def14a
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
o Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to §240.14a-12
RED LION HOTELS CORPORATION
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
þ No Fee Required
o Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
CALCULATION OF FILING FEE
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identify the filing for which the offsetting fee was paid previously. Identify the
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Dear
Shareholder:
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April 15, 2010
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You are cordially invited to attend the 2010 Annual Meeting of
Shareholders of Red Lion Hotels Corporation at 9:00 a.m. on
Wednesday, May 19, 2010, at the Red Lion River Inn,
Shoreline Ballroom, 700 North Division, Spokane, Washington
99202.
The accompanying Notice of 2010 Annual Meeting of Shareholders
and Proxy Statement describe the matters to be presented at the
meeting. In addition, management will speak on our developments
of the past year and respond to comments and questions of
general interest to shareholders.
It is important that your shares be represented and voted
whether or not you plan to attend the annual meeting in person.
You may vote by completing and mailing the enclosed proxy card
or the form forwarded by your bank, broker or other holder of
record. Voting by written proxy will ensure your shares are
represented at the meeting.
Sincerely,
Donald K. Barbieri
Chairman of the Board
IMPORTANT
A Proxy Statement and proxy card are enclosed. All shareholders
are urged to complete and mail the proxy card promptly. The
enclosed envelope for return of the proxy card requires no
postage. Any shareholder of record attending the meeting may
personally vote on all matters that are considered, in which
event the signed proxy will be revoked.
IT IS IMPORTANT THAT YOUR STOCK BE VOTED.
RED LION
HOTELS CORPORATION
NOTICE OF 2010 ANNUAL MEETING
OF SHAREHOLDERS
TO BE HELD ON MAY 19,
2010
To the Shareholders of Red Lion Hotels Corporation:
The 2010 Annual Meeting of Shareholders of Red Lion Hotels
Corporation will be held at 9:00 a.m. on Wednesday,
May 19, 2010, at the Red Lion River Inn, Shoreline
Ballroom, 700 North Division, Spokane, Washington 99202 for the
following purposes:
(1) To elect three directors to the Board of Directors for
three-year terms expiring at the 2013 Annual Meeting of
Shareholders;
(2) To ratify the selection of BDO Seidman, LLP as our
independent registered public accounting firm for 2010; and
(3) To transact such other business as may properly come
before the meeting and any adjournments thereof.
The foregoing items of business are more fully described in the
Proxy Statement accompanying this notice.
The Board of Directors has fixed March 31, 2010 as the
record date for the meeting. Only shareholders of record at the
close of business on that date will be entitled to notice of and
to vote at the meeting.
PLEASE SUBMIT A PROXY AS SOON AS POSSIBLE SO THAT YOUR SHARES
CAN BE VOTED AT THE MEETING IN ACCORDANCE WITH YOUR
INSTRUCTIONS. FOR SPECIFIC INSTRUCTIONS ON VOTING, PLEASE REFER
TO THE PROXY CARD OR THE INFORMATION PROVIDED BY YOUR BANK,
BROKER OR OTHER HOLDER OF RECORD. EVEN IF YOU VOTE YOUR PROXY,
YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE
NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BANK,
BROKER OR OTHER HOLDER OF RECORD AND YOU WISH TO VOTE IN PERSON
AT THE MEETING, YOU MUST OBTAIN A PROXY ISSUED IN YOUR NAME FROM
THE BANK, BROKER OR OTHER HOLDER OF RECORD.
By Order of the Board of Directors
Thomas L. McKeirnan
Secretary
Spokane, Washington
April 15, 2010
The 2009
Annual Report of Red Lion Hotels Corporation accompanies this
Proxy Statement.
Important
Notice Regarding the Availability of Proxy Materials for the
Shareholder Meeting
to Be Held on May 19, 2010:
The
Notice of Meeting, Proxy Statement, Proxy Card and 2009 Annual
Report are available
at
http://investor.shareholder.com/rlhcorp/annuals.cfm.
TABLE OF
CONTENTS
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RED LION
HOTELS CORPORATION
201 West North River Drive,
Suite 100
Spokane, Washington 99201
2010 PROXY STATEMENT
INFORMATION
CONCERNING VOTING AND SOLICITATION
General
The enclosed proxy is solicited on behalf of the Board of
Directors (the Board) of Red Lion Hotels
Corporation, a Washington corporation, for use at the 2010
Annual Meeting of Shareholders to be held at 9:00 a.m.
local time on Wednesday, May 19, 2010, and at any
adjournments thereof. The meeting will be held at the Red Lion
River Inn, Shoreline Ballroom, 700 North Division, Spokane,
Washington 99202. The following are directions to the hotel from
Interstate 90 East or West:
Take Exit 281 Division Street Exit. Follow
Division North approximately 1 mile. Cross the Spokane
River and turn right at the light (North River Drive). The hotel
is located on the right side of the street.
Proxies are solicited to give all shareholders of record an
opportunity to vote on matters properly presented at the
meeting. This Proxy Statement and the accompanying proxy card
are first being mailed on or about April 15, 2010 to all
shareholders entitled to vote at the meeting.
Who Can
Vote
You are entitled to vote at the meeting if you were a holder of
record of our common stock, $.01 par value, at the close of
business on March 31, 2010. Your shares may be voted at the
meeting only if you are present in person or represented by a
valid proxy.
For the ten days prior to the meeting, a list of shareholders
entitled to vote at the meeting will be available during
ordinary business hours for examination by any shareholder, for
any purpose germane to the meeting, at our principal executive
office at 201 West North River Drive, Suite 100,
Spokane, Washington 99201. This list will also be available at
the meeting.
Shares Outstanding
and Quorum
At the close of business on March 31, 2010, there were
18,361,743 shares of our common stock outstanding and
entitled to vote. A majority of the outstanding shares of our
common stock, present in person or represented by proxy, will
constitute a quorum at the meeting.
Proxy
Card and Revocation of Proxy
You may vote by completing and mailing the enclosed proxy card.
If you sign the proxy card but do not specify how you want your
shares to be voted, your shares will be voted by the proxy
holders named in the enclosed proxy (i) FOR
election of the three director nominees named below; and
(ii) FOR ratification of the selection of BDO
Seidman, LLP as our independent registered public accounting
firm for 2010. If one or more of the director nominees should
become unavailable for election prior to the meeting, an event
that currently is not anticipated by the Board, the proxies may
be voted in favor of the election of a substitute nominee or
nominees proposed by the Board.
The proxy holders named in the enclosed proxy are authorized to
vote in their discretion on any other matters that may properly
come before the meeting or any adjournments thereof. At the time
this Proxy Statement went to press, management was not aware of
any matter that may properly be presented for action at the
meeting other than those described in this Proxy Statement. In
addition, no shareholder proposal or director nomination was
received on a timely basis, so no such matters may be brought to
a vote at the meeting.
1
If you vote by proxy, you may revoke that proxy at any time
before it is voted at the meeting. Shareholders of record may
revoke a proxy by delivering a written notice of revocation or a
duly executed proxy bearing a later date to our Secretary at our
principal executive office at 201 West North River Drive,
Suite 100, Spokane, Washington 99201, or by attending the
meeting and voting in person. Attendance at the meeting will
not, by itself, revoke a proxy. If your shares are held in the
name of a broker, bank or other holder of record, you may change
your vote by submitting new voting instructions to that holder
of record. Please note that if your shares are held of record by
a broker, bank or other holder of record, and you decide to
attend and vote at the meeting, your vote in person at the
meeting will not be effective unless you present a legal proxy
issued in your name from that holder of record.
Voting of
Shares
Shareholders of record as of the close of business on
March 31, 2010 are entitled to one vote for each share of
our common stock held on all matters to be voted upon at the
meeting. You may vote by attending the meeting and voting in
person or by completing and mailing the enclosed proxy card or
the form forwarded by your bank, broker or other holder of
record. If your shares are held by a bank, broker or other
holder of record, please refer to the instructions they provide
for voting your shares. All shares entitled to vote and
represented by properly executed proxies that are received
before the polls are closed at the meeting and are not revoked
or superseded will be voted at the meeting in accordance with
the instructions indicated on those proxies. YOUR VOTE IS
IMPORTANT.
Counting
of Votes
All votes will be tabulated by the inspector of election
appointed for the meeting, who will separately tabulate
affirmative and negative votes, abstentions and broker
non-votes. Shares held by persons attending the meeting but not
voting, shares represented by proxies that reflect abstentions
on one or more proposals and broker non-votes will be counted as
present for purposes of determining a quorum. Abstentions will
not count as votes cast. A broker non-vote occurs
when a bank, broker or other holder of record holding shares for
a beneficial owner does not receive voting instructions from the
beneficial owner and does not have discretionary authority to
vote the shares without such instructions. Brokers will not have
discretionary authority to vote on the election of the three
director nominees named below. However, they will generally have
discretionary authority to vote on the other proposal scheduled
for consideration at the meeting.
Solicitation
of Proxies
We will bear the expense of preparing, printing and distributing
proxy materials to our shareholders. We will also furnish copies
of the proxy materials to banks, brokers and other holders of
record holding in their names shares of our common stock that
are beneficially owned by others, so that the proxy materials
can be forwarded to those beneficial owners. We will reimburse
these banks, brokers and other holders of record for costs
incurred in forwarding the proxy materials to the beneficial
owners.
PROPOSAL 1
ELECTION OF DIRECTORS
Under our Articles of Incorporation and By-Laws, the Board
consists of from three to 13 directors, as determined from
time to time by resolution of the Board. The number of directors
that currently constitutes the Board is eight. The Board is
divided into three classes. Each class consists, as nearly as
possible, of one-third of the total number of directors, with
members of each class serving for a three-year term. Each year
only one class of directors is subject to a shareholder vote.
The current directors are as follows:
Class A
(two positions with terms expiring in 2012):
Ryland P. Skip Davis
Peter F. Stanton
2
Class B
(three positions with terms expiring in 2010):
Donald K. Barbieri
Ronald R. Taylor
[Vacant]
Class C
(three positions with Mr. Brandstroms term expiring
in 2010 and the terms of Messrs. Barbieri and Eliassen expiring
in 2011):
Richard L. Barbieri
Raymond R. Brandstrom
Jon E. Eliassen
In November of last year, the Board expanded its size from seven
to eight directors, with the additional director assigned to
Class C. The Board then appointed Mr. Brandstrom to
fill the vacancy resulting from the expansion. Under Washington
law, because Mr. Brandstrom was appointed to fill a
vacancy, his term will expire at the annual meeting. The Board
has nominated Mr. Brandstrom for election as a Class B
director. This will leave one Class C position vacant
following the meeting, which the Board plans to eliminate by
reducing its size to seven directors.
Based upon the recommendation of the Nominating and Corporate
Governance Committee, Donald K. Barbieri, Raymond R. Brandstrom
and Ronald R. Taylor are nominees for election as Class B
directors. If elected at the annual meeting, each will serve
until the 2013 annual meeting of shareholders and until his
successor is elected and qualified, or until his earlier
retirement, resignation, disqualification, removal or death.
Each share of common stock is entitled to one vote for each of
the three nominees and will be given the option to vote
FOR or AGAINST each nominee or to
ABSTAIN. Cumulative voting is not permitted. It is
the intention of the proxy holders named in the enclosed proxy
to vote the proxies received by them in favor of the election of
the three nominees unless a shareholder directs otherwise. If
any nominee should become unavailable for election prior to the
meeting, an event that currently is not anticipated by the
Board, the proxies will be voted in favor of the election of a
substitute nominee or nominees proposed by the Board or the
number of directors may be reduced accordingly. Each nominee has
agreed to serve if elected and the Board has no reason to
believe that any nominee will be unable to serve.
The three nominees for the Board who receive the greatest number
of votes cast in the election of directors by the shares
entitled to vote and present in person or by proxy at the
meeting will be elected directors. An abstention from voting for
a nominee may make it less likely that the nominee will be one
of the three nominees who receive the greatest number of votes
cast. Brokers no longer have discretionary authority to vote in
the election of directors. If a broker holding shares for a
beneficial owner does not receive instructions from the
beneficial owner on how to vote in the election, the broker will
submit a non-vote, which also may make it less likely that a
nominee will be one of the three nominees who receive the
greatest number of votes cast.
Set forth below is biographical information for each nominee and
for each director whose term of office will continue after the
meeting. Except as disclosed in these biographies, there are no
family relationships among any of our directors or among any of
our directors and our executive officers.
NOMINEES
FOR ELECTION FOR A THREE-YEAR TERM EXPIRING AT THE 2013 ANNUAL
MEETING OF SHAREHOLDERS
Donald K. Barbieri, age 64, has been a director
since 1978 and Chairman of the Board since 1996. He is the
brother of Richard L. Barbieri. He served as President and Chief
Executive Officer of our company from 1978 until April 2003.
Mr. Barbieri joined our company in 1969 and was responsible
for our development activities in hotel, entertainment and real
estate areas. Mr. Barbieri is a past Chair for the Spokane
Regional Chamber of Commerce. Mr. Barbieri served as
President of the Spokane Chapter of the Building Owners and
Managers Association from 1974 to 1975 and served as President
of the Spokane Regional Convention and Visitors Bureau from 1977
to 1979. He also served on the Washington Tourism Development
Council from 1983 to 1985 and he has served on the Washington
Economic Development Board. Mr. Barbieri chaired the State
of Washingtons Quality of Life Task Force from 1985 to
1989. Mr. Barbieris many years of experience as the
former CEO of the company and his even
3
lengthier experience as a member of the Board provide him with
experience and institutional knowledge of the companys
business that cannot be replicated. His long-term leadership and
extensive experience in the hospitality industry provide ongoing
value to the company and the Board.
Ronald R. Taylor, age 62, has been a director since
April 1998. Mr. Taylor is President of Tamarack Bay, LLC, a
private consulting firm and is currently a director of two other
public companies, Watson Pharmaceuticals, Inc. (a pharmaceutical
manufacturer) and ResMed, Inc. (a manufacturer of equipment
relating to the management of sleep-disordered breathing). At
Watson Pharmaceuticals, Inc., Mr. Taylor is a member of the
Audit and Nominating and Corporate Governance Committees and is
Chairman of the Compensation Committee. At ResMed, Inc., he is a
member of the Nominating and Corporate Governance Committees and
Chairman of the Compensation Committee. Mr. Taylor is also
Chairman of the Board of two privately held companies. From 1998
to 2002, Mr. Taylor was a general partner of Enterprise
Partners, a venture capital firm. From 1996 to 1998,
Mr. Taylor worked as an independent business consultant.
From 1987 to 1996, Mr. Taylor was Chairman, President and
Chief Executive Officer of Pyxis Corporation (a health care
service provider), which he founded in 1987. Prior to founding
Pyxis, he was an executive with both Allergan Pharmaceuticals
and Hybritech, Inc. Mr. Taylor brings to the Board valuable
experience from service on the boards of directors of other
public companies, along with executive level management
experience and his knowledge and expertise in operational,
financial and compensation matters.
Raymond R. Brandstrom, age 57, has been a director
since November 2009. Mr. Brandstrom has been an advisor to
Emeritus Corporation since December 2009. From September 2007 to
December 2009, he served as its Executive Vice
President Finance, Secretary and Chief Financial
Officer. Mr. Brandstrom, one of Emerituss founders,
has served as a director since Emeritus inception in 1993
and currently serves as its Vice Chairman. From 1993 to March
1999, Mr. Brandstrom also served as Emeritus
President and Chief Operating Officer. In March 2000,
Mr. Brandstrom was elected Vice President of Finance, Chief
Financial Officer and Secretary of Emeritus. From May 1992 to
October 1996, Mr. Brandstrom served as President of
Columbia Pacific Group, Inc. and Columbia Pacific Management,
Inc. From May 1992 to May 1997, Mr. Brandstrom served as
Vice President and Treasurer of Columbia Winery, a company that
is engaged in the production and sale of table wines.
Mr. Brandstrom adds outstanding operational and financial
acumen to the Board, as well as years of experience in real
estate development and as a public company director and chief
financial officer.
THE BOARD RECOMMENDS A VOTE FOR EACH OF THE THREE
NAMED NOMINEES.
Directors
Continuing in Office Until the 2011 Annual Meeting of
Shareholders
Richard L. Barbieri, age 67, has been a director
since 1978. He is the brother of Donald K. Barbieri. From 1994
until December 2003, he served as our full-time General Counsel,
first as Vice President, then Senior Vice President and
Executive Vice President. From 1978 to 1995, Mr. Barbieri
served as legal counsel and Secretary, during which time he was
first engaged in the private practice of law at Edwards and
Barbieri, a Seattle law firm, and then at Riddell Williams P.S.,
a Seattle law firm, where he chaired the firms real estate
practice group. Mr. Barbieri has also served as chairman of
various committees of the Washington State Bar Association and
the King County (Washington) Bar Association, and as a member of
the governing board of the King County bar association. He also
served as Vice Chairman of the Citizens Advisory Committee
to the Major League Baseball Stadium Public Facilities District
in Seattle in 1996 and 1997. Mr. Barbieris
professional experience in real estate matters and in the
hospitality industry, combined with his legal training and
institutional knowledge of the company, provide the Board with
important and relevant perspective on the companys
business.
Jon E. Eliassen, age 63, was appointed as our
Interim President and Chief Executive Officer on
January 13, 2010. He has been a director of the company
since September 2003. Mr. Eliassen was President and CEO of
the Spokane Area Economic Development Council from 2003 until
2007. Mr. Eliassen retired in 2003 from his position as
Senior Vice President and Chief Financial Officer of Avista
Corp., a publicly-traded diversified utility. Mr. Eliassen
spent 33 years at Avista, including the last 16 years
as its Chief Financial Officer. While at Avista,
Mr. Eliassen was an active participant in development of a
number of successful subsidiary company operations including
technology related startups Itron, Avista Labs and Avista
Advantage. Mr. Eliassen serves as Chairman of the Board of
Directors of Itron Corporation, serves as a member of the Board
of Directors of IT Lifeline, Inc, and is the principal of
Terrapin Capital Group, LLC. Mr. Eliassens corporate
accomplishments are complemented by his
4
extensive service to the community in roles which have included
director and President of the Spokane Symphony Endowment Fund,
director of The Heart Institute of Spokane, Washington State
University Research Foundation, Washington Technology Center,
Spokane Intercollegiate Research and Technology Institute and
past director of numerous other organizations and energy
industry associations. Mr. Eliassens experience as an
executive and as a board member of other public companies, his
operational experience in a variety of businesses and his
extensive financial expertise are of great value in his role as
a director of the company.
Directors
Continuing in Office Until the 2012 Annual Meeting of
Shareholders
Ryland P. Davis, age 69, has been a director since
May 2005. He has been the owner and principal of Amicus
Healthcare Solutions since 2007. He served as Chief Executive
Officer of Providence Strategic Ventures from 2008 until March
2009. Prior to that, he was Chief Executive Officer of
Providence Health Care, a five-hospital regional delivery
network, from 1999 to 2008 and Chief Executive Officer of Sacred
Heart Medical Center in Spokane, a Providence Health Care
medical center, from 1996 to 1999. From 1993 to 1996,
Mr. Davis was Senior Vice President for the Hunter Group, a
hospital management firm specializing in healthcare consulting
and management nationally. From 1988 to 1993, he was Chairman
and CEO of Synergos Neurological Centers, Inc., in Santa Ana and
Sacramento, California. From 1987 to 1988, he was President of
Diversified Health Group, Inc., of Sacramento. From 1982 to
1987, he worked for American Health Group International as
President and CEO of Amerimed in Burbank, California, and as
Executive Vice President of Operations. From 1975 to 1982, he
worked for Hospital Affiliates International, as Group Vice
President in Sacramento, and as CEO of Winona Memorial Hospital
in Indianapolis, Indiana. From 1971 to 1975, he was Associate
Administrator of San Jose Hospital and Health Care Center
in San Jose, California and from 1968 to 1971, Assistant
Administrator of Alta Bates Hospital in Berkeley, California. He
has done numerous private business ventures related to
healthcare. Mr. Davis is a Fellow of the American College
of Health Care Executives and has published articles in
Modern Healthcare, Health Week, and
other business publications regarding healthcare issues and
perspectives. Mr. Davis is past Chair of the Spokane Area
Chamber of Commerce, is on the Boy Scouts of America Inland
Northwest Council Board, and is a member of the Washington State
University Presidents Advisory Council. He is also the
past Board Chair of the Institute for System Medicine and is a
board member of Providence Associated Medical Laboratories.
Mr. Davis years of experience as CEO of major
healthcare providers, combined with his operational and
financial expertise, make him an invaluable member of the Board.
Peter F. Stanton, age 53, has been a director since
April 1998. Mr. Stanton has served as the Chief Executive
Officer of Washington Trust Bank since 1993 and its
Chairman since 1997. Mr. Stanton previously served as
President of Washington Trust Bank from 1990 to 2000.
Mr. Stanton is also Chief Executive Officer, President and
Chairman of the Board of Directors of W.T.B. Financial
Corporation (a bank holding company). In addition to serving on
numerous state and local civic boards, Mr. Stanton was
President of the Washington Bankers Association from 1995 to
1996 and served as Washington state chairman of the American
Bankers Association in 1997 and 1998. He currently serves as a
National Trustee for the Boys and Girls Club of
America. Mr. Stanton is also a Trustee of Gonzaga
University, is on the Board of Trustees of Greater Spokane
Incorporated, as well as on the board of the Inland Northwest
Council, Boy Scouts of America. Mr. Stantons
executive level experience and his extensive knowledge of the
banking industry and credit markets are all especially
beneficial to his role as a long-term director of our company.
Director
and Director Nominee Qualifications; Diversity
Our Nominating and Corporate Governance Committee assists the
Board in reviewing the business and personal background of each
of our directors with respect to our companys business and
business goals. The committee generally considers diversity as
one of several factors relating to overall composition when
making nominations to our Board. While we do not have a formal
policy governing how diversity is considered, the committee
generally considers diversity by examining the entire Board
membership and, when making nominations to our Board, by
reviewing the diversity of the entire Board. The committee
construes Board diversity broadly to include many factors. As a
result, the committee strives to ensure that our Board is
composed of individuals with a variety of different opinions,
perspectives, personal, professional and industry experience and
backgrounds, skills, and expertise.
5
In addition to the qualities described previously in the
individual director biographies, the following matrix summarizes
the skills and attributes of our directors and director nominees
for 2010 that we believe are essential to our business:
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Donald
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Richard
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Ronald
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Ryland
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Pete
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Raymond
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Jon
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Barbieri
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Barbieri
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Taylor
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Davis
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Stanton
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Brandstrom
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Eliassen
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Senior leadership/ CEO/COO experience
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ü
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ü
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ü
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ü
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ü
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ü
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ü
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Business development experience
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ü
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ü
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ü
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ü
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ü
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ü
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ü
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Financial expertise/CFO
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ü
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ü
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ü
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ü
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ü
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ü
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ü
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Outside Public board experience
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ü
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ü
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ü
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Independence
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ü
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ü
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ü
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ü
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ü
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Industry Experience
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ü
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ü
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ü
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Marketing/sales expertise
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ü
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ü
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ü
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Government expertise
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ü
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ü
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Legal expertise
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ü
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Mergers and acquisitions
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ü
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ü
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ü
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ü
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ü
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ü
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ü
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Demonstrated integrity-personal and professional
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ü
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ü
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ü
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ü
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ü
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ü
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ü
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Real estate expertise
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ü
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ü
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ü
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ü
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ü
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ü
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ü
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Banking expertise
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ü
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Franchising expertise
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ü
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ü
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We have concluded that all of our directors, including the
nominees for election at the annual meeting, have the skills,
experience, knowledge and personal attributes that are necessary
to effectively serve on our Board and to contribute to the
overall success of our company. We believe that the diverse
background of each of our Board members ensures that we have a
Board that has a broad range of industry-related knowledge,
experience and business acumen.
PROPOSAL 2
RATIFICATION
OF SELECTION OF
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board has selected BDO Seidman, LLP
to serve as our independent registered public accounting firm
for 2010 and has further directed that this selection be
submitted for ratification by our shareholders at the annual
meeting. BDO Seidman, LLP has audited our financial statements
since 2001. Representatives of the firm are expected to be
present at the meeting, will have the opportunity to make a
statement if they desire to do so, and are expected to be
available to respond to appropriate questions from shareholders.
Unless instructed to the contrary, the proxies solicited hereby
will be voted for the ratification of the selection of BDO
Seidman, LLP as our independent registered public accounting
firm for 2010.
Shareholder ratification of the selection of BDO Seidman, LLP as
our independent registered public accounting firm is not
required by our By-laws or otherwise. However, the Board is
submitting the selection of the firm to the shareholders for
ratification as a matter of corporate practice. If the
shareholders fail to ratify the selection, the Audit Committee
will reconsider whether or not to retain that firm. Even if the
selection is ratified, the Audit Committee in its discretion may
select a different independent registered public accounting firm
at any time during the year if the Audit Committee determines
that such a change would be in our best interests and that of
our shareholders.
6
Each share of common stock is entitled to one vote on the
proposal to ratify the selection of BDO Seidman, LLP and will be
given the option to vote FOR or AGAINST
the proposal or to ABSTAIN. In order to approve this
proposal, the affirmative vote of a majority of the votes cast
by the holders of shares entitled to vote and present in person
or by proxy at the meeting is required. Abstention from voting
on this proposal will have no effect, since approval of the
proposal is based solely on the number of votes cast. Although
brokers generally have discretionary authority to vote on this
proposal, a non-vote on the proposal will have no effect, since
approval of the proposal is based solely on the number of votes
cast.
THE BOARD RECOMMENDS A VOTE FOR RATIFICATION OF
THE SELECTION OF BDO SEIDMAN, LLP.
7
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of our common stock as of April 1,
2010 by: (i) each of our directors and nominees;
(ii) each of our executive officers and one of our former
executive officers; (iii) all of our directors, nominees
and executive officers as a group; and (iv) each person
known by us to beneficially own more than 5% of our common stock.
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Number of
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Percentage of
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Beneficial Owner
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Shares Owned (1)
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Common Stock (1)
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Columbia Pacific Opportunity Fund, LP (2)
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3,441,541
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18.7
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%
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Dimensional Fund Advisors LP (3)
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1,600,689
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8.7
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%
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Donald K. Barbieri (4)(5)
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1,545,391
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8.4
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%
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Heather H. Barbieri (4)(6)
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1,396,578
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7.6
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%
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Principal Financial Group, Inc. (7)
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929,738
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5.1
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%
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Anupam Narayan (8)
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257,487
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1.4
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%
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Richard L. Barbieri
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178,402
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1.0
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%
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Thomas L. McKeirnan (9)
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95,808
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*
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Ronald R. Taylor (10)
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49,065
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*
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Anthony F. Dombrowik (11)
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48,135
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*
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Jon E. Eliassen
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38,284
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*
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Peter F. Stanton (12)
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35,338
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*
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George H. Schweitzer (13)
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34,529
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*
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Ryland P. Davis
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24,212
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*
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Raymond R. Brandstrom
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5,740
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*
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All directors and executive officers as a group
(10 persons) (14)
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2,054,903
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11.2
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%
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*
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Represents less than 1% of the
outstanding common stock.
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(1)
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For purposes of this table, a
person is deemed to have beneficial ownership of
shares of common stock if such person has the right to acquire
beneficial ownership of such shares within 60 days. For
purposes of computing the percentage of outstanding shares held
by each person named above, any security that such person has
the right to acquire within 60 days after April 1,
2010 is deemed to be outstanding, but is not deemed to be
outstanding for the purpose of computing the percentage
ownership of any other person.
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(2)
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The address for this beneficial
owner is 1910 Fairview Avenue East, Suite 500, Seattle,
Washington 98102 . The shares shown for this beneficial owner
are based solely on the Form 4 filed by this beneficial
owner on April 1, 2010.
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(3)
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The address for this beneficial
owner is Palisades West, Building One, 6300 Bee Cave Road,
Austin, Texas 78746. The shares shown for this beneficial owner
are based solely on the Schedule 13G/A filed by this
beneficial owner on February 8, 2010.
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(4)
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The shares shown for each of these
beneficial owners include 397,966 shares held by the
DKB & HHB Unity Trust, an irrevocable trust of which
these beneficial owners are co-trustees. Each of these
beneficial owners disclaims beneficial ownership of the
trusts shares.
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(5)
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Mr. Barbieris address is
820 North Post Street, Suite 603, Spokane, Washington
99201. Includes 22,418.5 shares that may be issued to
Mr. Barbieri if he elects to have Red Lion Hotels Limited
Partnership (RLHLP) redeem a like number of limited
partnership units (OP Units) that he holds in RLHLP.
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(6)
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Ms. Barbieris address is
201 West North River Drive, Suite 100, Spokane,
Washington 99201. Includes 560,700 shares held by the
Heather M. Barbieri Family LLC of which Ms. Barbieri is a
member but disclaims beneficial ownership except to the extent
of her beneficial interest therein. Also includes
22,418.5 shares that may be issued to Ms. Barbieri if
she elects to have RLHLP redeem a like number of OP Units that
she holds in RLHLP. Also includes 2,500 shares subject to
options exercisable within 60 days of April 1, 2010.
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(7)
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The address for this beneficial
owner is 711 High Street, Des Moines, Iowa
50392-0088.
The shares shown for this beneficial owner are based solely on
the Schedule 13G/A filed by this beneficial owner on
February 16, 2010.
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(8)
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Mr. Narayans employment
with the company terminated on January 13, 2010. The number
of shares shown as owned by him in the above table includes
131,702 shares subject to options exercisable within
60 days of April 1, 2010. Of these, options for
66,702 shares expired in accordance with their terms on
April 13, 2010. An option for the remaining
65,000 shares remains exercisable until July 30, 2010.
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(9)
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Includes 68,548 shares subject
to options exercisable, and 5,226 shares subject to
restricted stock units vesting, within 60 days of
April 1, 2010.
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(10)
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Includes 1,000 shares subject
to options exercisable within 60 days of April 1, 2010.
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8
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(11)
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Includes 37,683 shares subject
to options exercisable, and 4,775 shares subject to
restricted stock units vesting, within 60 days of
April 1, 2010.
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(12)
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Includes 1,000 shares subject
to options exercisable within 60 days of April 1, 2010.
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(13)
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Includes 22,500 shares subject
to options exercisable, and 4,282 shares subject to
restricted stock units vesting, within 60 days of
April 1, 2010.
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(14)
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Includes 130,731 shares
subject to options exercisable, and 14,283 shares subject
to restricted stock units vesting, within 60 days of
April 1, 2010. Also includes 22,418.5 shares that may
be issued to a member of the group if he elects to have RLHLP
redeem a like number of OP Units that he holds in RLHLP.
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SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires our executive officers and directors, and
persons who own more than 10% of our common stock (collectively,
Reporting Persons), to file reports of ownership and
changes in ownership of our common stock with the Securities and
Exchange Commission. Based solely on our review of the reports
filed by the Reporting Persons, and written representations from
certain Reporting Persons that no other reports were required
for those persons, we believe that, during the year ended
December 31, 2009, the Reporting Persons met all applicable
Section 16(a) filing requirements, except that Columbia
Pacific Opportunity Fund, LP, a beneficial owner of more than
10% of our common stock, filed eleven late reports on
Form 4 disclosing twelve transactions in our common stock
that were not timely reported.
CORPORATE
GOVERNANCE
Corporate
Governance Documents
The Board has adopted the following corporate governance
documents:
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Corporate Governance Guidelines;
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Code of Business Conduct and Ethics;
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Accounting and Audit Complaints and Concerns Procedures;
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Statement of Policy with respect to Related Party
Transactions; and
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charters for each of its standing committees, which include the
Audit Committee, the Compensation Committee and the Nominating
and Corporate Governance Committee.
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Copies of each of these corporate governance documents are
available online in the Investor Relations section of our
website at
www.redlion.com.1
We will provide copies of these documents to any shareholder
upon written request to our Secretary at our principal executive
office at 201 West North River Drive, Suite 100,
Spokane, WA 99201.
Director
Independence
The Board has determined that each of the following five members
of the Board is independent within the meaning of
applicable listing standards of the New York Stock Exchange (the
NYSE): Ryland P. Davis, Richard L. Barbieri, Peter
F. Stanton, Ronald R. Taylor and Raymond R. Brandstrom. Under
the NYSE listing standards, a director is considered
independent if the Board affirmatively determines
that he or she has no material relationship with our company,
either directly or as a partner, shareholder or officer of an
organization that has a relationship with our company. Our
Corporate Governance Guidelines contain categorical standards to
assist the Board in making determinations of independence. A
copy of these categorical standards is included in
Appendix A to this Proxy Statement. The Board has made an
affirmative determination that each of the five directors named
above satisfies these categorical standards.
1 This
website is not intended to function as a hyperlink, and the
information contained on the website is not intended to be part
of this Proxy Statement.
9
Meetings
of the Board of Directors
The Board met eight times in 2009. All directors attended at
least 75% of the total number of meetings of the Board and its
committees on which they serve.
We encourage all of our directors to attend each annual meeting
of shareholders. All of our directors attended our 2009 annual
meeting of shareholders.
Executive
Sessions of the Board
Following regularly scheduled meetings of the Board, the
non-management directors, which consist of the independent
directors identified above and Donald K. Barbieri, generally
meet in executive session without Mr. Eliassen or other
members of management. Donald K. Barbieri, as Chairman of the
Board, serves as the presiding director for these executive
sessions. In addition, at least once each year, and generally at
each quarterly meeting of the Board, the independent directors
meet in executive session without any of the non-independent
directors or members of management present.
Committees
of the Board of Directors
Audit
Committee
The Audit Committee engages our independent registered public
accounting firm, reviews with the firm the plans and results of
the audit engagement, approves the audit and non-audit services
provided by the firm, reviews our financial statements, reviews
our compliance with laws and regulations, receives and reviews
complaints relating to accounting or auditing matters, considers
the adequacy of our internal accounting controls, and produces a
report for inclusion in our annual proxy statement. The members
of the Audit Committee are Peter F. Stanton, Chairman, Ryland P.
Davis, Raymond R. Brandstrom and Ronald R. Taylor.
The Board has determined that each member of the Audit Committee
is financially literate under the current listing standards of
the NYSE. The Board also has determined that each member of the
Audit Committee qualifies as an audit committee financial
expert as defined by applicable rules of the Securities
and Exchange Commission. All members of the Audit Committee are
considered independent because they satisfy the independence
requirements for Board members prescribed by the NYSE listing
standards, including those set forth in
Rule 10A-3
under the Securities Exchange Act of 1934, as amended.
Compensation
Committee
The Compensation Committee discharges the responsibilities of
the Board relating to compensation and evaluation of our
President and Chief Executive Officer, or CEO, and other
executive officers, recommends to the Board the compensation of
Board members, oversees the administration of our equity
incentive plans and produces an annual report on executive
compensation for inclusion in our annual proxy statement. The
members of the Compensation Committee are Ronald R. Taylor,
Chairman, Ryland P. Davis and Peter F. Stanton.
The processes and procedures of the Compensation Committee for
considering and determining compensation for our executive
officers and directors are as follows:
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Compensation for our executive officers is generally determined
annually in February.
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The Compensation Committee reviews director compensation and
benefits annually and makes recommendations to the Board with
respect thereto.
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With respect to our CEO, during the first calendar quarter of
each year, the Compensation Committee reviews and approves
performance goals for the current year, evaluates his
performance in light of the goals established for the prior
year, considers competitive market data and establishes his
compensation based on this evaluation. As part of the evaluation
process, the Compensation Committee Chairman solicits comments
from other Board members. Final determinations regarding our
CEOs performance and compensation are made during an
executive session of the Compensation Committee and reported to
the Board.
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10
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Our Compensation Committee determines compensation for the other
executive officers based on the recommendations of our CEO and
competitive market data. Final determinations of their
compensation are made during an executive session of the
Compensation Committee and reported to the Board.
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During 2006, the Compensation Committee directly engaged Towers
Perrin, an independent compensation consulting firm, to review
total compensation levels for our directors and senior
management, including our executive officers. The firm reviewed
various sources of available data regarding the compensation
practices of hospitality industry and other companies, assessed
the competitiveness of our compensation in comparison to that of
the other companies, and provided the Compensation Committee
with a written report and recommendations.
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During 2008, at the request of the Compensation Committee,
Towers Perrin updated the portion of its prior report and
recommendations relating to compensation for our executive
officers.
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The Compensation Committee has no authority to delegate any of
the functions described above to any other persons.
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Nominating
and Corporate Governance Committee
The Nominating and Corporate Governance Committee is responsible
for identifying and recommending to the Board for selection or
nomination those individuals qualified to become members of the
Board under the criteria established by our Corporate Governance
Guidelines, periodically reviewing and making recommendations to
the Board with regard to size and composition of the Board and
its committees, recommending and periodically reviewing for
adoption and modification by the Board our Corporate Governance
Guidelines and overseeing the evaluation of the Board and
management. The members of the Nominating and Corporate
Governance Committee are Ryland P. Davis, Chairman, Peter F.
Stanton and Ronald R. Taylor.
Directors may be nominated by the Board or by shareholders in
accordance with our By-Laws. The Nominating and Corporate
Governance Committee will review all proposed nominees for the
Board, including those recommended by shareholders, in
accordance with its charter, our By-Laws and our Corporate
Governance Guidelines. The committee will review age (a minimum
age of 21 is prescribed for directors under the By-Laws),
desired experience, mix of skills and other qualities to assure
appropriate Board composition, taking into account the current
Board members and the specific needs of our company and the
Board. The committee will generally look for individuals who
have displayed high ethical standards, integrity and sound
business judgment. This process is designed to ensure that the
Board includes members with diverse backgrounds, skills and
experience, including appropriate financial and other expertise
relevant to our business.
While the committee is authorized to retain a third party to
assist in the nomination process, we have not paid a fee to any
third party to identify or assist in identifying or evaluating
potential nominees.
A shareholder of record can nominate a candidate for election to
the Board by complying with the procedures in Section 3.3
of our By-Laws. Any shareholder of record who wishes to submit a
nomination should review the By-Law requirements on nominations
by shareholders, which are included in the excerpt from the
By-Laws attached as Appendix B to this Proxy Statement. Any
nomination should be sent to our Secretary at our principal
executive office, 201 West North River Drive,
Suite 100, Spokane, WA 99201. Any recommendations from
shareholders regarding director nominees should be sent to the
Nominating and Corporate Governance Committee in care of our
Secretary at the same address.
Leadership
Structure
We believe it is the CEOs responsibility to lead the
company and it is the responsibility of the Chairman of the
Board to lead the Board. As directors continue to have more
oversight responsibilities than ever before, we believe it is
beneficial to have a separate chairman whose sole job is leading
the Board. Accordingly, our Corporate Governance Guidelines
currently provide that the Chairman of the Board cannot be an
officer of the company. The Board retains the authority to
modify this structure as and when appropriate to best address
our companys unique circumstances and to advance the best
interests of all shareholders.
11
Boards
Role in Risk Oversight
The Boards role in overseeing our companys risk is
to satisfy itself, directly or through Board committees,
that
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there are adequate processes designed and implemented by
management such that risks have been identified and are being
managed;
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the risk management processes function as intended to ensure
that our companys risks are taken into account in
corporate decision making; and
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the risk management system is designed to ensure that material
risks to our company are brought to the attention of the Board
or an appropriate committee of the Board.
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Each of our companys risk management processes is reviewed
periodically (but at least once a year) by either the Board or
an appropriate committee. Committee chairs regularly report on
committee meetings at the meetings of the full Board.
Following a recent review of our companys current risk
management systems and processes, the Board concluded that the
current allocation of oversight responsibilities between the
Board and its committees is adequate, so long as the committees
continue to coordinate their risk oversight responsibilities,
share information appropriately with the other members of the
Board, and provide timely and adequate reports to the full
Board. The Board will continually evaluate its risk oversight
role.
Communications
with the Board of Directors
Our annual meeting of shareholders provides an opportunity each
year for shareholders to ask questions of, or otherwise
communicate directly with, members of the Board on appropriate
matters. Shareholders or other interested parties may contact
the Chairman of the Board at any time by sending an
e-mail to
chairman@redlion.com. In addition, shareholders may
communicate in writing with any particular director, any
committee of the Board, or the directors as a group, by sending
a written communication to our Secretary at our principal
executive office, 201 West North River Drive,
Suite 100, Spokane, WA 99201. Copies of written
communications received at such address will be provided to the
Board or the relevant director unless such communications are
considered, in the reasonable judgment of our Secretary, to be
inappropriate for submission to the intended recipient(s).
Examples of shareholder communications that would be considered
inappropriate for submission to the Board include, without
limitation, customer complaints, solicitations, communications
that do not relate directly or indirectly to our business or
communications that relate to improper or irrelevant topics.
Communications concerning potential director nominees submitted
by any of our shareholders will be forwarded to the Chairman of
the Nominating and Corporate Governance Committee.
12
Compensation
Committee
Report2
The Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis provided below with
management, and based on the review and discussions, recommended
to the Board that the Compensation Discussion and Analysis be
included in this Proxy Statement and incorporated by reference
into our Annual Report on
Form 10-K.
Respectfully submitted,
Compensation Committee of the Board of Directors
Ronald R. Taylor, Chairman
Ryland P. Davis
Peter F. Stanton
March 22, 2010
Compensation
Committee Interlocks and Insider Participation
We have a banking relationship with Washington Trust Bank.
One of the members of the Compensation Committee, Peter F.
Stanton, is a director and the chief executive officer of this
bank. We have the following related party transactions with this
bank:
|
|
|
|
|
We had various amounts of cash on deposit and other investments
with the bank ranging during 2009 from approximately $121,000 to
$620,000 in the aggregate.
|
|
|
|
At the beginning of 2009, the bank held a promissory note
secured by commercial real estate in the principal amount of
approximately $2,130,000. During 2009, we made principal and
interest payments on this note of approximately $798,000. The
principal amount owed on the note at the end of 2009 was
approximately $1,440,000. The bank continues to hold this note
and we will make principal and interest payments on the note in
the future.
|
COMPENSATION
DISCUSSION AND ANALYSIS
This section discusses the compensation of our executive
officers. Compensation for the executive officers is determined
by the Compensation Committee of our Board. The Compensation
Committee is composed entirely of independent directors, as
defined under NYSE rules, and none of its members is a current
or former employee of our company. All decisions of the
Compensation Committee are reported to our Board.
There are no material differences in the compensation policies
or decisions with respect to the executive officers, except that
our compensation for our President and Chief Executive Officer,
or CEO, is determined exclusively by the Compensation Committee,
while the compensation of the other executive officers is
determined by the Compensation Committee based on similar
criteria, but also takes into account the recommendations of our
CEO.
Compensation
Program Objectives and Rewards
We believe that our executive compensation program should:
|
|
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|
|
Attract, motivate and retain highly qualified executives by
paying them competitively, consistent with our success and their
contributions to this success; and
|
2 The
material in this report is not soliciting material, is not
deemed filed with the Securities and Exchange Commission and is
not incorporated by reference in any of our filings under the
Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, whether made on, before, or after the
date of this Proxy Statement and irrespective of any general
incorporation language in such filing.
13
|
|
|
|
|
Pay for performance by rewarding and encouraging superior
company and individual performance, on both a short- and
long-term basis, in a way that promotes alignment with long-term
shareholder interests.
|
All of the compensation and benefits for our executive officers
have as a primary purpose our need to attract, retain and
motivate the highly talented individuals who will engage in the
behaviors necessary to enable us to succeed in our mission while
upholding our values in a highly competitive marketplace. Beyond
that, different elements are designed to engender different
behaviors.
|
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|
|
|
Base salary and benefits are designed to attract and retain
executives over time.
|
|
|
|
Annual cash awards under the Executive Officers Variable Pay
Plan (VPP) are designed to focus executives on
specific performance goals established each year by the
Compensation Committee. Executive officers may also receive
discretionary bonuses based on performance not otherwise
measured by the VPP or for other reasons.
|
|
|
|
Long-term equity incentives stock options and
restricted stock units (RSUs) under the
shareholder-approved 2006 Stock Incentive Plan focus
executives efforts on the behaviors within their control
that they believe are necessary to ensure our long-term success,
as reflected in increases to our stock price over a period of
years.
|
|
|
|
Severance and change of control arrangements are designed to
facilitate our ability to attract and retain executives as we
compete for talent in a marketplace where such protections are
commonly offered. These arrangements ease an executives
transition due to an unexpected employment termination. In the
event of rumored or actual fundamental corporate changes, these
arrangements will also allow executives to remain focused on our
business interests.
|
We do not believe that there are any of our compensation
policies and practices that are reasonably likely to have a
material adverse effect on our company. With respect to our
compensation policies and practices for executive officers, we
believe that our allocation of overall compensation among base
salary and annual and long-term incentives encourages our
executive officers to deliver strong results for our
shareholders without taking excessive risks. The base salaries
of our executive officers provide them assured cash compensation
at levels that our Compensation Committee deems appropriate
taking into account their respective job duties and
responsibilities. We believe these base salaries, taken together
with their at-risk annual and long-term incentives, motivate the
executive officers to perform at a high level. With respect to
annual cash awards under the VPP, we believe that our use of
objective company financial performance goals, together with the
Compensation Committees discretion to disqualify an
executive officer from receiving an award that might otherwise
be payable, serves to mitigate against undue risk-taking. We
also believe that our use of multi-year vesting schedules for
our long-term equity incentives encourages our executive
officers to deliver incremental value to our shareholders while
mitigating risk.
Elements
of Our Compensation Program
Base
Salaries
The Compensation Committee determines base salaries for the
executive officers early each year, based on job
responsibilities and individual contribution as well as base
salary levels of executives at peer hospitality companies. In
determining the base salaries of executive officers other than
the CEO, the Compensation Committee takes into consideration
recommendations made by the CEO.
In November 2006, an independent compensation consulting firm
provided the Compensation Committee a report and recommendations
with respect to total compensation levels for our senior
management team. The firm updated this report in January 2008
and provided competitive data sets and recommendations to assist
the
14
Compensation Committee in establishing 2008 compensation levels
for the executive officers. The report was based on the
following group of nine hospitality companies:
|
|
|
Ashford Hospitality Trust
|
|
Interstate Hotels & Resorts, Inc.
|
Bluegreen Corporation
|
|
Lodgian, Inc.
|
Choice Hotels International, Inc.
|
|
The Marcus Corporation
|
Equity Inns, Inc.
|
|
Morgans Hotel Group Co.
|
FelCor Lodging Trust
|
|
|
The Compensation Committee relied in part on this updated report
in establishing executive officer base salaries for 2008. In
establishing these base salaries, the Compensation Committee
also obtained base salary data from the Hospitality Compensation
Exchange Lodging Corporate Annual Report and determined
that, as a guideline, it would target base salaries for our
executives at the 50th percentile.
Due to the difficult economic environment, the nominal base
salaries of our executive officers were not increased for 2009.
Instead, the salaries of all of our salaried employees,
including the executive officers, were reduced by 5% for
virtually the entire year.
Under Section 162(m) of the Internal Revenue Code of 1986,
as amended (the Code), base salaries paid to
executive officers are deductible for federal income tax
purposes except to the extent that they exceed $1 million.
No executive received base salary in excess of $1 million
in 2009.
VPP
and Other Annual Cash Awards
Early each year, the Compensation Committee determines
performance goals for each executive officer under the VPP, as
well as the various levels of cash awards that each executive
will receive based on the extent to which his goals are
achieved. Historically, there has been a mix of company and
individual performance goals under the VPP. Company goals have
generally related to our companys overall financial
performance. Individual goals have been subjective or objective,
but they have generally been based on performance in areas of
our business that the Compensation Committee believed were
important to our success. The goals and award levels are
initially proposed by the CEO, and the final goals and award
levels are determined following a dialogue between the
Compensation Committee and the CEO. Award levels are specified
as a percentage of base salary. The award levels that are
potentially available under the VPP are, as a guideline,
targeted at the 50th percentile of peer company annual incentive
compensation.
In February 2009, the Compensation Committee determined that,
for each executive officer, there would be two company goals and
no individual goals for 2009. The company goals related to
achievement of specified levels of EBITDA and revenue per
available room (RevPAR) penetration. At the same time, the
following award levels were established, based in part on the
updated report that, as discussed above, the Compensation
Committee obtained in January 2008 from an independent
compensation consulting firm.
VPP Award
Levels for 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of Base Salary
|
|
Possible Award Payouts ($)
|
|
|
Threshold (1)
|
|
Target
|
|
Maximum
|
|
Threshold (1)
|
|
Target
|
|
Maximum
|
|
Actual
|
|
Anupam Narayan
|
|
|
0
|
%
|
|
|
60
|
%
|
|
|
200
|
%
|
|
|
0
|
|
|
|
205,200
|
|
|
|
684,000
|
|
|
|
0
|
|
George H. Schweitzer
|
|
|
0
|
%
|
|
|
30
|
%
|
|
|
100
|
%
|
|
|
0
|
|
|
|
59,850
|
|
|
|
199,500
|
|
|
|
0
|
|
Thomas L. McKeirnan
|
|
|
0
|
%
|
|
|
30
|
%
|
|
|
100
|
%
|
|
|
0
|
|
|
|
59,565
|
|
|
|
198,550
|
|
|
|
0
|
|
Anthony F. Dombrowik
|
|
|
0
|
%
|
|
|
30
|
%
|
|
|
100
|
%
|
|
|
0
|
|
|
|
49,875
|
|
|
|
166,250
|
|
|
|
0
|
|
|
|
|
(1) |
|
Award payouts for 2009 under the VPP were based on multiple
company performance goals, so we did not consider the VPP to
have any Threshold award level. If our company had
achieved the minimum level of performance required for that
achievement to result in some contribution to award payout under
the VPP, the respective percentages of base salary and award
payouts that these executives would have received would have |
15
|
|
|
|
|
been as follows: Mr. Narayan, 16.2% and $55,404;
Mr. Schweitzer, 8.1% and $16,160; Mr. McKeirnan, 8.1%
and $16,083; and Mr. Dombrowik, 8.1% and $13,466. |
The 2009 targets for the company goals were EBITDA of
$34.7 million and RevPAR penetration of 90%. Achievement of
these targets would have entitled the executives to 70% and 30%,
respectively, of the targeted award levels under the VPP.
Under the VPP, there is an overriding discretionary analysis of
each executives eligibility to receive variable pay. For
example, if an executive fails to follow company policy and
procedures, exposes the company to legal liability, or exhibits
behavior inappropriate for a leadership position, he may be
disqualified from receiving his variable pay, even if his
specified performance goals are achieved.
No awards will be paid under the VPP for 2009.
In addition to awards under the VPP, the Compensation Committee
has on occasion granted discretionary bonuses to executive
officers based on performance not otherwise measured by the VPP
or for other reasons. No discretionary bonuses were granted for
2009.
We generally intend that executive officer compensation be fully
deductible for federal income tax purposes, taking into account
Section 162(m) of the Code, provided that other
compensation objectives are met. We have not sought shareholder
approval of the VPP, which would ensure deductibility under the
Code, because we anticipate that, for the foreseeable future, no
executive officer will have aggregate base salary and annual
incentive awards of more than $1 million during any
calendar year.
Long-Term
Equity Incentives
We provide long-term incentives to our executive officers in the
form of stock options and restricted stock units
(RSUs), typically with a vesting period of four
years. This combination of equity incentives is intended to
benefit shareholders by enabling us to better attract and retain
top talent in a marketplace where such incentives are prevalent.
Both stock options and RSUs closely align our executives with
the achievement of our longer-term financial objectives that
enhance shareholder value.
The compensation consulting firm retained by the Compensation
Committee recommended that, in order to be more consistent with
practices at our peer companies, we adopt specific guidelines
for annual grants of equity incentives to our executive
officers. Based on this recommendation, the Compensation
Committee adopted guidelines under which the executive officers
would generally receive annual stock option and RSU grants
having a total value equal to from 40% to 100% of their base
salaries, with the value of the stock option and RSU components
constituting 75% and 25%, respectively, of this total value. At
the time of the annual meetings in 2007 and 2008, the
Compensation Committee granted equity incentives to the
executive officers based on these guidelines. For 2009, the
Compensation Committee determined to grant all of that
years long-term incentives in the form of RSUs. This
determination was based on the following factors:
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|
|
the amount of dilution that would have resulted from the grant
of stock options at a time when our stock price was depressed by
general market conditions;
|
|
|
|
a desire not to unduly deplete the pool of shares available
under our 2006 Stock Incentive Plan; and
|
|
|
|
the perceived trend at many companies to rely more heavily on
RSUs because they provide more stable incentives for executives.
|
Stock
Options
Stock options provide for financial gain derived from the
potential appreciation in stock price from the date that the
option is granted until the date that the option is exercised.
The exercise price of our stock options is set at fair market
value, which is the closing selling price of our common stock on
the NYSE on the grant date. The vesting provisions of the stock
options we have granted in the past have varied. Although no
stock options were granted in 2009, stock options granted to the
executive officers in prior years have generally vested in equal
annual increments over a period of four years from the date of
grant.
16
Under the shareholder-approved 2006 Stock Incentive Plan, we may
not grant stock options at a discount to fair market value or
with a so-called reload feature, and we may not
reduce the exercise price of outstanding stock options except in
the case of a stock split or other similar event. We do not lend
funds to employees to enable them to exercise stock options.
We do not backdate options or grant options retroactively. In
addition, we do not plan to coordinate grants of options so that
they are made before announcement of favorable information, or
after announcement of unfavorable information. Our options are
granted at fair market value on a fixed date or event, with all
required approvals obtained in advance of or on the actual grant
date. All grants to executive officers require the approval of
the Compensation Committee.
Our long-term performance ultimately determines the value of
stock options, because gains from stock option exercises are
entirely dependent on the long-term appreciation in the price of
our common stock. As a result, we believe stock option grants
encourage executives and other employees to focus on behaviors
and initiatives that should lead to an increase in the price of
our common stock, which benefits all our shareholders.
Under Section 162(m) of the Code, we generally may not
deduct compensation paid to an executive officer in a calendar
year if it exceeds $1 million. Certain compensation that is
considered performance-based is deductible without
regard to this $1 million limitation. We believe that any
compensation attributable to stock options held by our executive
officers will be considered performance-based, so
Section 162(m) of the Code should not limit our ability to
deduct it for federal income tax purposes.
Restricted
Stock Units
RSU grants provide for the issuance of shares of our common
stock if the recipient has met certain continued service
requirements. Under the RSUs granted to our executive officers
in 2009, an executive will receive one-fourth of the shares
subject to his award on each of the first four anniversaries of
the date of grant so long as he remains continuously employed
with us until the applicable anniversary.
Unlike stock options, RSUs may have value even if the price of
our common stock does not increase. Nevertheless, we award RSUs
because they promote retention and we believe they also create
incentives for executives to focus on increased share prices so
that the common stock subject to the award will be as valuable
as possible when it is eventually issued. Although we do not
impose any restriction on the sale of common stock issued
pursuant to RSUs, we expect that our executives will continue to
hold some if not all of the shares issued, which will also keep
their interests aligned with those of our shareholders.
Our RSUs do not qualify as performance-based compensation under
Section 162(m) of the Code. As a result, the value of
common stock ultimately issued to an executive officer pursuant
to an RSU will not be deductible to the extent that value, when
aggregated with the executive officers other compensation
that is subject to Section 162(m), exceeds $1 million.
17
EXECUTIVE
COMPENSATION
Summary
Compensation Table
The following table sets forth summary information concerning
the compensation awarded to, paid to or earned by our named
executive officers for all services rendered in all capacities
to us in 2007, 2008 and 2009.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
Plan
|
|
All Other
|
|
|
|
|
|
|
Salary
|
|
Bonus
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Compensation
|
|
Total
|
Name and Principal Position
|
|
Year
|
|
($)
|
|
($)
|
|
($)(1)
|
|
($)(1)
|
|
($)(2)
|
|
($)(3)
|
|
($)
|
|
Anupam Narayan (4)
|
|
|
2009
|
|
|
|
357,363
|
|
|
|
|
|
|
|
331,543
|
|
|
|
|
|
|
|
|
|
|
|
6,051
|
|
|
|
694,957
|
|
Former President,
|
|
|
2008
|
|
|
|
345,715
|
|
|
|
|
|
|
|
89,550
|
|
|
|
247,324
|
|
|
|
|
|
|
|
5,496
|
|
|
|
688,085
|
|
Chief Executive
|
|
|
2007
|
|
|
|
259,941
|
|
|
|
|
|
|
|
48,750
|
|
|
|
145,580
|
|
|
|
106,345
|
|
|
|
8,988
|
|
|
|
569,604
|
|
Officer and Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
George H. Schweitzer (5)
|
|
|
2009
|
|
|
|
208,461
|
|
|
|
|
|
|
|
77,362
|
|
|
|
|
|
|
|
|
|
|
|
22,365
|
|
|
|
308,188
|
|
Executive Vice
|
|
|
2008
|
|
|
|
148,615
|
|
|
|
|
|
|
|
37,497
|
|
|
|
138,995
|
|
|
|
|
|
|
|
18,241
|
|
|
|
343,348
|
|
President and Chief Operating Officer, Hotel Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas L. McKeirnan
|
|
|
2009
|
|
|
|
207,469
|
|
|
|
|
|
|
|
76,991
|
|
|
|
|
|
|
|
|
|
|
|
8,463
|
|
|
|
292,923
|
|
Senior Vice President,
|
|
|
2008
|
|
|
|
206,808
|
|
|
|
|
|
|
|
20,688
|
|
|
|
52,140
|
|
|
|
|
|
|
|
7,702
|
|
|
|
287,338
|
|
General Counsel and
|
|
|
2007
|
|
|
|
186,946
|
|
|
|
|
|
|
|
19,006
|
|
|
|
56,741
|
|
|
|
55,296
|
|
|
|
10,602
|
|
|
|
328,591
|
|
Corporate Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anthony F. Dombrowik (6)
|
|
|
2009
|
|
|
|
173,718
|
|
|
|
|
|
|
|
72,525
|
|
|
|
|
|
|
|
|
|
|
|
8,463
|
|
|
|
254,706
|
|
Senior Vice President,
|
|
|
2008
|
|
|
|
164,980
|
|
|
|
|
|
|
|
17,323
|
|
|
|
43,658
|
|
|
|
|
|
|
|
7,702
|
|
|
|
233,663
|
|
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Represents the grant date fair value of these stock awards and
option awards. See Note 9 to our consolidated financial
statements in our Annual Report on
Form 10-K
for the year ended December 31, 2009 for information
regarding the assumptions underlying the valuation of these
equity awards. |
|
(2) |
|
Represents amounts earned under our Executive Officers Variable
Pay Plan. This plan is further discussed under the caption
VPP and Other Annual Cash Awards in the Compensation
Discussion and Analysis. |
|
(3) |
|
Amounts shown for 2009 include or represent the following
discounts accorded the executive officers from contributions
otherwise required for participation in our self-insured
medical, dental and vision plan: Mr. Narayan, $6,051;
Mr. Schweitzer, $8,463; Mr. McKeirnan, $8,463; and
Mr. Dombrowik, $8,463. The amount shown for
Mr. Schweitzer for 2009 also includes $13,902 in commuting
expenses that we paid on his behalf. The total value of all
perquisites and personal benefits received by each other
executive officer in 2009 was less than $10,000. |
|
(4) |
|
Mr. Narayans employment terminated effective
January 13, 2010. |
|
(5) |
|
Mr. Schweitzer was hired effective April 1, 2008. |
|
(6) |
|
Mr. Dombrowik was appointed as our Senior Vice President,
Chief Financial Officer on March 26, 2008. Prior to that
time, he served as our Senior Vice President, Controller. |
18
2009
Grants of Plan-Based Awards
The following table sets forth summary information regarding all
grants of plan-based awards made to our named executive officers
for the year ended December 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
Date Fair
|
|
|
|
|
|
|
Estimated Possible Payouts Under
|
|
of Shares
|
|
Value of
|
|
|
|
|
|
|
Non-Equity Incentive Plan Awards (1)
|
|
of Stock
|
|
Stock
|
|
|
|
|
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
or Units
|
|
Awards
|
Name
|
|
Type of Award
|
|
Grant Date
|
|
($)(2)
|
|
($)
|
|
($)
|
|
(#)(3)
|
|
($)
|
|
Anupam Narayan (4)
|
|
Annual Incentive Award
|
|
|
|
|
|
|
0
|
|
|
|
205,200
|
|
|
|
684,000
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock Award
|
|
|
5/21/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
73,417
|
|
|
|
331,543
|
|
George H. Schweitzer
|
|
Annual Incentive Award
|
|
|
|
|
|
|
0
|
|
|
|
59,850
|
|
|
|
199,500
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock Award
|
|
|
5/21/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,131
|
|
|
|
77,362
|
|
Thomas L. McKeirnan
|
|
Annual Incentive Award
|
|
|
|
|
|
|
0
|
|
|
|
59,565
|
|
|
|
198,550
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock Award
|
|
|
5/21/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,049
|
|
|
|
76,991
|
|
Anthony F. Dombrowik
|
|
Annual Incentive Award
|
|
|
|
|
|
|
0
|
|
|
|
49,875
|
|
|
|
166,250
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock Award
|
|
|
5/21/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,060
|
|
|
|
72,525
|
|
|
|
|
(1) |
|
These represent the Threshold, Target
and Maximum award payouts that were available for
the 2009 performance period under our Executive Officers
Variable Pay Plan (the VPP). This plan is further
discussed under the caption VPP and Other Annual Cash
Awards in the Compensation Discussion and Analysis. The
actual award payouts are reported in the Non-Equity
Incentive Plan Compensation column of the Summary
Compensation Table. |
|
(2) |
|
Award payouts for 2009 under the VPP were based on multiple
company performance goals, so we did not consider the VPP to
have any Threshold award level. If our company had
achieved the minimum level of performance required for that
achievement to result in some contribution to award payout under
the VPP, the respective percentages of base salary and award
payouts that these executives would have received would have
been as follows: Mr. Narayan, 16.2% and $55,404;
Mr. Schweitzer, 8.1% and $16,160; Mr. McKeirnan, 8.1%
and $16,083; and Mr. Dombrowik, 8.1% and $13,466. |
|
(3) |
|
These awards are restricted stock units awarded under our 2006
Stock Incentive Plan. These units will vest in equal
installments on the first four anniversaries of the grant date,
subject to continuous service with us or one of our affiliates.
When restricted stock units vest, we will issue one share of our
common stock for each unit that vests as soon as is
administratively practicable. |
|
(4) |
|
Mr. Narayans employment terminated effective
January 13, 2010. |
19
2009
Outstanding Equity Awards at Fiscal Year End
The following table sets forth summary information regarding the
outstanding equity awards held by each of our named executive
officers at December 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards (1)
|
|
|
Stock Awards (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Shares or
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Units of
|
|
|
Units of
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
|
|
|
|
|
|
Stock That
|
|
|
Stock That
|
|
|
|
Options
|
|
|
Options
|
|
|
Option
|
|
|
Option
|
|
|
Have Not
|
|
|
Have Not
|
|
|
|
(#)
|
|
|
(#)
|
|
|
Exercise Price
|
|
|
Expiration
|
|
|
Vested
|
|
|
Vested
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($)(2)
|
|
|
Anupam Narayan (3)
|
|
|
80,000
|
|
|
|
0
|
|
|
|
5.10
|
|
|
|
11/22/14
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
15,000
|
|
|
|
7.46
|
|
|
|
11/10/15
|
|
|
|
|
|
|
|
|
|
|
|
|
24,980
|
|
|
|
8,326
|
|
|
|
12.21
|
|
|
|
11/21/16
|
|
|
|
|
|
|
|
|
|
|
|
|
16,696
|
|
|
|
16,694
|
|
|
|
13.00
|
|
|
|
5/17/17
|
|
|
|
|
|
|
|
|
|
|
|
|
13,184
|
|
|
|
39,550
|
|
|
|
7.80
|
|
|
|
2/13/18
|
|
|
|
|
|
|
|
|
|
|
|
|
11,842
|
|
|
|
35,526
|
|
|
|
8.74
|
|
|
|
5/22/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
951
|
|
|
|
4,698
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,876
|
|
|
|
9,267
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,327
|
|
|
|
21,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,862
|
|
|
|
19,078
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
73,417
|
|
|
|
362,680
|
|
George H. Schweitzer
|
|
|
11,250
|
|
|
|
33,750
|
(4)
|
|
|
8.80
|
|
|
|
4/1/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,196
|
(5)
|
|
|
15,788
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,131
|
(6)
|
|
|
84,627
|
|
Thomas L. McKeirnan
|
|
|
10,451
|
|
|
|
0
|
|
|
|
5.98
|
|
|
|
7/1/13
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
0
|
|
|
|
5.10
|
|
|
|
11/19/14
|
|
|
|
|
|
|
|
|
|
|
|
|
3,750
|
|
|
|
3,750
|
(7)
|
|
|
7.46
|
|
|
|
11/10/15
|
|
|
|
|
|
|
|
|
|
|
|
|
8,586
|
|
|
|
2,861
|
(8)
|
|
|
12.21
|
|
|
|
11/21/16
|
|
|
|
|
|
|
|
|
|
|
|
|
6,508
|
|
|
|
6,506
|
(9)
|
|
|
13.00
|
|
|
|
5/17/17
|
|
|
|
|
|
|
|
|
|
|
|
|
5,500
|
|
|
|
16,500
|
(10)
|
|
|
8.74
|
|
|
|
5/22/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
326
|
(11)
|
|
|
1,610
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
732
|
(12)
|
|
|
3,616
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,794
|
(13)
|
|
|
8,862
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,049
|
(6)
|
|
|
84,222
|
|
Anthony F. Dombrowik
|
|
|
7,525
|
|
|
|
0
|
|
|
|
5.98
|
|
|
|
6/23/13
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
0
|
|
|
|
5.10
|
|
|
|
11/19/14
|
|
|
|
|
|
|
|
|
|
|
|
|
2,500
|
|
|
|
2,500
|
(7)
|
|
|
7.46
|
|
|
|
11/10/15
|
|
|
|
|
|
|
|
|
|
|
|
|
6,511
|
|
|
|
2,170
|
(8)
|
|
|
12.21
|
|
|
|
11/21/16
|
|
|
|
|
|
|
|
|
|
|
|
|
4,624
|
|
|
|
4,623
|
(9)
|
|
|
13.00
|
|
|
|
5/17/17
|
|
|
|
|
|
|
|
|
|
|
|
|
4,606
|
|
|
|
13,815
|
(10)
|
|
|
8.74
|
|
|
|
5/22/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
247
|
(11)
|
|
|
1,220
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
520
|
(12)
|
|
|
2,569
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,502
|
(13)
|
|
|
7,420
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,060
|
(6)
|
|
|
79,336
|
|
|
|
|
(1) |
|
The vesting of unvested options and restricted stock units is
subject to continuous service with us or one of our affiliates
through the respective scheduled dates of vesting disclosed in
the footnotes to this table. Under certain circumstances, these
vesting dates may be accelerated. See Employment
Agreements; Severance and Change of Control Arrangements. |
|
(2) |
|
The value of these restricted stock units is calculated by
multiplying the number of unvested units by $4.94, the closing
market price of our common stock on December 31, 2009. |
20
|
|
|
(3) |
|
Mr. Narayans employment terminated effective
January 13, 2010. All of his stock awards shown in the
above table vested in full immediately upon such termination,
and all of the shares underlying those awards, net of shares
withheld to satisfy tax withholding obligations, were issued to
him on January 29, 2010. All of the option awards shown in
the above table expired unexercised in accordance with their
terms, except for the option for 80,000 shares at an
exercise price of $5.10 per share, which we agreed would remain
exercisable until July 30, 2010. |
|
(4) |
|
This option vested as to one-third of the remaining shares on
April 1, 2010 and will vest as to the remaining shares in
two equal installments on the next two anniversaries of that
date. |
|
(5) |
|
This restricted stock unit award vested as to one-third of the
remaining shares on April 1, 2010 and will vest as to the
remaining shares in two equal installments on the next two
anniversaries of that date. |
|
(6) |
|
Each of these restricted stock unit awards will vest in four
equal installments on May 21, 2010 and the next three
anniversaries of that date. |
|
(7) |
|
Each of these options will vest as to the remaining shares on
November 10, 2010. |
|
(8) |
|
Each of these options will vest as to the remaining shares on
November 21, 2010. |
|
(9) |
|
Each of these options will vest as to the remaining shares in
two equal installments on May 17, 2010 and May 17,
2011. |
|
(10) |
|
These options will vest as to the remaining shares in three
equal installments on May 22, 2010 and the next two
anniversaries of that date. |
|
(11) |
|
Each of these restricted stock unit awards will vest on
November 21, 2010. |
|
(12) |
|
Each of these restricted stock unit awards will vest in two
equal installments on May 17, 2010 and May 17, 2011. |
|
(13) |
|
Each of these restricted stock unit awards will vest in three
equal installments on May 22, 2010 and the next two
anniversaries of that date. |
21
2009
Option Exercises and Stock Vested
The following table summarizes the option exercises and vesting
of stock awards for each of our named executive officers for the
year ended December 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of
|
|
|
|
Number of
|
|
|
|
|
Shares
|
|
Value
|
|
Shares
|
|
|
|
|
Acquired
|
|
Realized
|
|
Acquired
|
|
Value Realized
|
|
|
on Exercise
|
|
on Exercise
|
|
on Vesting
|
|
on Vesting
|
Name
|
|
(#)
|
|
($)
|
|
(#)
|
|
($)(1)
|
|
Anupam Narayan (2)
|
|
|
0
|
|
|
|
0
|
|
|
|
4,616
|
|
|
|
19,043
|
|
George H. Schweitzer
|
|
|
0
|
|
|
|
0
|
|
|
|
1,065
|
|
|
|
3,142
|
|
Thomas L. McKeirnan
|
|
|
0
|
|
|
|
0
|
|
|
|
1,288
|
|
|
|
6,191
|
|
Anthony F. Dombrowik
|
|
|
0
|
|
|
|
0
|
|
|
|
1,007
|
|
|
|
4,842
|
|
|
|
|
(1) |
|
All of these stock awards were restricted stock units. The value
of the shares of common stock acquired upon vesting of these
units is calculated by multiplying the number of shares by the
closing market price of our common stock on the date the units
vested. |
|
(2) |
|
Mr. Narayans employment terminated effective
January 13, 2010. |
Employment
Agreements; Severance and Change of Control
Arrangements
Interim
President and Chief Executive Officer
On January 13, 2010, Jon E. Eliassen was appointed to serve
as our interim President and Chief Executive Officer. He
previously had served on our Board as an independent director
since 2003. Under an at-will unwritten employment agreement,
Mr. Eliassens salary for 2010 is $360,000. In
addition, he is separately compensated for service as a director
on the same basis and under the same terms and conditions as our
non-employee directors. Mr. Eliassen does not participate
in our Executive Officers Variable Pay Plan (VPP),
does not receive any equity awards outside of those granted to
him in his capacity as a director, and is not entitled to any
severance upon termination of his employment.
Employment
Agreements with Other Executive Officers
We have written employment agreements with George H. Schweitzer,
Thomas L. McKeirnan and Anthony F. Dombrowik that provided for
2010 base salaries of $210,000, $209,000 and $175,000
respectively. In early 2009, in conjunction with a company-wide
5% reduction of salaries for all salaried employees, the
agreements with our executives were amended to reduce the base
salaries by 5% for the remainder of the first six months of
2009. Each of our executives indicated his willingness to
continue to receive this reduced level of base salary so long as
the company-wide 5% salary reduction remained in place. The
agreements with our executives were subsequently amended on
July 1, 2009 to continue the reduced salary levels during
the last six months of 2009, and on January 1, 2010 to
continue the reduced salary levels for all of 2010.
The following is a summary of the other material terms of these
employment agreements.
Term
of Agreements; Restrictive Covenants
Each of these executives will serve in his current position
through December 31, 2010, unless his agreement terminates
earlier in accordance with its terms. Thereafter, each agreement
automatically renews for additional one-year periods, unless
terminated by either party upon
120-days
notice (a Non-renewal Notice) prior to the end of
the initial or any renewal period. If not terminated earlier,
the agreements with Messrs. Schweitzer and Dombrowik will
terminate automatically on May 31, 2012. Following
termination of an agreement for any reason, the executive will
generally be prohibited from competing with us for a period of
one year or soliciting any of our employees for a period of two
years.
22
Annual
Bonuses
If an executive officer attains the target performance measures
determined under our VPP for a particular year, he must be
eligible, subject to any discretion accorded the Compensation
Committee under the terms of the VPP to withhold a bonus
otherwise payable, to receive a bonus equal to at least 30%
percent of his base salary for that year.
No bonuses will be awarded under the VPP for 2009. The maximum
bonuses available under the VPP for 2010, measured as a
percentage of base salary, are 100% for each of
Messrs. Schweitzer, McKeirnan and Dombrowik. The maximum
goals and corresponding bonus levels for 2010 were increased
over those determined for 2009 in order to incentivize higher
achievement.
Severance
Arrangements
If we deliver a Non-Renewal Notice to Mr. Schweitzer,
McKeirnan or Dombrowik or terminate his agreement without cause,
or if one of these executives terminates his agreement for good
reason within six months following the occurrence of the event
that constitutes good reason, then:
|
|
|
|
|
any stock options held by the executive will immediately vest
and be exercisable, except that, in the case of
Messrs. Schweitzer and Dombrowik, this will not apply to
any stock option for which the exercise price is more than 10%
higher than the closing market price of our common stock on the
date of termination;
|
|
|
|
any stock granted to the executive will immediately vest, all
restrictions on restricted stock issued to the executive will
terminate, and any restricted stock awarded but not yet issued
to the executive will be issued;
|
|
|
|
we must provide a lump-sum severance payment equal to cash
compensation for the prior year (but not less than his total
annual base salary rate), plus the target award amount available
under the VPP for the year in which the termination occurs
(prorated for the portion of the year elapsed at the time of
termination), plus a continuation of all life, health and
insurance benefits for a one-year period; and
|
|
|
|
to the extent that the foregoing severance payments or benefits
received by an executive are deemed excess parachute
payments within the meaning of Section 280G(b)(1) of
the Internal Revenue Code of 1986, as amended (the
Code), and thereby result in the imposition upon the
executive of the excise tax imposed by Section 4999 of the
Code, we must pay the executive an additional amount (the
Gross-Up
Payment) such that the net amount retained by the
executive, after deduction of (i) any excise tax payable on
such excess parachute payments and the
Gross-Up
Payment, and (ii) any federal, state and local income and
employment taxes payable on the
Gross-Up
Payment, is the same as it would have been if such excise tax
had not been imposed.
|
The circumstances that constitute good reason
entitling an executive to severance benefits following a
voluntary termination of employment generally relate to:
(i) assignment to the executive of duties materially
inconsistent with the executives positions and
responsibilities as described in the agreement; (ii) the
removal of the executive from such positions; (iii) any
material continuing breach of the agreement;
and/or
(iv) a change in our headquarters office location. However,
the executive will not have good reason unless the executive
gives us written notice that the specified conduct or event has
occurred giving rise to his having good reason, and we fail to
cure such conduct or event within 30 days after receipt of
such notice.
If the employment of Messrs. Schweitzer, McKeirnan and
Dombrowik had terminated immediately following the end of our
fiscal year ended December 31, 2009 under circumstances
entitling them to the severance benefits described above, the
lump-sum severance payments payable to the executive officers,
and the value of the other severance benefits they would have
received, would have been as shown in the following table (due
to the fact that
23
there would have been no excess parachute payments on the
assumed date of termination, no
Gross-Up
Payments would have been payable with respect to such
terminations):
Table of
Severance Payments and Benefits
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
|
|
|
Accelerated
|
|
|
Life, Health
|
|
|
|
|
|
|
Severance
|
|
|
Stock
|
|
|
Restricted
|
|
|
and Insurance
|
|
|
|
|
Name
|
|
Payment (1)(2)
|
|
|
Options (3)
|
|
|
Stock Units (4)
|
|
|
Benefits (5)
|
|
|
Total (6)
|
|
|
George H. Schweitzer
|
|
$
|
210,000
|
|
|
$
|
0
|
|
|
$
|
100,415
|
|
|
$
|
13,714
|
|
|
$
|
324,129
|
|
Thomas L. McKeirnan
|
|
$
|
209,000
|
|
|
$
|
0
|
|
|
$
|
98,310
|
|
|
$
|
13,714
|
|
|
$
|
321,024
|
|
Anthony F. Dombrowik
|
|
$
|
175,000
|
|
|
$
|
0
|
|
|
$
|
90,545
|
|
|
$
|
13,714
|
|
|
$
|
279,259
|
|
|
|
|
(1) |
|
The severance payment for each of Messrs. Schweitzer,
McKeirnan and Dombrowik equals his total cash compensation for
2009 (but not less than his total annual base salary rate
without taking into account the 5% reduction in salaries that
was effective in 2009). |
|
(2) |
|
If the termination of employment entitling an executive officer
to a severance payment and other severance benefits occurs other
than at the beginning of a fiscal year, the executive officer
will receive, in addition to the amount set forth in this
column, the target award amount available to him under the VPP
for the year in which the termination occurs (prorated for the
portion of the year elapsed at the time of termination). The
target award amounts available to the executive officers for
2009 were as follows: Mr. Schweitzer, $59,850;
Mr. McKeirnan, $59,565; and Mr. Dombrowik, $49,875. |
|
(3) |
|
The acceleration of the stock options would have resulted in no
value to the executive officers, because the exercise prices of
all of their stock options was greater than $4.94, the closing
market price of our common stock on December 31, 2009. |
|
(4) |
|
The value of the accelerated restricted stock units is
calculated by multiplying the number of unvested units by $4.94,
the closing market price of our common stock on
December 31, 2009. |
|
(5) |
|
The value of the continuation of benefits under our self-insured
medical, dental and vision plan is estimated based on the
average per-employee cost of that plan for various categories of
employees in 2009. |
|
(6) |
|
Assumes that no amounts described in footnote 2 to this table
are paid in connection with the termination of employment
entitling the executive officers to severance payments and other
severance benefits. |
The following table shows the severance payments and benefits
paid or accrued in connection with the termination of the
employment of Anupam Narayan, our former President and Chief
Executive Officer, effective January 13, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Modification
|
|
Accelerated
|
|
Life, Health
|
|
|
Severance
|
|
of Stock
|
|
Restricted
|
|
and Insurance
|
|
|
Payment
|
|
Options
|
|
Stock Units
|
|
Benefits
|
|
Total
|
|
$
|
727,693
|
|
|
$
|
59,200
|
|
|
$
|
407,807
|
|
|
$
|
20,607
|
|
|
$
|
1,215,307
|
|
Change
of Control Arrangements
If our company undergoes a change of control as defined in the
respective employment agreements of Messrs. Schweitzer,
McKeirnan and Dombrowik, then all of the stock options held by
Mr. McKeirnan, and any of the stock options held by
Messrs. Schweitzer and Dombrowik for which the exercise
price is not more than 10% higher than the closing market price
of our common stock on the date of the change of control, will
vest and become exercisable; any stock granted to the executives
will immediately vest; all restrictions on restricted stock
issued to the executives will terminate; and any restricted
stock awarded but not yet issued to the executives will be
issued. If a change of control had occurred on December 31,
2009, the value of the acceleration of these equity awards would
have been as shown in the above Table of Severance Payments and
Benefits.
24
DIRECTOR
COMPENSATION
We pay our Chairman of the Board an annual retainer of $70,000.
We also pay or reimburse him for the cost of his office space
and provide coverage to him and his domestic partner under our
self-insured medical, dental and vision plan. We pay each of our
other non-employee directors an annual retainer of $30,000. The
chair of the Audit Committee receives an additional annual fee
of $20,000. The chairs of each of the Compensation Committee and
the Nominating and Corporate Governance Committee receive an
additional annual fee of $15,000. Non-chair members of these
committees receive an additional $5,000 annual fee for each
committee on which they serve. All director fees are generally
payable in advance in cash in equal quarterly installments.
However, since the second quarter of 2009, director fees have
been reduced by 5% and paid by issuance of shares of our common
stock having a value equal to the applicable fee amounts. Until
changed by the Board, director fees for future quarters will
also be reduced by 5% and paid by issuance of our common stock.
In addition to annual fees, each non-employee director is
entitled to receive, as soon as reasonably practical after each
annual meeting of our shareholders while he continues to serve
as a director, a grant of shares of our common stock that, based
on the closing market price on the last trading day prior to the
annual meeting, have a value of $25,000.
In addition to the annual fees and stock grants, it is our
policy to reimburse directors for their
out-of-pocket
expenses incurred in connection with their service on the Board
and its committees.
Mr. Eliassen, our interim President and Chief Executive
Officer, is separately compensated for service as a director on
the same basis and under the same terms and conditions as our
non-employee directors.
2009 Director
Compensation Table
The following table shows compensation of the non-employee
members of our Board for 2009:
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned
|
|
Fees Earned
|
|
Stock
|
|
All Other
|
|
|
|
|
or Paid in
|
|
or Paid in
|
|
Awards
|
|
Compensation
|
|
Total
|
Name
|
|
Cash ($)
|
|
Stock ($)
|
|
($)(1)(2)
|
|
($)
|
|
($)
|
|
Donald K. Barbieri
|
|
|
17,500
|
|
|
|
49,875
|
|
|
|
23,750
|
|
|
|
20,649
|
(3)
|
|
|
111,774
|
|
Richard L. Barbieri
|
|
|
7,500
|
|
|
|
21,375
|
|
|
|
23,750
|
|
|
|
0
|
|
|
|
52,625
|
|
Raymond R. Brandstrom
|
|
|
0
|
|
|
|
3,950
|
|
|
|
11,875
|
|
|
|
0
|
|
|
|
15,825
|
|
Ryland P. Davis
|
|
|
10,000
|
|
|
|
28,500
|
|
|
|
23,750
|
|
|
|
0
|
|
|
|
62,250
|
|
Jon E. Eliassen
|
|
|
12,500
|
|
|
|
35,625
|
|
|
|
23,750
|
|
|
|
0
|
|
|
|
71,875
|
|
Peter F. Stanton
|
|
|
15,000
|
|
|
|
42,750
|
|
|
|
23,750
|
|
|
|
0
|
|
|
|
81,500
|
|
Ronald R. Taylor
|
|
|
13,750
|
|
|
|
39,186
|
|
|
|
23,750
|
|
|
|
0
|
|
|
|
76,686
|
|
|
|
|
(1) |
|
On May 21, 2009, each director named above other than Mr.
Brandstrom received a grant of 5,086 unrestricted shares of our
common stock. Mr. Brandstrom received a prorated grant of 2,361
unrestricted shares of our common stock on November 11,
2009, when he was first appointed to the Board. The amounts
shown in this column represent the grant date fair value of
these stock awards. We recognized the full value of these awards
as compensation expense in 2009 for financial reporting purposes. |
|
(2) |
|
At December 31, 2009, Messrs. Stanton and Taylor each
held options to acquire 1,000 shares of our common stock.
At that date, none of our other non-employee directors held
options to acquire our common stock. |
|
(3) |
|
Represents $13,200 that we paid or reimbursed Mr. Barbieri
for the cost of his office space during 2009 plus $7,449 as the
estimated value of coverage under our self-insured medical,
dental and vision plan. |
25
REPORT OF
THE AUDIT
COMMITTEE3
The Audit Committee oversees our companys financial
reporting process on behalf of the Board. Management has the
primary responsibility for the financial statements and the
reporting process including the systems of internal controls. In
fulfilling its oversight responsibilities, the committee
reviewed and discussed the audited financial statements with
management.
The committee discussed with BDO Seidman, LLP the matters
required to be discussed by the Statement on Auditing Standards
No. 114, as adopted by the Public Company Accounting
Oversight Board in Rule 3200T.
The committee also received the written disclosures and the
letter from BDO Seidman, LLP required by applicable requirements
of the Public Company Accounting Oversight Board regarding the
independent accountants communications with the committee
concerning independence, and has discussed with BDO Seidman, LLP
the committees independence.
In reliance on the reviews and discussions referred to above,
the committee recommended to the Board that the audited
financial statements be included in the Annual Report on
Form 10-K
for the year ended December 31, 2009 for filing with the
Securities and Exchange Commission. The committee and the Board
have also recommended, subject to shareholder ratification, the
selection of BDO Seidman, LLP as our independent registered
public accounting firm for 2010.
Respectfully submitted,
Audit Committee of the Board of Directors
Peter F. Stanton, Chairman
Raymond R. Brandstrom
Ryland P. Davis
Ronald R. Taylor
March 23, 2010
PRINCIPAL
ACCOUNTANT FEES AND SERVICES
Fees
Paid
BDO Seidman, LLP billed our company the amounts shown in the
table below for professional services performed during 2008 and
2009:
|
|
|
|
|
|
|
|
|
Services Rendered
|
|
2008
|
|
|
2009
|
|
|
Audit Fees (1)
|
|
$
|
594,000
|
|
|
$
|
595,000
|
|
Audit-Related Fees (2)
|
|
|
24,500
|
|
|
|
37,000
|
|
|
|
|
|
|
|
|
|
|
Total Audit and Audit-Related Fees
|
|
|
618,500
|
|
|
|
632,000
|
|
Tax Fees (3)
|
|
|
153,775
|
|
|
|
173,006
|
|
All Other Fees (4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Fees
|
|
$
|
772,275
|
|
|
$
|
805,006
|
|
|
|
|
|
|
|
|
|
|
3 The
material in this report is not soliciting material, is not
deemed filed with the Securities and Exchange Commission and is
not incorporated by reference in any of our filings under the
Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, whether made on, before, or after the
date of this Proxy Statement and irrespective of any general
incorporation language in such filing.
26
|
|
|
(1) |
|
The audit fees covered the annual audit of our financial
statements, Sarbanes-Oxley compliance work and quarterly
reviews; and the audit of certain hotel properties. The audit
fees for 2008 also covered review of an SEC comment letter. |
|
(2) |
|
The audit-related fees covered audit and attest services
required by agreement on entities we consolidate, but not
required by statute or a regulatory body. They also covered the
audit of our employee benefit plan. |
|
(3) |
|
The tax fees covered tax returns, year-end tax planning and tax
advice. They also covered an IRS exam in 2008 and a cost
segregation study in 2009. |
|
(4) |
|
BDO Seidman, LLP did not bill us for any other professional
services rendered during 2008 or 2009, and it did not provide
our company during either of those years any professional
services described in paragraph (c)(4) of
Rule 2-01
of
Regulation S-X. |
Pre-Approval
Policies and Procedures
The Audit Committee is responsible for selecting, setting
compensation and overseeing the work of our independent
registered public accounting firm. The committee has adopted a
policy that requires advance approval of audit, audit-related,
tax, and other services (audit and non-audit
services) performed by the independent registered public
accounting firm.
The committee has delegated to its chairman authority to approve
permitted services provided that the chairman reports any
decisions to the committee at its next regularly scheduled
meeting. On an ongoing basis, management communicates specific
projects and categories of services for which the advance
approval of the committee or chairman is requested. The
committee or chairman reviews these requests and advises
management if the engagement services of the independent
registered public accounting firm are approved. On a periodic
basis, management reports to the committee actual spending for
audit and non-audit services compared to approved amounts.
Auditor
Independence
The Audit Committee has considered whether and determined that
the other professional services provided by BDO Seidman, LLP are
compatible with maintaining its independence.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Under our written Statement of Policy with respect to Related
Party Transactions, a related party transaction (as defined
below) may be consummated or may continue only if the Audit
Committee of our Board, or in certain cases the full Board,
approves or ratifies the transaction in accordance with the
guidelines set forth in the policy. The policy applies to the
following related parties:
|
|
|
|
|
our directors;
|
|
|
|
any of our executive or other officers who are required by
Section 16(a) of the Securities Exchange Act of 1934, as
amended, to file reports of ownership and changes in ownership
of our common stock with the Securities and Exchange Commission;
|
|
|
|
any person who is the beneficial owner of more than 5% of our
common stock;
|
|
|
|
any immediate family member, as defined in the policy, of any of
the foregoing persons; and
|
|
|
|
any entity that is owned or controlled in substantial part by
any of the foregoing persons.
|
Related party transaction is defined in the policy
as a transaction between us and any of the foregoing persons.
Under the policy, the following transactions are deemed to be
automatically pre-approved:
|
|
|
|
|
any compensation paid to a related party that has been approved
by the Compensation Committee;
|
27
|
|
|
|
|
any charitable contribution, grant or endowment by us to a
charitable organization, foundation or university at which a
related partys only relationship is as an employee (other
than an executive officer) or a director, if the aggregate
amount involved does not exceed the lesser of $50,000 or two
percent of the charitable organizations total annual
receipts;
|
|
|
|
any transaction where the related partys interest arises
solely from the ownership of our common stock and all holders of
our common stock receive the same benefit on a pro rata basis
(e.g. dividends);
|
|
|
|
any transaction where the related partys interest arises
solely from participation in an employee benefit plan maintained
by us for the general benefit of all of our employees; and
|
|
|
|
any transaction with a related party involving services as a
bank depositary of funds, transfer agent, registrar, trustee
under a trust indenture, or similar services.
|
Transactions
with Related Parties
Information is set forth below regarding certain related party
transactions that occurred during 2009 or that are anticipated
to occur during or following 2010. All of such transactions were
reviewed and approved or ratified in accordance with our
Statement of Policy with respect to Related Party Transactions.
Goodale &
Barbieri Company
Goodale & Barbieri Company (G&B) was
previously a wholly owned subsidiary of ours through which we
conducted the management, leasing, brokerage and development
portion of our former real estate division. In 2006, Thomas M.
Barbieri, the brother of Donald K. Barbieri and Richard L.
Barbieri, and another individual acquired G&B from us in a
transaction approved by our four independent directors.
During 2009 we paid G&B $39,000 for management of the
Kalispell Center and $12,000 for management of certain other
properties. We expect to pay G&B additional management fees
in the future. We believe that Thomas M. Barbieri owns 90% of
G&B, so that the approximated dollar value of his interest
in all of these transactions between G&B and us would be
90% of the respective total amounts disclosed.
David
Barbieri
David Barbieri serves as our Vice President, Information
Technology. He has been with our company since 1996 and has
served as our Vice President, Information Technology, since
2000. He was previously a Manufacturing Engineer at Exabyte
Corporation in Boulder, Colorado from 1993 to 1996 after
graduating from Colorado University with a degree in Mechanical
Engineering. He is the son of Donald K. Barbieri. The aggregate
amount of salary and bonus that we paid David Barbieri for 2009
was $137,435. His 2010 base salary is $130,142 and his target
bonus opportunity for 2010 is 30% of this salary.
28
PROPOSALS OF
SHAREHOLDERS
Proposals of shareholders to be considered for inclusion in the
Proxy Statement and proxy for our 2011 Annual Meeting of
Shareholders must be received by us on or prior to
December 14, 2010.
A shareholder of record, who intends to submit a proposal at the
2011 Annual Meeting of Shareholders that is not eligible for
inclusion in the Proxy Statement or proxy, or who intends to
submit one or more nominations for directors at the meeting,
must provide us prior written notice. Written notice of any such
proposal or nominations should be addressed to our Secretary and
received at our principal executive office at 201 West
North River Drive, Suite 100, Spokane, Washington 99201 not
later than December 14, 2010. The written notice must
satisfy certain requirements specified in our By-laws, which are
included in the excerpt from the By-Laws attached as
Appendix B to this Proxy Statement. A complete copy of our
By-laws will be sent to any shareholder upon written request to
our Secretary.
ANNUAL
REPORT ON
FORM 10-K
A copy of our Annual Report on
Form 10-K
for the year ended December 31, 2009 as filed with the
Securities and Exchange Commission is being mailed with this
Proxy Statement to each shareholder of record. Shareholders not
receiving a copy of such Annual Report may obtain one without
charge by writing or calling our Secretary, 201 West North
River Drive, Suite 100, Spokane, Washington 99201 ((509)
459-6100).
By Order of the Board of Directors
Thomas L. McKeirnan
Secretary
Spokane, Washington
April 15, 2010
29
APPENDIX A
Corporate
Governance Guidelines Regarding Director
Qualifications
Director
Qualification Standards
1. The Nominating and Corporate Governance Committee is
responsible for recommending to the Board (1) nominees for
Board membership to fill vacancies or newly created positions
and (2) the persons to be nominated by the Board for
election at our companys annual meeting of shareholders.
2. In connection with the selection and nomination process,
the Nominating and Corporate Governance Committee shall review
the desired experience, mix of skills and other qualities to
assure appropriate Board composition, taking into account the
current Board members and the specific needs of our company and
the Board. The Board will generally look for individuals who
have displayed high ethical standards, integrity and sound
business judgment. This process is designed to ensure that the
Board includes members with diverse backgrounds, skills and
experience, including appropriate financial and other expertise
relevant to the business of our company.
3. Independent Directors must comprise a majority of the
Board.
4. A director will not be an Independent
Director if any of the following situations set forth in
the following categories apply:
(a) the director has been an employee of our company, or
any of its consolidated subsidiaries, during the last three
years, or the director has an Immediate Family Member who is, or
who has been during the last 3 years, an executive officer
of our company;
(b) the director or the directors Immediate Family
Member has received more than $120,000 per year in direct
compensation from our company, or any of its consolidated
subsidiaries, other than director and committee fees and pension
or other forms of deferred compensation for prior service
(provided such compensation is not contingent in any way on
continued service) during any twelve-month period within the
last three years;
(c) (i) the director is a current partner or employee
of a firm that is our companys independent auditor,
(ii) the director has an immediate Family Member who is a
current partner of such a firm, (iii) the director has an
Immediate Family Member who is a current employee of such a firm
and personally works on our companys audit, or
(iv) the director or an Immediate Family Member was within
the last three years (but is no longer) a partner or employee of
such a firm and personally worked on our companys audit
within that time;
(d) the director or the directors Immediate Family
Member is, or during the last three years, has been, part of an
interlocking directorate in which a current executive officer of
our company, or any of its consolidated subsidiaries, served on
the compensation committee of another company that concurrently
employed the director (or any of his or her Immediate Family
Members) as an executive officer;
(e) the director is a current employee, or the
directors Immediate Family member is a current executive
officer of a company that makes payments to, or receives
payments (exclusive of charitable contributions that the Company
discloses on its website or in its annual proxy statement) from,
our company, or any of its consolidated subsidiaries, for
property or services in an amount which, in any of the last
three fiscal years, exceeds the greater of $1 million, or
2% of the consolidated gross revenues of such other company;
(f) the director has a material relationship with our
company, or any of its consolidated subsidiaries, either
directly or as a partner, shareholder or officer of an
organization that has a material relationship with our company,
or any of its consolidated subsidiaries. For this purpose,
material relationship is defined as one in which the
person, or an entity of which the director (or the
directors Immediate Family Member) is an employee, makes
payments to, or receives payments from, our company for property
or services in an amount which, in any single fiscal year,
exceeds the greater of $1 million, or 2% of such other
entitys consolidated gross revenues.
A-1
5. In addition to satisfying all of the independence
criteria set forth in paragraph 4 of this Section, all
members of the Audit Committee must also meet the following
requirements:
(a) A member of the Audit Committee may not receive
consulting, advisory or other compensatory fees from our
company, or any of its consolidated subsidiaries, other than in
his or her capacity as a member of the Audit Committee, the
Board of Directors, or any other committee of the Board
(compensatory fees do not include the receipt of fixed amounts
under a retirement plan (including deferred compensation) for
prior service with our company or any of its consolidated
subsidiaries, provided that such compensation is not contingent
in any way on continued service).
(b) No member of the Audit Committee may be an
affiliated person of our company, or any of its
consolidated subsidiaries, as such term is defined by the
Securities and Exchange Commission.
6. The number of boards on which a director may sit may be
reviewed on a
case-by-case
basis by the Board.
7. The Board has not established term limits for directors.
Although term limits can promote the inclusion on the Board of
people with diverse perspectives, the process described in
paragraph 2 of this Section can achieve the same result.
Moreover, term limits have the disadvantage of causing our
company to lose the contributions of directors who have been
able to develop, over a period of time, increasing insight into
our company and its operations, thereby increasing their
contributions to our company. However, in order to promote both
continuity and turnover, and to further the expectation that
Board members will be very actively involved in both the affairs
of our company and the communities which our company serves, the
Board will normally not nominate a person who would be serving
on the Board after the age of 75.
8. Each director shall be obligated to notify the Chairman
of the Board of our company promptly upon learning of any fact
which causes such director not to be considered an Independent
Director, as set forth in paragraph 4 above, or if any
entity of which such director is an officer or director becomes
a competitor of our company. The Nominating and Corporate
Governance Committee shall review the situation and make a
prompt recommendation to the Board.
A-2
APPENDIX B
Provisions
of By-Laws Regarding Director Nominations
Section 3.3 Nominations and Qualifications of
Directors.
(1) Nominations of candidates for election as directors at
an annual meeting of shareholders may only be made (i) by,
or at the direction of, the Board of Directors or (ii) by
any shareholder of the Corporation who is entitled to vote at
the meeting and who complies with the procedures set forth in
the remainder of this Section 3.3.
(2) If a shareholder proposes to nominate one or more
candidates for election as directors at an annual meeting, the
shareholder must have given timely notice thereof to the
Secretary of the Corporation. To be timely, a shareholders
notice must be delivered to, or mailed and received at, the
Principal Office (i) not less than one hundred twenty
(120) days prior to the first anniversary of the date that
the Corporations proxy statement was released to
shareholders in connection with the previous years annual
meeting; (ii) a reasonable time before the Corporation
begins to print and mail its proxy materials if the date of this
years annual meeting has been changed by more than thirty
(30) days from the date of the previous years
meeting; or (iii) not more than seven (7) days
following the delivery to shareholders of the notice of annual
meeting with respect to the current years annual meeting,
if the Corporation did not release a proxy statement to
shareholders in connection with the previous years annual
meeting, or if no annual meeting was held during such year.
(3) A shareholders notice to the Secretary under
Section 3.3(2) shall set forth, as to each person whom the
shareholder proposes to nominate for election as a director
(i) the name, age, business address and residence address
of such person, (ii) the principal occupation or employment
of such person, (iii) the number and class of shares of
stock of the Corporation that are beneficially owned on the date
of such notice by such person and (iv) if the Corporation
at such time has a class of securities registered pursuant to
Section 12 of the Securities Exchange Act of 1934, as
amended (the Exchange Act), any other information
relating to such person required to be disclosed in
solicitations of proxies with respect to nominees for election
as directors pursuant to Regulation 14A under the Exchange
Act, including but not limited to information required to be
disclosed by Schedule 14A of Regulation 14A, and any
other information that the shareholder would be required to file
with the Securities and Exchange Commission in connection with
the shareholders nomination of such person as a candidate
for director or the shareholders opposition to any
candidate for director nominated by, or at the direction of, the
Board of Directors. In addition to the above information, a
shareholders notice to the Secretary under
Section 3.3(2) shall (A) set forth (i) the name
and address, as they appear on the Corporations books, of
the shareholder and of any other shareholders that the
shareholder knows or anticipates will support any candidate or
candidates nominated by the shareholder and (ii) the number
and class of shares of stock of the Corporation that are
beneficially owned on the date of such notice by the shareholder
and by any such other shareholders and (B) be accompanied
by a statement in the form of a record, executed and
acknowledged by each candidate nominated by the shareholder,
that the candidate agrees to be so nominated and to serve as a
director of the Corporation if elected at the annual meeting.
(4) The Board of Directors, or a designated committee
thereof, may reject any shareholders nomination of one or
more candidates for election as directors if the nomination is
not made pursuant to a shareholders notice timely given in
accordance with the terms of Section 3.3(2). If the Board of
Directors, or a designated committee thereof, determines that
the information provided in a shareholders notice does not
satisfy the requirements of Section 3.3(3) in any material
respect, the Secretary of the Corporation shall notify the
shareholder of the deficiency in the notice. The shareholder
shall have an opportunity to cure the deficiency by providing
additional information to the Secretary within such period of
time, not to exceed five (5) days from the date such
deficiency notice is given to the shareholder, as the Board of
Directors or such committee shall reasonably determine. If the
deficiency is not cured within such period, or if the Board of
Directors or such committee determines that the additional
information provided by the shareholder, together with
information previously provided, does not satisfy the
requirements of Section 3.3(3) in any material respect,
then the Board of Directors or such committee may reject the
shareholders notice.
(5) Notwithstanding the procedures set forth in
Section 3.3(4), if a shareholder proposes to nominate one
or more candidates for election as directors at an annual
meeting, and neither the Board of Directors nor any committee
thereof has made a prior determination of whether the
shareholder has complied with the procedures set forth in this
B-1
Section 3.3 in connection with such nomination, then the
chairman of the annual meeting shall determine and declare at
the annual meeting whether the shareholder has so complied. If
the chairman determines that the shareholder has so complied,
then the chairman shall so state and ballots shall be provided
for use at the meeting with respect to such nomination. If the
chairman determines that the shareholder has not so complied,
then, unless the chairman, in his or her sole and absolute
discretion, determines to waive such compliance, the chairman
shall state that the shareholder has not so complied and the
defective nomination shall be disregarded.
(6) All directors of the Corporation shall be at least
twenty-one years of age. Directors need not be shareholders or
residents of the State of Washington. At each meeting of
shareholders for the election of directors at which a quorum is
present, the persons receiving a plurality of the votes cast
shall be elected directors.
B-2
ANNUAL MEETING OF SHAREHOLDERS OF
RED LION HOTELS CORPORATION
May 19, 2010
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL:
The Notice of Meeting, proxy statement and proxy card
are available at http://investor.shareholder.com/rlhcorp/annuals.cfm
Please sign, date and mail
your proxy card in the
envelope provided as soon
as possible.
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Please detach along perforated line and mail in the envelope provided. |
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g 20330000000000000000 9 |
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051910 |
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PLEASE
SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK
YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x
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1. To elect three directors to the Board of Directors: |
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FOR |
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c FOR ALL NOMINEES
c WITHHOLD AUTHORITY
FOR ALL NOMINEES
c FOR ALL EXCEPT
(See instructions below)
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NOMINEES:
O Donald K. Barbieri
O Raymond R. Brandstrom
O Ronald
R. Taylor
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2. RATIFICATION OF APPOINTMENT OF BDO SEIDMAN,
LLP TO SERVE AS OUR INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM FOR 2010.
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THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN. EXCEPT AS OTHERWISE DIRECTED, THIS PROXY WILL
BE VOTED FOR THE ELECTION OF ALL DIRECTORS LISTED IN PROPOSAL 1
AND FOR PROPOSAL 2, AND IT WILL BE VOTED IN THE DISCRETION OF THE
PROXIES ON ALL OTHER MATTERS THAT MAY PROPERLY COME BEFORE
THE MEETING.
The Board of Directors recommends a vote FOR ALL NOMINEES listed in
Proposal 1 and FOR Proposal 2.
TO INCLUDE ANY COMMENTS, USE THE COMMENTS BOX ON THE REVERSE
SIDE HEREOF. |
INSTRUCTIONS:
To withhold authority to vote for any individual nominee(s),
mark FOR ALL EXCEPT
and fill in the circle next to each nominee you wish to withhold, as
shown here: n
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To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that
changes to the registered name(s) on the account may not be submitted via
this method.
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Signature of Shareholder
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Date:
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Signature of Shareholder
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Date: |
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Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give
full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. |
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS OF
RED LION HOTELS CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
As an alternative to completing this form, you may enter your vote instruction by telephone at 1-800-PROXIES, or via
the Internet at WWW.VOTEPROXY.COM and follow the simple instructions. Use the Company Number and Account
Number shown on your proxy card.
The undersigned hereby constitutes and appoints Thomas L. McKeirnan and Jon E. Eliassen, and each of them, the
undersigneds true and lawful agents and proxies with full power of substitution in each, to represent and to vote, in such
manner as in their discretion shall be deemed appropriate to carry out the authority as designated on the reverse side, all shares
of Common Stock of Red Lion Hotels Corporation that the undersigned would be entitled to vote if present in person at the Annual
Meeting of Shareholders of Red Lion Hotels Corporation to be held on Wednesday, May 19, 2010, at 9:00 a.m. local time at the
Red Lion River Inn, Shoreline Ballroom, 700 North Division, Spokane, Washington and at any adjournments thereof, on all
matters that may come before the meeting, including matters incident to the conduct of the meeting and any shareholder
proposal omitted from the proxy statement and this proxy pursuant to the rules of the Securities and Exchange Commission.
You are encouraged to specify your choices by marking the appropriate boxes, SEE REVERSE SIDE, but you need not mark
any boxes if you wish to vote in accordance with the Board of Directors recommendations.
(Continued and to be signed on the reverse side)
ANNUAL MEETING OF SHAREHOLDERS OF
RED LION HOTELS CORPORATION
May 19, 2010
PROXY VOTING INSTRUCTIONS
INTERNET
- Access www.voteproxy.com and follow the
on-screen instructions. Have your proxy card available when you
access the web page, and use the Company Number and Account
Number shown on your proxy card.
TELEPHONE
- Call toll-free 1-800-PROXIES (1-800-776-9437) in
the United States or 1-718-921-8500 from foreign countries from any
touch-tone telephone and follow the instructions. Have your proxy
card available when you call and use the Company Number and
Account Number shown on your proxy card.
Vote online/phone until 11:59 PM EST the day before the meeting.
MAIL - Sign, date and mail your proxy card in the envelope
provided as soon as possible.
IN
PERSON - You may vote your shares in person by attending
the Annual Meeting.
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COMPANY NUMBER
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ACCOUNT NUMBER |
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NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL:
The Notice of Meeting, proxy statement and proxy
card are available at http://investor.shareholder.com/rlhcorp/annuals.cfm
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Please detach along
perforated line and mail in the envelope provided IF you are not voting via telephone or the Internet. |
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g 20330000000000000000 9 |
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051910 |
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PLEASE
SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK
YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x
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1. To elect three directors to the Board of Directors: |
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FOR |
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AGAINST |
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ABSTAIN |
c FOR ALL NOMINEES
c WITHHOLD AUTHORITY
FOR ALL NOMINEES
c FOR ALL EXCEPT
(See instructions below)
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NOMINEES:
O Donald K. Barbieri
O Raymond R. Brandstrom
O Ronald
R. Taylor
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2. RATIFICATION OF APPOINTMENT OF BDO SEIDMAN,
LLP TO SERVE AS OUR INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM FOR 2010.
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c |
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c |
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c |
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THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN. EXCEPT AS OTHERWISE DIRECTED, THIS PROXY WILL
BE VOTED FOR THE ELECTION OF ALL DIRECTORS LISTED IN PROPOSAL 1
AND FOR PROPOSAL 2, AND IT WILL BE VOTED IN THE DISCRETION OF THE
PROXIES ON ALL OTHER MATTERS THAT MAY PROPERLY COME BEFORE
THE MEETING.
The Board of Directors recommends a vote FOR ALL NOMINEES listed in
Proposal 1 and FOR Proposal 2.
TO INCLUDE ANY COMMENTS, USE THE COMMENTS BOX ON THE REVERSE
SIDE HEREOF. |
INSTRUCTIONS:
To withhold authority to vote for any individual nominee(s),
mark FOR ALL EXCEPT
and fill in the circle next to each nominee you wish to withhold, as shown here:
n |
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To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that
changes to the registered name(s) on the account may not be submitted via
this method.
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Signature of Shareholder
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Date:
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Signature of Shareholder
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Date: |
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Note: |
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Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give
full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. |