annual total returns to RFS shareholders are shown in the performance graph
below. The graph compares the yearly percentage change in the Company's
shareholder return on the Common Stock for the period December 31, 1995 through
December 31, 2000, with the changes in the Standard and Poor's 500 Stock Index
(the "S&P 500 Index") and the SNL Securities Hotel REIT Index for the same
period, assuming a base share price of $100 for the Common Stock and each index
for comparison purposes. Total return equals appreciation in stock price plus
dividends paid, and assumes that all dividends are reinvested. The performance
graph is not necessarily indicative of future investment performance.
The Hotel REIT Index is comprised of fourteen publicly traded REITs which
focus on investments in hotel properties.
RFS HOTEL INVESTORS, INC.
STOCK PRICE PERFORMANCE
TOTAL RETURN PERFORMANCE
RFS HOTEL INVESTORS, INC. S&P 500 SNL HOTEL REITS
------------------------- ------- ---------------
12/31/95 100.00 100.00 100.00
12/31/96 139.38 122.86 152.80
12/31/97 152.15 163.86 200.33
12/31/98 102.05 210.64 99.05
12/31/99 98.38 254.97 76.93
12/31/00 139.60 231.74 110.07
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ADDITIONAL INFORMATION
OTHER BUSINESS
RFS's Board does not intend to bring, and knows of no one intending to
bring, any matter before the annual meeting other than voting with respect to
the director nominees. 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 RFS Board.
OUTSTANDING SHARES
On March 15, 2001, a total of 24,858,547 shares of RFS Common Stock and
250,000 shares of Series B Preferred Stock were outstanding. Each share of
Common Stock is entitled to one vote.
ANNUAL REPORT
RFS's 2000 Annual Report to Stockholders and Form 10-K are enclosed with
this Proxy Statement.
HOW WE SOLICIT PROXIES
In addition to this mailing, RFS employees may solicit proxies personally,
electronically, or by telephone. RFS 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.
SHAREHOLDER PROPOSALS FOR 2002
The Board of Directors will make provision for presentation of appropriate
proposals by shareholders at the 2002 annual meeting of shareholders, provided
that such proposals are submitted by eligible shareholders who have complied
with the relevant regulations of the SEC. Shareholder proposals intended to be
submitted for presentation at the 2002 annual meeting of shareholders of the
Company must be in writing and must be received by the Company at its executive
offices on or before December 1, 2001 for inclusion in the Company's proxy
statement and the form of proxy relating to the 2002 annual meeting.
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of PricewaterhouseCoopers has served as auditors for RFS during
2000 and will serve in that capacity for 2001, unless the board subsequently
determines that a change is desirable. A representative of the auditors is
expected to be at RFS's 2001 Annual Meeting of Stockholders to respond to
appropriate questions and to make a statement if desired.
As amended, Item 9 of Schedule 14(a) requires that RFS disclose all fees
billed to RFS from PricewaterhouseCoopers pertaining to the past fiscal year as
follows:
Audit fees.................................................. $118,000
Tax planning and compliance................................. 201,000
Other fees.................................................. 30,000
--------
Total fees........................................ $349,000
========
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Fees for the reviews of financial statements included in the quarterly
reports on Form 10-Q are included in audit fees.
QUESTIONS
If you have questions or need more information about the annual meeting,
you may write to:
Corporate Secretary
RFS Hotel Investors, Inc.
850 Ridge Lake Blvd., Suite 220
Memphis, TN 38120
or call us at 901-767-7005 and ask for stockholder communications.
We also invite you to visit RFS's Internet site at www.rfshotel.com
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EXHIBIT A
AUDIT COMMITTEE CHARTER
ORGANIZATION
There shall be a committee of the Board of Directors, to be known as the
"Audit Committee," established pursuant to the Bylaws. The Audit Committee shall
be comprised of three (3) members of the Board of Directors of the Corporation
who are independent Directors of the Corporation and otherwise meet the
qualifications for membership set forth herein. The Board of Directors shall
elect the members of the Audit Committee, who shall serve until their successors
are elected and qualified, and shall designate one of the members of the Audit
Committee to serve as Chairman thereof The Secretary of the Corporation shall
serve as the Secretary of the Audit Committee.
STATEMENT OF POLICY
The Audit Committee shall provide assistance to the Corporation's directors
in fulfilling their responsibility to the shareholders, potential shareholders,
and investment community relating to corporate accounting, reporting practices
of the Corporation, and the quality and integrity of the financial reports of
the Corporation. In so doing, it is the responsibility of the Audit Committee to
maintain free and open means of communication between the directors, the
independent auditors and the financial management of the Corporation.
RESPONSIBILITIES
In carrying out its responsibilities, the Audit Committee shall maintain
the flexibility to react to changing conditions, and may adopt such policies and
procedures as it shall deem appropriate, to provide assurance to the directors
and shareholders of the Corporation that the Corporation's accounting and
reporting practices are in compliance with all applicable legal requirements and
are consistent with industry practices. The Audit Committee shall also undertake
such other tasks as may be delegated to it, from time to time, by the Board of
Directors.
In carrying out its responsibilities, the Audit Committee will undertake
the activities, and follow the procedural rules, described below.
CONTINUOUS ACTIVITIES -- GENERAL
1. Provide an open avenue of communication between the independent
auditor and the Board of Directors.
2. Meet at least four times during each calendar year, with additional
meetings to be called by the Chairman of the Committee if, in his opinion,
circumstances require. The Committee may ask members of management or
others to attend meetings and provide pertinent information as necessary.
3. Obtain a written statement from the independent auditor delineating
all relationships between the independent auditor and the Corporation,
discuss with the independent auditor the relationships disclosed in such
written statement, and make such other inquiries as the Audit Committee
deems necessary to confirm the independence of the independent auditor. The
Committee shall take or recommend such actions as it deems appropriate to
ensure the independence of the independent auditor.
24
4. Review with management and the independent auditor the coordination
of audit efforts between the independent auditor and the work performed by
the internal audit staffs of the management companies engaged in managing
the Corporation's hotels with a view to completeness of coverage, reduction
of redundant efforts, and the effective use of audit resources.
5. Inquire of management and the independent auditor about significant
risks or exposures and assess the steps management has taken to minimize
the same.
6. Consider and review with management and the independent auditor:
(1) The adequacy of internal controls, including computerized
information system controls and security;
(2) Recommendations of the independent auditor relating to
improvements in internal accounting controls, including the status of
previous recommendations;
(3) Other findings and recommendations of the independent auditor,
together with management's responses thereto;
(4) Any difficulties encountered by the independent auditor in the
course of its audit work, including any restrictions on the scope of its
activities or its access to required information; and
(5) Any significant changes required in the scope of the
independent auditor's audit plan.
7. Meet at least annually with the independent auditor and management,
in separate executive sessions, to discuss any matters that the Committee
or these groups believe should be discussed privately with the Audit
Committee.
8. Report periodically to the Board of Directors on significant
results of the foregoing activities.
9. Instruct the independent auditor that (i) the independent auditor
is ultimately responsible to the Board of Directors and the Audit
Committee, (ii) the Board of Directors and Audit Committee retain the
ultimate authority and responsibility to select, evaluate and discharge the
independent auditor, and (iii) the Board of Directors is the independent
auditor's client.
CONTINUOUS ACTIVITIES -- REPORTING POLICIES
1. Advise management and the independent auditor that they are
expected to provide the Audit Committee with a timely analysis of
significant current financial reporting issues and developments affecting
current financial reporting practices.
2. Review and discuss with management and the independent auditor
their qualitative judgments about the appropriateness of accounting
principles and financial disclosure practices currently being followed by
the Corporation and of any changes therein that are proposed to be adopted.
3. Review and discuss with management and the independent auditor the
degree of aggressiveness or conservatism of the accounting principles and
underlying estimates being utilized by the Corporation and whether those
principles and estimates are consistent with, or deviate from, customary
industry practices.
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SCHEDULED ACTIVITIES
1. Recommend the selection of the independent auditor for approval by
the Board of Directors and approve the compensation of the independent
auditor. Review and approve the discharge of the independent auditor.
2. Consider, in consultation with management and the independent
auditor, the audit scope and plan proposed by the independent auditor.
3. Review with management and the independent auditor the results of
the independent auditor's reviews of interim financial information and of
annual audits, and solicit the independent auditor's comments relating to:
(1) The independent auditor's review of interim financial
statements;
(2) The independent auditor's audit of the annual financial
statements and accompanying footnotes, and their report thereon;
(3) Any significant changes proposed in the independent auditor's
audit plan; and
(4) Any matters relating to the conduct of the review of interim
financial statements or the conduct of the annual audit which are
required to be communicated to the Audit Committee under Generally
Accepted Accounting Standards.
4. Arrange for a representative of the independent auditor to be
available to the full Board of Directors at least annually to help provide
an appropriate basis for the Board of Directors to approve the appointment
of the auditor.
5. Consider the independent auditor's reasoning behind its acceptance
or questioning of significant estimates by management.
6. Based upon its review, recommend to the full Board of Directors
that the audited financial statements be included in the Corporation's
Annual Report on Form 10-K.
7. At least annually, review, update as necessary and recommend to the
Board of Directors, the adoption of the Charter of the Audit Committee.
8. Prepare, and cause to be included in the Corporation's annual Proxy
Statement, a report of the Audit Committee in compliance with applicable
laws, rules and regulations.
"WHEN NECESSARY" ACTIVITIES
1. Review and approve any management consulting engagement to be
performed for the Corporation by the independent auditor and request
information on any other work undertaken by the independent auditor at the
request of management that is beyond the scope of the audit engagement
letter.
2. Review periodically with the Corporation's general counsel those
legal and regulatory matters that may have a material impact on the
Corporation's financial statements, compliance policies and programs.
3
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3. Conduct, or authorize investigations into, any matters within the
Audit Committee's scope of responsibilities. The Committee shall be
empowered to retain independent counsel and other professionals to assist
in the conduct of any such investigation.
MEMBERSHIP QUALIFICATIONS
1. All members of the Audit Committee shall be Independent Directors
of the Corporation and shall have no relationship to the Corporation that,
in the determination of the Board of Directors, may interfere with the
exercise of their independence from the Corporation and its management.
2. Members of the Audit Committee shall not be [or within the past
three (3) years have been] an officer or employee of the Corporation or any
of its affiliates.
3. Members of the Audit Committee shall not be a member of the
immediate family of any person who is [or within the past three (3) years
has been)] an executive officer of the Corporation or any of its
affiliates.
4. No member of the Audit Committee shall have received, within the
past three (3) years, any compensation from the Corporation or any of its
affiliates, other than for services as a director or under a tax-qualified
retirement or deferred compensation plan, unless the Board of Directors
shall have expressly determined that such compensatory relationship will
not interfere with such member's independence.
5. No member of the Audit Committee shall be a partner, controlling
shareholder or executive officer of any organization to which the
Corporation has made, or from which the Corporation has received,
significant payments during the past five (5) years, unless the Board of
Directors shall have expressly determined that such relationship will not
interfere with such member's independence.
6. No member of the Audit Committee shall be an executive officer of
any company if any executive officer of the Corporation sits on the
compensation committee of such other company.
7. All members of the Audit Committee shall be financially literate
and at least one member of the Audit Committee shall have appropriate
accounting or related financial management expertise, in each case as
determined by the Board of Directors.
PROCEDURAL RULES
1. Each member of the Audit Committee shall have one vote.
2. A quorum of the Audit Committee shall consist of any two (2)
members.
3. The Audit Committee shall take action only by the affirmative vote
of a majority of the members present at any meeting at which a quorum is
present, or by the unanimous written consent of the members thereof.
4. The Audit Committee shall maintain minutes of its meetings,
reflecting the actions taken or authorized by it, and copies thereof shall
be provided to the Board of Directors.
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PROXY NO. OF SHARES ______
RFS HOTEL INVESTORS, INC.
850 RIDGE LAKE BOULEVARD, SUITE 220, MEMPHIS, TENNESSEE 38120
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Robert M. Solmson and Kevin M Luebbers, or
either of them, as proxies, each with the power to appoint such person's
substitute, and hereby authorizes each of them to vote, as designated below, all
the shares of capital stock of RFS Hotel Investors, Inc. held of record by the
undersigned on March 15, 2001, at the Annual Meeting of Shareholders to be held
on May 3, 2001, or any adjournment thereof as specified below.
1. ELECTION OF DIRECTORS
(INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name below)
[ ] FOR ALL NOMINEES LISTED BELOW
CLASS I -- TERM EXPIRING 2004 -- BRUCE E CAMPBELL, RANDY L CHURCHEY, H.
LANCE FORSDICK
[ ] WITHHOLD AUTHORITY to vote for all nominees
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE ELECTION OF ALL NOMINEES FOR DIRECTOR.
DATED: , 2001
---------------------
Please sign exactly as name
appears in left. 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 corporate name by
President or other authorized
officer. If a partnership,
please sign in partnership
name by authorized person.
------------------------------
Signature
------------------------------
Signature if held jointly