<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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
Gaylord Entertainment Company
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
(GAYLORD ENTERTAINMENT COMPANY LOGO)
ONE GAYLORD DRIVE
NASHVILLE, TENNESSEE 37214
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 8, 1998
---------------------
You are hereby given notice of and invited to attend in person or by proxy
the first Annual Meeting of Stockholders of the "New" Gaylord Entertainment
Company to be held at the Presidential Ballroom, Opryland Hotel, 2800 Opryland
Drive, Nashville, Tennessee, on Friday, May 8, 1998, at 10:00 a.m. for the
following purposes:
1. To elect two Class I directors for three-year terms and until their
successors are duly elected and qualified;
2. To ratify the appointment of Arthur Andersen LLP as the independent
accountants of the Company; and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March 18, 1998 as
the record date (the "Record Date") for the determination of stockholders
entitled to notice of and to vote at such meeting and any adjournment thereof.
Only stockholders of record at the close of business on the Record Date are
entitled to notice of and to vote at such meeting.
You are cordially invited to attend the meeting. The Opryland Hotel has
reserved a limited number of rooms at a special rate of $169.00, single and
double occupancy, per night. If you would like a room, please make reservations
by Friday, April 24, 1998, by calling (615)316-6554 and requesting the Gaylord
Entertainment Company Annual Stockholders' Meeting rate.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, MANAGEMENT DESIRES TO HAVE
THE MAXIMUM REPRESENTATION AT THE MEETING AND RESPECTFULLY REQUESTS THAT YOU
DATE, EXECUTE, AND MAIL PROMPTLY THE ENCLOSED PROXY IN THE ENCLOSED STAMPED
ENVELOPE FOR WHICH NO ADDITIONAL POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES. A PROXY MAY BE REVOKED BY A STOCKHOLDER ANY TIME PRIOR TO ITS USE AS
SPECIFIED IN THE ENCLOSED PROXY STATEMENT.
By Order of the Board of Directors,
/s/ Thomas J. Sherrard
THOMAS J. SHERRARD
Secretary
Nashville, Tennessee
April 1, 1998
<PAGE> 3
(GAYLORD ENTERTAINMENT LOGO)
---------------------
PROXY STATEMENT
---------------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 8, 1998
---------------------
To Our Stockholders:
This Proxy Statement is furnished to stockholders of Gaylord Entertainment
Company (the "Company" or "New Gaylord") for use at the Annual Meeting of
Stockholders (the "Annual Meeting") to be held at the date, time, and place and
for the purposes set forth in the accompanying Notice of Annual Meeting of
Stockholders or at any adjournment or adjournments thereof. The enclosed proxy
is solicited on behalf of the Board of Directors of the Company and is subject
to revocation at any time prior to the voting of the proxy. The record of
stockholders entitled to vote at the Annual Meeting was taken at the close of
business on March 18, 1998. The approximate date on which this Proxy Statement
and the enclosed proxy are first being sent to stockholders is April 1, 1998.
The principal executive offices of the Company are located at One Gaylord Drive,
Nashville, Tennessee 37214.
New Gaylord is a Delaware corporation and, prior to September 30, 1997, was
a wholly owned subsidiary of its former parent, which was then known as Gaylord
Entertainment Company ("Old Gaylord"). On October 1, 1997, Old Gaylord
consummated a transaction with Westinghouse Electric Corporation, now known as
CBS Corporation ("CBS"), and G Acquisition Corp., a wholly owned subsidiary of
CBS ("Sub"), pursuant to which Sub was merged (the "CBS Merger") with and into
Old Gaylord, with Old Gaylord continuing as the surviving corporation and a
wholly owned subsidiary of CBS. Prior to the CBS Merger, Old Gaylord was
restructured (the "Restructuring") by transferring its assets and liabilities,
other than the cable networks TNN and CMT (U.S. and Canadian operations) and
certain other related assets and liabilities, to New Gaylord and its
subsidiaries. Following the Restructuring, on September 30, 1997, Old Gaylord
distributed (the "Distribution") pro rata to its stockholders all of the
outstanding capital stock of New Gaylord. In addition, immediately following the
CBS Merger, New Gaylord changed its name to Gaylord Entertainment Company.
Unless the context otherwise requires, references in this Proxy Statement to the
"Company" for periods prior to the Distribution are to Old Gaylord.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
As of March 18, 1998, there were 32,802,584 shares of the Company's Common
Stock outstanding and entitled to vote at the Annual Meeting. Each share of
Common Stock is entitled to one vote. The following table sets forth, as of
March 18, 1998 or such other date as indicated in the footnotes to the table,
the beneficial ownership of each current director (including the two nominees
for director), each of the executive officers named in the Summary Compensation
Table beginning on page 7, the executive officers and directors as a group, and
each stockholder known to management of the Company to own beneficially more
than 5% of the outstanding Common Stock. In accordance with the provisions of
Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), the beneficial ownership of Common Stock in the table includes restricted
stock and shares issuable upon the exercise of stock options awarded under the
Company's 1997 Stock Option and Incentive Plan (the "1997 Stock Plan") if such
options are currently exercisable or
<PAGE> 4
exercisable within 60 days of the date hereof. Unless otherwise indicated, the
Company believes that each beneficial owner set forth in the table has sole
voting and investment power.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP OF
COMMON STOCK
-------------------------
NAME NUMBER PERCENT
- ---- ---------- -------
<S> <C> <C>
Edward L. Gaylord(1)*+...................................... 6,625,563(2)(3) 20.1
Edith Gaylord Harper Revokable Trust(1)..................... 2,133,371(2)(4) 6.5
Christine Gaylord Everest*.................................. 1,064,268(2)(5) 3.2
E. K. Gaylord II*........................................... 647,235(2)(6) 2.0
Martin C. Dickinson*........................................ 1,328,019(2)(7) 4.0
Edward L. Gaylord, Edith Gaylord Harper, Christine
Gaylord Everest, and E.K. Gaylord II, as Voting
Trustees(1)............................................... 12,559,974(2) 38.3
Joe M. Rodgers*............................................. 54,420(8) **
Mary Agnes Wilderotter*..................................... -- --
Terry E. London*+........................................... 150,715(9) **
Jack J. Vaughn+............................................. 124,043(10) **
Jerry O. Bradley+........................................... 18,525(11) **
Dan E. Harrell+............................................. 40,970(12) **
Gabelli Funds, Inc.
One Corporate Center
Rye, NY 10580-1434........................................ 2,706,391(13) 8.3
Richard C. Blum & Associates, L.P.
909 Montgomery Street, Suite 400
San Francisco, CA 94133................................... 2,114,898(14) 6.4
All executive officers and directors as a group
(12 persons).............................................. 13,939,076(15) 41.8
</TABLE>
- ---------------
* Director
+ Named Executive Officer
** Less than one percent
(1) Mailing address: 9000 N. Broadway, Oklahoma City, Oklahoma 73114.
(2) Edward L. Gaylord, Edith Gaylord Harper, and certain other stockholders of
the Company are parties to a Voting Trust Agreement (the "Voting Trust")
with respect to the Common Stock, which terminates on October 3, 2000.
Edward L. Gaylord, Edith Gaylord Harper, Christine Gaylord Everest, and E.
K. Gaylord II, as the voting trustees (the "Voting Trustees") under the
Voting Trust, have the shared right to vote the 12,559,974 shares of Common
Stock held in the Voting Trust. Although the Voting Trustees do not have
the right to make any investment decisions with respect to the shares
beneficially owned by the Voting Trust, a stockholder party to the Voting
Trust needs the written consent of at least 60% of the Voting Trustees (the
"Trustees' Consent") to withdraw such holder's shares from the Voting Trust
(the "Trust Withdrawal Restriction").
(3) Includes (a) 4,666,558 shares beneficially owned as trustee of the Edward
L. Gaylord Revocable Trust, 4,635,998 of which are deposited with the
Voting Trust; (b) 352,586 shares beneficially owned by Mr. Gaylord's wife,
Thelma Gaylord, 345,236 of which are deposited with the Voting Trust; (c)
143,583 shares owned by the Edward L. Gaylord and Thelma Gaylord
Foundation, Edward L. Gaylord and Thelma Gaylord, Trustees; (d) 848,646
shares beneficially owned as trustee for the Mary I. Gaylord Revocable
Living Trust of 1985, all of which are deposited with the Voting Trust; (e)
13,333 shares beneficially owned as co-trustee of the Mary Gaylord
Foundation; (f) 262,395 shares beneficially owned by Gayno, Inc., a
corporation controlled by Edward L. Gaylord; (g) 128,625 shares
beneficially owned by The Oklahoman Foundation (the "Charitable Trust"), a
charitable trust of which Edward L. Gaylord is a trustee; (h) 88,900 shares
owned by The Oklahoma Publishing Company ("OPUBCO"), of which Edward L.
Gaylord is chairman; and (i) 120,937 shares issuable upon the exercise of
options. Edward L. Gaylord has shared voting and sole investment power
(subject to the Trust Withdrawal Restriction) with respect to the shares
listed in (a) and (d) above that are deposited with the Voting Trust (to
which Edward L. Gaylord is party as a stockholder and as a Voting Trustee),
and shared voting and shared investment power (limited solely to the
Trustees' Consent) with respect to the shares listed in (b) above that are
deposited with the Voting Trust, such 5,829,880 shares being referred to
herein as the "ELG Voting Trust Shares;" no voting or investment power with
respect to the 7,350 shares listed in (b) above that are not deposited with
the Voting Trust; and shared voting and investment power with respect to
the shares listed in (c), (e), (g), and (h) above. Does not include the
shares owned by Edward L. Gaylord's son and daughters, E. K. Gaylord II,
Christine Gaylord Everest, and Louise Gaylord Bennett, respectively. Does
not include 6,730,094 shares of Common Stock beneficially owned by the
Voting Trust (excluding the ELG Voting Trust Shares), as to which Edward L.
Gaylord has shared voting and shared investment power (limited solely to
the Trustees' Consent). See Note 2.
(4) Shares owned by the Edith Gaylord Harper 1995 Revokable Trust, Edith
Gaylord Harper, William J. Ross, and David O. Hogan Trustees (the "EGH
Revokable Trust"), 1,736,437 of which are deposited with the Voting Trust
(to which Mrs. Harper is party as a stockholder and as a Voting Trustee),
such shares being referred to herein as the "EGH Voting Trust Shares." Mrs.
Harper,
2
<PAGE> 5
Edward L. Gaylord's sister, has sole voting and investment power with
respect to the 396,934 shares in the EGH Revokable Trust that are not
deposited with the Voting Trust and shared voting and sole investment power
(subject to the Trust Withdrawal Restriction) with respect to the EGH
Voting Trust Shares. Does not include 10,823,537 shares of Common Stock
beneficially owned by the Voting Trust (excluding the EGH Voting Trust
Shares), as to which Mrs. Harper has shared voting and shared investment
power (limited solely to the Trustees' Consent). See Note 2.
(5) Includes (a) 849,163 shares which are deposited with the Voting Trust; (b)
711 shares owned or beneficially owned by Mrs. Everest's husband, James H.
Everest, 71 of which are deposited with the Voting Trust; (c) 3,759 shares
owned by each of Mrs. Everest's daughters, Mary C. Everest and Tricia L.
Everest, which are deposited with the Voting Trust; (d) 3,675 shares owned
by a foundation of which Mr. Everest is trustee, which are deposited with
the Voting Trust; (e) 128,625 shares beneficially owned by the Charitable
Trust of which Mrs. Everest is a trustee; and (f) 74,576 shares issuable
upon the exercise of options. Does not include the shares owned by Mrs.
Everest's father, mother, brother, and sisters, Edward L. Gaylord, Thelma
Gaylord, E. K. Gaylord II, and Louise Gaylord Bennett and Mary I. Gaylord,
respectively. Mrs. Everest has shared voting and sole investment power
(subject to the Trust Withdrawal Restriction) with respect to the shares
listed in (a) above deposited with the Voting Trust (to which Mrs. Everest
is party as a stockholder and as a Voting Trustee), and shared voting and
shared investment power (limited solely to the Trustees' Consent) with
respect to the shares listed in (b), (c), and (d) above that are deposited
with the Voting Trust, such 860,427 shares being referred to herein as the
"CGE Voting Trust Shares;" no voting or investment power with regard to the
640 shares in (b) above that are not deposited with the Voting Trust; and
shared voting and investment power with respect to the shares in the
Charitable Trust. Does not include 11,699,547 shares of Common Stock
beneficially owned by the Voting Trust (excluding the CGE Voting Trust
Shares), as to which Mrs. Everest has shared voting and shared investment
power (limited solely to the Trustees' Consent). See Note 2.
(6) Includes (a) 402,500 shares which are deposited with the Voting Trust (to
which E. K. Gaylord II is party as a stockholder and as a Voting Trustee),
such shares being referred to herein as the "EKG Voting Trust Shares;" (b)
128,625 shares beneficially owned by the Charitable Trust of which E. K.
Gaylord II is a trustee; (c) 88,900 shares owned by OPUBCO, of which E. K.
Gaylord II is president and a director; and (d) 27,210 shares issuable upon
the exercise of options. E. K. Gaylord II has shared voting and sole
investment power (subject to the Trust Withdrawal Restriction) with respect
to the EKG Voting Trust Shares, and shared voting and investment power with
respect to the shares in (b) and (c) above. Does not include the shares
owned by E. K. Gaylord II's father, mother, and sisters, Edward L. Gaylord,
Thelma Gaylord, and Christine Gaylord Everest, Louise Gaylord Bennett, and
Mary I. Gaylord, respectively. Does not include 12,157,474 shares of Common
Stock beneficially owned by the Voting Trust (excluding the EKG Voting
Trust Shares), as to which E. K. Gaylord II has shared voting and shared
investment power (limited solely to the Trustees' Consent). See Note 2.
(7) Includes (a) 1,198,871 shares beneficially owned by the Dickinson Trust, of
which Mr. Dickinson is a co-trustee, all of which are deposited with the
Voting Trust; (b) 93,824 shares beneficially owned as trustee for the
Martin C. Dickinson Revocable Trust, 66,332 of which are deposited with the
Voting Trust; (c) 1,060 shares beneficially owned by Mr. Dickinson's wife,
Carol D. Dickinson, 257 of which are deposited with the Voting Trust; and
(d) 34,264 shares issuable upon the exercise of options. Mr. Dickinson has
no voting and shared investment power (subject to the Trust Withdrawal
Restriction) with respect to the shares listed in (a) above; no voting and
sole investment power (subject to the Trust Withdrawal Restriction) with
respect to the shares listed in (b) above that are deposited with the
Voting Trust; and no voting or investment power with respect to the shares
listed in (c) above.
(8) Shares issuable upon the exercise of options.
(9) Includes (a) 3,216 shares owned directly and (b) 147,499 shares issuable
upon the exercise of options.
(10) Includes (a) 10,000 shares owned directly, (b) 40,000 shares of restricted
stock and (b) 74,043 shares issuable upon the exercise of options.
(11) Includes (a) 2,784 shares owned directly and (b) 15,741 shares issuable
upon the exercise of options.
(12) Shares of restricted stock.
(13) Based on information set forth in Amendment No. 2 to Schedule 13D, dated
January 15, 1998, filed with the SEC jointly by Gabelli Funds, Inc.
("GFI"), GAMCO Investors, Inc., a wholly-owned subsidiary of GFI ("GAMCO"),
Gemini Capital Management Ltd. ("Gemini"), and Mario J. Gabelli, the
majority stockholder of each of GFI and Gemini, Chairman of the Board of
Directors and Chief Executive Officer of GFI, and the Chief Investment
Officer for GFI and GAMCO. GFI reported that it had sole voting power with
respect to 2,218,617 shares of Common Stock and sole dispositive power with
respect to 2,259,790 shares of Common Stock; Gemini reported that it had
sole voting and dispositive power with respect to 5,000 shares of Common
Stock; and Mario J. Gabelli reported that he held no voting or dispositive
power with respect to shares of Common Stock.
(14) Based on information set forth in Amendment No. 1 to Schedule 13D, dated
February 9, 1998, filed with the SEC jointly by Richard C. Blum &
Associates, L.P., a California limited partnership whose principal business
is acting as general partner for investment partnerships and providing
investment advisory and financial consulting services ("RBCA L.P."),
Richard C. Blum & Associates, Inc., the sole general partner of RCBA L.P.
("RCBA Inc."), and Richard C. Blum, the Chairman and substantial
shareholder of RCBA Inc. The shares of Common Stock were acquired on behalf
of RCBA L.P.'s limited partnerships and investment advisory clients. RCBA
LP reported direct holdings of 1,760,998 shares of Common Stock and voting
and investment power with respect to 353,900 shares of Common Stock that
are legally owned by the common fund for the account of its equity fund.
(15) Includes 576,346 shares issuable upon the exercise of options.
3
<PAGE> 6
PROPOSAL ONE -- ELECTION OF CLASS I DIRECTORS
The Board of Directors of the Company is divided into three classes (Class
I, Class II, and Class III). At each annual meeting of stockholders, directors
constituting one class are elected for a three-year term. Directors are elected
by a plurality of the affirmative votes cast. The Restated Certificate of
Incorporation of the Company, as amended (the "Restated Certificate"), provides
that each class shall consist, as nearly as may be possible, of one-third of the
total number of directors constituting the entire Board of Directors. The
current Board of Directors is comprised of seven members, two of whom will be
elected at the Annual Meeting. The Board of Directors of the Company has
nominated and recommends to the stockholders Edward L. Gaylord and Joe M.
Rodgers, each of whom is an incumbent Class I director, for election as Class I
directors to serve until the annual meeting of stockholders in 2001 and until
such time as their respective successors are duly elected and qualified.
If any of the nominees should become unable to accept election, the persons
named in the proxy may vote for such other person or persons as may be
designated by the Board of Directors. Management has no reason to believe that
any of the nominees named above will be unable to serve. Certain information as
of March 18, 1998 with respect to the nominees for election as Class I directors
and with respect to Class II and Class III directors (who are not nominees for
election at the Annual Meeting) is set forth below.
CLASS I DIRECTOR NOMINEES
(TO BE ELECTED; TERMS EXPIRING 2001)
- --------------------------------------------------------------------------------
Edward L. Gaylord Director since 1946 Age 78
Mr. Edward L. Gaylord served as President and Chief Executive Officer of the
Company from 1974 until October 1991, and has served as Chairman of the Board of
the Company since October 1991. Mr. Gaylord has been a director of the Company
since 1946. Mr. Gaylord is currently the chairman and a director of OPUBCO, a
newspaper publishing company and affiliate of the Company. Mr. Gaylord is active
in numerous civic and charitable organizations, and is (among others) chairman
of the Oklahoma Industries Authority, director and past president (ten years) of
the State Fair of Oklahoma, chairman and director of The Oklahoma Medical
Research Foundation, and chairman and director of the National Cowboy Hall of
Fame & Western Heritage Center. Mr. Gaylord is the father of Mr. E. K. Gaylord
II, Vice-Chairman of the Board of the Company, and Mrs. Christine Gaylord
Everest, a director of the Company.
- --------------------------------------------------------------------------------
Joe M. Rodgers Director since 1991 Age 64
Mr. Rodgers has been a director of the Company since 1991. He is chairman of The
JMR Group, a private investment company specializing in merchant and investment
banking. Mr. Rodgers served as chairman of the board and chief executive officer
of Berlitz International, Inc., a foreign language services company, from
December 1991 until February 1993. From 1985 to 1989, Mr. Rodgers served as
United States Ambassador to France. Mr. Rodgers is also a director of AMR
Corporation/American Airlines, Inc.; American Constructors, Inc.; Gryphon
Holdings, Inc.; Lafarge Corporation; SunTrust Bank, Nashville, N.A.; Thomas
Nelson, Inc.; Tractor Supply Company; and Willis Corroon Group, PLC.
- --------------------------------------------------------------------------------
4
<PAGE> 7
CLASS II DIRECTORS
(TERMS EXPIRE IN 1999)
- --------------------------------------------------------------------------------
Martin C. Dickinson Director since 1974 Age 62
Mr. Dickinson has been a director of the Company since 1974. He is a retired
officer of Scripps Bank in La Jolla, California and has been a director of that
bank since 1990. Mr. Dickinson is also a director of OPUBCO and CBS, a director
of the National Cowboy Hall of Fame & Western Heritage Center, and the chairman
of the Scripps Foundation for Medicines and Sciences.
- --------------------------------------------------------------------------------
Christine Gaylord Everest Director since 1976 Age 46
Mrs. Everest has been a director of the Company since 1976. She has served as
vice president of OPUBCO since June 1996, as secretary of OPUBCO since June
1994, and as senior assistant secretary of OPUBCO from October 1991 until June
1994. Mrs. Everest is also a director of OPUBCO. Mrs. Everest is the daughter of
Mr. Edward L. Gaylord and the sister of Mr. E. K. Gaylord II, both of whom are
directors and executive officers of the Company.
- --------------------------------------------------------------------------------
CLASS III DIRECTORS
(TERMS EXPIRE IN 2000)
- --------------------------------------------------------------------------------
E. K. Gaylord II Director since 1977 Age 40
Mr. E. K. Gaylord II has served as Vice-Chairman of the Board of the Company
since May 1996 and as a director since 1977. Mr. Gaylord has been the president
of OPUBCO since June 1994 and is a director of OPUBCO. He served as executive
vice president and assistant secretary of OPUBCO from June 1993 until June 1994.
He also owns and operates the Lazy E Ranch in Guthrie, Oklahoma. Mr. Gaylord is
a director of the National Cowboy Hall of Fame & Western Heritage Center and is
a director of BASSGEC Management Company. Mr. Gaylord is the son of Mr. Edward
L. Gaylord and the brother of Mrs. Christine Gaylord Everest, both of whom are
directors of the Company.
- --------------------------------------------------------------------------------
Terry E. London Director since 1997 Age 48
Mr. London has been the President and Chief Executive Officer and a director of
the Company since May 1997. Mr. London was also the acting Chief Financial
Officer of the Company until February 1998. Prior to May 1997, Mr. London had
served, since March 1997, as Executive Vice President and Chief Operating
Officer and, from September 1993 until March 1997, as Senior Vice President and
Chief Financial and Administrative Officer of the Company. He served as Vice
President and Chief Financial Officer of the Company from October 1991 until
September 1993, and has been employed by the Company in various capacities since
1978. Mr. London is a certified public accountant.
- --------------------------------------------------------------------------------
Mary Agnes Wilderotter Director since 1997 Age 43
Ms. Wilderotter was named to the Board of Directors in October 1997. Ms.
Wilderotter has been the president, chief executive officer, and director of
Wink Communications, an interactive telecommunications and media concern, since
January 1997. Prior to January 1997, Ms. Wilderotter served in varying
capacities for AT&T Corporation, including as executive vice president of
national operations for AT&T Wireless Services Inc. and chief executive officer
of AT&T's aviation communication division from August 1995 until January 1997.
She also had held senior management positions with McCaw Cellular from 1991
until August 1995 and U.S. Computer Services Inc./Cable Data from 1987 to 1991.
Ms. Wilderotter is on the boards of Airborne Freight Corporation, Electric
Lightwave Company, Jacor Communications, and the California Cable Television
Association.
- --------------------------------------------------------------------------------
5
<PAGE> 8
The Board of Directors holds regular quarterly meetings and meets on other
occasions when required by special circumstances. Certain directors also devote
their time and attention to the Board's two principal standing committees. The
committees, their primary functions, and memberships are as follows:
Audit Committee -- This committee makes recommendations to the Board
of Directors with respect to the appointment of independent public
accountants, reviews significant audit and accounting policies and
practices, meets with the Company's independent public accountants
concerning, among other things, the scope of audits and reports, and
reviews the performance of the overall accounting and financial controls of
the Company. Members of the Audit Committee are Martin C. Dickinson
(Chairman) and Joe M. Rodgers.
Compensation Committee -- This committee has the responsibility for
reviewing and approving the compensation and benefits of executive
officers, advising management regarding benefits, including bonuses, and
other terms and conditions of compensation of other employees,
administering the Company's stock plan, and reviewing and recommending
compensation of directors. Members of the Compensation Committee are Martin
C. Dickinson, Joe M. Rodgers (Chairman), and Mary Agnes Wilderotter.
The Board of Directors does not have a standing nominating committee and
nominations for election to the Board of Directors may be made by the Board of
Directors, by a nominating committee appointed by the Board of Directors, or by
any stockholder entitled to vote for the election of directors as described
below. The By-laws establish an advance notice procedure for the nomination,
other than by or at the direction of the Board of Directors or a committee
thereof, of candidates for election as directors. Notice of director nominations
must be timely given in writing to the Secretary of the Company prior to the
meeting at which the directors are to be elected. To be timely, notice must be
delivered to or mailed and received at the principal executive offices of the
Company (a) in the case of an annual meeting, not less than 60 nor more than 90
days prior to the anniversary date of the immediately preceding annual meeting
of stockholders; provided, however, that in the event that the annual meeting is
called for a date that is not within 30 days before or after such anniversary
date, notice by the stockholder in order to be timely must be so received not
later than the close of business on the tenth day following the day on which
such notice of the date of the annual meeting was mailed or public disclosure of
the date of the annual meeting was made, whichever first occurs; and (b) in the
case of a special meeting of stockholders called for the purpose of electing
directors, not later than the close of business on the tenth day following the
day on which notice of the date of the special meeting was mailed or public
disclosure of the date of the special meeting was made, whichever first occurs.
Notice to the Company from a stockholder who proposes to nominate a person at a
meeting for election as a director must contain all information about such
person that would be required to be included in a proxy statement soliciting
proxies for the election of the proposed nominee (including such person's
written consent to serve as a director if so elected) and certain information
about the stockholder proposing to nominate that person. If the Chairman of the
meeting of stockholders determines that a person is not nominated in accordance
with the nomination procedure, such nomination will be disregarded.
During 1997 following the Distribution, the Board of Directors, the Audit
Committee, and the Compensation Committee each held one formal meeting. Each of
the directors attended at least 75% of the meetings of the Board of Directors
and the committees on which he or she served, including the meetings of Old
Gaylord's Board of Directors and committees.
6
<PAGE> 9
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth the cash compensation
and certain other components of the compensation of Terry E. London, the
President and Chief Executive Officer of the Company, and the other four most
highly compensated executive officers of the Company who were serving as
executive officers at December 31, 1997 (including Mr. London, the "Named
Executive Officers"). The table shows amounts earned by such persons in all
capacities in which they served and includes compensation paid or accrued by Old
Gaylord or by subsidiaries of Old Gaylord (including the Company and certain
subsidiaries of the Company) prior to the Distribution and the CBS Merger.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
AWARDS
ANNUAL -----------------------
NAME AND PRINCIPAL COMPENSATION RESTRICTED SECURITIES
POSITION AT ------------------- STOCK UNDERLYING ALL OTHER
DECEMBER 31, 1997 YEAR SALARY BONUS AWARDS OPTIONS(#) COMPENSATION(1)
- -------------------------- ---- -------- -------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Terry E. London........... 1997 $391,493 $328,827 $ -0- 300,000 $17,919
President and Chief 1996 312,000 194,683 84,643(2) 12,957 15,892
Executive Officer 1995 312,000 117,312 76,488(2) 13,605 14,058
Edward L. Gaylord......... 1997 510,000 -0- -0- 50,000 -0-
Chairman of the 1996 510,000 -0- -0- -0- -0-
Board 1995 510,000 -0- -0- -0- -0-
Jack J. Vaughn............ 1997 378,560 260,458 1,481,250(3) -0- 24,942
President -- Hospitality 1996 364,000 195,723 148,120(2) 19,196 24,280
and Attractions Group 1995 364,000 203,767 133,863(2) 20,156 19,973
Jerry O. Bradley.......... 1997 169,541 294,127 -0- 25,000 10,782
President -- Opryland 1996 163,020 276,609 52,880(2) 7,679 16,580
Music Group 1995 163,020 273,201 47,785(2) 8,062 8,893
Dan E. Harrell............ 1997(4) 285,812 154,515 1,213,736(5) 16,911 7,560
President -- Idea
Entertainment
</TABLE>
- ---------------
(1) Includes contributions by the Company to the supplemental deferred
compensation plan (the "SUDCOMP Plan") and to the 401(k) Savings Plan (the
"Savings Plan"), and premiums paid by the Company for group term life
insurance provided for the benefit of the Named Executive Officers. Mr.
Gaylord is not a participant in the SUDCOMP Plan or Savings Plan nor does he
receive life insurance benefits from the Company. The Company's
contributions to the SUDCOMP Plan, the Savings Plan, and payments on behalf
of the Named Executive Officers for group term life insurance are reflected
below.
<TABLE>
<CAPTION>
GROUP TERM TOTAL
LIFE INSURANCE ALL OTHER
NAME YEAR SUDCOMP 401(K) PREMIUMS COMPENSATION
- ---- ---- ------- ------ -------------- ------------
<S> <C> <C> <C> <C> <C>
Terry E. London............................ 1997 $6,062 $4,750 $7,107 $17,919
1996 4,484 4,500 6,908 15,892
1995 4,086 4,500 5,472 14,058
Jack J. Vaughn............................. 1997 11,884 4,750 8,308 24,942
1996 11,721 4,500 8,059 24,280
1995 9,443 4,152 6,378 19,973
Jerry O. Bradley........................... 1997 2,307 4,750 3,725 10,782
1996 8,471 4,500 3,609 16,580
1995 4,323 1,692 2,878 8,893
Dan E. Harrell............................. 1997 -0- 3,685 3,875 7,560
</TABLE>
(2) Awards of shares of restricted stock of Old Gaylord were made in 1996 and
1995 to certain Named Executive Officers, the restrictions with respect to
which were originally designed to lapse on the third anniversary of the date
of grant based on the extent to which Old Gaylord attained certain
predetermined cumulative earnings per share targets. In accordance with the
change in control provisions of the awards, all restrictions on such stock
lapsed in connection with the CBS Merger and the Distribution. The numbers
of shares of Old Gaylord with respect to which such restrictions lapsed held
my Messrs. London, Vaughn, and Bradley were 6,614, 11,574, and 4,132,
respectively. The values of these awards based on the per share price of Old
Gaylord Class A Common Stock
7
<PAGE> 10
immediately preceding the Distribution and the CBS Merger (as reported on
the New York Stock Exchange (the "NYSE"), $25.81) were $170,724, $298,754,
and $106,657, respectively.
(3) Awards of 50,000 shares of restricted stock on the date of the CBS Merger,
the value of which is based on the closing per share price of Common Stock
as reported on the NYSE on October 1, 1997, 10,000 of which vested on April
1, 1998, and 20,000 of which will vest on each of April 1, 1999 and 2000.
The value of the 50,000 shares of restricted stock was $1,596,875 on
December 31, 1997 based on the closing Common Stock price ($31 15/16) as
reported on the NYSE on December 31, 1997. The restricted stock is entitled
to dividends and voting rights from the date of grant.
(4) Employed by the Company on March 24, 1997.
(5) Awards of 40,970 shares of restricted stock on the date of the CBS Merger,
the value of which is based on the closing per share price of Common Stock
as reported on the NYSE on October 1, 1997, 4,143 of which will vest on
October 1, 2000, and 36,827 of which will vest annually in one-third
increments beginning on October 1, 2002. See "EMPLOYMENT, SEVERANCE, AND
CHANGE IN CONTROL ARRANGEMENTS." The value of the 40,970 shares of
restricted stock was $1,308,479 on December 31, 1997 based on the closing
Common Stock price ($31 15/16) as reported on the NYSE on that date. The
restricted stock is entitled to dividends and voting rights from the date of
grant.
OPTION GRANTS IN LAST FISCAL YEAR
The following table summarizes the terms of stock options granted by the
Company to each of the Named Executive Officers during 1997. All of the options
referred to in the table below are nonqualified stock options granted pursuant
to the 1997 Stock Plan, were granted, except for Mr. Harrell's, at the fair
market value on the date of grant (determined based upon the proportionate value
of the Old Gaylord Class A Common Stock as of September 30, 1997 attributable to
New Gaylord) and are for the purchase of the Common Stock. No stock appreciation
rights have ever been granted by the Company.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------------
PERCENT OF POTENTIAL REALIZABLE
TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS ANNUAL RATES OF STOCK
SECURITIES GRANTED TO PRICE APPRECIATION
UNDERLYING EMPLOYEES IN FOR OPTION TERM
OPTIONS FISCAL EXERCISE EXPIRATION ------------------------
NAME GRANTED(#)(1)(2) YEAR PRICE DATE 5% 10%
- ---- ---------------- ------------ -------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Terry E. London............... 300,000 34.0% $28.24 10/01/07 $5,327,995 $13,502,186
Edward L. Gaylord............. 50,000 5.7 28.24 10/01/07 887,999 2,250,364
Jack J. Vaughn................ -- -- N/A N/A -- --
Jerry O. Bradley.............. 25,000 2.8 28.24 10/01/97 444,000 1,125,182
Dan E. Harrell................ 16,911 1.9 23.52(3) 03/24/07 380,159(4) 840,938
</TABLE>
- ---------------
(1) Does not include options to acquire Old Gaylord Class A Common Stock (the
"Previously Granted Options") granted by Old Gaylord prior to the
Distribution. In connection with the Distribution and the CBS Merger, all
Previously Granted Options that were held by persons who would be Company
employees following the Distribution were converted into fully vested and
exercisable options to acquire shares of Common Stock under the 1997 Stock
Plan (the "Converted Options'). The conversion was made pursuant to a
formula designed to preserve the value of the Previously Granted Options
based upon their exercise prices and the fair market value of the Old
Gaylord Class A Common Stock immediately prior to the Merger. Messrs.
London, Gaylord, Vaughn, Bradley, and Harrell received 147,499, 120,937,
94,199, 66,131, and -0- Converted Options, respectively, with exercise
prices ranging from $10.17 to $27.35 per share.
(2) Options will vest annually in one-third increments beginning on October 1,
2000, except for Mr. Harrell's which will vest annually in one-quarter
increments beginning on March 24, 1999.
(3) Based on the fair market value of Old Gaylord Class A Common Stock on March
21, 1997, the last trading date prior to Mr. Harrell's initial employment by
the Company. The exercise price was determined pursuant to a formula
designed to calculate and preserve the increase in value that would have
occurred had such option been granted on March 24, 1997. Because of certain
agreements relating to the CBS Merger, the Company was prohibited from
granting options between February 9, 1997 and the consummation of the CBS
Merger.
(4) The realizable value at October 1, 1997, the date of grant, calculated as
the difference between the exercise price ($23.52 per share) and the value
of the Common Stock ($28.24 per share), was $79,820.
8
<PAGE> 11
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
The following table summarizes, for each of the Named Executive Officers,
the shares acquired upon the exercise of options to purchase Common Stock during
1997, the value realized on exercise, the total number of unexercised stock
options and the aggregate dollar value of in-the-money unexercised stock options
held at December 31, 1997. All of the stock options referenced below are for
Common Stock and were awarded pursuant to the 1997 Stock Plan.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT FY-END(#) OPTIONS AT FY-END(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Terry E. London........... -- -- 147,499 300,000 $2,785,641 $1,109,250
Edward L. Gaylord......... -- -- 120,937 50,000 2,632,496 184,875
Jack J. Vaughn............ 20,156(2) $ 111,110(2) 74,043 -- 1,281,944 --
Jerry O. Bradley.......... 50,390 1,150,404 15,741 25,000 90,754 92,438
Dan E. Harrell............ -- -- -- 16,911 -- 142,348
</TABLE>
- ---------------
(1) The aggregate dollar value of the options held at year-end are calculated as
the difference between the fair market value of the Company's Common Stock
($31 15/16 as reported on the NYSE on December 31, 1997) and the respective
exercise prices of the stock options.
(2) Does not include 72,300 shares of Old Gaylord Class A Common Stock acquired
in 1997 prior to the Distribution and a related value realized of
$1,003,679.
COMPENSATION PURSUANT TO OTHER PLANS
Retirement Plans
Employees of the Company and certain of its subsidiaries who have attained
age 21 and completed at least one year of service with more than 1,000 hours of
service are eligible to participate in the Company's defined benefit pension
plan (the "Retirement Plan"). The normal retirement benefit payable to a vested
participant upon retirement at age 65 is equal to the sum of:
(A) 0.85% of the participant's Average Monthly Compensation multiplied
by his or her number of Years of Benefit Service, as defined in the
Retirement Plan; and
(B) 0.65% of the excess, if any, of the participant's Average Monthly
Compensation over Covered Compensation multiplied by his or her Years of
Benefit Service.
The normal form of benefit is calculated in the form of a life only annuity
payable monthly. The participant may elect or may be required to take, based on
marital status, alternative forms of payment pursuant to the provisions of the
Retirement Plan.
Average Monthly Compensation is defined as the average of "includable
compensation" for the five consecutive years in which earnings were the highest
within the last ten years of credited service under the Retirement Plan.
Includable compensation is defined to include only base pay through December 31,
1988; thereafter it is defined as all "wages" within the meaning of Code Section
3121(a) (without such base pay limit), but excluding severance pay,
distributions from any plan of deferred compensation, compensation derived from
awards under the 1997 Stock Plan, and with the addition of employee
contributions to the Savings Plan and Code Section 125 deferrals, subject to
additional limitations imposed by the Code. Accrued benefits are 100% vested
after five years of service.
The Company also maintains two non-qualified retirement plans to provide
benefits to certain employees of the Company: (i) the NLT Supplemental Executive
Retirement Plan (the "NLT SERP") and (ii) the Retirement Benefit Restoration
Plan (the "Restoration Plan"). These plans are not prefunded and the
beneficiaries' rights to receive distributions thereunder constitute unsecured
claims to be paid from the general assets of the Company.
The NLT SERP provides a benefit to certain executives in an amount equal to
the actuarial difference between benefits provided by the Retirement Plan and
benefits that would have been available to such persons
9
<PAGE> 12
under the defined benefit pension plan of the predecessor to Opryland USA Inc.
had service continued thereunder from the date such predecessor was acquired by
the Company, August 31, 1983, until the date of retirement, service termination,
or death of the covered employee. The benefits payable under the NLT SERP are
determined as of the effective date of termination of employment and are subject
to the maximum benefit limitations imposed by Section 415 of the Code. Mr.
Vaughn is the only Named Executive Officer currently covered by the NLT SERP and
the estimated benefit payable to Mr. Vaughn (calculated as of December 31, 1997)
upon retirement at normal retirement age is $32,051 annually.
The Restoration Plan provides a benefit to certain employees to "replace"
benefits lost due to Code limitations imposed upon qualified defined benefit
pension plans. The benefit is determined by calculating the Retirement Plan
benefit without respect to limitations imposed by Section 415 of the Code and
subtracting the benefit payable from the Retirement Plan. The total annual
benefit is limited to 45% of Average Annual Compensation (without respect to
Code limitations), which limitation considers benefits payable pursuant to the
Restoration Plan, the Retirement Plan, the NLT SERP, employer matching
contributions to the Savings Plan and SUDCOMP Plan (assuming the maximum match),
and one-half of any annual Social Security benefit payable to the employee. To
determine the maximum benefit, all benefits are converted, based on the same
actuarial factors used to calculate benefits under the Retirement Plan, to a
life only annuity benefit payable at age 65. The Restoration Plan benefit is
reduced (not below zero) if the total annual benefit exceeds the 45% maximum
limitation.
The following table shows the combined estimated annual pension payable
under the Retirement Plan and the Restoration Plan to employees upon retirement
in specified remuneration and years-of-service classifications. The amounts
shown in the table do not include benefits payable from Social Security. The
amount of estimated annual pension is based upon a pension formula which applies
to all participants in the Retirement Plan and the Restoration Plan. The
estimated amounts are based on the assumption that (i) payments under the
Retirement Plan and the Restoration Plan will commence upon retirement at age 65
in 1997 in the form of a single life only annuity, (ii) Covered Compensation is
$29,304, and (iii) the Retirement Plan and the Restoration Plan will continue in
force in their present form.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL DEFINED BENEFIT PLAN EXCLUDING SOCIAL SECURITY(3)
------------------------------------------------------------------
ESTIMATED
FIVE-YEAR YEARS OF SERVICE
FINAL AVERAGE ------------------------------------------------------------------
PAY AT AGE 65(1) COMPENSATION(2) 10 15 20 25 30 35 40
- ---------------------------- --------------- ------ ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50,000...................... 45,000 4,845 7,268 9,690 12,113 14,536 16,958 19,381
75,000...................... 67,500 8,220 12,330 16,440 20,551 24,461 28,771 32,881
100,000..................... 90,000 11,595 17,393 23,190 28,988 34,786 40,583 46,381
125,000..................... 112,500 14,970 22,455 29,940 37,426 44,911 52,396 59,881
150,000..................... 135,000 18,345 27,518 36,690 45,863 55,036 64,208 73,381
200,000..................... 180,000 25,095 37,643 50,190 62,738 63,295 73,133 83,581
250,000..................... 225,000 31,845 47,768 63,690 79,613 81,107 81,107 83,581
300,000..................... 270,000 38,595 57,893 77,190 96,488 98,920 98,920 98,920
400,000..................... 360,000 52,095 78,143 104,190 130,988 134,545 134,545 134,545
500,000..................... 450,000 65,595 98,393 131,190 163,988 170,170 170,170 170,170
600,000..................... 540,000 79,095 118,643 158,190 197,738 205,796 205,796 205,796
</TABLE>
- ---------------
(1) The maximum annual compensation that can be recognized by a qualified
defined benefit pension retirement plan is $160,000 in 1997 (Code Section
401(a)(17)).
(2) Estimated five-year final average compensation is based on 90% of pay at age
65.
(3) The Restoration Plan benefit for covered employees whose pay at age 65
equals or exceeds $200,000 in the table above is calculated by limiting
total benefits payable under both of the Company defined benefit plans
(namely, the Retirement Plan and the Restoration Plan) to 45% as described
above.
Messrs. Gaylord, London, Vaughn, Harrell, and Bradley had 51, 20, 22, -0-,
and 11 years of credited service, respectively, on December 31, 1997. As a
result of the Code Section 401(a)(17) limitation on eligible compensation, the
1997 includable compensation in determining benefits under the Retirement Plan
was limited to $160,000 for the Named Executive Officers in 1997.
10
<PAGE> 13
401(k) Savings Plan
The Company maintains the Savings Plan, a defined contribution plan with a
salary deferral arrangement under Section 401(k) of the Code. Certain employees
of Old Gaylord who have attained age 21 and completed at least one year of
service and more than 1,000 hours of service are eligible to participate in the
Savings Plan.
Savings Plan participants are permitted to make elective contributions of
between 1% and 16% of their "Compensation" (as defined in the Savings Plan)
through March 31, 1998 and between 1% and 20% after March 31, 1998. Under the
Savings Plan, 50% of the contribution made by each participant is matched by the
Company up to six percent of compensation with a maximum employer contribution
equal to the lesser of (i) three percent of the participant's Compensation or
(ii) such lesser amount specified by Section 401(k) of the Code.
A participant's elective contributions vest immediately. The employer
matching contributions vest according to the following schedule:
<TABLE>
<CAPTION>
YEARS OF SERVICE PERCENT
- ---------------- -------
<S> <C>
Less than 2................................................. 0
2 to 3...................................................... 40
3 to 4...................................................... 60
4 to 5...................................................... 80
5 or more................................................... 100
</TABLE>
Participants actively participating in the Savings Plan are eligible to
apply for up to three loans. They are also permitted to make in-service
withdrawals and hardship withdrawals in conformity with the terms of the Savings
Plan.
Participating employees may invest both their own contributions and
employer contributions into one of seven funds including up to 30% of their
contributions in a fund comprised exclusively of the Company's Common Stock.
Upon termination of employment, disability, death, or retirement, a
participant receives the value of his or her account, payable as a lump sum
unless he or she elects to receive the value of his or her account balance in
the form of a joint and survivor annuity.
Supplemental Deferred Compensation Plan
The Company maintains the SUDCOMP Plan, which is an unfunded deferred
compensation arrangement for a select group of management or highly compensated
employees, including all of the Company's executive officers, which is intended
to provide benefits like those provided under the Savings Plan, notwithstanding
the limitations under the Savings Plan imposed by Section 401(k) of the Code.
The SUDCOMP Plan is administered by the Benefits Trust Committee which has the
exclusive authority to select the employees who are entitled to participate in
the SUDCOMP Plan and to interpret and administer the SUDCOMP Plan.
The terms of the SUDCOMP Plan are generally the same as the terms of the
Savings Plan except that (i) employer matching contributions (if any) are 50%
vested after two years of service and are vested in full after three years of
service, (ii) elective contributions are limited to the lesser of 16% of
compensation or $80,000, (iii) upon termination of employment for any reason,
distributions from the SUDCOMP Plan must generally be distributed to
participants within 90 days of their termination of employment, (iv)
distributions from the SUDCOMP Plan may not be rolled into an Individual
Retirement Account or another employer's defined contribution plan, and (v)
distributions from the SUDCOMP Plan are taxed in full upon distribution. SUDCOMP
Plan participants are permitted to invest both their own contributions and
employer contributions in the funds made available to Savings Plan participants,
other than the Common Stock fund.
11
<PAGE> 14
DIRECTOR COMPENSATION
Arrangements regarding directors' compensation for services as directors
are determined by the Compensation Committee. During 1997, the Company's policy
regarding cash compensation for non-employee directors was the same for Old
Gaylord as for New Gaylord. Each non-employee director received (a) an annual
Board retainer of $30,000, and (b) an annual committee retainer of $5,000 per
committee on which such director served ($6,000 for committee chairmen). In
addition, non-employee directors were entitled to a per-meeting fee of $1,500
for special meetings of the Board of Directors or its committees. The Company
has established a deferred compensation plan whereby non-employee directors may
defer their cash compensation until their retirement or resignation from the
Board of Directors. Currently, none of the directors are participating in the
deferred compensation plan. Employee directors are not compensated for service
as directors in addition to their salaries. All directors are reimbursed for
their expenses incurred in attending meetings. In addition, directors are
eligible to participate in the 1997 Stock Plan as determined from time to time
by the Compensation Committee. On October 1, 1997, the Company's four
non-employee directors, Mr. Dickinson, Mrs. Christine Gaylord Everest, Mr.
Rodgers, and Ms. Wilderotter, were awarded options to purchase 30,000, 30,000,
30,000, and 25,000 shares of Common Stock, respectively, at a price of $28.24
per share.
EMPLOYMENT, SEVERANCE, AND CHANGE IN CONTROL ARRANGEMENTS
Awards granted under the 1997 Stock Plan become immediately exercisable or
otherwise nonforfeitable in full in the event of a Change in Control of the
Company (as defined therein), notwithstanding specific terms of the awards
providing otherwise. Furthermore, with respect to stock options granted under
the 1997 Stock Plan, following a Change in Control the Compensation Committee
may, in its discretion, permit the cancellation of such options in exchange for
a cash payment in an amount per share equal, generally, to the difference
between the highest closing sales price during the sixty-day period preceding
the Change in Control and the exercise price. A Change in Control is defined in
the 1997 Stock Plan to include, among other things, (i) the acquisition of
securities representing a majority of the combined voting power of all classes
of the Company's capital stock by any person (other than the Company and other
related entities); (ii) the approval by the stockholders of the Company of a
merger or consolidation of the Company into or with another entity (with certain
exceptions), the sale or other disposition of all or substantially all of the
Company's assets, or the adoption of a plan of liquidation; or (iii) a change in
the composition of the Board of Directors in any two-year period such that
individuals who were Board members at the beginning of such period cease to
constitute a majority thereof (with certain exceptions).
Prior to the Distribution and the CBS Merger, Old Gaylord entered into
severance agreements with certain members of management (the "Severance
Agreements"), including each of the Named Executive Officers other than Mr.
Harrell, which agreements were assumed by New Gaylord following the CBS Merger.
These Severance Agreements became effective upon the CBS Merger, which
constituted a "Change of Control" (as defined therein), and provide for a
two-year employment agreement thereafter. In the event a Named Executive Officer
who has a Severance Agreement is terminated or his compensation is reduced
during such two-year period, he is entitled to a lump sum payment equal to 250%
of the sum of his base salary and cash incentive bonus.
In March 1997, the Company purchased Blanton Harrell Entertainment, an
international management company managing primarily Christian music artists. In
connection with such acquisition, Dan E. Harrell, a co-founder and 50% owner of
Blanton Harrell Entertainment and, following the Distribution and the CBS Merger
an executive officer of the Company, and the Company entered into a seven-year
employment agreement providing for a $300,000 annual base salary (increasing
annually as determined by the Compensation Committee, but in no event less than
the consumer price index) and an annual cash bonus of up to 60% of such base
salary, as determined by the Compensation Committee by reference to performance
criteria similar to those established for the Company's other executive
officers. The employment agreement also provides for annual awards of options to
purchase 16,911 shares of Common Stock (becoming exercisable annually in 25%
increments beginning on the second anniversary of the date of grant) and up to
4,143 shares of restricted stock
12
<PAGE> 15
(vesting and becoming nonforfeitable on the third anniversary of the date of
grant based on earnings per share targets), such options and shares of
restricted stock referred to herein collectively as "Annual Awards." Moreover,
Mr. Harrell was given a one-time award of 36,827 shares of restricted stock (the
"One-Time Award"), which shares vest and become nonforfeitable in one-third
increments on October 1, 2002, 2003, and 2004 if the business has achieved
targeted operating cash flow growth rates. In the event of a termination of Mr.
Harrell's employment by the Company without cause or by Mr. Harrell following a
breach of the employment agreement by the Company, Mr. Harrell would receive a
lump sum severance payment equal to 100% of his base salary (less $186,000) and
the exercisability or nonforfeitability, as applicable, of all Annual Awards
would be accelerated. In such case, Mr. Harrell would also have the right to
purchase for a nominal amount the artist management business sold to the
Company. In the event of a termination of employment without cause following a
Change of Control (as defined in the agreement), Mr. Harrell would receive a
lump sum severance payment equal to 200% of his base salary (less $186,000) and
the exercisability or nonforfeitability, as applicable, of all Annual Awards and
the One-Time Award would be accelerated.
In March 1998, the Company entered into a five-year employment agreement
with Jerry O. Bradley, an executive officer of the Company. The employment
agreement provides for an annual base salary of $200,000, subject to such
increase as may be determined from time to time by the Company, an annual cash
bonus based on the "net publishers' share" of Opryland Music Group, and an
additional annual cash bonus as determined in the discretion of the Company. In
addition, Mr. Bradley received an option to purchase 25,000 shares of Common
Stock, which option becomes exercisable annually in one-third increments
beginning on February 28, 2001. In the event Mr. Bradley is terminated without
cause, he will continue to receive his annual salary and bonus through February
28, 2003, with the bonus to be calculated by reference to Opryland Music Group's
"net publishers' share" earned in 1997, and the exercisability of all options
would be accelerated to the date of termination. Any severance benefits payable
to Mr. Bradley would be offset against any severance benefits Mr. Bradley may be
entitled to under his Severance Agreement described above.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors is composed of Messrs.
Dickinson and Rodgers and Ms. Wilderotter. Mr. Dickinson is also a director and
shareholder of OPUBCO. Edward L. Gaylord and E.K. Gaylord II, both directors and
executive officers of the Company, are also directors, executive officers, and
shareholders of OPUBCO.
In December 1997, the Company terminated its previously disclosed agreement
to exchange certain commercial real estate located in Dallas, Texas (the "OPUBCO
Real Estate") for the Company's interests in the Oklahoma Redhawks, a minor
league baseball franchise. Instead, the Company purchased the OPUBCO Real Estate
from OPUBCO for $1,000,000. At the same time, the Company leased 1,000 square
feet of the OPUBCO Real Estate to OPUBCO at an annual rent of $12,000, payable
in monthly installments. The term of the lease is from December 1, 1997 to
December 31, 1999. The Voting Trustees, who control approximately 38.3% of the
Company's voting power (see "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT"), also beneficially own a majority of the voting stock of OPUBCO.
Edward L. Gaylord, E.K. Gaylord II, Christine Gaylord Everest, and Martin C.
Dickinson, directors of the Company, are also directors of OPUBCO.
In February 1998, OKC Athletic Club Limited Partnership, the limited
partnership that owns the Oklahoma Redhawks in which the Company owns
approximately 40.2% (64.5% upon consummation of a pending transaction), borrowed
approximately $2.9 million from a wholly owned subsidiary of OPUBCO, which
borrowing bears interest at a prime rate plus 1% and is payable in full on
January 12, 2001.
The Company believes that the above-mentioned transactions were on terms no
less favorable to the Company or its controlled affiliates than can be obtained
from unaffiliated third parties.
13
<PAGE> 16
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The compensation of the Company's executive officers and other key
management personnel, approximately 43 persons including the Named Executive
Officers in 1997, is reviewed and approved annually by the Compensation
Committee of the Board of Directors, which is currently comprised of Martin C.
Dickinson, Joe M. Rodgers, and Mary Agnes Wilderotter, each of whom are
non-employee directors. With respect to executive compensation for 1997, initial
compensation decisions were made by Old Gaylord's Compensation Committee,
comprised of Messrs. Dickinson and Rodgers. Because the executive compensation
policies of Old Gaylord and New Gaylord in 1997 were the same, unless the
context otherwise requires, references in this report to the Compensation
Committee are to the committees of both Old Gaylord and New Gaylord. In addition
to reviewing and approving executive officers' salary and bonus arrangements,
the Compensation Committee establishes policies and guidelines for other
benefits and administers compensation and other benefits plans, including the
awards of stock and stock options pursuant to the 1997 Stock Plan. The
Compensation Committee is assisted in making compensation decisions by the
Company's management -- primarily the Chief Executive Officer (referred to in
this report as the "CEO") and, with respect to compensation decisions concerning
the CEO, the Chairman of the Board -- and the Company's independent professional
compensation consultants.
Compensation Policies and Procedures Applicable to Executive Officers for 1997
General. The stated mission of the Company is to maximize shareholder
value through the development and enhancement of the Company's country music
franchise, family value oriented entertainment, and world class convention and
lodging facilities. In that regard, the Compensation Committee is dedicated to
employing compensation policies and techniques designed to assist in that
mission by (i) attracting, retaining, and rewarding management personnel; (ii)
aligning the Company's executive compensation program with the interests of
shareholders by rewarding performance that enhances shareholder value; and (iii)
providing appropriate incentives for executives to achieve company-wide and
individual performance goals.
The first regular Compensation Committee meeting each calendar year is
dedicated to reviewing and adopting compensation policies to be applied during
the year and to establishing executive compensation for that year consistent
with those policies. At such meeting, the Company's CEO (with the assistance of
the Company's independent compensation consultants) submits proposed
compensation packages for the Company's executive officers (other than the
Chairman, the Vice Chairman, and the CEO) and the Compensation Committee reviews
and takes action on compensation packages for all of the Company's executive
officers, including the Chairman, the Vice Chairman, and the CEO. In making
these compensation decisions, the Compensation Committee focuses on three
primary components of the executive compensation program, each of which is
intended to reflect company-wide and individual performance based on factors
that are measured objectively and subjectively: base salary compensation, annual
incentive compensation, and long-term incentive compensation. From time to time
during the calendar year, in light of increased job responsibilities or
particularly meritorious performance, the Compensation Committee may review an
executive's compensation and make adjustments in any one or more of the
foregoing components.
Base Salary Compensation. The 1997 base salary compensation of the
Company's executive officers (other than the Chairman's and the Vice Chairman's,
but including the current CEO's) was proposed initially by Old Gaylord's former
CEO based on a number of factors, including prior year base salaries, individual
performances during the prior year, and executive compensation survey data
compiled by the Company's independent compensation consultants. At the direction
of the Compensation Committee, the independent compensation consultants were
instructed to survey comparable companies in each executive's area of
responsibility within the Company. (For example, with respect to a Hospitality
and Attractions Group executive, comparable companies in the leisure and
hospitality industries were surveyed.) The comparable companies surveyed by the
Company's independent compensation consultants included several (but not all) of
the companies included in the Dow Jones Lodging Index and the Dow Jones
Entertainment Index, which indices are presented on the performance graph on
page 17, as well as additional companies in the lodging, entertainment, media,
and music industries with whom the Company believes it competes for executive
talent. Based on historical compensation of the particular executive and survey
data produced by the independent
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<PAGE> 17
compensation consultants, the former CEO recommended a base salary for each
executive officer targeted, in general, to the 50th percentile of total
compensation for similarly situated executives of comparable companies, which
recommendation the Compensation Committee then reviewed, modified, and approved
in light of its compensation policies. The 1997 base compensation for the
Chairman was established by the Compensation Committee primarily on the basis of
his prior year's compensation and the Committee's view of the contributions of
the Chairman to the performance of the Company in 1996.
Annual Incentive Compensation. The Compensation Committee also reviewed
and approved corporate, departmental, and individual performance targets
established by the former CEO as the bases for annual incentive cash
compensation for each executive officer. It was determined that a portion of
each executive's incentive bonus would be based on 1997 operating cash flow
(defined as operating income plus depreciation and amortization), applied both
on a Company-wide basis in order to reflect the Company's "one company" culture
and, where appropriate, on a business-unit basis in order to reflect an
executive's managerial effectiveness. The Compensation Committee believed that,
for 1997, operating cash flow was the stock market's principal measurement of
the Company's performance and, accordingly, determined to make it the primary
basis for incentive compensation. The operating cash flow targets established at
the beginning of the year were modified to take into account the CBS Merger and
the Distribution. In general, corporate and individual performance levels were
established such that if the Company met its pre-established financial targets
and the executives fully completed their individual performance goals, the
executives' total cash compensation would be generally at the 75th percentile
for total compensation for similarly situated executives of comparable
companies. If such targets were exceeded, total cash compensation could exceed
the 75th percentile. For executives who manage a particular operating group, 9%
to 25% of their total bonus payout was determined by reference to the extent to
which a predetermined corporate operating cash flow target was met; up to 5% was
determined based on the executives' utilization of their capital budgets; 30% to
60% of their total bonus payout was determined by the extent to which operating
cash flow goals of the operating unit or group which they supervise were met; up
to 50% was determined based on their achievement of departmental goals; and up
to 20% was determined based on the achievement of individual goals as determined
in the subjective judgment of the Compensation Committee. For administrative
executives who did not manage a particular operating group, including the CEO,
40% to 60% of their total bonus payout was determined based on the extent to
which a predetermined corporate operating cash flow target was attained; up to
20% was determined based on the executives' utilization of capital budgets; up
to 30% was determined based on their achievement of departmental goals; and 20%
to 60% was determined based on their achievement of individual performance goals
as determined in the subjective judgment of the Compensation Committee.
Long-Term Incentive Compensation. The Compensation Committee believes that
a powerful way of aligning long-term interests of executive officers with those
of stockholders is to award equity-based compensation in the form of stock
options and restricted stock. In early 1997, because of the pending Distribution
and the CBS Merger, the Compensation Committee deferred consideration of
equity-based awards to executive officers. Upon consummation of the Distribution
and CBS Merger in October 1997, the Compensation Committee, at the
recommendation of the CEO, awarded nonqualified stock options to all but one of
the executive officers and awarded restricted stock to three executives. In
general, the options are exercisable at the market price on the date of award
and vest ratably over a three-year period beginning in 2000. The size of the
award of options were proposed by the CEO in consultation with the independent
compensation consultants based on the expected growth rates and relative values
of businesses the executives managed.
CEO London's Compensation
At the time the Compensation Committee established Mr. London's
compensation for 1997, he was serving as Chief Financial and Administrative
Officer of Old Gaylord. In reviewing and approving such compensation, the
Compensation Committee considered many of the same criteria described above with
respect to executive officers in general, including the compensation of
comparable executives at companies within the entertainment, lodging, and media
industries, the performance of the Company in 1996, and Mr. London's additional
executive responsibilities. Mr. London's initially proposed annual base salary
for 1997 was $325,000, which represented a 4% increase over his 1996 base
salary.
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<PAGE> 18
Effective as of May 1, 1997, Mr. London was elected to the position of
President and CEO and, in light of additional responsibilities and in
recognition of his exemplary service in connection with the CBS Merger, his
annual base salary was increased to $425,000.
Mr. London was awarded an incentive bonus for 1997 performance of $328,827.
Approximately 64% of this bonus, or $209,827, was based on the Company's
achievement of company-wide operating cash flow targets; 18%, or $59,500, was
based on Mr. London's utilization of the capital budget; and the remaining 18%
was based on Mr. London's achievement of individual performance goals. In
addition, in October 1997 Mr. London was awarded options to purchase 300,000
shares of Common Stock, which vest annually in one-third increments beginning in
2000.
Federal Income Tax Deductibility Limitation
Each year the Compensation Committee analyzes the potential impact of the
$1,000,000 limit on the deductibility of executive compensation for federal
income tax purposes enacted as part of the 1993 Omnibus Budget Reconciliation
Act ("OBRA"). Under the Department of the Treasury regulations, compensation
pursuant to the Company's stock incentive plans should, in general, be
"performance-based" and therefore excluded from the $1,000,000 limit. Other
forms of compensation provided by the Company, however, are not excluded from
such limit. The Compensation Committee believes that the Company will not lose
any deductions with respect to current executive compensation. The Compensation
Committee will continue to evaluate, however, whether it will approve annual
compensation arrangements exceeding $1,000,000 and whether it will attempt to
qualify any such amounts for deductibility under OBRA.
MARTIN C. DICKINSON
JOE M. RODGERS
MARY AGNES WILDEROTTER
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<PAGE> 19
PERFORMANCE GRAPH
The following Performance Graph compares New Gaylord's cumulative total
stockholder return on its Common Stock from October 1, 1997, the date
immediately following the Distribution (based on the proportionate value of Old
Gaylord Common Stock, as reported on the NYSE on September 30, 1997,
attributable to the New Gaylord Common Stock following the Distribution and CBS
Merger), through December 31, 1997 with the cumulative total return of the Dow
Jones Global-U.S. Index, the Dow Jones Lodging Index, and the Dow Jones
Entertainment Index.
<TABLE>
<CAPTION>
Gaylord Dow Jones Dow Jones
Measurement Period Entertainment Global-U.S. Dow Jones Entertainment
(Fiscal Year Covered) Company Index Lodging Index Index
<S> <C> <C> <C> <C>
10/1/97 100 100 100 100
12/31/97 113.64 103.26 104.73 119.56
</TABLE>
COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who beneficially own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the SEC and the New York Stock Exchange.
Officers, directors, and greater than ten percent stockholders are required by
federal securities regulations to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on the Company's review of the copies of such forms, or
written representations from certain reporting persons furnished to the Company,
the Company believes that its officers, directors and greater than ten percent
beneficial owners were in compliance with all applicable filing requirements,
except that Dan E. Harrell, President of the Company's Idea Entertainment
subsidiary, inadvertently failed to timely file a report on Form 3 at the time
of the Distribution. Such Form 3 has subsequently been filed.
PROPOSAL TWO -- RATIFICATION OF APPOINTMENT OF ACCOUNTANTS
Upon recommendation of the Audit Committee, the Board of Directors has
appointed Arthur Andersen LLP, independent public accountants, to audit the
accounts of the Company for 1998. Arthur Andersen LLP audited the accounts of
the Company for 1997 and has served as independent public accountants to the
Company since 1983. Although ratification by stockholders of this appointment is
not required by law or the
17
<PAGE> 20
Company's Restated Certificate or By-laws, management of the Company believes
that such ratification is desirable. In the event this appointment is not
ratified by the stockholders, the Board of Directors will consider such fact as
it deems appropriate. A representative of Arthur Andersen LLP is expected to be
present at the Annual Meeting, will have an opportunity to make a statement if
he or she so desires, and is expected to be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR PROPOSAL
TWO.
METHOD OF COUNTING VOTES
Unless a contrary choice is indicated, all duly executed proxies will be
voted in accordance with the instructions set forth on the back side of the
proxy card. Abstentions and "non-votes" are counted as present only for purposes
of determining a quorum. Abstentions and "non-votes" are treated as votes
against proposals presented to stockholders other than the election of
directors. A "non-vote" occurs when a nominee holding shares for a beneficial
owner votes on one proposal, but does not vote on another proposal because the
nominee does not have discretionary voting power and has not received
instructions from the beneficial owner.
PERSONS MAKING THE SOLICITATION
The cost of soliciting proxies in the accompanying form will be borne by
the Company. In addition to the use of mail, officers of the Company may solicit
proxies by telephone or facsimile transmission. Upon request, the Company will
reimburse brokers, dealers, banks, and trustees, or their nominees, for
reasonable expenses incurred by them in forwarding proxy material to beneficial
owners of shares of the Common Stock.
REVOCABILITY OF PROXY
Shares represented by valid proxies will be voted in accordance with
instructions contained therein, or, in the absence of such instructions, in
accordance with the Board of Directors' recommendations. Any stockholder of the
Company has the unconditional right to revoke his proxy at any time prior to the
voting thereof by any action inconsistent with the proxy, including notifying
the Secretary of the Company in writing, executing a subsequent proxy, or
personally appearing at the meeting and casting a contrary vote. No such
revocation will be effective, however, until such notice of revocation has been
received by the Company at or prior to the Annual Meeting.
PROPOSALS OF STOCKHOLDERS
A proper proposal submitted by a stockholder in accordance with applicable
rules and regulations for presentation at the Company's Annual Meeting of
Stockholders in 1999 and received at the Company's executive offices no later
than December 2, 1998, will be included in the Company's Proxy Statement and
form of proxy relating to such annual meeting.
OTHER MATTERS
The Board of Directors is not aware of any matter to be presented for
action at the meeting other than the matters set forth herein. Should any other
matter requiring a vote of stockholders arise, the proxies in the enclosed form
confer upon the person or persons entitled to vote the shares represented by
such proxies discretionary authority to vote the same in accordance with their
best judgment in the interest of the Company.
FINANCIAL STATEMENTS AVAILABLE
A copy of the Company's Annual Report on Form 10-K for the year ended
December 31, 1997 containing audited financial statements accompanies this Proxy
Statement.
April 1, 1998
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<PAGE> 21
APPENDIX A
PROXY
GAYLORD ENTERTAINMENT COMPANY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS OF GAYLORD ENTERTAINMENT COMPANY
(THE "COMPANY") TO BE HELD ON MAY 8, 1998
The undersigned hereby appoints Edward L. Gaylord and Terry E. London, and
each of them, as proxies, with full power of substitution, to vote all shares of
the undersigned as shown on the reverse side of this proxy at the Annual Meeting
of Stockholders of the Company to be held at the Presidential Ballroom, Opryland
Hotel, 2800 Opryland Drive, Nashville, Tennessee, on Friday, May 8, 1998, at
10:00 a.m., local time, and any adjournment thereof.
Your shares will be voted in accordance with your specifications on the
opposite side. If no choice is specified, shares will be voted FOR the election
of the two nominees and FOR the ratification of the appointment of accountants.
(Continued, and to be dated and signed on the other side.)
1. ELECTION OF DIRECTORS
<TABLE>
<S> <C> <C>
[ ] FOR all nominees listed below (except as [ ] WITHHOLD AUTHORITY to vote for all nominees [ ] *EXCEPTIONS
marked to the contrary below) listed below
</TABLE>
Nominees: Edward L. Gaylord and Joe M. Rodgers
(INSTRUCTIONS: To withhold authority to vote for any individual nominee(s),
mark the "Exceptions" box and write that nominee(s) name(s) on the line
below.)
[ ] *Exceptions:
2. RATIFICATION OF APPOINTMENT OF ACCOUNTANTS.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion on any other matter that may properly come before said
meeting or any adjournment thereof.
Dated , 1998
------------------
-----------------------------
Signature
-----------------------------
Signature, if held jointly
Please sign exactly as your
name appears on your stock
certificate. If registered in
the names of two or more
persons, each should sign.
Executors, administrators,
trustees, guardians,
attorneys, and corporate
officers should show their
full title.
SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY VOTES MUST BE INDICATED [X]
USING THE ENCLOSED ENVELOPE. IN BLACK OR BLUE INK.
