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[HOST MARRIOTT SERVICES LOGO]
6600 Rockledge Drive
Bethesda, Maryland 20817
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD TUESDAY MAY 11, 1999
April 9, 1999
We are pleased to inform you that the Annual Meeting of Shareholders of Host
Marriott Services Corporation (the "Company") will be held on Tuesday, May 11,
1999, at 10:00 a.m. at the Baltimore Marriott Inner Harbor, 110 S. Eutaw Street,
Baltimore, Maryland 21201. Doors to the meeting will open at 9:30 a.m.
The meeting will be conducted:
1. To consider and vote upon the following proposals described in the
accompanying Proxy Statement:
(i) Proposal One: The election of J. W. Marriott, Jr. and Andrew J.
Young as directors for three-year terms expiring at the 2002
Annual Meeting;
(ii) Proposal Two: The ratification of the appointment of Arthur
Andersen LLP as independent auditors;
2. To transact any other business properly before the meeting or any
adjournment of the meeting.
Shareholders of record of the Company's Common Stock at the close of business on
March 18, 1999 will receive this notice of the meeting and will be able to vote
at the meeting.
If there are not sufficient votes to approve any one or more of the foregoing
proposals at the time of the Annual Meeting, the Annual Meeting may be adjourned
in order to permit further solicitation of proxies.
We hope you will be able to join us on May 11.
/s/ Joe P. Martin
Joe P. Martin
General Counsel and Secretary
PLEASE REFER TO THE OUTSIDE BACK COVER
FOR INFORMATION ON ACCOMMODATIONS AND DIRECTIONS.
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HOST MARRIOTT SERVICES CORPORATION
6600 ROCKLEDGE DRIVE
BETHESDA, MARYLAND 20817
(301) 380-7000
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 11, 1999
INTRODUCTION
This year we are offering three voting choices. As a shareholder you have the
option of voting over the Internet, by using a toll-free telephone number or by
completing a proxy card and mailing it in the postage-paid envelope provided.
The method by which you vote will in no way limit your right to vote at the
meeting if you later decide to attend in person. Beginning this year
shareholders may also elect to receive future proxy materials and the Annual
Report via the Internet. Please refer to the enclosed letter for further details
on these enhancements.
PURPOSE
The purpose of this Proxy Statement is to solicit your proxy for the Board of
Directors. Your proxy will allow the designated proxy holders to vote your
shares for you at the meeting in the manner you specify regarding the two
proposals, and for other matters which could arise at the meeting. This Proxy
Statement is being sent to holders of record of the Company's outstanding shares
of common stock, as of the close of business on March 18, 1999, for use at the
Annual Meeting of Shareholders of the Company to be held on May 11, 1999, at
10:00 a.m., at the Baltimore Marriott Inner Harbor, 110 S. Eutaw Street,
Baltimore, Maryland 21201, and at any adjournment or postponement of the
meeting. This Proxy Statement, Notice of Meeting, and the accompanying proxy
card are being mailed to the Company's shareholders of record on or about April
9, 1999.
VOTING AT THE MEETING
To vote at the Annual Meeting, a person must have been the record holder of the
Company's common stock, no par value per share ("Common Stock"), at the close of
business on March 18, 1999, which is the Record Date. Holders of shares of
Common Stock on the Record Date are entitled to one vote per share on any matter
which may properly come before the Annual Meeting, or any adjournment of the
meeting. The presence, either in person or by properly executed proxy, of the
holders of a majority of the outstanding shares of Company Common Stock entitled
to vote at the Annual Meeting is necessary to constitute a quorum at the Annual
Meeting. A quorum is necessary to permit action to be taken by the shareholders
at the Annual Meeting.
Under Delaware law, shares represented at the Annual Meeting (either by properly
executed proxy or in person) that reflect abstentions or "broker non-votes"
(i.e., shares held by a broker or nominee which are represented at the Annual
Meeting, but with respect to which the broker or nominee is not authorized to
vote on a particular proposal) will be counted as shares that are present and
entitled to vote for purposes of determining the presence of a quorum.
Abstentions as to Proposal Two will have the same effect as a vote against the
proposal. Broker non-votes, however, will be treated as unvoted for purposes of
determining approval of the proposal and will not be counted as votes for or
against such proposals. Under applicable rules, brokers will have discretionary
voting authority to vote on Proposals One and Two.
The affirmative vote of a plurality of shares of Common Stock present in person
or represented by proxy at the Annual Meeting is required to elect the directors
nominated pursuant to
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Proposal One. "Plurality" means that the two individuals who receive the largest
number of votes cast are elected as directors. Consequently any shares not voted
will have no impact in the election of directors. The affirmative vote of a
majority of the shares of Common Stock having voting power present in person or
represented by proxy at the Annual Meeting is required to approve Proposal Two.
As of March 18, 1999, there were 33,805,283 shares of Common Stock outstanding
and entitled to vote at the Annual Meeting held by approximately 36,000 holders
of record. As of that date, certain members of the Marriott family (including
various trusts established by members of the Marriott family) in the aggregate
owned approximately 13.25% of the outstanding shares. The members of the
Marriott family have indicated an intention to vote in accordance with the
recommendations of the Board of Directors regarding the two Proposals to be
considered at the Annual Meeting. The Board of Directors recommends that
shareholders vote "FOR" both Proposals.
All shares of Common Stock that are represented at the Annual Meeting by
properly executed proxies received prior to or at the Annual Meeting and not
revoked will be voted at the Annual Meeting in accordance with the instructions
indicated in such proxies. If no instructions are indicated, the proxies will be
voted "FOR" the proposals.
In the event that a quorum is not present at the time the Annual Meeting is
convened, or if for any other reason the Company believes that additional time
should be allowed for the solicitation of proxies, the Company may adjourn the
Annual Meeting. If the Company proposes to adjourn the Annual Meeting by a vote
of the shareholders, the persons named in the enclosed form of proxy will vote
all shares of Common Stock for which they have voting authority in favor of such
adjournment.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by (i) filing
with First Chicago Trust Company of New York in its capacity as Transfer Agent
for the Company, at or before the Annual Meeting, a written notice of revocation
bearing a later date than the proxy, or (ii) duly executing a subsequent proxy
relating to the same shares of Common Stock and delivering it to the Transfer
Agent at or before the Annual Meeting, or (iii) attending the Annual Meeting and
voting in person. Attendance at the Annual Meeting does not in itself constitute
a revocation of a proxy. Any written notice revoking a proxy should be sent to
First Chicago Trust Company of New York, P.O. Box 8611, Edison, New Jersey
08818-9119.
RELATION OF THE COMPANY TO HOST MARRIOTT CORPORATION, MARRIOTT
INTERNATIONAL, INC. AND SODEXHO MARRIOTT SERVICES, INC.
The Company was previously an operating unit of Host Marriott Corporation,
formerly named Marriott Corporation. By a distribution of the Company's shares
to Host Marriott Corporation shareholders on December 29, 1995 ("Distribution"),
the Company became a separate corporation, engaged in food, beverage and retail
concessions and related matters at airports, tollroads and shopping malls.
Previously, on October 8, 1993, Host Marriott Corporation had distributed to its
shareholders the shares of its subsidiary, Marriott International, Inc.
("Marriott International"). The Company is a separate corporation from Marriott
International. On March 27, 1998 Marriott International separated its lines of
business in a spin off transaction. The Marriott International transaction is
described in its filings with the Securities and Exchange Commission. The effect
of the transaction was to separate Marriott International's institutional food
service and lodging and senior living services and related businesses. The food
service business is continued by Sodexho Marriott Services, Inc. and the lodging
and senior living services related businesses by the new Marriott International.
A more detailed discussion of the relationship of the Company to its former
parent corporation, Host Marriott Corporation, and to Marriott
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International and Sodexho Marriott Services, Inc. may be found in the "Certain
Transactions" section of this Proxy Statement.
DIRECTORS
<TABLE>
<S> <C> <C>
[PHOTO--WILLIAM J. William J. Shaw William J. Shaw is Chairman of the Board of
SHAW] (Chairman of the Host Marriott Services Corporation. He is also
Board) President, Chief Operating Officer and a
Age: 53 director of Marriott International. Mr. Shaw
also serves as Chairman of the Board of
Directors of Sodexho Marriott Services, Inc.
Mr. Shaw joined Marriott Corporation in 1974,
was elected Corporate Controller in 1979 and a
Vice President in 1982. In 1986, Mr. Shaw was
elected Senior Vice President -- Finance and
Treasurer. He was elected Executive Vice
President and Chief Financial Officer in April
1988. In February 1992, he was elected
President of the Marriott Service Group, which
comprised Marriott Corporation's and later
Marriott International's contract services line
of business. Mr. Shaw also serves on the Board
of Trustees of the University of Notre Dame and
the Suburban Hospital Foundation. In addition
to his responsibilities as Chairman of the
Board, Mr. Shaw also serves as Chair of the
Executive Committee of the Company's Board.
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[PHOTO--J. WILLARD J. Willard Marriott, Jr. J. Willard Marriott, Jr. is Chairman of the
MARRIOTT, JR.] Age: 66 Board and Chief Executive Officer of Marriott
International. He is a director of Host
Marriott Corporation, General Motors
Corporation and the U.S.-Russia Business
Council. Mr. Marriott also serves on the Board
of Trustees of the National Geographic Society
and the Board of Directors of Georgetown
University. He is a member of the Executive
Committee of the World Travel & Tourism
Council, and a member of the Business Council.
J. Willard Marriott, Jr. and Richard E.
Marriott are brothers.
</TABLE>
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<TABLE>
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[PHOTO--RICHARD E. Richard E. Marriott Richard E. Marriott is Chairman of the Board of
MARRIOTT] Age: 60 Host Marriott Corporation, and a director of
Marriott International. Prior to his election
as Chairman of the Board of Directors of Host
Marriott Corporation, he served as Vice
Chairman of the Board and as an Executive Vice
President of Marriott Corporation, before it
changed its name to Host Marriott Corporation.
He also serves as Chairman of the Board of
First Media Corporation, President and Trustee
for the Marriott Foundation for People with
Disabilities, and as a director of Gallaudet
University, Federal City Council, Polynesian
Cultural Center, Primary Children's Center,
Boys and Girls Club of America, Southeast
Region, and the J. Willard Marriott Foundation.
He is a past President of the National
Restaurant Association. Richard E. Marriott and
J. Willard Marriott, Jr. are brothers.
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[PHOTO--WILLIAM W. William W. McCarten William W. McCarten is President and Chief Ex-
MCCARTEN] Age: 50 ecutive Officer of the Company. Prior to the
Distribution, he served as President of Host
Marriott Corporation's Operating Group, which
conducted substantially all of Host Marriott
Corporation's airport, tollroad and other
businesses now conducted by the Company. He
joined Marriott Corporation in 1979, was
elected Vice President, Corporate Controller
and Chief Accounting Officer in 1985 and Senior
Vice President in 1986. He was named Executive
Vice President, Host and Travel Plazas in 1991
and President, Host and Travel Plazas in 1992.
In 1993 he became President of Host Marriott
Corporation's Operating Group and in 1995 was
elected President and Chief Executive Officer
and a director of the Company. Mr. McCarten has
served on the Advisory Board of the McIntire
School at the University of Virginia and is a
past chairman.
</TABLE>
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<TABLE>
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[PHOTO--ROSEMARY M. Rosemary M. Collyer Rosemary M. Collyer is a partner with the law
COLLYER] Age: 53 firm of Crowell & Moring LLP in Washington,
D.C., where she practices labor and employment
law and has served as Chairman of the firm's
Management Committee. Prior to joining Crowell
& Moring, Ms. Collyer served as General Counsel
of the National Labor Relations Board. Ms.
Collyer previously served as Chairman of the
Federal Mine Safety and Health Review Commis-
sion. Ms. Collyer was an attorney with the law
firm of Sherman and Howard in Denver, Colorado
before her government service. Ms. Collyer cur-
rently serves as Chair of the Compensation Pol-
icy Committee of the Company's Board.
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[PHOTO--R. MICHAEL R. Michael McCullough R. Michael McCullough is the Retired Chairman
MCCULLOUGH] Age: 60 and CEO of the international management con-
sulting firm of Booz-Allen & Hamilton Inc.
During his more than 30 years with Booz-Allen,
he was elected a partner in 1971 and he was
elected Chairman and CEO in 1984. He is
currently a Managing Director of Ariston
Partners. He has been a member of the Board of
Directors of the Professional Services Council
from 1980-1994, serving as President from 1982
until 1985. He has served as a member of the
Advisory Council of the Graduate School of
Business at Stanford University, the Boards of
Directors of the Wolf Trap Foundation, Caterair
International, and the University of Detroit.
He currently serves on the Boards of Directors
of Capital Automotive REIT, O'Sullivan
Corporation, and Watson Wyatt Worldwide.
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[PHOTO--GILBERT T. Gilbert T. Ray Gilbert T. Ray is a partner with the law firm
RAY] Age: 54 of O'Melveny & Myers LLP in Los Angeles,
California. He has extensive experience with
corporate and international financings, as well
as tax-exempt securities. He also heads the
governmental relations practice for the firm.
Mr. Ray is a director of the Automobile Club of
Southern California and a member of numerous
other boards including the Los Angeles
Convention & Visitors Bureau (Chairman of the
Board for 1994 -- 1995), the Los Angeles Area
Chamber of Commerce (Executive
Committee -- since 1998), the John Randolph
Haynes and Dora Haynes Foundation, and Ashland
University (Ohio).
</TABLE>
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<TABLE>
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[PHOTO--ANDREW J. Andrew J. Young Andrew J. Young has served as Chairman of
YOUNG] Age: 67 GoodWorks International LLC since 1997. Am-
bassador Young has spent more than 40 years in
public service. He was elected to three terms
in the U.S. Congress, representing the Fifth
Congressional District of Georgia. In 1977, he
was appointed U.S. Ambassador to the United Na-
tions. He was elected Mayor of Atlanta, Georgia
in 1981, and reelected in 1985. He is a
director of Delta Airlines, Thomas Nelson
Publishing Company, Cox Communications, Film
Fabricators, the Martin Luther King, Jr.
Center, and the Argus Board. Ambassador Young
also serves as Chairman of the Southern Africa
Enterprise Development Fund (SAEDF). Ambassador
Young currently serves as Chair of the
Nominating and Corporate Governance Committee
of the Company's Board.
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</TABLE>
OWNERSHIP OF COMPANY SECURITIES
As of March 18, 1999, the Company had one outstanding class of equity or
equity-linked securities, Company Common Stock.
The following table sets forth information as to the shares of Common Stock
beneficially owned (or deemed to be beneficially owned pursuant to the rules of
the Securities and Exchange Commission) as of March 18, 1999. The information is
provided for directors, nominees, the chief executive officer and the four
additional most highly compensated executive officers of the Company, as well as
by all directors and executive officers of the Company as a group. It also
includes, to the best of the Company's knowledge, beneficial owners of 5% or
more of the outstanding shares of Common Stock.
<TABLE>
<CAPTION>
SHARES OF COMPANY % OF COMMON
COMMON STOCK STOCK OUTSTANDING
BENEFICIALLY OWNED AS OF
NAME AS OF MARCH 18, 1999 MARCH 18, 1999(1)
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<S> <C> <C>
DIRECTORS:
Rosemary M. Collyer......................................... 1,000 *
J. Willard Marriott, Jr**................................... 2,566,930(2)(5) 7.59%
Richard E. Marriott......................................... 2,512,705(3) 7.43%
William W. McCarten......................................... 599,973(4) 1.77%
R. Michael McCullough....................................... (5) *
Gilbert T. Ray.............................................. (5) *
William J. Shaw............................................. 37,150(5)(6) *
Andrew J. Young**........................................... (5) *
NON-DIRECTOR EXECUTIVE OFFICERS:
Brian W. Bethers............................................ 139,612(7) *
Joe P. Martin............................................... 116,231(8) *
John J. McCarthy............................................ 282,872(9) *
Thomas G. O'Hare............................................ 197,579(10) *
All directors and executive officers as a group: 5,852,395 17.31%
Beneficial Owners of 5% or more:
Wanger Asset Management, L.P....................... 2,845,900(11) 8.42%
FMR Corp........................................... 2,832,100(12) 8.38%
Prudential Insurance Company of America............ 1,918,245(13) 5.67%
</TABLE>
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* Less than one percent (1%).
** Nominee for Director
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(1) Based on the number of shares outstanding, plus the number of shares
acquirable by the specified person(s) by stock option exercise within 60
days of March 18, 1999. The Common Stock ownership for Wanger Asset
Management, L.P., FMR Corp., and Prudential Insurance Company were recorded
at dates other than March 18, 1999. Refer to notes 11-13.
(2) Includes (i) shares held in family trusts for which Mr. Marriott serves as
a trustee or co-trustee; (ii) shares held in family trusts in which he is a
beneficiary or co-beneficiary; (iii) shares held in partnerships in which
the General Partner is indirectly controlled by Mr. Marriott; and (iv)
shares held by the J. Willard Marriott Foundation, for which Mr. Marriott
serves as a trustee with Richard E. Marriott and Alice Marriott. The
Foundation holds 601,657 shares, which is included in the total beneficial
ownership for both J. W. Marriott, Jr. and Richard E. Marriott, but the
Foundation's shares are counted only once in reporting the total number of
shares owned by all directors, nominees and executive officers as a group.
The shares do not include 39,177 shares held in a charitable annuity trust
created by the will of J.W. Marriott, Sr., in which J.W. Marriott, Jr. and
Richard E. Marriott have a remainder interest and of which Alice Marriott
is the trustee. It also does not include shares held by members of the
Marriott family other than J.W. Marriott, Jr. and Richard E. Marriott. J.W.
Marriott, Jr. does not hold any options to acquire shares of Company Common
Stock.
(3) Includes (i) shares held in family trusts for which Mr. Marriott serves as
a trustee or co-trustee; (ii) shares held in family trusts for which he is
a beneficiary or co-beneficiary; (iii) shares held by First Media Limited
Partners, whose General Partner is indirectly controlled by Mr. Marriott;
(iv) shares held by the J. Willard Marriott Foundation, for which Mr.
Marriott serves as a Trustee with J.W. Marriott, Jr. and Alice Marriott.
The Foundation holds 601,657 shares, which is included in the total
beneficial ownership for both Richard E. Marriott and J.W. Marriott, Jr.
but the Foundation's shares are counted only once in reporting the total
number of shares owned by all directors, nominees and executive officers as
a group; (v) options to acquire 11,140 shares within 60 days of March 18,
1999; and (vi) 48,360 shares of restricted stock.
(4) Includes (i) options to acquire 8,650 shares within 60 days of March 18,
1999; and (ii) 286,682 shares of restricted stock. Mr. McCarten did not
sell any Company Common Stock in 1998.
(5) As a non-employee director, this director has requested that a percentage
of eligible director compensation be deferred toward the acquisition of
Common Stock pursuant to the Company's Non-employee Directors' Deferred
Stock Compensation Plan ("NDDSC Plan"). These shares do not have voting
rights until distribution to the director upon retirement from the Board.
As of March 18, 1999, the following directors were deferring 100% of their
compensation into the NDDSC Plan. The shares were attributed to each
participating director as follows: J.W. Marriott, Jr. 3,327 shares, R.
Michael McCullough 6,098 shares, Gilbert T. Ray 11,559 shares, William J.
Shaw 6,052 shares. Ambassador Young has requested 50% of his eligible
compensation be deferred into the Plan. As of March 18, 1999, Ambassador
Young had 3,081 shares attributed to him.
(6) Includes 1,400 shares of restricted stock.
(7) Includes (i) 14,676 shares attributed to Mr. Bethers' profit sharing plan
account; (ii) options to acquire 7,830 shares within 60 days of March 18,
1999; and (iii) 70,882 shares of restricted stock.
(8) Includes (i) 13,650 shares attributed to Mr. Martin's profit sharing plan
account; (ii) options to acquire 473 shares within 60 days of March 18,
1999; and (iii) 61,869 shares of restricted stock.
(9) Includes (i) 67,307 shares attributed to Mr. McCarthy's profit sharing
account; (ii) options to acquire 3,470 shares within 60 days of March 18,
1999; and (iii) 101,952 shares of restricted stock.
(10) Includes (i) 55,824 shares attributed to Mr. O'Hare's profit sharing
account; (ii) options to acquire 1,820 shares within 60 days of March 18,
1999; and (iii) 89,013 shares of restricted stock.
(11) Wanger Asset Management, L.P. and Wanger Asset Management, Ltd., which is
the general partner of Wanger Asset Management, L.P., report that they have
shared voting and dispositive power with respect to 2,845,900 shares of
Company Common Stock. Their principal address is 227 West Monroe Street,
Suite 3000, Chicago, Illinois 60606. Based on Schedule 13G dated February
8, 1999.
(12) FMR Corp. reports that it has sole dispositive power with respect to
2,832,100 shares of Company Common Stock and beneficially owns 2,832,100
shares of Company Common Stock. These shares are held by the Fidelity
Magellan Fund. Edward C. Johnson 3d and Abigail Johnson each has sole power
to dispose of 2,832,100 shares. The address of FMR Corp., Edward C. Johnson
3d and Abigail Johnson is 82 Devonshire Street, Boston, Massachusetts
02109. Based on Amendment 3 to Schedule 13G dated February 1, 1999.
(13) The Prudential Insurance Company of America reports that it has shared
voting and dispositive power with respect to 1,062,145 shares of Company
Common Stock and has sole voting and dispositive power with respect to
856,100 shares of Company Common Stock. Their principal address is 751
Broad Street, Newark, New Jersey 07102. Based on Schedule 13G dated
February 2, 1999.
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THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The Board of Directors is composed of eight members. Mr. McCarten is the only
employee of the Company who serves on the Board. The Board met four times in
1998.
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The Board has four standing Committees: (i) Executive, (ii) Audit, (iii)
Compensation Policy, and (iv) Nominating and Corporate Governance.
The members of the Executive Committee are William J. Shaw (Chair), William W.
McCarten and R. Michael McCullough. When the Board of Directors is not in
session, this Committee is authorized to exercise all powers of the Board of
Directors, subject to specific restrictions as to powers retained by the full
Board of Directors. No change in the membership of the Executive Committee is
contemplated for 1999. The Committee met once in 1998.
The Audit Committee is composed of three directors who are not employees of the
Company: R. Michael McCullough (Chair), Gilbert T. Ray and Rosemary M. Collyer.
The Audit Committee meets at least five times a year with the independent
auditors, management representatives, internal auditors and the Company's
General Counsel; recommends to the shareholders appointment of independent
auditors; approves the scope of audits and other services to be performed by the
independent and internal auditors; and reviews the results of internal and
external audits, the accounting principles applied in financial reporting, and
financial and operational controls. The independent auditors, internal auditors
and the General Counsel of the Company have unrestricted access to the Audit
Committee and vice versa. No membership changes to the Audit Committee are
contemplated for 1999. The Committee met eight times in 1998.
The Compensation Policy Committee is composed of three directors who are not
employees of the Company: Rosemary M. Collyer (Chair), Gilbert T. Ray and R.
Michael McCullough. The Compensation Policy Committee's duties include
establishing policies and procedures relating to senior executive compensation
and various employee stock plans, and approval of senior executive bonuses and
stock awards. The Committee also establishes performance standards for senior
executives and determines annually whether these performance standards have been
satisfied. No membership changes to the Compensation Policy Committee are
contemplated for 1999. The Committee met eight times in 1998.
The Nominating and Corporate Governance Committee is composed of three directors
who are not employees of the Company: Ambassador Andrew J. Young (Chair),
Rosemary M. Collyer, and R. Michael McCullough. It considers candidates for
election as directors and is responsible for making recommendations with regard
to corporate governance. In addition, the Committee fulfills an advisory
function with respect to a range of matters affecting the Board of Directors and
its Committees, including the making of recommendations with respect to
qualifications of director candidates, compensation of directors, the selection
of committee chairs, committee assignments and related matters affecting the
functioning of the Board. No change in the membership of the Committee is
contemplated for 1999. The Committee met once in 1998.
Women and minorities hold three of the seven non-employee director positions on
the Board. The Compensation Policy Committee is chaired by a woman and the
Nominating and Corporate Governance Committee is chaired by an African-American
man. Three of the four Committees of the Board (Audit, Compensation Policy and
Nominating and Corporate Governance) have a majority of their membership
composed of women and minorities.
During 1998, no incumbent member of the Company's Board of Directors attended
fewer than 75% of the aggregate of (1) the total number of Board meetings held
and (2) the total number of meetings of committees of the Board on which he or
she served.
COMPENSATION OF DIRECTORS
Mr. McCarten, the only employee director of the Company, receives no additional
compensation for his services as a director. Directors who are not employees
(which are all other directors of the Company) receive an annual retainer fee of
$25,000 (with the exception of the Chairman of the Board of Directors, who
receives an annual retainer of $50,000) as well as an attendance fee of $1,250
for each shareholders' meeting, meeting of the Board of Directors or meeting of
a
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committee of the Board of Directors, regardless of the number of meetings held
on a given day. The Chair of each committee of the Board of Directors receives
an additional annual retainer fee of $1,250, with the exception of the Executive
Committee Chair. Mr. Shaw does not receive an annual retainer fee for his duties
as Chair of the Executive Committee. Directors are reimbursed for ordinary and
reasonable travel expenses and other out-of-pocket costs incurred in attending
meetings.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities ("Reporting Persons"), to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission and the New York Stock Exchange. Specific due dates for
these reports have been established, and the Company is required to report in
this Proxy Statement any failure to file by these dates for 1998. None of the
Company's Reporting Persons failed to file any of the required reports on a
timely basis with respect to transactions in the Company's equity securities in
1998; however, due to an administrative processing error, one required report
for 1998, filed in February 1999, failed to correctly state the total of
restricted shares held by Mr. McCarten, Mr. McCarthy, Mr. O'Hare, Mr. Bethers
and Mr. Martin. As soon as the error was discovered, amended filings were made.
EXECUTIVE OFFICERS
Provided below is information regarding the persons who are executive officers
(but not directors) of the Company.
<TABLE>
<CAPTION>
BUSINESS EXPERIENCE PRIOR TO BECOMING
NAME AND TITLE AGE AN EXECUTIVE OFFICER OF THE COMPANY
-------------- --- -------------------------------------
<S> <C> <C>
John J. McCarthy 52 John J. McCarthy joined Host International, Inc.
Executive Vice President, in 1974 as General Manager for the Tampa Airport
Malls and International Business Hotel. In 1978 he was promoted to Director of Real
Estate and he served as Vice President, Hotel
Operations beginning in 1979. In 1982 he was
promoted to Regional Vice President of Marriott
Corporation's Airport Division, Northeast. He was
appointed Vice President of Marriott Corporation's
Travel Plazas Division in 1989. In 1991, he served
as Senior Vice President, Travel Plazas
Operations. In 1992, he was appointed Senior Vice
President, Corporate Development and Marketing.
Mr. McCarthy was appointed Senior Vice President
of Host Marriott Corporation's Operating Group in
1993. In 1995, Mr. McCarthy was appointed Execu-
tive Vice President, Business Development for the
Company. In 1998, Mr. McCarthy was appointed
Executive Vice President, Malls and International
Business.
</TABLE>
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<PAGE> 11
<TABLE>
<CAPTION>
BUSINESS EXPERIENCE PRIOR TO BECOMING
NAME AND TITLE AGE AN EXECUTIVE OFFICER OF THE COMPANY
-------------- --- -------------------------------------
<S> <C> <C>
Thomas G. O'Hare 46 Thomas G. O'Hare joined Host International, Inc.
Executive Vice President, in 1975 as a Food and Beverage Supervisor at
North America Business Detroit Metro Airport. He was promoted to General
Manager at Newark International Airport in 1978.
In 1984, he was named Vice President of Corporate
Development. He returned to Operations in 1987 as
Regional Vice President and became Senior Vice
President for Airports in 1993. Mr. O'Hare was
appointed Senior Vice President of Host Marriott
Corporation's Operating Group in 1993 and as-
sumed the position of Senior Vice President for
Operations in 1994. In 1995, Mr. O'Hare was ap-
pointed Executive Vice President, Operations for
the Company. In 1998, Mr. O'Hare became Execu-
tive Vice President, North America Business.
Brian W. Bethers 37 Brian W. Bethers joined Marriott Corporation in
Executive Vice President 1985 as a financial analyst in the Operation,
and Chief Financial Officer Planning and Control Department. In 1989, he was
promoted to Director of the Host Operating Group
Financial Planning Department. In 1992, he became
Senior Director, Corporate Development. He was
appointed Vice President, Corporate Development in
1993. Mr. Bethers returned to Finance in 1995 when
he was appointed Senior Vice President and Chief
Financial Officer of the Company. In 1999, Mr.
Bethers became Executive Vice President and Chief
Financial Officer.
Joe P. Martin 52 Joe P. Martin joined Marriott Corporation in 1988
Senior Vice President, as Assistant General Counsel for Labor Law and
General Counsel and Secretary Litigation. In 1992, he became Chief Labor Counsel
for Marriott Corporation's Lodging Group and in
1993 became Associate General Counsel of Host
Marriott Corporation, responsible for labor, em-
ployment litigation, employee benefits, and execu-
tive compensation matters. Prior to joining
Marriott Corporation, he was a trial and appellate
litigator with the law firm of Fulbright &
Jaworski, and held senior trial attorney positions
with the Civil Rights Division of the United
States Department of Labor, J.C. Penney Company
and CIGNA Corporation. Mr. Martin became Senior
Vice President and General Counsel of the Company
in 1995 and Secretary in 1997.
</TABLE>
10
<PAGE> 12
<TABLE>
<CAPTION>
BUSINESS EXPERIENCE PRIOR TO BECOMING
NAME AND TITLE AGE AN EXECUTIVE OFFICER OF THE COMPANY
-------------- --- -------------------------------------
<S> <C> <C>
Timothy H. Pease 38 Timothy H. Pease joined Host Marriott Services in
Vice President, Controller 1995 as the Senior Director of Corporate Account-
and Chief Accounting Officer ing. Prior to joining Host Marriott Services, Mr.
Pease was a senior manager with Arthur Andersen
LLP. In 1998, Mr. Pease was appointed Vice
President, Controller and Chief Accounting Officer
of the Company.
</TABLE>
REPORT ON EXECUTIVE COMPENSATION BY THE COMPANY'S COMPENSATION POLICY COMMITTEE
THE COMMITTEE
The Compensation Policy Committee (the "Committee") of the Board of Directors of
the Company oversees the compensation of senior executives of the Company to
ensure that compensation serves to motivate and retain senior executives while
also being in the best interests of the Company and its shareholders.
THE OBJECTIVES OF EXECUTIVE COMPENSATION
The Company has established three key objectives for its executive compensation:
- - To build a strong relationship between shareholder return and executive
compensation by providing a compensation structure that motivates the
achievement of objectives that drive shareholder value.
- - To provide performance-based rewards that effectively link compensation to the
achievement of results.
- - To provide positive incentives that motivate achievement of both short and
long term goals by offering competitive compensation that maintains a
strategic balance between base compensation and incentive compensation so as
to instill a willingness to take well-calculated risks.
EXECUTIVE COMPENSATION
The Committee conducts an annual review of the components of executive
compensation to ensure the competitiveness of the compensation of the Chief
Executive Officer and the individuals who report directly to the CEO. The
Committee determines the compensation of direct reports of the Chief Executive
Officer ("CEO"), and makes recommendations regarding the compensation of the CEO
to the Board of Directors. The recommendations of the Committee regarding CEO
compensation have never been modified or rejected by the Board. The compensation
of persons other than the CEO and his direct reports is determined by the
management of the Company. To assist the Committee, the Company's Vice President
of Compensation presents compensation recommendations to the Committee for the
CEO and his direct reports based on data obtained from independent compensation
consultants, which reflects compensation practices of industry companies of
approximately the Company's size. The Committee establishes executive
compensation based on this information. The Committee generally sets executive
cash compensation (base salary plus targeted bonus) at the median level of the
survey data.
Due to the Committee's and the Company's emphasis on pay for performance and the
objective of building a strong relationship between shareholder return and
executive compensation, executive compensation is weighted toward long-term
stock incentives.
ANNUAL CASH COMPENSATION
Annual cash compensation is made up of two components -- base salary and annual
cash incentive (bonus). The Committee annually reviews base salaries and annual
cash incentives
11
<PAGE> 13
for the CEO and the CEO's direct reports and approves the appropriate
compensation and annual incentives. As discussed above, the Committee determines
annual base salaries for the direct reports of the CEO based on recommendations
made to the Committee by the CEO and the Company's Vice President of
Compensation and Towers Perrin, the Committee's outside independent compensation
consultant retained to assist the Committee. The annual cash incentive for each
executive is based on annual performance goals set by the Committee. For 1998,
the performance goals included: targeted levels of EBIT (earnings before
interest and taxes) and interest income and business development growth. The
Committee determined that annual cash incentive payouts to the CEO and his
direct reports for 1998, under their individual bonus plans, would range from
33.1% to 55.2% of their respective base salaries.
STOCK INCENTIVES
The Company has made stock awards and will make future awards under the
Company's shareholder approved Comprehensive Stock Plan (the "CS Plan"). The
Committee is responsible for administering the CS Plan.
Restricted stock is the current primary long-term incentive vehicle for the CEO
and his direct reports. The CS Plan permits the Committee to approve awards
subject to either "General Restrictions", usually relating to continued
employment, or "Performance Restrictions." The Committee believes that
performance-based awards are in the best interest of shareholders and thus the
stock awards it makes are weighted more heavily toward such awards.
In August 1998, the Committee made new grants of restricted stock and
performance-based stock options to Mr. McCarten and certain senior executives.
The grants are intended to reward Mr. McCarten and his management team if they
significantly increase shareholder value. The grants consist of a time-based
award of restricted stock, which vests in three equal installments beginning
August 1999, so long as the executive continues in employment, and a long term
performance award intended to vest when the Company meets or exceeds the 75th
percentile of Total Shareholder Return of the Russell 2000 index, over a period
of not less than 3 years. The performance awards will vest after seven years
from the date of the grant (August 2005) if the performance goals have not been
satisfied. The annual grant consists of restricted shares and the long term
performance award is a mix of restricted stock and stock options. The grants
were based on calibrated multiples of each recipient's base salary. The
multiples ranged from one to two and one half times base salary for the annual
grants, and three to six times base salary for the performance grants. Each of
these grants is made on a pretax basis. As a result, in all cases, the number of
shares released to the executive will be reduced by at least the current 28%
federal income tax withholding requirement and the applicable state income tax
rate. Taxes are paid in shares withheld at the time of vesting.
The Committee's performance standards for earning release of the 1998
installment of previously granted restricted shares were targeted levels of
return on investment, profitability and liquidity. The Committee determined that
only 57.2% of the available restricted shares were earned by Mr. McCarten and
the senior executives.
1998 COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The Committee recommends the total cash compensation of Mr. McCarten, which must
be approved by the full Board of Directors. The Board has never modified or
rejected any recommendation by the Committee regarding the CEO's compensation.
The Committee is solely responsible for establishing performance-based
compensation goals for the CEO's bonus and the release of restricted stock and
for determining whether the Committee's goals have been satisfied. In 1998, Mr.
McCarten earned a base salary of $485,000. The Committee, with the approval of
the Board, established a 1998 annual cash incentive plan through which he could
have earned 75% of his base salary. The Committee determined that in 1998 Mr.
McCarten earned a payout of 55.2% of his base salary.
12
<PAGE> 14
In 1993, when the Company was part of Host Marriott Corporation, Mr. McCarten
received a five year grant of Host Marriott Corporation restricted stock which
expired at the end of 1998. Forty percent of the award was time-based restricted
stock, which required him to continue in employment, and sixty percent of the
shares awarded were performance-based, requiring achievement of performance
targets. On February 2, 1996, Mr. McCarten converted all of his remaining
restricted shares of Host Marriott Corporation stock into Company restricted
stock. The converted Company restricted shares were also forty percent
time-based and sixty percent performance-based. The Committee sets the annual
performance goals which Mr. McCarten must achieve for release of his
performance-based restricted stock. For 1998, the Committee targeted levels of
return on investment, profitability and liquidity. On a pretax basis, Mr.
McCarten earned release of 60,174 performance-based restricted shares for 1998
and also earned release of 70,132 shares of time-based restricted stock. A total
of 45,025 shares of restricted stock were not earned in 1998. Under the terms of
the 1993 grant, the unearned performance-based shares will be available to Mr.
McCarten upon his retirement from the Company.
POLICY ON DEDUCTIBILITY OF EXECUTIVE COMPENSATION UNDER INTERNAL REVENUE CODE
SECTION 162(m)
Section 162(m) of the Internal Revenue Code of 1986, as amended ("Code"), limits
the deductibility of compensation paid to certain executive officers to $1
million unless certain requirements are met. Any compensation considered
performance-based is not subject to the $1 million limitation on deductibility.
The Committee's intention is to establish performance-based compensation for the
Company's senior management and qualify appropriate compensation under the
performance requirements of Section 162(m).
Respectfully submitted,
Rosemary M. Collyer, Chair,
Gilbert T. Ray, Member,
R. Michael McCullough, Member,
COMPENSATION POLICY COMMITTEE
13
<PAGE> 15
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table sets forth the compensation paid during
the past three fiscal years to the listed executive officers. The compensation
amounts in the following table represent all compensation paid to each
individual in connection with his position with the Company in 1998, 1997 and
1996. There are no employment agreements between the Company and the listed
executives. The listed executives do participate in various Company employee
benefit plans and have vested rights under certain of these plans. These plans
include the Company's Employee Profit Sharing, Retirement and Savings Plan and
Trust, and the Company's Executive Deferred Compensation Plan. The executives
also have rights under the restricted stock awards made by the Compensation
Policy Committee and the Board, which generally vest the unvested shares in the
event of certain contingencies such as the death, permanent disability of the
executive, retirement with the approval of the Board, or a change in control.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-----------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
-------------------------------- ---------------------- ----------
OTHER RESTRICTED
ANNUAL STOCK STOCK LTIP ALL OTHER
FISCAL SALARY BONUS COMPENSATION AWARDS OPTIONS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR (1)($) (2)($) (3)($) (4)(5)(8)($) (#) (6)($) (7)($)
--------------------------- ------ ------- ------- ------------ ------------ ------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William W. McCarten 1998 485,000 267,720 0 990,635 245,518 470,139 35,109
Chief Executive Officer 1997 465,000 290,625 0 0 0 1,352,070 26,802
and President 1996 458,654 326,103 0 0 0 1,071,767 27,975
John J. McCarthy 1998 297,500 150,901 0 303,834 125,501 132,688 367,346
Executive Vice President, 1997 285,000 165,870 0 0 0 381,600 98,278
Malls and International 1996 280,288 185,551 0 240,002 0 396,945 39,999
Business
Thomas G. O'Hare 1998 260,000 131,880 0 265,530 109,682 121,633 24,770
Executive Vice President, 1997 249,000 144,918 0 0 0 349,800 25,154
North America Business 1996 244,615 161,935 0 220,002 0 332,445 12,636
Brian W. Bethers 1998 214,000 98,864 0 218,548 90,276 88,459 18,654
Executive Vice President 1997 205,000 104,345 0 0 0 254,400 18,855
and Chief Financial Officer 1996 188,558 115,586 0 240,002 0 201,661 8,341
Joe P. Martin 1998 184,000 85,005 0 187,919 77,621 77,403 17,170
Senior Vice President, 1997 176,000 93,104 0 0 0 217,300 10,319
General Counsel and 1996 173,269 106,214 0 140,001 0 124,049 7,840
Secretary
</TABLE>
- ------------
(1) Salary amounts include base salary earned and paid in cash during the fiscal
year and the amount of base salary deferred at the election of the executive
officer under the Company's Employees' Profit Sharing, Retirement and
Savings Plan and Trust (the "Profit Sharing Plan") and the Company's
Executive Deferred Compensation Plan (the "Deferred Compensation Plan").
(2) Bonus (annual cash incentive) includes the amount of cash bonus earned
pursuant to the named individual's bonus plan during the fiscal year and
paid subsequent to the end of each fiscal year. The 1998 bonus payments were
paid in February 1999.
(3) Perquisites and other personal benefits, securities or property are not
reported since they were equal to the lesser of $50,000 or 10% of the total
of annual salary and bonus for each executive officer for each year.
(4) This column of the table reports restricted stock and deferred bonus stock
awards. Deferred bonus stock awards are discussed in footnote 5 below. The
restricted shares reported in this column are shares subject to "General
Restrictions" (see footnote 8). Restricted shares with "Performance
Restrictions" (see footnote 8) are reported as long-term incentive plan
("LTIP") awards and are not reported as restricted stock awards on this
table. The pretax value of restricted stock with "Performance Restrictions"
which vested in 1998 is reported in the table as "LTIP Payouts." The
restricted stock awards for 1996 listed on this table vested ratably over a
three year period (1996-1998) for Mr. Bethers, and vested ratably over a two
year period (1997-1998) for Mr. McCarthy, Mr. O'Hare and Mr. Martin. No new
restricted stock award was made in 1996 to Mr. McCarten. However, he
continued to ratably vest through December 31, 1998 a Host Marriott
Corporation restricted stock award made in 1993 which was converted into
restricted Company shares on February 2, 1996. Holders of restricted stock
would be entitled to dividends, if any, paid by the Company to holders of
Common Stock. No dividends were paid in 1996, 1997 or 1998. In 1998, new
restricted stock awards were made to the executives listed in the Table. The
new 1998 awards vest ratably over a three year period beginning August 1998,
and are subject to General Restrictions, including that the executive
remains employed by the Company. The values of the 1998 awards were
calculated at $10.344 per share, the average of the high and low of Company
Common Stock on the New York Stock Exchange on the last day of the 1998
fiscal year.
(5) The Company no longer makes Deferred Stock Bonus Awards. The Deferred Stock
Bonus Awards included in the Table in the "Restricted Stock Awards" column,
are stock awards granted by Host Marriott Corporation prior to the
Distribution, which were generally derived based on dividing 20% of each
individual's annual cash bonus award by the average of the high and low
trading prices for a share of Host Marriott Corporation common stock on the
New
14
<PAGE> 16
York Stock Exchange on the last trading day of the fiscal year. No voting
rights or dividends are attributed to these Deferred Stock Bonus Award
shares until such award shares are distributed. Awards may be denominated as
current (pre-retirement) awards or deferred (retirement) awards. A current
award is distributed in 10 annual installments commencing one year after the
award is granted. A vested deferred award is distributed in a lump sum or in
up to 10 annual installments following termination of employment. These
awards generally are not subject to forfeiture once the employee reaches age
55 and has 10 years of service, or after 20 years of service with Board
approval; however, the awards are not subject to forfeiture for any reason
if the employee dies or becomes permanently disabled. Each share of Host
Marriott Corporation Deferred Stock Bonus Awards held by each executive
listed in the Summary Compensation Table was split at the Distribution into
one share of Company Deferred Bonus Stock for each five shares of Host
Marriott Corporation Deferred Bonus Stock. Under the terms of the restricted
stock grants made to them, Mr. McCarten, Mr. McCarthy, Mr. O'Hare and Mr.
Martin were not eligible to receive awards of Deferred Bonus Stock in 1994,
1995, 1996, and in 1997, the Company decided to no longer make Deferred
Stock Bonus Awards. Each of these individuals received Deferred Bonus Stock
awards for years prior to 1994 from Host Marriott Corporation, which were
split into Host Marriott Corporation and Company deferred shares, which will
continue to be distributed pursuant to the terms of the awards. Mr. Bethers
was eligible to receive Deferred Bonus Stock Awards in 1994 and 1995, but
did not receive restricted stock in those years. In 1996, Mr. Bethers
received a restricted stock award and became ineligible for 1996 and
thereafter to receive any further Deferred Bonus Stock Awards. In January
1999, Mr. McCarten, Mr. McCarthy, Mr. O'Hare, Mr. Bethers and Mr. Martin
received a distribution of Company deferred stock from previous awards as
follows: Mr. McCarten, 81 shares valued at $821; Mr. McCarthy, 284 shares
valued at $2,877; Mr. O'Hare, 62 shares valued at $628; Mr. Bethers, 184
shares valued at $1,864 and Mr. Martin, 38 shares valued at $385. Values are
based on $10.125 per share, the average of the high and low of the trading
prices of the Company stock on the New York Stock Exchange as of January 4,
1999, the date the shares were released to each executive.
(6) For 1998, the pre-tax amounts attributed to LTIP Payouts represent the value
of the Company performance-based restricted stock awards that vested
following the close of the fiscal year. The value stated is based on $7.8125
per share, the average of the high and low trading prices of a share of
Company Stock on February 1, 1999, on the New York Stock Exchange, the date
the performance restrictions were removed.
(7) For 1998, amounts included as "All Other Compensation" represent Company
contribution amounts received under one or more of the Profit Sharing Plan,
the Deferred Compensation Plan or the Supplemental Retirement Plan for
certain employees. For 1998 for Mr. McCarten, $2,301 was attributable to the
Profit Sharing Plan and $25,608 was attributable to the Deferred
Compensation Plan. For 1998 for Mr. McCarthy, $2,301 was attributable to the
Profit Sharing Plan, $14,372 was attributable to the Deferred Compensation
Plan, and $340,473 was attributable to the Supplemental Retirement Plan. For
1998 for Mr. O'Hare, $2,301 was attributable to the Profit Sharing Plan and
$12,269 was attributable to the Deferred Compensation Plan. For 1998 for Mr.
Bethers, $2,301 was attributable to the Profit Sharing Plan and $9,153 was
attributable to the Deferred Compensation Plan. For 1998 for Mr. Martin,
$2,301 was attributable to the Profit Sharing Plan and $7,669 was
attributable to the Deferred Compensation Plan. Each of these Executives
also received $7,200 as a car allowance. Mr. O'Hare and Mr. McCarthy also
are eligible for up to $3,000 per year for supplemental medical expenses.
(8) Restricted stock grants presently held by Company executives consist of two
awards: shares subject to restrictions relating primarily to the passage of
time and continued employment ("General Restrictions" or "time-based"
restrictions) which vest ratably over a three year period, and an award of
stock subject to performance objectives such as financial performance of the
Company ("Performance Restrictions" or "performance-based" restrictions),
which vest in a lump sum when the specified performance goals are reached,
or in the event of the death, permanent disability of the executive,
retirement with approval of the Board or a change in control of the Company.
The performance goal for vesting the Long Term Incentive 1998
performance-based award is to meet or exceed the 75th percentile of Total
Shareholder Return of the Russell 2000 index, over a period of not less than
three years. Performance-based restricted stock awards were made by the
Committee to Mr. McCarten, Mr. Bethers, Mr. Martin, Mr. McCarthy and Mr.
O'Hare in August 1998. The Compensation Policy Committee administers the
restricted stock awards of the executives pursuant to performance criteria
set by the Committee. The 1998 "LTIP Payments" reflect the pretax, fair
market value of the released shares from the prior awards (made in 1993 to
Mr. McCarten, and in 1996 to the other executive officers) to Mr. Bethers,
Mr. Martin, Mr. McCarten, Mr. McCarthy and Mr. O'Hare, on February 1, 1999,
the date of release of the performance-based restricted stock shares for the
1998 fiscal year. All restricted stock awards subject only to General
Restrictions are presented on the Summary Compensation Table as "Restricted
Stock Awards", and the value stated in the Summary Compensation Table is the
fair market value on the date of the grant. As of January 1, 1999, the total
number and value of time-based and performance-based restricted shares held
by each executive is as follows: Mr. McCarten: 334,666 shares valued at
$3,461,785; Mr. McCarthy: 127,406 shares valued at $1,317,888; Mr. O'Hare:
112,614 shares valued at $1,164,879; Mr. Bethers: 90,082 shares valued at
$931,808; and Mr. Martin 77,756 shares valued at $804,308.
15
<PAGE> 17
PERFORMANCE GRAPH
The graph below compares the cumulative total return of the Company's common
stock against the cumulative total return of the S&P 500 Composite Stock Index
and the Russell 2000 index from the Distribution on December 29, 1995 through
January 1, 1999, the end of the 1998 fiscal year. The Russell 2000 index
contains companies with a range of market capitalizations comparable to the
Company. The Company has elected not to use a published industry or line-of-
business index because it believes that the Company has certain, but important,
differences from traditional food and beverage specialty companies, and it
believes the indexes chosen better reflect the performance of the Company. These
differences from traditional food and beverage specialty companies are more
fully reflected in the Company's Annual Report and its Annual Report on Form
10-K for 1998. The Company believes there is no published index with the exact
product and service mix of the Company.
The phrase "total cumulative return" assumes that $100 was invested on December
29, 1995 in the Company's common stock and in each index and that all dividends
(there were no dividends paid by the Company) were reinvested during the
specified periods. The price performance of the Company's common stock shown
below should not be viewed as being indicative of future performance.
[LINE GRAPH]
<TABLE>
<CAPTION>
HMSC S&P 500 Russell 2000
<S> <C> <C> <C>
December 29, 1995 100.00 100.00 100.00
January 3, 1997 137.50 124.18 116.31
January 3, 1998 206.25 164.77 142.31
January 1, 1999 148.21 210.85 139.28
</TABLE>
16
<PAGE> 18
STOCK OPTIONS
The tables below set forth information regarding the award and exercise during
fiscal year 1998 of certain options by each of the persons listed on the
preceding Summary Compensation Table and the value on January 1, 1999, the end
of the Company's fiscal year, of all unexercised options held by such
individuals. No stock appreciation rights were awarded to the listed persons by
the Company in fiscal year 1998.
AGGREGATED STOCK OPTION EXERCISES IN
LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES*
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
SHARES ACQUIRED VALUE FISCAL YEAR END(#) FISCAL YEAR END($)(1)
ON EXERCISE REALIZED --------------------------- ---------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William W. McCarten......... 600 5,081 8,650 0 89,476 0
John J. McCarthy............ 240 2,137 3,470 0 35,894 0
Thomas G. O'Hare............ 0 0 1,820 0 18,826 0
Brian W. Bethers............ 0 0 7,830 0 80,994 0
Joe P. Martin............... 180 1,524 473 0 4,893 0
</TABLE>
- -------------
* No Stock Appreciation Rights (SARs) were granted in 1998.
(1) Based on a per share price for Company Common Stock of $10.344. This price
reflects the average of the high and low trading prices on the New York
Stock Exchange on January 1, 1999. The value of the options reflect the gain
on the exercise of the option that would have been realized if the options
had been exercised on January 1, 1999.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
% OF TOTAL STOCK
OPTIONS GRANTED EXERCISE GRANT DATE IN-THE-MONEY
STOCK OPTIONS TO EMPLOYEES IN PRICE EXPIRATION PRESENT VALUE ON
NAME GRANTED(1)(#) FISCAL YEAR ($/SHARE) DATE(2) VALUE(3)($) 3/18/99(3)($)
---- ------------- ---------------- --------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William W. McCarten....... 245,518 14.4 $13.47 8/5/08 1,455,000 0
John J. McCarthy.......... 125,501 7.3 $13.47 8/5/08 743,750 0
Thomas G. O'Hare.......... 109,682 6.4 $13.47 8/5/08 650,000 0
Brian W. Bethers.......... 90,276 5.3 $13.47 8/5/08 535,000 0
Joe P. Martin............. 77,621 4.5 $13.47 8/5/08 460,000 0
</TABLE>
- -------------
(1) The stock options set forth in this table are performance-based options
granted by the Compensation Policy Committee in connection with the long
term performance incentive plan to reward executive officers for
significantly increasing shareholder value. The options can vest in not less
than 3 years, absent certain contingencies previously described, when the
Company meets or exceeds the 75th percentile of Total Shareholder Return of
the Russell 2000 index.
(2) The options vest, in a lump sum, on or before August 5, 2005, and must be
exercised on or before August 4, 2008. The options cannot vest prior to
August 5, 2001, absent certain contingencies previously described.
(3) The Black-Scholles option pricing model was used to determine the present
value of the options on the date of the grant. As of March 18, 1999, the
options were not in-the-money.
17
<PAGE> 19
LONG-TERM INCENTIVE AWARDS
The Compensation Policy Committee of the Company made Long-Term Incentive Plan
("LTIP") awards to the Company's executive officers in 1998. To motivate senior
executives and align their interests with shareholders for the purpose of
significantly increasing shareholder value, the Compensation Policy Committee
made new, long term performance stock awards to the Company's executive officers
in August 1998. With the advice of the Committee's independent compensation
consultant, Towers Perrin, and the Company's Vice President for Compensation,
the Committee made an annual award of performance-based restricted stock and
performance-based stock options to senior executives, including Mr. McCarten,
the President and CEO; Mr. Bethers, Executive Vice President and Chief Financial
Officer; Mr. Martin, Senior Vice President and General Counsel and Secretary;
Mr. McCarthy, Executive Vice President and Mr. O'Hare, Executive Vice President.
The performance-based awards for each executive are set forth below. The
performance restricted stock and stock options vest in a lump sum when the
performance goal established by the Compensation Policy Committee is satisfied,
or at the end of seven years from the grant (August 2005). The performance goal
is to meet or exceed 75th percentile of Total Shareholder Return of the Russell
2000 index, over a period of not less than three years. These awards are more
fully discussed in this Proxy Statement in the Report on Executive Compensation
by the Compensation Policy Committee.
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
PERFORMANCE OR UNDER NON-STOCK PRICE-BASED PLANS
NUMBER OF SHARES, OTHER PERIOD UNTIL ---------------------------------------------
UNITS OR OTHER MATURATION OR THRESHOLD
NAME RIGHTS(#)(1) PAYOUT(2)(3) ($ OR #) TARGET($ OR #) MAXIMUM($ OR #)
- ------------------------------- ------------------ ------------------ --------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
William J. McCarten............ 133,698 3-7 years N/A N/A N/A
John J. McCarthy............... 68,342 3-7 years N/A N/A N/A
Thomas G. O'Hare............... 59,728 3-7 years N/A N/A N/A
Brian W. Bethers............... 49,160 3-7 years N/A N/A N/A
Joe P. Martin.................. 42,269 3-7 years N/A N/A N/A
</TABLE>
- -------------
(1) The awards were made by the Company Compensation Policy Committee from the
Company's Comprehensive Stock Plan on August 5, 1998. The shares awarded are
performance-based restricted stock. The awards are subject to applicable
federal and state taxes, which must be satisfied in shares. The pre-tax
adjusted value of the awards on the date of the grants at $13.47 per share,
were: Mr. McCarten $1,800,912; Mr. McCarthy $920,567; Mr. O'Hare $804,536;
Mr. Bethers $662,185 and Mr. Martin $569,363.
(2) The awards may vest in a lump sum not less than 3 years from August 1998,
except in the event of certain contingencies, death, permanent disability or
change in control.
(3) The pre-tax values of the LTIP awards, using the average of the high and low
of the company stock traded on the New York Stock Exchange on January 1,
1999 which was $10.344 per share are as follows: Mr. McCarten $1,382,972;
Mr. McCarthy $706,930; Mr. O'Hare $617,826; Mr. Bethers $508,511; and Mr.
Martin $437,231.
CERTAIN TRANSACTIONS
RELATIONSHIP BETWEEN THE COMPANY AND HOST MARRIOTT CORPORATION AND MARRIOTT
INTERNATIONAL, INC. AND SODEXHO MARRIOTT SERVICES, INC.
J.W. Marriott, Jr. and Richard E. Marriott beneficially own approximately 7.59%
and 7.43%, respectively, of the outstanding shares of Common Stock. By reason of
their ownership of such shares of Common Stock and their positions as Directors,
J.W. Marriott, Jr. and Richard E. Marriott, who are also directors of Host
Marriott Corporation ("HMC") and Marriott International, Inc., would be deemed
in control of the Company within the meaning of the federal securities laws.
Other members of the Marriott family might also be deemed in control of the
Company by reason of their ownership of Company shares and/or their relationship
to other family members.
Prior to the Distribution of the Company to the shareholders of HMC on December
29, 1995, the Company and HMC entered into a Distribution Agreement, which
provided for, among other things, (i) certain asset transfers to occur prior to
the Distribution, (ii) the Distribution, (iii) the division between the Company
and HMC of certain liabilities and (iv) certain other
18
<PAGE> 20
agreements governing the relationship between the Company and HMC following the
Distribution.
Among the other agreements between the Company and HMC are:
(i) Tax Sharing Agreement. This Agreement defines the parties' rights and
obligations with respect to deficiencies and refunds of federal, state and other
income or franchise taxes relating to the Company for tax years prior to the
Distribution and with respect to certain tax matters of the Company after the
Distribution.
(ii) Employee Benefits Allocation Agreement. This Agreement allocates certain
responsibilities with respect to employee compensation, benefits and other
employment and labor matters.
(iii) Transitional Services Agreements. The Company and HMC also entered into a
number of agreements pursuant to which each company agreed to provide certain
services to the other and their respective subsidiaries for a transitional
period which has now expired. Such services were provided on market terms and
conditions.
In addition, HMC has agreed to guarantee the Company's performance in connection
with certain concessions operated by the Company. HMC has not been required to
make any payments pursuant to these guarantees and the Company does not
anticipate that any such payments will be made in 1999.
Also, in connection with the Distribution, the Company and Marriott
International, Inc. ("Marriott International") have entered into service
agreements substantially similar to pre-existing agreements between HMC and
Marriott International or, alternatively, the Company has accepted an assignment
of certain agreements between HMC and Marriott International. These include
agreements for administrative, consulting and procurement services ("MI
Agreements"). The amount of the payments to be made to Marriott International
under the MI Agreements in fiscal year 1999 will depend on the level of services
and supplies provided thereunder. In 1998, the approximate value of food and
supplies the Company purchased from affiliates of Marriott International was
$75.4 million. The Company also paid Marriott International $8.8 million in 1998
for corporate services such as computer systems support and other services.
There is a noncompetition agreement between the Company and Sodexho Marriott
Services, Inc. ("Sodexho Marriott Services"). The noncompetition agreement
extends to October 2000. The agreement provides, generally, that Sodexho
Marriott Services will not seek to enter the Company's venues of airports,
tollroads, and related venues, and the Company will not seek to enter Sodexho
Marriott Services venues related to institutional/contract food services.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal year 1998, the members of the Compensation Policy Committee were
Rosemary M. Collyer, Gilbert T. Ray, and R. Michael McCullough. In 1998, the
Company requested legal services from the law firm of Crowell & Moring, the
total of which is less than $50,000. Rosemary M. Collyer is a partner at the
firm. In 1998, the Company requested legal services for certain international
legal services from the law firm of O'Melveny & Myers, the total of which is
less than $50,000. Mr. Ray is a partner at the firm. All stock and compensation
awards of the Committee were separately approved by all other non employee
directors of the Board.
Mr. Shaw is Chairman of the Board of Sodexho Marriott Services. Mr. Shaw is also
a director of Marriott International and serves as its President and Chief
Operating Officer. J. W. Marriott Jr. is Chairman of the Board and Chief
Executive Officer of Marriott International and Richard E. Marriott is a
director of Marriott International.
19
<PAGE> 21
PROPOSAL ONE: DIRECTOR NOMINEES
The Board of Directors of the Company is composed of eight directors, seven of
whom are not officers or employees of the Company. The Certificate of
Incorporation classifies the current eight-member Board of Directors into three
classes. Each director serves for three years.
The terms of office of J.W. Marriott, Jr. and Andrew J. Young expire at the 1999
Annual Meeting. The Board of Directors, acting upon the recommendation of its
Nominating and Corporate Governance Committee, composed entirely of outside
directors of the Company, has nominated and recommends the re-election of Mr.
Marriott and Ambassador Young, each for a three-year term as director expiring
at the 2002 Annual Meeting of Shareholders. Neither Mr. Marriott or Ambassador
Young participated in the decision of the Board to nominate them for new terms
on the Board.
Unless otherwise instructed, the proxy holders will vote the proxies received by
them for Mr. Marriott and Ambassador Young.
If elected, each have consented to serve as directors for terms of three years
and until their respective successors are elected and qualified. Further
information with respect to the nominees is set forth under the section entitled
"Directors." Although it is not contemplated that any nominee will be unable to
serve as director, in such event, the proxies will be voted by the proxy holders
for such other person or persons as may be designated by the present Board of
Directors.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS A VOTE FOR J. W.
MARRIOTT, JR. AND ANDREW J. YOUNG AS DIRECTORS OF THE COMPANY FOR TERMS EXPIRING
AT THE ANNUAL MEETING OF SHAREHOLDERS IN 2002.
PROPOSAL TWO: APPOINTMENT OF AUDITORS
Subject to shareholder approval, the Board of Directors, acting through its
Audit Committee, has appointed Arthur Andersen LLP ("Arthur Andersen"), a firm
of independent public accountants, to audit and report to shareholders on the
consolidated financial statements of the Company and its subsidiaries for fiscal
year 1999. Arthur Andersen served as the public accountants of the Company for
fiscal year 1998. Representatives of Arthur Andersen will be present at the
Annual Meeting, will have an opportunity, if they so desire, to make a
statement, and will be available to respond to appropriate questions.
Unless otherwise instructed, the proxy holders will vote the proxies received by
them to ratify the appointment of Arthur Andersen LLP.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS A VOTE FOR SUCH
APPOINTMENT.
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
The Annual Meeting for 2000 is tentatively scheduled to be held on May 16, 2000.
Any shareholder who meets the requirements of the proxy rules under the
Securities Exchange Act of 1934 may submit to the Board of Directors proposals
to be considered for submission to the shareholders at the 2000 Annual Meeting.
Any such proposal should be submitted in writing by notice delivered or mailed
by first-class United States mail, postage prepaid, to the General Counsel, Host
Marriott Services Corporation, 6600 Rockledge Drive, Department 72/928.83,
Bethesda, Maryland 20817 and should be received no later than December 11, 1999
to be eligible for inclusion in the proxy materials for that meeting. Any such
notice shall set forth: (a) the name and address of the shareholder and the text
of the proposal to be introduced; (b) the number of shares of Company Common
Stock held of record, owned beneficially and represented by proxy by such
shareholder as of the date of such notice; and (c) a representation that the
20
<PAGE> 22
shareholder intends to appear in person or by proxy at the meeting to introduce
the proposal specified in the notice.
Any shareholder who meets the requirements of the proxy rules under the
Securities Exchange Act of 1934 may nominate a candidate for director of the
Company. Any such nomination should be submitted in writing by notice delivered
or mailed by first-class United States mail, postage prepaid, to the General
Counsel, Host Marriott Services Corporation, 6600 Rockledge Drive, Dept.
72/928.83, Bethesda, Maryland 20817 and must be received by December 11, 1999.
Any such notice shall set forth: (a) the name and address of the shareholder who
intends to make the nomination and of the person or persons to be nominated; (b)
a representation that the shareholder is a holder of record of Company Common
Stock entitled to vote at such meeting and intends to appear in person or by
proxy at the meeting to nominate the person or persons specified in the notice;
(c) the class and number of shares held of record, owned beneficially and
represented by proxy by such shareholder as of the date of the notice; (d) a
description of all arrangements or understandings between the shareholder and
each nominee and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by the
shareholder; (e) such other information regarding each nominee proposed by such
shareholder as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange Commission, had the
nominee been nominated, or intended to be nominated, by the Board of Directors;
and (f) the consent of each nominee to serve as a director of the Company if so
elected.
SOLICITATION OF PROXIES
Proxies will be solicited by mail, telephone, Internet or other means of
communication. Solicitation also may be made by directors, officers and regular
employees of the Company. The Company has retained MacKenzie Partners, Inc. to
assist in the solicitation of proxies from shareholders. MacKenzie Partners,
Inc. will receive a fee of $6,000 plus reimbursement of certain ordinary and
reasonable out-of-pocket expenses. The Company will reimburse brokerage firms,
custodians, nominees and fiduciaries in accordance with the rules of the New
York Stock Exchange for reasonable expenses incurred by them in forwarding
materials to the beneficial owners of shares. The entire cost of the
solicitation will be borne by the Company.
1998 FORM 10-K AND ANNUAL REPORT
All shareholders of record on the Annual Meeting Record Date will receive a copy
of the Company's 1998 Annual Report. Any shareholder who desires additional
copies of the Company's 1998 Annual Report or a copy of the Company's 1998
Annual Report on Form 10-K may obtain it without charge (except for exhibits for
which there is a copying charge) by addressing a request to Investor Relations,
Host Marriott Services Corporation, 6600 Rockledge Drive, Dept. 72/928.93,
Bethesda, Maryland 20817. The Company's Annual Report, Proxy Statement and most
recent financial information can also be found on our website. Please visit us
at www.hmscorp.com.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Joe P. Martin
Joe P. Martin
General Counsel and Secretary
21
<PAGE> 23
ANNUAL MEETING OF SHAREHOLDERS
OF HOST MARRIOTT SERVICES CORPORATION
The 1999 Annual Meeting of Shareholders of Host Marriott Services Corporation
will be held on Tuesday, May 11, 1999 at the Baltimore Marriott Inner Harbor,
110 S. Eutaw Street, Baltimore, Maryland 21201. The meeting will begin at 10:00
a.m. Doors to the meeting will open at 9:30 a.m.
Please contact the hotel for overnight reservations.
BALTIMORE MARRIOTT INNER HARBOR
110 S. EUTAW STREET
BALTIMORE, MARYLAND 21201
(410) 962-0202
Directions to the hotel:
TRAIN: Pennsylvania Station (Amtrak) -- 3 miles from Hotel. Taxis are
approximately $7.00.
PLANE: Baltimore Washington International Airport (BWI) -- 12 miles from Hotel.
Super Shuttle runs every 1/2 hour $10.00 one way, $15.00 round trip. Taxis are
approximately $18.00-$20.00.
CAR: FROM WASHINGTON, DC AND BWI AIRPORT (ROUTE 295) Take 295, North to
Baltimore (Baltimore Washington Parkway). Once in Baltimore 295 becomes Russell
Street. Follow traffic as it curves, with Oriole Park at Camden Yards on the
right (still on Russell Street). Turn right on Pratt Street (1 block) to Eutaw
Street. Turn left onto Eutaw Street and the Marriott hotel is on the left.
FROM WASHINGTON, DC VIA INTERSTATE 95 NORTH: Take 95, North to Baltimore, take
Exit 53, 395 North DOWNTOWN. When the expressway ends it becomes Howard Street.
Proceed on Howard Street for 4 traffic lights. At the 4th light (Lombard Street)
turn left and go one block to Eutaw Street. Turn left onto Eutaw Street and the
Marriott hotel is on the right.
FROM POINTS NORTH VIA INTERSTATE 95: Approaching Baltimore take the Fort McHenry
Tunnel (Toll $1.00). Take Exit 53, 395 North DOWNTOWN. When expressway ends it
becomes Howard Street. Proceed on Howard Street for 4 traffic lights. At the 4th
light (Lombard Street) turn left and go one block to Eutaw Street. Turn left
onto Eutaw Street and the Marriott hotel is on the right.
<PAGE> 24
HOST LOGO
April 9, 1999
Dear Shareholder:
We are pleased to be offering the following enhancements for our Shareholders
this year.
The first enhancement involves new and more convenient ways to vote your shares.
In addition to the traditional paper proxy card, shareholders may also vote via
the Internet by accessing the website maintained by our transfer agent, First
Chicago Trust Co., at www.vote-by-net.com or you may vote by telephone by
calling (800) 652-8683. To vote via the Internet or by telephone you must use
the control number printed on the enclosed proxy card.
Our second enhancement enables shareholders to receive future proxy materials,
including the proxy card and the Annual Report electronically via the Internet.
Delivery of proxy materials via this method will assist us in minimizing proxy
solicitation and printing costs. Shareholders who elect to receive proxy
solicitation materials via the Internet should fill out the consent form
maintained by First Chicago at www.vote-by-net.com.
IF YOU HAVE ANY QUESTIONS, OR NEED ASSISTANCE IN VOTING YOUR SHARES, PLEASE CALL
MACKENZIE PARTNERS, INC., OUR PROXY SOLICITOR, AT (800) 322-2885 OR (212)
929-5500 (CALL COLLECT).
In addition to the described voting enhancements, Internet account access is now
available to registered shareholders. Through the Internet, you can view your
share balance, access your account history, and obtain current and historical
stock prices. To view your account on the Internet, please call First Chicago
Trust Co. at 1-877-843-9327 and they will mail you a password. The password
provides you secure access to your information.
We hope you find these enhancements helpful.
Sincerely,
/s/ Joe P. Martin
Joe P. Martin
General Counsel and Secretary
<PAGE> 25
HOST LOGO
April 9, 1999
Dear Shareholder:
We are pleased to be offering the following enhancements to our proxy
solicitation process this year.
The first enhancement involves new and more convenient ways to vote your shares.
In addition to the traditional paper proxy card, shareholders may also vote via
the Internet by accessing the ADP's website at www.proxyvote.com or you may vote
by telephone by calling the toll free number indicated on the enclosed proxy
card. In order to vote by either the Internet or by telephone, you will need the
individualized 12 digit control number that is imprinted on your proxy card.
Our second enhancement enables shareholders to receive future proxy materials,
including the proxy card and the Annual Report electronically via the Internet.
Delivery of proxy materials via this method will assist us in minimizing proxy
solicitation and printing costs. Shareholders who elect to receive proxy
solicitation materials via the Internet must first vote their shares using the
Internet at www.proxyvote.com and immediately after voting fill out the consent
form that appears on-screen at the end of the Internet voting procedure.
We hope you find these enhancements helpful. If you have any questions, or need
assistance in voting your shares, please call MacKenzie Partners, Inc., our
proxy solicitor, at (800) 322-2885 or (212) 929-5500 (call collect).
Sincerely,
/s/ Joe P. Martin
Joe P. Martin
General Counsel and Secretary
<PAGE> 26
6807
[X] PLEASE MARK YOUR
VOTE AS IN THIS
EXAMPLE
<TABLE>
<CAPTION>
THIS PROXY, WHERE PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR ELECTION OF DIRECTORS, AND FOR PROPOSAL 2.
- ------------------------------------------------------------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of [ ] [ ] 2. Ratification of
Directors. appointment of Arthur
(see reverse) Andersen LLP as
independent auditors. [ ] [ ] [ ]
For, except vote withheld from the following nominee(s):
--------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Mark here to discontinue Annual Report
mailing for this account
(for multiple account holders only) [ ]
I WILL ATTEND THE ANNUAL MEETING [ ]
Change of
SIGNATURES(S)___________________________________________ DATE________________ Address/Comments on
NOTE: Please sign exactly as name appears hereon. Joint owners should each Reverse Side [ ]
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
- ------------------------------------------------------------------------------------------------------------------------------------
/\ FOLD AND DETACH HERE / \
</TABLE>
[HOST MARRIOTT SERVICES LOGO]
Dear Shareholder:
Host Marriott Services Corporation encourages you to take advantage of
convenient ways by which you can vote your shares. You can vote your shares over
the Internet or by telephone. This eliminates the need to return the proxy card.
To vote your shares over the Internet or by telephone you must use the control
number. The control number is the series of numbers printed in the box above,
just below the perforation. This control number must be used to access the
system.
1. To vote over the Internet:
- Log on to the Internet and go to the web site
http://www.vote-by-net.com 24 hours a day, 7 days a week.
2. To vote over the telephone:
- On a touch-tone telephone call 1-800-OK2-VOTE (1-800-652-8683)
24 hours a day, 7 days a week.
Your Internet or telephone vote authorizes the named proxies in the same manner
as if you marked, signed, dated and returned the proxy card. If you choose to
vote your shares over the Internet or by telephone, there is no need for you to
mail back your proxy card.
YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING.
<PAGE> 27
HOST MARRIOTT SERVICES CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
P
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
R TO BE HELD TUESDAY, MAY 11, 1999, 10:00 A.M.
O The undersigned appoints William J. Shaw and William W. McCarten as
Proxies. Each shall have power to appoint his substitute. They are
X authorized to represent and vote, as designated on the reverse side, all
shares of Host Marriott Services Corporation common stock held of record
Y by the undersigned on March 18, 1999 at the Annual Meeting of
Shareholders to be held on May 11, 1999 or any adjournment thereof. The
Board of Directors recommends votes FOR proposals 1 and 2.
COMMENTS OR CHANGE OF ADDRESS
Nominees for election as directors for
three-year terms expiring at the 2002
Annual Meeting. ________________________________
________________________________
01 J.W. Marriott, Jr. ________________________________
02 Andrew J. Young ________________________________
(If you have written in the
above space, please mark the
corresponding box on the reverse
side of this card)
--------------
SEE REVERSE
SIDE
--------------
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
- --------------------------------------------------------------------------------
/\ DETACH PROXY CARD HERE /\
ADMISSION TICKET
HOST MARRIOTT SERVICES CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
Tuesday, May 11, 1999, 10:00 a.m.
Baltimore Marriott Inner Harbor
110 S. Eutaw Street
Baltimore, Maryland 21201
- --------------------------------------------------------------------------------
AGENDA
- --------------------------------------------------------------------------------
1. ELECTION OF TWO DIRECTORS
-
2. RATIFICATION OF ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS
-
TRANSACTION OF OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT.
- --------------------------------------------------------------------------------
It is important that your shares are represented at this meeting, whether or not
you attend the meeting in person. To make sure your shares are represented,
we urge you to vote your shares either by telephone or the Internet or
by completing and mailing the proxy card above.
- --------------------------------------------------------------------------------
If you and your guest plan on attending the Annual Meeting, please mark the
appropriate box on the proxy card above. Present this Admission Ticket to
the Host Marriott Services Corporation representative at the entrance.
- --------------------------------------------------------------------------------
