<PAGE> 1
================================================================================
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
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY
(AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
BOYKIN LODGING COMPANY
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: Not Applicable Not Applicable
(2) Form, Schedule or Registration Statement No.: Not Applicable
(3) Filing Party: Not Applicable
(4) Date Filed: Not Applicable
================================================================================
<PAGE> 2
BOYKIN LODGING COMPANY
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
------------------------
Notice is hereby given that the Annual Meeting of Shareholders of Boykin
Lodging Company will be held at the Cleveland Marriott East, 3663 Park East
Drive, Beachwood, Ohio 44122, on Tuesday, May 26, 1998, at 10:00 a.m.,
Cleveland, Ohio, time, for the following purposes:
1. To elect seven directors, each to serve until the next annual
meeting of the shareholders and until his successor has been duly elected
and qualified;
2. To receive reports at the meeting. No action constituting approval
or disapproval of the matters referred to in said reports is contemplated;
and
3. To transact such other business as may properly come before the
meeting.
Only shareholders of record at the close of business on March 30, 1998,
will be entitled to notice of and to vote at the meeting or any adjournment
thereof. Shareholders are urged to complete, date and sign the enclosed proxy
and return it in the enclosed envelope. The principal address of Boykin Lodging
Company is Guildhall Building, Suite 1500, 45 W. Prospect Avenue, Cleveland,
Ohio 44115.
By order of the Board of Directors,
RAYMOND P. HEITLAND,
Secretary
Dated: April 23, 1998
YOUR VOTE IS IMPORTANT.
PLEASE SIGN, DATE AND RETURN YOUR PROXY
THE COMPANY RECENTLY MAILED TO ITS SHAREHOLDERS A SEPARATE JOINT PROXY
STATEMENT/PROSPECTUS AND PROXY CARD RELATING TO ITS PROPOSED MERGER WITH RED
LION INNS LIMITED PARTNERSHIP. BOTH THE PROPOSED MERGER AND THE ANNUAL MEETING
OF SHAREHOLDERS REQUIRE SEPARATE SHAREHOLDER ACTION. YOUR VOTE IS IMPORTANT FOR
BOTH THE PROPOSED MERGER AND THE ANNUAL MEETING.
<PAGE> 3
BOYKIN LODGING COMPANY
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of
proxies to be used at the Annual Meeting of Shareholders of Boykin Lodging
Company, an Ohio corporation (the "Company"), to be held at the Cleveland
Marriott East, 3663 Park East Drive, Beachwood, Ohio 44122, on Tuesday, May 26,
1998, at 10:00 a.m., Cleveland, Ohio, time, and at any adjournment thereof. This
proxy statement and the accompanying notice and proxy will first be sent to
shareholders by mail on or about April 23, 1998.
Annual Report. A copy of the Company's Annual Report to Shareholders for
the fiscal year ended December 31, 1997 is enclosed with this proxy statement.
Solicitation and Revocation of Proxies. This solicitation of proxies is
made by and on behalf of the Board of Directors. The cost of the solicitation of
proxies will be borne by the Company. In addition to solicitation of proxies by
mail, regular employees of the Company or its affiliates may solicit proxies by
telephone or facsimile.
If the enclosed proxy is signed and returned, the shares represented
thereby will be voted in accordance with any specification made therein by the
shareholder. In the absence of any such specification, they will be voted to
elect the director nominees set forth under the heading "Election of Directors."
A shareholder's presence at the meeting, without more, will not operate to
revoke his or her proxy. The proxy is revocable by a shareholder at any time
insofar as it has not been exercised by executing and delivering a later-dated
proxy or by giving notice to the Company in writing at its address indicated on
the attached Notice of Annual Meeting of Shareholders, or in open meeting.
Outstanding Shares. The close of business on March 30, 1998, has been
fixed as the record date for the determination of shareholders entitled to
notice of and to vote at the meeting. On that date, the Company's voting
securities outstanding consisted of 14,042,251 Common Shares, without par value,
each of which is entitled to one vote at the meeting.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company common shares (the "Common Shares") as of February 28,
1998, by: (a) the Company's directors (all of whom are also nominees for
director); (b) each other person who is known by the Company to own beneficially
more than 5% of the outstanding Common Shares; (c) the Company's Chief Executive
Officer and the four other most highly compensated executive officers named in
the Summary Compensation Table; and (d) the Company's executive officers and
directors as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT
NAME OF BENEFICIAL OWNER(1) BENEFICIALLY OWNED OF CLASS
--------------------------- ------------------ --------
<S> <C> <C>
Capital Growth Management Limited Partnership............... 943,000(2) 6.71%
One International Place
Boston, MA 02110
Robert W. Boykin(3)......................................... 93,433(4) *
Raymond P. Heitland(3)...................................... 18,334(5) *
Mark L. Bishop.............................................. 25,000(6) *
Paul A. O'Neil(3)........................................... 26,000(7) *
Andrew C. Alexander......................................... 0 0
Michael D. Murphy........................................... 0 0
Albert T. Adams............................................. 5,000(8) *
Lee C. Howley, Jr........................................... 12,000(8) *
Frank E. Mosier............................................. 5,000(8) *
William H. Schecter......................................... 0 0
Ivan J. Winfield............................................ 6,000(8) *
All Executive Officers and Directors as a Group............. 190,767 1.36%
</TABLE>
<PAGE> 4
- ---------------
* Less than 1%.
(1) Unless otherwise indicated, a beneficial owner has sole voting and
investment power with respect to all Common Shares set forth opposite his
name.
(2) The Common Shares are held in investment accounts maintained with Capital
Growth Management Limited Partnership ("Capital Growth") as of December 31,
1997. Capital Growth disclaims any beneficial interest in such shares.
Capital Growth has advised that it has sole voting and shared dispositive
power as to such shares.
(3) Robert W. Boykin owns 577,112 limited partnership interests ("Units") in
Boykin Hotel Properties, L.P., an Ohio limited partnership (the
"Partnership"); John E. Boykin and William J. Boykin, Robert W. Boykin's
brother and father, own 484,381 and 150,000 Units, respectively; and Raymond
P. Heitland and Paul A. O'Neil own 10,650 and 1,400 Units, respectively. The
Company owns approximately a 90.3% general partnership interest in the
Partnership. Under the Amended and Restated Agreement of Limited Partnership
of the Partnership, each of Robert W. Boykin, John E. Boykin, William J.
Boykin, Raymond P. Heitland and Paul A. O'Neil may cause the Partnership to
purchase his Units on or after November 4, 1999, for cash (the purchase
price of one Unit, subject to certain factors, being equal to the market
value of one Common Share of the Company). However, the Company may elect,
subject to certain conditions, to deliver Common Shares of the Company, in
lieu of cash, in exchange for tendered Units. Assuming conversion of their
Units into Company Common Shares, Robert W. Boykin and John E. Boykin would
beneficially own 4.37% and 3.16%, respectively, of the Company. Each of
William J. Boykin, Raymond P. Heitland and Paul A. O'Neil would beneficially
own less than 1% of the Company.
(4) Includes 73,333 common shares which Mr. Boykin has the right to acquire
through the exercise of a share option and 20,000 common shares which are
owned by Boykin Management Company Limited Liability Company, an Ohio
limited liability company ("BMC"), in which Mr. Boykin indirectly owns
approximately a 54% equity interest.
(5) Includes 13,333 common shares which Mr. Heitland has the right to acquire
through the exercise of a share option.
(6) Represents the 25,000 common shares which Mr. Bishop has the right to
acquire through the exercise of a share option.
(7) Includes 25,000 common shares which Mr. O'Neil has the right to acquire
through the exercise of a share option.
(8) Includes 5,000 common shares which each of Messrs. Adams, Howley, Mosier and
Winfield have the right to acquire through the exercise of a share option.
ELECTION OF DIRECTORS
In accordance with the Company's Code of Regulations, the number of
directors has been fixed at seven. At the Annual Meeting of Shareholders, the
shares represented by proxies, unless otherwise specified, will be voted for the
election of the seven nominees hereinafter named, each to serve until the next
Annual Meeting of Shareholders and until his successor is duly elected and
qualified.
The director nominees are identified in the following table. Each is
currently a director of the Company and was elected as a director at the 1997
Annual Meeting of Shareholders, except Mr. Schecter, who was elected by the
Board of Directors in August 1997 to fill a vacancy.
If for any reason any of the nominees is not a candidate when the election
occurs (which is not expected), the Board of Directors expects that proxies will
be voted for the election of a substitute nominee designated by management. The
following information is furnished with respect to each person nominated for
election as a director.
2
<PAGE> 5
NOMINEES FOR ELECTION AT THE ANNUAL MEETING
<TABLE>
<CAPTION>
EXPIRATION
PERIOD OF TERM
PRINCIPAL OCCUPATION OF SERVICE FOR WHICH
NAME AND AGE AND BUSINESS EXPERIENCE AS A DIRECTOR PROPOSED
------------ ----------------------- ------------- ----------
<S> <C> <C> <C>
Robert W. Boykin Chairman of the Board of Directors, 1996 to date 1999
48 President and Chief Executive Officer
of the Company
Raymond P. Heitland Secretary and Chief Financial Officer 1996 to date 1999
62 of the Company
Albert T. Adams Partner, Baker & Hostetler LLP 1996 to date 1999
47
Lee C. Howley, Jr. President, Howley & Company 1996 to date 1999
50
Frank E. Mosier Director of Associated Estates Realty 1996 to date 1999
67 Corporation
William H. Schecter President of National City Capital 1997 to date 1999
55 Corporation
Ivan J. Winfield Associate Professor at Baldwin- 1996 to date 1999
63 Wallace College
</TABLE>
Each of the nominees for election as a director has engaged in the
principal occupation or activity indicated for at least five years, except as
described below.
Mr. Boykin served as the President and Chief Executive officer of Boykin
Management Company from 1985 until November 1996. Mr. Heitland served as the
Chief Financial Officer of Boykin Management Company from 1970 until November
1996. Mr. Mosier served as Vice Chairman of the Advisory Board of BP America
Inc., a producer and refiner of petroleum products, from August 1991 to August
1993. Mr. Winfield served as managing partner of Coopers & Lybrand, L.L.P.'s
Northeast Ohio practice from 1990 until October 1994.
Mr. Adams is a director of Developers Diversified Realty Corporation and
Associated Estates Realty Corporation. Mr. Howley is a director of Captec Net
Lease Realty, Inc., LESCO, Inc. and International Total Services, Inc., and
currently serves as Co-Chairman of the Rock and Roll Hall of Fame and Museum in
Cleveland, Ohio. Mr. Mosier is a director of Associated Estates Realty
Corporation. Mr. Schecter is a director of NatCity Investments, a registered
investment company. Mr. Winfield is a director of HMI Industries, Inc. and
International Total Services, Inc. and a trustee of the Fairport Funds.
During the fiscal year ended December 31, 1997, the Board of Directors held
ten meetings. The Board of Directors has appointed an Audit Committee, an
Executive Committee, a Compensation Committee and a Long-Term Incentive Plan
Committee. The Board of Directors does not have a Finance or Nominating
Committee. Each member of the Board of Directors attended at least 75% of the
meetings of the Board of Directors and of the committees on which he served.
The Audit Committee comprises Messrs. Adams, Howley, Mosier, Schecter and
Winfield. During the fiscal year ended December 31, 1997, the Audit Committee
held one meeting. The Audit Committee recommends annually to the Board of
Directors the independent public accountants for the Company, reviews with the
independent public accountants the arrangements for and scope of the audits to
be conducted by them and the results of those audits, and reviews various
financial and accounting matters affecting the Company.
The Executive Committee comprises Messrs. Boykin, Heitland and Adams.
During the fiscal year ended December 31, 1997, the Executive Committee took
action by unanimous written consent on four occasions. The Executive Committee,
during the intervals between the meetings of the Company's Board of Directors,
3
<PAGE> 6
possesses and may exercise all of the powers of the Board of Directors in the
management of the business and affairs of the Company, except as otherwise
provided (i) by law, (ii) in the Amended and Restated Articles of Incorporation
of the Company or in the Code of Regulations of the Company (in each case as
amended from time to time), or (iii) by action of the Board of Directors.
The Compensation Committee comprises Messrs. Adams, Howley, Mosier,
Schecter and Winfield. During the fiscal year ended December 31, 1997, the
Compensation Committee held one meeting. The Compensation Committee periodically
reviews and determines the compensation, including fringe benefits and incentive
compensation, of officers and management personnel of the Company.
The Long-Term Incentive Plan Committee, which comprises Messrs. Howley,
Mosier, Schecter and Winfield, administers the Company's Long-Term Incentive
Plan and determines the employees of the Company who may participate in the
grant of any award (including share options), and the terms thereof, under the
Long-Term Incentive Plan. During the fiscal year ended December 31, 1997, the
Long-Term Incentive Plan Committee held one meeting and took action by unanimous
written consent on one occasion.
Directors' Compensation. Each director is compensated at the rate of
$20,000 per year ($16,000 for 1997). Each director also receives $1,000 for
attendance at each meeting of the Board of Directors and for each meeting of any
committee. Employees and officers of the Company or of a subsidiary of the
Company who are also directors are not paid any such director fees. On December
2, 1997, each director who was not an employee of the Company (Messrs. Adams,
Howley, Mosier, Schecter and Winfield) received an option for 5,000 Common
Shares, exercisable at $25.62 per share on and after December 2, 1998.
Non-employee directors are permitted to defer all or a portion of their
fees pursuant to the Company's Directors' Deferred Compensation Plan (the
"Deferred Plan"). The Deferred Plan, which is administered by Company officers
who are not eligible to participate in it, is unfunded and participants'
contributions are converted to units, the value of which fluctuate according to
the market value of the Company's Common Shares. During his term as a director,
Mr. Adams has deferred compensation represented by 1,430 units. As of February
28, 1998, those units were valued at $35,482.
COMPENSATION COMMITTEE REPORT
Introduction. The Compensation Committee (the "Committee") is responsible
for determining the compensation to be paid to the Company's executive officers.
The Committee is also responsible for making major policy decisions with respect
to health care and other benefit plans. The Long-Term Incentive Plan is
administered by the Company's Long-Term Incentive Plan Committee, which consists
of all of the members of the Committee except Mr. Adams.
The Committee's philosophy with respect to the compensation of the
Company's executive officers is (i) to provide a competitive total compensation
package that enables the Company to attract and retain qualified executives and
align their compensation with the Company's overall business strategies, and
(ii) through the Long-Term Incentive Plan Committee, to provide each executive
officer with a significant equity stake in the Company through share options.
To this end, the Committee determines executive compensation with a focus
on compensating executive officers based on their responsibilities and the
Company's performance. The primary components of the Company's executive
compensation program are (i) base salaries and certain other annual
compensation, (ii) bonuses and (iii) share options.
Base Salaries and Other Annual Compensation. The base salaries and certain
other compensation for the Company's executive officers in 1997 were determined
with reference to their experience in the industry, together with comparisons of
compensation paid by companies of similar size in the real estate investment
trust industry--including certain, but not all, of the companies included in
NAREIT (the National Association of Real Estate Investment Trusts). This
compensation was determined after consulting with the Company's financial
advisors and the managing underwriters of the Company's November 1996 initial
public offering.
4
<PAGE> 7
The initial base salaries for Messrs. Boykin, Heitland and Bishop are set
forth in employment agreements entered into between those officers and the
Company as of November 4, 1996. These agreements provide for initial annual base
salaries of $250,000, $150,000 and $140,000, respectively, for Messrs. Boykin,
Heitland and Bishop. Mr. O'Neil's initial base salary of $140,000 was set in May
1997. See "Employment Agreements and Arrangements." In addition, each of the
employment agreements and Mr. O'Neil's employment arrangement provides for use
of an automobile, health insurance and certain other benefits. The Committee
believes that these annual compensation packages are commensurate with Messrs.
Boykin's, Heitland's, Bishop's and O'Neil's experience and responsibility.
Bonuses. Mr. Boykin is entitled to a bonus of from 10% to 90% of his
annual base salary, and Messrs. Heitland, Bishop and O'Neil are entitled to
bonuses of from 5% to 45% of their annual base salaries, if Funds From
Operations per Common Share for the year exceed, by 5% to 20% or more, the Funds
From Operations per Common Share for the immediately preceding year. The formula
for determining these bonuses was determined after consultation with the
managing underwriters of the Company's November 1996 initial public offering.
"Funds From Operations" means income (loss) before minority interest (computed
in accordance with generally accepted accounting principles), excluding gains
(losses) from debt restructuring and sales of property (including furniture and
equipment), plus real estate-related depreciation and amortization (excluding
amortization of financing costs), and after adjustments for unconsolidated
partnerships and joint ventures.
Share Options. All of the Company's executive officers are eligible to
receive options to purchase Common Shares of the Company under the Long-Term
Incentive Plan. The Company's Long-Term Incentive Plan permits the Long-Term
Incentive Plan Committee to grant share option awards which are designed to
encourage and enable key employees of the Company to acquire a larger share
ownership and personal financial interest in the Company. The Compensation
Committee believes that share option awards subject to periodic vesting enable
the Company to attract and retain qualified individuals for service with the
Company. Individual option grants, with exercise prices at least equal to the
fair market value of the Company's Common Shares on the date of grant, are
determined by the Long-Term Incentive Plan Committee based on the executive's
current performance, potential for future responsibility, and the impact of the
particular executive officer's performance on the operational results of the
Company. Share option awards made during the last fiscal year to the named
executive officers of the Company are set forth in "Option Grants in Last Fiscal
Year" on page 7 of this proxy statement.
Albert T. Adams
Lee C. Howley, Jr.
Frank E. Mosier
William H. Schecter
Ivan J. Winfield
5
<PAGE> 8
EXECUTIVE COMPENSATION
The following information is set forth with respect to the Company's Chief
Executive Officer and each of the Company's four other most highly compensated
executive officers. The amounts for fiscal year 1996 reflect compensation paid
by the Company from November 4, 1996 (the date of its initial public offering)
through the end of the fiscal year. The Company did not pay compensation for any
period prior to November 4, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
--------------------
ANNUAL COMPENSATION AWARDS
---------------------------------- --------------------
OTHER RESTRICTED ALL
ANNUAL SHARE SHARE OTHER
NAME AND FISCAL SALARY BONUS COMPENSATION AWARD(S) OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($)(1) ($) (#)(2) ($)(3)
------------------ ------ -------- -------- ------------ ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert W. Boykin 1997 $251,181 $225,000 -- -- 25,000 $158,727
Chairman, President 1996 41,896 18,853 -- -- 250,000 1,046
and Chief Executive 1995 -- -- -- -- -- --
Officer
Raymond P. Heitland 1997 150,486 67,500 -- -- 5,000 33,900
Chief Financial Officer 1996 25,137 5,027 -- -- 75,000 570
and Secretary 1995 -- -- -- -- -- --
Mark L. Bishop 1997 140,454 63,000 -- -- 5,000 30,947
Senior Vice President - 1996 23,462 4,692 -- -- 75,000 --
Acquisition 1995 -- -- -- -- -- --
Paul A. O'Neil(4) 1997 87,453 88,625(5) -- -- 80,000 20,015
Treasurer 1996 -- -- -- -- -- --
1995 -- -- -- -- -- --
Andrew C. Alexander(6) 1997 42,852 19,110 -- -- 23,500 6,338
Corporate Counsel 1996 -- -- -- -- -- --
1995 -- -- -- -- -- --
</TABLE>
- ---------------
(1) No named executive officer received total perquisites and other personal
benefits above the threshold amounts specified in the regulations
promulgated by the Securities and Exchange Commission.
(2) See the Option table on page 7 for a schedule of options vesting.
(3) Amounts shown represent the Company's contributions on behalf of each of the
named executive officers to the Company's money purchase pension plan and on
behalf of Messrs. Boykin ($6,600), Heitland ($3,900) and Bishop ($2,625) to
the Company's nonqualified savings plan. Of the amount shown for Mr. Boykin,
$122,127 constitutes the aggregate amount of life insurance premiums paid by
the Company on two split-dollar life insurance policies.
(4) Mr. O'Neil commenced employment with the Company on May 20, 1997.
(5) Includes 1,000 shares granted to Mr. O'Neil on December 2, 1997 under the
Company's Long-Term Incentive Plan.
(6) Mr. Alexander commenced employment with the Company on July 30, 1997.
EMPLOYMENT AGREEMENTS AND ARRANGEMENTS
Robert W. Boykin, Raymond P. Heitland and Mark L. Bishop entered into
employment contracts with the Company in connection with the Company's November
1996 initial public offering. Mr. Boykin's agreement provides for an initial
three-year term that is automatically extended for an additional year at the end
of each year of the agreement, subject to the right of either party to terminate
the agreement by giving two years' prior written notice. The agreements for
Messrs. Heitland and Bishop both provide for one year terms that are
automatically extended for an additional year at the end of each year of the
agreement, subject to the
6
<PAGE> 9
right of either party to terminate the agreement by giving six months' prior
written notice. Mr. Heitland's and Mr. Bishop's employment agreements are
currently in effect until December 31, 1998. Each of Messrs. Boykin, Heitland
and Bishop is prohibited from competing with the Company during the term of his
employment agreement and, in the case of Messrs. Boykin and Heitland, for a term
of two years thereafter and, in the case of Mr. Bishop, for a term of six months
thereafter.
Each agreement provides for the annual base salary and bonus described
under the Compensation Committee Report, and for the use of an automobile,
medical and dental benefits, vacation and sick leave and certain additional
compensation. Mr. Boykin's employment agreement also provides for membership in
a country club, a golf club and a downtown business club and for certain life
insurance benefits.
In May 1997, the Company entered into an employment arrangement with Paul
A. O'Neil. The arrangement provides for an initial one year term that will be
extended for an additional year at the end of each year of the arrangement,
subject to the right of either party to terminate the arrangement by giving six
months' prior written notice. Mr. O'Neil is entitled to the use of an
automobile, medical and dental benefits, vacation and sick leave and certain
additional benefits available to the Company's other executive officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------- POTENTIAL REALIZABLE
PERCENTAGE OF VALUE AT ASSUMED
TOTAL OPTIONS ANNUAL RATES OF STOCK
GRANTED TO PRICE APPRECIATION FOR
EMPLOYEES OPTION TERM(3)
OPTIONS FISCAL EXERCISE PRICE EXPIRATION -----------------------
NAME GRANTED(1) YEAR(2) ($/SHARE) DATE 5% 10%
---- ---------- -------------- -------------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Robert W. Boykin 25,000 16.83% $25.62 December 2007 $ 402,791 $1,020,777
Raymond P. Heitland 5,000 3.36% $25.62 December 2007 80,558 204,155
Mark L. Bishop 5,000 3.36% $25.62 December 2007 80,558 204,155
Paul A. O'Neil 75,000(4) 50.50% $22.31 May 2007 1,052,009 2,666,692
5,000 3.36% $25.62 December 2007 80,558 204,155
Andrew C. Alexander 20,000(5) 13.46% $23.28 July 2007 292,733 742,036
3,500 2.35% $25.62 December 2007 56,391 142,908
</TABLE>
- ---------------
(1) Options are not exercisable during the first 12 months after the date of
grant, except as described in footnote 4.
(2) Based on 148,500 options granted to all employees during the fiscal year.
(3) These amounts are based on hypothetical appreciation rates of 5% and 10% and
are not intended to forecast the actual future appreciation of the Company's
shares. No gain to optionees is possible without an actual increase in the
price of the Company's shares, which would benefit all of the Company's
shareholders. All calculations are based on a ten-year option period.
(4) The option was granted in May 1997 in connection with Mr. O'Neil's
commencement of employment. The option provides for vesting with respect to
25,000 shares in each of November 1997, November 1998 and November 1999.
(5) The option was granted in July 1997 in connection with Mr. Alexander's
commencement of employment. The option provides for vesting with respect to
6,666 shares in July 1998 and 6,667 shares in each of July 1999 and July
2000.
7
<PAGE> 10
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FISCAL YEAR-END FISCAL YEAR-END
SHARES VALUE (#) ($)(1)
ACQUIRED ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) ($) UNEXERCISABLE UNEXERCISABLE
---- ----------- -------------- --------------- -------------------
<S> <C> <C> <C> <C>
Robert W. Boykin -- -- 73,333/201,667 $472,265/$1,158,235
Raymond P. Heitland 5,000 $27,800 13,333/61,667 85,865/369,035
Mark L. Bishop -- -- 25,000/55,000 161,000/326,100
Paul A. O'Neil -- -- 25,000/55,000 103,250/210,600
Andrew C. Alexander -- -- -0-/23,500 -0-/66,070
</TABLE>
- ---------------
(1) Represents the difference between the aggregate exercise price of the
options and the closing price of the Company's Common Shares of $26.44 per
share on December 31, 1997.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Albert T. Adams, a member of the Compensation Committee, is a partner in
Baker & Hostetler LLP, which acts as general legal counsel for the Company. The
Company expects that Baker & Hostetler LLP will continue to provide legal
services in that capacity in 1998.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company owns approximately a 90.3% general partnership interest in the
Partnership. Robert W. Boykin, Chairman, President and Chief Executive Officer
of the Company, owns 577,112 Units (a 4.3% limited partnership interest) in the
Partnership. John E. Boykin and William J. Boykin, Robert W. Boykin's brother
and father, own 484,381 and 150,000 Units, respectively. Raymond P. Heitland, a
director and the Chief Financial Officer of the Company, and Paul A. O'Neil, the
Treasurer of the Company, own 10,650 and 1,400 Units, respectively. See
"Security Ownership of Certain Beneficial Owners and Management."
The Partnership owns 15 hotels that it leases, under percentage leases, to
BMC. Robert W. Boykin and his brother John E. Boykin indirectly own
approximately a 54% and a 46% equity interest, respectively, in BMC. John E.
Boykin is a director and the secretary of BMC, and Robert W. Boykin and Paul A.
O'Neil are directors of BMC. For the fiscal year ended December 31, 1997, BMC
paid to the Partnership approximately $34.8 million in rent. In 1998, BMC will
continue to pay the Partnership rent under the percentage leases.
The Company entered into an Agreement and Plan of Merger (the "Merger
Agreement") on December 30, 1997 with Red Lion Inns Limited Partnership ("Red
Lion") and certain related parties, pursuant to which the Company agreed to
acquire (through the Partnership) the portfolio of 10 DoubleTree licensed hotels
containing 3,062 rooms owned by Red Lion (the "DoubleTree Hotels"). The
DoubleTree Hotels are currently leased by Red Lion Inns Operating L.P. to
Westboy LLC, a wholly owned subsidiary of BMC. If the merger is completed, the
Partnership will own Red Lion Inns Operating L.P., which will continue to lease
the hotels to Westboy LLC. Westboy LLC will then pay Red Lion Inns Operating
L.P. rent for the DoubleTree Hotels under a percentage lease.
The Company believes that the leases with BMC are as favorable to the
Company and the Partnership as leases with independent third party lessees would
be, and that the lease with Westboy LLC (if the proposed merger is completed)
will be as favorable to the Company and the Partnership as a lease with an
independent third party lessee would be.
On September 5, 1997, BMC purchased 20,000 Common Shares from the Company
for $490,625. The purchase price of $24.53 per share was equal to the per Unit
price paid by the Company from the proceeds of the sale to purchase Units from
two unrelated parties. The per Unit price was based on the average closing
8
<PAGE> 11
price of the Company's Common Shares on the New York Stock Exchange for a recent
10-day trading period in accordance with the agreement under which the Company
purchased the Units. BMC intends to use the 20,000 Common Shares in connection
with an incentive compensation plan for its senior executives.
Albert T. Adams, a director of the Company, is a partner in Baker &
Hostetler LLP, which acts as general legal counsel for the Company. The Company
expects that Baker & Hostetler LLP will continue to provide legal services in
that capacity in 1998.
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total return of a
hypothetical investment in the Common Shares with the cumulative total return of
a hypothetical investment in each of the New York Stock Exchange Market Index
and the Media General Financial Services, Inc. Industry Group 432 (Real Estate
Investment Trusts) Index based on the respective market price of each such
investment at October 29, 1996, December 31, 1996, March 31, 1997, June 30,
1997, September 30, 1997 and December 31, 1997, assuming in each case an initial
investment of $100 on October 29, 1996, and reinvestment of dividends.
<TABLE>
<CAPTION>
Measurement Period Boykin Industry
(Fiscal Year Covered) Lodging Co. Index Broad Market
<S> <C> <C> <C>
10/29/96 100.00 100.00 100.00
12/31/96 121.50 114.26 105.25
3/31/97 112.93 114.90 107.11
6/30/97 125.98 121.08 124.42
9/30/97 143.19 133.14 134.45
12/31/97 144.01 134.64 138.58
</TABLE>
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Any shareholder proposal intended to be presented at the Company's 1999
Annual Meeting of Shareholders must be received by the Company at Guildhall
Building, Suite 1500, 45 W. Prospect Avenue, Cleveland, Ohio 44115, on or before
December 24, 1998, for inclusion in the Company's proxy statement and form of
proxy relating to the 1999 Annual Meeting of Shareholders.
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<PAGE> 12
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and owners of more than 10% of the Company's
Common Shares, to file with the Securities and Exchange Commission (the "SEC")
and the New York Stock Exchange initial reports of ownership and reports of
changes in ownership of Common Shares and other equity securities of the
Company. Executive officers, directors and owners of more than 10% of the Common
Shares are required by SEC regulations to furnish the Company with copies of all
forms they file pursuant to Section 16(a).
To the Company's knowledge, based solely on its review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1997, all
Section 16(a) filing requirements applicable to its executive officers,
directors and greater-than-10% beneficial owners were complied with, except that
one of Mr. Howley's Form 4 filings was not timely.
OTHER MATTERS
The Company has not selected its independent accountants for the current
fiscal year. This selection will be made later in the year by the Board of
Directors. Representatives of Arthur Andersen LLP, which served as the Company's
independent public accountants during the fiscal year ended December 31, 1997,
are expected to be present at the Annual Meeting of Shareholders and will have
an opportunity to make a statement if they so desire and will be available to
respond to appropriate questions.
If the enclosed proxy is executed and returned to the Company, the persons
named in it will vote the shares represented by that proxy at the meeting. The
form of proxy permits specification of a vote for the election of directors as
set forth under the heading "Election of Directors," the withholding of
authority to vote in the election of directors, or the withholding of authority
to vote for one or more specified nominees.
When a choice has been specified in the proxy, the shares represented will
be voted in accordance with that specification. If no specification is made,
those shares will be voted at the meeting to elect directors as set forth under
the heading "Election of Directors." Under Ohio law and the Company's Amended
and Restated Articles of Incorporation, as amended, broker non-votes and
abstaining votes will not be counted in favor of or against any nominee.
Director nominees who receive the greatest number of affirmative votes will be
elected directors. If any other matter properly comes before the meeting, the
persons named in the proxy will vote thereon in accordance with their judgment.
Management does not know of any other matter that will be presented for action
at the meeting.
By order of the Board of Directors,
RAYMOND P. HEITLAND,
Secretary
Dated: April 23, 1998
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<PAGE> 13
BOYKIN LODGING COMPANY
P R O X Y
---------
The undersigned hereby appoints ROBERT W. BOYKIN, PAUL A.
O'NEIL AND ROBERT A. WEIBLE, and each of them, attorneys and
proxies of the undersigned, with full power of substitution, to
attend the annual meeting of shareholders of Boykin Lodging Company
to be held at the Cleveland Marriott East, 3663 Park East Drive,
Beachwood, Ohio 44122, on Tuesday, May 26, 1998, at 10:00 a.m.,
Cleveland, Ohio, time, or any adjournment thereof, and to vote the
number of shares of the Company which the undersigned would be
entitled to vote, and with all the power the undersigned would
possess if personally present, as follows:
1. [ ] FOR (except as noted below), or [ ] WITHHOLD AUTHORITY
to vote for, the following nominees for election as
directors, each to serve until the next annual meeting of
the shareholders and until his successor has been duly
elected and qualified: Robert W. Boykin, Raymond P.
Heitland, Albert T. Adams, Lee C. Howley, Jr., Frank E.
Mosier, William H. Schecter and Ivan J. Winfield.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY
PARTICULAR NOMINEE, WRITE THAT NOMINEE'S NAME
ON THE LINE PROVIDED BELOW.)
---------------------------------------------------------------
2. On such other business as may properly come before the
meeting.
THE PROXIES WILL VOTE AS SPECIFIED ABOVE, OR IF A CHOICE IS NOT
SPECIFIED, THEY WILL VOTE FOR THE NOMINEES LISTED IN ITEM 1.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY
Receipt of the Notice of
Annual Meeting of
Shareholders and Proxy
Statement dated April 23,
1998, is hereby acknowledged.
Dated: , 1998
-----------------
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Signature(s)
(Please sign exactly as your
name or names appear hereon,
indicating, where proper,
official position or
representative capacity.)
