[Logo] Sonesta International Hotels Corporation
200 CLARENDON STREET
BOSTON, MASSACHUSETTS 02116
April 17, 1998
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders to
be held on May 18, 1998 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 1997 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
[Logo] 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, 1998
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 1998.
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 8, 1998 are
entitled to notice of and to vote at the Meeting.
By Order of the Board of Directors,
Peter J. Sonnabend
Secretary
Dated: April 17, 1998
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 1998. 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 17,
1998.
Outstanding Voting Securities and Voting Rights
The outstanding voting securities of the Company as of April 1, 1998
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 8, 1998
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, 1998(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 65; Director since May, 1995;
Attorney and Director and Trustee of several organizations ............................. None 57,285(4)
(2.8%)
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., where he is a Chairman of the Audit Committee, 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: 74; 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 Director of Digital Equipment
Corporation and Intermet Corporation. He is also Independent General Partner of three
ML-Lee Acquisition Funds and trustee of several cultural and educational
organizations. Mr. Alden is 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, 1998(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: 59; 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%)
1963 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.
Lawrence M. Levinson Age: 79; Director since January, 1973;
Partner, Burns & Levinson, Attorneys at Law (Boston, Massachusetts) ................... None 1,500
(Less
Mr. Levinson graduated from Harvard College in 1939 and, after serving in the than
United States Army, from Harvard Law School in 1947. He serves as a Director of .1%)
Arrow Automotive Industries, Inc. and Independent Bank Corp., and an Honorary
Director of Rockland Trust Company. He also serves as a director, trustee, officer and/or
counsel for various other corporation and charitable organizations.
Peter J. Sonnabend (8)(9) Age: 44; Director since May, 1995;
Vice Chairman and Secretary, Sonesta International Hotels Corporation ................. 2,000(5) 104,112(7)
(18.7%) (5%)
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 serves as a Director of Hub Data, Inc. He is a trustee of The Institute of
Contemporary Art, in Boston, and is also involved in professional, cultural and
community organizations.
7
Owned Beneficially as of
April 1, 1998(1)
Common Stock Nominees ---------------------------------
Shares and Shares and
Percent of Percent of
Preferred Common
Name, Age and Principal Occupation Stock(2) Stock(3)
- -------------------------------------------------------------------------------------- -------------- ----------------
Roger P. Sonnabend (6)(8) Age: 72; Director since May, 1959;
Chairman of the Board and Chief Executive Officer, Sonesta International Hotels
Corporation ........................................................................ 2,000(5) 553,084(7)
(18.7%) (26.7%)
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.
Stephanie Sonnabend (8)(10) Age: 45; Director since January, 1996;
President, Sonesta International Hotels Corporation ................................ 2,000(5) 100,008(7)
(18.7%) (4.8%)
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: 55; 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, the Safeguard affiliated venture capital firm. She also serves as a Director
of Cambridge Technology Partners, Inc., Centocor, Inc., and the Scudder mutual funds
and of several private companies, and is a trustee of Northeastern University and
Connecticut College.
8
Owned Beneficially as of
April 1, 1998(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: 70; Director since June, 1961;
Chairman of the Executive Committee and Chief Financial Officer, Sonesta
International Hotels Corporation .................................................. 2,000(5) 481,614(7)
(18.7%) (23.3%)
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: 66; Director since April, 1964;
Senior Vice President, Sonesta International Hotels Corporation ................... 2,000(5) 204,310(7)
(18.7%) (9.9%)
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, 1998 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, 1998 the nominees listed in the table above beneficially
owned an aggregate of 1,281,224 shares of the Company's Common Stock,
representing 62% of that class of equity securities.
9
(4) Of these shares, 56,000 are held as a Trustee of several trusts for the
benefit of Paul Sonnabend's children and grandchildren; 42,000 of these
shares are deemed to be beneficially owned by Paul Sonnabend and 24,500 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 96,008 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, Bower and Levinson. 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, Levinson, 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. Alden, Bower, Peter J. Sonnabend and Stephanie 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, Bower, Levinson, 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 1997 there were five 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 1997. 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 1997, except Mr. Alden who
attended four of the seven meetings of the Board and the committees on which he
serves.
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 1997 $418,374 58,238 NONE
Chief Executive Officer 1996 418,374 56,335
1995 418,374 72,136
Paul Sonnabend 1997 396,158 55,145 NONE
Chairman of Exec. Comm. 1996 396,158 53,362
& Chief Financial Officer 1995 396,158 68,305
Stephen Sonnabend 1997 280,395 39,031 NONE
Senior Vice President 1996 280,395 37,769
1995 280,395 48,346
Hans U. Wandfluh 1997 225,500 52,643 NONE
Vice President; President & General 1996 205,000 51,250
Manager, Royal Sonesta Hotel, 1995 192,400 48,100
New Orleans
Jacqueline Sonnabend 1997 208,000 28,954 NONE
Executive Vice President 1996 200,000 26,940
1995 156,000 26,894
Peter J. Sonnabend 1997 208,000 28,954 NONE
Vice Chairman, 1996 200,000 26,940
Vice President, and 1995 156,000 26,894
Secretary
Stephanie Sonnabend 1997 208,000 28,954 NONE
President 1996 200,000 26,940
1995 156,000 26,894
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.
& Chief Financial Officer
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, 1998, 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) 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 ................ $ 30,302 $ 40,403 $ 50,504 $ 54,544 $ 54,544
$150,000 ................ $ 37,247 $ 49,662 $ 62,078 $ 67,044 $ 67,044
$175,000 ................ $ 44,191 $ 58,922 $ 73,652 $ 79,544 $ 79,544
$200,000 ................ $ 51,136 $ 68,181 $ 85,226 $ 92,044 $ 92,044
$225,000 ................ $ 58,080 $ 77,440 $ 96,800 $104,544 $104,544
$250,000 ................ $ 65,025 $ 86,699 $108,374 $117,044 $117,044
$300,000 ................ $ 78,913 $105,218 $125,000 $125,000 $125,000
$350,000 ................ $ 92,802 $123,737 $125,000 $125,000 $125,000
$400,000 ................ $106,691 $125,000 $125,000 $125,000 $125,000
$450,000 ................ $120,580 $125,000 $125,000 $125,000 $125,000
$500,000................. $125,000 $125,000 $125,000 $125,000 $125,000
- --------
*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 1997 the maximum benefit allowable under the Employee Retirement
Income Security Act of 1974 is $125,000.
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 25 years
of credited service, and Jacqueline, Peter and Stephanie Sonnabend have 14, 11
and 19 years of accredited service, respectively.
Compensation Committee Report on Executive Compensation
The executive compensation program of the Company has, for many years, had
two primary components: base salary and annual cash incentive compensation.
These components are administered by the Compensation Committee of the Company
which is comprised solely of non-management directors. The Committee evaluates
executive compensation in light of numerous factors, including changes in the
cost of living, job responsibilities, job performance, the compensation awarded
to executives holding similar positions in other companies of comparable size
and complexity to the Company, characteristics unique to the Company, and the
performance and financial condition of the Company.
Base salaries for the chief executive officer and the other executives
named in the Summary Compensation Table for the year 1997 were determined by
the Compensation Committee, which convened in early 1997 and
13
reviewed, in particular, the outstanding 1996 performances of the Company's
owned hotel in Boston (Cambridge), Massachusetts and its leased hotel in New
Orleans, Louisiana, as well as the improving results reported by the Company's
resort hotel in Anguilla, B.W.I. The Committee also considered the Company's
successful refinancing of the mortgage loan on Royal Sonesta Hotel Boston
(Cambridge), and the amount of cash realized from the Company's sale of its
interest in a building in New York City. Based on the foregoing and the factors
set forth in the preceding paragraph, the Committee, on Management's
recommendation, granted base salary increases to all executive officers of the
Company, except the chief executive officer, the chairman of the executive
committee and chief financial officer, and the senior vice president of the
Company who received no increase in their base salaries for 1997. Generally,
the average increase in base compensation for other executives of the Company
was 4% for 1997.
The second component of 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 such plan. The key
hotel employees earn annual bonuses under the plan based upon 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 no longer maintains a stock option plan 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 the 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, Lawrence M. Levinson, 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, 1992
and ending December 31, 1997.
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 3/4/98 including data to 12/31/97
12/31/92 100.000 100.000 100.000
01/29/93 100.000 102.847 103.687
02/26/93 102.439 99.010 107.147
03/31/93 102.439 101.876 115.364
04/30/93 112.195 97.528 112.015
05/28/93 109.756 103.354 115.635
06/30/93 117.561 103.832 97.332
07/30/93 130.067 103.954 88.480
08/31/93 152.579 109.327 92.221
09/30/93 152.579 112.583 96.003
10/29/93 162.584 115.114 96.922
11/30/93 157.582 111.682 92.502
12/31/93 164.407 114.796 95.118
01/31/94 166.956 118.281 99.563
02/28/94 166.956 117.177 103.462
03/31/94 170.779 109.971 92.861
04/29/94 170.779 108.544 78.804
05/31/94 170.779 108.809 78.778
06/30/94 173.981 104.830 70.611
07/29/94 173.981 106.980 76.897
08/31/94 173.981 113.800 80.428
09/30/94 171.384 113.509 81.967
10/31/94 184.368 115.740 81.774
11/30/94 186.965 111.900 77.047
12/30/94 188.783 112.214 77.249
01/31/95 182.182 112.843 73.717
02/28/95 188.783 118.811 75.761
03/31/95 179.541 122.334 74.221
04/28/95 176.901 126.186 80.427
05/31/95 171.621 129.442 85.381
06/30/95 182.710 139.932 92.653
07/31/95 190.771 150.218 97.794
08/31/95 196.144 153.262 96.271
09/29/95 175.993 156.787 90.875
10/31/95 137.032 155.888 82.420
11/30/95 139.719 159.549 83.977
12/29/95 135.093 158.699 85.655
01/31/96 170.934 159.482 86.453
02/29/96 176.448 165.552 83.136
03/29/96 179.205 166.101 83.514
04/30/96 184.719 179.882 94.053
05/31/96 187.476 188.141 104.953
06/28/96 190.834 179.660 108.876
07/31/96 204.866 163.662 101.565
08/30/96 221.704 172.832 102.525
09/30/96 238.543 186.052 110.867
10/31/96 242.752 183.997 107.571
11/29/96 223.107 195.372 106.559
12/31/96 227.718 195.196 106.864
01/31/97 222.025 209.068 105.514
02/28/97 223.448 197.511 108.251
03/31/97 223.448 184.617 93.731
04/30/97 210.639 190.389 99.212
05/30/97 210.639 211.973 102.046
06/30/97 212.609 218.455 104.307
07/31/97 214.055 241.517 106.928
08/29/97 231.411 241.149 118.705
09/30/97 234.303 255.413 120.464
10/31/97 264.676 242.142 109.372
11/28/97 347.116 243.337 112.324
12/31/97 327.477 239.527 102.150
- ---------------------------------------------------------------------------------------------------------------------------------
Legend
Symbol CRSP Total Returns Index For 12/31/92 12/31/93 12/30/94 12/29/95 12/31/96 12/31/97
- ------ ---------------------------- -------- -------- -------- -------- -------- --------
.. ___ .. [star] Sonesta International Hotels Corporation 100.0 164.4 188.8 135.1 227.7 327.5
_________ [box] Nasdaq Stock Market (U.S. Companies) 100.0 114.8 112.2 158.7 195.2 239.6
- - - - - - [triangle] NASDAQ Stocks (SCI 7010-7019 US + Foreign) 100.0 95.1 77.2 85.7 106.9 102.2
Hotels and Motels
Notes:
A. The lines represent monthly index levels derived from compound daily returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the previous trading day.
C. If the month interval, based on the fiscal 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 12/31/92.
E. Methodology for calculating the company index was changed at request to accommodate a one-day suspension.
- ---------------------------------------------------------------------------------------------------------------------------------
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 1997.
Certain Relationships/Transactions
Mr. George S. Abrams, a Director of the Company, performed legal services
for the Company during 1996, 1997 and 1998.
The law firm of Burns & Levinson, of which Mr. Lawrence M. Levinson, a
Director of the Company, is a partner, performed legal services for the Company
during 1996, 1997 and 1998.
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, 1997 through March 1, 1998 have totaled $134,024
including $55,838 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, 1998
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) .......... 108,883(3) 5.3%
c/o Sonesta Beach Resort
350 Ocean Drive
Key Biscayne, FL 33149
Paul Sonnabend (2) ............. 481,614 23.3%
200 Clarendon Street
Boston, MA 02116
Peter J. Sonnabend (2) ......... 104,112(4) 5.0%
200 Clarendon Street
Boston, MA 02116
Roger P. Sonnabend (2) ......... 553,084 26.7%
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) ..................................................... 204,310 9.9%
200 Clarendon Street
Boston, MA 02116
All executive officers and Directors as a group (16 persons including those 1,287,924 62%
noted above) ..............................................................
Marvin C. Schwartz (5) .................................................... 199,500 9.7%
c/o Neuberger & Berman
605 Third Avenue
New York, New York 10158-3698
- --------
(1) See note 1 on Page 9.
(2) 1,215,908 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, 103,883 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) 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 (16 persons including above) 2,000 18.7%
- --------
(1) See note 1 on Page 9.
(2) On April 1, 1998 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: 91,408 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 1998. 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 of stockholders intending to be presented 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, 1998.
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 17, 1998
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, 1998
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, 1998 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 17, 1998.
(Continued and to be SIGNED on other side)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
Please mark
your votes as
indicated in
this example
[EXAMPLE - BOX WITH X INSERTED]
The undersigned hereby instructs said proxies to vote
1. ELECTION OF DIRECTORS: G. Abrams, V. Alden, J. Bower, L. Levinson, 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.)
- --------------------------------------------------------------------------------
FOR all nominees
listed above (except
as marked to the
contrary)
[BOX for marking vote]
WITHHOLD
AUTHORITY
to vote for all
nominees listed above
[BOX for marking vote]
2. Ratification of Ernst & Young as independent
accountants of the Company for the year 1998.
FOR AGAINST ABSTAIN
3. On 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.
Date , 1998
---------------------------------
- --------------------------------------------
- --------------------------------------------
Signature(s)
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.
PLEASE DATE, SIGN AND MAIL THIS PROXY PROMPTLY.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
PREFERRED PROXY
SONESTA INTERNATIONAL HOTELS CORPORATION
PROXY For Annual Meeting of Stockholders--May 18, 1998
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, 1998 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 17, 1998.
(Continued and to be SIGNED on other side)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
Please mark
your votes as
indicated in
this example
[EXAMPLE - BOX WITH X INSERTED]
The undersigned hereby instructs said proxies to vote
1. ELECTION OF DIRECTORS: P. Sonnabend, S. Sonnabend
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the line provided below.)
- --------------------------------------------------------------------------------
FOR all nominees
listed above (except
as marked to the
contrary)
[BOX for marking vote]
WITHHOLD
AUTHORITY
to vote for all
nominees listed above
[BOX for marking vote]
2. On 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 NO. 1.
Date , 1998
---------------------------------
- --------------------------------------------
- --------------------------------------------
Signature(s)
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.
PLEASE DATE, SIGN AND MAIL THIS PROXY PROMPTLY.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE