Item 10.
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Directors, Executive Officers and Corporate Governance
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DIRECTORS
Set forth below is certain information regarding each of our current directors as of April 27, 2018.
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Name
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Age
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Principal Occupation and Other Information
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Keith A. Cline
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48
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Keith A. Cline has served as the Companys President and Chief Executive Officer since February 18, 2016, after serving as the Companys Interim President and Chief Executive Officer since September 15, 2015.
Mr. Cline has served on the Companys Board of Directors since September 2015. From January 2013 until November 2015, Mr. Cline was the Companys Executive Vice President and Chief Financial Officer. From 2011 to 2013, prior to
joining the Company, Mr. Cline was Chief Administrative Officer and Chief Financial Officer at Charming Charlie, Inc. and, from 2006 to 2011, Mr. Cline was Senior Vice President of Finance at Express, Inc. Mr. Cline began his career
at Arthur Andersen & Company and held financial leadership roles at The J.M. Smucker Company, FedEx Custom Critical and Limited Brands. Mr. Cline is a summa cum laude graduate of the University of Akron with a B.S. in Accounting and a
M.B.A. in Finance.
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James R. Abrahamson
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62
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James R. Abrahamson has served on the Companys Board of Directors since November 2015. Mr. Abrahamson is currently the Chairman of Interstate Hotels & Resorts and previously also served as Interstates
Chief Executive Officer until March 22, 2017. Prior to joining Interstate in 2011, Mr. Abrahamson held senior leadership positions with InterContinental Hotels Group (IHG), Hyatt Corporation, Marcus Corporation and Hilton
Worldwide. At IHG, where he served from 2009 to 2011, he was President of the Americas division, and at Hyatt, which he joined in 2004, he was Head of Development for the Americas division. At Marcus, where he served from 2000 to 2004,
Mr. Abrahamson led the Baymont Inns and Suites and Woodfield Suites hotels division consisting of approximately 200 properties, both owned and franchised. At Hilton, where he served from 1988 to 2000, Mr. Abrahamson oversaw the Americas
region franchise and management contract development for all Hilton brands, and he launched the Hilton Garden Inn brand. Mr. Abrahamson currently serves as Chairman of the board of directors of Vici Properties Inc., a real estate investment
trust which owns and develops gaming, hospitality and entertainment destinations which was
spun-off
from a subsidiary of Caesars Entertainment Corporation. Mr. Abrahamson also serves on the board, and is
the immediate past chair, of the American Hotel and Lodging Association and the U.S. Travel Association, where he served as board chair in 2013 and 2014. He holds a degree in Business Administration from the University of Minnesota.
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Glenn Alba
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46
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Glenn Alba has served on the boards of directors of certain of our predecessor entities since 2006 and on the Companys Board of Directors since 2013. Mr. Alba is President of Opterra Capital, which he founded in
December 2017. Until July 2017, Mr. Alba was a Managing Director in the Real Estate Group of Blackstone based in New York. At Blackstone, which Mr. Alba joined in 1997, Mr. Alba was involved in the asset management of a broad range of
Blackstones real estate investments in the US and Europe including office, hotel, multi-family and industrial assets. While based in the London office from 2001 to 2004, Mr. Alba managed a diverse set of assets in London, Paris and other
cities in France as well as portfolio investments across Germany. More recently, Mr. Alba was primarily involved in the hotel sector with management responsibility for various full-service and limited service hotels in the LXR Luxury Resorts
portfolio in the U.S. as well as global portfolio management duties. Mr. Alba received a B.S. in Accounting from Villanova University. Mr. Alba currently serves as a member of the Presidents Advisory Council and the Real Estate
Advisory Council at Villanova University.
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1
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Name
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Age
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Principal Occupation and Other Information
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Scott O. Bergren
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71
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Scott O. Bergren has served on the Companys Board of Directors since June 2015. Mr. Bergren served as Chief Executive Officer (CEO) of both Pizza Hut (Global) and Yum! Innovation until his retirement in December 2014.
Prior to becoming CEO at Pizza Hut (Global) at the end of 2013, Mr. Bergren served as CEO of Pizza Hut (U.S.) beginning in 2011. He also had served as CEO of Yum! Innovation since 2011. Mr. Bergren has held many roles across Yum! Brands,
Inc. since 2002, including President and Chief Concept Officer of Pizza Hut Inc., Chief Marketing & Food Innovation Officer for Kentucky Fried Chicken and Yum! Brands in Louisville and Chief Concept Officer of Yum! Restaurants
International in Dallas. Mr. Bergren also served as President of Chevys, Inc., a full-service Mexican casual dining concept, from 1995 to March 2002, first as part of PepsiCo, and then as part of a
management-led
buyout of the company. Prior to 1995, he built and operated Pizza Hut and Kentucky Fried Chicken restaurants in Mexico and Central America working for Tricon Global Restaurants, Inc.s
International Division. Mr. Bergren has also served as President/CEO of Round Table Pizza and Peter Piper Pizza. He served on the Board of Directors of Buffalo Wild Wings, Inc. until its acquisition by Arbys Restaurant Group, Inc. in
February 2018. He currently serves on the board of directors of Wawa, Inc., a privately held convenience store chain. Mr. Bergren is a graduate of Northwestern University and served as a First Lieutenant in the U.S. Army.
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Alan J. Bowers
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63
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Alan J. Bowers has served on the boards of directors of certain of our predecessor entities since 2013 and on the Companys Board of Directors since February 2014. Mr. Bowers most recently served as President, Chief
Executive Officer and a board member of Cape Success, LLC from 2001 to 2004 and of Marketsource Corporation from 2000 to 2001. From 1995 to 1999, Mr. Bowers served as President, Chief Executive Officer and a board member of MBL Life Assurance
Corporation. Mr. Bowers held various positions, including Audit and Area Managing Partner, at Coopers & Lybrand, L.L.P. where he worked from 1978 to 1995 and also worked at Laventhol & Horwath, CPAs from 1976 to 1978.
Mr. Bowers also serves on the boards of directors of Ocwen Financial Corporation and Walker & Dunlop, Inc. Mr. Bowers previously served on the board of Quadel Consulting Corp. from July 2005 to June 2015 and on the boards and as
audit committee chairman of American Achievement Corp. from August 2006 to March 2016; Refrigerated Holdings, Inc. from January 2009 to April 2013; Roadlink Inc. from February 2010 to April 2013; and Fastfrate Holdings, Inc. from July 2008 to June
2011, each a privately held company. Mr. Bowers holds a B.S. in Accounting, from Montclair State University and an M.B.A., Finance and Economics, from St. Johns University and is a Certified Public Accountant in New Jersey.
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Henry G. Cisneros
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70
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Henry G. Cisneros has served on the boards of directors of certain of our predecessor entities since 2013 and on the Companys Board of Directors since February 2014. Mr. Cisneros currently serves as Chairman of the
CityView companies, which he joined in 2003. Mr. Cisneros served as the Secretary of the U.S. Department of Housing and Urban Development from 1992 to 1997 and, prior to that, Mr. Cisneros served four terms as Mayor of San Antonio, Texas.
Mr. Cisneros has served as President of the National League of Cities, as Deputy Chair of the Federal Reserve Bank of Dallas and is currently an officer of Habitat for Humanity International. Mr. Cisneros is also currently Chairman of the
San Antonio Economic Development Foundation and a member of the advisory boards of the Bill and Melinda Gates Foundation and the Broad Foundation. Mr. Cisneros holds a Bachelor of Arts and a Masters degree in Urban and Regional Planning
from Texas A&M University. Mr. Cisneros also holds a Masters degree in Public Administration from Harvard University and a Doctorate in Public Administration from George Washington
University.
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2
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Name
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Age
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Principal Occupation and Other Information
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Giovanni Cutaia
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45
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Giovanni Cutaia has served on the Companys Board of Directors since November 2014. Mr. Cutaia is a Senior Managing Director and Head of Global Asset Management in the Real Estate Group of Blackstone. Prior to joining
Blackstone in 2014, Mr. Cutaia was at Lone Star Funds where he was a Senior Managing Director and
Co-Head
of Commercial Real Estate Investments Americas from 2009 to 2014. Prior to Lone Star,
Mr. Cutaia spent over 12 years at Goldman Sachs in its Real Estate Principal Investments Area as a Managing Director in its New York and London offices. Mr. Cutaia received a B.A. from Colgate University and an M.B.A. from the Tuck School
of Business at Dartmouth College.
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Brian Kim
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Brian Kim has served on the Companys Board of Directors since November 2014. Mr. Kim is a Managing Director in the Real Estate Group of Blackstone. Since joining Blackstone in 2008, Mr. Kim has played a key role
in a number of Blackstones investments including the take private and subsequent sale of Strategic Hotels & Resorts, the acquisition of Peter Cooper Village / Stuyvesant Town and the creation of BRE Select Hotels Corp,
Blackstones select service hotel platform. Prior to joining Blackstone, Mr. Kim worked at Apollo Real Estate Advisors, Max Capital Management Corp. and Credit Suisse First Boston. Mr. Kim has served as a board member, Chief Financial
Officer, Vice President and Managing Director of BRE Select Hotels Corp since May 2013 and as Head of Acquisitions and Capital Markets of Blackstone Real Estate Income Trust, Inc. since January 2017. Mr. Kim received an AB in Biology from
Harvard College where he graduated with honors.
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Mitesh B. Shah
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48
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Mitesh B. Shah has served on the boards of directors of certain of our predecessor entities since 2013 and on the Companys Board of Directors since February 2014. He has served as Chairperson of the Companys Board of
Directors since November 2014. Mr. Shah currently serves as Chief Executive Officer and Senior Managing Principal of Noble Investment Group, which he founded in 1993 and which specializes in making opportunistic investments in the lodging and
hospitality real estate sector. Mr. Shah is a member of the franchise and owners board for Hyatt Hotels Corporation and is a member of the Industry Real Estate Finance Advisory Council of the American Hotel and Lodging Association.
Mr. Shah is serving his third term as a member of the Board of Trustees of Wake Forest University. In addition, he is an executive committee member of Woodward Academy. Mr. Shah holds a Bachelor of Arts in Economics from Wake Forest
University.
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Gary M. Sumers
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65
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Gary M. Sumers has served on the Companys Board of Directors since February 2014. Mr. Sumers was most recently a Senior Managing Director and Chief Operating Officer in the Real Estate Group of Blackstone. From joining
Blackstone in 1995 until his retirement at the end of 2013, Mr. Sumers activities included heading Blackstone Real Estate Advisors (BREA) Strategic Asset Management Group, oversight of all financial reporting activities and
responsibility for the property disposition activities. From 1993 to 1995, Mr. Sumers was Chief Operating Officer of General Growth Properties, a publicly traded regional mall REIT. Mr. Sumers also serves on the Washington University board
of trustees as well as the Washington University Investment Committee Board of Directors. Mr. Sumers received an A.B. from Washington University in St. Louis, received his law degree from Northwestern University and attended the London School
of Economics.
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3
EXECUTIVE OFFICERS
Set forth below is certain information regarding each of our current executive officers as of April 27, 2018 other than Keith A. Cline, whose
biographical information is presented under Directors above.
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Name
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Age
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Principal Occupation and Other Information
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John W. Cantele
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57
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John W. Cantele has served as the Companys Executive Vice President and Chief Operating Officer since April 25, 2016. Prior to joining the Company, Mr. Cantele was most recently Global Head, Select Hotels at the
Hyatt Hotel Corporation, where he had served since 2011. In his role as Global Head, Select Hotels, Mr. Cantele managed Hyatts owned select service hotels, oversaw Hyatts franchised hotels operating under the Hyatt House, Hyatt
Place and Summerfield Suites brands and was responsible for corporate operations, sales, revenue management and product design. At Hyatt, he also served in the roles of Senior VP, Select Hotels and Senior VP, Hyatt Summerfield Suites/Hyatt House.
Prior to that, from 2000 to 2011, Mr. Cantele served as Senior VP of Operations/Partner at LodgeWorks Hotel Corporation. Beginning in 1988, Mr. Cantele served first as General Manager/Director of Sales, Multi-Property and then as VP of
Operations of Summerfield Suites Hotels. He remained with Summerfield Suites Hotels through its acquisition by Wyndham International, Inc., where he continued in the role of VP of Operations from 1998 to 2000. Mr. Cantele graduated from the
University of Wisconsin at Stout with a B.S. in hospitality management.
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Julie M. Cary
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52
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Julie M. Cary joined La Quinta in 2006 as Executive Vice President and Chief Marketing Officer. Prior to joining the Company, from 2004 to 2006, Ms. Cary served as Vice President at Brinker International, as Vice President
of Marketing at Dean Foods from 2003 to 2004, as Senior Manager of Marketing until promoted to Vice President of Marketing at Gerber Products Company from 1998 to 2003 and as Assistant Brand Manager until promoted to Brand Manager at Ralston Purina
from 1991 to 1997. Ms. Cary holds an M.B.A. from Washington University and a bachelors degree in business administration from the University of Illinois.
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Mark M. Chloupek
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46
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Mark M. Chloupek joined La Quinta as Executive Vice President and General Counsel in 2006 and was named Secretary in 2013. Prior to joining the Company, from 1999 through 2006, Mr. Chloupek served as Vice President and
Senior Vice President and Chief Counsel of Operations for Wyndham International, Inc. Prior to joining Wyndham, from 1996 to 1999, Mr. Chloupek worked for Locke Lord LLP (formerly Locke Purnell Rain Harrella professional corporation), a
Dallas-based law firm. Additionally, Mr. Chloupek currently serves on the board of the Dallas Chapter of the Juvenile Diabetes Research Foundation and formerly served on the board of The Texas General Counsel Forum. Mr. Chloupek received a
B.A. in economics from the College of William and Mary, where he graduated Phi Beta Kappa and summa cum laude, and received a J.D. from the University of Virginia School of Law.
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James H. Forson
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51
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James H. Forson has served as the Companys Executive Vice President, Chief Financial Officer and Treasurer since February 2016. He previously served as the Companys Interim Chief Financial Officer from November 2015
until February 2016 and as Senior Vice President, Chief Accounting Officer and Treasurer from 2012 until February 2016. Prior to that role, Mr. Forson was Vice President and Controller from 2010, when he joined La Quinta, to 2012 and also
served as Acting Chief Financial Officer from 2012 to 2013. Prior to joining La Quinta, Mr. Forson was Audit Senior Manager with Grant Thornton LLP from 2006 through 2010. Mr. Forson graduated from the University of Virginias
McIntire School of Commerce with a B.S. degree in Commerce with distinction, and is a Certified Public Accountant in Texas.
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Rajiv K. Trivedi
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55
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Rajiv K. Trivedi joined La Quinta in 2000 and has served as the Companys Executive Vice President since 2006 and as Executive Vice President and Chief Development Officer since 2009. Prior to joining us, from 1992 to 2000,
Mr. Trivedi served as Vice President of Franchise Operations at Cendant Corporation and in a variety of key management roles in the hotel industry, including Cendant Corporation. Mr. Trivedi currently serves on the board and is a member of
the real estate committee of Childrens Medical Center of Dallas. He is active in numerous civic and industry organizations including the Asian American Hotel Owners Association (AAHOA). Mr. Trivedi graduated from the Maharaja Sayajirao
University of Baroda with an M.S. in Math and Business.
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4
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires executive officers and directors, a companys chief accounting officer and persons who
beneficially own more than 10% of a companys common stock, to file initial reports of ownership and reports of changes in ownership with the SEC and the NYSE. Executive officers, directors, the chief accounting officer and beneficial owners
with more than 10% of our common stock are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. Based solely on our review of copies of such reports and written representations from our executive officers,
directors and Blackstone, we believe that our executive officers, directors and Blackstone complied with all Section 16(a) filing requirements during 2017.
CORPORATE GOVERNANCE
Our
Board of Directors manages or directs our business and affairs, as provided by Delaware law, and conducts its business through meetings of the Board of Directors and four standing committees: the Audit Committee; the Compensation Committee; the
Nominating and Corporate Governance Committee; and the Real Estate Committee.
We have structured our corporate governance in a manner we
believe closely aligns our interests with those of our stockholders. Notable features of our corporate governance include:
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our Board of Directors is not classified and each of our directors is subject to
re-election
annually;
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under our Bylaws and our Corporate Governance Guidelines, directors (other than directors designated pursuant to the stockholders agreement) who fail to receive a majority of the votes cast in uncontested
elections will be required to submit their resignation to our Board of Directors;
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we have fully independent Audit, Compensation and Nominating and Corporate Governance Committees and our independent directors meet regularly in executive sessions without the presence of our corporate officers or
non-independent
directors;
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we do not have a stockholder rights plan, and if our Board of Directors were ever to adopt a stockholder rights plan in the future without prior stockholder approval, our Board of Directors would either submit the plan
to stockholders for ratification or cause the rights plan to expire within one year; and
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we have implemented a range of other corporate governance best practices, including placing limits on the number of directorships held by our directors to prevent overboarding and implementing a robust
director education program.
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The stockholders agreement described under Transactions with Related
PersonsStockholders Agreement provides that Blackstone has the right to nominate to our Board of Directors a number of designees approximately equal to the percentage of voting power of all shares of our capital stock entitled to
vote generally in the election of directors as collectively beneficially owned by Blackstone. Currently, we have three directors on our Board who are current or former employees of Blackstone and who were recommended by Blackstone as director
nominees pursuant to the stockholders agreement (Messrs. Alba, Cutaia and Kim), and we have one director on our Board who is a retired employee of Blackstone (Mr. Sumers). The provisions of the stockholders agreement regarding the
nomination of directors will remain in effect until Blackstone is no longer entitled to nominate a director to our Board of Directors, unless Blackstone requests that they terminate at an earlier date.
Director Independence and Independence Determinations
Under our Corporate Governance Guidelines and NYSE rules, a director is not independent unless our Board of Directors affirmatively determines
that he or she does not have a direct or indirect material relationship with us or any of our subsidiaries.
Our Corporate Governance
Guidelines define independence in accordance with the independence definition in the current NYSE corporate governance rules for listed companies. Our Corporate Governance Guidelines require our Board of Directors to review the independence of all
directors at least annually.
In the event a director has a relationship with the Company that is relevant to his or her independence and
is not addressed by the objective tests set forth in the NYSE independence definition, our Board of Directors will determine, considering all relevant facts and circumstances, whether such relationship is material.
Our Board of Directors has affirmatively determined that each of Messrs. Abrahamson, Alba, Bergren, Bowers, Cisneros, Cutaia, Kim, Shah and
Sumers is independent under the guidelines for director independence set forth in the Corporate Governance Guidelines and under all applicable NYSE guidelines, including with respect to committee membership. Our Board also has
5
determined that each of Messrs. Bowers, Cisneros and Shah is independent for purposes of Section 10A(m)(3) of the Exchange Act, and that each of Messrs. Cutaia, Shah and Sumers
is independent for purposes of Section 10C(a)(3) of the Exchange Act. In making its independence determinations, our Board of Directors considered and reviewed all information known to it (including information identified through
annual directors questionnaires).
Executive Sessions
Executive sessions, which are meetings of the
non-management
members of the Board, are regularly
scheduled throughout the year. In addition, at least once a year, the independent directors meet in a private session that excludes management and any
non-independent
directors. Our Chairperson, Mr. Shah,
presides at the executive sessions.
Communications with the Board
As described in our Corporate Governance Guidelines, stockholders and other interested parties who wish to communicate with a member or members
of our Board of Directors, including the chairperson of our Board of Directors and each of the Audit, Compensation or Nominating and Corporate Governance Committees or with the
non-management
or independent
directors as a group, may do so by addressing such communications or concerns to the General Counsel of the Company, 909 Hidden Ridge, Suite 600, Irving, Texas 75038, who will forward such communication to the appropriate party.
Board Committees
Audit Committee
Our Audit Committee consists of Messrs. Bowers, Cisneros and Shah, with Mr. Bowers serving as chair. All members of the Audit Committee
have been determined to be independent, consistent with our Audit Committee charter, Corporate Governance Guidelines and the NYSE listing standards applicable to boards of directors in general and audit committees in particular. Our
Board of Directors also has determined that each of the members of the Audit Committee is financially literate within the meaning of the listing standards of the NYSE. In addition, our Board of Directors has determined that Alan J.
Bowers qualifies as an audit committee financial expert as defined by applicable SEC regulations.
The duties and responsibilities of the
Audit Committee are set forth in its charter, which may be found at
www.lq.com
under Investor Relations: Corporate Governance: Governance Documents: Audit Committee Charter, and include oversight of the following:
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the adequacy and integrity of our financial statements and our financial reporting and disclosure practices;
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the soundness of our system of internal controls regarding finance and accounting compliance;
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the annual independent audit of our combined financial statements;
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the independent registered public accounting firms qualifications and independence;
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the engagement of the independent registered public accounting firm;
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the performance of our internal audit function and independent registered public accounting firm; and
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our compliance with legal and regulatory requirements in connection with the foregoing.
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The
Audit Committee also prepares the report of the committee required by the rules and regulations of the SEC to be included in our annual proxy statement.
With respect to our reporting and disclosure matters, the responsibilities and duties of the Audit Committee include reviewing and discussing
with management and the independent registered public accounting firm our annual audited financial statements and quarterly financial statements prior to inclusion in our Annual Report on Form
10-K,
Quarterly
Reports on Form
10-Q
or other public filings in accordance with applicable rules and regulations of the SEC.
The charter of the Audit Committee permits the committee to delegate any or all of its authority to one or more subcommittees. In addition,
the Audit Committee has the authority under its charter to engage independent counsel and other advisors as it deems necessary or advisable.
6
Compensation Committee
Our Compensation Committee consists of Messrs. Cutaia, Shah and Sumers, with Mr. Sumers serving as chair. Each of Messrs. Cutaia, Shah and
Sumers has been determined to be independent as defined by our Corporate Governance Guidelines and the NYSE listing standards applicable to boards of directors in general and compensation committees in particular.
The duties and responsibilities of the Compensation Committee are set forth in its charter, which may be found at
www.lq.com
under
Investor Relations: Corporate Governance: Governance Documents: Compensation Committee Charter, and include the following:
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the establishment, maintenance and administration of compensation and benefit policies designed to attract, motivate and retain personnel with the requisite skills and abilities to contribute to the long term success of
the Company;
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oversight of the goals, objectives and compensation of our Chief Executive Officer, including evaluating the performance of the Chief Executive Officer in light of those goals;
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oversight of the compensation of our other executives and
non-management
directors;
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our compliance with the compensation rules, regulations and guidelines promulgated by the NYSE, the SEC and other laws, as applicable; and
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the issuance of an annual report on executive compensation for inclusion in our annual proxy statement.
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With respect to our reporting and disclosure matters, the responsibilities and duties of the Compensation Committee include overseeing the
preparation of the Compensation Discussion and Analysis for inclusion in our annual proxy statement and Annual Report on Form
10-K
in accordance with applicable rules and regulations of the SEC.
The charter of the Compensation Committee permits the committee to delegate any or all of its authority to one or more subcommittees and to
delegate to one or more of our officers the authority to make awards to team members other than any Section 16 officer under our incentive compensation or other equity-based plan, subject to compliance with the plan and the laws of our state of
jurisdiction. In addition, the Compensation Committee has the authority under its charter to retain outside consultants or advisors, as it deems necessary or advisable.
Nominating and Corporate Governance Committee
Our Nominating and Corporate Governance Committee consists of Messrs. Abrahamson, Alba, Bergren and Bowers, with Mr. Alba serving as
chair. Each of Messrs. Abrahamson, Alba, Bergren and Bowers has been determined to be independent as defined by our Corporate Governance Guidelines and the NYSE listing standards.
The duties and responsibilities of the Nominating and Corporate Governance Committee are set forth in its charter, which may be found at
www.lq.com
under Investor Relations: Corporate Governance: Governance Documents: Nominating Corporate Governance Committee Charter, and include the following:
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advise our Board of Directors concerning the appropriate composition and qualifications of our Board of Directors and its committees;
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identify individuals qualified to become board members;
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recommend to the Board the persons to be nominated by the Board for election as directors at any meeting of stockholders;
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recommend to the Board the members of the board to serve on the various committees of the Board;
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develop and recommend to the Board a set of corporate governance principles and assist the Board in complying with them; and
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oversee the evaluation of the Board, the Boards committees and management.
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The charter
of the Nominating and Corporate Governance Committee permits the committee to delegate any or all of its authority to one or more subcommittees. In addition, the Nominating and Corporate Governance Committee has the authority under its charter to
retain outside counsel or other experts as it deems necessary or advisable.
7
Real Estate Committee
Our Real Estate Committee consists of Messrs. Bergren, Bowers, Cline, Cutaia and Shah, with Mr. Cutaia serving as chair. The purpose and
responsibilities of the Real Estate Committee are set forth in its charter, which may be found at
www.lq.com
under Investor Relations: Corporate Governance: Governance Documents: Real Estate Committee Charter, and include reviewing and
approving real estate transactions of the Company or its subsidiaries for sale prices in amounts which are no more than $20 million per transaction or series of related transactions.
The charter of the Real Estate Committee permits the committee to delegate any or all of its authority to one or more subcommittees consisting
of one or more
non-management
members.
Committee Charters and Corporate Governance Guidelines
Our commitment to good corporate governance is reflected in our Corporate Governance Guidelines, which describe our Board of Directors
views and policies on a wide range of governance topics. These Corporate Governance Guidelines are reviewed from time to time by our Nominating and Corporate Governance Committee and, to the extent deemed appropriate in light of emerging practices,
revised accordingly, upon recommendation to and approval by our Board of Directors.
Our Corporate Governance Guidelines, Audit Committee,
Compensation Committee, Nominating and Corporate Governance Committee and Real Estate Committee charters, and other corporate governance information are available on our website at
www.lq.com
under Investor Relations: Corporate Governance:
Governance Documents. Any stockholder also may request them in print, without charge, by contacting the Secretary of La Quinta Holdings Inc., 909 Hidden Ridge, Suite 600, Irving, Texas 75038.
Code of Business Conduct & Ethics
We maintain a Code of Business Conduct & Ethics that is applicable to all of our directors, officers and employees, including our
Chairman, Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer and other senior officers. The Code of Business Conduct & Ethics sets forth our policies and expectations on a number of topics, including conflicts of
interest, corporate opportunities, confidentiality, compliance with laws (including insider trading laws), use of our assets and business conduct and fair dealing. This Code of Business Conduct & Ethics also satisfies the requirements for a
code of ethics, as defined by Item 406 of Regulation
S-K
promulgated by the SEC. The Code of Business Conduct & Ethics may be found on our website at
www.lq.com
under Investor Relations:
Corporate Governance: Governance Documents: Code of Business Conduct & Ethics.
We will disclose within four business days any
substantive changes in or waivers of the Code of Business Conduct & Ethics granted to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, by
posting such information on our website as set forth above rather than by filing a Form
8-K.
In the case of a waiver for an executive officer or a director, the required disclosure also will be made available
on our website within four business days of the date of such waiver.
Item 11.
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Executive Compensation
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COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis below with management. Based on its review and
discussion with management, the Compensation Committee recommended to the board of directors that the Compensation Discussion and Analysis be included in this Annual Report on Form
10-K/A
for the fiscal year
ended December 31, 2017.
Submitted by the Compensation Committee of the Board of Directors:
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Gary M. Sumers, Chair
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Giovanni Cutaia
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Mitesh B. Shah
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8
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Section
Overview
Our executive compensation program is designed to attract and retain individuals with the skills and qualifications to
manage and lead the Company effectively. The overarching goal of our program is to motivate our leaders to contribute to the achievement of our financial goals and to focus on long-term value creation for our stockholders.
Our named executive officers, or NEOs, for fiscal 2017 were the following five individuals:
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Keith A. Cline, our President and Chief Executive Officer;
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James H. Forson, our Executive Vice President, Chief Financial Officer and Treasurer; and
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Our three other most highly compensated executive officers who served in such capacities at December 31, 2017, namely:
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John W. Cantele, our Executive Vice President and Chief Operating Officer;
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Rajiv K. Trivedi, our Executive Vice President and Chief Development Officer; and
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Mark M. Chloupek, our Executive Vice President, Secretary and General Counsel.
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Executive Summary
Compensation Philosophy and Objectives.
Our executive compensation program is designed to implement our compensation
philosophy, which is based on the following objectives:
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Pay for PerformanceThe executive compensation program should focus our executive team on the successful achievement of key financial, operating and other goals, such that realized pay is based on performance;
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Promote Core ValuesThe executive compensation program should support the Companys core values, which are to enhance our guests experience and create enduring relationships by striving for excellence
and serving with integrity every day;
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Align with Shareholder ValueThe executive compensation program should align the executive teams incentives with the long-term interests of the Company and its stockholders;
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Market CompetitiveThe executive compensation program should provide competitive pay opportunities within the labor markets in which we compete to support the attraction and retention of highly qualified
executives; and
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Reflect Good GovernanceThe executive compensation program should reflect sound governance practices and processes, and the Compensation Committee will retain the ability to adapt the program to reflect evolving
market practices and governance standards.
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Elements of Compensation.
Our executive compensation program has three
primary elements:
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Element
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Description and Purpose
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Base Salary
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Fixed component of compensation.
Reviewed annually and
adjusted when appropriate.
Intended to support our market-competitiveness with respect to annual pay for the skills and
experience necessary to meet the requirements of the executives role.
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Annual Cash Bonus
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Variable performance-based component of compensation.
Designed to reward
achievement of financial, operating and other goals for which executives are held accountable.
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Long-Term Incentives
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Variable component of compensation focused on long-term performance and value
creation.
Designed to
motivate and reward long-term achievement of business objectives, align the interests of our executives with stockholders and support the retention of our executives.
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Each component is designed to support the Companys compensation philosophy and objectives.
The Compensation Committee evaluates our executive compensation program annually, or more frequently as circumstances require, to
maintain a competitive environment for talent and to ensure that our incentive programs are achieving their desired results. We do not adhere to rigid formulas in determining the amount and mix of compensation elements. We will continue to emphasize
pay-for-performance
and long-term incentive compensation when designing our executive officers compensation.
Say on Pay and Say on Frequency Votes
. In 2017, the Compensation Committee considered the outcome of the stockholder advisory vote on
2016 executive compensation when making decisions relating to the compensation of our NEOs and our executive compensation program and policies. Our stockholders voted at our 2017 annual meeting, in a
non-binding,
advisory vote, on the 2016 compensation paid to our NEOs. Approximately 97% of the votes were cast in favor of the Companys 2016 compensation decisions. Based on this level of support, the
Compensation Committee decided that the say on pay vote result did not necessitate any substantive changes to our compensation program.
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, stockholders can vote on the frequency of
say-on-pay
voting once every six years. We expect this vote to next occur at our 2021 annual meeting. Until that time, we expect to hold an advisory,
non-binding
say-on-pay
vote on an annual basis.
Compensation Determination Process
Role of the Compensation Committee
. Our Compensation Committee is responsible for making all executive compensation determinations. In
reviewing and approving the compensation of our executive officers, including our NEOs, the Compensation Committee considers many factors, including the advice of its compensation consultant, the alignment of pay outcomes with Company performance
and stockholder interests and competitive market data.
Role of Management
. Mr. Cline works closely with the Compensation
Committee in managing the executive compensation program and attends some meetings of the Compensation Committee. He does not participate in the determination of his own compensation.
Role of Compensation Consultants
. In late 2014 the Compensation Committee retained the services of Meridian Compensation Partners, LLC
(Meridian) to serve as its independent compensation consultant. As requested by the Compensation Committee, Meridian has advised and is expected to continue to advise the Compensation Committee with respect to executive officer
compensation, including executive compensation programs (including short- and long-term incentive plans), individual compensation levels, the peer companies used to assess compensation levels and marketplace trends in executive compensation.
Meridian also assisted with the preparation of this Compensation Discussion and Analysis. Except as set forth above, Meridian does not provide any services to the Company other than advising on executive officer and director compensation and related
matters. In April 2018, the Compensation Committee determined that Meridian is independent from management and that Meridians work has not raised any conflicts of interest.
Use of Comparative Market Data
. Our goal is to compensate our executive officers competitively in the market for executive talent. When
determining final target pay levels, the Compensation Committee reviews and considers individual factors, such as the knowledge, experience and capabilities of each executive.
To gain a general understanding of current compensation practices, the Compensation Committee reviews pay of executives serving in similar
positions at peer companies with whom we compete for hiring and retaining executive talent. The external market data reviewed for 2017 included target total compensation (i.e. the sum of the base salary, target annual incentive and target long-term
incentive) among a group of peer companies. The Compensation Committee reviewed and discussed the external market data, and used the data to inform its compensation decisions.
In 2017, the Compensation Committee, with the assistance of Meridian, selected a group of peer companies, which we refer to as our Peer
Group. Meridian provided the Compensation Committee with annual (base salary and annual incentive) and long-term (equity and long-term cash incentive) compensation information with respect to the Peer Group.
The criteria used for selecting the Peer Group included industry, lodging property focus, performance, company size (as measured by revenue,
enterprise value, number of properties and number of rooms), business mix, geographic location, and those companies for which we believe we compete for shareholder dollars, customers and/or executive talent.
10
The Peer Group for 2017 consisted of the following companies:
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Choice Hotels International Inc.
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Host Hotels & Resorts
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RLJ Lodging Trust
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Clubcorp Holdings. Inc.
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Hyatt Hotels Corp.
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Ryman Hospitality Properties, Inc.
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Diamondrock Hospitality Co.
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Intercontinental Hotels
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Summit Hotel Properties
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Extended Stay America, Inc.
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Lasalle Hotel Properties
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Vail Resorts
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Hersha Hospitality Trust
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Marcus Corp.
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Wyndham Worldwide Corporation
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The Company also reviewed the structure of the compensation programs of Hilton Worldwide Holdings Inc. and
Marriott International, Inc. but did not consider the total target compensation of executives at those companies as compensation at those companies was not considered comparable due to their larger size relative to La Quinta.
Elements of Compensation
There
are three main components to our executive compensation program: base salary, annual cash incentive compensation and long-term equity compensation. In 2017, we also granted our NEOs special retention awards to encourage and reward their continued
focus and energy on making objective business decisions that are in the best interests of the Company and its stockholders as we pursue the
Spin-Off
(as defined below). See 2017 Retention
Awards below.
Base Salary
We
believe it is important to provide a competitive fixed level of pay to attract and retain experienced and successful executives. In determining the amount of base salary that each NEO receives, we look to the executives current compensation,
time in position, any change in the executives position or responsibilities and the relation of the executives position to those of other executives within the Company and in similar positions at peer companies. Base salaries are
reviewed annually or at other times when appropriate and may be increased from time to time pursuant to such review. In March 2017, in connection with our annual review, we determined to increase the salaries of each of our NEOs as follows:
Mr. Cline, from $750,000 to $772,500; Mr. Forson, from $400,000 to $425,000; Mr. Cantele, from $475,000 to $495,000; Mr. Trivedi, from $470,000 to $495,000; and Mr. Chloupek, from $365,000 to $400,000. In addition to taking
into account the Peer Group information provided by Meridian, the Compensation Committee also considered the Companys interest in encouraging the NEOs continued focus and energy on making objective business decisions that are in the best
interests of the Company and its stockholders as we pursue the separation of our real estate business, which will be included in our subsidiary CorePoint Lodging Inc. (CorePoint), from our franchise and management businesses (the
Spin-Off).
The following table reflects our NEOs base salaries at the end of 2016 and 2017:
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Name
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Base Salary as of
December 31, 2016
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Base Salary as of
December 31, 2017
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Keith A. Cline
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$
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750,000
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$
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772,500
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James H. Forson
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$
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400,000
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$
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425,000
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John W. Cantele
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$
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475,000
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$
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495,000
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Rajiv K. Trivedi
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$
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470,000
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$
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495,000
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Mark M. Chloupek
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$
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365,000
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$
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400,000
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2017 Annual Cash Incentive Compensation
Our annual cash incentive compensation plan for the year ended December 31, 2017 (the 2017 Cash Bonus Plan) compensated and
rewarded successful achievement of both short-term financial and
non-financial
goals that were closely aligned with the long-term goals of the Company. The payout under the 2017 Cash Bonus Plan was based on
the financial performance of the Company or a combination of (1) the financial performance of the Company and (2) individual strategic objectives. For Mr. Cline, the financial performance of the Company composed 100% of his total
award opportunity and for each of our other NEOs, the financial performance of the Company composed 80% of the total award opportunity and individual strategic objectives composed 20% of the total award opportunity. For each of the NEOs, the
threshold, target and maximum annual bonus opportunity for the year ended December 31, 2017, expressed as a percentage of such NEOs base salary, was as follows: 50%, 100% and 150%, respectively.
2017 Financial Component Goals and Results
The financial component of each NEOs annual bonus opportunity was based on (1) Adjusted EBITDA (as defined under Note 17:
Segments to our Consolidated Financial Statements in Part II, Item 8 of the 2017
10-K),
as may be further adjusted for other unusual items as determined by the Compensation Committee) and
(2) Net Promoter (as described in our 2017
10-K).
For fiscal 2017, for Mr. Cline, Adjusted EBITDA composed 70% of the financial component and Net Promoter composed 30% of the financial
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component. For each of the other NEOs, Adjusted EBITDA composed 50% of the total award opportunity and Net Promoter composed 30% of the total award opportunity (with the remaining 20% consisting
of individual strategic objectives). These financial measures were chosen because they are key indicators of Company profitability and guest satisfaction. The following table sets forth the threshold, target and maximum amounts for each of the
financial components, as well as the payout percentages for each category.
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Threshold
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Target
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Maximum
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Adjusted EBITDA
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$
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320 million
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$
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335 million
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$
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350 million
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Net Promoter
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43.9
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44.4
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44.9
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Payout Percentage of Target
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50
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%
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100
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%
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150
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%
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To the extent that actual performance fell between the applicable threshold, target or maximum levels for the
Net Promoter component, payouts were determined using linear interpolation. To the extent that actual performance fell between the applicable threshold, target or maximum levels for the Adjusted EBITDA component, payouts were determined based on the
curve set forth below.
2017 Individual Strategic Objectives and Results
The remaining 20% of the potential total award opportunity for Messrs. Forson, Cantele, Trivedi and Chloupek was based on their individual
performance relative to individual performance criteria. For example, for Mr. Forson, the individual strategic objective criteria consisted of regulatory compliance, and support of the execution of the
Spin-Off;
for Mr. Cantele, the criteria consisted of the successful execution of 50 hotel repositionings, the design and implementation of a 2017 renovation and repositioning plan for the Companys
Inns and Inns & Suites, and successful achievement of ADR growth goals for the Companys Inns & Suites; for Mr. Trivedi, the criteria consisted of establishing standard operating procedures for use by franchisee
construction and operations
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teams, commodity purchase goals, goals relating to the franchise operations relaunch of the Companys Here for You campaign, goals relating to visits to recently opened
properties, and asset sale goals; for Mr. Chloupek, the criteria consisted of goals relating to compliance assessments, resolving within a certain timeframe certain employee and third party claims, internal compliance goals, and support of the
execution of the
Spin-Off.
Individual performance with respect to these goals was measured at set threshold, target and maximum levels, with corresponding payout percentages at each of these levels (50%, 100%
and 150%, respectively) for Messrs. Forson, Cantele, Trivedi and Chloupek.
Determination of 2017 Cash Bonus Plan Payouts
The following table shows the actual results based on the Companys actual fiscal 2017 performance and the payout percentages with respect
to each of the financial components.
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Adjusted EBITDA
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Net Promoter
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Actual Performance
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$
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326.9 million
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45.6
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Payout PercentageMessrs. Cline, Forson,
Cantele, Trivedi and Chloupek
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83.7
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%
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150
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%
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Actual amounts paid under the 2017 Cash Bonus Plan were then calculated by multiplying each NEOs base
salary in effect as of March 6, 2017 by his target bonus percentage. For Mr. Cline, the target bonus potential was then multiplied by a combined achievement factor based on the weighted average of Adjusted EBITDA payout percentage and the
Net Promoter payout percentage and, for Messrs. Forson, Cantele, Trivedi and Chloupek, by a combined achievement factor based on the weighted average of Adjusted EBITDA payout percentage, the Net Promoter payout percentage and the individual
strategic objective payout percentage. Based on the performance achieved, each of the NEOs earned an annual bonus for 2017 under the 2017 Cash Bonus Plan as follows, which amounts are reflected in the
Non-Equity
Incentive Plan Compensation column of the Summary Compensation Table:
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Name
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2017
base salary
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Target
bonus as a
percentage of
base salary
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Target
bonus
potential
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Achievement
factor as a
percentage
of target
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2017
annual bonus
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Keith A. Cline
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$
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772,500
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100
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%
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$
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772,500
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103.59
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%
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$
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800,233
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James H. Forson
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$
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425,000
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100
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%
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$
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425,000
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116.85
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%
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$
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496,613
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John W. Cantele
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$
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495,000
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100
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%
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$
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495,000
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116.85
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%
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$
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578,408
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Rajiv K. Trivedi
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$
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495,000
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100
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%
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$
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495,000
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116.85
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%
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$
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578,408
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Mark M. Chloupek
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$
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400,000
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100
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%
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$
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400,000
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116.85
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%
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$
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467,400
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2017 Retention Awards
To encourage and reward the continued focus and energy of certain employees, including our NEOs, on making objective business decisions that
are in the best interests of the Company and its stockholders as we pursue the
Spin-Off,
on January 17, 2017, the Board of Directors adopted and approved the La Quinta Holdings Inc. Retention Bonus Plan
(the 2017 Retention Plan), which provides for the payment of awards to specified eligible employees, including the NEOs, upon the occurrence of a specified date or event.
Under the 2017 Retention Plan, the NEOs were granted awards with the following values: $1,875,000 for Mr. Cline; $750,000 for
Mr. Forson; $890,625 for Mr. Cantele; $587,500 for Mr. Trivedi; and $912,500 for Mr. Chloupek. These retention awards are payable 50% in cash and 50% in shares of restricted stock. The shares of restricted stock were granted
pursuant to the Amended and Restated La Quinta Holdings Inc. 2014 Omnibus Incentive Plan (the Omnibus Incentive Plan) on January 23, 2017, and the number of shares of restricted stock granted was equal to the value of the award
payable in restricted shares divided by the per share fair value of the Companys common stock on January 17, 2017.
The cash
portion of a retention award is payable, and shares of restricted stock vest, on the earliest to occur of the following, subject, in each case, to an NEOs continued employment through such date: (i) April 17, 2018; (ii) the date
that is six months from the consummation of a significant corporate event (as defined in the 2017 Retention Plan); (iii) the date of an NEOs termination of employment (x) by the Company without cause (as defined in the 2017 Retention
Plan) at any time following January 17, 2017 or (y) by the NEO with good reason (as defined in the 2017 Retention Plan) within the six months prior to, or on or following, a significant corporate event; or (iv) the date of a change in
control (as defined in the 2017 Retention Plan).
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Long-Term Equity Compensation
The following description of our long-term equity compensation program focuses on our time-vesting and performance-based equity awards, which
reflect our current pay for performance philosophy and approach towards compensation.
2017 Equity Awards
In addition to the restricted stock granted to our NEOs under the 2017 Retention Plan in January 2017, in March 2017, in connection with our
annual review of our compensation for executives, the Compensation Committee determined to grant to each of our NEOs the following awards under the Omnibus Incentive Plan: (1) time-vesting restricted stock (time-vesting restricted stock
award) (50% of the total target value of the March 2017 equity awards) and (2) performance-vesting performance share units (PSUs) (50% of the total target value of the March 2017 equity awards). The relative mix of these two
awards reflects the Compensation Committees determination to balance our goals of aligning the interests of our executives with that of stockholders and retaining our executives.
Time-Vesting Restricted Stock.
The time-vesting restricted stock awards granted in fiscal 2017 vest in three equal
annual installments, with the first
one-third
of the total number of shares granted vesting on December 31, 2017, the second
one-third
of the total number of shares
granted vesting on December 31, 2018, and the remainder of the number of shares granted vesting on December 31, 2019, subject to the executives continued employment through the applicable vesting date.
Performance Share Units (PSUs).
The PSUs granted in fiscal 2017 are settled after the end of the performance
period, which begins on January 1, 2017 and ends on December 31, 2019, based on the Companys total shareholder return relative to the total shareholder returns of members of a peer company group (relative total shareholder
return), as defined in the PSU agreement. For a description of the peer company group, see Narrative to Summary Compensation Table and Fiscal 2017 Grants of Plan-Based AwardsEquity Awards2017 Equity AwardsPerformance
Share Units (PSUs) below. The actual value of the PSUs that become vested based on the performance measure (relative total shareholder return) is based on an achievement factor which, in each case, ranges from a 33% payout for
threshold performance, to 100% for target performance, to 200% for maximum performance. To the extent that actual performance falls between the applicable threshold, target or maximum levels, payouts will be determined using linear interpolation. In
the event that Absolute TSR (as defined below under Narrative to Summary Compensation Table and Fiscal 2017 Grants of Plan-Based AwardsEquity Awards2017 Equity AwardsPerformance Share Units (PSUs)) has a
negative value, the resulting award is capped at 1.5 times the target award.
The table below sets forth the total target value of the
equity awards granted to our named executive officers in March 2017 as well as the target value of the PSU award, assuming that the target level of performance is achieved, and the fair market value on the grant date of the time-vesting restricted
stock award.
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Name
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Total Target
Value
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Time-Vesting Restricted Stock
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Target PSU
Value
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Value
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Number of Shares
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Keith A. Cline
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$
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3,000,000
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$
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1,500,000
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110,214
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$
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1,500,000
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James H. Forson
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$
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850,000
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$
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425,000
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31,228
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$
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425,000
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John W. Cantele
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$
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800,000
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$
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400,000
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29,391
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$
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400,000
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Rajiv K. Trivedi
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$
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800,000
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$
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400,000
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29,391
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$
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400,000
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Mark M. Chloupek
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$
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700,000
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$
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350,000
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25,717
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$
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350,000
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Settlement of Previously Granted PSUs
In February 2018, following the completion of the
3-year
performance period of January 1, 2015
through December 31, 2017, we settled the PSU awards that were granted in 2015. Performance goals for the 2015 PSU awards were established by the Compensation Committee in February 2015. At the time the performance goals were established, the
metric that was selected was total shareholder return relative to the total shareholder returns of members of a peer company group (relative TSR), as defined in the PSU agreement. The actual value of the PSUs that become vested based on
relative TSR ranges from a 33% payout for threshold performance, to 100% for target performance, to 200% for maximum performance. The threshold, target and maximum goals for these performance measures and the actual performance are shown in the
below table:
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Measurement
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Weighting
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Threshold
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Target
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Maximum
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Actual
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Earned
(% of
Target)
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Relative TSR
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100%
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30
th
percentile
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50
th
percentile
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90
th
percentile
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22nd percentile
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0.0%
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14
Based on the Companys performance as set forth in the chart above, the actual value of the
2015 PSU award was equal to 0% of the target PSU value for each of our NEOs because the Company did not achieve threshold performance for the performance measure.
Other Benefits and Perquisites
Our executives, including our NEOs, are eligible for specified benefits, such as group health, dental, long- and short-term disability
insurance, accidental death and dismemberment insurance and employer-paid basic life insurance premiums. These benefits are intended to provide competitive and adequate protection in case of sickness, disability or death. In addition, we generally
provide specified perquisites to our NEOs, when determined to be necessary and appropriate, including employer-paid executive physical examinations. In addition, until March 2017, we provided car allowances to certain of our executives. The value of
perquisites and other personal benefits are reflected in the All Other Compensation column of the Summary Compensation Table and the accompanying footnote. We believe that these benefits are competitive in our industry and
consistent with our overall compensation philosophy.
Retirement Benefits
The Company maintains a
tax-qualified
401(k) plan in which all of our corporate employees, including
our NEOs, are eligible to participate and under which the Company matches each employees contributions
dollar-for-dollar
up to 3% of such employees eligible
earnings and $0.50 for every $1.00 for the next 2% of the employees eligible earnings. The maximum match available under the 401(k) plan is 4% of the employees eligible earnings. All matching contributions by us are always fully vested.
Severance Benefits
To
encourage and reward our executives continued focus and energy on making objective business decisions that are in the best interests of the Company and its stockholders as we pursue the
Spin-Off
and to
provide greater certainty regarding executive pay obligations in the context of planning and negotiating any potential corporate transactions, on January 17, 2017, the Board of Directors adopted and approved the La Quinta Holdings Inc.
Executive Severance Plan (the Severance Plan) for employees of the Company at the level of Vice President and above, including the NEOs. The Severance Plan provides for payment of severance and other benefits to eligible executives,
including the NEOs, in the event of a termination of employment with the Company without cause or for good reason (each as defined in the Severance Plan), or in the event of a termination with the Company as a result of retirement, death, or
disability (as such terms are defined in the Severance Plan), in each case, subject to the (i) executives execution and
non-revocation
of a general release of claims in favor of the Company and
(ii) continued compliance with the executives confidentiality,
non-interference
and invention assignment obligations to the Company. See Potential Payments Upon Termination or Change in
ControlExecutive Severance Plan Adopted in 2017.
The terms of Mr. Chloupeks employment agreement also provide
severance protection to Mr. Chloupek in the case of specified qualifying termination events. The severance payments under Mr. Chloupeks employment agreement are contingent upon his execution of a release of claims and compliance with
specified post-termination restrictive covenants. While Mr. Chloupeks employment agreement contains severance terms applicable to him, he is eligible to receive benefits under the Severance Plan only to the extent that any amounts due and
payable under the Severance Plan are greater than and in addition to the amount due and payable to Mr. Chloupek under his employment agreement.
In addition, each of our equity award agreements contains severance provisions.
See Potential Payments Upon Termination or Change in Control for descriptions of payments to be made under these agreements.
Clawback Policy
We have adopted a
clawback policy for incentive compensation plans. The Compensation Committee determined that it may be appropriate to recover annual and/or long-term incentive compensation in specified situations. Under the policy, if the Compensation Committee
determines that incentive compensation of its current and former Section 16 officers (or any other employee designated by the Board of Directors or the Compensation Committee) was overpaid, in whole or in part, as a result of a restatement of
the reported financial results of the Company or any of its segments due to material
non-compliance
with financial reporting requirements (unless
15
due to a change in accounting policy or applicable law), and such restatement was caused or contributed, directly or indirectly, by such employees fraud, willful misconduct or gross
negligence, then the Compensation Committee will determine, in its discretion, whether to seek to recover or cancel any overpayment of incentive compensation paid or awarded during the three-year period preceding the date on which the Company is
required to prepare the restatement.
Stock Ownership Policy
We have an executive stock ownership policy for our NEOs, which provides the following guidelines relating to stock ownership by each of our
NEOs within five years of the later of (x) the date on which we made our first broad-based equity incentive grants following our initial public offering (which was June 11, 2014) or (y) the date he or she first becomes subject to the
stock ownership policy:
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Chief Executive Officer: 4 times base salary
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All other executive officers: 2 times base salary
|
The NEOs each currently have stock
ownership that meets the levels shown above.
Hedging and Pledging Policies
The Companys Insider Trading Policy requires executive officers and directors to consult the Companys General Counsel prior to
engaging in transactions involving the Companys securities. In order to protect the Company from exposure under insider trading laws, executive officers and directors are encouraged to enter into
pre-programmed
trading plans under Exchange Act Rule
10b5-1.
The Companys Insider Trading Policy prohibits directors and executive officers from hedging or
monetization transactions including, but not limited to, through the use of financial instruments such as exchange funds, variable forward contracts, equity swaps, puts, calls, and other derivative instruments, or through the establishment of a
short position in the Companys securities. The Companys Insider Trading Policy limits the pledging of Company securities to those situations approved by the Companys General Counsel.
Risk Assessment
The Compensation
Committee believes that the design and objectives of our executive compensation program provide an appropriate balance of incentives for executives and avoid inappropriate risks. In this regard, our executive compensation program includes, among
other things, the following design features:
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Balances a mix of fixed versus variable,
at-risk
compensation;
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Balances a mix of short-term cash and long-term equity incentive compensation;
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Incentive plans establish caps on award payouts;
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Provides that variable compensation is based on a variety of qualitative and quantitative performance goals;
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Provides for a clawback of executive compensation in specified circumstances; and
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Executive stock ownership policy.
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Tax and Accounting Considerations
The Compensation Committee recognizes the tax and regulatory factors that can influence the structure of executive compensation programs.
Generally, Section 162(m) (Section 162(m)) of the Internal Revenue Code of 1986, as amended (the Code) limits the Companys federal income tax deduction for compensation in excess of $1 million paid to
NEOs in any one year. Historically, performance-based compensation, within the meaning of Section 162(m) was excluded from the limitation as long as specified requirements were met, and we designed our Omnibus Incentive Plan in a
manner intended to allow us to utilize this performance-based exception. For 2017, we considered the application of Section 162(m) in awarding compensation to our NEOs, and designed a portion of the compensation awards granted to our NEOs in a
manner intended to qualify as performance-based compensation. However, we did not design our 2017 Retention Plan in a manner intended to comply with the performance-based exception to Section 162(m). Moreover, as a result of the elimination of
the performance-based compensation exemption at the end of 2017, subject to certain grandfathering rules, we will no longer be permitted to take deductions for performance-based compensation, and therefore, we anticipate that
compensation decisions will not be made with as much, if any, focus on the application of Section 162(m).
16
The Compensation Committee also considers the accounting implications of the various elements of
our compensation program, including the impact on our financial results and the dilutive impact to stockholders of various forms of compensation.
Compensation Actions taken in 2018
2018
Retention Awards
On January 30, 2018, the Board of Directors adopted and approved the La Quinta Holdings Inc. Project Longhorn
Retention Bonus Plan (the 2018 Retention Plan), effective as of April 18, 2018, which provides for the payment of cash awards to specified eligible employees, including the NEOs, upon the occurrence of a specified date or event.
The Board of Directors adopted and approved the 2018 Retention Plan to encourage and reward the continued focus and energy of certain
employees, including the NEOs, on making objective business decisions that are in the best interests of the Company and its stockholders as it pursues the consummation of the proposed merger (the Merger) of WHG BB Sub, Inc. (Merger
Sub), a Delaware corporation and an indirect wholly-owned subsidiary of Wyndham Worldwide Corporation, a Delaware corporation (Wyndham Worldwide) with and into the Company in accordance with and subject to the terms of the
Agreement and Plan of Merger, dated as of January 17, 2018, by and among the Company, Wyndham Worldwide and Merger Sub.
Under the
2018 Retention Plan, the NEOs were granted cash awards with the following values: $750,000 for Mr. Cline; $300,000 for Mr. Forson; $356,250 for Mr. Cantele; $235,000 for Mr. Trivedi; and $365,000 for Mr. Chloupek. The
retention award is payable on the earliest to occur of the following, subject, in each case, to an NEOs continued employment through such date: (i) October 31, 2018; and (ii) the date of an NEOs Qualifying Covered
Termination (as defined in the 2018 Retention Plan). Any participant in the 2018 Retention Plan (including the NEOs) who begins employment with CorePoint prior to October 31, 2018 will forfeit the value of his or her retention award under the
2018 Retention Plan. The consummation of the Merger will have no effect on the vesting of awards granted under the 2018 Retention Plan.
Employee
Matters Agreement
In connection with the
Spin-Off,
La Quinta entered into an Employee Matters
Agreement with CorePoint (the EMA), which among other items, provides for the conversion of La Quinta performance share units (PSUs) into La Quinta time-vesting restricted stock awards (RSAs) upon the
Spin-Off.
The EMA generally provides that outstanding PSUs issued under the Omnibus Incentive Plan will be converted to RSAs based on deemed satisfaction of applicable performance criteria at (i) the greater of
target or actual performance levels in respect of applicable performance periods that have ended on or prior to the end of the fiscal quarter ending immediately prior to the fiscal quarter in which the
spin-off
occurs (i.e., the portion of the applicable performance period representing the number of fiscal quarters that have elapsed since the commencement of the applicable performance period), and
(ii) target performance levels in respect of performance periods that have not ended prior to such fiscal quarter. RSAs received in connection with the conversion of PSUs will continue to be subject to vesting based on the holders
continued employment with La Quinta or CorePoint, as applicable, through the end of the applicable performance period to which such PSUs relate.
It is currently expected that PSUs which were granted in 2016, other than PSUs granted to Mr. Cantele in 2016, will be converted to RSAs
based on deemed satisfaction of the applicable performance criteria at target levels and PSUs that were granted in 2017, as well as those were granted to Mr. Cantele in 2016, will be converted to RSAs based on deemed satisfaction of the
applicable performance criteria at actual performance levels.
17
Tabular Executive Compensation Disclosure
Summary Compensation Table
The following table
presents summary information regarding the total compensation awarded to, earned by, or paid to each of our NEOs for the fiscal years indicated.
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Name and principal position
|
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Year
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|
Salary
($)
(1)
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|
Bonus
($)
|
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|
Stock
Awards
($)
(2)
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|
Non-Equity
Incentive
Plan
Compensation
($)
(3)
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|
All Other
Compensation
($)
(4)
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Total
($)
|
|
Keith A. Cline
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2017
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768,555
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|
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|
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4,159,607
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|
800,233
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|
|
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16,440
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|
|
|
5,744,835
|
|
President and Chief
Executive Officer
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2016
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|
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|
714,984
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|
|
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500,000
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|
|
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3,785,707
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|
|
|
337,500
|
|
|
|
15,097
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|
|
|
5,353,288
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2015
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|
|
479,912
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|
|
|
|
|
|
|
1,252,750
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|
227,976
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|
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14,767
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1,975,405
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James H. Forson
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2017
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|
420,616
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1,285,869
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496,613
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13,409
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2,216,507
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Executive Vice President and
Chief Financial Officer and Treasurer
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2016
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383,607
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|
|
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150,000
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|
|
|
959,100
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|
|
306,000
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|
|
11,742
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|
|
|
1,810,449
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2015
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|
|
272,986
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|
|
|
|
|
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|
279,838
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64,900
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15,276
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633,000
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|
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John W. Cantele
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2017
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|
491,493
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|
|
|
|
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1,300,847
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578,408
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|
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13,609
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|
|
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2,384,357
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Executive Vice President and
Chief Operating Officer
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2016
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|
|
326,420
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|
|
|
|
|
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1,494,309
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|
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249,711
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|
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|
142,918
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|
|
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2,213,358
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|
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|
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Rajiv K. Trivedi
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2017
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490,616
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|
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1,152,170
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|
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578,408
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16,191
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|
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2,237,385
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Executive Vice President and
Chief Development Officer
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2016
|
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|
|
470,000
|
|
|
|
|
|
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|
1,710,393
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|
|
|
299,625
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|
|
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27,979
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|
|
|
2,507,997
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2015
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|
467,315
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|
|
|
|
|
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885,606
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199,327
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27,350
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1,579,598
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Mark M. Chloupek
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2017
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393,863
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1,203,585
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467,400
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24,297
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|
|
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2,089,145
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Executive Vice President,
Secretary and General Counsel
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2016
|
|
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365,000
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|
|
|
|
|
|
|
1,007,793
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|
|
|
279,225
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|
|
|
27,713
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|
|
|
1,679,731
|
|
|
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2015
|
|
|
|
362,986
|
|
|
|
|
|
|
|
632,526
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|
|
|
172,280
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|
|
|
27,849
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|
|
|
1,195,641
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|
(1)
|
The base salaries of the NEOs were increased on March 6, 2017 as follows: in the case of Mr. Cline, from $750,000 to $772,500; in the case of Mr. Forson, from $400,000 to $425,000; in the case of
Mr. Cantele, from $475,000 to $495,000; in the case of Mr. Trivedi, from $470,000 to $495,000; and in the case of Mr. Chloupek, from $365,000 to $400,000.
|
(2)
|
Represents the aggregate grant date fair value of stock awards granted during fiscal 2017, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718,
CompensationStock Compensation (Topic 718), without taking into account estimated forfeitures. The fiscal 2017 stock awards consist of the grants of time-vesting restricted stock awards and PSUs. Terms of the fiscal 2017 stock
awards are summarized under Compensation Discussion and AnalysisElements of CompensationLong-Term Equity Compensation above and in the Narrative to Summary Compensation Table and Fiscal 2017 Grants of Plan-Based
Awards below. The assumptions made when calculating the amounts are found in Note 15: Equity-Based Compensation to our Consolidated Financial Statements in Part II, Item 8 of our 2017
10-K.
The final PSU value of the PSUs granted in fiscal 2017 will be determined subject to achievement under the relative total shareholder return measure. As the PSUs are only subject to market conditions and a service period requirement as defined under
Topic 718, they have no maximum grant date fair values that differ from the fair values presented in the table.
|
(3)
|
Amounts in this column for fiscal 2017 include the amounts earned under the annual bonus plan. See Compensation Discussion and AnalysisElements of Compensation2017 Annual Cash Incentive
Compensation.
|
(4)
|
All other compensation for fiscal 2017 includes 401(k) matching contributions of $10,800 for each of our NEOs. For each of our NEOs, perquisites and other personal benefits included employer-paid long-term disability
insurance, employer-paid short-term disability insurance, employer-paid accidental death and dismemberment insurance and employer-paid life insurance. In addition, for Messrs. Cline and Chloupek, perquisites and other personal benefits included the
employer-paid executive physical; and for Messrs. Trivedi and Chloupek, a car allowance, which car allowance was discontinued in March 2017.
|
18
Fiscal 2017 Grants of Plan-Based Awards
The following table sets forth information concerning grants of plan-based awards to our NEOs during the fiscal year ended December 31,
2017.
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|
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|
Estimated Possible Payouts
Under Non-Equity Incentive
Plan Awards
(1)
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|
|
Estimated Future Payouts
Under Equity Incentive
Plan Awards
(2)
|
|
|
All Other
Stock
Awards:
Number of
Shares of
Stock or
|
|
|
Grant
Date Fair
Value of
Stock
and Option
|
|
Name
|
|
Award Type
|
|
Grant Date
|
|
|
Threshold
($)
|
|
|
Target
($)
|
|
|
Maximum
($)
|
|
|
Threshold
(#)
|
|
|
Target
(#)
|
|
|
Maximum
(#)
|
|
|
Units
(3)
(#)
|
|
|
Awards
(4)
($)
|
|
Keith A. Cline
|
|
2017 Cash Bonus Plan
|
|
|
|
|
|
|
115,875
|
|
|
|
772,500
|
|
|
|
1,158,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 Retention
Restricted Stock
|
|
|
01/23/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
65,790
|
|
|
|
919,744
|
|
|
|
Time-Vesting
Restricted Stock Grant
|
|
|
03/06/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
110,214
|
|
|
|
1,500,013
|
|
|
|
Performance Share
Units Grant
|
|
|
03/06/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,792
|
|
|
|
108,460
|
|
|
|
216,920
|
|
|
|
|
|
|
|
1,739,850
|
|
|
|
|
|
|
|
|
|
|
|
|
James H. Forson
|
|
2017 Cash Bonus Plan
|
|
|
|
|
|
|
14,025
|
|
|
|
425,000
|
|
|
|
637,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 Retention
Restricted Stock
|
|
|
01/23/2017
|
|
|
|
|
|
|
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|
26,316
|
|
|
|
367,898
|
|
|
|
Time-Vesting
Restricted Stock Grant
|
|
|
03/06/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
31,228
|
|
|
|
425,013
|
|
|
|
Performance Share
Units Grant
|
|
|
03/06/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,142
|
|
|
|
30,731
|
|
|
|
61,462
|
|
|
|
|
|
|
|
492,958
|
|
John W. Cantele
|
|
2017 Cash Bonus Plan
|
|
|
|
|
|
|
16,335
|
|
|
|
495,000
|
|
|
|
742,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 Retention
Restricted Stock
|
|
|
01/23/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,250
|
|
|
|
436,875
|
|
|
|
Time-Vesting
Restricted Stock Grant
|
|
|
03/06/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,391
|
|
|
|
400,012
|
|
|
|
Performance Share
Units Grant
|
|
|
03/06/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,545
|
|
|
|
28,923
|
|
|
|
57,846
|
|
|
|
|
|
|
|
463,960
|
|
|
|
|
|
|
|
|
|
|
|
|
Rajiv K. Trivedi
|
|
2017 Cash Bonus Plan
|
|
|
|
|
|
|
9,900
|
|
|
|
495,000
|
|
|
|
742,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 Retention
Restricted Stock
|
|
|
01/23/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,615
|
|
|
|
288,198
|
|
|
|
Time-Vesting
Restricted Stock Grant
|
|
|
03/06/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,391
|
|
|
|
400,012
|
|
|
|
Performance Share
Units Grant
|
|
|
03/06/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,545
|
|
|
|
28,923
|
|
|
|
57,846
|
|
|
|
|
|
|
|
463,960
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark M. Chloupek
|
|
2017 Cash Bonus Plan
|
|
|
|
|
|
|
10,000
|
|
|
|
400,000
|
|
|
|
600,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 Retention
Restricted Stock
|
|
|
01/23/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,018
|
|
|
|
447,612
|
|
|
|
Time-Vesting
Restricted Stock Grant
|
|
|
03/06/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,717
|
|
|
|
350,008
|
|
|
|
Performance Share
Units Grant
|
|
|
03/06/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,352
|
|
|
|
25,308
|
|
|
|
50,616
|
|
|
|
|
|
|
|
405,965
|
|
(1)
|
Reflects the possible payouts of cash incentive compensation under the 2017 Cash Bonus Plan. The actual amounts paid are reflected in the
Non-Equity
Inventive Plan
Compensation column of the Summary Compensation Table and described in Compensation Discussion and AnalysisElements of Compensation2017 Annual Cash Incentive Compensation above.
|
(2)
|
Reflects PSU grants, the terms of which are summarized in the narrative below and under Compensation Discussion and AnalysisElements of CompensationLong-Term Equity Compensation above. The number
of shares shown in the table was determined for our NEOs other than Mr. Cantele by dividing the threshold, target, and maximum value of the PSU award by the
20-day
trailing average closing price of the
Companys common stock on December 30, 2016 ($13.83 per share).
|
(3)
|
Reflects time-vesting restricted stock grants and 2017 Retention Plan stock grants, the terms of which are summarized under Compensation Discussion and AnalysisElements of CompensationLong-Term Equity
Compensation above.
|
(4)
|
Represents the grant date fair value of each equity award computed in accordance with Topic 718, without taking into account estimated forfeitures.
|
Narrative to Summary Compensation Table and Fiscal 2017 Grants of Plan-Based Awards
Employment Agreements
In
connection with his appointment as President and Chief Executive Officer, we entered into the Cline Offer Letter, dated February 18, 2016, with Mr. Cline. In connection with his appointment as Executive Vice President and Chief Operating
Officer, we entered into the Cantele Offer Letter, dated April 13, 2016, with Mr. Cantele. We also entered into an employment agreement, dated as of August 20, 2003, as amended August 17, 2005, with Mr. Chloupek. We do not
have employment agreements with any of our other NEOs. For a description of the provisions of the Cline Offer Letter and Mr. Chloupeks employment agreement related to payments upon termination of employment or a change in control, see
Potential Payments Upon Termination or Change in Control below.
Mr. Cline
In connection with his appointment as President and Chief Executive Officer in February 2016, the Compensation Committee and the Board, after
consultation with Meridian, approved the following compensation arrangement, reflected in the Cline Offer Letter, for Mr. Cline:
|
|
|
Base salary of $750,000, subject to increase (but not decrease), which base salary was increased to $772,500 as of March 6, 2017.
|
19
|
|
|
Target annual cash incentive opportunity equal to 100% of his base salary.
|
|
|
|
Target long-term incentive opportunity of $2.75 million for the 2016 fiscal year.
|
Mr. Cantele
In connection with his appointment as Executive Vice President and Chief Operating Officer, the Company entered into the Cantele Offer
Letter with Mr. Cantele. The Cantele Offer Letter provides that Mr. Cantele will be the Companys Executive Vice President and Chief Operating Officer with the following compensation and benefits: (i) an annual base salary of
$475,000, subject to increase (but not decrease), which base salary was increased to $495,000 as of March 6, 2017; (ii) an annual bonus opportunity with a target amount equal to 100% of his base salary, with the actual bonus amount based
upon achievement of Company and individual performance targets established by the Compensation Committee for the fiscal year to which the bonus relates; provided that, the annual bonus for the 2016 fiscal year would be
pro-rated
to reflect Mr. Canteles partial year of service; (iii) eligibility to receive annual grants under the Companys long-term incentive program in amounts and in a form determined by
the Compensation Committee; provided that, for the 2016 fiscal year, Mr. Canteles long-term incentive award would have a target value of $900,000.
Mr. Chloupek
Mr. Chloupeks employment agreement, dated as of August 20, 2003, as amended August 17, 2005, provides that he is to serve
as Senior Vice President, is eligible to receive a base salary (which was increased to $400,000 as of March 6, 2017), and is eligible to receive a cash incentive compensation award, which amounts shall be determined by the Compensation
Committee. The employment agreement provides for an initial three-year employment term that extends automatically for additional
one-year
periods, unless we or Mr. Chloupek elects not to extend the term.
Equity Awards
2017 Equity
AwardsRestricted Stock
On January 23, 2017, we made restricted stock grants to each of our NEOs under the 2017 Retention
Plan. For a description of these awards, see Compensation Discussion and AnalysisElements of CompensationCash Bonus Opportunities2017 Retention Awards above. The vesting terms of these restricted stock awards upon a
termination or change in control are summarized below in Potential Payments Upon Termination or Change in Control.
On
March 6, 2017, we granted the time-vesting restricted stock awards pursuant to our long-term incentive plan to each of our NEOs. For a description of these awards, see Compensation Discussion and AnalysisLong-Term Equity
Compensation above. The vesting terms of the time-vesting restricted stock awards upon termination or a change in control are summarized below in Potential Payments Upon Termination or Change in Control.
2017 Equity AwardsPerformance Share Units (PSUs)
On March 6, 2017, we granted PSUs pursuant to our long-term incentive plan to each of our NEOs, which awards are described generally above
under Compensation Discussion and AnalysisLong-Term Equity Compensation. The vesting terms of the PSUs upon an executives termination or a change in control are summarized in Potential Payments Upon Termination or
Change in Control below. The grants of PSUs that we made in 2017 have a performance period beginning on January 1, 2017 and ending on December 31, 2019. The Compensation Committee determined that the compensation opportunity under
these grants will be based on relative total shareholder return over the performance period. The Compensation Committee believes that the performance goals described below for the PSUs are reasonably attainable, yet provide an appropriate incentive
to maximize our performance and shareholder value. The Compensation Committee believes that achievement of maximum performance against the relative total shareholder return goal would require exceptional corporate performance over the performance
period.
Relative Total Shareholder Return.
The final PSU value will be determined at the end of the performance period based upon
the Companys total shareholder return, calculated as set forth below, as compared to the total shareholder return of the comparison companies listed below.
The Companys total shareholder return performance (Absolute TSR) is calculated as the compounded annual growth rate,
expressed as a percentage (rounded to the nearest tenth of a percentage (0.1%)), in the value per share of common stock during the performance period due to the appreciation in the price per share of our common stock and dividends paid during the
performance period (assuming dividends are reinvested).
20
In order to compare the Companys total shareholder return with that of our comparison
companies, each company is ranked in order of its total shareholder return. The Companys percentile rank among the comparison companies results in an achievement factor that is then used to determine the final PSU value as follows:
|
|
|
|
|
|
Performance Level
|
|
Percentage of Target PSU Value that Vests
|
Maximum
|
|
|
|
200
|
%
|
Target
|
|
|
|
100
|
%
|
Threshold
|
|
|
|
33
|
%
|
Below Threshold
|
|
|
|
0
|
%
|
To the extent that actual performance falls between the applicable threshold, target or maximum levels,
payouts will be determined using linear interpolation. In the event that Absolute TSR has a negative value, the resulting award will be capped at 1.5 times the target award.
For the fiscal 2017 grants, the following comparison companies are used for measuring relative total shareholder return for the PSUs. Only
such companies that are public throughout the entire performance period will be included for purposes of the final calculation. The criteria used for selecting the PSU comparison group was similar in nature to the Peer Group used to benchmark our
executive compensation. However, for this comparison group, we narrowed the criteria used to only hospitality/lodging companies (or REITs) and those companies for which we believe we compete for shareholder dollars.
|
|
|
Choice Hotels International Inc.
|
|
InterContinental Hotels Group PLC
|
|
|
Clubcorp Holdings, Inc.
|
|
LaSalle Hotel Properties
|
|
|
DiamondRock Hospitality Co.
|
|
Marcus Corporation
|
|
|
Extended Stay America Inc.
|
|
Marriott International, Inc.
|
|
|
Hersha Hospitality Trust
|
|
RLJ Lodging Trust
|
|
|
Hilton Worldwide Holdings Inc.
|
|
Ryman Hospitality Properties, Inc.
|
|
|
Hospitality Properties Trust
|
|
Summit Hotel Properties, Inc.
|
|
|
Host Hotels & Resorts, Inc.
|
|
Vail Resorts, Inc.
|
|
|
Hyatt Hotels Corporation
|
|
Wyndham Worldwide Corporation
|
Once calculated, the final PSU value will be delivered to the executive, subject to the executives
continued employment through the date of determination, in the form of a number of shares of our common stock determined by dividing the final PSU value by the
20-day
trailing average closing price of our
common stock on the first day of the performance period; however, because markets were not open on January 1, 2017, it is determined by the
20-day
trailing average closing price of the Companys
common stock on December 30, 2016 ($13.83 per share).
For information regarding the treatment of outstanding PSUs in connection with
the
Spin-Off,
see Compensation Discussion and AnalysisCompensation Actions taken in 2018Employee Matters Agreement.
Outstanding Equity Awards at 2017 Fiscal
Year-End
The following table sets forth information regarding outstanding equity awards made to our NEOs as of December 31, 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
Name
|
|
Number of Shares or
Units of Stock That
Have Not
Vested
(#)
(1)
|
|
|
Market Value
of Shares or Units of
Stock That Have Not
Vested
($)
(2)
|
|
|
Equity Incentive Plan
Awards: Number of
Unearned Shares,
Units or Other
Rights That
Have
Not Vested
(#)
(3)
|
|
|
Equity Incentive Plan
Awards:
Market or Payout Value
of Unearned Shares,
Units or Other
Rights
That Have Not Vested
($)
(2)
|
|
Keith A. Cline
|
|
|
267,652
|
|
|
|
4,940,856
|
|
|
|
252,195
|
|
|
|
4,655,520
|
|
James H. Forson
|
|
|
79,390
|
|
|
|
1,465,539
|
|
|
|
70,441
|
|
|
|
1,300,341
|
|
John W. Cantele
|
|
|
77,948
|
|
|
|
1,438,920
|
|
|
|
142,030
|
|
|
|
2,621,874
|
|
Rajiv K. Trivedi
|
|
|
126,577
|
|
|
|
2,336,611
|
|
|
|
68,108
|
|
|
|
1,257,274
|
|
Mark M. Chloupek
|
|
|
90,652
|
|
|
|
1,673,436
|
|
|
|
58,313
|
|
|
|
1,076,458
|
|
(1)
|
Consists of the following outstanding shares of our restricted stock:
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Award
|
|
Grant Date
|
|
|
Number
|
|
|
Vesting
|
Mr. Cline
|
|
Retention Restricted Stock
|
|
|
2/18/2016
|
|
|
|
93,458
|
|
|
In full on February 18, 2019
|
|
|
Retention Restricted Stock
|
|
|
1/23/2017
|
|
|
|
65,790
|
|
|
The earlier of April 17, 2018 and the occurrence of certain events
|
|
|
Time-Vesting Restricted Stock
|
|
|
3/17/2016
|
|
|
|
34,928
|
|
|
In full on December 31, 2018
|
|
|
Time-Vesting Restricted Stock
|
|
|
3/6/2017
|
|
|
|
73,476
|
|
|
Ratably on December 31, 2018 and December 31, 2019
|
Mr. Forson
|
|
Retention Restricted Stock
|
|
|
2/18/2016
|
|
|
|
23,365
|
|
|
In full on February 18, 2019
|
|
|
Retention Restricted Stock
|
|
|
1/23/2017
|
|
|
|
26,316
|
|
|
The earlier of April 17, 2018 and the occurrence of certain events
|
|
|
Time-Vesting Restricted Stock
|
|
|
3/17/2016
|
|
|
|
8,891
|
|
|
In full on December 31, 2018
|
|
|
Time-Vesting Restricted Stock
|
|
|
3/6/2017
|
|
|
|
20,818
|
|
|
Ratably on December 31, 2018 and December 31, 2019
|
Mr. Cantele
|
|
Retention Restricted Stock
|
|
|
5/3/2016
|
|
|
|
16,182
|
|
|
In full on April 25, 2019
|
|
|
Retention Restricted Stock
|
|
|
1/23/2017
|
|
|
|
31,250
|
|
|
The earlier of April 17, 2018 and the occurrence of certain events
|
|
|
Time-Vesting Restricted Stock
|
|
|
5/3/2016
|
|
|
|
10,922
|
|
|
In full on December 31, 2018
|
|
|
Time-Vesting Restricted Stock
|
|
|
3/6/2017
|
|
|
|
19,594
|
|
|
Ratably on December 31, 2018 and December 31, 2019
|
Mr. Trivedi
|
|
Retention Restricted Stock
|
|
|
3/17/2016
|
|
|
|
76,207
|
|
|
In full on March 15, 2019
|
|
|
Retention Restricted Stock
|
|
|
1/23/2017
|
|
|
|
20,615
|
|
|
The earlier of April 17, 2018 and the occurrence of certain events
|
|
|
Time-Vesting Restricted Stock
|
|
|
3/17/2016
|
|
|
|
10,161
|
|
|
In full on December 31, 2018
|
|
|
Time-Vesting Restricted Stock
|
|
|
3/6/2017
|
|
|
|
19,594
|
|
|
Ratably on December 31, 2018 and December 31, 2019
|
Mr. Chloupek
|
|
Retention Restricted Stock
|
|
|
3/17/2016
|
|
|
|
33,870
|
|
|
In full on March 15, 2019
|
|
|
Retention Restricted stock
|
|
|
1/23/2017
|
|
|
|
32,018
|
|
|
The earlier of April 17, 2018 and the occurrence of certain events
|
|
|
Time-Vesting Restricted Stock
|
|
|
3/17/2016
|
|
|
|
7,620
|
|
|
In full on December 31, 2018
|
|
|
Time-Vesting Restricted Stock
|
|
|
3/6/2017
|
|
|
|
17,144
|
|
|
Ratably on December 31, 2018 and December 31, 2019
|
(2)
|
Values determined based on December 29, 2017 closing market price of our common stock of $18.46 per share.
|
(3)
|
Consists of the following outstanding PSUs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Grant Date
|
|
|
Number
|
|
|
Market Value ($)
|
|
Mr. Cline
|
|
|
5/19/2016
|
|
|
|
35,275
|
|
|
|
651,177
|
|
|
|
|
3/6/2017
|
|
|
|
216,920
|
|
|
|
4,004,343
|
|
Mr. Forson
|
|
|
5/19/2016
|
|
|
|
8,979
|
|
|
|
165,752
|
|
|
|
|
3/6/2017
|
|
|
|
61,462
|
|
|
|
1,134,589
|
|
Mr. Cantele
|
|
|
5/19/2016
|
|
|
|
84,184
|
|
|
|
1,554,037
|
|
|
|
|
3/6/2017
|
|
|
|
57,846
|
|
|
|
1,067,837
|
|
Mr. Trivedi
|
|
|
5/19/2016
|
|
|
|
10,262
|
|
|
|
189,437
|
|
|
|
|
3/6/2017
|
|
|
|
57,846
|
|
|
|
1,067,837
|
|
Mr. Chloupek
|
|
|
5/19/2016
|
|
|
|
7,697
|
|
|
|
142,087
|
|
|
|
|
3/6/2017
|
|
|
|
50,616
|
|
|
|
934,371
|
|
22
The PSUs granted on May 19, 2016 will vest, if at all, based on the Companys
achievement of the relative total shareholder return performance measure with respect to the period beginning on January 1, 2016 and ending on December 31, 2018 for all of our NEOs other than Mr. Cantele, and with respect to the
period beginning on April 25, 2016 and ending on December 31, 2018 for Mr. Cantele, as determined by the Compensation Committee following the end of fiscal 2018. As of December 31, 2017, the achievement level with respect to
relative total shareholder return was below threshold for all of our NEOs other than Mr. Cantele. For Mr. Cantele, such achievement level was above target. Accordingly, the number and value of PSUs reported in the table reflect amounts
based on threshold performance for relative total shareholder return for all of our NEOs other than Mr. Cantele, and the number and value of PSUs reported in the table for Mr. Cantele reflect amounts based on maximum performance. The
actual number of shares that will be distributed with respect to the PSUs is not yet determinable. For information regarding the treatment of outstanding PSUs in connection with the
Spin-Off,
see
Compensation Discussion and AnalysisCompensation Actions taken in 2018Employee Matters Agreement.
The PSUs granted
on March 6, 2017 will vest, if at all, based on the Companys achievement of the relative total shareholder return performance measure with respect to the period beginning on January 1, 2017 and ending on December 31, 2019 for
all of our NEOs, as determined by the Compensation Committee following the end of fiscal 2019. The terms of the PSUs are summarized above in Compensation Discussion and AnalysisElements of CompensationLong-Term Equity
Compensation and Narrative to Summary Compensation Table and Fiscal 2017 Grants of Plan-Based Awards table above. As of December 31, 2017, the achievement level with respect to relative total shareholder return was above
target. Accordingly, the number and value of PSUs reported in the table reflect amounts based on maximum performance for relative total shareholder return. The actual number of shares that will be distributed with respect to the PSUs is not yet
determinable. For information regarding the treatment of outstanding PSUs in connection with the
Spin-Off,
see Compensation Discussion and AnalysisCompensation Actions taken in 2018Employee
Matters Agreement.
Fiscal 2017 Option Exercises and Stock Vested
The following table provides information regarding shares that vested during fiscal 2017 for our NEOs.
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
(1)
|
|
Name
|
|
Number of Shares
Acquired on Vesting
(#)
|
|
|
Value Realized
on Vesting
($)
(2)
|
|
Keith A. Cline
|
|
|
101,346
|
|
|
|
1,767,121
|
|
James H. Forson
|
|
|
26,544
|
|
|
|
464,331
|
|
John W. Cantele
|
|
|
40,946
|
|
|
|
667,067
|
|
Rajiv K. Trivedi
|
|
|
48,518
|
|
|
|
791,394
|
|
Mark M. Chloupek
|
|
|
35,822
|
|
|
|
589,960
|
|
(1)
|
Reflects shares of our common stock vested upon the vesting of restricted stock during fiscal 2017, as further described below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Award
|
|
Number
|
|
|
Vesting Date
|
|
Mr. Cline
|
|
Retention Restricted Stock
|
|
|
25,423
|
|
|
|
6/1/2017
|
|
|
|
Time-Vesting Restricted Stock Granted in 2015
|
|
|
4,257
|
|
|
|
12/31/2017
|
|
|
|
Time-Vesting Restricted Stock Granted in 2016
|
|
|
34,928
|
|
|
|
12/31/2017
|
|
|
|
Time-Vesting Restricted Stock Granted in 2017
|
|
|
36,738
|
|
|
|
12/31/2017
|
|
Mr. Forson
|
|
Retention Restricted Stock
|
|
|
6,292
|
|
|
|
6/1/2017
|
|
|
|
Time-Vesting Restricted Stock Granted in 2015
|
|
|
951
|
|
|
|
12/31/2017
|
|
|
|
Time-Vesting Restricted Stock Granted in 2016
|
|
|
8,891
|
|
|
|
12/31/2017
|
|
|
|
Time-Vesting Restricted Stock Granted in 2017
|
|
|
10,410
|
|
|
|
12/31/2017
|
|
Mr. Cantele
|
|
Retention Restricted Stock
|
|
|
20,227
|
|
|
|
4/25/2017
|
|
|
|
Time-Vesting Restricted Stock Granted in 2016
|
|
|
10,922
|
|
|
|
12/31/2017
|
|
|
|
Time-Vesting Restricted Stock Granted in 2017
|
|
|
9,797
|
|
|
|
12/31/2017
|
|
Mr. Trivedi
|
|
Retention Restricted Stock
|
|
|
25,551
|
|
|
|
6/1/2017
|
|
|
|
Time-Vesting Restricted Stock Granted in 2015
|
|
|
3,009
|
|
|
|
12/31/2017
|
|
|
|
Time-Vesting Restricted Stock Granted in 2016
|
|
|
10,161
|
|
|
|
12/31/2017
|
|
|
|
Time-Vesting Restricted Stock Granted in 2017
|
|
|
9,797
|
|
|
|
12/31/2017
|
|
Mr. Chloupek
|
|
Retention Restricted Stock
|
|
|
17,479
|
|
|
|
6/1/2017
|
|
|
|
Time-Vesting Restricted Stock Granted in 2015
|
|
|
2,149
|
|
|
|
12/31/2017
|
|
|
|
Time-Vesting Restricted Stock Granted in 2016
|
|
|
7,621
|
|
|
|
12/31/2017
|
|
|
|
Time-Vesting Restricted Stock Granted in 2017
|
|
|
8,573
|
|
|
|
12/31/2017
|
|
(2)
|
Reflects the aggregate market value of shares of our common stock vested on the applicable date(s) of vesting.
|
23
2017 Pension Benefits
We have no pension benefits for our executive officers.
2017
Non-Qualified
Deferred Compensation
We have no
non-qualified
defined contribution or other
non-qualified
compensation plans for executive officers.
Potential Payments Upon Termination or Change in
Control
The following table describes the potential payments and benefits under the Companys compensation and benefit plans
and contractual agreements to which the named executive officers would have been entitled if a termination of employment or change in control occurred on December 29, 2017, which was the last business day of fiscal 2017. All equity awards have
been calculated using the closing stock price of our common stock on December 29, 2017 of $18.46. A description of the provisions governing such payments under our agreements and any material conditions or obligations applicable to the receipt
of payments are described below under Description of Termination and Change in Control Provisions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Payment Elements
|
|
Involuntary
Termination
Without Cause
|
|
|
Involuntary
Termination
for Good Reason
|
|
|
Death
|
|
|
Disability
|
|
|
Change-in-
Control (Single-
Trigger)
|
|
|
Termination in
Connection with a
Change-in-
Control
|
|
Keith A. Cline
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance(a)
|
|
$
|
3,890,233
|
|
|
$
|
3,890,233
|
|
|
$
|
772,500
|
|
|
$
|
772,500
|
|
|
|
|
|
|
$
|
5,435,233
|
|
Cash Retention Award(b)
|
|
$
|
937,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
937,500
|
|
|
$
|
937,500
|
|
Equity Awards(c)
|
|
$
|
5,016,287
|
|
|
$
|
3,801,804
|
|
|
$
|
5,802,942
|
|
|
$
|
5,802,942
|
|
|
$
|
3,250,733
|
|
|
$
|
8,378,643
|
|
Health & Welfare(d)
|
|
$
|
31,612
|
|
|
$
|
31,612
|
|
|
|
|
|
|
$
|
15,806
|
|
|
|
|
|
|
$
|
47,418
|
|
Outplacement Services(e)
|
|
$
|
10,000
|
|
|
$
|
10,000
|
|
|
|
|
|
|
$
|
10,000
|
|
|
|
|
|
|
$
|
10,000
|
|
Excise Tax
Gross-Up
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Total Benefit
|
|
$
|
9,885,632
|
|
|
$
|
7,733,649
|
|
|
$
|
6,575,442
|
|
|
$
|
6,591,248
|
|
|
$
|
4,188,233
|
|
|
$
|
14,808,794
|
|
James H. Forson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance(a)
|
|
$
|
1,771,613
|
|
|
$
|
1,771,613
|
|
|
$
|
425,000
|
|
|
$
|
425,000
|
|
|
|
|
|
|
$
|
2,196,613
|
|
Cash Retention Award(b)
|
|
$
|
375,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
375,000
|
|
|
$
|
375,000
|
|
Equity Awards(c)
|
|
$
|
1,482,222
|
|
|
$
|
996,429
|
|
|
$
|
1,544,857
|
|
|
$
|
1,544,857
|
|
|
$
|
1,062,731
|
|
|
$
|
2,416,329
|
|
Health & Welfare(d)
|
|
$
|
25,023
|
|
|
$
|
25,023
|
|
|
|
|
|
|
$
|
16,682
|
|
|
|
|
|
|
$
|
33,364
|
|
Outplacement Services(e)
|
|
$
|
10,000
|
|
|
$
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
10,000
|
|
Excise Tax
Gross-Up
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Total Benefit
|
|
$
|
3,663,858
|
|
|
$
|
2,803,065
|
|
|
$
|
1,969,857
|
|
|
$
|
1,986,539
|
|
|
$
|
1,437,731
|
|
|
$
|
5,031,306
|
|
John W. Cantele
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance(a)
|
|
$
|
2,063,408
|
|
|
$
|
2,063,408
|
|
|
$
|
495,000
|
|
|
$
|
495,000
|
|
|
|
|
|
|
$
|
2,558,408
|
|
Cash Retention Award(b)
|
|
$
|
445,312
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
445,312
|
|
|
$
|
445,312
|
|
Equity Awards(c)
|
|
$
|
1,949,735
|
|
|
$
|
1,372,860
|
|
|
$
|
1,936,186
|
|
|
$
|
1,936,186
|
|
|
$
|
1,937,863
|
|
|
$
|
3,182,382
|
|
Health & Welfare(d)
|
|
|
28,649
|
|
|
$
|
28,649
|
|
|
|
|
|
|
$
|
19,099
|
|
|
|
|
|
|
$
|
38,198
|
|
Outplacement Services(e)
|
|
$
|
10,000
|
|
|
$
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
10,000
|
|
Excise Tax
Gross-Up
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Total Benefit
|
|
$
|
4,497,104
|
|
|
$
|
3,474,917
|
|
|
$
|
2,431,186
|
|
|
$
|
2,450,285
|
|
|
$
|
2,383,175
|
|
|
$
|
6,234,300
|
|
Rajiv K. Trivedi
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance(a)
|
|
$
|
2,063,408
|
|
|
$
|
2,063,408
|
|
|
$
|
495,000
|
|
|
$
|
495,000
|
|
|
|
|
|
|
$
|
2,337,370
|
|
Cash Retention Award(b)
|
|
$
|
293,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
293,750
|
|
|
$
|
293,750
|
|
Equity Awards(c)
|
|
$
|
2,391,313
|
|
|
$
|
2,010,760
|
|
|
$
|
2,560,038
|
|
|
$
|
2,560,038
|
|
|
$
|
923,553
|
|
|
$
|
3,303,583
|
|
Health & Welfare(d)
|
|
$
|
28,649
|
|
|
$
|
28,649
|
|
|
|
|
|
|
$
|
19,099
|
|
|
|
|
|
|
$
|
38,198
|
|
Outplacement Services(e)
|
|
$
|
10,000
|
|
|
$
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
10,000
|
|
Excise Tax
Gross-Up
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Total Benefit
|
|
$
|
4,787,120
|
|
|
$
|
4,112,817
|
|
|
$
|
3,055,038
|
|
|
$
|
3,074,137
|
|
|
$
|
1,217,303
|
|
|
$
|
5,982,902
|
|
24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Payment Elements
|
|
Involuntary
Termination
Without Cause
|
|
|
Involuntary
Termination
for Good Reason
|
|
|
Death
|
|
|
Disability
|
|
|
Change-in-
Control (Single-
Trigger)
|
|
|
Termination in
Connection with a
Change-in-
Control
|
|
Mark M. Chloupek
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance(a)
|
|
$
|
1,667,400
|
|
|
$
|
1,667,400
|
|
|
$
|
400,000
|
|
|
$
|
400,000
|
|
|
|
|
|
|
$
|
2,067,400
|
|
Cash Retention Award(b)
|
|
$
|
456,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
456,250
|
|
|
$
|
456,250
|
|
Equity Awards(c)
|
|
$
|
1,712,393
|
|
|
$
|
1,121,341
|
|
|
$
|
1,578,484
|
|
|
$
|
1,578,484
|
|
|
$
|
1,066,177
|
|
|
$
|
2,487,154
|
|
Health & Welfare(d)
|
|
$
|
23,574
|
|
|
$
|
23,574
|
|
|
|
|
|
|
$
|
15,716
|
|
|
|
|
|
|
$
|
31,432
|
|
Outplacement Services(e)
|
|
$
|
10,000
|
|
|
$
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
10,000
|
|
Excise Tax
Gross-Up(f)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
500,000
|
|
Total Benefit
|
|
$
|
3,869,617
|
|
|
$
|
2,822,315
|
|
|
$
|
1,978,484
|
|
|
$
|
1,994,200
|
|
|
$
|
1,522,427
|
|
|
$
|
5,552,236
|
|
(a)
|
Cash Severance: The amount of any cash severance payment (e.g., base salary, annual bonus, and
pro-rata
non-equity
incentive plan
compensation payments). For Mr. Trivedi, severance has been reduced by $221,038 to avoid excise tax.
|
(b)
|
Cash Retention Award: Represents the cash portion of the NEOs award under the 2017 Retention Plan.
|
(c)
|
Equity Awards: Represents vesting of restricted stock under the 2017 Retention Plan and accelerated vesting of other restricted stock and PSU awards. For PSU awards, the amount represents the potential payout assuming
the performance period ended on December 29, 2017 and is based on actual performance as of that date.
|
(d)
|
Health & Welfare: In the event of an involuntary termination without cause or a termination for good reason, represents continued health insurance coverage at substantially the same level as provided
immediately prior to such termination, at the same cost as generally provided to similarly situated active Company employees (the welfare benefit), for a period of 18 months for Messrs. Forson, Cantele, Trivedi and Chloupek and 24 months
for Mr. Cline, in each case assuming 2017 rates. In the event of an involuntary termination without cause or a termination for good reason in connection with a change in control, represents the welfare benefit for a period of 24 months for
Messrs. Forson, Cantele, Trivedi and Chloupek and 36 months for Mr. Cline, in each case assuming 2017 rates.
|
(e)
|
Outplacement Services: Under the Severance Plan, each NEO is entitled to payment of, or reimbursement for, up to $10,000 in outplacement services within the three-year period following certain terminations of
employment.
|
(f)
|
Excise Tax
Gross-Up:
In the event of a termination in connection with a change in control, Mr. Chloupek is entitled to an excise tax
gross-up
payment. Mr. Chloupek is in an excise tax position and therefore would receive an excise tax
gross-up
payment. The excise tax is $582,863, but the
gross-up
is capped at $500,000 (1.25 times Mr. Chloupeks base salary).
|
Description of
Termination and Change in Control Provisions
The following is a description of the provisions governing the payments set forth above
under our Severance Plan, employment agreements and equity awards, as well as any material conditions or obligations applicable to the receipt of payments.
Executive Severance Plan Adopted in 2017
On January 17, 2017, the Board of Directors adopted and approved the Severance Plan for employees of the Company at the level of Vice
President and above, including the NEOs. The Severance Plan provides for payment of severance and other benefits to eligible executives, including the NEOs, in the event of a termination of employment with the Company without cause or for good
reason (each as defined in the Severance Plan), or in the event of a termination with the Company as a result of retirement, death, or disability (as such terms are defined in the Severance Plan), in each case, subject to the
(i) executives execution and
non-revocation
of a general release of claims in favor of the Company and (ii) continued compliance with the executives confidentiality,
non-interference
and invention assignment obligations to the Company.
In the event of a covered
termination, in addition to certain accrued obligations, the Severance Plan provides for the following payments and benefits to the NEOs:
|
|
|
a
lump-sum
pro-rata
bonus for the year of termination, based on actual performance;
|
|
|
|
a
lump-sum
payment equal to the sum of the executives (x) annual base salary and (y) bonus based on target performance (the cash severance amount)
times the multiplier applicable to such executive (which is 1.5 for Messrs. Forson, Cantele, Trivedi and Chloupek and 2.0 for Mr. Cline);
|
|
|
|
continued health insurance coverage at substantially the same level as provided immediately prior to such termination, at the same cost as generally provided to similarly situated active Company employees (the
welfare benefit), for a period of 18 months for Messrs. Forson, Cantele, Trivedi and Chloupek and 24 months for Mr. Cline; and
|
|
|
|
payment of, or reimbursement for, up to $10,000 in outplacement services within the three-year period following such termination (the outplacement benefit).
|
25
Notwithstanding the foregoing, in the event such covered termination occurs on or within the
six-month
period prior to, or within the
two-year
period following, the first to occur of (i) a change in control and (ii) a significant corporate event (each as
defined in the Severance Plan), in addition to certain accrued obligations, the Severance Plan provides for the following payments and benefits to the named executive officers:
|
|
|
a
lump-sum
pro-rata
bonus for the year of termination, based on target performance;
|
|
|
|
the cash severance amount times the multiplier applicable to such executive (which is 2.0 for Messrs. Forson, Cantele, Trivedi and Chloupek and 3.0 for Mr. Cline);
|
|
|
|
the welfare benefit for a period of 24 months for Messrs. Forson, Cantele, Trivedi and Chloupek and 36 months for Mr. Cline; and
|
|
|
|
the outplacement benefit.
|
In the event of a termination with the Company as a result of the
executives death or disability, in addition to certain accrued obligations, the Severance Plan provides for the following payments and benefits to the named executive officers: (i) a
lump-sum
bonus
for the year of termination, based on target performance; and (ii) solely in the case of the executives disability, the welfare benefit for a period of 12 months. In the event of a termination with the Company as a result of the
executives retirement, in addition to certain accrued obligations, the Severance Plan provides for the payment of a
lump-sum
pro-rata
bonus for the year of
termination, based on actual performance, to eligible executives.
In addition, the Severance Plan provides that, upon the first to occur
of (i) a change in control and (ii) a significant corporate event, any unvested and outstanding award granted to the named executive officers under Omnibus Incentive Plan that is not continued, converted, assumed or replaced in connection
with such change in control or significant corporate event will fully vest; provided, that, vesting for performance-based vesting awards (a) with market performance conditions will be based on actual performance and (b) with financial
performance conditions will be based on target performance.
The Severance Plan provides that if any payments and/or benefits due to a
participant (including any named executive officer) under the Severance Plan and/or any other arrangements will constitute excess parachute payments (as defined in Section 280G of the Code (Section 280G)), the
Company will reduce the amount of payments under the Severance Plan by the minimum amount necessary such that the present value of the participants parachute payments (as defined in Section 280G) is below 300% of such
participants base amount (as defined in Section 280G), calculated in accordance with the Treasury Regulations promulgated under Section 280G; provided, however, in no event will the amount of any severance payments be reduced
unless (a) the net
after-tax
amount of such payments and benefits as so reduced is greater than or equal to (b) the net
after-tax
amount of such payments and
benefits without such reduction.
While Mr. Chloupeks employment agreement contains severance terms applicable to him (as
described below under Employment Agreement Provisions Mr. Chloupek), he is eligible to receive the above benefits under the Severance Plan only to the extent that any amounts due and payable under the Severance Plan are
greater than and in addition to the amount due and payable to Mr. Chloupek under his employment agreement.
Employment Agreement Provisions
Mr. Chloupek
Pursuant to the terms of Mr. Chloupeks employment agreement, dated as of August 20, 2003, and
amended August 17, 2005, upon a termination by us without cause or by Mr. Chloupek for good reason, and subject to his signing a general release of claims and his continued compliance with the restrictive covenants described below, he is
entitled to severance payments in an amount equal to one and
one-half
times the sum of his average (A) annual base salary and (B) incentive compensation, in each case over the three immediately
preceding fiscal years, payable over the
18-month
period after his date of termination of employment (the Severance Amount). In the event Mr. Chloupek commences any employment during the
12-month
period following the date of his termination of employment, we are entitled to reduce his remaining Severance Amount by 50% of the amount of any cash compensation received by him during such period. In
addition, if Mr. Chloupek commences any employment after the
six-month
period following the first anniversary of his termination of employment, we are entitled to reduce his remaining Severance Amount by
25% of the amount of any cash compensation received by him during such period.
In the event of Mr. Chloupeks termination of
employment without cause, for good reason or due to death or disability, Mr. Chloupek is entitled to receive his prorated bonus in a lump sum payment at the rate of his bonus for the fiscal year of his termination. In the event that such
termination of employment occurs within the first six months of the year, his prorated bonus will not exceed 50% of the maximum bonus which he could have been paid in the year immediately preceding the year of his termination of employment. In
addition, he (other than in the case of his death), his spouse and his eligible dependents are entitled to receive continued healthcare coverage for one year following such termination.
26
If, within 12 months after a change in control, Mr. Chloupeks employment is terminated
without cause or for good reason, his employment agreement provides for the payment of the Severance Amount over the
18-month
period after the date of termination, however, the Company does not have the right
to set off any amounts received by Mr. Chloupek from a new employer if he commences employment within such 18 month-period. In the event Mr. Chloupek is terminated within 12 months following a change in control, he, his spouse and his
eligible dependents are entitled to receive continued healthcare coverage for one year following such termination.
Mr. Chloupeks employment agreement provides for reimbursement by us on a grossed up basis for all taxes incurred in
connection with all payments or benefits provided to him upon a change in control that are determined by us to be subject to the excise tax imposed by Section 4999 of the Code in an amount equal to the lesser of (A) the aggregate amount of
all excise tax payments on a grossed up basis, or (B) 1.25 times his then-current annual base salary.
Mr. Chloupeks employment agreement contains restrictive covenants, including an indefinite covenant not to disclose confidential
information, and, during Mr. Chloupeks employment and for the
18-month
period following the termination of his employment, covenants related to
non-competition
and
non-solicitation
of employees and customers of the Company.
Treatment of Equity Awards
Time-Vesting Restricted Stock.
Under the terms of the time-vesting restricted stock awards, upon termination of an executives
employment without cause or with good reason prior to a change in control, the number of shares of time-vesting restricted stock that would have vested on the next scheduled vesting date following such termination will immediately vest. In addition,
upon termination of an executives employment without cause or with good reason on or following a change in control or upon termination of an executives employment due to the executives death or disability (regardless of whether
prior to or on or following a change in control), all unvested time-vesting restricted stock will immediately vest. If the executives employment terminates for any reason other than as described above, all unvested time-vesting restricted
stock will be forfeited.
PSUs.
Under the terms of the PSU awards, upon the executives termination of his or her employment
for good reason or termination of the executives employment without cause, or the executives death or disability during the performance period, a
pro-rated
portion of the PSU award will immediately
vest based on actual performance, with such
pro-ration
based on the number of days in the performance period that have elapsed. Upon a change in control during the performance period, the PSU will immediately
vest with the final value of the PSU determined based on actual performance through the date of the change in control, but the Committee will have the discretion to settle such PSUs in either cash or shares of Company common stock. If the
executives employment terminates for any reason other than as described above, the executives PSUs will be forfeited.
2016
Retention Restricted Stock
. Under the terms of the 2016 retention restricted stock awards, upon termination of an executives employment without cause, an executives termination of his or her employment with good reason, or
termination due to the executives death or disability, all unvested retention restricted stock will immediately vest. If the executives employment terminates for any reason other than as described above, all unvested retention restricted
stock will be forfeited.
Restricted Stock and Cash under 2017 Retention Plan
. Under the terms of the awards granted in 2017 under
the 2017 Retention Plan, the shares of restricted stock will vest and the cash portion of the award is payable on the earliest to occur of (i) April 17, 2018; (ii) the date that is six months from the consummation of a significant
corporate event (as defined in the 2017 Retention Plan); (iii) the date of a NEOs termination of employment (x) by the Company without cause (as defined in the 2017 Retention Plan) at any time following January 17, 2017 or
(y) by the NEO with good reason (as defined in the 2017 Retention Plan) within the six months prior to, or on or following, a significant corporate event; or (iv) the date of a change in control (as defined in the 2017 Retention Plan).
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2017, none of the members of our Compensation Committee has at any time been one of our executive officers or employees. None of our
executive officers currently serves, or has served during the last completed fiscal year, on the compensation committee or board of directors of any other entity that has one or more executive officers serving as a member of our Board of Directors
or Compensation Committee. We are parties to certain transactions with Blackstone described in the Transactions with Related Persons section of this Proxy Statement.
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COMPENSATION OF DIRECTORS
In 2017, each outside director (other than the directors employed by Blackstone) was entitled to annual compensation as follows:
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An annual cash retainer of $60,000, payable quarterly;
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An additional annual cash retainer of $25,000, payable quarterly, for serving as the chairperson of the Board;
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An additional annual cash retainer of $10,000, payable quarterly, for serving as the chairperson of the compensation committee of the Board;
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An additional annual cash retainer of $25,000, payable quarterly, for serving as the chairperson of the audit committee of the Board;
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An equity award having a fair market value of $100,000 payable annually in restricted stock units which vest over three years in equal installments from the date of grant and where such award must be held until the
earlier of the directors termination or the date the director meets the stock ownership guidelines described below; and
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An additional equity award having a fair market value of $50,000 payable annually in restricted stock units which vest over three years in equal installments from the date of grant and where such award must be held
until the earlier of the directors termination or the date the director meets the stock ownership guidelines described below, for serving as the chairperson of the Board.
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Our directors are not paid any fees for attending meetings; however, our directors are reimbursed for reasonable travel and related expenses
associated with attendance at board or committee meetings.
We adopted a stock ownership policy effective upon the consummation of our
initial public offering. Each of our
non-employee
directors is required to own stock in an amount equal to five times his or her annual cash retainer, provided that a
non-employee
director who is employed by a stockholder of the Company that meets the ownership requirements for a
non-employee
director shall be exempt from such
requirement. Each director is expected to meet these ownership guidelines within five years from the later of the date of the first annual grant to such directors following the consummation of our initial public offering and when the director first
becomes subject to the policy.
In June 2017, we granted to each of Messrs. Abrahamson, Bergren, Bowers, Cisneros and Sumers 6,998
restricted stock units and we granted to Mr. Shah, the chairman of our Board of Directors, 10,497 restricted stock units. The restricted stock units vest in three equal annual installments from the date of grant, with the first
one-third
of the number of restricted stock units granted vesting on June 11, 2018, the second
one-third
of the total number of restricted stock units granted vesting on
June 11, 2019, and the remainder of the number of restricted stock units granted vesting on June 11, 2020, subject to the directors continued service through the applicable vesting date.
In June, 2017, Mr. Alba retired as a Managing Director of Blackstone and in October, 2017 we granted him 3,465 restricted stock units
that vest in three equal annual installments from the date of grant, with the first
one-third
of the number of restricted stock units granted vesting on October 20, 2018, the second
one-third
of the total number of restricted stock units granted vesting on October 20, 2019, and the remainder of the number of restricted stock units granted vesting on October 20, 2020, subject to his
continued service through the applicable vesting date.
If a directors service terminates for any reason other than as described
below, all unvested restricted stock units will be forfeited. Upon termination of a directors service due to the directors death or disability, or upon the occurrence of a change in control, all unvested restricted stock units will
immediately vest.
Director Compensation for Fiscal 2017
The table below sets forth information regarding
non-employee
director compensation for the fiscal year
ended December 31, 2017.
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Name
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Fees Earned or Paid in Cash
($)
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Stock Awards ($)
(1)
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Total ($)
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James R. Abrahamson
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60,000
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100,001
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160,001
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Glenn Alba
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15,000
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62,751
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77,751
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Scott Bergren
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60,000
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100,001
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160,001
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Alan J. Bowers
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85,000
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100,001
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185,001
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Henry G. Cisneros
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60,000
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100,001
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160,001
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Name
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Fees Earned or Paid in Cash
($)
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Stock Awards ($)
(1)
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Total ($)
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Giovanni Cutaia
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Brian Kim
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Mitesh B. Shah
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85,000
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150,002
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235,002
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Gary M. Sumers
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70,000
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100,001
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170,001
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(1)
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Represents the aggregate grant date fair value of restricted stock units granted during 2017. The assumptions used in the valuation are discussed in Note 15: Equity-Based Compensation to our Consolidated
Financial Statements in Part II, Item 8 of our 2017
10-K.
The aggregate number of restricted stock units outstanding as of December 31, 2017 for our
non-employee
directors was as follows: 13,882 restricted stock units for Mr. Abrahamson, 3,465 restricted stock units for Mr. Alba, 14,177 restricted stock units for Mr. Bergren, 14,177 restricted stock units for Mr. Bowers, 14,177 restricted stock units for Mr.
Cisneros, 21,344 restricted stock units for Mr. Shah and 14,582 restricted stock units for Mr. Sumers.
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CEO PAY RATIO
We are providing the following information about the relationship of the annual total compensation of our employees and the annual
total compensation of Keith A. Cline, the President and Chief Executive Officer of the Company (our CEO):
For 2017, our last
completed fiscal year, the median of the annual total compensation of all employees of our Company (other than our CEO) was $20,860, and the annual total compensation of our CEO, as reported in the Summary Compensation Table above, was $5,744,835.
Based on this information, for 2017, Mr. Clines total annual compensation was 275 times that of the median of the annual total compensation of all employees.
To identify the median of the annual total compensation of all our employees (other than our CEO), as well as to determine the annual total
compensation of our median employee and our CEO, we took the following steps:
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We determined that, as of December 31, 2017, our employee population consisted of approximately 7,268 individuals with all of these individuals located in the United States. This population consisted of our
full-time, part-time, and temporary employees.
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2.
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To identify the median employee from our employee population, we compared the 2017 base salary earned (for salaried employees), or wages plus overtime (for hourly employees) plus the 2016 actual incentive
paid in 2017 of our employees as reflected in our payroll records for 2017. We believe this compensation measure reasonably reflects annual compensation across our employee base.
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We identified our median employee using this compensation measure, which was consistently applied to all our employees included in the calculation. We annualized the compensation of all permanent full-time and part-time
employees that were employed for less than the full fiscal year of 2017. Since all our employees are located in the United States, as is our CEO, we did not make any
cost-of-living
adjustments in identifying the median employee.
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4.
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Once we identified our median employee, we combined all of the elements of such employees total compensation for 2017.
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5.
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With respect to the annual total compensation of our CEO, we used the amount reported in the Total column of our 2017 Summary Compensation Table.
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