SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant |X|
Filed by a party other than the Registrant |_|
Check the appropriate box:
|X| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 240.14a-11(c) or Rule 240.14a-12
ITT DESTINATIONS, INC.
(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 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>
PRELIMINARY COPY
FOR PURPOSES OF THIS PRELIMINARY PROXY STATEMENT, THE COMPANY HAS ASSUMED THAT,
AT THE TIME THIS PROXY STATEMENT IS MAILED TO STOCKHOLDERS, THE DISTRIBUTION (AS
DEFINED HEREIN) SHALL HAVE OCCURRED. THE DISTRIBUTION IS THE SUBJECT OF
LITIGATION PENDING IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
NEVADA. SHOULD THE DISTRIBUTION BE DELAYED, THIS PROXY STATEMENT WILL BE REVISED
ACCORDINGLY.
ITT
DESTINATIONS, INC.
1997
NOTICE OF
ANNUAL MEETING
AND
PROXY STATEMENT
<PAGE>
PRELIMINARY COPY
ITT Rand V. Araskog
DESTINATIONS, INC. Chairman and
Chief Executive
, 1997
Dear Stockholder:
It is my pleasure to cordially invite you to attend the first Annual Meeting of
stockholders of ITT Destinations, Inc. to be held at noon on , November
, 1997 in the of , , . As you are aware, Destinations is one of the
world's largest hotel and gaming companies and was formed in 1997 as part of ITT
Corporation's Comprehensive Plan to enhance the value of ITT Corporation.
I urge you to participate in the business of the Annual Meeting by completing
and returning the enclosed proxy as promptly as possible. Your vote is
important.
The accompanying Notice of Annual Meeting and Proxy Statement provides
information about the matters to be acted upon by Destinations' stockholders at
the Annual Meeting. The Proxy Statement also contains information about the role
and responsibilities of the Board of Directors and the Committees of the Board
and provides important information about each nominee for election as a Class I
director.
Sincerely yours,
RAND V. ARASKOG
Chairman and Chief Executive
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PRELIMINARY COPY
ITT Ann N. Reese
DESTINATIONS, INC. Executive Vice President,
Chief Financial Officer
and Corporate Secretary
, 1997
NOTICE OF ANNUAL MEETING
The Annual Meeting of the stockholders of ITT Destinations, Inc.
("Destinations") will be held in the of , , , on ,
November , 1997 at noon, local time, for the following purposes:
1. to elect Destinations' Class I directors;
2. to ratify the appointment of Arthur Andersen LLP as
Destinations' independent auditors for 1997;
3. to approve an amendment to Destinations' Articles of
Incorporation to change the corporation's name to "ITT Corporation";
and
4. to act upon such other matters as may properly come before
the meeting.
Stockholders of record at the close of business on , , 1997 will be
entitled to notice of and to vote at the meeting.
STOCKHOLDERS ARE URGED TO COMPLETE, SIGN, DATE, AND RETURN THE ENCLOSED PROXY
PROMPTLY IN THE SELF-ADDRESSED ENVELOPE (WHICH IS POSTAGE-PAID FOR STOCKHOLDERS
IN THE UNITED STATES, CANADA AND THE UNITED KINGDOM) WHETHER OR NOT THEY EXPECT
TO ATTEND THE MEETING. A STOCKHOLDER MAY NEVERTHELESS VOTE IN PERSON IF HE OR
SHE DOES ATTEND.
Sincerely yours,
ANN N. REESE
Executive Vice President,
Chief Financial Officer
and Corporate Secretary
<PAGE>
PRELIMINARY COPY
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ITT Destinations, Inc.
1330 Avenue of the Americas
New York, New York 10019-5490
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement and accompanying proxy are being mailed to stockholders
commencing , 1997 in connection with the solicitation of proxies by the Board
of Directors of ITT Destinations, Inc. ("Destinations" or the "Company") for the
1997 Annual Meeting. The Company's Information Statement, which is not a part of
this Proxy Statement, preceded this Proxy Statement.
At the Annual Meeting, stockholders will consider and vote upon the election of
the Company's Class I directors, who will hold office until the fourth annual
meeting of the Company's stockholders and until their successors are elected and
qualified. At the Annual Meeting, the stockholders will also consider and vote
upon the ratification of the appointment of Arthur Andersen LLP as Destinations'
independent public accountants for fiscal year 1997; the approval of an
amendment to Destinations' Articles of Incorporation to change the Company's
name to "ITT Corporation"; and any other business that may properly come before
the Annual Meeting.
Your vote is important, regardless of how many shares you own. Please sign and
date the accompanying proxy card and mail it in the enclosed self-addressed
envelope (which is postage prepaid for stockholders in the United States, Canada
and the United Kingdom) as promptly as possible, whether or not you expect to
attend the meeting.
IF YOUR SHARES ARE HELD IN THE NAME OF A BANK, BROKER OR OTHER NOMINEE, WE URGE
YOU TO CONTACT THE PARTY RESPONSIBLE FOR YOUR ACCOUNT AND DIRECT HIM OR HER TO
SIGN AND RETURN THE COMPANY'S PROXY CARD.
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VOTING PROCEDURES
The Board has fixed the close of business on , 1997 as the record date (the
"Record Date") for determining the stockholders entitled to notice of, and to
vote at, the Annual Meeting. On the Record Date, there were shares of Common
Stock outstanding. The holders of the Common Stock are entitled to one vote per
share on each matter submitted to a vote at the Annual Meeting. Stockholders do
not have the right to cumulate votes in the election of the Class I directors.
All such shares entitled to vote at the Annual Meeting are referred to herein as
"Record Shares." The presence in person or by proxy of stockholders holding a
majority of the Record Shares will constitute a quorum for the transaction of
business at the meeting. Shares represented by proxies that are marked "abstain"
will be counted as Record Shares present for purposes of determining the
presence of a quorum on all matters. Proxies relating to "street name" shares
that are voted by brokers on some but not all of the matters will be treated as
Record Shares present for purposes of determining the presence of a quorum on
all matters, but they will not be treated as shares entitled to vote at the
Annual Meeting on those matters as to which authority to vote is withheld by the
broker ("broker non-votes").
Whether or not you plan to attend the meeting, you are urged to vote by proxy.
Duly executed and unrevoked proxies received by the Company prior to the Annual
Meeting will be voted in accordance with the stockholder's specifications marked
thereon. Any stockholder giving a proxy may revoke it at any time prior to
voting at the Annual Meeting by filing with the Secretary of the Company a duly
executed revocation, by submitting a later dated proxy with respect to the same
shares or by attending the Annual Meeting and voting in person (although
attendance at the Annual Meeting will not in and of itself constitute a
revocation of your proxy).
A stockholder may, with respect to the election of the Class I directors,
(i) vote for the election of all four director nominees proposed by
your Board, (ii) withhold authority to vote for all such director nominees
or (iii) withhold authority to vote for any of such director nominees
by so indicating in the appropriate space on the proxy. The By-laws provide that
at each meeting of stockholders at which a quorum is present, directors shall be
elected by a plurality of votes cast by stockholders holding shares of stock of
the Company entitled to vote for the election of directors. The four nominees
receiving the highest vote totals will be elected as Class I directors of the
Company. Consequently, votes that are withheld in the election of the Class I
directors and broker non-votes will have no effect on the election.
With respect to the other items, a stockholder may vote for or against such
matters or abstain from voting. Pursuant to the By-laws, each of the other items
requires the affirmative vote of a majority in voting power of the stockholders
present in person or by proxy and entitled to vote at the Annual Meeting
(assuming a quorum is present). An abstention or a broker non-vote on any of
these items will have no effect on such vote.
The accompanying proxy represents all of the shares you are entitled to vote at
the meeting, other than shares held through an employee plan. If you are a
participant in the Destinations 401(k) Retirement Savings Plan or a savings plan
for hourly employees, the trustee under that plan will provide you with a proxy
representing the shares you are entitled to vote under the plan.
The Board has appointed two current officers of The Bank of New York to act as
inspectors of election at the Annual Meeting. The By-laws of the Company provide
that, except in limited circumstances not applicable to the 1997 Annual Meeting,
stockholders shall be accorded privacy in voting and that the integrity of the
balloting process shall be assured. The vote of any stockholder is not disclosed
to management except as may be necessary to meet legal requirements. However,
all comments directed to management from stockholders, whether written on the
proxy card or elsewhere, will be forwarded to management. Among their other
duties, the inspectors of election will certify as to compliance with such
confidentiality provisions.
BOARD OF DIRECTORS
The Board of Directors is responsible for establishing broad corporate policies
and for overseeing the overall performance of the Company. The Board reviews
significant developments affecting Destinations and acts on other matters
requiring Board approval.
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Destinations was formed under the laws of the State of Nevada on July 15,
1997 as a wholly owned subsidiary of ITT Corporation, a Nevada corporation
("ITT"). ITT was spun off from ITT Corporation, a Delaware corporation
(now ITT Industries, Inc.) ("Old ITT") in December 1995. On , 1997, ITT
distributed (the "Distribution") to its stockholders all of the shares of
Common Stock of Destinations. From the time of its formation until ,
1997, Robert A. Bowman, Ann N. Reese and Richard S. Ward were the directors
of Destinations. Bette B. Anderson, Rand V. Araskog, Nolan D. Archibald, Robert
A. Bowman, Robert A. Burnett, Paul G. Kirk, Jr., Edward C. Meyer, Benjamin F.
Payton, Vin Weber, Margita E. White and Kendrick R. Wilson III were elected
directors of Destinations effective , 1997. Neither the Board nor
any of the standing committees of the Board held any meetings in 1996 or prior
to , 1997.
The standing committees of the Board are the Audit, Capital, Compensation and
Personnel, Corporate Governance and Legal Affairs, Executive and Policy, Gaming
Audit, Nominating and Public Affairs Committees.
THE AUDIT COMMITTEE recommends the selection of independent auditors for the
Company, confirms the scope of audits to be performed by such auditors, reviews
audit results and internal accounting and control procedures and policies and
reviews the fees paid to the Company's independent auditors. The Committee
reviews and recommends approval of the audited financial statements of the
Company and the annual reports to stockholders. It also reviews the expense
accounts of senior executives. The members of the Audit Committee are: Bette B.
Anderson, Paul G. Kirk, Jr., Edward C. Meyer, Benjamin F. Payton, Vin Weber and
Kendrick R. Wilson III.
THE CAPITAL COMMITTEE is responsible for maximizing the effective use of the
assets of the Company and its subsidiaries and reviewing capital expenditures
and appropriations. The members of the Capital Committee are: Bette B. Anderson,
Rand V. Araskog, Nolan D. Archibald, Robert A. Bowman, Robert A. Burnett,
Paul G. Kirk, Jr., Edward C. Meyer, Benjamin F. Payton, Vin Weber, Margita E.
White and Kendrick R. Wilson III.
THE COMPENSATION AND PERSONNEL COMMITTEE, which is comprised entirely of
non-employee directors, oversees the compensation and benefits of employees,
evaluates management performance and establishes executive compensation. In
the performance of its functions, the Committee has access to independent
compensation counsel. The members of the Compensation and Personnel Committee
are: Bette B. Anderson, Nolan D. Archibald, Robert A. Burnett, Paul G. Kirk,
Jr., Edward C. Meyer and Margita E. White.
THE CORPORATE GOVERNANCE AND LEGAL AFFAIRS COMMITTEE reviews and considers
major claims and litigation and legal, regulatory and related governmental
policy matters affecting the Company and its subsidiaries. The Committee
reviews and approves management policies and programs relating to compliance
with legal and regulatory requirements, business ethics and environmental
matters. The members of the Corporate Governance and Legal Affairs Committee
are: Bette B. Anderson, Robert A. Burnett, Edward C. Meyer, Benjamin F. Payton,
Vin Weber, Margita E. White and Kendrick R. Wilson III.
THE EXECUTIVE AND POLICY COMMITTEE exercises the powers of the Board in the
management of the business and affairs of the Company in the intervals between
meetings of the Board. The Committee reviews the long-range corporate strategies
formulated by senior management and the non-employee directors meet in
executive session to review the overall performance of the chief executive,
particularly with respect to the Company's long-range strategies. The members
of the Executive and Policy Committee are: Bette B. Anderson, Rand V. Araskog,
Nolan D. Archibald, Robert A. Burnett, Paul G. Kirk, Jr., Edward C. Meyer,
Benjamin F. Payton, Vin Weber, Margita E. White and Kendrick R. Wilson III.
THE GAMING AUDIT COMMITTEE reviews audit results and internal accounting,
control and surveillance procedures and policies employed in connection with the
Company's casino gaming activities. Pursuant to the requirements of certain
gaming laws, the employees primarily responsible for internal accounting and
internal surveillance at the Company's casinos report directly to the Gaming
Audit Committee. The members of the Gaming Audit Committee are: Robert A.
Bowman, Benjamin F. Payton and Margita E. White.
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THE NOMINATING COMMITTEE makes recommendations to the Board concerning the
organization, size and composition of the Board and its Committees, proposes
nominees for election to the Board and its Committees and considers the
qualifications, compensation and retirement of directors. The members of the
Nominating Committee are: Bette B. Anderson, Nolan D. Archibald, Edward C.
Meyer and Benjamin F. Payton.
The Nominating Committee will consider recommendations for director nominees
that are submitted by stockholders in writing to the Secretary of the Company.
The By-laws contain provisions relating to nominations for director at any
stockholders meeting.
THE PUBLIC AFFAIRS COMMITTEE reviews and defines the Company's social
responsibilities, including issues of significance to the Company and its
stockholders and employees. The members of the Public Affairs Committee are:
Robert A. Burnett, Paul G. Kirk, Jr., Benjamin F. Payton, Vin Weber and
Margita E. White.
The Board is comprised of eleven directors, only two of whom, Rand V. Araskog
and Robert A. Bowman, are officers of Destinations. The Board is divided into
three classes consisting of four directors in each of the first two classes and
three directors in the third class. The directors in Classes I, II and III will
come up for reelection at the Company's first, second and third annual meetings
of stockholders, respectively, and thereafter will serve staggered three-year
terms. The Company's four Class I directors are all nominees for reelection.
DIRECTORS' RETIREMENT POLICY
The Board has adopted a retirement policy that provides that (i) no person may
be nominated for election or reelection as a non-employee director after
reaching age 72 and (ii) no employee of Destinations or of any of its
subsidiaries (other than an employee who has served as chief executive of
Destinations) may be nominated for election or reelection as a director after
reaching age 65, unless the Board has specifically waived these age
requirements.
DIRECTORS' COMPENSATION
Members of the Board who are employees of Destinations or its subsidiaries are
not compensated for service on the Board or any Committee of the Board.
Non-employee directors receive a fee of $1,000 for each meeting of the Board
attended and for each meeting of a Committee attended. Members of the Board,
except for Mr. Araskog and Mr. Bowman, receive an annual retainer fee of $48,000
payable solely in restricted shares of Common Stock. See "Restricted Stock Plan
for Non-Employee Directors." Directors are reimbursed for travel expenses
incurred on behalf of the Company.
DIRECTORS' BENEFITS
Certain directors of the Company who were non-employee directors of ITT had been
offered participation in a group life insurance program and the ITT Group
Accident Program for Officers and Directors. The Board has adopted substantially
identical plans and programs (the Destinations Directors Group Life Plan and the
Destinations Group Accident Program for Officers and Directors, respectively).
The Destinations Directors Group Life Plan provides $100,000 of non-contributory
group life insurance to participating non-employee directors during their
service on the Board. The Destinations Group Accident Program for Officers and
Directors is a non-contributory group accidental death and dismemberment program
that provides each director $750,000 of coverage during his or her service on
the Board. Additional benefits are permitted to be purchased.
Destinations has assumed an unfunded retirement plan to provide benefits accrued
as of December 19, 1995 for its non-employee directors who were directors
of Old ITT on December 18, 1995. No future benefits are accruing under the plan.
The benefits are payable upon retirement from the Board at or after age 65
after completing at least five years of service on the Board, including service
on the Boards of Directors of ITT and Old ITT. Under the plan, directors
may indicate a preference, subject to certain conditions, to receive any accrued
benefit in the form of a single (discounted) lump-sum payment immediately
payable upon such director's retirement. Accrued
4
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benefits to the affected directors, Mrs. Anderson, Mr. Archibald, Mr. Burnett,
Mr. Kirk, Gen. Meyer, Dr. Payton and Mrs. White, presently have a total value of
$1,467,000 in the aggregate.
RESTRICTED STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
In connection with the Distribution, the Board adopted the 1997 Restricted Stock
Plan for the Non-Employee Directors (the "1997 Non-Employee Directors Plan").
The 1997 Non-Employee Directors Plan is designed to further the Company's
objectives of attracting and retaining individuals of ability as directors and
providing the directors with a closer identity with the interests of
Destinations' stockholders.
Under the 1997 Non-Employee Directors Plan, directors of the Company who are not
employees of Destinations or any of its subsidiaries automatically participate
in the 1997 Non-Employee Directors Plan. There are presently nine directors of
the Company who are eligible to participate in the 1997 Non-Employee Directors
Plan.
The 1997 Non-Employee Directors Plan is administered by the Compensation and
Personnel Committee of the Board. The Committee has the responsibility of
interpreting the 1997 Non-Employee Directors Plan and establishing the rules
appropriate for the administration of the 1997 Non-Employee Directors Plan.
Grants of restricted stock will be made automatically on the date of each annual
meeting of the Company's stockholders to each non-employee director elected at
the meeting or continuing in office following the meeting. The amount of the
award shall equal (and be in lieu of) the annual retainer in effect for the
calendar year within which the award date falls, divided by the fair market
value of Common Stock. "Annual retainer" is defined as the amount payable to a
director for service on the Board during the calendar year and does not include
meeting attendance fees. The annual retainer is presently set at $48,000. "Fair
market value" is defined as the average of the high and low sales price per
share of Common Stock on the date of the applicable annual meeting, as reported
on the New York Stock Exchange Composite Tape. A total of 120,000 shares are
reserved for issuance under the 1997 Non-Employee Directors Plan. The shares to
be issued may be treasury shares or newly issued shares of Common Stock. The
shares of Common Stock that are granted under the 1997 Non-Employee Directors
Plan are held in escrow and are subject to a restriction period (after which
restrictions lapse) which commences on the grant date and ends on the earliest
of (i) the fifth anniversary of the grant date, (ii) upon retirement at age 72,
(iii) upon a "change of control" (as defined) of Destinations, (iv) death, (v)
the onset of disability or (vi) resignation in certain cases of ill health,
relocation or entering into any governmental, diplomatic or other service or
employment. Except as provided above, any resignation from Board service within
the restriction period will result in forfeiture of the shares. Shares may not
be sold, assigned, transferred, pledged or otherwise disposed of during the
restriction period. Until such risk of forfeiture lapses or the shares are
forfeited, a director will not have the right to vote and to receive dividends
on the shares granted under the 1997 Non-Employee Directors Plan.
The Board may amend, suspend or discontinue the 1997 Non-Employee Directors Plan
at any time except that the Board may not, without stockholder approval, take
any action that would cause the 1997 Non-Employee Directors Plan to no longer
comply with Rule 16b-3 under the Securities Exchange Act of 1934. No amendment,
suspension or discontinuance of the 1997 Non-Employee Directors Plan may impair
a director's right under a restricted Common Stock award previously granted
without his or her consent.
The 1997 Non-Employee Directors Plan will terminate on December 31, 2007,
provided that grants of restricted Common Stock made prior to the termination of
the plan may vest following such termination in accordance with their terms.
No shares of restricted Common Stock have been granted to non-employee directors
under the 1997 Non-Employee Directors Plan.
EXECUTIVE OFFICERS OF THE CORPORATION
Set forth below is certain information as to Destinations' executive officers.
All of the Company's executive officers resigned from any positions held with
ITT effective the date of the Distribution.
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NAME, AGE AND POSITION
WITH THE COMPANY BIOGRAPHICAL DATA
- ------------------ -----------------
Rand V. Araskog, 65
Chairman and Chief Executive ..... Mr. Araskog was Chairman and Chief Executive
of ITT from December 1995 to 1997.
He has been a director of ITT since December
1995. In December 1996, he was also elected
Chairman of ITT Sheraton Corporation and
Caesars World, Inc. Prior to his election
as Chairman and Chief Executive of ITT,
he was Chairman, President and Chief
Executive of Old ITT.
Robert A. Bowman, 42
President and
Chief Operating Officer ......... Mr. Bowman was President and Chief
Operating Officer and a director of ITT
from December 1995 to 1997. From
September 1992 to December 1995, he was
Executive Vice President and Chief
Financial Officer of Old ITT. From April
1991 to September 1992, he was Executive
Vice President and Chief Financial Officer
of ITT Sheraton Corporation. Prior
to that he was Treasurer of the State of
Michigan.
Ann N. Reese, 44
Executive Vice President,
Chief Financial Officer
and Corporate Secretary .......... Ms. Reese was Executive Vice President
and Chief Financial Officer of ITT from
December 1995 to 1997. From
September 1992 to December 1995 she was
Senior Vice President and Treasurer of Old
ITT and prior to that time she was Vice
President and Assistant Treasurer of Old
ITT.
Richard S. Ward, 57
Executive Vice President and
General Counsel .................. Mr. Ward was Executive Vice President,
General Counsel and Corporate
Secretary of ITT from December 1995 to
1997. From May 1994
to December 1995, he was Executive Vice
President and General Counsel
of Old ITT. From September 1992 to May
1994 he was Senior Vice
President and General Counsel of Old ITT and
prior to that time he was
Vice President and Associate General
Counsel of Old ITT.
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NAME, AGE AND POSITION
WITH THE COMPANY BIOGRAPHICAL DATA
- ------------------ -----------------
Peter G. Boynton, 54
Senior Vice President of ITT
Destinations, Inc.
and President and Chief
Executive Officer of
Caesars World, Inc. .............. Mr. Boynton was a Senior Vice President
of ITT from December 1995 to
1997 and has been the President and Chief
Executive Officer of Caesars World, Inc.
since December 1995. From July 1995 to
December 1995 he was a Senior Vice President
of Old ITT and from February 1995 to
December 1995 he was also President and
Chief Operating Officer of Caesars World,
Inc. From 1982 to February 1995 he was
President and Chief Operating Officer of
Caesars Atlantic City Hotel/Casino.
Juan Cappello, 59
Senior Vice President and
the Director of Corporate
Relations ........................ Mr. Cappello was Senior Vice President
and the Director of Corporate
Relations of ITT from December 1995
to 1997. He was
also a Senior Vice President and the
Director of Corporate Relations of Old
ITT, a position he held since December 1984.
Jon F. Danski, 44
Senior Vice President and
Controller ....................... Mr. Danski was Senior Vice President
and Controller of ITT from December
1995 to 1997. From October
1993 to December 1995 he was
Senior Vice President and Controller
of Old ITT and prior to that
he was Vice President and General
Auditor of RJR Nabisco.
Nicholas J. Glakas, 52
Senior Vice President ............ Mr. Glakas was a Senior Vice
President of ITT from December 1995 to
1997. From October 1995
to December 1995 he was Senior
Vice President of Old ITT. From September
1992 to October 1995 he
was Vice President, Associate
General Counsel & Director of
Government Affairs of Old ITT
and prior to that time he was
Director of Government Affairs of
Old ITT.
Ralph W. Pausig, 63
Senior Vice President and the
Director of Human Resources ...... Mr. Pausig was a Senior Vice President
and the Director of Human Resources
of ITT from December 1995 to
1997. He was also a Senior Vice
President and the Director of Human
Resources of Old ITT, a position he
held since March 1987.
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NAME, AGE AND POSITION
WITH THE COMPANY BIOGRAPHICAL DATA
- ------------------ -----------------
Mark Thomas, 41
Senior Vice President and Director
of Corporate Development ......... Mr. Thomas was a Senior Vice Presiden
and Director of Corporate
Development of ITT from June 1997 to
1997. From October
1995 to June 1997 he was Vice
President and Director of Corporate
Development of ITT. From June 1994
to October 1995 he was Senior
Vice President and Director
of Corporate Development for ITT
Sheraton Corporation. From April
1994 to June 1994 he was Senior
Vice President and General Counsel
of Hilton Gaming Corporation,
a subsidiary of Hilton Hotels
Corporation. From April 1993 to
April 1994 he was Vice President
and General Counsel of Sheraton
Gaming Corporation. From May 1980
to April 1993 he held various
positions in the Law Department
of Holiday Corporation and its
successor corporation, The Promus
Companies Incorporated, the
parent company of Holiday Inns,
Hampton Inns, Embassy Suites,
Homewood Suites and Harrahs.
Elizabeth A. Tuttle, 41
Senior Vice President
and Treasurer .................... Ms. Tuttle was a Senior Vice President
and Treasurer of ITT from
December 1995 to 1997.
From February 1995 to December 1995
she was Vice President and Assistant
Treasurer of Old ITT. From
October 1993 to February 1995 she
was Assistant Treasurer & Director
of Capital Markets of Old ITT. From July
1992 to October 1993 she was
Assistant Treasurer & Manager of Financial
Planning and Operations of
Old ITT and prior to that time she was
Manager of Financial Planning
and Operations of Old ITT.
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NAME, AGE AND POSITION
WITH THE COMPANY BIOGRAPHICAL DATA
- ------------------ ------------------
Daniel P. Weadock, 58
Senior Vice President of ITT
Destinations, Inc. and President
and Chief Executive Officer of
ITT Sheraton Corporation ......... Mr. Weadock was a Senior Vice
President of ITT and the President and
Chief Executive Officer of ITT Sheraton
Corporation from December 1995
to 1997. In connection with the
Distribution, Mr. Weadock
was appointed President and Chief
Executive Officer of ITT Sheraton
Corporation, a newly formed subsidiary
of the Company which is
responsible for the Company's hotel
operations. From July 1995 to
December 1995, he was a Senior Vice
President of Old ITT. From
November 1993 to December 1995 he was
also the President and Chief
Operating Officer of ITT Sheraton
Corporation. Prior to that time he
was Chairman, President and Chief
Executive Officer of ITT Communications
and Information Services, Inc.
The Company expects that Mr. Ward will replace Ms. Reese as Corporate Secretary
following completion of Mr. Ward's licensing by the gaming authorities of the
State of Nevada.
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ITEM NO. 1
ELECTION OF CLASS I DIRECTORS
At the 1997 Annual Meeting, four Class I directors are to be elected to hold
office until the fourth Annual Meeting of Destinations' stockholders and until
their successors are elected and qualified. UNLESS DIRECTED TO THE CONTRARY, THE
SHARES REPRESENTED BY VALID PROXIES WILL BE VOTED FOR THE ELECTION OF ALL FOUR
NOMINEES.
The Board has no reason to believe that any nominee will be unable to serve as a
Class I director. If for any reason a nominee should become unable to serve, the
shares represented by valid proxies will be voted for the election of such other
person as the Board may recommend or the Board may reduce the number of Class I
directors to eliminate the vacancy.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE BOARD'S NOMINEES AS CLASS I DIRECTORS
OF THE COMPANY.
A brief summary of each of the Board's nominees' principal occupation, business
affiliations and other information follows:
[PHOTO] BETTE B. ANDERSON
PRINCIPAL OCCUPATION --
VICE CHAIRMAN OF KELLY,
ANDERSON, PETHICK &
ASSOCIATES, INC.,
CONSULTANTS
DIRECTOR SINCE 1997
(DIRECTOR OF ITT 1995-1997;
DIRECTOR OF OLD ITT 1981-1995)
Mrs. Anderson, age 68, joined Kelly, Anderson, Pethick & Associates, Inc., a
Washington-based management firm, in 1990, was elected president in 1991 and was
elected Vice Chairman in 1995. She had previously been executive vice president
of the firm. Mrs. Anderson was formerly a partner in the public affairs company
of Anderson, Benjamin, Read & Haney. She was Undersecretary of the United States
Treasury from 1977 to 1981. Mrs. Anderson was affiliated for 27 years with the
Citizens and Southern National Bank of Savannah, having served as a vice
president until she assumed the Treasury post. Mrs. Anderson is a director of
ITT Educational Services, Inc., The Hartford Financial Services Group, Inc.,
American Banknote Corp., United Payors & United Providers Inc., the Miller
Foundation and the University of Virginia.
10
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[PHOTO] ROBERT A. BURNETT
PRINCIPAL OCCUPATION --
CHAIRMAN AND CEO (RETIRED)
OF MEREDITH CORPORATION,
DIVERSIFIED MEDIA COMPANY
DIRECTOR SINCE 1997
(DIRECTOR OF ITT 1995-1997;
DIRECTOR OF OLD ITT 1985-1995)
Mr. Burnett, age 70, served as chairman of Meredith Corporation from 1988 until
his retirement in 1992. He served as president and chief executive officer
from 1977 to 1989. Mr. Burnett is a director of The Hartford Financial Services
Group, Inc., ITT Industries, Inc., Meredith Corporation, Whirlpool
Corporation and MidAmerican Energy Corp.
[PHOTO] EDWARD C. MEYER
PRINCIPAL OCCUPATION -- CHAIRMAN OF MITRETEK SYSTEMS,
PROFESSIONAL AND TECHNICAL SERVICES PROVIDER DIRECTOR
SINCE 1997 (DIRECTOR OF ITT 1995-1997; DIRECTOR OF OLD
ITT 1986-1995)
General Meyer, age 68, retired in 1983 as Chief of Staff of the United States
Army. He is a director of FMC Corporation and its joint venture company in
Turkey, Savunma Sanayii A.S., Aegon USA, the Brown Group and GRC International.
General Meyer is also a director of ITT Corporation (which is expected to change
its name to ITT Information Services, Inc.) and ITT Industries, Inc. He is a
managing partner of Cilluffo Associates Limited Partnership, which owns
approximately 20% of GRC International.
11
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[PHOTO] VIN WEBER PRINCIPAL OCCUPATION -- PARTNER AT CLARK &
WEINSTOCK, INC., PUBLIC RELATIONS FIRM DIRECTOR SINCE
1997 (DIRECTOR OF ITT 1996-1997)
Mr. Weber, age 45, is a partner at Clark & Weinstock, Inc., a Washington-based
public relations firm. He is vice chairman and co-founder of Empower
America, a public interest group. He is also a senior fellow at the University
of Minnesota's Humphrey Institute of Public Affairs and co-director of the
Institute's Policy Forum. Mr. Weber served in the U.S. House of Representatives
from 1980 to 1992, representing Minnesota's 2nd district. He is also a
director of Department 56, Inc., ITT Educational Services, Inc., Mark Centers
Trust, Inc., OneLink Communications, Inc. (formerly MarketLink, Inc.) and TCF
Financial Corporation.
Only the Company's Class I directors are up for reelection at the 1997 Annual
Meeting. A brief summary of each of the Board's Class II and Class III
directors' principal occupation, business affiliations and other information
follows:
CLASS II -- TERM EXPIRES AT SECOND ANNUAL MEETING:
[PHOTO] ROBERT A. BOWMAN
PRINCIPAL OCCUPATION --
PRESIDENT AND CHIEF OPERATING
OFFICER OF ITT DESTINATIONS, INC.
DIRECTOR SINCE 1997
(DIRECTOR OF ITT 1995-1997)
Mr. Bowman, age 42, is President and Chief Operating Officer of the Company.
Prior to the Distribution, Mr. Bowman served as President and Chief Operating
Officer of ITT. Mr. Bowman became President and Chief Operating Officer of ITT
in December 1995. Prior to December 1995, he served with Old ITT as
executive vice president and chief financial officer since September 1992. From
April 1991 to September 1992, Mr. Bowman served as executive vice president
and chief financial officer of ITT Sheraton Corporation. Mr. Bowman was
Treasurer of the State of Michigan from 1983 until December 1990. Mr. Bowman is
a director of ITT Educational Services, Inc. and a trustee of The Rockefeller
Foundation.
12
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[PHOTO] PAUL G. KIRK, JR.
PRINCIPAL OCCUPATION --
OF COUNSEL TO
SULLIVAN & WORCESTER,
LAW FIRM
DIRECTOR SINCE 1997
(DIRECTOR OF ITT 1995-1997;
DIRECTOR OF OLD ITT 1989-1995)
Mr. Kirk, age 59, became a partner in the law firm of Sullivan & Worcester in
1977 and is presently of Counsel to the firm. He served as Chairman of the
Democratic National Committee from 1985 to 1989 and as Treasurer from 1983 to
1985. Following his resignation in 1989 as chairman of the Democratic National
Committee, he returned to Sullivan & Worcester as a partner in general corporate
practice at the firm's Boston and Washington offices. Mr. Kirk is a director of
Kirk-Sheppard & Co., Inc., of which he also is Chairman and Treasurer. He is
also a director of the Bradley Real Estate Corporation, The Hartford Financial
Services Group, Inc. and Rayonier Inc.
[PHOTO] BENJAMIN F. PAYTON
PRINCIPAL OCCUPATION --
PRESIDENT OF TUSKEGEE
UNIVERSITY
DIRECTOR SINCE 1997
(DIRECTOR OF ITT 1995-1997;
DIRECTOR OF OLD ITT 1987-1995)
Dr. Payton, age 64, has been President of Tuskegee University in Alabama
since 1981. Previously he had served as President of Benedict College and as
Program Officer, education and public policy, of the Ford Foundation. Dr.
Payton is a director of Amsouth Bancorporation, the Liberty Corporation, Praxair
Corporation, SONAT Inc., Morrisons, Inc., Ruby Tuesday, Inc., the Southern
Regional Council and the Alabama Shakespeare Festival.
13
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[PHOTO] KENDRICK R. WILSON III
PRINCIPAL OCCUPATION --
MANAGING DIRECTOR OF
LAZARD FRERES & CO. LLC,
INVESTMENT BANKERS
DIRECTOR SINCE 1997
(DIRECTOR OF ITT 1996-1997)
Mr. Wilson, age 50, joined Lazard Freres & Co. LLC in 1989 after serving as
founder and President of Ranieri Wilson & Co., a merchant banking firm. Prior
thereto, he was Senior Executive Vice President and a director of E.F. Hutton
& Co. and Managing Director in the financial institutions group of Salomon
Brothers Inc. Mr. Wilson is a director of American Buildings Company, Inc.,
American Marine Holdings, Inc., Bank United and Meigher Communications, Inc. He
is also a trustee of BlackRock Asset Investors.
CLASS III -- TERM EXPIRES AT THIRD ANNUAL MEETING:
[PHOTO] RAND V. ARASKOG
PRINCIPAL OCCUPATION --
CHAIRMAN AND CHIEF EXECUTIVE OF
ITT DESTINATIONS, INC.
DIRECTOR SINCE 1997
(DIRECTOR OF ITT 1995-1997;
DIRECTOR OF OLD ITT 1977-1995)
Mr. Araskog, age 65, is Chairman and Chief Executive of the Company. Prior to
the Distribution, Mr. Araskog served as Chairman and Chief Executive of ITT.
Mr. Araskog became Chairman and Chief Executive of ITT in December 1995. In
December 1996, Mr. Araskog became Chairman of ITT Sheraton Corporation and
Caesars World, Inc. Prior to December 1995, since 1966, he served with Old
ITT, including as Chief Executive from 1979, Chairman from 1980 and President
from 1991. He is a director of Alcatel Alsthom of France, Dow Jones & Company,
Inc., ITT Corporation (which is expected to change its name to ITT
Information Services, Inc.), ITT Educational Services, Inc., The Hartford
Financial Services Group, Inc., ITT Industries, Inc., Rayonier Inc. and Shell
Oil Company.
14
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[PHOTO] NOLAN D. ARCHIBALD
PRINCIPAL OCCUPATION --
CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER OF
THE BLACK & DECKER CORPORATION,
CONSUMER AND COMMERCIAL
PRODUCTS COMPANY
DIRECTOR SINCE 1997
(DIRECTOR OF ITT 1995-1997;
DIRECTOR OF OLD ITT 1986-1988 AND 1991-1995)
Mr. Archibald, age 54, joined Black & Decker in 1985 as President and Chief
Operating Officer and since that time has been elected Chief Executive Officer
and Chairman. Prior to joining Black & Decker, he was Senior Vice President and
President of the Consumer and Commercial Products Group of the Beatrice
Companies, Inc. and held various executive and marketing positions with the
Beatrice Companies, Inc. during the period 1977 to 1985. Mr. Archibald is also a
director of Brunswick Corporation.
[PHOTO] MARGITA E. WHITE
PRINCIPAL OCCUPATION --
PRESIDENT OF THE ASSOCIATION
FOR MAXIMUM SERVICE
TELEVISION, INC.,
TELEVISION TRADE ASSOCIATION
DIRECTOR SINCE 1997
(DIRECTOR OF ITT 1995-1997;
DIRECTOR OF OLD ITT 1980-1995)
Mrs. White, age 60, has been President of the Association for Maximum Service
Television, Inc. since 1987. She served in the United States federal government
as a member of the Federal Communications Commission and as a Director of the
White House Office of Communications, Assistant Press Secretary to President
Ford, and Assistant Director of the United States Information Agency. She is a
director of ITT Corporation (which is expected to change its name to ITT
Information Services, Inc.), ITT Educational Services, Inc., The Growth Fund of
Washington, Leitch Technology Corp., Washington Mutual Investors Fund and a
trustee of Mitretek Systems.
15
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ITEM NO. 2
RATIFICATION OF THE APPOINTMENT
OF INDEPENDENT AUDITORS
In accordance with the recommendation of the Audit Committee, the Board has
appointed Arthur Andersen LLP as independent auditors of the Company for 1997,
subject to ratification by the stockholders. If the stockholders do not ratify
the appointment of Arthur Andersen LLP, the selection of other independent
auditors will be considered by the Audit Committee and the Board.
Arthur Andersen LLP has served as independent auditors of ITT and Old ITT and
most of their respective subsidiaries for many years, and its long-term
knowledge of ITT has enabled it to carry out its audits with effectiveness and
efficiency. In keeping with the established policy of Arthur Andersen LLP,
partners and employees of the firm engaged in auditing Destinations are
periodically rotated, thus giving the Company the benefit of new expertise and
experience. Arthur Andersen LLP personnel regularly attend meetings of the Audit
Committee. Arthur Andersen LLP's fees for the 1996 audit of ITT totaled
approximately $2.3 million, of which $1.9 million related to Destinations.
Representatives of Arthur Andersen LLP will attend the Annual Meeting, will have
the opportunity to make a statement if they desire to do so, and will be
available to respond to appropriate questions.
THE BOARD RECOMMENDS THAT YOU VOTE FOR RATIFICATION OF THE APPOINTMENT OF ARTHUR
ANDERSEN LLP AS INDEPENDENT AUDITORS OF THE COMPANY.
ITEM NO. 3
AMENDMENT TO DESTINATIONS'
ARTICLES OF INCORPORATION TO CHANGE THE COMPANY'S NAME TO "ITT CORPORATION"
In connection with the Distribution, stockholders are being asked, pursuant to
the Nevada General Corporation Law, to vote to amend the Articles of
Incorporation of Destinations to change the Company's name to "ITT Corporation."
At ITT's annual meeting, stockholders of ITT will be asked to amend ITT's
Restated Articles of Incorporation to change its name to "ITT Information
Services, Inc." The proposed amendment to Destinations' Articles of
Incorporation will be effective only if ITT's stockholders vote in favor of
changing ITT's name to "ITT Information Services, Inc." It would not be possible
for two publicly traded companies to have the same name.
Stockholders of Destinations and ITT are being asked to approve these name
changes to minimize confusion to the public and to investors and to reflect
that, since the Distribution, Destinations has conducted the hotel and gaming
businesses conducted by ITT prior to the Distribution and ITT's principal
businesses are now its telephone directories publishing businesses.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE AMENDMENT OF DESTINATIONS' ARTICLES
OF INCORPORATION TO CHANGE THE COMPANY'S NAME TO "ITT CORPORATION."
16
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ITEM NO. 4
OTHER MATTERS
As of the date of this Proxy Statement, the Board has no knowledge of any
business which will be presented for consideration at the Annual Meeting other
than that described above. As to such other business, if any, that may properly
come before the meeting, the persons named as proxies will vote in accordance
with their judgment.
STOCKHOLDER PROPOSALS FOR SECOND ANNUAL MEETING
Proposals submitted by stockholders for inclusion in the Proxy Statement for
Destinations' next annual meeting must be received by the Company no later than
the close of business on . Address your proposals to Secretary, ITT
Destinations, Inc., 1330 Avenue of the Americas, New York, New York 10019-5490.
Please note that proposals must comply with all of the requirements of Rule
14a-8 under the Securities Exchange Act of 1934 as well as the requirements set
forth in the By-laws. A copy of the By-laws may be obtained from the Secretary
of the Company upon request.
REPORT OF THE COMPENSATION
AND PERSONNEL COMMITTEE
The executive compensation program of the Company is designed to attract, reward
and retain skilled executives and to provide incentives which vary depending
upon the attainment of short-term operating performance objectives and strategic
long-term performance goals. The major objective of the long-term incentive
program is to provide executives with incentives directly linked to the creation
of stockholder value. The program overall is intended to be highly leveraged so
that when performance goals are exceeded, executives can earn better than
average compensation and, conversely, when such goals are not achieved,
compensation will be below competitive levels.
This report sets forth the executive compensation policies of the Compensation
and Personnel Committee of the Board with respect to the executive officers of
the Company. Immediately following this report is a performance graph which
compares the cumulative total return of Destinations' Common Stock to the
cumulative total return of the S&P 500 Index and a composite index composed of
for the period beginning on , 1997, when Destinations' Common Stock
began to trade on the New York Stock Exchange on a when-issued basis, through
, 1997, assuming the investment of $100 in each on , 1997.
The amounts of all compensation awarded to, earned by, or paid to the chief
executive officer and the four other most highly compensated executive officers
of ITT who were serving as executive officers of the Company at , 1997
are set forth on the Summary Compensation Table following the performance graph.
THE COMMITTEE'S ROLE
The Compensation and Personnel Committee is responsible for the administration
of the executive compensation program, and it reviews all proposed new or
amended employee benefit plans. The Committee is currently composed of the six
non-employee directors named at the end of this report, none of whom is eligible
to participate in any of the plans which make up the Company's executive
compensation program. It is the policy of the Board to periodically rotate the
members and chairperson of the Committee to assure that fresh points of view are
part of the Committee's deliberations.
The Committee may select consultants from nationally recognized independent
compensation and benefits consulting firms to provide expert advice on any
aspect of the executive compensation program. The Committee may request written
reports or hold private meetings with such consultants in order to get
independent opinions on compensation proposals. The Committee may meet in
executive session which is not attended by any executives or managers of the
Company. The Committee regularly reports its activities to the Executive and
Policy Committee of the Board.
THE COMPENSATION PROGRAM
GENERAL. The compensation program for executives of the Company presently
consists of base salary, annual incentive bonus, long-term incentives and
employee benefits. It is the intent of the Committee that incentives based upon
long-term performance should be the major compensation component for senior
executives.
17
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BASE SALARY. Salaries are set and administered to reflect the value of the job
in the marketplace and individual contribution and performance. Salaries provide
a necessary element of stability in the total pay program and, as such, are not
subject to significant variability. Salary increases are based primarily on
merit. During 1996, ITT evaluated executive salaries in relation to a
competitive annualized merit increase guideline of 4% for expected levels of
individual performance. Actual increases can vary from the guideline depending
primarily on individual performance. The normal interval between salary reviews
for senior executives is 18 months.
Mr. Araskog's base salary was not increased during 1996.
Among the other named officers, Mr. Bowman's salary was raised to $800,000
effective August 1, 1996, an increase of $100,000 after 12 months. Mr. Weadock's
annual salary was increased from $525,000 to $600,000 on November 1, 1996 after
an interval of 18 months. Mr. Boynton's annual salary was increased from
$650,000 to $725,000 during 1996. Ms. Reese's annual salary was increased from
$400,000 to $460,000 effective December 1, 1996 after 12 months.
ANNUAL INCENTIVE BONUS. Under the ITT Annual Incentive Bonus Plan, the amounts
of annual bonus awards are based upon corporate financial performance for the
year compared to annual performance goals established by the Committee at the
beginning of the year. For 1996, such performance goal for ITT was based on
EBITDA. Under a leveraged performance/payout schedule, the performance factor
generated a standard bonus adjustment factor of 113%. The calculated bonus
amounts for 1996 performance for Messrs. Araskog and Bowman and for Ms. Reese
are shown in the Summary Compensation Table following this report and were
determined strictly in accordance with the above described formula and standard
bonus adjustment factor. The bonus factor for Mr. Weadock reflects the
performance measurement formula applicable to ITT Sheraton Corporation; the
bonus amount for Mr. Boynton reflects the performance measurement formula
applicable to Caesars World, Inc. The bonus amounts paid to Messrs. Araskog,
Bowman, Weadock and Boynton and Ms. Reese were reviewed and approved by the
Committee prior to payment.
STOCK OPTION AWARDS. Stock option awards provide long-term
incentives which are directly related to the performance of our Common
Stock. Options generally have a 10-year term and closely align the executive's
interests with those of other stockholders. In connection with the Distribution,
executives of the Company surrendered their options to purchase the common stock
of ITT in exchange for options to purchase the Common Stock of the Company.
These options were issued in amounts and at exercise prices designed to preserve
the economic benefits of the surrendered options. The tables and other
information contained in this Proxy Statement reflect options to purchase the
common stock of ITT and do not reflect this recent issuance of the options to
purchase the Common Stock of the Company.
During 1996, there were no awards of restricted common stock of ITT.
EMPLOYEE BENEFITS. Executives also participate in the Company's broad-based
employee benefits program which includes a pension program, a 401(k)
retirement savings plan, group medical and dental coverage,
group life insurance and other benefit plans. Further details on the pension
plans in which Messrs. Araskog, Bowman, Weadock, and Boynton and Ms. Reese
participate are provided on pages 24 through 27.
In 1995, ITT adopted the ITT Deferred Compensation Plan, which Destinations
assumed in connection with the Distribution. Under this plan, executives with a
base salary of $200,000 or more may elect to defer receipt of all or a portion
of their annual bonus. Destinations will credit interest on the deferred
compensation based upon the performance of benchmark investment funds made
available under the plan and selected by the executive.
DISCUSSION OF THE COMMITTEE'S POLICY REGARDING
QUALIFYING COMPENSATION FOR DEDUCTIBILITY UNDER
SECTION 162(M) OF THE INTERNAL REVENUE CODE
Tax legislation known as the Omnibus Budget Reconciliation Act of 1993 ("OBRA")
was passed by Congress and signed into law by the President
18
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in August 1993. Under OBRA, which created Code subsection 162(m), the
allowable deduction for compensation paid or accrued with
respect to the chief executive officer and each of the four
most highly compensated executive officers of a publicly held
corporation is limited to no more than $1 million per year for taxable years
beginning on or after January 1, 1994. Certain types of compensation are
exempted from this deduction limitation, including payments subject to: (a) the
attainment of an objective performance goal or goals; (b) an outside director
requirement; and (c) a stockholder approval requirement. Proposed regulations
issued by the Internal Revenue Service in 1993 and 1994 provided broad guidance
to companies, but were not intended to be comprehensive.
It is the policy of the Committee to establish a competitive executive
compensation program and to design and administer incentive plans which relate
rewards directly to the overall performance of the Company and the individual
executive's specific contribution. To qualify pay for exemption from Section
162(m) as "performance-based compensation," the requirements of OBRA and the
proposed regulations generally preclude the use of discretion in determining
specific amounts of compensation. Accordingly, base salaries are subject to the
$1 million limit on deductible compensation as are annual bonus amounts where
discretion is used to increase an executive's payment above an amount determined
strictly by an objective formula.
In light of OBRA, it is the policy of the Committee to modify where practicable
the executive incentive plans so as to maximize the tax deductibility of
compensation paid to its top executive officers.
The Committee believes that the overall performance of its most senior
executives cannot in all cases be reduced to a fixed formula and that the
prudent use of discretion in determining pay levels is in the best interest of
the Company and its stockholders. Under some circumstances, the Committee's use
of discretion in determining appropriate amounts of compensation may be
essential. In those situations where discretion is used by the Committee,
compensation may not be fully deductible. The Committee does not believe that
such loss of deductibility will have any material impact on the financial
condition of the Company.
This report is furnished by the members of the Compensation and Personnel
Committee. The members of the Compensation and Personnel Committee are listed
below.
BETTE B. ANDERSON
NOLAN D. ARCHIBALD
ROBERT A. BURNETT
PAUL G. KIRK, JR., CHAIRMAN
EDWARD C. MEYER
MARGITA E. WHITE
19
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CORPORATE PERFORMANCE GRAPH
The following graph compares the cumulative total return of Destinations' Common
Stock to the cumulative total return of the S&P 500 Index and a composite index
composed of (the "Peer Index") for the period beginning on , 1997,
when Destinations' Common Stock began to trade on the New York Stock Exchange on
a when-issued basis, through , 1997, assuming the investment in each of $100
on , 1997.
CUMULATIVE TOTAL RETURN
(BASED ON AN INVESTMENT OF $100 BEGINNING , 1997)
[To be provided]
Source: Georgeson & Company Inc.
20
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COMPENSATION OF EXECUTIVE OFFICERS
The following table discloses compensation received by Destinations' Chief
Executive and the four other most highly compensated executive officers for
services rendered to ITT and Old ITT for the fiscal years ended December 31,
1996, December 31, 1995 and December 31, 1994:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
----------------------------------------------------
OTHER
ANNUAL
COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) SATION(2)($)
----------------------------- ---- -------- -------- -----------
<S> <C> <C> <C> <C>
Rand V. Araskog ................... 1996 2,000,000 2,260,000 347,268
Chairman and Chief 1995 2,000,000 2,330,800 251,063
Executive 1994 1,625,000 2,405,000 219,457
Robert A. Bowman .................. 1996 741,667 813,600 75,117
President and Chief 1995 583,333 611,800 44,942
Operating Officer 1994 456,250 471,750 25,534
Daniel P. Weadock ................. 1996 537,500 757,300 55,287
Senior Vice President of 1995 516,667 398,800 433,646
ITT Destinations, Inc.; 1994 500,000 385,000 13,408
President and Chief
Executive Officer of ITT
Sheraton Corporation
Peter G. Boynton (1) .............. 1996 682,583 15,200 694,276
Senior Vice President of 1995 578,117 299,776 105,288
ITT Destinations, Inc.; 1994 -- -- --
President and Chief
Executive Officer of
Caesars World, Inc.
Ann N. Reese ...................... 1996 405,000 389,900 47,910
Executive Vice President 1995 303,571 252,300 45,369
and Chief Financial Officer 1994 263,333 210,000 33,738
</TABLE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
--------------------------------------
AWARDS PAYOUTS
-------------------------- --------
LONG-TERM
RESTRICTED SECURITIES INCENTIVE ALL OTHER
STOCK UNDERLYING PLAN COMPEN-
NAME AND PRINCIPAL POSITION AWARDS($) OPTIONS(3)(#) PAYOUTS SATION(4)($)
----------------------------- ---------- ------------- --------- ------------
<S> <C> <C> <C> <C>
Rand V. Araskog ................... -- 150,000 -- 422,280
Chairman and Chief 2,718,750 429,971 2,625,000 449,962
Executive -- 429,971 -- 58,656
Robert A. Bowman .................. -- 100,000 -- 25,625
President and Chief 1,087,500 143,324 900,000 37,380
Operating Officer -- 143,324 -- 13,844
Daniel P. Weadock ................. -- 40,000 -- 18,281
Senior Vice President of -- 59,718 1,280,000 44,321
ITT Destinations, Inc.; -- 83,605 -- 17,500
President and Chief
Executive Officer of ITT
Sheraton Corporation
Peter G. Boynton (1) .............. -- 40,000 -- 11,705
Senior Vice President of -- 59,718 -- 14,500
ITT Destinations, Inc.; -- -- -- --
President and Chief
Executive Officer of
Caesars World, Inc.
Ann N. Reese ...................... -- 40,000 -- 14,008
Executive Vice President 543,750 71,662 113,600 30,018
and Chief Financial Officer -- 71,662 -- 10,998
</TABLE>
- --------------------
(1) Mr. Boynton became an executive officer of Old ITT following the January
1995 acquisition of Caesars World, Inc. As a result, the 1994 compensation
paid to Mr. Boynton by Caesars World, Inc. has not been included.
(2) Amounts shown in this column are tax reimbursement allowances, which are
intended to offset the inclusion in taxable income of the value of certain
benefits, except that: (a) the amounts shown for Mr. Araskog also include
$164,066, $92,224 and $128,873 in 1996, 1995 and 1994, respectively, for
personal benefits including tax and financial counseling and transportation
services, (b) the amount shown for Mr. Bowman in 1996 also includes $40,309
for personal benefits including tax and transportation services, (c) the
amount shown for Mr. Weadock in 1995 includes $426,597 in relocation
allowance, (d) the amounts shown for Mr. Boynton include $513,463 and
$41,074 in 1996 and 1995, respectively, in relocation allowances and (e) the
amounts shown for Ms. Reese also include $25,602, $22,186 and $20,973 in
1996, 1995 and 1994, respectively, for personal benefits including tax and
transportation services.
(3) The named executives do not hold any stock appreciation rights in connection
with the options shown above. The options shown for all years are options to
purchase the common stock of ITT. The options for years prior to 1996 are
substitute options which replaced surrendered options originally granted by
Old ITT before the spin-off of ITT in 1995.
(4) The amounts shown in this column are contributions by ITT under the ITT
401(k) Retirement Savings Plan and, in the case of Messrs. Araskog, Bowman
and Weadock and Ms. Reese, the ITT Excess Savings Plan, which are defined
contribution plans. Under such plans, ITT made a matching contribution in an
amount equal to 50% of an employee's contribution, such matching
contribution not to exceed two and one-half percent (2.5%) of such
employee's salary. Under these plans, ITT also made a non-matching
retirement contribution equal to one percent (1%) of an employee's salary.
In the case of Mr. Araskog, the amounts also include $353,113 and $354,156
paid in 1996 and 1995, respectively, by ITT and Old ITT for premiums on a
split-dollar life insurance policy maintained jointly for Mr. and Mrs.
Araskog. Destinations is entitled to be reimbursed for its payments with
respect to such policy upon the earlier to occur of (i) the death of Mr.
Araskog or Mrs. Araskog, whichever occurs later, and (ii) the date on which
the cash surrender value of the policy is sufficient to repay amounts paid
by ITT or Destinations and continue to sustain the policy until the year
2035, which is expected to occur at the end of the year 2008.
In the case of Mr. Boynton, the amount shown for 1996 includes a life
insurance premium of $8,538 paid by ITT.
21
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ANNUAL INCENTIVE BONUS PLAN
Under the ITT Annual Incentive Bonus Plan, the amounts of annual bonus awards
are based upon corporate financial performance for the year compared to annual
performance goals established by the Compensation and Personnel Committee at the
beginning of the year. For 1996, such performance goal for ITT was based on
EBITDA. Under a leveraged performance/payout schedule, the performance factor
generated a standard bonus adjustment factor of 113%. The calculated bonus
amounts for 1996 performance for Messrs. Araskog and Bowman and for Ms. Reese
are shown in the Summary Compensation Table set forth above and were determined
strictly in accordance with the above described formula and standard bonus
adjustment factor. The bonus factor for Mr. Weadock reflects the performance
measurement formula applicable to ITT Sheraton Corporation; the bonus amount for
Mr. Boynton reflects the performance measurement formula applicable to Caesars
World, Inc. The bonus amounts paid to Messrs. Araskog, Bowman, Weadock and
Boynton and Ms. Reese were reviewed and approved by the Compensation and
Personnel Committee prior to payment.
OPTION GRANTS OF ITT COMMON STOCK TO THE
COMPANY EXECUTIVES IN LAST FISCAL YEAR
The following table sets forth as to the named executives information relating
to options granted by ITT from January 1, 1996 through December 31, 1996.
<TABLE>
<CAPTION>
STOCK OPTION GRANTS IN 1996
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF % OF TOTAL RATES OF STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED EXERCISE OPTION TERM
OPTIONS TO EMPLOYEES PRICE(3) EXPIRATION -----------------------------
NAME GRANTED(L)(#) IN 1996(2) ($/SHARE) DATE 5%($) 10%($)
- ------ ------------- -------------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Rand V. Araskog(4) .... 150,000 8.6 55.88 2/8/06 5,271,000 13,359,000
Robert A. Bowman(4) ... 100,000 5.7 55.88 2/8/06 3,514,000 8,906,000
Daniel P. Weadock(4) .. 40,000 2.3 55.88 2/8/06 1,405,600 3,562,400
Peter G. Boynton(4) ... 40,000 2.3 55.88 2/8/06 1,405,600 3,562,400
Ann N. Reese(4) ....... 40,000 2.3 55.88 2/8/06 1,405,600 3,562,400
</TABLE>
- -----------------
(1) The numbers in this column represent options to purchase the common stock of
ITT. Options to purchase the common stock of ITT granted in 1996 have been
converted into options to purchase Destinations Common Stock in a manner
designed to preserve the economic benefits of the existing options to
officers of Destinations.
(2) Percentages indicated are based on a total of 1,741,546 options granted to
457 employees of ITT during 1996.
(3) The exercise price per share is 100% of the fair market value of a share of
the common stock of ITT on the date of grant. This exercise price will be
adjusted to reflect the conversion into options to purchase Destinations
Common Stock in a manner designed to preserve the economic benefits of the
options to officers of Destinations. The exercise price may be paid in cash
or in shares of Destinations Common Stock valued at their fair market value
on the date of exercise. Options granted on February 6, 1996 are not
exercisable until the trading price of the common stock of ITT equals or
exceeds $69.85 per share for five consecutive trading days at which time
two-thirds of the options will be exercisable; when the trading price equals
or exceeds $78.23 per share for five consecutive days, the options will be
fully exercisable. These exercise prices have not been adjusted to give
effect to the Distribution. Notwithstanding the above, the options will be
fully exercisable after February 6, 2005, but not later than February 8,
2006.
(4) Securities underlying options to purchase the common stock of ITT granted in
1997 for such individuals are as follows: Mr. Araskog, 162,500 options; Mr.
Bowman, 108,300 options; Mr. Weadock, 43,300 options; Mr. Boynton, 43,300
options; and Ms. Reese, 43,300 options. These options granted on February 4,
1997 are not exercisable until the trading price of the common stock of ITT
equals or exceeds $70.94 per share for five consecutive trading days, at
which two-thirds of these options will be exercisable. When the trading
price of the common stock of ITT equals or exceeds $79.45 for five
consecutive trading days, these options will be fully exercisable. These
exercise prices have not been adjusted to give effect to the Distribution.
22
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AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth as to the named executives information regarding
options to purchase the common stock of ITT exercised during 1996 and the value
of in-the-money outstanding options to purchase the common stock of ITT at
December 31, 1996.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED,
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS HELD AT
SHARES FISCAL YEAR END (#) FISCAL YEAR END ($)(1)
ACQUIRED ON VALUE ------------------------------- ----------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE EXERCISABLE
- ----- ------------ ----------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Rand V. Araskog ........... -- -- 1,251,617 150,000 6,718,105 --
Robert A. Bowman .......... -- -- 521,653 100,000 4,357,947 --
Peter G. Boynton .......... -- -- 322,186 40,000 -- --
Daniel P. Weadock ......... -- -- 59,718 40,000 3,569,868 --
Ann N. Reese .............. -- -- 236,544 40,000 1,797,819 --
</TABLE>
- -----------------
(1) Based on the New York Stock Exchange consolidated trading closing price of
the common stock of ITT on December 31, 1996 of $43.375.
SEVERANCE AGREEMENTS
Destinations has assumed the ITT Corporation Senior Executive Severance Pay
Plan, a severance pay plan which applies to senior executives of the Company who
are U.S. citizens or who are employed in the U.S., including all executive
officers of the Company other than Mr. Araskog and the executive officers and
other employees who are covered by the severance agreements described below.
Under the plan, if a participant's employment is involuntarily terminated by the
Company, other than for cause or as a result of other occurrences specified in
the plan, or such executive terminates employment for good reason within two
years following a Change in Control of the Company (as defined), the participant
is entitled to receive severance consisting of (i) a lump-sum payment equal to
the sum of (A) two times the executive's annual base salary in effect
immediately prior to the executive's termination of employment and (B) for
certain designated employees, including the executive officers covered by the
plan, two times the highest bonus paid or awarded to the executive under the
Company's executive compensation plans in respect of the three years immediately
preceding the Change in Control, (ii) continued welfare benefits, fringe
benefits and perquisites for two years and (iii) one year of outplacement
services. The plan includes pre- and post-Change in Control offset provisions
for other compensation from the Company and requirements on the part of
executives with respect to noncompetition and compliance with the Company's Code
of Corporate Conduct. All severance payable under the plan is subject to the
same Gross-Up Payment mechanism described below with respect to Mr. Araskog's
employment contract. As of June 30, 1997, none of the named executives
participated in this plan.
Destinations has entered into severance agreements (previously entered into by
ITT) to eight executives of the Company, including seven executive officers.
Each agreement provides that, if the executive is involuntarily terminated other
than for cause or such executive terminates for good reason within two years
following a Change in Control, the executive will receive severance consisting
of (i) a lump-sum payment equal to the sum of (A) two or three times the
executive's annual base salary in effect immediately prior to the executive's
termination of employment and (B) two or three times the highest bonus paid or
awarded to the executive under the Company's executive compensation plans in
respect of the three years immediately preceding the Change in Control, (ii)
continued welfare benefits, fringe benefits and perquisites for a number of
years equal to the number by which such executive's annual base salary is
multiplied for purposes of determining such executive's severance and (iii) one
year of outplacement services. All severance payable under each agreement is
subject to the
23
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same Gross-Up Payment mechanism described below with respect to
Mr. Araskog's employment contract. The executive officers who have entered into
the severance agreements with the Company are Robert A. Bowman, Peter G.
Boynton, Ann N. Reese, Richard S. Ward, Daniel P. Weadock, Jon F. Danski and
Elizabeth A. Tuttle.
EMPLOYMENT CONTRACT
Destinations has assumed an employment contract previously entered into by ITT
with Mr. Araskog which provides for, among other things: (i) a base salary of
$2,000,000 per year, entitlement to receive bonus and additional incentive
compensation each year as may be awarded in the discretion of the Compensation
and Personnel Committee of the Board, participation in Destinations' benefit
plans (other than pre-retirement and post-retirement life insurance benefits),
contractual disability and death benefits, his employment as chairman and chief
executive of Destinations until October 31, 2000 (when he will have reached age
69); (ii) his service as consultant to his successor as chief executive of
Destinations from November 1, 2000 through October 31, 2003 for a fee of not
less than $400,000 per year; (iii) his nomination as a director of Destinations
at each annual meeting of the Company's stockholders that he comes up for
reelection, commencing with the annual meeting for 2001 and including the annual
meeting to be held in 2003 and, upon election, payment to him of the usual
director's fees for service in such capacity; (iv) the provision of office space
and certain staff and transportation assistance in connection with his service
as a director and consultant subsequent to October 31, 2000; (v) certain
payments in the event that, after completion of services through October 31,
2000 in accordance with the terms of the contract, Mr. Araskog at any time prior
to October 31, 2003 is not nominated as a director of the Company, which
payments would be in the form of a discounted lump-sum payment equal to the then
present value of the balance remaining of the consulting fees and the director's
fees referred to above; and (vi) covenants by Mr. Araskog against competition
with any business actively conducted by Destinations or any of its subsidiaries
and for compliance with the Company's Code of Corporate Conduct.
The contract also provides that, if Mr. Araskog is involuntarily terminated
other than for cause or he terminates for good reason within two years following
a Change in Control, he shall receive severance consisting of a lump-sum payment
equal to the remaining payments owed to him during the respective employment and
consulting terms set forth in the employment contract. The contract provides
that if any payment made under it to Mr. Araskog would be subject to the excise
tax imposed by Section 4999 of the Internal Revenue Code of 1986 (the "Excise
Tax"), then Mr. Araskog shall be entitled to receive from the Company an
additional payment (the "Gross-Up Payment") in an amount such that the net
amount of such payment and Gross-Up Payment retained by Mr. Araskog, after the
calculation and deduction of all Excise Taxes (including any interest or
penalties imposed with respect to such taxes) on such payment and all Federal,
state and local income tax, employment tax and Excise Tax (including any
interest or penalties imposed with respect to such taxes) on the Gross-Up
Payment, shall be equal to such payment.
The aggregate amount of all severance payments the Company would make under the
Senior Executive Pay Plan and all severance agreements with employees, assuming
all participants therein and parties thereto were terminated after an applicable
Change in Control of the Company, would be approximately $165 million.
1997 STOCK PLAN
Effective prior to the Distribution, Destinations adopted an incentive stock
plan (the "1997 Stock Plan") under which the Company may grant to its employees
awards in the form of stock options, stock appreciation rights, restricted stock
and performance shares, as well as substitute stock options, stock appreciation
rights and restricted stock awards. The 1997 Stock Plan is administered by the
Compensation and Personnel Committee, and is designed to enable Destinations to
attract and retain key employees and to directly link their incentives to the
performance of the Common Stock.
PENSION PLANS
GENERAL. Destinations has assumed the ITT Salaried Retirement Plan (the
"Retirement Plan")
24
<PAGE>
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for its salaried employees. The Retirement Plan was
previously amended by ITT to recognize service prior to December 19, 1995 with
companies affiliated with Old ITT for eligibility, vesting and benefit accrual
purposes and further provides for an offset of any benefit payable from any ITT
retirement plan covering the same period of service. Service with ITT on or
after December 19, 1995 and prior to the Distribution will also be recognized
under the Retirement Plan. Messrs. Araskog, Bowman and Weadock and Ms. Reese
participate in the Retirement Plan.
Prior to the Distribution, executives of Caesars World, Inc. did not
participate in the retirement plans maintained by ITT and,
following the Distribution, they do not participate in the retirement
plans maintained by Destinations. Accordingly, Mr. Boynton is covered by the
Caesars Executive Security Plans (collectively, the "Caesars Pension Plan").
RETIREMENT PLAN. The Retirement Plan covers all eligible salaried employees of
Destinations and certain of its subsidiaries, including senior executive
officers and other Destinations executives.
A member's annual pension equals two percent of the member's average
final compensation for each of the first 25 years of benefit service,
plus one and one-half percent of a member's average final compensation
for each of the next 15 years of benefit service, reduced by one and
one-quarter percent of the member's primary Social Security benefit for
each year of benefit service to a maximum of 40 years; provided that no more
than one-half of the member's primary Social Security benefit is used for such
reduction. A member's average final compensation (including salary plus approved
bonus payments) is defined under the Plan as the total of (i) a member's average
annual base salary for the five calendar years of the last 120 consecutive
calendar months of eligibility service affording the highest such average plus
(ii) a member's average annual compensation not including base salary for the
five calendar years of the member's last 120 consecutive calendar months of
eligibility service affording the highest such average. The Plan also provides
for undiscounted early retirement pensions for members who retire at or after
age 60 following completion of 15 years of eligibility service. A member is
vested in benefits accrued under the Plan upon completion of five years of
eligibility service.
Applicable Federal legislation limits the amount of benefits that
can be paid and compensation which may be recognized under a
tax-qualified retirement plan. Destinations has assumed non-qualified unfunded
retirement plans which were sponsored by ITT prior to the Distribution (the
"Excess Pension Plans") for payment of those benefits at retirement that cannot
be paid from the qualified retirement plan. The practical effect of the Excess
Pension Plans is to continue calculation of retirement benefits to all employees
on a uniform basis. Benefits under the Excess Pension Plans will generally be
paid directly by Destinations. The Company has also assumed sponsorship of an
excess plan trust under which excess benefits under the Excess Pension Plans are
funded. Certain officers of Destinations may indicate a preference, subject to
certain conditions, to receive any excess benefit in the form of a single
discounted lump-sum payment. Any "excess" benefit accrued will be immediately
payable in the form of a single discounted lump-sum payment upon the occurrence
of a change in corporate control (as defined in the Excess Pension Plans).
25
<PAGE>
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Based on various assumptions as to remuneration and years of service, before
Social Security reductions, the following table illustrates the estimated annual
benefits payable from the Retirement Plan at retirement at age 65 that are paid
for by Destinations, subject to the offsets described above.
<TABLE>
<CAPTION>
RETIREMENT PLAN TABLE
YEARS OF SERVICE
AVERAGE FINAL ------------------------------------------------------------------------------------------------------
COMPENSATION 20 25 30 35 40
- ------------ ---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
$ 50,000 $ 20,000 $ 25,000 $ 28,750 $ 32,500 $ 36,250
100,000 40,000 50,000 57,500 65,000 72,500
300,000 120,000 150,000 172,500 195,000 217,500
500,000 200,000 250,000 287,500 325,000 362,500
750,000 300,000 375,000 431,250 487,500 543,750
1,000,000 400,000 500,000 575,000 650,000 725,000
1,500,000 600,000 750,000 862,500 975,000 1,087,500
2,000,000 800,000 1,000,000 1,150,000 1,300,000 1,450,000
2,500,000 1,000,000 1,250,000 1,437,500 1,625,000 1,812,500
3,000,000 1,200,000 1,500,000 1,725,000 1,950,000 2,175,000
3,500,000 1,400,000 1,750,000 2,012,500 2,275,000 2,537,000
4,000,000 1,600,000 2,000,000 2,300,000 2,600,000 2,900,000
5,000,000 2,000,000 2,500,000 2,875,000 3,250,000 3,625,000
</TABLE>
The amounts shown under "Salary" and "Bonus" opposite the names of the
individuals in the Summary Compensation Table on page 21 comprise the
compensation which is used for purposes of determining "average final
compensation" under the plan. The amounts shown reflect compensation paid by ITT
and Old ITT to such named individuals and years of service rendered by the named
individuals to ITT and Old ITT, in each case, prior to the Distribution. The
years of service of each of the individuals for eligibility and benefit purposes
as of June 30, 1997 are as follows: Rand V. Araskog, 30.59 years; Robert A.
Bowman, 6.23 years; Daniel P. Weadock, 35.96 years; and Ann N. Reese, 9.66
years.
THE CAESARS PENSION PLAN. The Caesars Pension Plan provides for annual pension
benefits for individuals retiring at age 65 payable in the form of a straight
life annuity for various levels of compensation and years of service. Under the
Caesars Pension Plan, benefits may also be payable as a lump sum, subject to the
approval of the Compensation and Personnel Committee and other specified
conditions. The Caesars Pension Plan is a defined benefit pension plan which is
not a tax qualified plan and covers all full time salaried officers and selected
other key executives. Benefits under the Caesars Pension Plan accrue at the rate
of two percent of average annual salary for each year of credited service with a
one-time additional 5% accrual after completion of ten years of credited
service. Benefits vest after five years of credited service and are subject to a
maximum of 30 years. Under certain circumstances, benefits may be forfeited
concurrent with or following termination of employment.
Based upon various assumptions as to remuneration and years of service, the
following table illustrates the estimated annual benefits payable from the
Caesars Pension Plan at retirement at age 65. The amounts shown in the table are
not subject to reduction for Social Security benefits or other offset amounts
and are based upon the assumption that the Caesars Pension Plan continues in its
present form.
26
<PAGE>
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<TABLE>
<CAPTION>
CAESARS PENSION PLAN TABLE
YEARS OF SERVICE
FIVE YEAR -----------------------------------------------------------------------------------
AVERAGE SALARY 15 20 25 30
-------------- --------- --------- --------- ---------
<C> <C> <C> <C> <C>
$ 125,000 $ 43,750 $ 56,250 $ 68,750 $ 81,250
150,000 52,500 67,500 82,500 97,500
175,000 61,200 78,750 96,250 113,750
200,000 70,000 90,000 110,000 130,000
225,000 78,750 101,250 123,750 146,250
250,000 87,500 112,500 137,500 162,500
300,000 105,000 135,000 165,000 195,000
400,000 140,000 180,000 220,000 260,000
500,000 175,000 225,000 275,000 325,000
600,000 210,000 270,000 330,000 390,000
800,000 280,000 360,000 440,000 520,000
1,000,000 350,000 450,000 550,000 650,000
1,200,000 420,000 540,000 660,000 780,000
</TABLE>
The remuneration covered by the Caesars Pension Plan is the average of the
participant's highest five years of salary earned during the applicable
employee's last ten years of employment with Caesars World, Inc. The amount
shown under "Salary" opposite the name of Mr. Boynton in the Summary
Compensation Table on page 21 will be used for determining "average annual
salary" under the plan. As of June 30, 1997, Mr. Boynton had 21.17 years of
credited service under the Caesars Pension Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
There are no compensation committee interlocks. The members of Destinations'
Nominating Committee are Bette B. Anderson, Nolan D. Archibald, Edward C.
Meyer and Benjamin F. Payton and the members of Destinations' Compensation
and Personnel Committee are Bette B. Anderson, Nolan D. Archibald, Robert A.
Burnett, Paul G. Kirk, Jr., Edward C. Meyer and Margita E. White.
27
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS,
DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
All of the outstanding shares of Common Stock prior to the Distribution were
held beneficially and of record by ITT.
The following table sets forth the expected beneficial ownership of Destinations
Common Stock after giving effect to the Distribution by (i) each person who is a
director or nominee, (ii) each of the executive officers named in the Summary
Compensation Table on page 21, (iii) all directors and officers of the Company,
as a group, and (iv) each person or entity known by Destinations to have owned
more than five percent of the outstanding common stock of ITT. The information
is based on the number of shares of common stock of ITT owned by such persons or
entities as of June 30, 1997, and reflects the distribution of one share of
Destinations Common Stock for each share of common stock of ITT. The share
totals and percentage interests set forth below do not, however, give effect to
the results of ITT's tender offer for up to 30 million shares of its common
stock. Unless otherwise indicated in the footnotes below, each person or entity
is assumed to have sole voting and investment power with respect to the shares
set forth opposite such person's or entity's name. Also shown in the table are
shares of Common Stock which may be acquired within 60 days through the exercise
of options. Numbers of shares issuable upon exercise of such options have not,
however, been adjusted to give effect to the Distribution.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) PERCENT OF CLASS
- ------------------------- ----------------------- ---------------
<S> <C> <C>
Bette B. Anderson ................................................ 2,811 shares(2) *
Rand V. Araskog .................................................. 1,748,398 shares 1.5%
Nolan D. Archibald ............................................... 1,811 shares *
Robert A. Bowman ................................................. 549,046 shares *
Robert A. Burnett ................................................ 2,891 shares *
Paul G. Kirk, Jr. ................................................ 1,821 shares *
Edward C. Meyer .................................................. 3,311 shares *
Benjamin F. Payton ............................................... 1,303 shares *
Vin Weber ........................................................ 844 shares *
Margita E. White ................................................. 2,811 shares *
Kendrick R. Wilson III ........................................... 3,744 shares *
Daniel P. Weadock ................................................ 396,061 shares *
Peter G. Boynton ................................................. 60,855 shares *
Ann N. Reese ..................................................... 251,068 shares *
All directors and executive officers as a group(1)(2) ............ 4,122,208 shares 3.7%
Bankers Trust New York Corporation ............................... 7,728,083 shares(3) 8.9%
280 Park Avenue
New York, New York 10017
FMR Corp. ........................................................ 13,166,423 shares(4) 11.3%
82 Devonshire Street
Boston, Massachusetts 02109
</TABLE>
- -----------------
* Less than one percent.
(1) All shares are owned directly except as hereinafter otherwise indicated.
Pursuant to regulations of the Securities and Exchange Commission, shares of
Common Stock (i) receivable by directors and executive officers upon
exercise of employee stock options exercisable within 60 days after
, 1997, and (ii) allocated to the accounts of certain directors
and executive officers under the Retirement Plan at , 1997, are
deemed to be beneficially owned by such directors and executive officers at
that date. Of the number of shares shown above the following represent
shares of Common Stock that may be acquired upon exercise of employee stock
options for the accounts of: Mr. Araskog, 1,196,617 shares; Mr. Bowman,
521,653 shares; Mr. Weadock, 322,186 shares; Mr. Boynton, 59,718 shares; Ms.
Reese, 236,544 shares; and all directors and executive officers as a group,
3,330,352 shares. The number of shares of Common Stock receivable upon
exercise of these options will be adjusted to preserve the economic benefit
of such options following the Distribution. Of the number of shares shown
above, the following amounts were allocated under the Retirement Plan to the
accounts of: Mr. Araskog, 20,255 shares; Mr. Bowman, 2,455 shares; Mr.
Weadock, 52,796 shares; Mr. Boynton, 137 shares; Ms. Reese, 1,348 shares;
and all directors and executive officers as a group, 113,404 shares.
(2) An additional 83 shares of the common stock of ITT are owned by Mrs.
Anderson's husband. Mrs. Anderson disclaims beneficial ownership of
such shares.
28
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(3) A February 14, 1997 Schedule 13G filed with the Securities and Exchange
Commission reflects that Bankers Trust New York Corporation, through its
wholly owned subsidiary Bankers Trust Company (as Trustee for various trusts
and employee benefit plans, and as investment adviser), beneficially owned
7,728,083 shares of common stock of ITT. Of these shares, Bankers Trust
Company was deemed to have (i) sole power to vote or to direct the vote with
respect to 7,725,383 shares of common stock of ITT, (ii) shared power to
vote or to direct the vote with respect to 2,700 shares of the common stock
of ITT, (iii) sole power to dispose or to direct the disposition of
1,990,982 shares of the common stock of ITT and (iv) shared power to dispose
or direct the disposition of 16,505 shares of the common stock of ITT.
(4) A February 14, 1997 Schedule 13G provided to ITT reflects that FMR Corp.
("FMR") beneficially owned 13,166,423 shares of common stock of ITT. Of such
reported shares, Fidelity Management & Research Company ("Fidelity"), a
wholly owned subsidiary of FMR and an investment adviser registered under
Section 203 of the Investment Advisers Act of 1940, beneficially owned
12,437,559 shares as a result of acting as investment adviser to several
investment companies registered under Section 8 of the Investment Company
Act of 1940. Edward C. Johnson 3d, the Chairman of FMR, FMR, through its
control of Fidelity, and the Fidelity Funds each reported sole power to
dispose of the 12,437,559 shares of common stock of ITT owned by the
Fidelity Funds. Neither FMR nor Mr. Johnson reported the sole power to vote
or direct the voting of the shares owned directly by the Fidelity Funds,
which power resides with the Funds' Boards of Trustees. Fidelity carries out
the voting of the shares under written guidelines established by the Funds'
Boards of Trustees. Fidelity Management Trust Company ("FMTC"), a wholly
owned subsidiary of FMR, and a bank as defined in Section 3(a)(6) of the
Securities Exchange Act of 1934, was the beneficial owner of 725,464 shares
of common stock of ITT as a result of its serving as investment manager of
institutional accounts. Mr. Johnson and FMR, through its control of FMTC,
reported sole dispositive power over 725,464 shares and sole power to vote
or to direct the voting of 513,264 shares, and no power to vote or to direct
the voting of 212,000 shares of common stock of ITT owned by such
institutional accounts. Members of the Edward C. Johnson 3d family and
trusts for their benefit are the predominant owners of Class B shares of
common stock of FMR, representing approximately 49% of the voting power of
FMR. Mr. Johnson owned 12.0% and Abigail P. Johnson owned 24.5% of the
aggregate outstanding voting stock of FMR. Ms. Johnson is a Director of FMR.
The Johnson family group and all other Class B stockholders have entered
into a stockholders' voting agreement under which all Class B shares will be
voted in accordance with the majority vote of Class B shares. Accordingly,
through their ownership of voting common stock and the execution of the
stockholders' voting agreement, members of the Johnson family may be deemed,
under the Investment Company Act of 1940, to form a controlling group with
respect to FMR. The number of shares of common stock of ITT reported
included 3,400 shares owned directly by Mr. Johnson or in trusts for the
benefit of Mr. Johnson or a Johnson family member for which Mr. Johnson
serves as trustee. Mr. Johnson reported sole voting and dispositive power
over 400 shares and shared voting and dispositive power over 3,000 shares.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Lazard Freres & Co. LLC ("Lazard Freres"), of which Mr. Kendrick R. Wilson III
is a Managing Director, performed various investment banking services for ITT
and its subsidiaries in 1996 for which Lazard Freres was paid customary fees.
Goldman, Sachs & Co. ("Goldman, Sachs"), Lazard Freres and ITT entered into an
engagement letter, dated as of February 10, 1997, regarding investment banking
services rendered to ITT in connection with the tender offer by Hilton Hotels
Corporation for shares of the common stock of ITT (the "Hilton Offer").
Destinations assumed this engagement letter in connection with the Distribution.
Pursuant to the engagement letter, ITT paid each of Lazard Freres and Goldman,
Sachs 50% of (a) an initial fee equal to $1 million and (b) one half of an
additional advisory fee equal to $19 million, which was paid on September 30,
1997. Goldman, Sachs and Lazard Freres have been assisting and advising ITT and
Destinations in connection with the Hilton Offer and ITT's comprehensive plan,
of which the Distribution was a part, from time to time through the date hereof.
Mr. Wilson receives a percentage of Lazard Freres' income, including a
percentage of any income earned by Lazard Freres under the engagement letter.
Destinations' By-laws provide for indemnification of the directors and officers
of the Company to the fullest extent permitted by applicable state law, as then
in effect. The indemnification rights conferred by the By-laws are not exclusive
of any other right to which a person seeking indemnification may otherwise be
entitled. The Company also provides liability insurance for the directors and
officers for certain losses arising from claims or charges made against them
while acting in their capacities as directors or officers and has entered into
an indemnification agreement with each of its directors. Under these
indemnification agreements, Destinations has agreed to indemnify its directors
against all expenses, liabilities or losses incurred by the directors in their
capacity as such: (i) to the fullest extent permitted by applicable law; (ii) as
provided in the By-laws as in effect on the date of such agreement; and (iii) in
the event the Company does not maintain the aforementioned insurance or
comparable coverage, to the full extent provided in the applicable policies as
in effect on the date of the agreement (the Company's obligations in (ii) and
(iii) being subject to certain exceptions). Contractual rights under such
indemnification agreements are believed to provide the directors more protection
than the By-laws, which are subject to change.
29
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GENERAL
In addition to the matters described above, there will be an address by the
chairman and chief executive at the Annual Meeting and a general discussion
period during which stockholders will have an opportunity to ask questions about
the business and operations of Destinations.
As of the date of this Proxy Statement, the Board has no knowledge of any
business which will be presented for consideration at the meeting other than
that described above. As to such other business, if any, that may properly come
before the meeting, the persons named as proxies will vote in accordance with
their judgment.
SOLICITATION OF PROXIES
Proxies may be solicited by mail, advertisement, telephone or other methods and
in person. Solicitations may be made by directors, officers, investor relations
personnel and other employees of the Company, none of whom will receive
additional compensation for such solicitations.
The Company has retained Georgeson & Company, Inc. ("Georgeson") for
solicitation and advisory services in connection with the solicitation, for
which Georgeson is to receive a fee estimated at $ , together with reimbursement
for its reasonable out-of-pocket expenses and for payments made to brokers and
other nominees for their expenses in forwarding soliciting material. Georgeson
will distribute proxy materials to beneficial owners and solicit proxies by
personal interview, mail, telephone and telegram, and will request brokerage
houses and other custodians, nominees and fiduciaries to forward soliciting
material to the beneficial owners of the Common Stock held on , 1997 by such
person. The Company has also agreed to indemnify Georgeson against certain
liabilities and expenses. It is anticipated that Georgeson will employ
approximately persons to solicit stockholders for the Annual Meeting. Georgeson
is also acting to assist the Company and ITT in connection with the Hilton
Offer, for which Georgeson will be paid customary compensation in addition to
reimbursement for reasonable out-of-pocket expenses.
All expenses of solicitation of proxies will be borne by the Company. Costs
incidental to the solicitations of proxies include expenditures for printing,
postage, legal, accounting, public relations, soliciting, advertising and
related expenses and are expected to be approximately $ in addition to the fees
of Georgeson described above (excluding the amount normally expended by the
Company for the solicitation of proxies at its annual meetings). Total costs
incurred to date for, in furtherance of, or in connection with these
solicitations of proxies are approximately $ .
By Order of the Board of Directors,
ANN N. REESE
Executive Vice President,
Chief Financial Officer
and Corporate Secretary
Dated: , 1997
30
<PAGE>
[Reverse of Proxy Card]
ITT Rand V. Araskog
DESTINATIONS, INC. Chairman and
Chief Executive
Dear Stockholder:
The 1997 Annual Meeting of ITT Destinations, Inc. will be held at noon on
, November , 1997 in the of , ,
. Stockholders of record at the close of business on , 1997
will be entitled to vote at the meeting and any adjournment thereof.
Stockholders of record who plan to attend the Annual Meeting in person
may request an admission card by marking the box below. Stockholders who hold
their shares beneficially through bank or brokerage accounts should bring with
them proof of their ownership if they wish to attend the meeting.
Whether or not you plan to attend the meeting, you can assure that your
shares are represented by promptly completing, signing, dating and returning the
proxy card below.
Sincerely yours,
RAND V. ARASKOG
Chairman and Chief Executive
DETACH PROXY CARD HERE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO TEXT PRINTING IN THIS AREA
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1, 2 AND 3.
- --------------------------------------------------------------------------------
1. Election of Class I Directors
For The
For [ ] Withheld [ ] Following [ ]
BETTE B. ANDERSON; ROBERT A. BURNETT; EDWARD C. MEYER; AND VIN WEBER.
If you do not wish your shares voted "FOR" a particular nominee or nominees,
mark the "For The Following" box and strike a line through the nominee's
name(s). Your shares will be voted for the remaining nominee(s).
- --------------------------------------------------------------------------------
2. Ratification of Appointment of Arthur Andersen LLP as Independent Public
Accountants
For [ ] Against [ ] Abstain [ ]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Authority to vote to adjourn the Annual Meeting
Granted [ ] Withheld [ ]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3. Approval of Amendment to the Articles of Incorporation to Change the
Corporation's Name to ITT Corporation
For [ ] Against [ ] Abstain [ ]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MARK THIS BOX TO REQUEST AN
ADMISSION CARD FOR THE MEETING [ ]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO VOTING BOXES BELOW THIS LINE
--------------------------------------------
ADDRESS AREA
--------------------------------------------
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
(THIS LINE DOES NOT PRINT )
Please sign this proxy exactly as your name appears hereon. Joint owners should
each sign personally. Trustees and other fiduciaries should indicate the
capacity in which they sign, and where more than one name appears, a majority
should sign. If a corporation, the signature should be that of an authorized
officer who should state his or her title.
Signature: ---------------------------------------------
Date: --------------------------------------------------
Signature: ---------------------------------------------
Date: --------------------------------------------------
Title: -------------------------------------------------
<PAGE>
DETACH PROXY CARD HERE
- --------------------------------------------------------------------------------
ITT DESTINATIONS, INC.
PROXY CARD
Proxy For The Annual Meeting of Stockholders to be Held on November , 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
This undersigned hereby constitutes and appoints and , and each of them,
true and lawful agents and proxies of the undersigned, with full power of
substitution, to represent the undersigned and to vote all shares of stock which
the undersigned is entitled to vote at the Annual Meeting of Stockholders of ITT
Destinations, Inc. (the "Company") to be held on November , 1997, and at any
and all adjournments and postponements thereof, on all matters before such
meeting.
THIS PROXY WILL BE VOTED AS SPECIFIED ON THE REVERSE SIDE. HOWEVER, IF NO
VOTE IS SPECIFIED, THIS PROXY WILL BE VOTED "FOR" THE ELECTION AS CLASS I
DIRECTORS OF THE NOMINEES LISTED ON THE REVERSE SIDE, "FOR" THE RATIFICATION OF
THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC ACCOUNTANTS AND
"FOR" THE PROPOSED AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION TO
CHANGE THE COMPANY'S NAME TO "ITT CORPORATION," ALL OF WHICH MATTERS ARE MORE
FULLY DESCRIBED IN THE ANNUAL MEETING PROXY STATEMENT OF WHICH THE UNDERSIGNED
SHAREHOLDER ACKNOWLEDGES RECEIPT.
THIS PROXY GRANTS DISCRETIONARY AUTHORITY (1) TO VOTE FOR A SUBSTITUTE
NOMINEE OF THE BOARD IF ANY NOMINEE FOR A CLASS I DIRECTOR LISTED ON THE REVERSE
SIDE IS UNABLE TO SERVE, OR FOR GOOD CAUSE WILL NOT SERVE AS A CLASS I DIRECTOR
(UNLESS AUTHORITY TO VOTE FOR ALL NOMINEES OR FOR THE PARTICULAR NOMINEE WHO HAS
CEASED TO BE A CANDIDATE IS WITHHELD) AND (2) TO VOTE ON OTHER MATTERS THAT MAY
COME BEFORE THE MEETING IN ACCORDANCE WITH THE BEST JUDGMENT OF THE NAMED
PROXIES; PROVIDED, HOWEVER, THAT YOU MAY WITHHOLD FROM THE NAMED PROXIES
AUTHORITY TO VOTE TO ADJOURN THE ANNUAL MEETING.
PLEASE VOTE, SIGN AND DATE THIS PROXY ON THE OTHER SIDE AND RETURN PROMPTLY IN
THE ENCLOSED ENVELOPE.
THIS PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS OF ITT DESTINATIONS,
INC.
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS INDICATED, THIS PROXY
WILL BE VOTED "FOR" PROPOSALS 1, 2 AND 3.
