<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
ONE GAYLORD DRIVE
NASHVILLE, TENNESSEE 37214
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 13, 1999
---------------------
You are hereby given notice of and invited to attend in person or by proxy
the Annual Meeting of Stockholders (the "Annual Meeting") of Gaylord
Entertainment Company (the "Company") to be held at the Presidential Ballroom,
Opryland Hotel, 2800 Opryland Drive, Nashville, Tennessee, on Thursday, May 13,
1999, at 10:00 a.m. for the following purposes:
1. To elect three Class II directors, each director to serve for a
three-year term and until such person's successor is duly elected and
qualified;
2. To amend the Company's Amended and Restated 1997 Stock Option and
Incentive Plan to increase the number of shares authorized for grant and
issuance pursuant thereto;
3. To approve and adopt the Company's Employee Stock Purchase Plan;
4. To ratify the appointment of Arthur Andersen LLP as the independent
accountants of the Company; and
5. To transact such other business as may properly come before the
Annual Meeting or any adjournment(s) thereof.
The Board of Directors has fixed the close of business on March 18, 1999 as
the record date (the "Record Date") for the determination of stockholders
entitled to notice of and to vote at the Annual Meeting and any adjournment(s)
thereof. Only stockholders of record at the close of business on the Record Date
are entitled to notice of and to vote at the Annual Meeting.
You are cordially invited to attend the meeting. The Opryland Hotel has
reserved a limited number of rooms at a special rate of $160, single and double
occupancy, per night. If you would like a room, please make reservations by
Friday, May 7, 1999, by calling (615) 316-6003 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 ANNUAL 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 AT ANY TIME PRIOR TO ITS USE AS
SPECIFIED IN THE ATTACHED PROXY STATEMENT.
By Order of the Board of Directors,
/s/ Thomas J. Sherrard
THOMAS J. SHERRARD
Secretary
Nashville, Tennessee
March 31, 1999
<PAGE> 3
GAYLORD ENTERTAINMENT COMPANY
---------------------
PROXY STATEMENT
---------------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 13, 1999
---------------------
To Our Stockholders:
This Proxy Statement is furnished to stockholders of Gaylord Entertainment
Company, a Delaware corporation (the "Company"), 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, 1999 (the "Record Date"). The approximate date on which
this Proxy Statement and the enclosed proxy are first being sent to stockholders
is March 31, 1999. The principal executive offices of the Company are located at
One Gaylord Drive, Nashville, Tennessee 37214.
As of the Record Date, there were 32,809,448 shares of the Company's Common
Stock, par value $.01 per share (the "Common Stock") outstanding and entitled to
vote at the Annual Meeting. Each share of Common Stock is entitled to one vote.
A majority of the shares of Common Stock entitled to vote, represented in
person or by proxy, constitutes a quorum. If a quorum is not present at the time
of the Annual Meeting, or if for any reason the Company believes that additional
time should be allowed for the solicitation of proxies, the Company may adjourn
or postpone the Annual Meeting with or without a vote of the stockholders.
Unless a contrary choice is indicated, all duly executed proxies received
prior to or at the Annual Meeting will be voted in accordance with the
instructions set forth on the back side of the proxy card. Directors must be
elected by a plurality of the votes of the shares present (in person or by
proxy) and entitled to vote for the election of directors. All other matters
shall be determined based upon the vote of a majority of the shares present (in
person or by proxy) and entitled to vote on the matter. A "broker 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 with regard to the other proposal and has not
received specific instructions from the beneficial owner as to how to vote on
that proposal. Abstentions are, in effect, votes against proposals presented to
stockholders other than the election of directors. Broker non-votes have no
effect on proposals submitted to stockholders.
Shares represented by valid proxies will be voted in accordance with
instructions contained therein, or, in the absence of such instructions, FOR the
election of all director nominees and FOR all other proposals described in this
Proxy Statement. 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 at One Gaylord Drive, Nashville, Tennessee 37214; by executing a
subsequent proxy; or by 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.
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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.
Corporate Background
Until September 30, 1997, the Company was a wholly owned subsidiary of a
corporation which was then known as Gaylord Entertainment Company ("Old
Gaylord"). On October 1, 1997, Old Gaylord consummated a transaction with CBS
Corporation ("CBS"), formerly known as Westinghouse Electric Corporation, 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 network TNN and
the U.S. and Canadian operations of the cable network CMT, as well as certain
other related assets and liabilities, to the Company 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 the Company. In addition, immediately following the CBS Merger, the
Company 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.
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PROPOSAL ONE -- ELECTION OF CLASS II 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 for the election of directors at
the Annual Meeting. 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 nine members, three of whom will be elected at the Annual Meeting.
Since the 1998 Annual Meeting of Stockholders, Craig L. Leipold and Howard L.
Wood were designated by unanimous action of the Board of Directors to fill
vacancies created by expansion of the Board of Directors as provided in the
Restated Certificate. The Board of Directors of the Company has nominated and
recommends to the stockholders Martin C. Dickinson, Christine Gaylord Everest
and Howard L. Wood, each of whom is an incumbent Class II director, for election
as Class II directors to serve until the annual meeting of stockholders in 2002
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 the Record Date with respect to the nominees for election as Class II
directors and with respect to Class I and Class III directors (who are not
nominees for election at the Annual Meeting) is set forth below.
CLASS II DIRECTOR NOMINEES
(TO BE ELECTED; TERMS EXPIRING IN 2002)
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Martin C. Dickinson Director since 1974 Age 63
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 The Oklahoma Publishing
Company ("OPUBCO"), a newspaper publishing company and an affiliate of the
Company, CBS Corporation, and the National Cowboy Hall of Fame & Western
Heritage Center, and is the chairman of the Scripps Foundation for Medicines and
Sciences.
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Christine Gaylord Everest Director since 1976 Age 47
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.
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Howard L. Wood Director since 1999 Age 59
Mr. Wood has been a director of the Company since March 1999. He is a co-founder
and vice-chairman of Charter Communications, Inc., an operator of cable
television properties in the United States. Prior to the formation of Charter in
1992, Mr. Wood was president and chief executive officer of Cencom Cable
Associates, Inc., an operator of cable television properties that Mr. Wood
joined in 1987. Prior to that time, Mr. Wood was with Arthur Andersen & Co.,
where he served as partner-in-charge of the St. Louis tax division from 1973
until joining Cencom. He currently serves as a commissioner of the Missouri
Department of Conservation. Mr. Wood is a certified public accountant.
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CONTINUING DIRECTORS
The persons named below will continue to serve as directors until the
annual meeting of stockholders in the year indicated and until their successors
are elected and take office. Stockholders are not voting at this Annual Meeting
on the election of Class III or Class I directors.
CLASS III DIRECTORS
(TERMS EXPIRE IN 2000)
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E. K. Gaylord II Director since 1977 Age 41
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 49
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.
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Mary Agnes Wilderotter Director since 1997 Age 44
Ms. Wilderotter was named to the Board of Directors in October 1997. Ms.
Wilderotter has been the president, chief executive officer, and a 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 held senior management positions with McCaw Cellular from 1991 until
August 1995 and with U.S. Computer Services Inc./Cable Data from 1987 to 1991.
Ms. Wilderotter is a director of Airborne Freight Corporation, Electric
Lightwave Company, Jacor Communications, and the California Cable Television
Association.
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CLASS I DIRECTORS
(TERMS EXPIRE IN 2001)
- --------------------------------------------------------------------------------
Edward L. Gaylord Director since 1946 Age 79
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. 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.
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Joe M. Rodgers Director since 1991 Age 65
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.
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Craig L. Leipold Director since 1999 Age 46
Mr. Leipold has been a director of the Company since February 1999. He is
chairman and chief executive officer of the Nashville Predators, a National
Hockey League expansion team that began its inaugural season in 1998. For the
past nine years he has served as chairman and chief executive officer of
LaCrosse-Rainfair Safety Company of Racine, Wisconsin. Before his association
with LaCrosse-Rainfair, he was founder and president of Ameritel Corporation of
Neenah, Wisconsin. Mr. Leipold also serves as a director of LaCrosse Footwear,
Inc. and The Levy Organization and is a member of the Board of Governors of the
National Hockey League. His civic activities include service as a trustee of
Hendrix College, a director of the Nashville Area Chamber of Commerce and a past
chairman of the Wisconsin Sports Authority.
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The Board of Directors holds regular quarterly meetings and meets on other
occasions when required by special circumstances. The Board's two principal
standing 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 and with
the Company's director of internal audit 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), Joe M. Rodgers, Craig L.
Leipold (since February 1, 1999) and Howard L. Wood (since March 1, 1999).
During 1998, the Audit Committee met three times.
Compensation Committee -- This Committee is responsible for reviewing
and approving all compensation and benefits for executive officers,
advising management regarding the compensation (including bonuses) for
other designated key employees of the Company, administering the Company's
1997 Stock Option and Incentive Plan, advising management regarding
employee benefit plans, and reviewing and recommending compensation for
directors. Members of the Compensation Committee are Joe M.
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Rodgers (Chairman), Martin C. Dickinson, Mary Agnes Wilderotter and Howard
L. Wood (since March 1, 1999). The Compensation Committee met four times
during 1998.
During 1998, the Board of Directors held four regular and no special
meetings. Each of the directors attended at least 75% of the aggregate of: (i)
the total number of meetings of the Board of Directors held during the period
for which he or she was a director and (ii) the total number of meetings held by
all committees of Board of Directors on which he or she served during the period
for which he or she served.
Nominations for election to the Board of Directors may be made by the Board
of Directors, by a nominating committee (if appointed by the Board of
Directors), or by any stockholder entitled to vote for the election of directors
as described below. The Board of Directors does not have a standing nominating
committee, but the Company's Compensation Committee has recommended candidates
to the Board of Directors in the past. The Bylaws establish an advance notice
procedure for the nomination of candidates for election as directors, other than
by the Board of Directors or a nominating committee. Notice of such director
nominations must be timely given in writing to the Secretary of the Company
before 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 before the anniversary date of the immediately preceding
annual meeting of stockholders, except that if the annual meeting is called for
a date that is not within 30 days before or after such anniversary date, the
stockholder's notice must be received by the close of business on the tenth day
following the earlier to occur of the day on which notice of the date of the
annual meeting was mailed or public disclosure of the date of the annual meeting
was made; and (b) in the case of a special meeting of stockholders called for
the purpose of electing directors, by the close of business on the tenth day
following the earlier to occur of 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. The notice to the Company from a stockholder who proposes to
nominate a person at a meeting for election as a director must contain all the
information about that person that would have to be included in a proxy
statement soliciting proxies for the election of the proposed nominee (including
the person's written consent to serve as a director if so elected) and certain
information about the stockholder proposing to nominate that person. The
nomination will be disregarded if the presiding officer of the stockholders
meeting determines that a person was not nominated in accordance with this
nomination procedure.
PROPOSAL TWO -- PROPOSAL TO AMEND THE COMPANY'S AMENDED AND RESTATED 1997 STOCK
PLAN TO INCREASE THE NUMBER OF SHARES AUTHORIZED FOR GRANT AND
ISSUANCE PURSUANT THERETO
Background and Purpose.
In order to continue to attract, motivate, and retain outstanding officers,
directors and key employees of the Company, the Board of Directors believes that
it is essential to provide compensation incentives to such persons that are
competitive with those provided by other companies. In addition, the Board
believes that it is important to continue to identify the interests of its
officers, directors, key employees, consultants and advisors with those of the
stockholders by encouraging equity ownership of the Company. To those ends, on
February 16, 1999, the Board of Directors voted to adopt, subject to stockholder
approval, an amendment to the Gaylord Entertainment Company Amended and Restated
1997 Stock Option and Incentive Plan (the "1997 Stock Plan") to increase the
number of shares authorized for grant and issuance thereunder. The following
summaries of the proposed amendment to the 1997 Stock Plan (the "Proposed
Amendment") and the 1997 Stock Plan as currently in effect, the text of each of
which is annexed as Appendix A hereto, are qualified in all respects by the
specific provisions contained in the Proposed Amendment and the 1997 Stock Plan.
Proposed Amendment.
Currently, 3,000,000 shares of Common Stock are reserved for the grant of
awards and issuance under the 1997 Stock Plan, all which have been granted as
non-qualified stock options ("NQSOs") or restricted stock awards as of the
Record Date. Pursuant to the Proposed Amendment, an additional 1,250,000 shares
of
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Common Stock will be made available and reserved for the grant of awards and
issuance under the 1997 Stock Plan, 248,440 of which have been granted or
committed to be granted as of the Record Date subject to stockholder approval of
the Proposed Amendment.
SUMMARY OF TERMS OF 1997 STOCK PLAN
Eligibility.
Under the 1997 Stock Plan, directors, officers and other key employees,
consultants and advisors of the Company are eligible to receive awards of stock
options, stock appreciation rights and restricted stock. Options granted under
the 1997 Stock Plan may be incentive stock options ("ISOs"), within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), or
NQSOs. Stock appreciation rights ("SARs") may be granted simultaneously with the
grant of an option or, in the case of NQSOs, at any time during its term.
Administration.
Unless otherwise determined by the Board of Directors of the Company, the
1997 Stock Plan is administered by the Compensation Committee of the Board of
Directors, if comprised solely of nonemployee directors within the meaning of
Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or by the Board of Directors if the Compensation Committee is not so
comprised (any entity administering the 1997 Stock Plan, hereinafter referred to
as the "Committee"). Currently, the Compensation Committee is comprised solely
of nonemployee directors and is serving as the Committee. Also, the members of
the Committee (and the Compensation Committee) are currently outside directors
within the meaning of Section 162(m) of the Code. Subject to the provisions of
the 1997 Stock Plan, the Committee determines the type of award, when and to
whom awards will be granted, and the number of shares covered by each award. The
Committee also determines the terms, provisions, and kind of consideration
payable (if any), with respect to awards. In addition, the Committee has sole
discretionary authority to interpret the 1997 Stock Plan and to adopt and amend
rules and regulations related thereto. In determining the persons to whom awards
will be granted and the number of shares covered by each award, the Committee
takes into account the contributions to the management, growth, and
profitability of the business of the Company by the respective persons and such
other factors as the Committee deems relevant.
Participation.
The persons eligible to participate in the 1997 Stock Plan are officers,
directors, key employees, consultants or advisors of the Company or any
"Subsidiary" (as defined in the 1997 Stock Plan), except that only consultants
or advisors who have rendered bona fide services to the Company or any
Subsidiary in connection with its business operations, and not in connection
with the offer or sale of securities in capital-raising transactions, are
eligible to participate. The selection of persons who are eligible to
participate in the 1997 Stock Plan is within the sole discretion of, and grants
to them are determined by, the Committee.
Shares Subject to the 1997 Stock Plan.
Currently, the 1997 Stock Plan provides that 3,000,000 shares of Common
Stock are reserved for the grant of awards and issuance thereunder, all of which
have been granted or committed to be granted as NQSOs or as restricted stock
awards and none of which have been granted or committed to be granted as ISOs or
SARs, as of the Record Date. Any shares of Common Stock covered by an award that
terminates unexercised will be available for additional awards. The 1997 Stock
Plan also provides for adjustment of the number of shares subject to the 1997
Stock Plan, the Performance Goals (as defined below) and the option price or
applicable market value of outstanding awards in the event of a stock split,
combination of shares, recapitalization, or other change in the capitalization
of the Company. The 1997 Stock Plan limits the number of shares with respect to
which awards (including options, SARs, and restricted stock) may be granted to
any individual to no more than 500,000 shares (subject to adjustment) in any
given three year period. Unless the 1997 Stock Plan is terminated earlier by the
Board of Directors, awards may be granted until September 30,
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2007, provided that awards granted prior to that date may continue in effect
beyond September 30, 2007. Pursuant to the Proposed Amendment, an additional
1,250,000 shares of Common Stock will be made available and reserved for the
grant of awards and issuance under the 1997 Stock Plan, 248,440 of which have
been granted or committed to be granted as of the Record Date subject to
stockholder approval of the Proposed Amendment.
Stock Options.
The Committee determines, in its sole discretion, the purchase price of the
shares of stock covered by an option and the kind of consideration payable with
respect to any awards at the time such option or award is granted; provided,
that in the case of ISOs, the option price must be not less than 100% of the
Fair Market Value (as defined in the 1997 Stock Plan) of a share of Common Stock
on the date of grant of the option, and provided further that the option price
must be 110% of the Fair Market Value of a share of Common Stock in the case of
ISOs granted to Ten Percent Stockholders (as defined in the 1997 Stock Plan).
Each option granted under the 1997 Stock Plan is exercisable at such times and
under such conditions as the Committee determines, provided that in the case of
ISOs, such exercise period may not exceed ten years from the date of grant, and
provided further, that in the case of ISOs granted to Ten Percent Stockholders,
such exercise period may not exceed five years from the date of grant. The
aggregate Fair Market Value of the shares with respect to which ISOs granted
under the 1997 Stock Plan and any other option plans exercisable for the first
time by each grantee during any calendar year may not exceed $100,000.
Stock options may be exercised by delivery of consideration to the Company
equal to the exercise price in the form of cash, shares of Common Stock having a
Fair Market Value equal to the exercise price, cash provided through a
broker-dealer sale and remittance procedure, in a combination of one or more of
the foregoing, or in any other manner that the Committee deems appropriate or
that the related option agreement may provide. The Committee determines when
options expire.
The 1997 Stock Plan generally provides that options which are unexercisable
upon termination of an option holder's employment are canceled. Options which
are exercisable on the date of termination of the option holder's employment may
be exercised for a period of 90 days after such termination of employment (or
earlier in accordance with the option's terms), except that if employment is
terminated by the Company for cause the employee's options, although
exercisable, expire immediately unless the Committee extends them. If the option
holder's employment terminates due to retirement, the option holder's then
exercisable options remain exercisable for the remainder of the option term. In
addition, the 1997 Stock Plan generally provides that in the event of the death
or disability of the option holder while in the employ of the Company, or within
90 days after termination of such employment, the option will become fully
exercisable and will remain exercisable until the expiration of the stated term
of the option.
Stock Appreciation Rights.
The 1997 Stock Plan also permits the Committee to grant SARs with respect
to all or any portion of the shares of the Common Stock covered by options. Each
SAR will confer a right to receive an amount with respect to each share subject
thereto, upon exercise thereof, equal to the excess of (i) the Fair Market Value
of one share of Common Stock on the date of exercise over (ii) the grant price
of the SAR. The grant price of any SAR granted in tandem with an option will be
equal to the exercise price of the underlying option, and the grant price of any
other SAR will be such price as the Committee determines. The Committee may, in
its sole discretion, condition the exercise of any SAR upon the attainment of
specified Performance Goals (as defined below).
Restricted Stock.
The 1997 Stock Plan further provides for the granting of restricted stock
awards, which are awards of Common Stock that may not be transferred or
otherwise disposed of for such period as the Committee determines. The Committee
may also impose such other conditions and restrictions on the shares of
restricted stock as it deems appropriate, including the satisfaction of one or
more of the following performance criteria:
8
<PAGE> 11
(i) pre-tax income or after-tax income; (ii) operating cash flow; (iii)
operating profit; (iv) return on equity, assets, capital, or investment; (v)
earnings or book value per share; (vi) sales or revenues; (vii) operating
expenses; (viii) Common Stock price appreciation; and (ix) implementation or
completion of critical projects or processes (collectively, the "Performance
Goals"). The Performance Goals may include a threshold level of performance
below which no payment will be made (or no vesting will occur), levels of
performance at which specified payments will be made (or specified vesting will
occur), and a maximum level of performance above which no additional payment
will be made (or at which full vesting will occur). Attainment of each of the
Performance Goals will be determined, to the extent applicable, in accordance
with generally accepted accounting principles and will be subject to
certification by the Committee, although the Committee has the authority to make
equitable adjustments to the Performance Goals in recognition of unusual or
non-recurring events affecting the Company. The Committee may provide that such
restrictions will lapse with respect to specified percentages of the awarded
shares of restricted stock on successive future dates. The Committee has the
further authority to cancel all or any portion of the restriction with respect
to restricted stock on such terms and conditions as it deems appropriate.
Amendment and Termination.
The Board of Directors at any time and from time to time may suspend,
terminate, modify, or amend the 1997 Stock Plan, without stockholder approval to
the fullest extent permitted by the Exchange Act and the rules and regulations
thereunder; provided, however, that no suspension, termination, modification, or
amendment of the 1997 Stock Plan may adversely affect any award previously
granted under the 1997 Stock Plan, unless written consent of the grantee is
obtained.
Change in Control.
In the event of a Change in Control (as defined below) of the Company, the
awards granted under the 1997 Stock Plan will become immediately exercisable or
otherwise nonforfeitable in full, notwithstanding terms of the awards providing
otherwise. Change in Control is defined in the 1997 Stock Plan to mean, among
other things: (i) the acquisition of securities representing a majority of the
combined voting power of the Company 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), a sale or other disposition of all or substantially all of
the Company's assets, or a plan of liquidation; or (iii) a change in the
composition of the Board of Directors in any two-year period so that individuals
who were directors at the beginning no longer constitute a majority of the Board
of Directors (with certain exceptions).
Transferability.
ISOs (and any SAR related thereto) are not transferable otherwise than by
will or by the laws of descent and distribution, and all ISOs are exercisable
during the grantee's lifetime only by the grantee. NQSOs (and any SAR related
thereto) are not transferable without the prior consent of the Committee, other
than (i) by will or the laws of descent and distribution; (ii) by a grantee to a
member of the option holder's "Immediate Family" (as defined in the 1997 Stock
Plan); or (iii) by a grantee to a trust for the benefit of a member of the
option holder's Immediate Family. Awards of restricted stock will be
transferable only to the extent set forth in the instruments evidencing such
awards.
Certain U.S. Federal Income Tax Consequences.
The following is a brief summary of certain U.S. federal income tax aspects
of options awarded under the 1997 Stock Plan based upon the federal income tax
laws in effect on the date hereof. This summary is not intended to be
exhaustive, and the exact tax consequences to any grantee will depend upon his
or her particular circumstances and other factors. 1997 Stock Plan participants
must consult their tax advisors with respect to any state, local and foreign tax
considerations or particular federal tax implications of options granted under
the 1997 Stock Plan.
9
<PAGE> 12
Incentive Stock Options. Neither the grant nor the exercise of an ISO will
result in taxable income to the employee. The tax treatment on sale of shares of
Common Stock acquired upon exercise of an ISO depends on whether the holding
period requirement is satisfied. The holding period is met if the disposition by
the employee occurs (i) at least two years after the date of grant of the
option, (ii) at least one year after the date the shares were transferred to the
employee, and (iii) while the employee remains employed by the Company or not
more than three months after his or her termination of employment (or not more
than one year in the case of a disabled employee). If the holding period
requirement is satisfied, the excess of the amount realized upon sale of the
shares of Common Stock acquired upon the exercise of the ISO over the price paid
for these shares will be treated as a long-term capital gain. If the employee
disposes of the Common Stock acquired upon the exercise of the ISO before the
holding period requirement is met (a "disqualifying disposition"), the excess of
the fair market value of the shares on the date of exercise or, if less, the
fair market value on the date of disposition, over the exercise price will be
taxable as ordinary, compensation income to the employee at the time of
disposition, and the Company will be entitled to a corresponding deduction. The
balance of the gain, if any, will be a capital gain for the employee. Although
the exercise of an ISO will not result in taxable income to the employee, the
excess of the fair market value of the Common Stock on the date of exercise over
the exercise price will be included in the employee's "alternative minimum
taxable income" under the Code.
Nonqualified Stock Options. There will be no federal income tax
consequences to the Company or to the grantee upon the grant of NQSOs under the
1997 Stock Plan. However, upon the exercise of an NQSO under the 1997 Stock
Plan, the grantee will recognize ordinary compensation income for federal income
tax purposes in an amount equal to the excess of the fair market value of the
shares of Common Stock purchased over the exercise price. The Company will
generally be entitled to a tax deduction at such time and in the same amount
that the employee recognizes ordinary income. If the shares of Common Stock so
acquired are later sold or exchanged, the difference between the amount realized
from such sale or exchange and the fair market value of such stock on the date
of exercise of the option is generally taxable as long-term or short-term
capital gain or loss depending upon how long the shares of Common Stock have
been held.
Exercises Other Than For Cash. If the grantee is permitted to pay the
exercise price upon exercise of an ISO or NQSO, in whole or in part, by
delivering shares of Common Stock already owned by him or her, the grantee will
recognize no gain or loss for federal income tax purposes to the extent of the
fair market value of the shares surrendered. That number of shares of Common
Stock acquired upon exercise which is equal to the number of shares surrendered
will have a tax basis equal to the tax basis of the shares surrendered, and
(except as noted below with respect to disqualifying dispositions) the holding
period of such shares will include the holding period of the shares surrendered.
In the case of an NQSO, (i) the grantee will recognize ordinary compensation
income equal to the fair market value of the shares received in excess of the
number of shares surrendered to pay the exercise price, (ii) the basis of
additional shares received upon exercise of the NQSO will be equal to the fair
market value of such shares on the date of exercise, and (iii) the holding
period for such additional shares will commence on the date the option is
exercised. In the case of an ISO, (i) the grantee will not recognize ordinary
compensation income as a result of the exercise in respect of the shares
received in excess of the number of shares surrendered to pay the exercise
price, (ii) the tax basis of the additional shares received will be zero, and
(iii) the holding period of such shares will commence on the date of the
exercise. If any of the shares received upon exercise of the ISO are disposed of
within two years of the date of grant of the ISO or within one year after
exercise, the shares with the lowest (i.e., zero) basis will be deemed to be
disposed of first, and such disposition will be a disqualifying disposition
giving rise to ordinary income as previously discussed above.
If the grantee is permitted to engage in a "cashless exercise" (i.e., an
exercise without the payment of cash or the surrender of shares already owned)
of an NQSO, whether in a broker-dealer transaction or otherwise, the foregoing
results do not change. On the other hand, if the grantee is permitted to engage
in a "cashless exercise" of an ISO, there will be a deemed disqualifying
disposition with respect to the shares necessary to fund the exercise, with the
result that the grantee will recognize ordinary income to the extent of the
difference between the fair market value and the exercise price of the shares
used to fund the exercise. Shares not used to fund the exercise will retain
their status as ISOs.
10
<PAGE> 13
New Benefits.
The future selection of persons who are eligible to participate in the 1997
Stock Plan and the amount of any award under the 1997 Stock Plan to any such
participant are subject to the discretion, within the terms of the 1997 Stock
Plan, of the Compensation Committee and, therefore, cannot be determined in
advance. Similarly, the dollar value of such awards cannot be determined prior
to their grant. The table below provides information regarding the dollar value
and the number of shares underlying awards granted in 1998 and in 1999 (subject
to shareholder approval, as applicable) under the 1997 Stock Plan:
1997 STOCK PLAN BENEFITS
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
DOLLAR VALUE SHARES DOLLAR VALUE SHARES
OF 1998 AWARDED OF 1999 AWARDED IN
NAME STOCK OPTIONS(1) IN 1998(2)(3) STOCK OPTIONS(4) 1999(3)(5)(6)
- ---- ---------------- ------------- ------------------- ----------------
<S> <C> <C> <C> <C>
Terry E. London, CEO......... $-0- -0- $-0- 50,000
Edward L. Gaylord............ -0- -0- -0- 7,000
Jerry O. Bradley............. -0- 25,000 -0- 7,500
Dan E. Harrell............... -0- -0- -0- 21,054
Carl W. Kornmeyer............ -0- -0- -0- 20,000
Jack J. Vaughn............... -0- 50,000 -0- -0-
Executive Group.............. -0- 270,000 -0- 207,554
Non-Executive Director
Group...................... -0- 28,000 -0- 78,000
Non-Executive Officer
Employee Group............. -0- 82,500 -0- 152,329
</TABLE>
- ---------------
(1) Based upon the closing sales price of Common Stock of $30 1/8 as reported on
the NYSE on December 31, 1998 and (i) exercise prices of NQSOs awarded to
Messrs. Bradley and Vaughn of $31.06 and $33.63, respectively; (ii) a
weighted average exercise price of options awarded to members of the
executive group of $32.25; (iii) a weighted average exercise price of
options awarded to members of the non-executive director group of $33.44;
and (iv) a weighted average exercise price of options awarded to members of
the non-executive officer employee group of $30.90.
(2) Awards of NQSOs only; there were no awards of ISOs, SARs or restricted stock
in 1998.
(3) Options vest in one-third increments annually beginning on the third
anniversary of the date of grant, except that options granted to Mr. Bradley
in 1998 vest in one-third increments annually beginning on February 28,
2001, options granted to Mr. Harrell vest in one-quarter increments annually
beginning on the second anniversary of the date of grant, and options
granted to Mr. Vaughn vested on February 1, 1999. Options expire ten years
after the date of grant.
(4) Based upon the closing sales price of Common Stock of $25 1/4 as reported on
the NYSE on the Record Date and an exercise price of each NQSO granted in
1999 of $27 7/8.
(5) Awards of NQSOs only, except that Mr. Harrell was awarded 4,143 shares of
restricted stock; there have been no awards of ISOs or SARs in 1999.
Restrictions on shares of restricted stock granted to Mr. Harrell lapse on
the third anniversary of the date of grant, subject to the achievement of
performance targets.
(6) 248,440 of the 437,883 NQSOs and shares of restricted stock awarded in 1999
were awarded subject to stockholder approval of the Proposed Amendment.
Section 16 Liability.
The 1997 Stock Plan has been designed to qualify for the exemption from the
short-swing profit restrictions on directors and executive officers provided by
Rule 16b-3 under the Exchange Act.
Approval of Proposal.
Under Section 162(m) of the Code and the rules of the New York Stock
Exchange (the "NYSE"), the approval and adoption of this proposal requires the
affirmative vote of the holders of a majority of the total votes cast on such
proposal by the holders of the outstanding shares of Common Stock, provided that
the total number of votes cast on such proposal represents over 50% of the
number of votes entitled to be cast on such proposal.
Pursuant to the By-laws of the Company, as amended, the affirmative vote of
a majority of the shares of Common Stock present in person or represented by
proxy and entitled to vote thereon is required for adoption of this proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR PROPOSAL
TWO.
11
<PAGE> 14
PROPOSAL THREE -- PROPOSAL TO APPROVE AND ADOPT THE COMPANY'S EMPLOYEE
STOCK PURCHASE PLAN
Background and Purpose.
The Company believes in providing its employees the opportunity as well as
an inducement to acquire a proprietary interest in the Company. To that end, on
February 16, 1999, the Board of Directors adopted, subject to stockholder
approval, the Gaylord Entertainment Company Employee Stock Purchase Plan (the
"Stock Purchase Plan"). The following summary of the Stock Purchase Plan is
qualified in all respects by the specific provisions contained in the Stock
Purchase Plan, a copy of which is set forth as Appendix B hereto.
The Stock Purchase Plan provides eligible employees of the Company and its
subsidiaries the opportunity to purchase shares of Common Stock at a discounted
price through accumulated payroll deductions and lump sum contributions. The
purpose of the Stock Purchase Plan is to attract and retain individuals with a
high degree of training, experience, expertise and ability, to provide an
opportunity for these individuals to acquire a proprietary interest in the
success of the Company and to more closely align their interests with those of
the Company's stockholders.
Eligibility.
In order to be eligible to participate in the Stock Purchase Plan, an
individual must be an employee of the Company or a corporate subsidiary in which
the Company owns at least 80% of the outstanding stock and must have been
employed in such capacity for a period of at least 12 continuous months prior to
the first day of any Option Period (as defined below); provided, however, any
employee whose customary employment is 20 hours per week or less or whose
customary employment is for not more than five months in any calendar year is
not eligible to participate in the Stock Purchase Plan. Also, any employee who
is a 5% or greater stockholder of the Company's voting stock is not eligible to
participate in the Stock Purchase Plan.
If the Company acquires or creates a new subsidiary, employees of the
subsidiary will automatically become eligible to participate in the Stock
Purchase Plan, unless otherwise determined by the Board of Directors. Where a
subsidiary is acquired, its employees may be given credit for service with the
acquired subsidiary prior to the acquisition for purposes of satisfying the
requirement of 12 months continuous employment. As of December 31, 1998, the
Company had approximately 3,500 employees who would meet the eligibility
requirements for participation in the proposed Stock Purchase Plan.
Administration.
A committee composed of one or more individuals to whom authority is
delegated by the Board of Directors (the "Plan Administrator") will administer
the Stock Purchase Plan. The Plan Administrator will, among other things,
administer the Stock Purchase Plan, keep records of the contribution account
balance and the share account of each participant, interpret and apply the
provisions of the Stock Purchase Plan, determine all questions arising as to
eligibility, contributions, determination of the Exercise Price (as defined
below) and all other matters of administration, and determine whether to place
restrictions on the sale or transfer of stock purchased pursuant to the Stock
Purchase Plan and the nature of such restrictions. The Plan Administrator may
delegate any or all of these duties. The initial Plan Administrator will be the
Company's Benefits Trust Committee. All costs and expenses of administering the
Stock Purchase Plan will be paid by the Company. No brokerage commissions will
be charged on a participant's purchase of Common Stock.
Participation.
Participation in the Stock Purchase Plan is voluntary, and eligible
employees may enroll by specifying the amount of compensation to be deducted
during each payroll period for the purchase of shares of Common Stock. The Stock
Purchase Plan will operate on the basis of successive three month option periods
as follows: (i) January 1 through March 31; (ii) April 1 through June 30; (iii)
July 1 through September 30; and (iv) October 1 through December 31 (each of
such periods hereinafter referred to as an "Option Period").
12
<PAGE> 15
Assuming shareholder approval is obtained, the first Option Period will begin on
July 1, 1999. On the first day of each Option Period, each participant will be
deemed to receive an option to purchase shares of Common Stock, with the number
of shares and the Exercise Price to be determined as provided in the Stock
Purchase Plan.
Pursuant to the terms of the Stock Purchase Plan, eligible employees of the
Company may elect to deduct during each bi-weekly or monthly payroll period not
less than $10.00 or $20.00, respectively, and up to 15% of their Total
Compensation, as defined in the Stock Purchase Plan (subject to the limitations
set forth below). The amounts deducted each pay period shall be credited to the
participant's contribution account (each, a "Contribution Account"). Also, any
participant in the Stock Purchase Plan will be entitled to make one lump sum
contribution to the participant's Contribution Account during each Option
Period, provided that such lump sum contribution does not exceed 15% of the
participant's Total Compensation for the Option Period. No interest will accrue
on any contributions or on the balance in a participant's Contribution Account.
On the last trading day of each Option Period (the "Exercise Date"), the
aggregate amount in each participant's Contribution Account will be used to
purchase shares of Common Stock at a purchase price (the "Exercise Price") equal
to the lesser of (i) 85% of the closing market price of the Common Stock on the
Exercise Date or (ii) 85% of the closing market price of the Common Stock on the
first trading date of each Option Period (the "Grant Date"). Purchases by each
participant are limited to $25,000 of market value of Common Stock in any
calendar year. If the total number of shares of Common Stock to be purchased by
all participants on an Exercise Date exceeds the number of shares of Common
Stock remaining authorized for issuance under the Stock Purchase Plan, a
pro-rata allocation of the shares of Common Stock available for issuance will be
made among such electing participants.
To be eligible for or to change the amount of withholding for an Option
Period, a participant must have completed an enrollment form specifying the
amount to be withheld at least 30 days prior to the commencement of an Option
Period, except in the case of the first Option Period, in which case an
enrollment form must be completed by June 15, 1999. A participant may at any
time, in writing, elect to withdraw from the Stock Purchase Plan and to have his
or her contributions returned, unless the withdrawal request is within 30 days
of the Exercise Date in an Option Period. In such a case, the participant's
contributions during such Option Period will be used to purchase shares on the
Exercise Date for the benefit of the participant.
Upon termination of employment as a result of death, disability or
retirement (at or after age 55) during an Option Period, no further
contributions will be made to a participant's Contribution Account. In such an
event, the participant or his or her legal representative may elect to withdraw
the balance of the participant's Contribution Account. If no such request is
made, the balance will be used to purchase shares of Common Stock on the
succeeding Exercise Date. In the event of a termination of a participant's
employment for a reason other than death, disability or retirement during an
Option Period, no further contributions will be made and the remaining balance
will be paid in cash to the former employee.
Amendment and Termination; Private Letter Ruling.
The Board of Directors may at any time amend the Stock Purchase Plan in any
respect, including termination of the Stock Purchase Plan, without notice to
participants. If the Stock Purchase Plan is terminated, all options to purchase
stock outstanding at the termination date shall become null and void and the
balance in each participant's Contribution Account shall be paid to that
participant. Without the approval of the stockholders of the Company, however,
the Stock Purchase Plan may not be amended to increase the number of shares
reserved under the Stock Purchase Plan (except pursuant to certain changes in
the capital structure of the Company).
The Company is seeking a private letter ruling from the Internal Revenue
Service (the "IRS") regarding certain tax attributes of the Stock Purchase Plan.
In the event the IRS recommends amendment of the Stock Purchase Plan in any
respect, the Board of Directors reserves the right to amend the plan pursuant to
its authority as described above.
13
<PAGE> 16
Number of Shares Reserved Under Stock Purchase Plan.
The Company has reserved, subject to stockholder approval, 500,000 shares
of Common Stock for issuance under the Stock Purchase Plan. The aggregate number
of shares of Common Stock reserved under the Stock Purchase Plan and the
calculation of the Exercise Price shall be adjusted by the Plan Administrator
(subject to direction by the Board of Directors) in an equitable manner to
reflect changes in the capitalization of the Company, including, but not limited
to, such changes as result from merger, consolidation, reorganization,
recapitalization, stock dividend, dividend in property other than cash, stock
split, combination of shares, exchange of shares and change in corporate
structure. If any such adjustment would create a fractional share of Common
Stock or a right to acquire a fractional share of Common Stock, such fractional
share shall be disregarded.
Rights as a Stockholder.
At the time funds are used to purchase Common Stock under the Stock
Purchase Plan, a participant shall have all the rights and privileges of a
stockholder of the Company with respect to whole shares purchased under the
Stock Purchase Plan, whether or not certificates representing such shares have
been issued.
Restrictions on Sale.
The Plan Administrator may, in its sole discretion, place restrictions on
the sale or transfer of shares of Common Stock purchased under the Stock
Purchase Plan during any Option Period by notice to all participants of the
nature of such restrictions given in advance of the commencement date of such
Option Period. The restrictions may prevent the sale, transfer, or other
disposition of any shares of Common Stock purchased during the Option Period for
a period of up to two years from the Grant Date, subject to such exceptions as
the Plan Administrator may determine (e.g., termination of employment). If a
participant requests the issuance of a stock certificate for shares restricted
pursuant to the Stock Purchase Plan, the certificate will contain an appropriate
legend disclosing the nature and duration of the restriction. Any such
restrictions determined by the Plan Administrator shall be applicable equally to
all shares of Common Stock purchased during the Option Period for which the
restrictions are first applicable and to all shares of Common Stock purchased
during subsequent Option Periods until such restrictions lapse or are eliminated
by the Plan Administrator.
Federal Income Tax Consequences.
The following is a brief summary of certain U.S. federal income tax aspects
of options awarded under the Stock Purchase Plan based upon the federal income
tax laws in effect on the date hereof. This summary is not intended to be
exhaustive, and the exact tax consequences to any grantee will depend upon his
or her particular circumstances and other factors. Stock Purchase Plan
participants must consult their tax advisors with respect to any state, local
and foreign tax considerations or particular federal tax implications of options
granted under the Stock Purchase Plan.
The Stock Purchase Plan is intended to qualify for favorable tax treatment
under Section 423 of the Code. Pursuant to the Code, participants generally do
not immediately recognize income for federal income tax purposes on the amount
of the initial discount when shares of Common Stock are purchased. If the
recipient of Common Stock under the Stock Purchase Plan disposes of shares
before the end of the holding period (two years after the Grant Date), he or she
generally will recognize ordinary income in the year of disposition in an amount
equal to the difference between his or her purchase price and the market value
of the Common Stock on the Exercise Date. The excess (if any) of the amount
received upon disposition over the market value on the Exercise Date will be
taxed as a capital gain. If a disposition occurs after the expiration of the
holding period, the recipient generally will recognize ordinary income in the
year of disposition equal to the lesser of (i) the original discount on the
shares of Common Stock assuming the shares had been purchased on the Grant Date
or (ii) the excess of the fair market value of such shares on the date of
disposition over the price paid by the recipient on the Exercise Date. The
difference between the amount received upon disposition and the tax basis (i.e.,
purchase price plus amount taxed as ordinary income) will be treated as a
capital gain or a capital loss for tax purposes, as the case may be. The Company
generally will not be entitled to a tax
14
<PAGE> 17
deduction for compensation expense of the original sales to participants, but
may be entitled to a deduction if a participant disposes of Common Stock
received under the Stock Purchase Plan prior to the expiration of the applicable
holding period.
New Benefits.
Because participation in the Stock Purchase Plan is voluntary, it is not
possible to determine which or how many eligible employees will participate in
the Stock Purchase Plan in the future. Because the amount of each participant's
contributions to his or her Contribution Account is elective, it is also not
possible to determine the dollar value or number of shares of Common Stock that
would be received or distributed to any person or group of persons under the
Stock Purchase Plan.
Section 16 Liability.
The Stock Purchase Plan has been designed to qualify for the exemption from
the short-swing profit restrictions on executive officers provided by Rule 16b-3
under the Exchange Act.
Adoption of Proposal.
Under Section 423 of the Code and the rules of the NYSE, the approval and
adoption of this proposal requires the affirmative vote of the holders of a
majority of the total votes cast on such proposal by the holders of the
outstanding shares of Common Stock, provided that the total number of votes cast
on such proposal represents over 50% of the number of votes entitled to be cast
on such proposal.
Pursuant to the By-laws of the Company, as amended, the affirmative vote of
a majority of the shares of Common Stock present in person or represented by
proxy and entitled to vote thereon is required for adoption of this proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR PROPOSAL
THREE.
PROPOSAL FOUR -- PROPOSAL TO RATIFY THE 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 1999. Arthur Andersen LLP audited the accounts of
the Company for 1998 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 Company's Restated Certificate or Bylaws, 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 affirmative vote of a majority of the shares of Common Stock present in
person or represented by proxy and entitled to vote thereon is required for
adoption of this proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR PROPOSAL
FOUR.
15
<PAGE> 18
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of the Record Date or such other date as
indicated in the footnotes to the table, the beneficial ownership of each
current director (including the three nominees for director), each of the
executive officers named in the Summary Compensation Table beginning on page 19,
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 Exchange
Act, the beneficial ownership of Common Stock described in the table includes
restricted stock and shares issuable upon the exercise of stock options awarded
under the 1997 Stock Plan if such options are exercisable currently or within 60
days of the Record Date. Unless otherwise indicated, the Company believes that
each beneficial owner set forth in the table has sole voting and sole investment
power with respect to the shares of Common Stock described.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP OF
COMMON STOCK
-------------------------
NAME NUMBER PERCENT
---- ---------- -------
<S> <C> <C>
Edward L. Gaylord(1)*+...................................... 7,717,963(2)(3) 23.4
Edith Gaylord Harper 1995 Revokable Trust(1)................ 2,133,371(2)(4) 6.5
Christine Gaylord Everest*.................................. 1,101,258(2)(5) 3.3
E.K. Gaylord II*............................................ 1,739,635(2)(6) 5.3
Martin C. Dickinson*........................................ 1,366,281(2)(7) 4.2
Edward L. Gaylord, Edith Gaylord Harper, Christine Gaylord
Everest, and E.K. Gaylord II, as Voting Trustees(1)....... 13,671,274(2) 41.7
Craig L. Leipold*........................................... 25,166(8) **
Joe M. Rodgers*............................................. 91,420(9) **
Mary Agnes Wilderotter*..................................... 32,000(9) **
Howard L. Wood*............................................. 25,735(10) **
Terry E. London*+........................................... 150,715(11) **
Jerry O. Bradley+........................................... 18,525(12) **
Dan E. Harrell+............................................. 40,970(13) **
Carl W. Kornmeyer........................................... 17,233(14) **
Jack J. Vaughn.............................................. 174,043(15) **
Gabelli Funds, Inc.......................................... 4,567,206(16) 13.9
One Corporate Center
Rye, NY 10580-1434
Richard C. Blum & Associates, L.P........................... 2,114,898(17) 6.4
909 Montgomery Street, Suite 400
San Francisco, CA 94133
All executive officers and directors as a group (16
persons).................................................. 15,321,330(18) 45.4
</TABLE>
- ---------------
* Director
+ Named Executive Officer
** Less than 1%
(1) Mailing address: 9000 N. Broadway, Oklahoma City, Oklahoma 73114.
(2) Includes (a) 12,539,974 shares held pursuant to a Voting Trust Agreement
(the "Voting Trust") among Edward L. Gaylord, Edith Gaylord Harper,
Christine Gaylord Everest, E.K. Gaylord II, Martin C. Dickinson and certain
other stockholders of the Company; and (b) 1,131,300 shares beneficially
owned by OPUBCO, a corporation over which the Voting Trust has voting
control. The Voting Trust 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, by the consent of at least 60% of the Voting
Trustees, the 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 as trustee for the Thelma Gaylord Revocable Trust, 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) 828,646 shares beneficially
16
<PAGE> 19
owned as trustee for the Mary I. Gaylord Revocable Living Trust of 1985,
all of which are deposited with the Voting Trust; (e) 33,333 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) 1,131,300 shares owned by OPUBCO, of
which Edward L. Gaylord is chairman; and (i) 170,937 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); 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; and shared voting and shared
investment power with respect to the shares listed in (h) above, such
6,941,180 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), and (g)
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 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, Edward L. Gaylord's sister, has shared voting and sole investment
power (subject to the Trust Withdrawal Restriction) with respect to the EGH
Voting Trust Shares. Does not include 11,934,837 shares 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 owned directly, all of which are deposited with
the Voting Trust; (b) 701 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) 111,576 shares issuable upon the exercise of options. Mrs.
Everest has shared voting and sole investment power (subject to the Trust
Withdrawal Restriction) with respect to the shares listed in (a) above that
are 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 respect to the 630
shares in (b) above that are not deposited with the Voting Trust; and
shared voting and shared investment power with respect to the shares in the
Charitable Trust. 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 Gaylord McClean,
respectively. Does not include 12,810,847 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 owned directly, all of which are deposited with
the Voting Trust (to which E. K. Gaylord II is party as a stockholder and
as a Voting Trustee); (b) 1,131,300 shares owned by OPUBCO, of which E. K.
Gaylord II is president and a director; (c) 128,625 shares beneficially
owned by the Charitable Trust of which E. K. Gaylord II is a trustee; and
(d) 77,210 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 shares listed in (a) above; and
shared voting and shared investment power with respect to the shares in (b)
above, such 1,533,800 shares being referred to herein as the "EKG Voting
Trust Shares"; and shared voting and shared investment power with respect
to the shares listed in (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
Gaylord McClean, respectively. Does not include 12,137,474 shares
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) 600,000 shares beneficially owned as co-trustee of the
Elizabeth M. Dickinson Trust, 598,871 of which are deposited with the
Voting Trust; (b) 600,000 shares beneficially owned as president and a
director of the Donald C. Dickinson and Elizabeth M. Dickinson Foundation,
all of which are deposited with the Voting Trust; (c) 93,824 shares
beneficially owned as the trustee for the Martin C. Dickinson Revocable
Trust, 66,332 of which are deposited with the Voting Trust; (d) 1,060
shares beneficially owned by Mr. Dickinson's wife, Carol D. Dickinson, 257
of which are deposited with the Voting Trust; (e) 133 shares beneficially
owned as co-trustee for the benefit of Christopher J. Fleet; and (f) 71,264
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 that are deposited with the
Voting Trust; shared voting and shared investment power with respect to the
1,129 shares listed in (a) above that are not deposited with the Voting
Trust; no voting and shared investment power (subject to the Trust
Withdrawal Restriction) with respect to the shares listed in (b) above; no
voting and sole investment power (subject to the Trust Withdrawal
Restriction) with respect to the shares listed in (c) above that are
deposited with the Voting Trust; no voting or investment power with respect
to the shares listed in (d) above; and shared voting and shared investment
power with respect to the shares listed in (e) above. See Note 2.
(8) Includes (a) 166 shares owned directly; and (b) 25,000 shares issuable upon
the exercise of options.
(9) Shares issuable upon the exercise of options.
(10) Includes (a) 735 shares owned directly; and (b) 25,000 shares issuable upon
the exercise of options.
(11) Includes (a) 3,216 shares owned directly; and (b) 147,499 shares issuable
upon the exercise of options.
(12) Includes (a) 2,784 shares owned directly; and (b) 15,741 shares issuable
upon the exercise of options.
(13) Shares of restricted stock.
17
<PAGE> 20
(14) Includes (a) 719 shares owned directly; (b) 75 shares owned by Mr.
Kornmeyer's wife, Claudia Kornmeyer; and (c) 16,439 shares issuable upon
the exercise of options.
(15) Includes (a) 50,000 shares owned directly; and (b) 124,043 shares issuable
upon the exercise of options.
(16) Based on information set forth in Amendment No. 7 to Schedule 13D, filed
with the Securities and Exchange Commission (the "SEC") as of January 11,
1999, jointly by Gabelli Funds, Inc. ("GFI"), GAMCO Investors, Inc., a
wholly-owned subsidiary of GFI ("GAMCO"), MJG Associates, Inc. ("MJGA"),
Mario J. Gabelli (the majority stockholder of each of GFI and Gemini,
Chairman of the Board of Directors and Chief Executive Officer of GFI, the
Chief Investment Officer for GFI and GAMCO), Gemini Capital Management
Limited ("Gemini"), and Marc J. Gabelli (the majority stockholder,
President and Chief Investment Officer of Gemini). The joint filers
reported that GFI has sole voting and dispositive power with respect to
1,044,301 shares of Common Stock; GAMCO has sole voting power with respect
to 3,406,739 shares of Common Stock and sole dispositive power with respect
to 3,502,905 shares of Common Stock; and Gemini has sole voting and
dispositive power with respect to 20,000 shares of Common Stock; provided
that upon the occurrence of certain events, the voting committee of each of
GFI's investment fund subsidiaries may assume sole voting power of such
fund's shares of Common Stock with respect to which GFI has reported sole
voting power. Mario J. Gabelli, Marc J. Gabelli and GFI reported that none
of them held any direct voting or dispositive power with respect to shares
of Common Stock beneficially owned directly by other reporting persons
among the joint filers.
(17) Based on information set forth in Amendment No. 1 to Schedule 13D, filed
with the SEC as of February 9, 1998 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 ("RCBA L.P."),
Richard C. Blum & Associates, Inc., the sole general partner of RCBA L.P.
("RCBA Inc."), and Richard C. Blum, the Chairman and a substantial
shareholder of RCBA Inc. The reporting persons reported that the shares of
Common Stock were acquired on behalf of RCBA L.P.'s limited partnerships
and investment advisory clients. RCBA L.P. reported direct ownership of
1,760,998 shares of Common Stock, with respect to which RCBA L.P. has sole
voting and investment power, and indirect holdings of 353,900 shares of
Common Stock that are legally owned by RCBA L.P.'s common fund for the
account of its equity fund, with respect to which RCBA L.P. has sole voting
and investment power.
(18) Includes (a) 914,427 shares issuable upon the exercise of options; and (b)
40,970 shares of restricted stock.
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who beneficially own more than 10% 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 10% 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 10%
beneficial owners were in compliance with all applicable filing requirements,
except that director Martin C. Dickinson inadvertently failed to file a Form 4
with respect to one purchase transaction. The transaction was subsequently
reflected on a Form 5 timely filed by Mr. Dickinson.
18
<PAGE> 21
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, the other four most highly
compensated executive officers of the Company who were serving as executive
officers at December 31, 1998, and Jack J. Vaughn (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, 1998 YEAR SALARY BONUS AWARDS OPTIONS(#) COMPENSATION(1)
- ---------------------------------- ---- -------- -------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Terry E. London................... 1998 $425,000 $232,181 $ -0- -0- $23,491
President and Chief 1997 391,493 328,827 -0- 300,000 17,919
Executive Officer 1996 312,000 194,683 84,643(2) 12,957 15,892
Edward L. Gaylord................. 1998 510,000 -0- -0- -0- -0-
Chairman of the 1997 510,000 -0- -0- 50,000 -0-
Board 1996 510,000 -0- -0- -0- -0-
Jerry O. Bradley.................. 1998 194,924 287,330 -0- 25,000 18,476
President -- Acuff-Rose 1997 169,541 294,127 -0- 25,000 10,782
Music Publishing 1996 163,020 276,609 52,880(2) 7,679 16,580
Dan E. Harrell.................... 1998 310,000 215,581 -0- -0- 11,381
President -- Idea 1997(3) 285,812 154,515 1,213,736(4) 16,911 7,560
Entertainment
Carl W. Kornmeyer................. 1998 270,000 163,620 -0- -0- 14,800
President -- 1997 245,000 177,258 -0- 70,000 9,884
Communications Group 1996 195,833 143,200 52,880(2) 11,518 7,719
Jack J. Vaughn.................... 1998 378,560 74,980 -0- 50,000 52,630
Chairman -- Opryland 1997 378,560 260,458 1,481,250(5) -0- 24,942
Lodging Group 1996 364,000 195,723 148,120(2) 19,196 24,280
</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 Officer. 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
in the table below.
<TABLE>
<CAPTION>
GROUP TERM
LIFE INSURANCE
NAME YEAR SUDCOMP 401(K) PREMIUMS
- ---- ---- ------- ------ --------------
<S> <C> <C> <C> <C>
Terry E. London.......................................... 1998 $10,197 $4,800 $ 8,494
1997 6,062 4,750 7,107
1996 4,484 4,500 6,908
Jerry O. Bradley......................................... 1998 9,581 4,800 4,095
1997 2,307 4,750 3,725
1996 8,471 4,500 3,609
Dan E. Harrell........................................... 1998 -0- 4,800 6,581
1997 -0- 3,685 3,875
Carl W. Kornmeyer........................................ 1998 4,526 4,800 5,474
1997 1,987 4,750 3,147
1996 2,617 4,500 602
Jack J. Vaughn........................................... 1998 14,756 4,800 8,074
1997 11,884 4,750 8,308
1996 11,721 4,500 8,059
</TABLE>
In addition, during 1998 the Company conveyed to Mr. Vaughn an automobile
which was valued at $25,000.
(2) Awards of shares of restricted stock of Old Gaylord were made in 1996 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
19
<PAGE> 22
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 awarded in 1996 with
respect to which such restrictions lapsed held by Messrs. London, Bradley,
Kornmeyer, and Vaughn were 3,307, 2,066, 2,066, and 5,787, respectively. The
values of these awards, based on the per share price of Old Gaylord Class A
Common Stock immediately preceding the Distribution and the CBS Merger (as
reported on the NYSE, $25.81), were $85,362, $53,329, $53,329, and $149,377,
respectively.
(3) Employed by the Company on March 24, 1997.
(4) 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, with restrictions as to 4,143
such shares scheduled to lapse on October 1, 2000, and restrictions as to
36,827 such shares scheduled to lapse in one-third increments annually
beginning on October 1, 2002. See "EMPLOYMENT, SEVERANCE, AND CHANGE IN
CONTROL ARRANGEMENTS." The value of the 40,970 shares of restricted stock
was $1,234,221 on December 31, 1998 based on the closing Common Stock price
($30 1/8) as reported on the NYSE on that date. The restricted stock is
entitled to dividends and voting rights from the date of grant.
(5) Award 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, with restrictions lapsing as to
10,000 such shares on April 1, 1998, and restrictions lapsing as to 40,000
such shares on October 16, 1998.
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 1998. All of the options
referred to in the table below are NQSOs granted pursuant to the 1997 Stock
Plan, were granted at the fair market value on the date of grant, and are for
the purchase of the Common Stock. No SARs 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(#) YEAR PRICE DATE 5% 10%
- ---- ---------------- ------------ -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Terry E. London................ -- --% $ -- -- $ -- $ --
Edward L. Gaylord.............. -- -- -- -- -- --
Jerry O. Bradley............... 25,000(1) 7.1 31.06 3/20/08 488,376 1,237,641
Dan E. Harrell................. -- -- -- -- -- --
Carl W. Kornmeyer.............. -- -- -- -- -- --
Jack J. Vaughn................. 50,000(2) 14.2 33.63 5/07/08 1,057,486 2,679,878
</TABLE>
- ---------------
(1) Options vest in one-third increments annually beginning on February 28,
2001.
(2) Options vested February 1, 1999.
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
1998, 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, 1998. 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 $2,518,299 $565,500
Edward L. Gaylord......... -- -- 170,937 -- 2,507,548 --
Jerry O. Bradley.......... -- -- 15,741 50,000 62,224 47,125
Dan E. Harrell............ -- -- -- 16,911 -- 111,697
Carl W. Kornmeyer......... -- -- 16,439 70,000 66,135 131,950
Jack J. Vaughn............ -- -- 124,043 -- 1,147,741 --
</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
($30 1/8 as reported on the NYSE on December 31, 1998) and the respective
exercise prices of the stock options.
20
<PAGE> 23
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"). Accrued benefits are 100% vested after 5 years of
service. 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 the monthly Integration Level, as defined in the
Retirement Plan, 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 Compensation for
the five consecutive years in which earnings were the highest within the last
ten years of employment. The Integration Level is the average of the Social
Security taxable wage bases in effect for each calendar year during the 35-year
period ending with the calendar year in which the participant retires or
terminates from employment.
Compensation is defined as a participant's wages, salaries, fees, and other
amounts received for personal services actually rendered in the course of
employment. It excludes severance pay, distributions from any plan of deferred
compensation, amounts realized from the exercise of a nonqualified stock option,
amounts realized when restricted stock (or property) held by the employee either
becomes freely transferable or is no longer subject to a substantial risk of
forfeiture, amounts realized from the sale, exchange or other disposition of
stock acquired under a qualified stock option, and other amounts which received
special tax benefits. Compensation also includes any amounts contributed by the
Company on behalf of an employee (i) to a nonqualified plan of deferred
compensation or (ii) which are not includable in the gross income of the
employee due to the Code Section 125, 402(e)(3) or 402(h). Compensation in
excess of the 1998 statutory compensation limit of $160,000 will be disregarded.
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 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. None of the
Named Executive Officers are currently covered by the NLT SERP. Mr. Vaughn, who
retired as an employee of the Company effective December 31, 1998, received a
single lump sum payment in respect of benefits otherwise payable to him under
the NLT SERP following retirement in the amount of $528,094.
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
21
<PAGE> 24
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 401(k) 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 pensions 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 1998 in the form of a single life only annuity, (ii) the Integration Level is
$31,128 and (iii) the Retirement Plan and the Restoration Plan will continue in
force in their present form. Effective January 1, 1999, unless the participant
selects an alternative payout option, payment under the Retirement Plan and the
Restoration Plan will occur in the form of lump sum.
<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>
100,000.............. 90,000 11,477 17,215 22,953 28,692 34,430 40,168 45,907
125,000.............. 112,500 14,852 22,278 29,703 37,129 44,555 51,981 59,407
150,000.............. 135,000 18,227 27,340 36,453 45,567 54,680 63,793 72,907
200,000.............. 180,000 24,977 37,465 49,953 61,998 65,930 76,918 87,907
250,000.............. 225,000 31,727 47,590 63,453 79,317 79,511 79,511 87,907
300,000.............. 270,000 38,477 57,715 76,953 96,192 97,023 97,023 97,023
400,000.............. 360,000 51,977 77,965 103,953 129,942 132,048 132,048 132,048
500,000.............. 450,000 65,477 98,125 130,953 163,692 167,073 167,073 167,073
600,000.............. 540,000 78,977 118,465 157,953 197,442 202,098 202,098 202,098
700,000.............. 630,000 92,477 138,715 184,953 231,192 237,123 237,123 237,123
800,000.............. 720,000 105,977 158,965 211,953 264,942 272,148 272,148 272,148
</TABLE>
- ---------------
(1) The maximum annual compensation that can be recognized by a qualified
defined benefit pension retirement plan is $160,000 in 1998 (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, Bradley, Harrell, Kornmeyer, and Vaughn had 52,
21, 12, 1, 24, and 23 years of credited service, respectively, on December 31,
1998. As a result of the Code Section 401(a)(17) limitation on eligible
compensation, the 1998 includable compensation in determining benefits under the
Retirement Plan was limited to $160,000 for the Named Executive Officers.
401(k) Savings Plan.
The Company maintains the 401(k) Savings Plan, a defined contribution plan
with a salary deferral arrangement under Section 401(k) of the Code. Certain
employees 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 Savings
Plan.
Savings Plan participants are permitted to make elective contributions of
between 1% and 20% of their "Compensation" (as defined in the Savings Plan).
Under the Savings Plan, 50% of the contribution made by each participant is
matched by the Company up to 6% of compensation, with a maximum employer
22
<PAGE> 25
contribution equal to the lesser of (i) 3% 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 401(k) Savings Plan may request
no more than one new loan each quarter and may have no more than three loans
outstanding at any time. 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. For any participant who
first performed an hour of service with the employer on or before December 31,
1991, the benefit will be paid in the form of an annuity, unless a lump sum
payment is elected. The form of benefit for any other participant will be a lump
sum payment.
Supplemental Deferred Compensation Plan.
The Company maintains the SUDCOMP Plan, which is a 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 401(k) Savings Plan, notwithstanding the
limitations under the 401(k) 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 (20% effective January 1, 1999) 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 same or similar funds made available to 401(k)
Savings Plan participants, other than the Common Stock fund.
DIRECTOR COMPENSATION
Arrangements regarding directors' compensation for services as directors
are determined by the Compensation Committee. During 1998, each non-employee
director received (i) an annual Board retainer of $30,000, and (ii) 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
23
<PAGE> 26
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 May 8,
1998, the Company's four non-employee directors at that time, Mr. Dickinson,
Mrs. Everest, Mr. Rodgers, and Ms. Wilderotter, were each awarded options to
purchase 7,000 shares of Common Stock at a price of $33.44 per share, such
options to vest one year from the date of grant thereof.
EMPLOYMENT, SEVERANCE, AND CHANGE IN CONTROL ARRANGEMENTS
Awards granted under the 1997 Stock Plan become immediately exercisable or
otherwise non-forfeitable in full in the event of a Change in Control of the
Company (as defined therein), notwithstanding specific terms of the awards
providing otherwise. 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 September 30, 1997, 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 the Company 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 prior to the expiration of the two
year employment period on September 30, 1999, 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 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 (vesting and
becoming non-forfeitable on the third anniversary of the date of grant based on
earnings per share targets), such options and shares of restricted stock being
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 non-forfeitable 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 non-forfeitability, as applicable, of all Annual Awards and the One-Time
Award would be accelerated.
24
<PAGE> 27
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 Acuff-Rose and an additional
annual cash bonus as determined in the discretion of the Company, not to exceed
9% of his annual base salary. In addition, Mr. Bradley received an option to
purchase 25,000 shares of Common Stock, which option becomes exercisable in
one-third increments annually 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 Acuff-Rose's "net publishers' share" earned in 1997, and the
exercisability of all options will be accelerated to the date of termination.
Any severance benefits payable to Mr. Bradley under such circumstances would be
offset against any severance benefits Mr. Bradley may be entitled to under his
Severance Agreement described above.
In June 1998, the Company entered into a two-year consulting agreement with
Jack J. Vaughn effective January 1, 1999 following his retirement as an officer
of the Company. The agreement provides for an annual consulting fee of $200,000
and the reimbursement by the Company of reasonable and necessary expenses of Mr.
Vaughn approved by the Company. In the event the Company terminates the
agreement prior to the end of the term of the agreement, Mr. Vaughn will
continue to receive his consulting fee for the remainder of the term.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors is composed of Messrs.
Dickinson, Rodgers and Wood (since March 1, 1999) 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.
The Company leases 1,000 square feet of certain real estate located in
Dallas, Texas owned by it 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.
In February 1998, OKC Athletic Club, LP, the limited partnership that owns
the Oklahoma Redhawks in which the Company owns approximately 65%, borrowed
approximately $2.9 million from a wholly owned subsidiary of OPUBCO, bearing
interest at a prime rate plus 1% and payable in full on January 12, 2001. In
January 1999, the limited partnership prepaid the loan in full with borrowings
from the Company.
The Company believes that the above-mentioned transactions were on terms no
less favorable to the Company or its affiliates than could have been obtained
from unaffiliated third parties.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Edward L. Gaylord and E.K. Gaylord II are executive officers of the Company
and of OPUBCO, and such persons, together with Christine Gaylord Everest and
Martin C. Dickinson, are also directors of the Company and of OPUBCO. The Voting
Trustees, who control approximately 45.4% of the Company's voting power (see
"SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT"), beneficially
own a majority of the voting stock of OPUBCO. The descriptions of the
transactions between the Company or its affiliates and OPUBCO contained in
"COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION" above are
incorporated herein by this reference.
Howard L. Wood has been a director of the Company since March 1999 and,
until November 1998, owned an interest in Charter Communications, Inc., an
operator of cable television properties in the United States. Mr. Wood also
served, and continues to serve, as an executive officer of Charter. In 1995, the
Company sold its cable television systems to CCT Holdings Corp. ("CCTH"), an
affiliate of Charter, in exchange for $198.8 million in cash, a note receivable
in the face amount of $165.7 million and the right to
25
<PAGE> 28
receive a percentage of proceeds from certain future asset sales. During the
fourth quarter of 1998, the Company received payment of $238.4 million from CCT
representing prepayment of the note receivable and accrued interest, and in
January 1999 the Company received a payment of approximately $130 million in
connection with the sale of the cable assets by CCTH to a third party.
Craig L. Leipold has been a director of the Company since February 1999
and, together with members of his immediate family, owns an 80.1% interest in
Nashville Hockey Club Limited Partnership, the limited partnership that owns the
Nashville Predators, an expansion team of the National Hockey League. Mr.
Leipold is also an executive officer of the Predators. The Company acquired a
19.9% interest in the limited partnership in exchange for cash consideration of
approximately $12.8 million, which was paid in 1997 and 1998.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The compensation of the Company's executive officers and other key
management personnel, approximately 49 persons including the Named Executive
Officers in 1998, is reviewed and approved annually by the Compensation
Committee of the Board of Directors, which was comprised during 1998 of Joe M.
Rodgers, Martin C. Dickinson, and Mary Agnes Wilderotter, each of whom are
non-employee directors. In March 1999, Howard L. Wood, who is also a
non-employee director, became an additional member of the Compensation
Committee. 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 certain 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. The following report was
prepared prior to Mr. Wood becoming a member of the Compensation Committee.
COMPENSATION POLICIES AND PROCEDURES APPLICABLE TO EXECUTIVE OFFICERS FOR 1998
General. The stated mission of the Company is to maximize stockholder
value through the development and enhancement of the Company's country music
franchise, family oriented entertainment, and world class convention and lodging
facilities. In that regard, the Compensation Committee is dedicated to employing
compensation policies and strategies 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 stockholders by
rewarding performance that enhances stockholder value; and (iii) providing
appropriate incentives for executives to achieve company-wide, business unit and
individual performance goals.
The first regular Compensation Committee meeting each calendar year is
dedicated to reviewing performance of management during the prior year,
reviewing and adopting compensation policies to be applied during the succeeding
year and establishing executive compensation for that succeeding year consistent
with those policies. At such meeting, the Compensation Committee reviews and
takes action on the compensation for the Company's executive officers (other
than the Chairman, the Vice Chairman, and the CEO), which are proposed by the
Company's CEO (with the assistance of the Board's independent compensation
consultants). At such meeting, the Compensation Committee also determines the
compensation for 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.
26
<PAGE> 29
Base Salary Compensation. The 1998 base salary compensation of the
Company's executive officers (other than the Chairman's and the Vice-Chairman's,
but including the CEO's) is 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
of the companies comprising the Dow Jones Lodging Index and the Dow Jones
Entertainment Index, which indices are presented on the Performance Graph on
page 29, 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 compensation consultant, the 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 1998 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 1997.
Annual Incentive Compensation. The Compensation Committee also reviewed
and approved corporate, departmental, and individual performance targets
established by the 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 1998 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 1998, 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. In general, corporate and individual performance levels
were established such that if the Company and, where applicable, the executive's
business unit 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 20% 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 30% was
determined based on their achievement of department 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, 55% to 60%
of their total bonus payout was determined based on the extent to which a
predetermined corporate operating cash flow target was attained; 5% to 20% was
determined based on the executives' utilization of their capital budgets; up to
20% was determined based on their achievement of department goals; and 20% to
40% 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. During 1998, stock options were awarded by the
Compensation Committee primarily to newly hired executive employees. Shares of
restricted stock were not awarded during 1998. In general, the options are
exercisable at the market price on the date of award and vest ratably over a
three-year period beginning three years after grant. 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.
27
<PAGE> 30
CEO LONDON'S COMPENSATION
In reviewing and approving the compensation of Mr. London in 1998, the
Compensation Committee considered many of the same criteria as 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 1997, and the scope of Mr.
London's executive responsibilities.
Mr. London's base salary for 1998 was $425,000, which was the same as his
1997 year end base salary. In addition, Mr. London was awarded an annual
incentive bonus for 1998 performance of $232,181. Approximately 51% of this
bonus, or $119,131, was based on the Company's achievement of Company-wide
operating cash flow targets; 26% or $59,500 was based on Mr. London's
utilization of the capital budget; and the remaining 23% was based on Mr.
London's achievement of individual performance goals. Mr. London was not awarded
any options during 1998.
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 is in no
immediate danger of losing any deductions. 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.
JOE M. RODGERS, CHAIRMAN
MARTIN C. DICKINSON
MARY AGNES WILDEROTTER
28
<PAGE> 31
PERFORMANCE GRAPH
The following Performance Graph compares the Company'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 Company's Common Stock following the Distribution and CBS
Merger), through December 31, 1998 with the cumulative total return of the Dow
Jones Lodging Index, the Dow Jones Entertainment Index, the Russell 2000 Index,
and the Dow Jones Global-U.S. Index. The Company is changing its equity market
index from the Dow Jones Global-U.S. Index to the Russell 2000 Index. Because
the companies included in the Russell 2000 Index are more comparable to the
Company in market capitalization size than the companies in the Dow Jones
Global-U.S. Index, the Company believes that the Russell 2000 Index provides a
better gauge of the Company's performance.
<TABLE>
<CAPTION>
GAYLORD DOW JONES
ENTERTAINMENT DOW JONES ENTERTAINMENT DOW JONES GLOBAL
COMPANY LODGING INDEX INDEX RUSSELL 2000 INDEX -U.S. INDEX
------------- ------------- ------------- ------------------ ----------------
<S> <C> <C> <C> <C> <C>
Oct 97 100.00 100.00 100.00 100.00 100.00
Dec 97 113.64 104.73 119.56 96.65 103.26
Dec 98 109.44 79.90 228.25 94.19 132.84
</TABLE>
PROPOSALS OF STOCKHOLDERS
To be eligible for inclusion in the Company's proxy statement for the 2000
annual meeting, proposals of stockholders must be in writing and be received by
the Company at its principal executive offices not later than December 2, 1999.
If a stockholder desires to bring business before the 2000 annual meeting
which is not the subject of a proposal submitted for inclusion in the proxy
statement, the Company's Bylaws require that he or she must
29
<PAGE> 32
notify the Company in writing not later than March 14, 2000 and not earlier than
February 13, 2000. If a proposal is not received by March 14, 2000, management's
proxies may exercise their discretionary authority to vote previously solicited
proxies against such proposal if it is raised at the 2000 annual meeting, even
though the proposal is not discussed in the proxy statement.
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.
March 31, 1999
30
<PAGE> 33
APPENDIX A
PROPOSED AMENDMENT.
The first sentence of Section 5 of the 1997 Stock Option Plan is proposed
to be amended to read, in its entirety, as follows:
The maximum number of shares of Common Stock reserved for the grant of
awards under the Plan shall be 4,250,000 (including shares of Common
Stock reserved for the grant of awards issued in connection with the
Distribution Agreement (as defined below)), subject to adjustment as
provided in Section 11 hereof.
1997 STOCK PLAN.
The text of the 1997 Stock Option Plan, as currently in effect, is set
forth below:
GAYLORD ENTERTAINMENT COMPANY
1997 STOCK OPTION AND INCENTIVE PLAN
AMENDED AND RESTATED AS OF AUGUST 15, 1998
1. PURPOSE; TYPES OF AWARDS; CONSTRUCTION.
The purpose of this Amended and Restated 1997 Stock Option and Incentive
Plan of Gaylord Entertainment Company (the "Plan") is to afford an incentive to
officers, directors, key employees, consultants and advisors of Gaylord
Entertainment Company (the "Company"), or any Subsidiary (as defined herein)
which now exists or hereafter is organized or acquired by the Company, to
acquire a proprietary interest in the Company, to continue as officers,
directors, employees, consultants and advisors, to increase their efforts on
behalf of the Company and to promote the success of the Company's business.
It is further intended that options granted by the Compensation or other
Committee (the "Committee") of the Board of Directors of the Company (the
"Board") pursuant to Section 8 of the Plan shall constitute "incentive stock
options" ("Incentive Stock Options") within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), and options granted by
the Committee pursuant to Section 7 of the Plan shall constitute "nonqualified
stock options" ("Nonqualified Stock Options"). The Committee may also grant
stock appreciation rights ("Stock Appreciation Rights" or "SARs") pursuant to
Section 9 of the Plan and shares of restricted stock ("Restricted Stock")
pursuant to Section 10 of the Plan.
The provisions of the Plan are intended to satisfy the requirements of
Section 16(b) of the Securities Exchange Act of 1934, and shall be interpreted
in a manner consistent with the requirements thereof, as now or hereafter
construed, interpreted, and applied by regulations, rulings, and cases. The Plan
is also designated so that awards granted hereunder intended to comply with the
requirements for "performance-based" compensation under Section 162(m) of the
Code may comply with such requirements. The creation and implementation of the
Plan shall not diminish or prejudice other compensation plans or programs
approved from time to time by the Board.
2. DEFINITIONS.
As used in this Plan, the following words and phrases shall have the
meanings indicated:
(a) "Common Stock" shall mean shares of Common Stock, par value $.01
per share, of the Company.
(b) "Disability" shall mean a Grantee's (as defined in Section 3
hereof) inability to engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment that can be
expected to result in death or that has lasted or can be expected to last
for a continuous period of not less than twelve (12) months.
A-1
<PAGE> 34
(c) "Fair Market Value" per share of Common Stock as of a particular
date shall mean (i) the closing sales price per share of Common Stock on
the national securities exchange on which the Common Stock is principally
traded, for the last preceding date on which there was a sale of such
Common Stock on such exchange, or (ii) if the shares of Common Stock are
then traded in an over-the-counter market, the average of the closing bid
and asked prices for the shares of Common Stock in such over-the-counter
market for the last preceding date on which there was a sale of such Common
Stock in such market, or (iii) if the shares of Common Stock are not then
listed on a national securities exchange or traded in an over-the-counter
market, such value as the Committee, in its sole discretion, shall
determine.
(d) "Immediate Family" shall mean any child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, sibling, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-
in-law, and shall include adoptive relationships.
(e) "Option" or "Options" shall mean a grant to a Grantee of an option
or options to purchase shares of Common Stock. Options granted by the
Committee pursuant to the Plan shall constitute either Incentive Stock
Options or Nonqualified Stock Options.
(f) "Parent" shall mean any company (other than the Company) in an
unbroken chain of companies ending with the Company if, at the time of
granting an Option, each of the companies other than the Company owns stock
or equity interests (including partnership interests) possessing fifty
percent (50%) or more of the total combined voting power of all classes of
stock or equity interests in one of the other companies in such chain.
(g) "Performance Goals" means performance goals based on one or more
of the following criteria: (i) pre-tax income or after-tax income; (ii)
operating cash flow; (iii) operating profit; (iv) return on equity, assets,
capital, or investment; (v) earnings or book value per share; (vi) sales or
revenues; (vii) operating expenses; (viii) cost of capital; (ix) Common
Stock price appreciation; and (x) implementation or completion of critical
projects or processes. Where applicable, the Performance Goals may be
expressed in terms of attaining a specified level of the particular
criteria or the attainment of a percentage increase or decrease in the
particular criteria, and may be applied to one or more of the Company or
any Subsidiary, or a division or strategic business unit of the Company, or
may be applied to the performance of the Company relative to a market
index, a group of other companies, or a combination thereof, all as
determined by the Committee. The Performance Goals may include a threshold
level of performance below which no payment will be made (or no vesting
will occur), levels of performance at which specified payments will be made
(or specified vesting will occur), and a maximum level of performance above
which no additional payment will be made (or at which full vesting will
occur). Each of the foregoing Performance Goals shall be determined, to the
extent applicable, in accordance with generally accepted accounting
principles and shall be subject to certification by the Committee;
provided, that the Committee shall have the authority to make equitable
adjustments to the Performance Goals in recognition of unusual or
non-recurring events affecting the Company or any Subsidiary or the
financial statements of the Company or any Subsidiary, in response to
changes in applicable laws or regulations, or to account for items of gain,
loss, or expense determined to be extraordinary or unusual in nature or
infrequent in occurrence or related to the disposal of a segment of
business or related to a change in accounting principles.
(h) "Subsidiary" shall mean any company (other than the Company) in an
unbroken chain of companies beginning with the Company if, at the time of
granting an Option, each of the companies other than the last company in
the unbroken chain owns stock or equity interests (including partnership
interests) possessing fifty percent (50%) or more of the total combined
voting power of all classes of stock or equity interests in one of the
other companies in such chain.
(i) "Ten Percent Stockholder" shall mean a Grantee who, at the time an
Incentive Stock Option is granted, owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of
the Company or any Parent or Subsidiary.
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(j) "Retirement" means retirement by an employee from active
employment with the Company or any Subsidiary (i) on or after attaining age
65, or (ii) with the express written consent of the Company on or after
attaining age 55.
(k) "Voting Trust" shall mean the trust created by that certain Voting
Trust Agreement, dated as of October 3, 1990, as amended October 7, 1991,
and as may be amended hereafter from time to time, and "Voting Trustees"
shall mean the trustees of the Voting Trust.
3. ADMINISTRATION.
The Plan shall be administered by the Committee, which will be comprised
solely of "Non-Employee Directors" within the meaning of Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or by the
Board if for any reason the Committee is not so comprised, in which case all
references herein to the Committee shall refer to the Board.
The Committee shall have the authority in its discretion, subject to and
not inconsistent with the express provisions of the Plan, to administer the Plan
and to exercise all the powers and authorities either specifically granted to it
under the Plan or necessary or advisable in the administration of the Plan,
including, without limitation, the authority to grant Options, SARs, and
Restricted Stock; to determine which Options shall constitute Incentive Stock
Options and which Options shall constitute Nonqualified Stock Options and
whether such Options will be accompanied by Stock Appreciation Rights; to
determine the purchase price of the shares of Common Stock covered by each
Option (the "Option Price") and SARs, the kind of consideration payable (if any)
with respect to awards, and the various methods for payment; to determine the
period during which Options may be exercised and during which Restricted Stock
shall be subject to restrictions, and whether in whole or in installments; to
determine the persons to whom, and the time or times at which awards shall be
granted (such persons are referred to herein as "Grantees"); to determine the
number of shares to be covered by each award; to determine the terms,
conditions, and restrictions of any Performance Goals and the number of Options,
SARs, or shares of Restricted Stock subject thereto; to interpret the Plan; to
prescribe, amend, and rescind rules and regulations relating to the Plan; to
determine the terms and provisions of the agreements (which need not be
identical) entered into in connection with awards granted under the Plan (the
"Agreements"); to cancel or suspend awards, as necessary; and to make all other
determinations deemed necessary or advisable for the administration of the Plan.
The Committee may delegate to one or more of its members or to one or more
agents such administrative duties as it may deem advisable, and the Committee or
any person to whom it has delegated duties as aforesaid may employ one or more
persons to render advice with respect to any responsibility the Committee or
such person may have under the Plan. All decisions, determinations, and
interpretations of the Committee shall be final and binding on all Grantees of
any awards under this Plan.
The Board shall fill all vacancies, however caused, in the Committee. The
Board may from time to time appoint additional members to the Committee, and may
at any time remove one or more Committee members and substitute others. One
member of the Committee shall be selected by the Board as chairman. The
Committee shall hold its meetings at such times and places as it shall deem
advisable. All determinations of the Committee shall be made by a majority of
its members either present in person or participating by conference telephone at
a meeting or by written consent. The Committee may appoint a secretary and make
such rules and regulations for the conduct of its business as it shall deem
advisable, and shall keep minutes of its meetings.
No members of the Board or Committee shall be liable for any action taken
or determination made in good faith with respect to the Plan or any award
granted hereunder.
4. ELIGIBILITY.
Directors, officers, key employees, consultants and advisors of the Company
or any Subsidiary shall be eligible to receive awards hereunder; provided,
however, that only consultants or advisors who have rendered bona fide services
to the Company or any Subsidiary in connection with its business operations, and
not in
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connection with the offer or sale of securities in capital-raising transactions,
shall be eligible to receive awards hereunder. In determining the persons to
whom awards shall be granted and the number of shares to be covered by each
award, the Committee, in its sole discretion, shall take into account the
contribution by the eligible participants to the management, growth, and
profitability of the business of the Company and such other factors as the
Committee shall deem relevant.
5. STOCK.
The maximum number of shares of Common Stock reserved for the grant of
awards under the Plan shall be 3,000,000 (including shares of Common Stock
reserved for the grant of awards issued in connection with the Distribution
Agreement (as defined below)), subject to adjustment as provided in Section 11
hereof. Such shares may, in whole or in part, be authorized but unissued shares
or shares that shall have been or may be reacquired by the Company.
If any outstanding award under the Plan should, for any reason, expire or
be canceled, forfeited, or terminated, without having been exercised in full,
the shares of Common Stock allocable to the unexercised, canceled, forfeited, or
terminated portion of such award shall (unless the Plan shall have been
terminated) become available for subsequent grants of awards under the Plan.
The maximum number of shares of Common Stock with respect to which awards
(including Options, SARs, and Restricted Stock) may be granted under the Plan to
any eligible employee during any consecutive three-year period shall be 500,000,
subject to adjustment as provided in Section 11 hereof. Notwithstanding the
foregoing, shares of Common Stock issued or issuable to any person in connection
with the Agreement and Plan of Distribution, dated as of September 30, 1997,
between the Company and Gaylord Entertainment Company, a Delaware corporation
(the "Distribution Agreement") shall not be counted for purposes of the maximum
number of shares limitation in the preceding sentence.
6. TERMS AND CONDITIONS OF OPTIONS.
Each Option granted pursuant to the Plan shall be evidenced by a written
agreement between the Company and the Grantee (the "Option Agreement"), in such
form as the Committee shall from time to time approve, which Option Agreement
shall comply with and be subject to the following terms and conditions:
(a) Number of Shares. Each Option Agreement shall state the number of
shares of Common Stock to which the Option relates.
(b) Type of Option. Each Option Agreement shall specifically state
that the Option constitutes an Incentive Stock Option or a Nonqualified
Stock Option.
(c) Option Price. Each Option Agreement shall state the Option Price,
which, in the case of an Incentive Stock Option, shall not be less than one
hundred percent (100%) of the Fair Market Value of the shares of Common
Stock covered by the Option on the date of grant. The Option Price shall be
subject to adjustment as provided in Section 11 hereof. Unless otherwise
stated in the resolution, the date on which the Committee adopts a
resolution expressly granting an Option shall be considered the day on
which such Option is granted.
(d) Medium and Time of Payment. The Option Price shall be paid in
full, at the time of exercise, in any manner that the Committee shall deem
appropriate or that the Option Agreement shall provide for, including, in
cash, in shares of Common Stock having a Fair Market Value equal to such
Option Price, in cash provided through a broker-dealer sale and remittance
procedure, approved by the Committee, in a combination of cash and Common
Stock, or in such other manner as the Committee shall determine.
(e) Term and Exercisability of Options. Each Option shall be
exercisable at such times and under such conditions as the Committee, in
its discretion, shall determine; provided, however, that in the case of an
Incentive Stock Option, such exercise period shall not exceed ten (10)
years from the date of grant of
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such Option. The exercise period shall be subject to earlier termination as
provided in Section 6(f) hereof. An Option may be exercised, as to any or
all full shares of Common Stock as to which the Option has become
exercisable, by giving written notice of such exercise to the Committee or
its designated agent.
(f) Termination of Employment.
(i) Generally. Except as otherwise provided herein or as
determined by the Committee, an Option may not be exercised unless the
Grantee is then in the service or employ of the Company or a Parent or
Subsidiary (or a company or a parent or subsidiary company of such
company issuing or assuming the Option in a transaction to which Section
424(a) of the Code applies), and unless the Grantee has remained
continuously in such service or employ since the date of grant of the
Option. Unless otherwise determined by the Committee at or after the
date of grant, in the event that the employment of a Grantee or the
service provided to the Company by the Grantee terminates (other than by
reason of death, Disability, Retirement, or for Cause) all Options that
are exercisable at the time of such termination may be exercised for a
period of 90 days from the date of such termination or until the
expiration of the stated term of the Option, whichever period is
shorter. For purposes of interpreting this Section 6(f) only, the
service of a director as a non-employee member of the Board shall be
deemed to be employment by the Company.
(ii) Death or Disability. If a Grantee's employment with, or
service to, the Company or a Parent or Subsidiary terminates by reason
of death, or if the Grantee's employment or service terminates by reason
of Disability, all Options theretofore granted to such Grantee will
become fully vested and exercisable (notwithstanding any terms of the
Options providing for delayed exercisability) and may be exercised by
the Grantee, by the legal representative of the Grantee's estate, or by
the legatee under the Grantee's will at any time until the expiration of
the stated term of the Option. In the event that an Option granted
hereunder is exercised by the legal representative of a deceased or
disabled Grantee, written notice of such exercise must be accompanied by
a certified copy of letters testamentary or equivalent proof of the
right of such legal representative or legatee to exercise such Option.
(iii) Retirement. If a Grantee's employment with, or service to,
the Company or a Parent or Subsidiary terminates by reason of
Retirement, any Option held by the Grantee may thereafter be exercised,
to the extent it was exercisable at the time of such Retirement or on
such accelerated basis as the Committee may determine at or after the
date of grant (but before the date of such Retirement), at any time
until the expiration of the stated term of the Option.
(iv) Cause. If a Grantee's employment with, or service to, the
Company or a Parent or Subsidiary terminates for "Cause" (as determined
by the Committee in its sole discretion) the Option, to the extent not
theretofore exercised, shall terminate on the date of termination of
employment.
(v) Committee Discretion. Notwithstanding the provisions of
subsections (i) through (iv) above, the Committee may, in its sole
discretion, at or after the date of grant (but before the date of
termination), establish different terms and conditions pertaining to the
effect on any Option of termination of a Grantee's employment with, or
service to, the Company or a Parent or Subsidiary, to the extent
permitted by applicable federal and state law.
(g) Other Provisions. The Option Agreements evidencing Options under
the Plan shall contain such other terms and conditions, not inconsistent
with the Plan, as the Committee may determine.
7. NONQUALIFIED STOCK OPTIONS.
Options granted pursuant to this Section 7 are intended to constitute
Nonqualified Stock Options and shall be subject only to the general terms and
conditions specified in Section 6 hereof.
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8. INCENTIVE STOCK OPTIONS.
Options granted pursuant to this Section 8 are intended to constitute
Incentive Stock Options and shall be subject to the following special terms and
conditions, in addition to the general terms and conditions specified in Section
6 hereof
(a) Value of Shares. The aggregate Fair Market Value (determined as
of the date the Incentive Stock Option is granted) of the shares of equity
securities of the Company with respect to which Incentive Stock Options
granted under this Plan and all other option plans of any Parent or
Subsidiary become exercisable for the first time by each Grantee during any
calendar year shall not exceed $100,000. To the extent such $100,000 limit
has been exceeded with respect to any Options first becoming exercisable,
including acceleration upon a Change in Control, and notwithstanding any
statement in the Option Agreement that it constitutes an Incentive Stock
Option, the portion of such Option(s) that exceeds such $100,000 limit
shall be treated as a Nonqualified Stock Option.
(b) Ten Percent Stockholder. In the case of an Incentive Stock Option
granted to a Ten Percent Stockholder, (i) the Option Price shall not be
less than one hundred ten percent (110%) of the Fair Market Value of the
shares of Common Stock on the date of grant of such Incentive Stock Option,
and (ii) the exercise period shall not exceed five (5) years from the date
of grant of such Incentive Stock Option.
9. STOCK APPRECIATION RIGHTS.
The Committee is authorized to grant SARs to Grantees on the following
terms and conditions:
(a) In General. Unless the Committee determines otherwise, an SAR (i)
granted in tandem with a Nonqualified Stock Option may be granted at the
time of grant of the related Nonqualified Stock Option or at any time
thereafter, and (ii) granted in tandem with an Incentive Stock Option may
only be granted at the time of grant of the related Incentive Stock Option.
An SAR granted in tandem with an Option shall be exercisable only to the
extent the underlying Option is exercisable and shall terminate when the
underlying Option terminates.
(b) SARs. An SAR shall confer on the Grantee a right to receive an
amount with respect to each share subject thereto, upon exercise thereof,
equal to the excess of (i) the Fair Market Value of one share of Common
Stock on the date of exercise over (ii) the grant price of the SAR (which
in the case of an SAR granted in tandem with an Option shall be equal to
the exercise price of the underlying Option, and which in the case of any
other SAR shall be such price as the Committee may determine).
(c) Performance Goals. The Committee may condition the exercise of
any SAR upon the attainment of specified Performance Goals, in its sole
discretion.
10. RESTRICTED STOCK.
The Committee may award shares of Restricted Stock to any eligible employee
or director. Each award of Restricted Stock under the Plan shall be evidenced by
an instrument, in such form as the Committee shall from time to time approve
(the "Restricted Stock Agreement"), and shall comply with the following terms
and conditions (and with such other terms and conditions not inconsistent with
the terms of this Plan as the Committee, in its discretion, shall establish
including, without limitation, the requirement that a Grantee provide
consideration for Restricted Stock upon the lapse of restrictions):
(a) The Committee shall determine the number of shares of Common Stock
to be issued to the Grantee pursuant to the award.
(b) Shares of Restricted Stock may not be sold, assigned, transferred,
pledged, hypothecated or otherwise disposed of, except by will or the laws
of descent and distribution, for such period as the Committee shall
determine from the date on which the award is granted (the "Restricted
Period"). The Committee may impose such other restrictions and conditions
on the shares as it deems appropriate including the satisfaction of
Performance Goals. Certificates for shares of stock issued pursuant to
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Restricted Stock awards shall bear an appropriate legend referring to such
restrictions, and any attempt to dispose of any such shares of stock in
contravention of such restrictions shall be null and void and without
effect. During the Restricted Period, such certificates shall be held in
escrow by an escrow agent appointed by the Committee. In determining the
Restricted Period of an award, the Committee may provide that the foregoing
restrictions lapse at such times, under such circumstances, and in such
installments, as the Committee may determine.
(c) Subject to such exceptions as may be determined by the Committee,
if the Grantee's continuous employment with the Company or any Parent or
Subsidiary shall terminate for any reason prior to the expiration of the
Restricted Period of an award, any shares remaining subject to restrictions
(after taking into account the provisions of Subsection (f) of this Section
10.) shall thereupon be forfeited by the Grantee and transferred to, and
reacquired by, the Company or a Parent or Subsidiary at no cost to the
Company or such Parent or Subsidiary.
(d) During the Restricted Period the Grantee shall possess all
incidents of ownership of such shares, subject to Subsection (b) of this
Section 10, including the right to receive cash dividends with respect to
such shares and to vote such shares; provided, that shares of Common Stock
distributed in connection with a stock split or stock dividend shall be
subject to restriction and a risk of forfeiture to the same extent as the
Restricted Stock with respect to which such shares are distributed.
(e) Upon the occurrence of any of the events described in Section
11(c), all restrictions then outstanding with respect to shares of
Restricted Stock awarded hereunder shall automatically expire and be of no
further force or effect.
(f) The Committee shall have the authority (and the Restricted Stock
Agreement may so provide) to cancel all or any portion of any outstanding
restrictions prior to the expiration of the Restricted Period with respect
to any or all of the shares of Restricted Stock awarded on such terms and
conditions as the Committee shall deem appropriate.
11. EFFECT OF CERTAIN CHANGES.
(a) If there is any change in the shares of Common Stock through the
declaration of extraordinary cash dividends, stock dividends,
recapitalization, stock splits, or combinations or exchanges of such
shares, or other similar transactions, the number of shares of Common Stock
available for awards (both the maximum number of shares issuable under the
Plan as a whole and the maximum number of shares issuable on a per-employee
basis, each as set forth in Section 5 hereof), the number of such shares
covered by outstanding awards, the Performance Goals, and the price per
share of Options or SARs shall be proportionately adjusted by the Committee
to reflect such change in the issued shares of Common Stock; provided, that
any fractional shares resulting from such adjustment shall be eliminated;
and provided, further, that, with respect to Incentive Stock Options, such
adjustment shall be made in accordance with Section 424(h) of the Code.
(b) In the event of the dissolution or liquidation of the Company; in
the event of any corporate separation or division, including but not
limited to, split-up, split-off or spin-off; or in the event of other
similar transactions, the Committee may, in its sole discretion, provide
that either:
(i) the Grantee of any award hereunder shall have the right to
exercise an Option (at its then Option Price) and receive such property,
cash, securities, or any combination thereof upon such exercise as would
have been received with respect to the number of shares of Common Stock
for which such Option might have been exercised immediately prior to
such dissolution, liquidation, or corporate separation or division; or
(ii) each Option shall terminate as of a date to be fixed by the
Committee and that not less than thirty (30) days' written notice of the
date so fixed shall be given to each Grantee, who shall have the right,
during the period of thirty (30) days preceding such termination, to
exercise all or part of such Option.
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In the event of a proposed sale of all or substantially all of the
assets of the Company or the merger of the Company with or into another
corporation, any award then outstanding shall be assumed or an equivalent
award shall be substituted by such successor corporation or a parent or
subsidiary of such successor corporation, unless such successor corporation
does not agree to assume the award or to substitute an equivalent award, in
which case the Committee shall, in lieu of such assumption or substitution,
provide for the realization of such outstanding awards in the manner set
forth in Section 11(b)(i) or 11(b)(ii) above.
(c) If, while any awards remain outstanding under the Plan, any of the
following events shall occur (which events shall constitute a "Change in
Control" of the Company):
(i) the "beneficial ownership," as defined in Rule 13d-3 under the
Exchange Act, of securities representing more than a majority of the
combined voting power of the Company are acquired by any "person" as
defined in Sections 13(d) and 14(d) of the Exchange Act (other than (A)
the Company, (B) any trustee or other fiduciary holding securities under
an employee benefit plan of the Company, (C) the Voting Trust and the
Voting Trustees, (D) Edward L. Gaylord or any member of his Immediate
Family, or any "person" controlled by, controlling or under common
control with Edward L. Gaylord or any member of his Immediate Family; or
(E) any corporation owned, directly or indirectly, by the shareholders
of the Company in substantially the same proportions as their ownership
of stock of the Company); or
(ii) the shareholders of the Company approve a definitive agreement
to merge or consolidate the Company with or into another company (other
than a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) a majority of
the combined voting power of the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation), or to sell or otherwise dispose of all or substantially
all of its assets, or adopt a plan of liquidation; or
(iii) during any period of two consecutive years, individuals who
at the beginning of such period were members of the Board cease for any
reason to constitute at least a majority thereof (unless the election,
or the nomination for election by the Company's shareholders, of each
new director was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of
such period);
then from and after the date on which any such Change in Control shall have
occurred (the "Acceleration Date"), any Option, SAR, and share of
Restricted Stock awarded pursuant to this Plan shall be exercisable or
otherwise nonforfeitable in full, as applicable, whether or not otherwise
exercisable or forfeitable.
Following the Acceleration Date, the Committee shall, in the case of a
merger, consolidation, or sale or disposition of assets, promptly make an
appropriate adjustment to the number and class of shares of Common Stock
available for awards, and to the amount and kind of shares or other
securities or property receivable upon exercise or other realization of any
outstanding awards after the effective date of such transaction, and, if
applicable, the price thereof.
(d) In the event of a change in the Common Stock of the Company as
presently constituted that is limited to a change of all of its authorized
shares of Common Stock into the same number of shares with a different par
value or without par value, the shares resulting from any such change shall
be deemed to be the Common Stock within the meaning of the Plan.
(e) Except as herein before expressly provided in this Section 11, the
Grantee of an award hereunder shall have no rights by reason of any
subdivision or consolidation of shares of stock of any class or the payment
of any stock dividend or any other increase or decrease in the number of
shares of stock of any class or by reason of any dissolution, liquidation,
merger, or consolidation or spin-off of assets or stock of another company;
and any issue by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be
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made with respect to, the number or price of shares of Common Stock subject
to an award. The grant of an award pursuant to the Plan shall not affect in
any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structures or to merge or to consolidate or to dissolve, liquidate, or
sell, or transfer all or part of its business or assets or engage in any
similar transactions.
12. SURRENDER AND EXCHANGES OF AWARDS.
The Committee may permit the voluntary surrender of all or a portion of any
Option granted under the Plan or any option granted under any other plan,
program, or arrangement of the Company or any Subsidiary ("Surrendered Option"),
to be conditioned upon the granting to the Grantee of a new Option for the same
number of shares of Common Stock as the Surrendered Option, or may require such
voluntary surrender as a condition precedent to a grant of a new Option to such
Grantee. Subject to the provisions of the Plan, such new Option (1) may be an
Incentive Stock Option or a Nonqualified Stock Option and (2) shall be
exercisable at the price, during such period, and on such other terms and
conditions as are specified by the Committee at the time the new Option is
granted. The Committee may also grant Restricted Stock in exchange for
Surrendered Options to any holder of such Surrendered Option.
13. PERIOD DURING WHICH AWARDS MAY BE GRANTED.
Awards may be granted pursuant to the Plan from time to time within a
period of ten (10) years from the date of the Distribution (as defined in the
Distribution Agreement), provided that awards granted prior to such tenth
anniversary date may be extended beyond such date.
14. LIMITS ON TRANSFERABILITY OF AWARDS.
Awards of Incentive Stock Options (and any SAR related thereto) shall not
be transferable otherwise than by will or by the laws of descent and
distribution, and all Incentive Stock Options are exercisable during the
Grantee's lifetime only by the Grantee. Awards of Nonqualified Stock Options
(and any SAR related thereto) shall not be transferable, without the prior
written consent of the Committee, other than (i) by will or by the laws of
descent and distribution, (ii) by a Grantee to a member of his or her Immediate
Family, or (iii) to a trust for the benefit of the Grantee or a member of his or
her Immediate Family. Awards of Restricted Stock shall be transferable only to
the extent set forth in the Restricted Stock Agreement.
15. EFFECTIVE DATE.
The Plan shall be deemed to have taken effect on October 1, 1997.
16. AGREEMENT BY GRANTEE REGARDING WITHHOLDING TAXES.
If the Committee shall so require, as a condition of exercise of an Option
or SAR or other realization of an award, each Grantee shall agree that no later
than the date of exercise or other realization of an award granted hereunder,
the Grantee will pay to the Company or make arrangements satisfactory to the
Committee regarding payment of any federal, state, or local taxes of any kind
required by law to be withheld upon the exercise of an Option or other
realization of an award. Alternatively, the Committee may provide that a Grantee
may elect, to the extent permitted or required by law, to have the Company
deduct federal, state, and local taxes of any kind required by law to be
withheld upon the exercise of an Option or realization of any award from any
payment of any kind due to the Grantee. The Committee may, in its sole
discretion, permit withholding obligations to be satisfied in shares of Common
Stock subject to the award.
17. AMENDMENT AND TERMINATION OF THE PLAN.
The Board at any time and from time to time may suspend, terminate, modify,
or amend the Plan without stockholder approval to the fullest extent permitted
by the Exchange Act and the rules and regulations thereunder; provided, however,
that no suspension, termination, modification, or amendment of the Plan may
adversely affect any award previously granted hereunder, unless the written
consent of the Grantee is obtained.
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18. RIGHTS AS A SHAREHOLDER.
Except as provided in Section 10(d) hereof, a Grantee or a transferee of an
award shall have no rights as a shareholder with respect to any shares covered
by the award until the date of the issuance of a stock certificate to him or her
for such shares. No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities, or other property) or distribution
of other rights for which the record date is prior to the date such stock
certificate is issued, except as provided in Section 11 hereof.
19. NO RIGHTS TO SERVICE OR EMPLOYMENT.
Nothing in the Plan or in any award granted or Agreement entered into
pursuant hereto shall confer upon any Grantee the right to continue in the
employ of the Company or any Subsidiary or to be entitled to any remuneration or
benefits not set forth in the Plan or such Agreement or to interfere with or
limit in any way the right of the Company or any such Subsidiary to terminate
such Grantee's service to or employment by the Company or such Subsidiary.
Awards granted under the Plan shall not be affected by any change in duties or
position of a Grantee as long as such Grantee continues to provide service to or
is in the employ of the Company or any Subsidiary.
20. BENEFICIARY.
A Grantee may file with the Committee a written designation of a
beneficiary on such form as may be prescribed by the Committee and may, from
time to time, amend or revoke such designation. If no designated beneficiary
survives the Grantee, the executor or administrator of the Grantee's estate
shall be deemed to be the Grantee's beneficiary.
21. UNFUNDED STATUS OF PLAN.
The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a Grantee by
the Company, nothing contained herein shall give any such Grantee any rights
that are greater than those of a general creditor of the Company. In its sole
discretion, the Committee may authorize the creation of trusts or other
arrangements to meet the obligations created under the Plan to deliver Common
Stock or payments in lieu of or with respect to awards hereunder; provided,
however, that, unless the Committee otherwise determines with the consent of the
affected participant, the existence of such trusts or other arrangements is
consistent with the "unfunded" status of the Plan.
22. GOVERNING LAW.
The Plan and all determinations made and actions taken pursuant hereto
shall be governed by the laws of the State of Delaware.
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APPENDIX B
GAYLORD ENTERTAINMENT COMPANY
EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I
INTRODUCTION
1.1 Establishment of Plan. Gaylord Entertainment Company, a Delaware
corporation ("Gaylord") with its principal offices located in Nashville,
Tennessee, adopts the following employee stock purchase plan for its eligible
employees, effective on July 1, 1999. This Plan shall be known as the Gaylord
Entertainment Company Employee Stock Purchase Plan.
1.2 Purpose. The purpose of this Plan is to provide an opportunity for
eligible employees of the Employer to become stockholders of Gaylord. It is
believed that broad-based employee participation in the ownership of the
business will help to achieve the unity of purpose conducive to the continued
growth of the Employer and to the mutual benefit of its employees and
shareholders.
1.3 Qualification. This Plan is intended to be an employee stock purchase
plan which qualifies for favorable Federal income tax treatment under Section
423 of the Code.
1.4 Rule 16b-3 Compliance. This Plan is intended to comply with Rule 16b-3
under the Securities Exchange Act of 1934, and should be interpreted in
accordance therewith.
ARTICLE II
DEFINITIONS
As used herein, the following words and phrases shall have the meanings
specified below:
2.1 Board of Directors. The Board of Directors of Gaylord.
2.2 Closing Market Price. The closing price of the Stock as reported in
the consolidated trading of the New York Stock Exchange listed securities;
provided that if there should be any material alteration in the present system
of reporting sales prices of such Stock, or if such Stock should no longer be
listed on the New York Stock Exchange, the market value of the Stock as of a
particular date shall be determined in such a method as shall be specified by
the Plan Administrator.
2.3 Code. The Internal Revenue Code of 1986, as amended from time to time.
2.4 Commencement Date. The first day of each Option period. The first
Commencement Date shall be July 1, 1999.
2.5 Contribution Account. As set forth in Article V, the account
established on behalf of a Participant to which shall be credited the amount of
the Participant's contribution.
2.6 Effective Date. July 1, 1999.
2.7 Employee. Each employee of an Employer except:
(a) any employee whose customary employment is twenty (20) hours per
week or less, or
(b) any employee whose customary employment is for not more than five
months in any calendar year.
2.8 Employer. Gaylord and any United States corporation which is a
Subsidiary of Gaylord (except for a Subsidiary which by resolution of the Board
of Directors is expressly not authorized to become a participating Employer).
The term "Employer" shall include any corporation into which an Employer may be
merged or consolidated or to which all or substantially all of its assets may be
transferred, provided such corporation does not affirmatively disavow this Plan.
2.9 Exercise Date. The last trading date of each Option Period on the New
York Stock Exchange.
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2.10 Exercise Price. The price per share of the Stock to be charged to
Participants at the Exercise Date, as determined in Section 6.3.
2.11 Five-Percent Shareholder. An Employee who owns five percent (5%) or
more of the total combined voting power or value of all classes of stock of
Gaylord or any Subsidiary thereof. In determining this five percent test, shares
of stock which the Employee may purchase under outstanding options, warrants or
other convertible securities, as well as stock attributed to the Employee from
members of his family or otherwise under Section 424(d) of the Code, shall be
treated as stock owned by the Employee in the numerator, but shares of stock
which may be issued under options, warrants or other convertible securities
shall not be counted in the total of outstanding shares in the denominator.
2.12 Grant Date. The first trading date of each Option Period on the New
York Stock Exchange.
2.13 Option Period. Successive periods of three (3) months (i) commencing
on July 1 and ending on September 30, (ii) commencing on October 1 and ending on
December 31, (iii) commencing on January 1 and ending on March 31, and (iv)
commencing on April 1 and ending on June 30.
2.14 Participant. Any Employee of an Employer who has met the conditions
for eligibility as provided in Article IV and who has elected to participate in
the Plan.
2.15 Plan. Gaylord Entertainment Company Employee Stock Purchase Plan.
2.16 Plan Administrator. The committee composed of one or more individuals
to whom authority is delegated by the Board of Directors to administer the Plan.
The initial committee shall be the Benefits Trust Committee of Gaylord.
2.17 Share Account. As set forth in Article VIII, the account established
on behalf of a Participant to which shall be credited the number of shares of
Stock purchased by such Participant through exercise of the options granted
hereunder.
2.18 Stock. Those shares of common stock of Gaylord which are reserved
pursuant to Section 6.1 for issuance upon the exercise of options granted under
this Plan.
2.19 Subsidiary. Any United States corporation in an unbroken chain of
corporations beginning with Gaylord, each of which (other than the last
corporation in the chain) owns stock possessing eighty percent (80%) or more of
the combined voting power of all classes of stock in one of the other
corporations in such chain.
2.20 Total Compensation. All amounts paid to a Participant, such as
salary, wages, bonus, commissions and overtime, except that Total Compensation
shall not include any distributions from a plan of deferred compensation, any
income realized with respect to a stock option or with respect to the grant of
shares of stock (including income realized when any such shares become freely
transferable or are no longer subject to a substantial risk of forfeiture).
Total Compensation shall include elective deferrals to a qualified plan under
Section 401(k) of the Code, salary reduction contributions to a cafeteria plan
under Section 125 of the Code, and elective deferrals to a nonqualified deferred
compensation plan.
ARTICLE III
SHAREHOLDER APPROVAL
3.1 Shareholder Approval Required. Without the approval of the
shareholders of Gaylord, no amendment to this Plan shall increase the number of
shares reserved under the Plan, other than as provided in Section 10.3. Approval
by shareholders must comply with applicable provisions of the corporate charter
and bylaws of Gaylord and with Delaware law prescribing the method and degree of
shareholder approval required for issuance of corporate stock or options.
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ARTICLE IV
ELIGIBILITY AND PARTICIPATION
4.1 Conditions. Each Employee shall become eligible to become a
Participant for each Option Period on its Commencement Date if such Employee has
been employed by the Employer for a continuous period at least twelve (12)
months prior to the Commencement Date. No Employee who is a Five-Percent
Shareholder shall be eligible to participate in the Plan. Notwithstanding
anything to the contrary contained herein, no individual who is not an Employee
shall be granted an option to purchase Stock under the Plan.
4.2 Application for Participation. Each Employee who becomes eligible to
participate shall be furnished a summary of the Plan and an enrollment form. If
such Employee elects to participate hereunder, Employee shall complete such form
and file it with Employer no later than thirty (30) days prior to the next
Commencement Date or, in the case of the first Commencement Date, no later than
June 15, 1999. The completed enrollment form shall indicate the amount of
Employee contribution authorized by the Employee. If no new enrollment form is
filed by a Participant in advance of any Option Period after the initial Option
Period, that Participant shall be deemed to have elected to continue to
participate with the same contribution previously elected (subject to the limit
of fifteen percent (15%) of Total Compensation specified in Section 5.1). If any
Employee does not elect to participate in any given Option Period, such Employee
may elect to participate on any future Commencement Date so long as such
Employee continues to meet the eligibility requirements.
4.3 Date of Participation. All Employees who elect to participate shall be
enrolled in the Plan commencing with the first day of the Option Period
following their submission of the enrollment form. Upon becoming a Participant,
the Participant shall be bound by the terms of this Plan, including any
amendments whenever made.
4.4 Acquisition or Creation of Subsidiary. If the stock of a corporation
is acquired by Gaylord or another Employer so that the acquired corporation
becomes a Subsidiary, or if a Subsidiary is created, the Subsidiary in either
case shall automatically become an Employer and its Employees shall become
eligible to participate in the Plan on the first Commencement Date after the
acquisition or creation of the Subsidiary, as the case may be. In the case of an
acquisition, credit shall be given to Employees of the acquired Subsidiary for
service with such corporation prior to the acquisition for purposes of
satisfying the requirement of Section 4.1 of twelve (12) months continuous
employment. Notwithstanding the foregoing, the Board of Directors may by
appropriate resolutions (i) provide that the acquired or newly created
Subsidiary shall not be a participating Employer, (ii) specify that the acquired
or newly created Subsidiary will become a participating Employer on a
Commencement Date other than the first Commencement Date after the acquisition
or creation, or (iii) attach any condition whatsoever (including denial of
credit for prior service) to eligibility of the employees of the acquired or
newly created Subsidiary.
ARTICLE V
CONTRIBUTION ACCOUNT
5.1 Employee Contributions. The enrollment form signed by each Participant
shall authorize the Employer to deduct from the Participant's compensation an
after-tax amount equal to either (i) an exact number of dollars during each
payroll period of not less than twenty dollars ($20.00) for a monthly payroll
period, or (ii) a specified percentage of the Participant's Total Compensation;
provided, however, that such deduction shall not exceed fifteen percent (15%) of
the Participant's Total Compensation for the Option Period. The dollar amount
deducted each payday shall be credited to the Participant's Contribution
Account. Participant contributions will not be permitted to commence at any time
during the Option Period other than on a Commencement Date. No interest will
accrue on any contributions or on the balance in a Participant's Contribution
Account.
5.2 Modification of Contribution Rate. No change shall be permitted in a
Participant's amount of withholding except upon a Commencement Date, and then
only if the Participant files a new enrollment form with the Employer at least
thirty (30) days in advance of the Commencement Date designating the desired
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withholding rate. Notwithstanding the foregoing, a Participant may notify the
Employer at any time that the Participant wishes to discontinue the
Participant's contributions (except during the last thirty (30) days of the
Option Period). This notice shall be in writing and on such forms as provided by
the Employer and shall become effective as of a date provided on the form not
more than thirty (30) days following its receipt by the Employer. The
Participant shall become eligible to recommence contributions on the next
Commencement Date.
5.3 Withdrawal of Contributions. A Participant may elect to withdraw the
balance of his Contribution Account at any time during the Option Period prior
to the Exercise Date (except during the last thirty (30) days of the Option
Period). The option granted to a Participant shall be canceled upon his
withdrawal of the balance in his Contribution Account. This election to withdraw
must be in writing on such forms as may be provided by the Employer. If
contributions are withdrawn in this manner, further contributions during that
Option Period will be discontinued in the same manner as provided in Section
5.2, and the Participant shall become eligible to recommence contributions on
the next Commencement Date.
5.4 Lump Sum Contributions. Subject to the limitations described in
Section 5.5, a Participant who has not discontinued his contributions pursuant
to Section 5.2 or elected to withdraw his contributions pursuant to Section 5.3
may make no more than one (1) lump sum contribution during each Option Period.
These lump sum contributions shall be paid by check by the Participant,
delivered at least fifteen (15) days prior to the Exercise Date, and shall be
credited to the Participant's Contribution Account.
5.5 Limitations on Contributions. During each Option Period, the total
contributions by a Participant to his Contribution Account (including both
contributions by payroll deduction pursuant to Section 5.1 and lump sum
contributions pursuant to Section 5.4) shall not exceed fifteen percent (15%) of
the Participant's Total Compensation for the Option Period. If a Participant's
total contributions should exceed this limit, the excess shall be returned to
the Participant after the end of the Option Period, without interest.
ARTICLE VI
ISSUANCE AND EXERCISE OF OPTIONS
6.1 Reserved Shares of Stock. Gaylord shall reserve five hundred thousand
(500,000) shares of Stock for issuance upon exercise of the options granted
under this Plan.
6.2 Issuance of Options. On the Grant Date each Participant shall be
deemed to receive an option to purchase Stock with the number of shares and
Exercise Price determined as provided in this Article VI, subject to the maximum
limit specified in Section 6.6(a) and (b). All such options shall be
automatically exercised on the following Exercise Date, except for options which
are canceled when a Participant withdraws the balance of his Contribution
Account or which are otherwise terminated under the provisions of this Plan.
6.3 Determination of Exercise Price. The Exercise Price of the options
granted under this Plan for any Option Period shall be the lesser of
(a) eighty-five percent (85%) of the Closing Market Price of the Stock
on the Exercise Date;
(b) eighty-five percent (85%) of the Closing Market Price of the Stock
on the Grant Date.
6.4 Purchase of Stock. On an Exercise Date, all options shall be
automatically exercised, except that the options of a Participant who has
terminated employment pursuant to Section 7.1 or who has withdrawn all his
contribution shall expire. The Contribution Account of each Participant shall be
used to purchase the maximum number of shares of Stock (including fractional
shares) determined by dividing the Exercise Price into the balance of the
Participant's Contribution Account.
6.5 Terms of Options. Options granted under this Plan shall be subject to
such amendment or modification as the Employer shall deem necessary to comply
with any applicable law or regulation, including but not limited to Section 423
of the Code, and shall contain such other provisions as the Employer shall from
time to time approve and deem necessary.
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6.6 Limitations on Options. The options granted hereunder are subject to
the following limitations:
(a) The maximum number of shares of Stock which may be purchased by
any Participant on an Exercise Date shall be 2000 shares. This maximum
number of shares shall be adjusted upon the occurrence of an event
described in Section 10.3.
(b) No Participant shall be permitted to purchase during any calendar
year Stock under this Plan (and any other plan of the Employer or
Subsidiary which is qualified under Section 423 of the Code) having a
market value in excess of $25,000 (as determined on the Grant Date for the
Option Period during which each such share of Stock is purchased).
(c) No option may be granted to a Participant if the Participant
immediately after the option is granted would be a Five-Percent
Shareholder.
(d) No Participant may assign, transfer or otherwise alienate any
options granted to him under this Plan, otherwise than by will or the laws
of descent and distribution, and such options must be exercised during the
Participant's lifetime only by the Participant.
6.7 Pro-Rata Reduction of Optioned Stock. If the total number of shares of
Stock to be purchased under option by all Participants on an Exercise Date
exceeds the number of shares of Stock remaining authorized for issuance under
Section 6.1, a pro-rata allocation of the shares of Stock available for issuance
will be made among Participants in proportion to their respective Contribution
Account balances on the Exercise Date, and any money remaining in the
Contribution Accounts shall be returned to the Participants.
6.8 State Securities Laws. Notwithstanding anything to the contrary
contained herein, the Company shall not be obligated to issue shares of Stock to
any Participant if to do so would violate any State securities law applicable to
the sale of Stock to such Participant. In the event that the Company refrains
from issuing shares of Stock to any Participant in reliance on this Section, the
Company shall return to such Participant the amount in such Participant's
Contribution Account that would otherwise have been applied to the purchase of
Stock.
ARTICLE VII
TERMINATION OF PARTICIPATION
7.1 Termination of Employment. Any Employee whose employment with the
Employer is terminated during the Option Period prior to the Exercise Date for
any reason except death, disability or retirement at or after age 55 shall cease
being a Participant immediately. The balance of that Participant's Contribution
Account shall be paid to such Participant as soon as practical after his
termination. The option granted to such Participant shall be null and void.
7.2 Death. If a Participant should die while employed by the Employer, no
further contributions on behalf of the deceased Participant shall be made. The
legal representative of the deceased Participant may elect to withdraw the
balance in said Participant's Contribution Account by notifying the Employer in
writing prior to the Exercise Date in the Option Period during which the
Participant died. In the event no election to withdraw is made prior to the
Exercise Date, the balance accumulated in the deceased Participant's
Contribution Account shall be used to purchase shares of Stock in accordance
with Section 6.4.
7.3 Retirement. If a Participant shall retire from the employment of the
Employer at or after attaining age 55, no further contributions on behalf of the
retired Participant shall be made. The Participant may elect to withdraw the
balance in his Contribution Account by notifying the Employer in writing prior
to the Exercise Date in the Option Period during which the Participant retired.
In the event no election to withdraw is made prior to the Exercise Date, the
balance accumulated in the retired Participant's Contribution Account shall be
used to purchase shares of Stock in accordance with Section 6.4.
7.4 Disability. If a Participant should terminate employment with the
Employer on account of disability, as determined by reference to the definition
of "disability" in the Employer's long-term disability plan, no further
contributions on behalf of the disabled Participant shall be made. The
Participant may elect to
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withdraw the balance in his Contribution Account by notifying the Employer in
writing prior to the Exercise Date in the Option Period during which the
Participant became disabled. In the event no election to withdraw is made prior
to the Exercise Date, the balance accumulated in the disabled Participant's
Contribution Account shall be used to purchase shares of Stock in accordance
with Section 6.4.
ARTICLE VIII
OWNERSHIP OF STOCK
8.1 Stock Certificates. As soon as practical after the Exercise Date,
Gaylord will credit the Share Account maintained for the benefit of each
Participant by the Company with that number of shares of Stock purchased by such
Participant through exercise of the options granted hereunder. Certificates may
be issued at the request of the Participant (i) in the name of the Participant,
(ii) jointly in the name of the Participant and a member of the Participant's
family, (iii) in trust to a trustee, (iv) to the Participant as custodian for
the Participant's child under the Gift to Minors Act, or (v) to the legal
representative of a deceased Participant.
8.2 Premature Sale of Stock. If a Participant (or former Participant)
sells or otherwise disposes of any shares of Stock obtained under this Plan
(a) prior to two (2) years after the Grant Date of the option under
which such shares were obtained; or
(b) prior to one (1) year after the Exercise Date on which such shares
were obtained,
that Participant (or former Participant) must notify the Employer immediately in
writing concerning such disposition.
8.3 Restrictions on Sale. The Plan Administrator may, in its sole
discretion, place restrictions on the sale or transfer of shares of Stock
purchased under the Plan during any Option Period by notice to all Participants
of the nature of such restrictions given in advance of the Commencement Date of
such Option Period. The restrictions may prevent the sale, transfer or other
disposition of any shares of Stock purchased during the Option Period for a
period of up to two years from the Grant Date, subject to such exceptions as the
Plan Administrator may determine (e.g., termination of employment with the
Employer). If the Participant requests the issuance of a certificate pursuant to
Section 8.1 for shares that are restricted, the certificates shall contain an
appropriate legend disclosing the nature and duration of the restriction. Any
such restrictions determined by the Plan Administrator shall be applicable
equally to all shares of Stock purchased during the Option Period for which the
restrictions are first applicable and to all shares of Stock purchased during
subsequent Option Periods unless otherwise determined by the Plan Administrator.
If the Plan Administrator should change or eliminate the restrictions for a
subsequent Option Period, notice of such action shall be given to all
Participants.
ARTICLE IX
ADMINISTRATION AND AMENDMENT
9.1 Administration. The Plan Administrator shall (i) administer the Plan,
(ii) keep records of the Contribution Account balance of each Participant, (iii)
keep records of the Share Account for each Participant, (iv) interpret the Plan,
(v) determine all questions arising as to eligibility to participate, amount of
contributions permitted, determination of the Exercise Price, and all other
matters of administration, and (vi) determine whether to place restrictions on
the sale and transfer of Stock and the nature of such restrictions, as provided
in Section 8.3. The Plan Administrator shall have such duties, powers and
discretionary authority as may be necessary to discharge the foregoing duties,
and may delegate any or all of the foregoing duties to any individual or
individuals (including officers or other Employees who are Participants). The
Board of Directors shall have the right at any time and without notice to remove
or replace any individual or committee of individuals serving as Plan
Administrator. All determinations by the Plan Administrator shall be conclusive
and binding on all persons. Any rules, regulations, or procedures that may be
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necessary for the proper administration or functioning of this Plan that are not
covered in this Plan document shall be promulgated and adopted by the Plan
Administrator.
9.2 Amendment. The Board of Directors may at any time amend the Plan in
any respect, including termination of the Plan, without notice to Participants.
If the Plan is terminated, all options outstanding at the time of termination
shall become null and void and the balance in each Participant's Contribution
Account shall be paid to that Participant. Notwithstanding the foregoing, no
amendment of the Plan as described in Section 3.1 shall become effective until
and unless such amendment is approved by the shareholders of Gaylord.
ARTICLE X
MISCELLANEOUS
10.1 Expenses. The Employer will pay all expenses of administering this
Plan that may arise in connection with the Plan.
10.2 No Contract of Employment. Nothing in this Plan shall be construed to
constitute a contract of employment between an Employer and any Employee or to
be an inducement for the employment of any Employee. Nothing contained in this
Plan shall be deemed to give any Employee the right to be retained in the
service of an Employer or to interfere with the right of an Employer to
discharge any Employee at any time, with or without cause, regardless of the
effect which such discharge may have upon him as a Participant of the Plan.
10.3 Adjustment Upon Changes in Stock. The aggregate number of shares of
Stock reserved for purchase under the Plan as provided in Section 6.1, and the
calculation of the Exercise Price as provided in Section 6.3, shall be adjusted
by the Plan Administrator (subject to direction by the Board of Directors) in an
equitable manner to reflect changes in the capitalization of Gaylord, including,
but not limited to, such changes as result from merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, combination of shares, exchange of shares and change in
corporate structure. If any adjustment under this Section 10.3 would create a
fractional share of Stock or a right to acquire a fractional share of Stock,
such fractional share shall be disregarded and the number of shares available
under the Plan and the number of shares covered under any options granted
pursuant to the Plan shall be the next lower number of shares, rounding all
fractions downward.
10.4 Employer's Rights. The rights and powers of any Employer shall not be
affected in any way by its participation in this Plan, including but not limited
to the right or power of any Employer to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge or
to consolidate or to dissolve, liquidate or sell, or transfer all or any part of
its business or assets.
10.5 Limit on Liability. No liability whatever shall attach to or be
incurred by any past, present or future shareholders, officers or directors, as
such, of Gaylord or any Employer, under or by reason of any of the terms,
conditions or agreements contained in this Plan or implied therefore, and any
and all liabilities of any and all rights and claims against Gaylord, an
Employer, or any shareholder, officer or director as such, whether arising at
common law or in equity or created by statute or constitution or otherwise,
pertaining to this Plan, are hereby expressly waived and released by every
Participant as a part of the consideration for any benefits under this plan;
provided, however, no waiver shall occur, solely by reason of this Section 10.5,
of any right which is not susceptible to advance waiver under applicable law.
10.6 Gender and Number. For the purposes of the Plan, unless the contrary
is clearly indicated, the use of the masculine gender shall include the
feminine, and the singular number shall include the plural and vice versa.
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APPENDIX C
PROXY
GAYLORD ENTERTAINMENT COMPANY
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 13, 1999
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF GAYLORD ENTERTAINMENT COMPANY
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 Gaylord Entertainment Company (the "Company") to be held at
the Presidential Ballroom, Opryland Hotel, 2800 Opryland Drive, Nashville,
Tennessee, on Thursday, May 13, 1999, at 10:00 a.m., local time, and any
adjournment(s) thereof (the "Meeting").
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 THREE (3) NOMINEES SET FORTH BELOW; FOR THE PROPOSAL TO AMEND THE
COMPANY'S AMENDED AND RESTATED 1997 STOCK OPTION AND INCENTIVE PLAN TO INCREASE
THE NUMBER OF SHARES AUTHORIZED FOR GRANT AND ISSUANCE PURSUANT THERETO; FOR THE
PROPOSAL TO APPROVE AND ADOPT THE COMPANY'S EMPLOYEE STOCK PURCHASE PLAN; FOR
THE PROPOSAL TO RATIFY THE APPOINTMENT OF ACCOUNTANTS; AND, IN THE DISCRETION OF
THE PERSONS ENTITLED TO VOTE THE SHARES, FOR ANY OTHER MATTER THAT MAY PROPERLY
COME BEFORE THE MEETING OR ANY ADJOURNMENT(S) THEREOF, IN EACH CASE AS MORE
FULLY SET FORTH IN THE ACCOMPANYING PROXY STATEMENT OF THE COMPANY.
VOTES MUST BE INDICATED [X] USING BLACK OR BLUE INK ONLY.
(Continued, and to be dated and signed on the other side.)
<PAGE> 51
<TABLE>
<S> <C>
1. ELECTION OF DIRECTORS. Nominees for three-year term ending
2002: Martin C. Dickinson, Christine Gaylord Everest and
Howard L. Wood
[ ] FOR ALL NOMINEES (except as indicated below)
[ ] AUTHORITY WITHHELD TO VOTE FOR ALL NOMINEES
To withhold authority to vote for any individual nominee,
mark "FOR ALL NOMINEES" and write the excepted nominee's
name on the line below.
Exception:
------------------------------------------------------------
2. PROPOSAL TO AMEND THE COMPANY'S AMENDED AND RESTATED 1997
STOCK OPTION AND INCENTIVE PLAN TO INCREASE THE NUMBER OF
SHARES AUTHORIZED FOR GRANT AND ISSUANCE PURSUANT THERETO.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO APPROVE AND ADOPT THE COMPANY'S EMPLOYEE STOCK
PURCHASE PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. PROPOSAL TO RATIFY THE APPOINTMENT OF ACCOUNTANTS.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. IN THE DISCRETION OF THE PERSON(S) ENTITLED TO VOTE THE
SHARES ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE
SAID MEETING OR ANY ADJOURNMENTS THEREOF.
</TABLE>
Dated: , 1999.
------------------------------
-------------------------------------
Signature
-------------------------------------
Signature(s), 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
USING THE ENCLOSED ENVELOPE.
