[Letterhead of Sonesta International Hotels Corporation]
200 CLARENDON STREET
BOSTON, MASSACHUSETTS 02116
April 16, 1999
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders to
be held on May 18, 1999, at 9:00 in the morning, notice of which is enclosed.
The Meeting will be held at the Company's Corporate Offices, 200 Clarendon
Street, Boston, Massachusetts. I hope that as many stockholders as possible will
attend.
Please date and sign the enclosed Proxy and return it in the accompanying
envelope. This will not prevent you from voting in person at the Meeting if you
so desire, in which case you may revoke your Proxy at that time. By returning
your signed Proxy now, you can be sure that your vote will be counted even if
you are not able to attend the Meeting. If you have received Proxies as both a
Common Stock and Preferred Stock owner, please sign, date and return both
Proxies.
The Annual Report of the Company for 1998 is being forwarded to
stockholders together with this Notice and Proxy Statement; however, any
stockholder who wishes to receive another copy of this report or the Company's
Form 10-K may obtain one, without charge, by writing to the Secretary of the
Company at the above address.
Roger P. Sonnabend
Chairman of the Board
[Letterhead of Sonesta International Hotels Corporation]
200 CLARENDON STREET
BOSTON, MASSACHUSETTS 02116
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
To the Stockholders of
Sonesta International Hotels Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Sonesta
International Hotels Corporation (the "Company"), will be held at the Company's
Corporate Offices, 200 Clarendon Street, Boston, Massachusetts on May 18, 1999,
at 9:00 a.m., for the following purposes.
Matter No.
- ----------
1. To elect a Board of Directors.
2. To ratify the appointment of Ernst & Young LLP as independent auditors for
the year 1999.
3. To consider and transact such other business as may properly come before
the Meeting or any adjournment or adjournments thereof.
Holders of Preferred and Common Stock are entitled to vote on Matter No. 1
as set forth in the accompanying Proxy Statement; only the holders of Common
Stock may vote on the other matters.
Stockholders of record at the close of business on April 9, 1999 are
entitled to notice of and to vote at the Meeting.
By Order of the Board of Directors,
Peter J. Sonnabend
Secretary
Dated: April 16, 1999
PROXY STATEMENT
Solicitation of Proxies
The accompanying Proxy is solicited by the Board of Directors of the
Company. All shares represented by the accompanying Proxy will be voted in
accordance with the specified choice of the stockholders. In the absence of
directions, the Proxy will be voted for the election of the nominees for
Directors named in this Proxy Statement, and for the ratification of the
appointment of Ernst & Young LLP as independent auditors for the year 1999. The
Proxy may be revoked at any time before it is exercised by notifying the Company
in writing at the address listed on the Notice of Annual Meeting of
Stockholders, Attention--Office of the Secretary; or by voting in person at the
Meeting.
All costs of solicitation of Proxies will be borne by the Company. In
addition to solicitation by mail, the Company's Directors, officers and regular
employees, without additional remuneration, may solicit Proxies by telephone,
telegraph and personal interviews. Brokers, custodians and fiduciaries will be
requested to forward Proxy soliciting material to the owners of stock held in
their names, and the Company will reimburse them for their out-of-pocket and
clerical disbursements in connection therewith. This Proxy Statement and
accompanying Proxy are first being mailed to stockholders on or about April 16,
1999.
Outstanding Voting Securities and Voting Rights
The outstanding voting securities of the Company as of April 1, 1999
consisted of 2,068,215 shares of Common Stock and 10,672 shares of Preferred
Stock. Only stockholders of record at the close of business on April 9, 1999
will be entitled to vote. Stockholders are entitled to one vote per share. In
connection with the election of Directors, holders of Preferred Stock as a class
elect two Directors and holders of Common Stock as a class elect the remaining
Directors. All stockholders have cumulative voting rights with respect to the
election of Directors, which means that within each class a stockholder's total
vote (number of shares held multiplied by the number of Directors to be elected
by that class) may be cast entirely for one nominee or distributed among two or
more nominees. The Board of Directors is soliciting discretionary authority to
cumulate votes. The vote of the holders of a majority of the Common Stock voting
at the Meeting will be sufficient to take action on matters other than the
election of Directors. Holders of Preferred Stock are not entitled to vote on
any matter other than the election of Directors.
Under SEC rules, boxes and a designated blank space are provided on the
proxy card for shareholders to mark if they wish either to abstain on one or
more of the proposals or to withhold authority to vote for one or more nominees
for Director. In accordance with New York State law, such abstentions are not
counted in determining the votes cast in connection with the selection of
auditors or the election of one or more of the nominees for Director.
5
1. ELECTION OF DIRECTORS
The persons named in the accompanying Proxy, unless otherwise instructed,
intend to vote shares of Common Stock in favor of the election as Directors for
the ensuing year of the Common Stock Nominees named below and to vote shares of
Preferred Stock in favor of the election as Directors for the ensuing year of
the Preferred Stock Nominees named below, and will be entitled to vote
cumulatively in respect of any such nominees. In case any of those named should
become unavailable to serve, it is intended that votes may be cast for a
substitute. The Board of Directors of the Company has no reason to believe the
persons named will be unable or decline to serve if elected.
Owned Beneficially as of
April 1, 1999(1)
Common Stock Nominees ------------------------------
Shares and Shares and
Percent of Percent of
Preferred Common
Name, Age and Principal Occupation Stock(2) Stock(3)
---------------------------------- ------------ ---------------
George S. Abrams Age 66; Director since May, 1995;
Attorney and Director and Trustee of several organizations ............................. None 61,285(4)
(3.0%)
Mr. Abrams has been an attorney with the law firm Winer and Abrams, Boston,
Massachusetts for more than 20 years. He formerly served as General Counsel and Staff
Director of the United States Senate Judiciary Subcommittee on Refugees. Mr. Abrams
is a Director of Viacom, Inc. and of National Amusements, Inc. Mr. Abrams also serves
as a trustee and on the Visiting Committees of a number of cultural, arts-related and
educational institutions, including the Museum of Fine Arts, in Boston, and the Harvard
University Art Museums.
Vernon R. Alden Age: 75; Director since May, 1978;
Director and Trustee of several organizations .......................................... None 2,819
(.1%)
Mr. Alden was Chairman of the Board and Executive Committee of The Boston
Company, Inc., a financial services company, from 1969 to 1978. He was President of
Ohio University from 1962 to 1969. Mr. Alden is a former Director of Digital Equipment
Corporation, Colgate-Palmolive Company, McGraw-Hill, The Mead Corporation and
Intermet Corporation. He is an Independent General Partner of three ML-Lee
Acquisition Funds and trustee of several cultural and educational organizations. Mr.
Alden is a Chairman of the Japan Society of Boston and the Honorary Consul General
for the Royal Kingdom of Thailand in Boston.
6
Owned Beneficially as of
April 1, 1999(1)
Common Stock Nominees ---------------------------------
Shares and Shares and
Percent of Percent of
Preferred Common
Name, Age and Principal Occupation Stock(2) Stock(3)
- ------------------------------------------------------------------------------------ -------------- ----------------
Joseph L. Bower Age: 60; Director since May, 1984;
Donald Kirk David Professor of Business Administration, Harvard Business
School ........................................................................... None 200
(Less
than
Mr. Bower has been a member of the faculty of the Harvard Business School since .1%)
l963 and has served as Senior Associate Dean, Chairman of the Doctoral Programs, and
Director of Research. Mr. Bower is a Director of ANIKA Therapeutics, Inc., Brown
Group, Inc., The ML-Lee Acquisition Funds, New America High Income Fund, and is
Vice Chairman of the New England Conservatory of Music and a trustee of the
DeCordova and Dana Museum and Park. He has published extensively on strategy,
organization, and the relation of business and government.
Peter J. Sonnabend (8)(9) Age: 45; Director since May, 1995;
Vice Chairman and Secretary, Sonesta International Hotels Corporation ............ 2,000(5) 106,112(7)
(18.7%) (5.1%)
After graduating from Wesleyan University and Boston University School of Law,
Mr. Sonnabend practiced law with the Boston law firm of Winer and Abrams from
1980 to 1987. In March 1987, he joined the Company as Vice President and
Assistant Secretary, in May 1987 he became Vice President and Secretary, and in
May 1995 was named Vice Chairman. He also represents the Company as General
Counsel. Mr. Sonnabend is a trustee of The Institute of Contemporary Art, in
Boston.
Roger P. Sonnabend (6)(8) Age: 73; Director since May, 1959;
Chairman of the Board and Chief Executive Officer, Sonesta International Hotels
Corporation ...................................................................... 2,000(5) 539,351(7)
(18.7%) (26.1%)
Mr. Sonnabend, a graduate of the Massachusetts Institute of Technology and
Harvard Business School, became a Vice President of the Company in 1956 after
ten years of hotel managerial experience. Subsequently, he was Executive Vice
President and from 1963 to 1970 was President of the Company. Since June, 1970,
Mr. Sonnabend has been Chairman of the Board and from January, 1978 until
November, 1983 he also held the office of President. He is involved with many
professional, business, community and educational institutions.
7
Owned Beneficially as of
April 1, 1999(1)
Common Stock Nominees ---------------------------------
Shares and Shares and
Percent of Percent of
Preferred Common
Name, Age and Principal Occupation Stock(2) Stock(3)
- ------------------------------------------------------------------------------------------ -------------- ----------------
Stephanie Sonnabend (8) (10) Age: 46; Director since January, 1996;
President, Sonesta International Hotels Corporation .................................... 2,000(5) 106,875(7)
(18.7%) (5.2%)
Ms. Sonnabend graduated from Harvard-Radcliffe College in 1975 and The Sloan
School of Management, MIT in 1979. She joined the company in 1979 and held various
managerial positions including Vice President of Sales, Vice President of Marketing,
and Executive Vice President. In January 1996, she became President of the Company.
Ms. Sonnabend serves on the Board of Directors of Century Bancorp and Century Bank
and Trust, the Board of Trustees of Radcliffe College, and the Board of Overseers of
New England Conservatory.
Jean C. Tempel Age: 56; Director since September, 1995;
Special Limited Partner, TL Ventures ...................................................
None None
During 1991, Ms. Tempel was a consultant for Safeguard Scientifics, Inc., a
Philadelphia-based NYSE technology company. She became President and COO in
January, 1992. In November, 1993, she returned to Boston and became a partner in
TL Ventures, a Safeguard affiliated venture capital firm. She serves as a
Director of Centocor, Inc., a trustee of the Scudder-Kemper mutual funds, and of
several private companies, and is a trustee of Northeastern University and
Connecticut College.
8
Owned Beneficially as of
April 1, 1999(1)
Preferred Stock Nominees ---------------------------------
Shares and Shares and
Percent of Percent of
Preferred Common
Name, Age and Principal Occupation Stock(2) Stock(3)
- ------------------------------------------------------------------------------------------ -------------- ----------------
Paul Sonnabend (6) (8) Age: 71; Director since June, 1961;
Chairman of the Executive Committee and Chief Financial Officer, Sonesta
International Hotels Corporation ....................................................... 2,000(5) 477,614(7)
(18.7%) (23.1%)
Mr. Sonnabend graduated in 1950 from Cornell University School of Hotel
Administration after serving in the U.S. Naval Reserve. He was President of the
Company from 1970 to 1977. In May, 1980, Mr. Sonnabend became Vice Chairman
of the Board, a position he held until November, 1983 when he reassumed the
Presidency of the Company. In January, 1996, in connection with Stephanie
Sonnabend's being named President, Mr. Sonnabend was named Chairman of the
Executive Committee and Chief Financial Officer of the Company. Mr. Sonnabend is
active in many community projects.
Stephen Sonnabend (6) (8) Age: 67; Director since April, 1964;
Senior Vice President, Sonesta International Hotels Corporation ........................ 2,000(5) 201,310(7)
(18.7%) (9.7%)
Mr. Sonnabend has served as General Manager of the Royal Sonesta Hotel in
Cambridge and the Sonesta Beach Resort in Key Biscayne. In 1970 he became Senior
Vice President of the Company and serves as President of the Sonesta Beach Resort
in Key Biscayne, Florida.
- --------
(1) Shares are considered beneficially owned for the purposes of this Proxy
Statement if held by the person indicated as beneficial owner, or if such
person, directly or indirectly, through any contract, arrangement,
understanding, relationship, or otherwise has the power to vote, to direct
the voting of and/or to dispose of or to direct the disposition of, such
security, or if the person has the right to acquire beneficial ownership
within sixty (60) days.
(2) As of April 1, 1999 the nominees listed in the table above owned an
aggregate of 2,000 shares of the Company's Preferred Stock, representing
18.7% of that class of equity securities.
(3) As of April 1, 1999 the nominees listed in the table above beneficially
owned an aggregate of 1,265,569 shares of the Company's Common Stock,
representing 61% of that class of equity securities.
9
(4) Of these shares, 60,000 are held as a Trustee of several trusts for the
benefit of Paul Sonnabend's children and grandchildren; 38,000 of these
shares are deemed to be beneficially owned by Paul Sonnabend and 26,500 of
these shares are deemed to be beneficially owned by Peter J. Sonnabend.
(5) Constitutes the 2,000 shares of Preferred Stock owned by the Sonnabend
Foundation, a charitable trust established by the Sonnabends. See Note 2 on
page 17.
(6) Roger, Paul and Stephen Sonnabend are brothers.
(7) By virtue of his or her stock ownership interest and position with the
Company, he or she may be deemed to control the Company (or be in common
control with other stockholders of the Company) within the meaning of the
Rules and Regulations of the Securities and Exchange Commission under the
Securities Exchange Act of 1934.
(8) See Note 2 on page 17.
(9) Peter J. Sonnabend is the son of Paul Sonnabend, who is deemed to be the
beneficial owner of 71,700 shares of the common stock owned by Peter J.
Sonnabend.
(10) Stephanie Sonnabend is the daughter of Roger P. Sonnabend, who is deemed to
be the beneficial owner of 98,297 shares of the Common Stock owned by
Stephanie Sonnabend.
Committees of the Board of Directors
The Company's Board of Directors has an Audit Committee consisting of
Messrs. Abrams, Alden and Bower. Mr. Alden serves as Chairman of this
Committee, which meets periodically with the Company's management and
independent public accountants to assure that they are carrying out their
responsibilities.
The Company's Board of Directors has an Executive Committee consisting of
Messrs. Bower, Paul Sonnabend, and Roger P. Sonnabend. Mr. Paul Sonnabend
serves as Chairman of this Committee. The Committee has the authority, except
as proscribed by law, to exercise the powers of the Directors in the management
of the business affairs and property of the Company during the intervals
between the meetings of the Board.
The Company's Board of Directors has a Nominating Committee consisting of
Messrs. Bower, Alden, and Peter J. Sonnabend, and Ms. Sonnabend. Mr. Bower
serves as Chairman of this Committee. The functions of this Committee include
consideration of the composition of the Board and recommendation of individuals
for election as Directors of the Company. The Nominating Committee will
consider nominees recommended by security holders provided such nominations are
made pursuant to the Company's By-laws and applicable law.
The Company's Board of Directors has a Compensation Committee consisting
of Messrs. Alden and Bower and Ms. Tempel. Mr. Bower serves as Chairman of this
Committee, which meets periodically to review and consider the appropriateness
of the compensation of the Company's management.
Directors' Attendance and Fees
Directors who are not salaried employees of the Company receive annual
compensation of $12,000, plus an attendance fee of $600 per meeting.
10
During 1998 there were four meetings of the Board of Directors, one meeting
of the Compensation Committee, and one meeting of the Audit Committee. The
Executive Committee did not meet during 1998. Each of the nominees attended at
least 75% of the total number of meetings of the Board of Directors and of the
committees on which such Directors served during 1998, except Mr. Alden who
attended two of the four meetings of the Board.
Executive Compensation
Set forth below is the compensation paid and/or accrued by the Company,
including its subsidiaries, for services in all capacities for the last three
completed fiscal years to or for the benefit of the CEO and each of its four
other most highly compensated executive officers whose aggregate cash
compensation exceeded $100,000.
Summary Compensation Table
Annual Compensation
-------------------------------------------
Name & Principal Other Annual
Position Year Salary Bonus * Compensation
- ------------------------------------- ------ ----------- --------- --------------
Roger P. Sonnabend 1998 $418,374 $74,722 NONE
Chief Executive Officer 1997 418,374 58,238
1996 418,374 56,335
Paul Sonnabend 1998 396,158 70,754 NONE
Chairman of Exec. Comm. 1997 396,158 55,145
& CFO 1996 396,158 53,362
Stephen Sonnabend 1998 280,395 50,079 NONE
Senior Vice President 1997 280,395 39,031
1996 280,395 37,769
Hans U. Wandfluh 1998 235,000 58,750 NONE
Vice President; President & General 1997 225,000 52,643
Manager, Royal Sonesta Hotel, 1996 205,000 51,250
New Orleans
Jacqueline Sonnabend 1998 250,000 44,650 NONE
Executive Vice President 1997 208,000 28,954
1996 200,000 26,940
Peter J. Sonnabend 1998 250,000 44,650 NONE
Vice Chairman, 1997 208,000 28,954
Vice President, and 1996 200,000 26,940
Secretary
Stephanie Sonnabend 1998 250,000 44,650 NONE
President 1997 208,000 28,954
1996 200,000 26,940
Long Term Compensation
----------------------------------------------------
Restricted Securities
Name & Principal Stock Underlying LTIP ** All Other
Position Award Options/SAR's Payouts Compensation
- ------------------------------------- ------------ --------------- --------- -------------
Roger P. Sonnabend NONE NONE NONE NONE
Chief Executive Officer
Paul Sonnabend NONE NONE NONE NONE
Chairman of Exec. Comm.
& CFO
Stephen Sonnabend NONE NONE NONE NONE
Senior Vice President
Hans U. Wandfluh NONE NONE NONE NONE
Vice President; President & General
Manager, Royal Sonesta Hotel,
New Orleans
Jacqueline Sonnabend NONE NONE NONE NONE
Executive Vice President
Peter J. Sonnabend NONE NONE NONE NONE
Vice Chairman,
Vice President, and
Secretary
Stephanie Sonnabend NONE NONE NONE NONE
President
- --------
* These bonuses were paid under the Company's incentive compensation plan (see
p.12)
** Long Term Incentive Plan
11
Agreements with Executives
The Company entered into Restated Employment Agreements with Roger P.
Sonnabend, Paul Sonnabend, and Stephen Sonnabend, effective as of January 1,
1992, and amended and updated in November 1995 (Paul) and March 1996 (Roger,
Stephen), which replaced Restated Employment Agreements dated January 1, 1984,
at annual base salaries of at least $418,374, $396,158, and $280,395,
respectively. The current terms end December 31, 1999, but are automatically
renewed for successive one year terms unless terminated by either party. Upon
the death of any of such executives, the Company has undertaken to continue
payments to their respective "Beneficiary" (as defined in the Agreement) in an
amount equal to fifty percent (50%) of the applicable base salary as of the date
of death, for a period of four years following death. Under separate agreements,
dated December 31, 1991, and amended and updated in November 1995 (Paul) and
March 1996 (Roger, Stephen), the Company has agreed that in the event of the
permanent and total disability of Roger P. Sonnabend, Paul Sonnabend or Stephen
Sonnabend while in the employ of the Company, the Company will continue payments
to such executive in an amount equal to fifty percent (50%) of the applicable
base salary at the date of disability, for a period of four years following the
disability; and if death occurs during disability, for the balance of the
four-year period, to the executive's spouse, estate or other designated
beneficiary.
Incentive Compensation Plan
The Company has an incentive compensation plan under which pre-tax profit
thresholds are established at the beginning of each year for certain of its
hotels. Once the profit threshold is reached at a hotel, key employees of that
hotel are entitled to receive a bonus equal to 3% of their annual salary, and
10% of any profits in excess of the threshold are shared proportionally by the
same group. Additionally, key employees of each hotel may receive a bonus of up
to two percentage points based on an evaluation of that hotel's performance in
the areas of personal service and hotel physical appearance. The total incentive
bonus paid out during each year is capped at 25% of base salary. Executive
Office key employees, including officers of the Company, are entitled to receive
incentive payments equal to that percentage of their respective salaries which
equals the average (as a percentage of salaries) of all incentive payments made
to certain hotel key employees as a group.
Pension Plan
The Company has an I.R.S. qualified defined benefit pension plan which
covers all non-union salaried employees at its Executive Offices and its hotels
in Boston (Cambridge), Key Biscayne and New Orleans. All officers and Directors
who are full-time employees of the Company are covered under this plan. Benefits
under the plan are based on the average compensation for the highest sixty
consecutive months of service during employment, reduced proportionately for
each year of service less than twenty-seven (full service period). The plan
provides for integration with 50% of the primary Social Security benefit,
reduced proportionately for each year of service less than twenty-seven. It
provides for a normal retirement age of 65 and an early retirement age of 55
with five years of service. Benefits become vested at normal retirement age or
upon the completion of five years of service and attaining the age of 21. Thus,
the Company is unable to ascertain the benefits which may accrue to its
Directors and/or officers since the benefits are based on variable factors.
The following table sets forth a range of estimated annual retirement
benefits under the plan upon retirement at age 65.
12
PENSION PLAN TABLE
Average
Annual Compensation for Years of Service
Highest Sixty ------------------------------------------------------
Consecutive Months 15 20 25 30* 35*
- ----------------------- ---------- ---------- ---------- ---------- ----------
$125,000 ................ $30,249 $40,332 $50,415 $54,448 $54,448
$150,000 ................ $37,193 $49,591 $61,989 $66,948 $66,948
$175,000 ................ $44,138 $58,850 $73,563 $79,448 $79,448
$200,000 ................ $51,082 $68,110 $85,137 $91,948 $91,948
$225,000 ................ $58,027 $77,369 $96,711 $104,448 $104,448
$250,000 ................ $64,971 $86,628 $108,285 $116,948 $116,948
$300,000 ................ $78,860 $105,147 $130,000 $130,000 $130,000
$350,000 ................ $92,749 $123,665 $130,000 $130,000 $130,000
$400,000 ................ $106,638 $130,000 $130,000 $130,000 $130,000
$450,000 ................ $120,527 $130,000 $130,000 $130,000 $130,000
$500,000 ................ $130,000 $130,000 $130,000 $130,000 $130,000
- --------
*The maximum benefit under the Company's Pension Plan is based on 27 years of
service.
The above benefits are calculated on a straight-life annuity basis and
after deducting a portion of Social Security benefits, as described above.
For 1998 the maximum benefit allowable under the Employee Retirement Income
Security Act of 1974 is $130,000.
Each of Roger, Paul and Stephen Sonnabend has the maximum number of years
of credited service under the pension plan (27 years). Of the other individuals
named in the Summary Compensation Table on page 11, Hans Wandfluh has 26 years
of credited service, and Jacqueline, Peter and Stephanie Sonnabend have 15, 12
and 20 years of accredited service, respectively.
Compensation Committee Report on Executive Compensation
The compensation paid to Company executives has, for many years, consisted
largely of two components: base salary and cash incentive bonus program. The
Compensation Committee, which is comprised solely of non-management directors,
is responsible for reviewing, approving and administering executive
compensation. In evaluating executive compensation, the Committee considers
several factors, including job responsibilities, job performance, the
compensation paid to executives holding similar positions in other companies of
comparable size and complexity to the Company, the performance and financial
condition of the Company, factors unique to the Company, and changes in the cost
of living.
13
The Compensation Committee met in January 1998 to consider the base
salaries to be paid to the chief executive officer and the executives named in
the Summary Compensation Table for 1998. The Committee noted the record
performance in 1997 of the Company's hotels in Boston (Cambridge),
Massachusetts, its leased hotel in New Orleans, Louisiana, and the improved
results and enhanced facilities of its resort hotel in Anguilla, B.W.I. The year
1997 was also notable in that the Company completed the extensive renovation of
one half of the guestrooms at its Boston hotel, and installed other improvements
at the property including a new communications system; opened a new hotel in
Luxor, Egypt; and entered into agreements for a new hotel in Miami Beach,
Florida. Based on the above-mentioned factors, the Committee, on Management's
recommendation, approved base salary increases for all executive officers of the
Company, except the chief executive officer, the chairman of the executive
committee and senior vice president, who for the third consecutive year received
no increase in base salary. The increase in base salary for Hans U. Wandflluh
was 8%, and the increase for Jacqueline, Peter and Stephanie Sonnabend was 20%.
The second component of executive compensation relates to annual bonuses
which may be earned by the chief executive officer as well as all other
executive and key officers of the Company under the Company's Incentive
Compensation Plan. The chief executive officer and the other named executive
officers earn bonuses under this plan based on the average (as a percentage of
salaries) of all incentive payments made to certain key hotel employees under
the plan based on performance objectives established by Management and approved
by the Compensation Committee at the beginning of each year for certain of the
company's hotels. The Company's Incentive Compensation Plan is described in more
detail under "Incentive Compensation Plan" contained elsewhere in this Proxy
Statement.
The Company has not maintained a stock option plan for several years and
none of the executive officers named in the Summary Compensation Table presently
holds any stock options. Stock options have not been deemed a necessary part of
the Company's compensation program due in part to the fact that six of the seven
named executive officers are beneficial owners of a significant number of shares
of the Company's capital stock.
Submitted by the Compensation Committee.
Vernon R. Alden, Joseph L. Bower, Chairman, and Jean C. Tempel.
Performance Graph
The following graph compares the annual percentage change in the cumulative
total shareholder return on the Company's Common Stock against the cumulative
total return of the NASDAQ Stock Market (US Companies) and the NASDAQ Hotels and
Motels for the five-year period commencing December 31, 1993 and ending December
31, 1998.
14
Comparison of Five-Year Cumulative Total Returns
Performance Graph for
Sonesta International Hotels Corporation
Prepared by the Center for Research in Security Prices
Produced on 04/02/1999 including data to 12/31/1998
[Line chart]
Sonesta Nasdaq NASDAQ
International Stock Stocks
Hotels Market Hotels and
Corporation (U.S. Companies) Motels
---------------------------------------------------
12/31/93 100.000 100.000 100.000
101.550 103.035 104.674
101.550 102.073 108.773
103.876 95.798 97.628
103.876 94.554 82.859
103.876 94.785 82.833
105.824 91.319 74.246
105.824 93.192 80.853
105.824 99.135 84.565
104.244 98.881 86.183
112.141 100.824 86.004
113.721 97.479 81.033
12/30/94 114.827 97.752 81.245
110.812 98.309 77.530
114.827 103.509 79.680
109.206 106.579 78.060
107.600 109.937 84.587
104.388 112.775 89.798
111.133 121.914 97.446
116.036 130.876 102.853
119.304 133.531 101.251
107.047 136.601 95.576
83.350 135.813 86.732
84.984 139.004 88.370
12/29/95 82.170 138.265 90.136
103.970 138.944 90.976
107.324 144.233 87.485
109.001 144.708 87.882
112.355 156.710 98.942
114.032 163.906 110.409
116.074 156.517 114.536
124.609 142.559 106.859
134.851 150.547 107.868
145.093 162.062 116.646
147.653 160.271 113.178
135.705 170.179 112.113
12/31/96 138.509 170.025 112.434
135.046 182.109 111.014
135.912 172.037 113.893
135.912 160.804 98.617
128.121 165.831 104.383
128.121 184.696 107.365
129.319 190.353 109.744
130.198 210.432 112.502
140.755 210.179 124.893
142.515 222.580 126.743
160.989 211.020 115.073
211.133 212.164 118.179
12/31/97 199.187 208.532 107.474
213.415 215.158 106.549
199.187 235.389 112.986
202.744 244.025 107.435
199.187 248.054 111.732
167.175 234.261 105.394
176.514 250.681 97.960
219.742 247.694 93.089
197.227 198.800 72.013
192.724 226.450 68.409
190.923 236.226 71.143
199.929 260.132 75.070
12/31/98 196.573 293.832 73.465
[End line chart]
Legend
Symbol CRSP Total Returns Index for: 12/31/93 12/30/94 12/29/95 12/31/96 12/31/97 12/31/98
------ ----------------------------- -------- -------- -------- -------- -------- --------
[Solid line, square] Sonesta International Hotels Corporation 100.0 114.8 82.2 138.5 199.2 196.6
[Dashes & dots, star] Nasdaq Stock Market (U.S. Companies) 100.0 97.8 138.8 170.0 208.5 239.6
[Dashes, triangle] NASDAQ Stocks (SCI 7010-7019 US + Foreign) 100.0 81.2 90.1 90.1 107.5 102.2
Hotels and Motels
Notes:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the monthly interval, based on the firscal year-end, is not a trading
day, the preceding trading day is used.
D. The Index level for all series was set to $100.0 on 12/31/93.
15
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Company's Board of Directors consisted
of Vernon R. Alden, Joseph L. Bower, Lawrence M. Levinson and Jean C. Tempel
throughout 1998.
Certain Relationships/Transactions
Mr. George S. Abrams, a Director of the Company, performed legal services
for the Company during 1997, 1998 and 1999.
The law firm of Burns & Levinson, of which Mr. Lawrence M. Levinson, a
former Director of the Company, is a partner, performed legal services for the
Company during 1997, 1998 and 1999.
The Company has purchased artwork for its hotels and executive offices from
Obelisk Gallery, Inc., a corporation owned by Mrs. Roger Sonnabend. Purchases
from January 1, 1998 through March 1, 1999 have totaled $139,343 including
$19,090 on behalf of managed hotels. The Company believes that the prices paid
for such artwork are at least as favorable to the Company as would have been
obtained from unrelated parties.
PRINCIPAL STOCKHOLDERS
The following tables set forth certain information as of April 1, 1999 with
respect to persons known to the Company to be the beneficial owners of more than
5% of the Company's Common Stock and more than 5% of the Company's Preferred
Stock.
COMMON STOCK
Name and Address Number of Shares Percent
of Beneficial Owner Beneficially Owned(1) of Class
- ------------------- --------------------- --------
Alan M. Sonnabend (2) ........... 115,749(3) 5.6%
c/o Sonesta Beach Resort
350 Ocean Drive
Key Biscayne, FL 33149
Paul Sonnabend (2) .............. 477,614 23.1%
200 Clarendon Street
Boston, MA 02116
Peter J. Sonnabend (2) .......... 106,112(4) 5.1%
200 Clarendon Street
Boston, MA 02116
Roger P. Sonnabend (2) .......... 539,351 26.1%
200 Clarendon Street
Boston, MA 02116
Stephanie Sonnabend (2) ......... 106,875(5) 5.2%
200 Clarendon Street
Boston, MA 02116
16
Name and Address Number of Shares Percent
of Beneficial Owner Beneficially Owned(1) of Class
- ------------------- --------------------- --------
Stephen Sonnabend (2) ..................................................... 201,310 9.7%
200 Clarendon Street
Boston, MA 02116
All executive officers and Directors as a group (15 persons including those 1,274,558 61.6%
noted above) ..............................................................
Marvin C. Schwartz (6) .................................................... 199,500 9.6%
c/o Neuberger & Berman
605 Third Avenue
New York, New York 10158
- --------
(1) See note 1 on Page 9.
(2) 1,195,675 shares of the Company's Common Stock are subject to the Sonnabend
Voting Trust Agreement dated August 1, 1984, as amended in December, 1984.
The voting trust terminates on December 31, 2000, or at such time as there
are fewer than two trustees. The present trustees are Messrs. Roger, Paul
and Stephen Sonnabend; any two trustees have the power to vote the shares in
their discretion unless otherwise directed by the holders of a majority of
the beneficial owners of the shares. The trustees and fourteen other members
of the Sonnabend family are the record owners of these shares.
(3) Of these shares, 106,172 are deemed to be beneficially owned by Roger P.
Sonnabend.
(4) Of these shares, 71,700 are deemed to be beneficially owned by Paul
Sonnabend.
(5) Of these shares, 98,297 are deemed to be beneficially owned by Roger P.
Sonnabend.
(6) Marvin C. Schwartz has the sole power to dispose of 74,000 shares and has
shared dispositive power with regard to 125,500 shares. Mr. Schwartz has
sole voting power with regard to 74,000 shares and does not have shared
voting power over any shares.
PREFERRED STOCK
Name and Address Number of Shares Percent
of Beneficial Owner Beneficially Owned(1) of Class
- ------------------- --------------------- --------
Paul Sonnabend, Stephanie Sonnabend and Peter J. Sonnabend, as holders of
the voting rights in the Sonnabend Foundation(2) .......................... 2,000 18.7%
All executive officers and Directors as a group (15 persons including above) 2,000 18.7%
- --------
(1) See note 1 on Page 9.
(2) On April 1, 1999 members of the Sonnabend family, including Roger P.
Sonnabend, Paul Sonnabend, Stephanie Sonnabend, Stephen Sonnabend and Peter
J. Sonnabend, owned beneficially 2,000 shares of Preferred Stock, all of
which was owned beneficially by the Sonnabend Foundation, a
charitable trust established by the Sonnabends.
17
Jacqueline Sonnabend and Hans U. Wandfluh, who are referenced in the
Summary Compensation Table on Page 11, are the beneficial owners of the
following amounts of Common Stock: Jacqueline Sonnabend: 98,275 shares; Hans U.
Wandfluh: 4,000 shares. Neither of such persons is the beneficial owner of
Preferred Stock.
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The persons named in the accompanying Proxy intend, unless otherwise
instructed, to vote shares of Common Stock for Ernst & Young LLP as independent
auditors for the Company for the year 1999. The appointment of this firm has
been made by the Board of Directors of the Company upon recommendation of its
Audit Committee, subject to stockholder ratification. Until 1979, Arthur Young &
Company, which merged with Ernst & Whinney during 1989 to form Ernst & Young
LLP, had acted as independent auditors for the Company for many years and was
reappointed in 1985.
Ernst & Young LLP is an internationally recognized firm of independent
auditors. This firm has considerable experience in the hotel industry and has
offices in all locations in which the Company operates. In the opinion of the
Board of Directors of the Company, Ernst & Young LLP is fully qualified to act
as independent auditors for the Company.
The Audit Committee has previously reviewed and approved the scope of the
annual audit by the Company's independent public accountants. The Committee also
reviews all services and fees at the end of each annual audit.
A representative of Ernst & Young LLP is expected to be present at the
Meeting and will have an opportunity to make a statement and is to be available
to respond to stockholders' questions.
STOCKHOLDER PROPOSALS
Proposals that stockholders intend to present at the next Annual Meeting of
Stockholders must comply with Rule 14a-8 of the Securities and Exchange
Commission issued under the Securities Exchange Act of 1934 and must be received
at the principal executive offices of the Company, 200 Clarendon Street, Boston,
Massachusetts 02116 not later than February 1, 2000.
18
MISCELLANEOUS
The Board of Directors does not know of any matters, other than those
discussed in this Proxy Statement, which may come before the Meeting. However,
if any other matters are properly presented at the Meeting, it is the intention
of the persons named in the accompanying Proxy to vote, or otherwise act, in
accordance with their judgment on such matters.
By Order of the Board of Directors
PETER J. SONNABEND
Secretary
Dated: April 16, 1999
The Board of Directors hopes that all stockholders will attend the Meeting.
In the meantime, you are requested to execute the accompanying Proxy and return
it in the enclosed envelope. Stockholders who attend the Meeting may vote their
stock personally even though they have sent in their Proxies.
19
COMMON PROXY
SONESTA INTERNATIONAL HOTELS CORPORATION
PROXY For Annual Meeting of Stockholders--May 18, 1999
Sonesta International Hotels Corporation
200 Clarendon Street, Boston, Massachusetts
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of SONESTA INTERNATIONAL HOTELS CORPORATION, a
New York corporation, hereby constitutes and appoints BOY A.J. VAN RIEL and
PETER J. SONNABEND and each of them, the true and lawful attorneys and proxies
of the undersigned with power of substitution in each of them and their
respective substitute(s), for and in the name of the undersigned to vote the
COMMON STOCK which the undersigned is entitled to vote at the Annual Meeting of
Stockholders of Sonesta International Hotels Corporation, to be held on May 18,
1999 at 9:00 A.M. and at any adjournment(s) thereof, to the same extent and with
all powers which the undersigned would possess if personally present. A majority
of such attorneys and proxies or their substitute(s), or if only one be present
and acting at such meeting, then that one, shall have and may exercise all of
the powers of all of said attorneys and proxies. The undersigned hereby
acknowledges receipt of the Notice of Annual Meeting of Stockholders and the
Proxy Statement furnished therewith, each dated April 16, 1999.
(Continued and to be SIGNED on the other side)
- --------------------------------------------------------------------------------
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
SONESTA INTERNATIONAL HOTELS CORPORATION
COMMON STOCK
May 18, 1999
Please Detach and Mail in the Envelope Provided
Please mark
your votes as
indicated in
this example.
[EXAMPLE - BOX WITH X INSERTED]
FOR all nominees WITHHOLD
listed at right AUTHORITY
(except as marked to to vote for nominees
the contrary) listed at right
1. ELECTION
DIRECTORS. [BOX for marking vote] [BOX for marking vote] Nominees: G. Abrams
V. Alden
J. Bower
P.J. Sonnabend
R. Sonnabend
S. Sonnabend
J. Tempel
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the line provided below.)
- --------------------------------------------------------------------------------
2. Ratification of Ernst & Young as independent
accountants of the Company for the year 1999.
FOR AGAINST ABSTAIN
3. Upon such other business as may properly come
before the meeting or any adjournment(s) thereof.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL
BE VOTED FOR PROPOSALS NO. 1 AND NO. 2.
PLEASE DATE, SIGN AND MAIL THIS PROXY PROMPTLY.
Date , 1999
---------------------------------
- --------------------------------------------
- --------------------------------------------
Signature(s)
NOTE: Please sign exactly as your name or names appear
hereon. Joint owners should sign personally. Corporate
proxies should be signed by authorized officer, and
have seal affixed and attested.
PREFERRED PROXY
SONESTA INTERNATIONAL HOTELS CORPORATION
PROXY For Annual Meeting of Stockholders--May 18, 1999
Sonesta International Hotels Corporation
200 Clarendon Street, Boston, Massachusetts
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of SONESTA INTERNATIONAL HOTELS CORPORATION, a
New York corporation, hereby constitutes and appoints BOY A.J. VAN RIEL and
PETER J. SONNABEND and each of them, the true and lawful attorneys and proxies
of the undersigned with power of substitution in each of them and their
respective substitute(s), for and in the name of the undersigned to vote the 5%
CUMULATIVE PREFERRED STOCK which the undersigned is entitled to vote at the
Annual Meeting of Stockholders of Sonesta International Hotels Corporation, to
be held on May 18, 1999 at 9:00 A.M., and at any adjournment(s) thereof, to the
same extent and with all powers which the undersigned would possess if
personally present. A majority of such attorneys and proxies or their
substitute(s), or if only one be present and acting at such meeting, then that
one, shall have and may exercise all of the powers of all of said attorneys and
proxies. The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Stockholders and the Proxy Statement furnished therewith, each dated
April 16, 1999.
(Continued and to be SIGNED on the other side)
- --------------------------------------------------------------------------------
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
SONESTA INTERNATIONAL HOTELS CORPORATION
PREFERRED STOCK
May 18, 1999
Please detach and Mail in the Envelope Provided
Please mark
your votes as
in this example.
[EXAMPLE - BOX WITH X INSERTED]
FOR all nominees WITHHOLD
listed at right AUTHORITY
(except as marked to to vote for nominees
the contrary) listed at right
1. ELECTION
DIRECTORS [BOX for marking vote] [BOX for marking vote] Nominees: P. Sonnabend
S. Sonnabend
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the line provided below.)
- --------------------------------------------------------------------------------
2. Upon such other business as may properly come
before the meeting or any adjournment(s) thereof.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL
BE VOTED FOR PROPOSAL 1.
PLEASE DATE, SIGN AND MAIL THIS PROXY PROMPTLY.
Date , 1999
---------------------------------
- --------------------------------------------
- --------------------------------------------
Signature(s)
NOTE: Please sign exactly as your name or names appear
hereon. Joint owners should sign personally. Corporate
proxies should be signed by authorized officer, and
have seal affixed and attached.