<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[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 Section 240.14a-11(c) or Section 240.14a-12
Marriott International, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Marriott International, Inc.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
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[LETTERHEAD OF MARRIOTT INTERNATIONAL, INC. APPEARS HERE]
Dear Fellow Shareholder:
On behalf of your Board of Directors, we are pleased to invite you to
attend the 1998 Annual Meeting of Shareholders of Marriott International, Inc.
The meeting will be held on Wednesday, May 20, 1998 at 10:30 a.m. in the
Arlington Ballroom of the Crystal Gateway Marriott Hotel, 1700 Jefferson Davis
Highway, Arlington, Virginia. Doors to the meeting will open at 9:30 a.m. A map
showing the location of the hotel and information on parking and public
transportation is provided on the back of this Proxy Statement.
This will be our first shareholder meeting since our spinoff from the
"old" Marriott International on March 27, 1998. At this meeting you will be
asked to elect three directors and adopt the 1998 Employee Stock Purchase Plan.
Your Board of Directors recommends a vote FOR both of these proposals. You will
---
also be asked to consider the retention or modification of the company's
existing dual class equity structure. For the reasons outlined in the attached
proxy, your Board of Directors recommends a vote FOR both of these proposals.
---
Lastly, two shareholder proposals are also under consideration. Your Board of
Directors recommends a vote AGAINST these proposals. The enclosed notice and
-------
proxy statement contain details about the business to be conducted at the
meeting.
Holders of record of the Company's Common Stock as of March 27, 1998 are
entitled to notice of and to vote at the 1998 Annual Meeting.
Your vote is important regardless of the number of shares you own. To
assure that your shares are represented at the meeting, we urge you to mark your
choices on the enclosed proxy card, sign and date the card and return it
promptly in the envelope provided. If you are able to attend the meeting and
wish to vote your shares personally, you may do so at any time before the proxy
is voted at the meeting. If you have any questions regarding this proxy, feel
free to call MacKenzie Partners at (800)-322-2885 or (212)-929-5500 (call
collect).
Sincerely yours,
J.W. Marriott, Jr. William J. Shaw
Chairman of the Board and President and
Chief Executive Officer Chief Operating Officer
<PAGE>
[LOGO OF MARRIOTT INTERNATIONAL, INC. APPEARS HERE]
Corporate Headquarters: Mailing Address:
10400 Fernwood Road Marriott Drive
Bethesda, Maryland 20817 Washington, D.C. 20058
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD WEDNESDAY, MAY 20, 1998
April [20], 1998
Notice is hereby given that the Annual Meeting of Shareholders of Marriott
International, Inc. (the "Company") will be held on Wednesday, May 20, 1998, at
10:30 a.m., in the Arlington Ballroom of the Crystal Gateway Marriott Hotel,
1700 Jefferson Davis Highway, Arlington, Virginia. Doors to the meeting will
open at 9:30 a.m.
The meeting will be conducted:
1. To consider and vote upon the following proposals (collectively, the
"Proposals") described in the accompanying Proxy Statement, which provide
for:
(i) Proposal One: Election of Gilbert M. Grosvenor, Richard E. Marriott,
and Harry J. Pearce, as directors, each for a term of three years
expiring at the 2001 Annual Meeting of Shareholders;
(ii) Proposal Two: Approval of the adoption of the Marriott International,
Inc. 1998 Employee Stock Purchase Plan (the "Stock Purchase Plan") and
the reservation of 5 million shares of common stock, par value $0.01
per share, of the Company for issuance under the Stock Purchase Plan;
<PAGE>
(iii) Proposal Three: The retention of two classes of common stock as
currently provided in the Company's Amended and Restated Certificate of
Incorporation (the "Certificate of Incorporation") (if Proposal Three
and Proposal Four are both approved, the Proposal receiving the
greatest number of votes in favor will be adopted);
(iv) Proposal Four: The retention of two classes of common stock as
currently provided in the Company's Certificate of Incorporation, as
well as an amendment to the Certificate of Incorporation to (i)
strengthen the "minority rights protection" provision by changing the
threshold to 5% from 15%, and (ii) provide that all classes of common
stock shall have one vote per share when voting on transactions with
respect to which the Board of Directors has agreed or been ordered to
waive or amend, or redeem the rights granted under, the Company's
Rights Agreement (if Proposal Three and Proposal Four are both
approved, the Proposal receiving the greatest number of votes in favor
will be adopted);
(v) Proposal Five: A shareholder proposal to adopt cumulative voting
for the election of directors; and
(vi) Proposal Six: A shareholder proposal with respect to certain
attributes of individuals to be directors of the Company; and
2. To transact such other business as may properly come before the meeting.
Shareholders of record at the close of business on March 27, 1998, will be
entitled to notice of and to vote at this meeting.
W. David Mann
Secretary
PLEASE REFER TO THE OUTSIDE BACK COVER
FOR INFORMATION ON PARKING AND PUBLIC TRANSPORTATION.
EACH SHAREHOLDER IS REQUESTED TO EXECUTE AND PROMPTLY
RETURN THE ENCLOSED PROXY CARD IN THE PREPAID
ENVELOPE ENCLOSED.
2
<PAGE>
MARRIOTT INTERNATIONAL, INC.
10400 FERNWOOD ROAD, BETHESDA, MARYLAND 20817
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
MAY 20, 1998
INTRODUCTION
This Proxy Statement (the "Proxy Statement") is furnished to shareholders of
Marriott International, Inc., a Delaware corporation (the "Company" or "New
Marriott"), which on March 27, 1998 changed its name from New Marriott MI, Inc.,
in connection with the solicitation of proxies by the Board of Directors of the
Company (the "Board") from holders of record of the Company's outstanding shares
of Common Stock, par value $0.01 per share, which are entitled to one vote per
share ("MAR Common Stock") and the Company's outstanding shares of Class A
Common Stock, par value $0.01 per share, which are entitled to ten votes per
share ("MAR-A Common Stock" and together with the MAR Common Stock, the
"Company Common Stock"), as of the close of business on March 27, 1998 (the
"Annual Meeting Record Date") for use at the Annual Meeting of Shareholders of
the Company (the "Annual Meeting") to be held on May 20, 1998, at 10:30 a.m., in
the Arlington Ballroom of the Crystal Gateway Marriott Hotel, 1770 Jefferson
Davis Highway, Arlington, Virginia, or at any adjournment or postponement
thereof. This Proxy Statement, Notice of Meeting, and accompanying proxy card
are first being mailed to the Company's shareholders on or about April [20],
1998.
The Company was incorporated on September 19, 1997, under the name New Marriott
MI, Inc., as a wholly-owned subsidiary of Marriott International, Inc., a
Delaware corporation incorporated in 1971 ("Old Marriott") . New Marriott was
formed to own and operate, as a separate public company, the lodging (including
timeshare resort development and operation), senior living services and
distribution services businesses of Old Marriott. Following shareholder
approval thereof at a special meeting held on March 17 and March 20, 1998 (the
"Special Meeting"), on March 27, 1998 (the "Spinoff Date"), Old Marriott
distributed to holders of outstanding shares of Old Marriott common stock, on a
share-for-share basis, all of the issued and outstanding shares of New Marriott
(the "Spinoff"). The Spinoff was effected by a stock dividend of one share of
MAR Common Stock and one share of MAR-A Common Stock for each outstanding share
of Old Marriott Common Stock held of record as of the close of business on March
27, 1998. Upon the consummation of the Spinoff, New Marriott changed its name
to Marriott International, Inc. and became a separate, publicly held company. At
the same time, Old Marriott changed its name to Sodexho Marriott Services, Inc.
("SMS"). Each incumbent director of Old Marriott became a
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<PAGE>
director of New Marriott, and resigned as a director of Old Marriott (other than
William J. Shaw, who will serve as Chairman of the SMS Board of Directors).
These appointments were ratified by shareholders of Old Marriott at the Special
Meeting.
VOTING RIGHTS AND PROXY
INFORMATION
Only holders of record of shares of Company Common Stock as of the close of
business on the Annual Meeting Record Date will be entitled to notice of and to
vote at the Annual Meeting or any adjournment or postponement thereof. Such
holders of shares of MAR Common Stock are entitled to one vote per share and
such holders of MAR-A Common Stock are entitled to ten votes per share on any
matter which may properly come before the Annual Meeting. The presence, either
in person or by properly executed proxy, of the holders of a majority of the
votes represented by the shares of Company Common Stock issued and outstanding
and entitled to vote thereat is necessary to constitute a quorum at the Annual
Meeting and to permit action to be taken by the shareholders at such meeting.
Under Delaware law, shares represented by proxies that reflect abstentions or
"broker non-votes" (i.e., shares held by a broker or nominee that are
represented at the Annual Meeting, but with respect to which such broker or
nominee is not empowered to vote on a particular proposal) will be counted as
shares that are present and entitled to vote for purposes of determining the
presence of a quorum. The affirmative vote of the holders of at least a majority
of the votes represented by the shares of Company Common Stock present in person
or represented by proxy at the Annual Meeting is required to approve each of the
Proposals other than Proposals Three and Four, each of which requires the
affirmative vote of the holders of at least a majority of the votes represented
by all outstanding shares of Company Common Stock entitled to vote at the Annual
Meeting. Proposal Four also requires the affirmative vote of the holders of at
least a majority of the outstanding shares of MAR Common Stock entitled to vote
at the Annual Meeting, voting separately as a class, and the affirmative vote of
the holders of at least a majority of the outstanding shares of MAR-A Common
Stock entitled to vote at the Annual Meeting, voting separately as a class.
Abstentions will have the same effect as votes against the Proposals. Broker
non-votes will have the same effect as votes against Proposals Three and Four,
but they will be treated as not voted for purposes of determining approval of
the other Proposals and will not be counted as votes for or against such other
Proposals. The MAR Common Stock and MAR-A Common Stock vote together as a single
class on all matters voted upon by the shareholders of the Company that do not
otherwise require a separate class vote by law or under the Company's Amended
and Restated Certificate of Incorporation (the "Certificate of Incorporation").
Proposal Three and Proposal Four are alternative proposals, although the Board
of Directors recommends that shareholders vote FOR both Proposals. Proposal
Three provides for the retention of the two classes of Company Common Stock in
their present form and Proposal Four provides for the retention of the two
classes of Company Common Stock in a modified form.
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If Proposal Three is approved and Proposal Four is not approved, then the two
classes of common stock will be retained in their present form. If Proposal Four
is approved and Proposal Three is not approved, then the two classes of common
stock will be retained in a modified form. If Proposal Three and Proposal Four
are both approved, then the Proposal receiving the greatest number of votes in
favor will be adopted. If neither Proposal Three nor Proposal Four is approved,
then the Board will take such action as may be necessary to cause all shares of
Company Common Stock to have the same voting power by converting all MAR Common
Stock into MAR-A Common Stock as expressly permitted by the Certificate of
Incorporation. Such action will be taken as soon as practicable after the Annual
Meeting. Thereafter, the Company will take all necessary steps to remove the
dual class provisions from the Certificate of Incorporation and would refrain
from issuing additional shares of MAR Common Stock in the future.
While all voting at the Annual Meeting will be on the basis of two classes of
stock with different voting rights, since the record date for the Spinoff in
which the Company Common Stock was received is the same as the Annual Meeting
Record Date, the relative voting power of the shareholders entitled to vote at
the Annual Meeting will be the same as if there were currently only one class of
Company Common Stock.
As of the Annual Meeting Record Date, there were 127,807,364 shares of MAR
Common Stock and 127,807,364 shares of MAR-A Common Stock outstanding and
entitled to vote at the Annual Meeting. The MAR Common Stock and MAR-A Common
Stock are the only issued and outstanding classes of equity securities of the
Company. Certain members of the Marriott family (including various trusts
established by members of the Marriott family) in the aggregate beneficially own
shares representing approximately 19.5% of the outstanding MAR Common Stock and
approximately 19.5% of the outstanding MAR-A Common Stock, and have indicated
their intention to vote their shares in accordance with the recommendations of
the Board as set forth herein with respect to the Proposals. All shares of
Company Common Stock that are represented at the Annual Meeting by properly
executed proxies received prior to or at the Annual Meeting and not revoked will
be voted at the Annual Meeting in accordance with the instructions indicated in
such proxies. If no instructions are indicated for any of the Proposals, such
proxies will be voted in accordance with the Board's recommendations as set
forth herein with respect to such Proposals.
In the event that a quorum is not present at the time the Annual Meeting is
convened, or if for any other reason the Company believes that additional time
should be allowed for the solicitation of proxies, the Company may adjourn the
Annual Meeting with or without a vote of the
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shareholders. If the Company proposes to adjourn the Annual Meeting by a vote of
the shareholders, the persons named in the enclosed proxy card will vote all
shares of Company Common Stock for which they have voting authority in favor of
such adjournment.
Any proxy duly given pursuant to this solicitation may be revoked at any time
before it is voted by (i) filing with First Chicago Trust Company of New York in
its capacity as transfer agent for the Company (the "Transfer Agent"), at or
before the Annual Meeting, a written notice of revocation bearing a later date
than the proxy, (ii) duly executing a subsequent proxy relating to the same
shares of Company Common Stock and delivering it to the Transfer Agent at or
before the Annual Meeting, or (iii) attending the Annual Meeting and voting in
person (although attendance at the Annual Meeting will not in and of itself
constitute a revocation of a proxy). Prior to the date of the Annual Meeting,
written notice to revoke a proxy should be sent to First Chicago Trust Company
of New York, P.O. Box 8089, Edison, New Jersey 08818-9355.
6
<PAGE>
DIRECTORS
[PHOTO J.W. Marriott, Jr.*
APPEARS (Chairman of the Board)
HERE] Age: 66
Mr. Marriott is Chairman of the Board and
Chief Executive Officer of the Company.
He joined Marriott Corporation in 1956
and has been a member of the Board of
Marriott Corporation/Host Marriott
Corporation/Marriott International since
1964. He became President of Marriott
Corporation in 1964, Chief Executive
Officer of Marriott Corporation in 1972
and Chairman of the Board of Marriott
Corporation in 1985. Mr. Marriott also is
a director of Host Marriott Corporation,
Host Marriott Services Corporation,
General Motors Corporation, and the U.S.-
Russia Business Council. He serves on the
Board of Trustees of the Mayo Foundation,
National Geographic Society, and
Georgetown University. He is on the
President's Advisory Committee of the
American Red Cross and the Executive
Committee of the World Travel & Tourism
Council, and is a member of the Business
Council and the Business Roundtable. Mr.
Marriott has served as Chief Executive
Officer of the Company since its
inception in 1997, and served as Chairman
and Chief Executive Officer of Old
Marriott from October 1993 to March 1998.
Mr. Marriott has served as a director of
the Company since March 1998 and is
currently serving a three-year term
expiring at the 1999 Annual Meeting of
Shareholders.
[PHOTO Richard E. Marriott*
APPEARS Age: 59
HERE]
Mr. Marriott is Chairman of the Board of
Host Marriott Corporation. He is also
Chairman of the Board of First Media
Corporation and serves as a director of
Host Marriott Services Corporation and
Potomac Electric Power Company (PEPCO),
and as
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<PAGE>
a trustee of Gallaudet University,
Polynesian Cultural Center, Primary
Children's Medical Center, Boys and Girls
Clubs of America SE Region, and The J.
Willard Marriott Foundation. He also
serves on the Board of Trustees of
Federal City Council and Marriott
Foundation for People with Disabilities
and the Advisory Committee for the
International Hotel and Restaurant
Association. Prior to 1993, Mr. Marriott
served as an Executive Vice President and
member of the Board of Directors of
Marriott Corporation. Mr. Marriott has
been a director of Marriott
Corporation/Host Marriott
Corporation/Marriott International since
1979, and is currently serving a three-
year term expiring at the 1998 Annual
Meeting of Shareholders.
* Messrs. J.W. Marriott, Jr. and Richard E. Marriott are brothers.
[PHOTO Henry Cheng Kar-Shun
APPEARS Age: 51
HERE]
Dr. Cheng has served as Managing Director
of New World Development Company Limited
("New World Development"), a publicly
held Hong Kong real estate development
and investment company since 1989. He is
the Chairman of New World Infrastructure
Limited and Tai Fook Group Limited and a
director of HKR International Limited,
all of which are publicly-held Hong Kong
companies. Dr. Cheng serves as an
executive officer of Chow Tai Fook
Enterprises Limited, a privately-held
family company that controls New World
Development. Dr. Cheng served as Chairman
and Director of Renaissance Hotel Group
N.V. from June 1995 until its purchase by
the Company in March 1997. He is Chairman
of the Advisory Council for The Better
Hong Kong Foundation. Dr. Cheng serves as
a
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<PAGE>
member of the Services Promotion Strategy
Group, a unit under the Hong Kong
Financial Secretary's Office, and as a
Committee Member of the Eighth Chinese
People's Political Consultative Committee
of the People's Republic of China. Dr.
Cheng has also served as a member of the
Election Committee of the Hong Kong
Special Administrative Region. Dr. Cheng
served as a director of Old Marriott from
June 1997 to March 1998, and has served
as a director of the Company since March
1998. He is currently serving a term
expiring at the 2000 Annual Meeting of
Shareholders.
[PHOTO Gilbert M. Grosvenor
APPEARS Age: 66
HERE]
Mr. Grosvenor is Chairman of the Board of
the National Geographic Society (a
publisher of books and magazines and
producer of television documentaries) and
a director or trustee of Chevy Chase
Federal Savings Bank, Ethyl Corporation,
B.F. Saul REIT and Saul Centers, Inc. He
is on the Board of Visitors of the
Nicholas School of the Environment of
Duke University. Mr. Grosvenor served as
a member of the Board of Directors of Old
Marriott (and prior to October 1993 of
Marriott Corporation) from 1987 to March
1998, and has served as a director of the
Company since March 1998. He is currently
serving a three-year term expiring at the
1998 Annual Meeting of Shareholders.
[PHOTO Floretta Dukes McKenzie
APPEARS Age: 62
HERE]
Dr. McKenzie is the founder, Chairwoman
and Chief Executive Officer of The
McKenzie Group, Inc. (an educational
consulting firm). She is also a director
or trustee of Potomac Electric Power
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Company (PEPCO), National Geographic
Society, Acacia Group, Group
Hospitalization and Medical Services,
Inc. (GHMSI), Howard University, White
House Historical Association, American
Association of School Administrators
Leadership of Learning Foundation,
Lightspan Partnership, Inc., Impact II-
The Teachers Network, National School
Board Foundation, Institute for
Educational Leadership, Inc., Forum for
the American School Superintendent,
Harvard Graduate School of Education
Urban Superintendents Program and John
Hopkins Leadership Development Program.
From 1981 to 1988, she served as
Superintendent of the District of
Columbia Public Schools and Chief State
School Officer. Dr. McKenzie served as a
director of Old Marriott (and prior to
October 1993 of Marriott Corporation)
from 1992 to March 1998, and has served
as a director of the Company since March
1998. She is currently serving a three-
year term expiring at the 2000 Annual
Meeting of Shareholders.
[PHOTO Harry J. Pearce
APPEARS Age: 55
HERE]
Mr. Pearce is Vice Chairman of the Board
of General Motors Corporation (an
automobile manufacturer) and a director
of General Motors Acceptance Corporation,
Hughes Electronics Corporation, American
Automobile Manufacturers Association, and
MDU Resources Group, Inc. and is a member
of the U.S. Air Force Academy's Board of
Visitors. He also serves on the Board of
Trustees of Howard University and is a
member of Northwestern University School
of Law's Dean's Advisory Council. Mr.
Pearce served as a director of Old
Marriott from 1995 to March 1998, and has
served as a director of the Company since
March 1998. He is currently serving a
term expiring at the 1998 Annual Meeting
of Shareholders.
10
<PAGE>
[PHOTO W. Mitt Romney
APPEARS Age: 51
HERE]
Mr. Romney is a director, President and
Chief Executive Officer of Bain Capital,
Inc. (a private equity investment firm).
He is also a director of The Sports
Authority, Inc., and Staples, Inc. Mr.
Romney is a member of the Executive Board
of the Boy Scouts of America and the
boards of the National Points of Light
Foundation and City Year. Mr. Romney
served as a member of the Board of
Directors of Old Marriott (and of
Marriott Corporation prior to October
1993) from 1993 to March 1998 and has
served as a director of the Company since
March 1998. He is currently serving a
three-year term expiring at the 1999
Annual Meeting of Shareholders.
[PHOTO Roger W. Sant
APPEARS Age: 66
HERE]
Mr. Sant is Chairman of the Board and a
co-founder of The AES Corporation (a
global power company). He is also
Chairman of the Board of World Wildlife
Fund (U.S.) and a member of the Board of
World Resources Institute and Worldwide
Fund for Nature. Mr. Sant served as a
director of Old Marriott from 1993 to
March 1998, and has served as a director
of the Company since March 1998. He is
currently serving a three-year term
expiring at the 2000 Annual Meeting of
Shareholders.
[PHOTO William J. Shaw
APPEARS Age: 52
HERE]
Mr. Shaw has served as President and
Chief Operating Officer of the Company
since March 1997 (including service in
the same capacity with Old Marriott until
March 1998). Mr. Shaw joined
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Marriott Corporation in 1974, was elected
Corporate Controller in 1979 and a Vice
President in 1982. In 1986, Mr. Shaw was
elected Senior Vice President--Finance
and Treasurer of Marriott Corporation. He
was elected Executive Vice President of
Marriott Corporation and promoted to
Chief Financial Officer in April 1988. In
February 1992, he was elected President
of the Marriott Service Group, which
later became Old Marriott's Contract
Service Group. Mr. Shaw was elected
Executive Vice President and President--
Marriott Service Group in October 1993.
Mr. Shaw is also Chairman of the Board of
Directors of Host Marriott Services
Corporation and Sodexho Marriott
Services, Inc. He also serves on the
Board of Trustees of the University of
Notre Dame, Loyola College in Maryland
and the Suburban Hospital Foundation. Mr.
Shaw has served as a director of Old
Marriott (now called Sodexho Marriott
Services, Inc.) since May 1997, and as a
director of the Company since March 1998.
He is currently serving for a term
expiring at the 1999 Annual Meeting of
Shareholders.
[PHOTO Lawrence M. Small
APPEARS Age: 56
HERE]
Mr. Small is President, Chief Operating
Officer and a member of the Board of
Directors of Fannie Mae (a
Congressionally chartered mortgage
financing corporation). Before joining
Fannie Mae, Mr. Small was Vice Chairman
and Chairman of the Executive Committee
of the Boards of Directors of
Citicorp/Citibank. He also serves as a
director of The Chubb Corporation,
Chairman of the Financial Advisory
Committee of Trans-Resources
International, a member of the Board of
Trustees of Morehouse College and New
York University Medical Center, and a
member of the U.S. Holocaust Memorial
Council. Mr. Small served as a director
of Old Marriott from 1995 to March 1998,
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<PAGE>
and has served as a director of the
Company since March 1998. He is currently
serving a term expiring at the 2000
Annual Meeting of Shareholders.
13
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as to the shares of Company Common
Stock beneficially owned (or deemed to be beneficially owned pursuant to the
rules of the Securities and Exchange Commission (the "SEC")) as of March 27,
1998, by each director of the Company, each nominee, each of the executive
officers named in the Summary Compensation Table included elsewhere herein, all
directors and executive officers of the Company as a group, and beneficial
holders of five percent (5%) or more of either class of outstanding Company
Common Stock, immediately after giving effect to the issuance of one share of
MAR Common Stock and one share of MAR-A Common Stock for each share of Old
Marriott Common Stock outstanding on March 27, 1998 as a result of the Spinoff.
<TABLE>
<CAPTION>
Common Stock Class A Common Stock
--------------------------------------------- ---------------------------------------------
Amount Amount
Beneficially Owned (1) Percent of Class Beneficially Owned (1) Percent of Class
Name ---------------------- ---------------- ---------------------- ----------------
- ----
<S> <C> <C> <C> <C>
Directors:
J.W. Marriott, Jr. 13,408,336(2)(3) 10.5 13,408,336(2)(3) 10.5
Richard E. Marriott 12,953,970(2)(4) 10.1 12,953,970(2)(4) 10.1
Henry Cheng Kar-Shun 1,300 * 1,300 *
Gilbert M. Grosvenor 2,100 * 2,100 *
Floretta Dukes McKenzie 435 * 435 *
Harry J. Pearce 5,000 * 5,000 *
W. Mitt Romney 5,000 * 5,000 *
Roger W. Sant 10,000 * 10,000 *
William J. Shaw 662,072(5)(7) * 662,072(5)(7) *
Lawrence M. Small 42,500(6) * 42,500(6) *
Named Executive Officers:
Joseph Ryan 62,846(5)(7) * 62,846(5)(7) *
Michael A. Stein 111,335(5)(7) * 111,335(5)(7) *
William R. Tiefel 457,842(5)(7) * 457,842(5)(7) *
James M. Sullivan 146,048(5)(7) * 146,048(5)(7) *
All Directors, Nominees and 24,043,066(2)(8) 18.8 24,043,066(2)(8) 18.8
Executive Officers as a Group
(20 Including the Foregoing)
</TABLE>
- -------------
* Less than 1 percent
(1) Based on the number of shares outstanding at, plus the number of shares
acquirable by the specified person(s) within 60 days of, March 27, 1998.
Reflects the issuance of stock options and restricted stock to replace
previously outstanding options and restricted stock of Old Marriott in
connection with the Spinoff. Share amounts reflect antidilution adjustments
for the Spinoff in order to preserve the economic value of the securities
previously held.
(2) Includes: 1,575,020 shares of each class held by J.W. Marriott, Jr. and
Richard E. Marriott as co-trustees of 16 trusts for the benefit of their
children and 2,536,787 shares of each class owned by The J. Willard Marriott
Foundation, a charitable foundation in which J.W. Marriott, Jr., Richard E.
Marriott and their mother serve as co-trustees. These shares are reported as
beneficially owned by both J.W. Marriott, Jr. and Richard E. Marriott, but
are included only once in reporting the number of shares owned by all
directors, nominees and executive officers as a group. The shares included
herein do not include: (i) 1,910,354 shares of each class owned and
controlled by certain other members of the Marriott family, (ii) 1,667,385
shares of each class held by a charitable annuity trust,
14
<PAGE>
created by the will of J. Willard Marriott, in which J.W. Marriott, Jr. and
Richard E. Marriott have a remainder interest and in which their mother is
trustee, or (iii) 157,774 shares of each class held by the adult children of
J.W. Marriott, Jr. and Richard E. Marriott, as trustees of 26 trusts
established for the benefit of the grandchildren of J.W. Marriott, Jr. and
Richard E. Marriott.
(3) Includes, in addition to the shares referred to in footnote (2): (i) 885,328
shares of each class subject to options exercisable within 60 days, (ii)
402,430 shares of each class held as trustee of two trusts for the benefit
of Richard E. Marriott, (iii) 68,426 shares of each class owned by J.W.
Marriott, Jr.'s wife (Mr. Marriott disclaims beneficial ownership of such
shares), (iv) 670,267 shares of each class owned by four trusts for the
benefit of J.W. Marriott, Jr.'s children, in which his wife serves as a co-
trustee, (v) 23,329 shares of each class owned by six trusts for the benefit
of J.W. Marriott, Jr.'s grandchildren, in which his wife serves as a co-
trustee, (vi) 80,000 shares of each class, owned by JWM Associates Limited
Partnership, whose general partner is J.W. Marriott, Jr. and (vii) 2,707,590
shares of each class owned by Family Enterprises, whose general partner is a
corporation in which J.W. Marriott, Jr. is a controlling shareholder.
(4) Includes, in addition to the shares referred to in footnote (2): (i) 61,317
shares of each class subject to options exercisable within 60 days, (ii)
299,689 shares of each class held as trustee of two trusts established for
the benefit of J.W. Marriott, Jr., (iii) 68,219 shares of each class owned
by Richard E. Marriott's wife, (iv) 603,828 shares of each class owned by
four trusts for the benefit of Richard E. Marriott's children, in which his
wife serves as a co-trustee, and (v) 2,302,729 shares of each class owned by
First Media Limited Partners, whose general partner is a corporation in
which Richard E. Marriott is the controlling shareholder.
(5) Includes shares of unvested restricted stock awarded under the 1998
Comprehensive Stock and Cash Incentive Plan as follows: Mr. Ryan: 30,823
shares of each class; Mr. Stein: 16,513 shares of each class; Mr. Shaw:
20,917 shares of each class; Mr. Tiefel: 2,202 shares of each class; and
Mr. Sullivan: 12,110 shares of each class. Shares of restricted stock are
voted by the holder thereof. See "Executive Compensation; Summary
Compensation Table."
(6) Includes 2,000 shares of each class held by two trusts for the benefit of
non-family members in which Mr. Small is trustee and 500 shares of each
class held by Mr. Small as custodian for a non-family member minor child.
Mr. Small disclaims beneficial ownership of all such shares.
(7) Includes shares subject to options exercisable within 60 days, as follows:
Mr. Ryan: 23,392 shares of each class; Mr. Stein: 77,332 shares of each
class; Mr. Shaw: 581,781 shares of each class; Mr. Tiefel: 394,643 shares
of each class; and Mr. Sullivan: 119,028 shares of each class.
(8) All directors, nominees and executive officers as a group (other than J.W.
Marriott, Jr. and Richard E. Marriott) would have beneficially owned an
aggregate of 1,792,567 shares or 1.4 percent of each class of New Marriott
Common Stock outstanding as of March 27, 1998, based on the number of shares
of each class of Company Common Stock beneficially owned by such persons as
of such date.
THE BOARD OF DIRECTORS AND
COMMITTEES OF THE BOARD
The Board of Directors of Old Marriott, on which each current director of the
Company served during 1997, met seven times in 1997. No director attended fewer
than 75% of the total number of meetings of the Board and Committees on which
such director served, other than Dr. Cheng.
The Board has appointed four standing committees: (i) Executive; (ii) Audit;
(iii) Compensation Policy; and (iv) Nominating and Corporate Governance.
Committee members of the Company held identical committee positions with Old
Marriott during 1997 and until March 27, 1998.
The members of the Executive Committee are J.W. Marriott, Jr. (Chair) and Roger
W. Sant. When the Board is not in session, this Committee is authorized to
exercise all powers of the Board, subject to specific restrictions as to powers
retained by the full Board. Retained powers
15
<PAGE>
include those relating to amendments to the certificate of incorporation and
bylaws, mergers, consolidations, sales or exchanges involving substantially all
of the Company's assets, declarations of dividends, and issuances of stock. The
Executive Committee of Old Marriott did not meet in 1997.
The members of the Audit Committee, none of whom are employees of the Company,
are: W. Mitt Romney (Chair), Gilbert M. Grosvenor, Harry J. Pearce, Roger W.
Sant, and Lawrence M. Small. The Audit Committee meets with the Company's
independent auditors, management representatives and internal auditors. The
Audit Committee recommends to the Board the appointment of independent auditors,
approves the scope of audits and other services to be performed by the
independent and internal auditors, considers whether any circumstance, including
the performance of any professional service, impairs the independence of the
auditors, and reviews the results of internal and external audits, the
accounting principles applied in financial reporting, and financial and
operational controls. The independent auditors and internal auditors have
unrestricted access to the Audit Committee and vice versa. The Audit Committee
of Old Marriott met three times in 1997.
The members of the Compensation Policy Committee, none of whom are employees of
the Company, are: Floretta Dukes McKenzie (Chair), Roger W. Sant, W. Mitt
Romney, and Lawrence M. Small. The functions of this Committee include
submitting recommendations on policies and procedures relating to senior
officers' compensation and various employee stock plans, and approval of
individual salary adjustments, bonus payments, and stock awards in those areas.
The Compensation Policy Committee of Old Marriott met five times in 1997.
The members of the Nominating and Corporate Governance Committee, none of whom
are employees of the Company, are: Gilbert M. Grosvenor (Chair), Floretta Dukes
McKenzie, and Harry J. Pearce. This Committee makes recommendations to the Board
regarding corporate governance and considers nominees for election as directors.
The Committee utilizes the same procedure to consider nominees recommended by
shareholders as is used to consider nominees recommended by any other source. In
addition, the Committee fulfills an advisory function with respect to a range of
matters affecting the Board and its committees, including the making of
recommendations with respect to qualifications of director candidates,
compensation of directors, selection of committee chairs, committee assignments,
and related matters affecting the functioning of the Board. The Nominating and
Corporate Governance Committee of Old Marriott met once in 1997.
COMPENSATION OF DIRECTORS
Directors who are also employees of the Company receive no additional
compensation for service as directors. Directors who are not employees receive
an annual retainer fee of $25,000, together with an attendance fee of $1,250 per
Board, Committee or shareholder meeting. The Chair of each Committee of the
Board receives an additional annual fee of $1,000. Any individual director
16
<PAGE>
receiving these fees may elect to defer payment of all or any portion thereof
pursuant to the Company's Executive Deferred Compensation Plan and/or the 1998
Comprehensive Stock and Cash Incentive Plan. Gilbert M. Grosvenor, Floretta
Dukes McKenzie, Harry J. Pearce, W. Mitt Romney, Roger W. Sant, and Lawrence M.
Small are currently participating in one or both of these plans. Under the
Marriott International, Inc. 1995 Non-Employee Directors' Deferred Stock
Compensation Plan, in 1997 each non-employee director received an annual
director stock award of 250 shares and the following special one-time director
stock awards: Mr. Grosvenor, Mr. Sant and Dr. McKenzie: 3,000 shares; Mr. Small
and Mr. Pearce: 2,000 shares; Mr. Romney: 1,500 shares. For 1998 and subsequent
years, annual director stock awards will be made under the Marriott
International, Inc. 1998 Comprehensive Stock and Cash Incentive Plan. The
amount of such awards will be determined by the Board of Directors at a meeting
preceding each annual meeting of shareholders with a value approximately equal
to one-half of the annual retainer fee (or $12,500) as of the date of
determination. Directors are also reimbursed for travel expenses and other out-
of-pocket costs incurred when attending meetings.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's executive officers and directors, and persons who own
more than ten percent of a registered class of the Company's equity securities
("Reporting Persons"), to file reports of beneficial ownership and changes in
beneficial ownership of Company equity securities with the SEC and the New York
Stock Exchange. Specific due dates for these reports have been established, and
the Company is required to report in this Proxy Statement any failure by such
persons to file such reports on a timely basis during 1997. During 1997, the
Company's directors were not subject to Section 16 (a) because the Company was
during that period a wholly owned subsidiary of Old Marriott. During 1997, the
Reporting Persons of Old Marriott were in compliance with these requirements,
with the exception of one transaction not timely reported by Robert T. Pras and
one transaction not timely reported by Edwin D. Fuller.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1997, the Compensation Policy Committee of Old Marriott was comprised of
Floretta Dukes McKenzie (Chair), Roger W. Sant, W. Mitt Romney and Lawrence M.
Small.
J.W. Marriott, Jr. serves on the Executive Compensation Committee of the Board
of Directors of General Motors Corporation. Harry J. Pearce, a director of the
Company, is an executive officer and director of General Motors Corporation.
EXECUTIVE COMPENSATION
17
<PAGE>
The following tables on Executive Compensation (Table I - Summary Compensation
Table, Table II - Stock Option Grants in Last Fiscal Year, and Table III -
Aggregated Stock Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values) reflect awards denominated in Old Marriott Common Stock and do not
reflect redenomination of such awards into shares of New Marriott Common Stock
as a result of the Spinoff. All awards were made under the Marriott
International, Inc. 1993 Comprehensive Stock Incentive Plan or the Marriott
International, Inc. 1996 Comprehensive Stock Incentive Plan (the "Old MI
Plans"). In connection with the Spinoff, the awards under the Old MI Plans were
cancelled and substitute awards were granted under the Marriott International,
Inc. 1998 Comprehensive Stock and Cash Incentive Plan (the "MI Plan"). The
substitute awards preserved (but did not increase or decrease) the economic
value of the awards under the Old MI Plans.
Summary Compensation Table
Table I below sets forth a summary of the compensation paid by Old Marriott
during the last three fiscal years to the Chief Executive Officer of Old
Marriott and the five most highly compensated executive officers (other than the
Chief Executive Officer) of Old Marriott as of January 2, 1998. The persons
listed below hold the same positions with the Company as the positions they held
with Old Marriott during 1997 and until March 27, 1998.
18
<PAGE>
TABLE I
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Name Fiscal Salary Bonus Restricted Stock All Other
Year (1)(2) ($) Stock Options Compensation
($) (3)(4) (#) (5)
($) ($)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
J. W. Marriott, Jr. 1997 900,000 990,000 198,001 287,500 79,590
Chairman and 1996 840,866 809,754 161,975 71,000 32,125
Chief Executive 1995 800,000 696,000 139,202 100,000 7,592
Officer
- ----------------------------------------------------------------------------------------------------
William J. Shaw 1997 618,846 556,961 111,410 195,000 24,009
President and 1996 545,289 425,325 85,085 46,000 19,780
Chief Operating 1995 520,000 342,680 589,152 52,000 35,910
Officer
- ----------------------------------------------------------------------------------------------------
William R. Tiefel 1997 565,000 452,000 90,431 135,000 44,714
Executive Vice 1996 545,289 393,699 1,175,020 46,000 40,323
President and 1995 520,000 341,120 365,720 52,000 35,187
President-Marriott
Lodging Group
- ----------------------------------------------------------------------------------------------------
Joseph Ryan 1997 400,000 320,000 741,766 100,000 12,493
Executive Vice 1996 371,000 248,941 49,775 25,000 1,170
President and 1995 350,000 217,000 43,403 30,000 119,900
General Counsel
- ----------------------------------------------------------------------------------------------------
Michael A. Stein 1997 400,000 320,000 63,966 100,000 29,761
Executive Vice 1996 356,731 239,366 47,850 23,000 25,950
President and 1995 325,000 201,500 572,792 25,000 21,126
Chief Financial
Officer
- ----------------------------------------------------------------------------------------------------
James M. Sullivan 1997 400,000 320,000 63,966 100,000 29,684
Executive Vice 1996 320,000 236,730 47,355 23,000 24,622
President - 1995 265,000 383,787 460,450 11,500 19,700
Lodging
Development
- ----------------------------------------------------------------------------------------------------
</TABLE>
Footnotes:
(1) Fiscal year 1996 base salary earnings were for 53 weeks, all other fiscal
year base salary earnings were for 52 weeks.
(2) Salary amounts include base salary earned and paid in cash during the
fiscal year and the amount of base salary deferred at the election of the
executive officer under the Old Marriott Employees' Profit Sharing, Retirement
and Savings Plan and Trust (the "Profit Sharing Plan") and Executive Deferred
Compensation Plan (the "Deferred Plan").
19
<PAGE>
(3) All awards of restricted stock noted in the above table for 1995, 1996
and 1997 were originally made under the Old MI Plans for 1995, 1996 and 1997
performance. Restricted stock awards granted by the Company are subject to
general restrictions, such as continued employment and non-competition, and in
some cases, additional performance restrictions such as attainment of financial
objectives. Holders of restricted stock receive dividend payments and exercise
voting rights with respect to such shares. Awards of deferred bonus stock were
generally derived by dividing 20 percent of each individual's annual cash bonus
award by the average of the high and low trading prices for a share of Old
Marriott Common Stock on the last trading day for the fiscal year. No voting
rights or dividends are attributed to award shares until such awards are
distributed. The individual executive may elect to denominate the awards as
current or deferred. A current award is distributed in 10 annual installments
commencing one year after the award is granted. A deferred award is distributed
in a lump sum or in up to 10 installments following termination of employment.
Deferred bonus stock contingently vests pro-rata in ten annual installments
commencing one year after the award is granted to the employee. Awards are not
subject to forfeiture once the employee reaches age 55 with 10 years of service
with the Company, or has 20 years of service with the Company with Board
approval.
(4) Total awards for each executive including awards reflected in the
restricted stock column in the above table include the following for the named
individual: (i) for Mr. Marriott 5,833 shares deferred bonus stock with a value
of $399,910; (ii) for Mr. Shaw 15,651 shares deferred bonus stock, 27,000
shares restricted stock and 25,000 shares deferred contract stock with an
aggregate value of $4,638,153; (iii) for Mr. Tiefel 66,569 shares deferred
bonus stock, 2,000 shares restricted stock and 49,847 shares deferred contract
stock with an aggregate value of $8,118,601; (iv) for Mr. Ryan 3,098 shares
deferred bonus stock, 28,000 shares restricted stock and 10,000 shares deferred
contract stock with an aggregate value of $2,817,679; (v) for Mr. Stein 5,977
shares deferred bonus stock, 15,000 shares restricted stock and 10,000 shares
deferred contract stock with an aggregate value of $2,123,783; and (vi) for Mr.
Sullivan 9,308 shares deferred bonus stock, 12,000 shares restricted stock,
10,000 shares deferred contract stock with an aggregate value of $2,146,476.
(5) Amounts included in "All Other Compensation" represent Company matching
contributions made under one or both of the Profit Sharing Plan and the Deferred
Plan. In 1997, for Mr. Marriott, $3,711 was attributable to the Profit Sharing
Plan and $75,879 was attributable to the Deferred Plan; for Mr. Shaw, $2,082 was
attributable to the Profit Sharing Plan and $21,926 was attributable to the
Deferred Plan; for Mr. Tiefel, $3,711 was attributable to the Profit Sharing
Plan and $41,003 was attributable to the Deferred Plan; for Mr. Ryan, $1,531 was
attributable to the Profit Sharing Plan and $10,962 was attributable to the
Deferred Plan; for Mr. Stein, $3,711 was attributable to the Profit Sharing Plan
and $26,050 was attributable to the Deferred Plan; for Mr. Sullivan, $3,711 was
attributable to the Profit Sharing Plan and $25,972 was attributable to the
Deferred Plan.
20
<PAGE>
Stock Options
Table II and Table III below set forth information regarding options to purchase
Old Marriott Common Stock granted in fiscal 1997 under the Old MI Plans.
TABLE II
Stock Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Stock % of Total
Options Stock Grant Date
Granted Options Granted Exercise Expiration Present Value
Name (1) to Employees in Price Date (4)
- ----- (#) Fiscal Year ($/Sh) (2)(3) ($)
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
J. W. Marriott, Jr. 225,000 6.5 54.188 02/06/07 4,155,750
62,500 1.8 67.7813 11/06/12 1,470,000
William J. Shaw 150,000 4.3 54.188 02/06/07 2,770,500
45,000 1.3 67.7813 11/06/12 1,058,400
William R. Tiefel 100,000 2.9 54.188 02/06/07 1,847,000
35,000 1.0 67.7813 11/06/12 823,200
Joseph Ryan 80,000 2.3 54.188 02/06/07 1,477,600
20,000 0.6 67.7813 11/06/12 470,400
Michael A. Stein 80,000 2.3 54.188 02/06/07 1,477,600
20,000 0.6 67.7813 11/06/12 470,400
James M. Sullivan 80,000 2.3 54.188 02/06/07 1,477,600
20,000 0.6 67.7813 11/06/12 470,400
</TABLE>
(1) Under the Old MI Plans, the Company was entitled to grant to eligible
employees stock options either on a non-qualified tax basis or as "incentive
stock options" within the meaning of Section 422 of the Internal Revenue Code.
All options granted to Company employees in 1997 were non-qualified options and
totaled 3,449,975 shares.
(2) All options granted except for the supplemental options granted on
February 6, 1997, vest over four years on the anniversary date of the grant at a
rate of 25% per year and have a 15-year term. Except as set forth in the
succeeding sentence, if an optionee ceases to be an employee, other than by
reason of death, while holding an exercisable option, the option will generally
terminate if not exercised within three months of termination of employment.
Options held by optionees who retire and meet certain retirement provisions of
the Old MI Plan (retirement approved by the Compensation Policy Committee of the
Board of Directors and either age 55 with 10 years of service, or 20 years of
service) will not expire until the earlier of (i) the expiration of
21
<PAGE>
the option in accordance with its original term or (ii) one year from the date
on which the option granted latest in time to the optionee has fully vested.
Options are not transferable except that if an optionee dies while an employee
of the Company more than one year from the date the option was granted, a
legatee may exercise the remaining options at any time up to one year after the
date of death of the employee.
(3) The options granted on February 6, 1997 will vest in full at the end of
eight years on the anniversary date of the grant and may vest earlier at the end
of three, four or five years if certain stock price appreciation goals are
achieved.
(4) The Black-Scholes option pricing model was used to estimate the present
value of the options at the date of the grant. The material assumptions and
adjustments used in estimating the value of the options include: a 10-year
option term for the February grant and a 15-year option term for the November
grant, an exercise price of $54.188 for the options issued in February and
$67.7813 for the options issued in November, expected volatility of 23.97%, an
annual dividend of $0.35, a risk free interest rate of 6.15%, an expected life
of 7.15 years and a 13.3% reduction to reflect the probability of forfeiture due
to termination prior to vesting. These inputs resulted in an $18.47 per share
option value for the February grant and a $23.52 per share option value for the
November grant.
22
<PAGE>
TABLE III
Aggregated Stock Option Exercises in Last Fiscal
Year and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Number of Shares Underlying Value of Unexercised
Shares Unexercised Options In-the-Money Stock Options
Name Company Acquired at Fiscal Year End (#) Fiscal Year End (3)
(1)(2) on Value ---------------------- -------------------
Exercise Realized
(#) ($) Exercisable Unexercisable Exercisable Unexercisable
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
J.W. Marriott, Jr. MI 0 0 954,250 413,250 45,379,937 6,470,336
HMC 0 0 810,447 0 12,671,964 0
----------------------------------------------------------------------------------------------------
TOTAL 0 0 1,764,697 413,250 58,051,901 6,470,336
- -------------------------------------------------------------------------------------------------------------------------
William J. Shaw MI 20,000 952,066 528,500 269,500 25,707,664 4,032,905
HMC 22,389 364,950 439,927 0 7,033,999 0
----------------------------------------------------------------------------------------------------
TOTAL 42,389 1,317,016 968,427 269,500 32,741,663 4,032,905
- -------------------------------------------------------------------------------------------------------------------------
William R. Tiefel MI 30,000 1,314,617 358,500 209,500 17,291,480 3,306,518
HMC 9,795 150,171 283,211 0 45,81,072 0
----------------------------------------------------------------------------------------------------
TOTAL 39,795 1,464,788 641,711 209,500 21,872,552 3,306,518
- -------------------------------------------------------------------------------------------------------------------------
Joseph Ryan MI 25,000 1,208,600 33,750 146,250 1,068,972 2,406,150
HMC 0 0 0 0 0 0
----------------------------------------------------------------------------------------------------
TOTAL 25,000 1,208,600 33,750 146,250 1,068,972 2,406,150
- -------------------------------------------------------------------------------------------------------------------------
Michael A. Stein MI 20,400 1,105,086 70,250 137,250 2,612,242 2,090,397
HMC 14,386 288,409 0 0 0 0
----------------------------------------------------------------------------------------------------
TOTAL 34,786 1,393,495 70,250 137,250 2,612,242 2,090,397
- -------------------------------------------------------------------------------------------------------------------------
James M. Sullivan MI 4,700 165,830 108,125 126,375 5,160,066 1,715,963
HMC 0 0 13,154 0 213,072 0
----------------------------------------------------------------------------------------------------
TOTAL 4,700 165,830 121,279 126,375 5,373,138 1,715,963
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
Footnotes:
(1) "MI" represents options to purchase Old Marriott Common Stock. "HMC"
represents options to purchase Host Marriott Corporation Common Stock.
(2) In connection with the distribution of all of Old Marriott's outstanding
common stock on a share-for-share basis to shareholders of Marriott Corporation
(now Host Marriott Corporation) ("Host Marriott") in October 1993 (the "October
1993 Distribution") and pursuant to the Marriott Corporation Employee Stock
Option Plan, all Marriott Corporation options were adjusted to reflect the
October 1993 Distribution. Each nonqualified Marriott Corporation option was
"split" by (i) adjusting the price at which the Marriott Corporation option (as
adjusted, a "Host Marriott Corporation Option") was exercisable for common stock
of Host Marriott
23
<PAGE>
Corporation and (ii) providing the holder thereof with an option to purchase an
identical number of shares of Old Marriott Common Stock (each, an "Old Marriott
Option"). The exercise price of the Old Marriott Option was set, and the
exercise price of the corresponding Host Marriott Corporation Option was
adjusted, so as to equal, in the aggregate, the exercise price of the Marriott
Corporation option prior to the October 1993 Distribution. Accordingly, these
adjustments merely preserved, and did not increase or decrease, the economic
value of the outstanding Marriott Corporation option prior to the October 1993
Distribution. In December of 1995, in connection with the distribution of all of
Host Marriott Services Corporation's outstanding common stock on a share-for-
share basis to shareholders of Host Marriott Corporation (the "Host Marriott
Services Distribution") and pursuant to the Host Marriott Corporation 1993
Comprehensive Stock Incentive Plan, all Host Marriott Corporation Options were
adjusted to reflect the Host Marriott Services Distribution. The Host Marriott
Services Distribution resulted in a lower option price and greater number of
options in Host Marriott Corporation for all Old Marriott employees with
outstanding options in Host Marriott Corporation. The exercise price was set,
and the price of the Host Marriott Corporation Options were adjusted, so as to
preserve (but not increase or decrease) the economic value of each Host Marriott
Corporation Option immediately prior to the Host Marriott Services Distribution.
(3) Based on a per share price for Old Marriott Common Stock of $68.56 and a
per share price for Host Marriott Corporation Common Stock of $19.21. These
prices reflect the average of the high and low trading prices on the New York
Stock Exchange on January 2, 1998.
REPORT ON EXECUTIVE COMPENSATION
BY THE COMPENSATION POLICY
COMMITTEE
The Compensation Policy Committee (the "Committee") is responsible for
establishing basic principles related to the compensation programs of the
Company and for providing oversight for compensation programs for senior
executive officers. The principles include building a strong relationship
between shareholder return and executive compensation, providing incentives
to achieve both short and long-term goals, and providing an overall level
of remuneration which is competitive and reflective of performance. The
Committee met five times during 1997. The Chief Executive Officer and other
senior executive officers are not present at the meetings unless requested
by the Committee.
Compensation Philosophy and Programs
In administering senior executive officer compensation, the Committee's
objective is to establish a total pay program for the Company which
appropriately balances compensation costs with salaries and incentives
sufficient to retain and motivate key executives. Senior Human Resources
management of the Company presents proposals and recommendations on senior
executive officer compensation to the Committee for their review and
evaluation. To establish compensation targets, the Committee uses data
provided by the Company which is obtained from independent consultants. The
data reflects compensation practices with companies of approximately
Marriott's size (the comparator group) who participate in a variety of
compensation surveys. The Committee believes that targeting compensation at
a level comparable to other large companies appropriately reflects the
labor market for Company executives. Target cash compensation levels (base
salary range midpoint plus target bonus) are established at the median
level of cash compensation for the comparator group. Long-term incentive
levels are established based on the average of three-year median long-term
incentive values for the comparator group. Companies in the comparator
group
24
<PAGE>
may be included in the Standard & Poor's Hotel/Motel Index used in the
performance chart included in this Proxy Statement; however, the comparator
group is not made up exclusively of companies used in that Index. As the Company
also recruits senior executives from outside the hospitality industry, the
Committee believes that the broad-based comparator group is a more appropriate
basis for comparison.
Base Salary
The Company has an executive compensation salary structure approved by the
Committee, which includes salary ranges established around a salary grade
midpoint. Each position's salary grade range and target bonus opportunity are
established based on the median level of total cash compensation for similar
positions in the survey data. Actual base salaries are set within the
prescribed salary range, based on a subjective assessment of factors including
tenure, experience, and individual performance. This assessment is not subject
to weightings or formulas. Individual annual salary increases reflect the
position within the salary range, the merit increase guidelines established by
the Company, and individual performance over the prior year. Merit increase
guidelines are established based on survey information of annual salary increase
budgets for the comparator group, along with an assessment of the Company's
labor costs for management employees.
Annual Cash Incentives
Old Marriott established the 1994 Executive Officer Incentive Plan, which is
focused on financial objectives, and the 1994 Executive Officer Individual
Performance Plan, which is focused on human resource and other business
requirements, to help motivate the attainment of annual objectives. The plans
governed certain cash incentive arrangements in place for 1997. Under each
plan, goals and objectives were established for a minimum level, a target level,
and a maximum level of performance. Actual performance was measured relative to
these levels for each objective in order to determine the actual payout. For
each objective, no payment was made if performance failed to meet the minimum
level for that objective.
The 1997 incentive plans for the Chief Executive Officer and other senior
executive officers included objectives related to Company financial performance,
individual performance, customer satisfaction, and lodging growth objectives.
Stock Incentives
The Company provides intermediate and long-term incentives through the MI Plan
(for 1997, Old Marriott provided these incentives through the Old MI Plan). The
Committee believes that stock ownership by senior executive management is
essential for aligning management's interest with that of shareholders. Through
deferred bonus stock awards, approximately 3,000 managers, including the Chief
Executive Officer and other senior executive officers, receive an award of
shares equal to 20% of their annual cash bonus. The award is distributed
ratably over a ten year
25
<PAGE>
period, or at retirement if so elected by certain levels of management, and is
contingent upon continued employment.
In addition to deferred bonus stock awards, the Company also makes grants of
stock options under the MI Plan. Stock options are the primary long-term
incentive of the Company. The number of shares subject to options granted to
each executive officer is related to a guideline number of shares which is
established for each eligible salary grade level based on the survey data
described above. The Committee establishes a range of share awards around the
guideline award, and individual awards are determined based on a subjective
assessment of individual performance, contribution and potential. Under the
terms of the MI Plan, awards of restricted stock and deferred contract stock are
also made to key management employees. These awards tend to be relatively
infrequent and are used to recognize special performance of key executives or as
an employment inducement. The Company considers a number of factors when
determining stock grants such as individual performance, the size of competitive
long-term awards, key contributions, and previous share grants.
1997 Compensation of the Chief Executive
Officer and Reported Executive Officers
The salaries for Mr. Marriott and all other executive officers were reviewed by
the Committee in November, 1996. Mr. Marriott received an increase in base pay
on January 4, 1997 of 9.1%, which resulted in his annual pay rate increasing to
$900,000. This salary is below the median for the survey group. The other five
named executive officers received base salary increases ranging from 5.6% to
14.3% which were effective January 4, 1997. As a group, the other named senior
executive officers have base salaries which approximate the median of the survey
group.
Under the 1994 Executive Officer Incentive Plan, Mr. Marriott's annual incentive
opportunity as a percentage of base salary was 55% based on attaining a
corporate cash flow objective and 22% related to earnings per share. Under the
1994 Executive Officer Individual Performance Plan, Mr. Marriott's annual
incentive opportunity as a percentage of base salary was 22% related to
individual objectives and 11% related to customer satisfaction. In 1997, Old
Marriott exceeded the maximum level of performance for the cash flow objective
and performance for earnings per share was at the maximum level of performance.
Mr. Marriott accomplished all of his individual objectives and performance for
customer satisfaction was above the maximum level. The aggregate target level
of bonus award for Mr. Marriott was 80% and the maximum level of bonus award was
equal to 110% of eligible fiscal year salary. The total award payout of
$990,000 corresponded to 110% of salary. Mr. Marriott's annual cash incentive
payout was below the median for the comparator group. From a total cash
compensation perspective, his annual compensation, including base salary and
bonus compensation, is below the median for the comparator group. In addition,
Mr. Marriott received 2,888 shares of deferred bonus stock which was equal to
20% of his bonus. Mr. Marriott has elected to receive his deferred bonus stock
shares after retirement.
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The other named senior executive officers were also participants in the 1994
Executive Officer Incentive Plan and the 1994 Executive Officer Individual
Performance Plan. Measures utilized included Old Marriott and, in some cases,
business group cash flow, customer satisfaction, lodging rooms growth objectives
and individual objectives. The aggregate target payouts for other named
executives were set at 50% to 60% of salary and the maximum aggregate payouts
from 80% to 90% of salary. Actual total award payouts for 1997 ranged from 80%
to 90% of salary.
In 1997, two stock option grants were made to Mr. Marriott and the other named
executive officers. A special supplemental grant was made in February to Mr.
Marriott of options to acquire 225,000 shares that will vest at the end of eight
years. The option grant may vest earlier at the end of year three, four or five
if the Company's stock price appreciation is at the 75th percentile of the
Standard and Poor's 500 Index. The other named executive officers received a
similar supplemental grant of options to acquire shares ranging from 80,000 to
150,000 shares. The primary objective of these grants is to focus executive
management on opportunities for significant stock price appreciation. If the
stock price goals are achieved, the total compensation paid to the senior
management team would approximate the 75th percentile. It is the committee's
belief that shareholder value would increase substantially and that overall
executive compensation paid at the 75th percentile is appropriate.
In addition, Mr. Marriott received a grant of options to acquire 62,500 shares
in November which vest over four years. This grant, as well as similar grants
to the other named executive officers, were all at the guideline level
established for their specific salary grade.
27
<PAGE>
Impact of Internal Revenue Code Section
162(m)
Under the Omnibus Budget Reconciliation Act of 1993, provisions were added to
the Internal Revenue Code under Section 162(m) that limit the tax deduction for
compensation expense in excess of one million dollars paid to each of certain
executive officers. However, performance-based compensation can be excluded
from the limit so long as it meets certain requirements. The Committee believes
the 1994 Executive Officer Incentive Plan satisfies the requirements for
exemption under the Internal Revenue Code Section 162(m). Payments made under
this Plan qualify as performance-based compensation and constitute the majority
of aggregate annual incentive payment for Mr. Marriott and all other named
executive officers.
Although the 1994 Executive Officer Individual Performance Plan does not meet
the requirement necessary for exemption as performance based compensation, it is
the belief of the Compensation Policy Committee that incentives for performance
relative to certain Company objectives, such as personnel planning, customer
satisfaction and other non-financial business requirements, are relevant and
appropriate. For 1997, the annual salary plus the bonus paid under the 1994
Executive Officer Individual Performance Plan for Mr. Marriott and the other
named executive officers were in each case less than one million dollars after
amounts deferred into the Deferred Plan. The Committee reserves the right to
pay non-deductible compensation if it believes to do so is in the best interest
of the shareholders and the Company. The stock option awards made under the
terms of the Old MI Plan are exempt as performance based compensation for
purposes of calculating the one million dollar limit. Due to the Company's
focus on performance-based compensation plans and continued deferral of
compensation by certain executive officers, the Committee expects to continue to
qualify most compensation paid to the group as tax deductible.
Summary
The Compensation Policy Committee believes that the compensation programs of the
Company are well structured to encourage attainment of objectives and foster a
shareholder perspective in management. The Committee feels that the awards made
in 1997 were competitive and appropriate, and serve shareholders' long-term
interest.
Members Of The Compensation Policy Committee
Floretta Dukes McKenzie, Chair
Roger W. Sant
W. Mitt Romney
Lawrence M. Small
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PERFORMANCE GRAPH
The following line graph compares the cumulative total shareholder return on Old
Marriott's Common Stock against the cumulative total returns of the Standard &
Poor's Corporation Composite 500 Index (the "S&P 500 Index") and the Standard
and Poor's Corporation Lodging-Hotels Composite Index (the "S&P Lodging-Hotels
Index") over the period commencing October 1, 1993 (the initial trading date for
the Old Marriott Common Stock) and ending January 2, 1998. Comparable data does
not exist for the Company, which became a public company on March 27, 1998 and
has had only a brief trading history. The graph assumes an initial investment
of $100 on October 1, 1993, and reinvestment of dividends.
The Company believes the information provided has only limited relevance to an
understanding of Old Marriott's compensation policies during the indicated
periods and does not reflect all matters appropriately considered by Old
Marriott in developing its compensation strategy.
-----------------------------------------------------------------
COMPARISON OF SHAREHOLDER RETURNS AMONG MARRIOTT
INTERNATIONAL, THE S&P 500 INDEX AND THE S&P LODGING-HOTELS INDEX
-----------------------------------------------------------------
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
10/1/93 12/31/93 12/30/94 12/29/95 1/3/97 1/2/98
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Marriott International, Inc. 100 112.1 109.8 150.5 217.8 271.5
S&P Lodging-Hotels Index 100 105.0 93.3 110.3 131.4 181.3
S&P 500 Index 100 102.3 103.6 142.53 175.3 228.5
</TABLE>
29
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CERTAIN TRANSACTIONS
JWM Family Enterprises, L.P. ("Family Enterprises"), a Delaware limited
partnership owned by J.W. Marriott, Jr., the Chairman and Chief Executive
Officer of the Company, and members of his immediate family, owns a 216-room
Courtyard Hotel in Long Beach, California, a 120-room Residence Inn in San
Antonio, Texas and a 468-room Fairfield Inn in Anaheim, California. Subsidiaries
of the Company operate the three properties pursuant to management agreements
with Family Enterprises. For 1997, the Company received management fees
totaling $878,183 for these properties, plus reimbursement of certain expenses.
The Company also received payments in 1997 of $54,647 from Family Enterprises
related to furnishings and supplies for the Anaheim and Long Beach Hotels.
McIntosh Mill Ltd. ("McIntosh Mill"), a Utah limited partnership in which
Richard E. Marriott, a director of the Company, has a 40 percent limited
partnership interest, is party to an agreement with Marriott Ownership Resorts,
Inc. ("MORI"), a subsidiary of the Company, under which MORI purchased land in
Park City, Utah from McIntosh Mill on which MORI is constructing a mixed-use,
multi-phase development. The terms of the Agreement call for McIntosh Mill to
purchase from MORI the commercial condominium units for a cash purchase price
calculated as the pro rata share of the development and construction costs of
the project allocable to the commercial units less (i) the value of the land
allocated to the residential condominium units retained by MORI for its time
share resort, and (ii) an agreed upon development fee earned by McIntosh Mill.
Construction of all phases was completed in 1997 and the cash portion of the
purchase price for the commercial space payable to MORI is approximately $3.95
million. MORI has secured payment of these amounts by purchase money mortgages
on the commercial condominium units until McIntosh Mill obtains long term
mortgage financing which is expected to be arranged in 1998.
On March 29, 1997, the Company acquired substantially all of the outstanding
common stock of Renaissance Hotel Group N.V. ("RHG"), an operator and franchisor
of 150 hotels in 38 countries, for approximately $1 billion. Dr. Henry Cheng
Kar-Shun, a director of the Company, together with members of the Cheng family,
beneficially owned approximately 60 percent of the RHG shares acquired by the
Company, and Dr. Cheng became a director of the Company in connection with the
RHG acquisition. RHG operates 87 hotels in which affiliates of Dr. Cheng and
members of the Cheng family have a direct or indirect ownership or leasehold
interest. New World Development, for which Dr. Cheng serves as Managing Director
and which is 35.3 percent owned by Dr. Cheng and members of the Cheng family,
its affiliates or affiliates of Dr. Cheng have indemnified RHG, its subsidiaries
and the Company for certain lease, debt, guarantee and other obligations in
connection with the formation of RHG as a hotel management company in 1995.
30
<PAGE>
Relationship Between the Company and Host Marriott
J.W. Marriott, Jr. and Richard E. Marriott and their respective immediate family
members beneficially own approximately 6.5 percent and 6.5 percent,
respectively, of the common stock of Host Marriott Corporation ("Host
Marriott"). Richard E. Marriott is the Chairman of the Board of Host Marriott,
and J.W. Marriott, Jr. is a director of Host Marriott.
The Company and Host Marriott are or have been party to agreements which
provide, among other things, for the Company to (i) manage lodging properties
owned or leased by Host Marriott (the "Host Marriott Lodging Management
Agreements"), (ii) manage senior living communities owned by Host Marriott (the
"Host Marriott Senior Living Management Agreements"), (iii) advance up to $225
million to Host Marriott under a line of credit (the "Host Marriott Credit
Agreement"), (iv) guarantee Host Marriott's performance in connection with
certain loans or other obligations (the "Company Guarantees") and (v) provide
Host Marriott with various administrative and consulting services and a sublease
of office space at the Marriott headquarters building (the "Services
Agreements"). The Company has the right to purchase up to 20 percent of the
voting stock of Host Marriott if certain events involving a change of control of
Host Marriott occur. These agreements were assigned from Old Marriott to the
Company upon completion of the Spinoff.
The Host Marriott Lodging Management Agreements provide for the Company to
manage Marriott hotels, Courtyard hotels and Residence Inns owned or leased by
Host Marriott. Each Host Marriott Lodging Management Agreement, when entered
into, reflects market terms and conditions and is substantially similar to the
terms of management agreements with third-party owners regarding lodging
facilities of a similar type. The Company recognized sales of $2,302 million and
operating profit (before corporate expenses and interest) of $140 million during
1997, from the lodging properties owned or leased by Host Marriott.
Additionally, Host Marriott is a general partner in several unconsolidated
partnerships that own lodging properties operated by the Company under long-term
agreements. The Company recognized sales of $1,513 million and operating profit
(before corporate expenses and interest) of $122 million in 1997, from the
lodging properties owned by these unconsolidated partnerships. The Company also
leases land to certain of these partnerships and recognized land rent income of
$23 million in 1997.
In June 1997, the Company sold to Host Marriott all of the issued and
outstanding stock of Forum Group, Inc. which owns or leases 29 senior living
communities, for aggregate consideration of approximately $550 million,
comprised of cash, notes from Host Marriott, the Company's share of outstanding
debt of Forum Group, and approximately $87 million to be received as expansions
as certain communities are completed. Marriott Senior Living Services, Inc., a
subsidiary of the Company, manages these communities under the Host Marriott
Senior Living Management Agreements. Each Host Marriott Senior Living Management
Agreement reflects market terms and conditions and is substantially similar to
the terms of management agreements with third-party owners regarding senior
living facilities of a similar type. The Company recognized sales of $126
million and operating profit (before corporate expenses and interest) of $1
million under these
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agreements during 1997.
On June 19, 1997, the $225 million secured credit facility under the Host
Marriott Credit Agreement was terminated by mutual consent. Under the Host
Marriott Credit Agreement, interest on outstanding balances up to $112.5 million
accrued at LIBOR plus 3 percent; interest on outstanding balances from $112.5
million to $225 million accrued at LIBOR plus 4 percent. The Company has
provided, and may in the future provide, financing to Host Marriott for a
portion of the cost of acquiring properties to be operated or franchised by the
Company, including notes received as partial consideration for Host Marriott's
purchase of Forum Group, Inc. The outstanding principal amount of these loans
was $135 million at January 2, 1998, and the Company recognized $9 million in
1997 in interest and fee income under these credit agreements with Host
Marriott.
Under the Company Guarantees, the Company has guaranteed Host Marriott's
performance to lenders and other third parties. These guarantees were limited
to $107 million at January 2, 1998. No payments have been made by the Company
pursuant to these guarantees.
The Company also provides certain administrative services to Host Marriott
(including the services provided to Host Marriott Services prior to the Host
Marriott Services Distribution) for which the Company was paid approximately $17
million in 1997, including reimbursements, pursuant to the Services Agreements.
In December 1997, Host Marriott completed its acquisition of the Leisure Park at
Lakewood, New Jersey senior living community, purchasing all but one percent of
the Company's 50 percent interest for approximately $8.65 million in cash and
notes. In 1997, the Company's subsidiary that manages this facility received
management fees of $919,665 from the partnership.
Relationship Between the Company and Host Marriott Services
Until December 29, 1995, Host Marriott Services Corporation ("Host Marriott
Services") was a wholly owned subsidiary of Host Marriott. On that date, Host
Marriott separated the Host Marriott Services businesses from its other
businesses through the Host Marriott Services Distribution to holders of
outstanding shares of Host Marriott common stock of one share of Host Marriott
Services common stock for each five shares of Host Marriott common stock. Upon
the consummation of the Host Marriott Services Distribution, Host Marriott
Services became a separate, publicly held company.
J.W. Marriott, Jr. and Richard E. Marriott and their respective immediate family
members beneficially own approximately 6.9 percent and 6.8 percent,
respectively, of the common stock of Host Marriott Services. William J. Shaw,
President and Chief Operating Officer and a Director of the Company, is the
Chairman of the Board of Host Marriott Services, and J.W. Marriott, Jr. and
Richard E. Marriott are directors of Host Marriott Services.
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<PAGE>
In connection with the Host Marriott Services Distribution, the Company and Host
Marriott Services entered into service agreements that are similar to the
Services Agreements, and in some cases Host Marriott has assigned to Host
Marriott Services, and Host Marriott Services has assumed, the applicable
Services Agreements. The Company received payments aggregating approximately $10
million in 1997, including reimbursements, pursuant to these agreements. In
addition, the Company provides and distributes food and supplies to Host
Marriott Services, for which the Company charged $80 million in 1997.
PROPOSAL ONE--ELECTION OF
DIRECTORS
The Certificate of Incorporation classifies the Board into three classes. Each
director serves for a term of three years. Alice S. Marriott and Sterling D.
Colton each hold the title of director emeritus.
The terms of office of Gilbert M. Grosvenor, Richard E. Marriott, and Harry J.
Pearce expire at the 1998 Annual Meeting of Shareholders. The Board, acting upon
the recommendation of its Nominating and Corporate Governance Committee, has
nominated and recommends the re-election of Messrs. Grosvenor, Marriott, and
Pearce, each for a three-year term as director expiring at the 2001 Annual
Meeting of Shareholders.
Unless otherwise instructed, the proxy holders will vote the proxies received by
them in favor of the re-election of Messrs. Grosvenor, Marriott, and Pearce.
If elected, Messrs. Grosvenor, Marriott, and Pearce have consented to serve as
directors for a term of three years and until their respective successors are
elected and qualified. Further information with respect to the nominees is set
forth under the section herein entitled "Directors." Although it is not
contemplated that any nominee will be unable to serve as director, in such
event, the proxies will be voted by the proxy holders for such other person or
persons as may be designated by the present Board.
Vote Required
Election of the nominees is subject to the affirmative vote of the holders of at
least a majority of votes represented by shares of Company Common Stock present
in person or represented by proxy at the Annual Meeting of Shareholders.
The Board recommends a vote FOR re-election of Gilbert M. Grosvenor, Richard E.
Marriott, and Harry J. Pearce as directors of the Company.
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<PAGE>
PROPOSAL TWO - APPROVAL OF THE ADOPTION OF THE
MARRIOTT INTERNATIONAL, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN AND
THE RESERVATION OF FIVE MILLION SHARES OF
COMPANY COMMON STOCK FOR ISSUANCE UNDER THE PLAN
Prior to the Spinoff, Old Marriott maintained the Old Marriott 1993 Employee
Stock Purchase Plan. Subject to shareholder approval, the Board has adopted the
Marriott International, Inc. 1998 Employee Stock Purchase Plan (the "Stock
Purchase Plan"), which is substantially similar to the Old Marriott plan.
Attached as Appendix A is a copy of the Stock Purchase Plan.
Subject to approval by the shareholders, the Board has authorized an aggregate
of five million shares of MAR Common Stock for issuance under the Stock Purchase
Plan. In the event that the MAR Common Stock is converted into MAR-A Common
Stock, or the MAR Common Stock and MAR-A Common Stock are combined into a single
class of common stock, the Stock Purchase Plan and shares reserved for issuance
thereunder will apply to the class of common stock into which the MAR Common
Stock is converted or combined, as the case may be.
If the shareholders approve the Stock Purchase Plan, all active, non-temporary
employees of the Company and participating subsidiaries on May 1, 1998 (with the
limited exception of those holding 5% or more of the outstanding shares of the
Company) will be eligible for participation in the Stock Purchase Plan, provided
they customarily work more than five months per year and more than 20 hours per
week. If continued in subsequent years, all active, non-temporary employees of
the Company and participating subsidiaries on the first business day of January
of each year (with the limited exception of those holding 5% or more of the
outstanding shares of the Company) will be eligible for participation in the
Stock Purchase Plan, provided they customarily work more than five months per
year and more than 20 hours per week. Non-employee directors will not be
eligible to participate. The plan will provide employees with an opportunity,
through payroll deductions, to purchase MAR Common Stock and thereby increase
their interest in the Company's growth and success.
For the 1998 plan year of the Stock Purchase Plan, participants will be able to
contribute between 5% and 15% of their base pay to purchase shares of MAR Common
Stock at a price per share equal to the lower of (i) 100% of its fair market
value on May 21, 1998 or (ii) 100% of its fair market value on the last business
day of January, 1999. If continued in subsequent years, participants will be
able to contribute between 5% and 10% of their base pay to purchase shares of
MAR Common Stock at a price per share equal to lower of (i) 100% of its fair
market value on the first business day of January or (ii) 100% of its fair
market value on the last business day of the subsequent January. Participants
may withdraw at any time and receive a refund of their contributions. No
participant will be able to purchase shares of MAR Common Stock in any one year
having a fair market value on the first day of the plan year in excess of
$25,000.
The Stock Purchase Plan is intended to qualify as an employee stock purchase
plan under
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Section 423 of the Internal Revenue Code of 1986, as amended. As such, the
purchase of shares under the Stock Purchase Plan will not result in taxable
income to the employee or a deduction to the Company at the time of purchase. If
the employee sells any shares acquired under the Stock Purchase Plan (or
transfers them by gift) within two years after the date the purchase price is
initially fixed for each year (the date of option grant) or within one year
after the shares are purchased, there will be a disqualifying disposition and
the employee will realize ordinary income. The Company will have a corresponding
tax deduction at the time of the transfer equal to the difference between the
employee's purchase price for the shares and their fair market value on the date
of purchase. Any gain in excess of that ordinary income will be short-term
capital gain. If an employee disposes of shares acquired under the Stock
Purchase Plan other than in a disqualifying disposition, the employee realizes a
long term capital gain (or loss) equal to the difference between the employee's
purchase price for the shares and their fair market value on the date of
disposition.
Vote Required
Approval of the adoption of the Stock Purchase Plan and the reservation of five
million shares of MAR Common Stock for issuance under the Stock Purchase Plan is
subject to the affirmative vote of the holders of a majority of the votes
represented by the shares of Company Common Stock present in person or
represented by proxy at the Annual Meeting of Shareholders.
The Board recommends a vote FOR approval of the adoption of the Stock Purchase
Plan and the reservation of five million shares of MAR Common Stock for issuance
under the Stock Purchase Plan.
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PROPOSALS THREE AND FOUR -- PROPOSALS RELATING TO TWO CLASSES
OF COMMON STOCK
The two classes of Company Common Stock (together, the "Dual Class
Capitalization") were adopted by Company shareholders as part of a proposal to
approve the Spinoff and a related transaction with Sodexho Alliance, S.A. That
proposal was presented to shareholders in a Proxy Statement of Old Marriott,
dated February 12, 1998 in connection with a Special Meeting of Stockholders
(the "Special Meeting") held on March 17 and March 20, 1998. Old Marriott
received strong shareholder support for the Spinoff and related transaction. In
response to the concerns of certain shareholders, Old Marriott announced on
March 16 that in the event the Spinoff was approved at the Special Meeting, the
Company would include in this Annual Meeting Proxy Statement a separate and
independent proposal on whether the Dual Class Capitalization should be
retained.
Proposals Three and Four offer shareholders two alternative proposals relating
to the two classes of common stock. Proposal Three provides for the retention
in the Certificate of Incorporation of the two classes of common stock: MAR
Common Stock, with one vote per share and MAR-A Common Stock, with ten votes per
share, as currently provided in the Certificate of Incorporation. Attached
hereto as Appendix B is a description of the rights, powers and preferences of
the two classes of Company Common Stock. In response to the concerns of certain
shareholders, Proposal Four provides for the retention of the two classes of
Company Common Stock in a modified form (the "Modified Dual Class
Capitalization"). Proposals Three and Four are described separately below.
Shareholders are entitled to vote for or against either or both of Proposals
Three and Four and are not required to choose among them. The Board unanimously
recommends that shareholders vote FOR both Proposal Three AND Proposal Four.
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PROPOSAL THREE -- RETENTION OF TWO CLASSES
OF COMMON STOCK IN PRESENT FORM
Proposal Three provides for the retention in the Certificate of Incorporation of
two classes of common stock: MAR Common Stock, with one vote per share and MAR-A
Common Stock, with ten votes per share, as currently provided in the Certificate
of Incorporation. A vote FOR Proposal Three is a vote for the retention of the
Company's Dual Class Capitalization in its present form. If Proposal Three and
Proposal Four are both approved, then the Proposal receiving the greatest number
of votes will be adopted.
Reasons for the Retention of the Dual Class
Capitalization of the Company
The Company believes that the retention of the existing two classes of Company
Common Stock with different voting rights is in the best interest of the Company
and its shareholders. The Board believes that the Dual Class Capitalization (a)
provides the Company with greater flexibility in financing its growth, (b)
promotes continuity in the leadership, involvement and substantial voting
interests of the Marriott family, (c) provides additional liquidity to
shareholders, (d) helps foster the maintenance of long-term business
relationships with hotel and senior living community owners, franchisees and
other third parties, and (e) enhances the Company's ability to attract and
retain highly qualified key employees.
The material advantages of the Dual Class Capitalization are described below.
Financing Flexibility
The dual class capitalization provides the Company with greater flexibility in
pursuing its growth strategy. The lodging industry currently is undergoing a
major global consolidation, while merger activity in the highly fragmented
senior living industry is expected to increase over the next several years. The
Company has a successful track record of acquiring and enhancing the value of
lodging and senior living businesses, while accelerating their growth. The
Company plans actively to seek opportunities created by the current
consolidation trends in the lodging and senior living service industries. The
dual class structure provides the Company with greater flexibility to be more
aggressive in pursuing value-creating acquisitions. The ability to issue low-
vote common stock, for which there is already a sizeable and liquid market,
better positions the Company to take advantage of acquisition opportunities in
its businesses without significantly diluting the voting interests of existing
shareholders or providing sellers with undue voting power, and without
jeopardizing the Company's investment grade credit rating.
By permitting the Company to issue shares of either high-voting or low-voting
common stock, the Dual Class Capitalization provides the Company with increased
flexibility to issue common stock (i) to raise equity capital (either through
direct issuances of stock or through issuances of convertible securities) for a
variety of corporate purposes, including to finance future capital
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<PAGE>
expenditures, (ii) as consideration for future acquisitions and (iii) in
connection with employee stock plans as a means of attracting, compensating and
retaining key employees, without significantly diluting the voting power of the
Company's existing shareholders. By providing the Company with the ability to
issue low-voting MAR Common Stock as described above, the Dual Class
Capitalization helps to mitigate any reluctance Marriott family members and
senior management of the Company might otherwise have to support the issuance of
significant additional shares of authorized common stock of the Company because
of the voting dilution such issuance would entail. For a description of the
interests in the Company held by Marriott family members and senior management
of the Company, see "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT."
Continuity
The Board believes that the Marriott name and family association are key
attributes of the Company, which travelers and others associate with high
quality, service, consistency and integrity. These are largely attributable to
the leadership and commitment of the Marriott family to the business since its
inception. The Company's history of growth, profitability and financial
strength over a period of many years is due in large part to the continuous,
stable leadership provided by Marriott family members, including their emphasis
on long-term results and their ability to forge strategic relationships with
business partners. The Board believes that the Dual Class Capitalization
reduces the risk of disruption in the continuity of the Company's current
operating policies and long-range strategy that might otherwise result if the
Company were to issue additional equity securities for acquisitions or other
purposes, or if members of the Marriott family were to dispose of a significant
percentage of their equity interest in the Company for estate tax,
diversification or other reasons. Approval of Proposal Three will maintain the
Company's ability to issue shares of MAR Common Stock for financing, acquisition
and compensation purposes without significantly diluting the voting power of the
Company's existing shareholders. Members of the Marriott family have informed
the Company that they have no current plans or arrangements to sell or otherwise
dispose of any MAR Common Stock or MAR-A Common Stock.
Shareholders' Flexibility and Liquidity
Shareholders who hold both classes of Company Common Stock in roughly equal
proportions will be able to maintain their voting positions even if they decide
to sell or otherwise dispose of approximately one-half of their equity interest
in the Company. In addition, because shareholders who are interested in
maintaining their voting interest in the Company may be more willing to sell
shares of the Company if such sale does not result in a decrease in their
relative voting power, the Dual Class Capitalization may result in increased
trading of equity securities of the Company, thereby increasing liquidity.
Furthermore, the presence of two classes of common stock with different voting
rights may allow holders of Common Stock to increase voting power without
increasing equity investment by selling shares of MAR Common Stock and buying
shares of MAR-A Common Stock with the proceeds. Their ability to do so,
however, would be limited
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<PAGE>
(and if Proposal Four is adopted, even more limited) by the minority rights
protection provision in the Certificate of Incorporation. See Appendix B for a
description of the minority rights protection provision relating to the Company
Common Stock.
Business Relationships
To the extent that hotel and senior living community owners, franchisees and
other third parties with significant long-term business relationships with the
Company may have concerns about potential changes in the continued leadership
and involvement of the Marriott family, the Dual Class Capitalization may, by
promoting stability and continuity, encourage and strengthen such business
relationships.
Key Employees
The Dual Class Capitalization may enhance the Company's ability to attract and
retain highly qualified key employees by providing added assurance as to the
continued leadership and involvement of the Marriott family and the high
standards of service and quality which they have instilled in the Company since
its inception. In addition, by enabling the Company to issue MAR Common Stock
as part of its equity-based compensation plans, such as the MI Plan, the Company
has the flexibility to allow key employees to continue to participate in the
growth of the Company without materially diluting the voting power of existing
shareholders.
Certain Potential Disadvantages of Retaining the Dual Class Capitalization
While the Board has determined that retention of the Dual Class Capitalization
is in the best interests of the Company and its shareholders, the Dual Class
Capitalization may also be considered to have certain disadvantages, including
those set forth below.
Members of the Marriott family have informed the Company that they have no
agreements to act in concert and no plans to sell any of their Company Common
Stock. However, if they were to act in concert and to reduce their equity
interest in the Company, the dual class structure would permit them to retain
substantially all of their voting power while disposing of approximately 50% of
their equity interest. Accordingly, that structure could limit the
circumstances in which a sale or transfer of equity by members of the Marriott
family would lead to a business combination or a proxy contest for the removal
of directors. This might deprive shareholders of the Company of an opportunity
to sell their shares at a premium over prevailing market prices and may also
make it more difficult to replace the Board and management of the Company.
Vote Required
Approval of the retention of the Dual Class Capitalization in its present form
is subject to the affirmative vote of the holders of at least a majority of the
votes represented by all outstanding shares of Company Common Stock entitled to
vote at the Annual Meeting.
39
<PAGE>
The Board unanimously recommends that shareholders vote FOR Proposal Three.
PROPOSAL FOUR -- RETENTION OF TWO CLASSES
OF COMMON STOCK, WITH CERTAIN MODIFICATIONS
Like Proposal Three, Proposal Four also provides for the retention of the Dual
Class Capitalization. This proposal, however, would make several changes to the
rights and obligations of the two classes under the Company's Certificate of
Incorporation, which are described below. These changes are designed to respond
to concerns that have been expressed by certain shareholders. If Proposal Three
and Proposal Four are both approved, then the Proposal receiving the greatest
number of votes will be adopted.
Proposal Four provides for the retention of two classes of Company Common Stock
as currently provided in the Company's Certificate of Incorporation, as well as
an amendment to the Certificate of Incorporation to (i) strengthen the "minority
rights protection" provision by changing the threshold to 5% from 15%, and (ii)
provide that all classes of Company Common Stock will have one vote per share
when voting on transactions with respect to which the Board has agreed or been
ordered to waive or amend, or redeem the rights granted under, the Rights
Agreement dated as of March 27, 1998, by and between the Company and The Bank of
New York as Rights Agent (the "Rights Agreement"). A vote FOR Proposal Four
is a vote for the retention of the Dual Class Capitalization, modified as
described above. The full text of the amendment to the Certificate of
Incorporation is set forth in Appendix C hereto.
The Modified Dual Class Capitalization
The Modified Dual Class Capitalization differs from the Dual Class
Capitalization in two respects:
Change in "Minority Rights Protection" Threshold
If Proposal Four is adopted, the "minority rights protection" provision will be
strengthened by reducing the threshold to 5% from 15%. This means that if a
Person or group (each as defined in the Certificate of Incorporation) acquires
after the Spinoff 5% or more of the outstanding MAR-A Common Stock, and does not
at that time own at least the same percentage of MAR Common Stock acquired after
the Spinoff, then such Person or group must commence within 90 days and complete
a cash tender offer for a number of shares of MAR Common Stock necessary for
such Person or group to own the same percentage of outstanding MAR Common Stock
acquired after the Spinoff as the percentage of MAR-A Common Stock acquired
after the Spinoff. Failure to comply results in a loss of all voting power for
shares of MAR-A Common Stock acquired after the Spinoff by such Person or group.
The same requirement applies for each incremental 5% increase (i.e., 10%, 15%,
20%, etc.) in ownership of MAR-A Common Stock by a Person or group after the
Spinoff.
40
<PAGE>
No Difference in Vote Under Certain Circumstances
If Proposal Four is adopted, then all classes of Company Common Stock will
have the same number of votes per share when voting on transactions with respect
to which the Board has agreed or been ordered to waive or amend, or redeem the
rights granted under, the Company's Rights Agreement. Under the Company's
Rights Agreement, the preferred stock purchase rights granted thereunder are
automatically converted into rights to purchase MAR Common Stock for a price
equal to 50% of the then-market price, if certain transactions occur between the
Company and the holder of a significant amount of MAR Common Stock (generally,
20% or more of either class of Company Common Stock) or if a holder acquires 30%
of either class of Company Common Stock, subject to certain exceptions. The
Board has the right to redeem the rights or, under certain circumstances, to
waive or amend the Rights Agreement. Thus, if the Board supports or approves a
transaction or acquisition that would otherwise trigger the exercise of the
rights, the Board can avoid the significant dilution that would result from the
exercise of the rights by redeeming them (for $0.01 per right) or where
permitted under the Rights Agreement, by appropriately amending or waiving the
rights. Rights agreements such as the Company's are designed to provide the
Board of Directors with sufficient time to review unsolicited or surprise
acquisition proposals, to seek and evaluate appropriate alternatives to such
proposals, and generally to act in what it believes to be in the best interests
of shareholders. The proposed amendment would provide equal voting rights for
both classes of Company Common Stock when shareholders consider and vote on
transactions where the Board has agreed or been ordered to eliminate the
applicability of the Rights Agreement to the transaction being considered. The
full text of the amendment to the Certificate of Incorporation is set forth in
Appendix C hereto.
Reasons for the Modifications to the Dual Class Capitalization
In general, the reasons for and potential disadvantages of the Modified Dual
Class Capitalization are the same as for the Dual Class Capitalization. See
"PROPOSAL THREE -- RETENTION OF TWO CLASSES OF COMMON STOCK IN PRESENT FORM --
Reasons for the Retention of the Dual Class Capitalization of the Company" and
"-- Certain Potential Disadvantages of Retaining the Dual Class Capitalization."
However, in response to the concerns of certain shareholders, the first change
in Proposal Four is designed to even further restrict the ability of a
significant shareholder to disproportionately increase his or her voting control
without increasing his or her equity investment in the Company. The second
change in Proposal Four is similarly designed to allay concerns that the dual
class structure may serve to entrench existing ownership and management or deter
attractive acquisition proposals. This change prevents the dual class structure
from impeding shareholder approval of an acquisition transaction where the Board
has acted (whether voluntarily or in response to court order) to exempt the
transaction from the Company's Rights Agreement. In a vote on any such
transaction so exempted, the MAR Common Stock and the MAR-A Common Stock would
each have one vote per share. This change in voting power aligns the impact of
the dual class structure with that of the Company's Rights Agreement -- where
the latter has been removed as an obstacle, the former will be removed as well.
Accordingly, the Modified Dual Class Capitalization is intended to address
shareholder
41
<PAGE>
concerns without depriving the Company of the benefits of the dual class
structure, such as financing flexibility.
Vote Required
Approval of the Modified Dual Class Capitalization is subject to the affirmative
vote of the holders of at least a majority of the votes represented by all
outstanding shares of Company Common Stock entitled to vote at the Annual
Meeting, as well as the affirmative vote of the holders of at least a majority
of the outstanding shares of MAR Common Stock entitled to vote at the Annual
Meeting, voting separately as a class, and the affirmative vote of at least a
majority of the outstanding shares of MAR-A Common Stock entitled to vote at the
Annual Meeting, voting separately as a class.
The Board unanimously recommends that shareholders vote FOR Proposal Four.
If Proposal Four is adopted, then the Modified Dual Class Capitalization will
become effective upon the filing of an Amendment to the Certificate of
Incorporation in the form attached hereto as Appendix C. The Company would file
the Amendment as soon as practicable after the Annual Meeting.
42
<PAGE>
If neither Proposal Three nor Proposal Four is adopted, then the Board of
Directors would cause all MAR Common stock to be converted, on a share-for-share
basis, into shares of MAR-A Common Stock as expressly permitted by the
Certificate of Incorporation. This would result in all outstanding common
shares having ten votes per share, and would mean that the Certificate of
Incorporation would continue to reflect the dual class structure even though
there would be no shares of MAR Common Stock outstanding, and the Board of
Directors would not in the future issue MAR Common Stock. The Board would take
this action as soon as practicable after the Annual Meeting. Thereafter, the
Company would take all necessary steps to remove the dual class provisions from
the Certificate of Incorporation and would refrain from issuing additional
shares of MAR Common Stock in the future.
43
<PAGE>
PROPOSAL FIVE -- SHAREHOLDER PROPOSAL TO
ADOPT CUMULATIVE VOTING FOR ELECTION OF DIRECTORS
A shareholder (Mrs. Evelyn Y. Davis, Editor, Highlights and Lowlights, Watergate
Office Building, 2600 Virginia Avenue, N.W., Suite 215, Washington, D.C.
20037), who owns 200 shares of Company Common Stock, has notified the Company of
her intention to propose the following resolution at the Annual Meeting of
Shareholders:
"RESOLVED: That the stockholders of Marriott International, assembled in
Annual Meeting in person and by proxy, hereby request the Board of Directors
to take the necessary steps to provide for cumulative voting in the election
of directors, which means each stockholder shall be entitled to as many votes
as shall equal the number of shares he or she owns multiplied by the number of
directors to be elected, and he or she may cast all of such votes for a single
candidate, or any two or more of them as he or she may see fit."
In support of the resolution, Mrs. Davis has submitted the following statement:
"Many states have mandatory cumulative voting, so do National Banks. In
addition, many corporations have adopted cumulative voting. Last year the
owners of 19,695,884 shares, representing approximately 19.3% of shares
voting, voted for this proposal."
"If you AGREE, please mark your proxy FOR this resolution."
The Board has considered this proposal (as has the Nominating and Corporate
Governance Committee) and recommends that shareholders vote against it for the
following reasons:
Each director of the Company currently is elected by the holders of a majority
of the Company's outstanding shares, thereby permitting the directors to
administer the affairs of the corporation for the benefit of all shareholders.
The Board believes that cumulative voting is undesirable because it is directed
toward the election of one or more directors by a special group of shareholders.
The shareholder or special group electing a director by cumulative voting may
seek to have that director represent the shareholder's or group's special
interest rather than the interests of the shareholders as a whole. This
partisanship among directors and voting on behalf of special interests could
interfere with the effectiveness of the Board and could be contrary to the
interests of the Company and its shareholders as a whole.
The majority of states, including the State of Delaware, the state in which the
Company is incorporated, do not require cumulative voting. The Company's
present method of electing directors is employed by over 88% of companies in the
Standard and Poor's 500 Index, and by
44
<PAGE>
most companies listed on the New York Stock Exchange. The Board believes that
this method is appropriate to ensure that directors will represent all the
shareholders and not a particular group.
Vote Required
Approval of the proposed resolution is subject to the affirmative vote of the
holders of a majority of shares of Company Common Stock present in person or
represented by proxy at the Annual Meeting of Shareholders.
The Board recommends a vote AGAINST this proposal.
PROPOSAL SIX -- SHAREHOLDER PROPOSAL WITH RESPECT TO CERTAIN
ATTRIBUTES OF INDIVIDUALS TO BE DIRECTORS OF THE COMPANY
A shareholder (the Southwest Ohio District Council Pension Fund, 130 Tri-County
Parkway, Suite 403, Cincinnati, Ohio 45246), which owns approximately 4,700
shares of Company Common Stock, has notified the Company of its intention to
propose the following resolution at the Annual Meeting of Shareholders:
"RESOLVED: The shareholders of Marriott International Inc. (the "Company")
urge the Company's Board of Directors to take the steps necessary to amend the
Company's By-Laws, effective after the 1998 annual meeting, to provide that
the Board of Directors shall consist of a majority of independent directors.
For these purposes, the definition of independent director shall mean a
director who:
- has not been employed by the Company or an affiliate in an executive
capacity within the last five years;
- was not, and is not a member of a corporation or firm that is one of the
Company's paid advisers or consultants;
- is not employed by a customer, supplier or provider of professional
services to the Company;
- has no personal services contract with the Company;
- is not employed by a foundation or university that receives grants or
endowments from the Company;
- is not a relative of the management of the Company;
45
<PAGE>
- is not an officer of a company on which the Company's Chairman or
Chief Executive Officer is also a board member."
In support of the resolution, the Southwest Ohio District Council Pension Fund
has submitted the following statement:
"The purpose of this proposal is to incorporate within the Board of
Directors a basic standard of independence that we believe will permit
clear and objective decision making in the best long term interests of
shareholders. A Board of Directors must formulate corporate policies and
monitor the activities of management in implementing these policies. Given
the critical importance of these functions, we believe that it is in the
interest of all stockholders that a majority of board members be
independent. This proposal is prompted by our belief that the employment,
business, and family relationships of any corporate director has the
potential to raise conflicts of interest that may limit the vigilance and
diligence of the board."
"The definition of 'independent director' established in this proposal
provide clear guidance in determining whether or not a given director is
independent for purposes of determining the composition of the board.
Adoption of this proposal would assure that the Company has the governance
structures necessary to achieve its goals profitably and responsibly."
The Board has considered this proposal (as has the Nominating and Corporate
Governance Committee) and recommends that shareholders vote against it for the
following reasons:
The Company strongly believes in the importance of a diverse and highly
qualified board of directors. However, the Board believes that this proposal is
arbitrary, unduly restrictive and could deprive the Company of the services of
highly qualified directors. The Company has been well served by its present
policy on board membership, which selects nominees for election based on
criteria, including overall business experience and specific expertise, and
giving due consideration of any relationships with the Company. Any material
relationships between the Company and any director are disclosed under
Securities and Exchange Commission rules. (See "CERTAIN TRANSACTIONS")
We note that there are only two Company employees on the Board of Directors and
a sizable majority of the Board consists of persons who would satisfy any
reasonable test of independence, including the definition used by the New York
Stock Exchange. Adoption of this proposal would unduly restrict the candidates
available for service on the Board. It also would limit consideration of
candidates who have sound judgment, extensive experience, and a thorough
knowledge of the operations of the Company. The proposal would, for example,
apply to highly qualified persons simply because they are employed by companies
that do business with the Company. It could also foreclose the Company from
obtaining services from another company simply because one of its
46
<PAGE>
employees is a current Company director. The Board believes that the Company's
current policies regarding the independence of directors is appropriate.
Vote Required
Approval of the proposed resolution is subject to the affirmative vote of the
holders of a majority of shares of Company Common Stock present in person or
represented by proxy at the Annual Meeting of Shareholders.
The Board recommends a vote AGAINST this proposal.
OTHER MATTERS
The Company's management knows of no other matters which may be presented for
consideration at the Annual Meeting. However, if any other matters properly come
before the Annual Meeting, it is the intention of the persons named in the proxy
to vote such proxy in accordance with their judgment on such matters.
The Bylaws of the Company provide that in order to be considered at a meeting of
shareholders, a shareholder proposal or a nomination of a director candidate
requested to be introduced at a meeting must be made by notice in writing
delivered or mailed by first class United States mail, postage prepaid, to the
secretary of the Company, and received by the secretary not less than ninety
days prior to the first anniversary of the preceding year's annual meeting of
shareholders; provided, however, that in the event the date of the annual
meeting of shareholders is advanced more than thirty days or delayed by more
than sixty days from such anniversary date, notice by the shareholder must be so
delivered not later than the close of business on the seventh day following the
date on which notice of such meeting is first given to shareholders. Each such
notice shall set forth: (a) the name and address of the shareholder who intends
to make the proposal or nomination and the text of the proposal to be introduced
or in the case of a director nominee, certain information regarding the nominee
specified in the Bylaws; (b) the class and number of shares of stock held of
record, owned beneficially and represented by proxy by such shareholder as of
the record date for the meeting (if such date shall then have been made publicly
available) and as of the date of such notice; and (c) a representation that the
shareholder intends to appear in person or by proxy at the meeting to introduce
the proposal(s) or nominate the director nominee, specified in the notice. The
Chairman of the meeting may refuse to acknowledge the introduction of any
shareholder proposal or the nomination of any person not made in compliance with
the foregoing procedure.
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
The Annual Meeting for 1999 is scheduled to be held on May 7, 1999. Any
shareholder who meets the requirements of the proxy rules under the Exchange Act
and the Company's bylaws may submit to the Board not more than one proposal to
be considered for inclusion in the Company's
47
<PAGE>
1999 proxy material. Any such proposal must be submitted in writing by notice
delivered or mailed by first class United States mail, postage prepaid, to the
Secretary, Marriott International, Inc., Marriott Drive, Dept. 52/862
Washington, D.C. 20058 and must be received no later than [___________], 1998.
Any such notice shall set forth: (a) the name and address of the shareholder and
the text of the proposal to be introduced, (b) the class and number of shares of
stock held of record or owned beneficially as of the date of such notice (and if
such shares are beneficially owned, proof of ownership must be submitted with
the proposal); and (c) a representation that the shareholder intends to appear
in person or by proxy at the meeting to introduce the proposal specified in the
notice.
SOLICITATION OF PROXIES
Proxies will be solicited by mail, telephone, or other means of communication.
Solicitation also may be made by directors, officers, and regular employees of
the Company not specifically employed for proxy solicitation purposes. The
Company has retained the services of MacKenzie Partners, Inc. to assist in the
solicitation of proxies from shareholders. MacKenzie Partners will receive a fee
of [$_______], plus reimbursement of certain out-of-pocket expenses. The Company
will reimburse brokerage firms, custodians, nominees, and fiduciaries, in
accordance with the rules of the New York Stock Exchange, for reasonable
expenses incurred by them in forwarding materials to the beneficial owners of
shares. The entire cost of solicitation will be borne by the Company.
FORM 10-K ANNUAL REPORT
A copy of the Company's 1997 Annual Report on Form 10-K filed with the SEC is
being mailed to shareholders together with this Proxy Statement. Any
shareholder who desires an additional copy may obtain one (excluding exhibits)
without charge by addressing a request to the Secretary, Marriott International,
Inc., Marriott Drive, Dept. 52/862, Washington, D.C. 20058. The reproduction
cost incurred by the Company will be charged if copies of exhibits are
requested.
BY ORDER OF THE BOARD
OF DIRECTORS
W. David Mann
Secretary
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APPENDIX A
THE MARRIOTT INTERNATIONAL, INC.
EMPLOYEE STOCK PURCHASE PLAN
Effective May 21, 1998
<PAGE>
THE MARRIOTT INTERNATIONAL, INC.,
---------------------------------
EMPLOYEE STOCK PURCHASE PLAN
----------------------------
The Marriott International, Inc. Employee Stock Purchase Plan (the "Plan")
as set forth in this document, is intended through payroll savings to enable
eligible employees to purchase stock of Marriott International, Inc. (the
"Corporation") and thus to benefit the Corporation by increasing the employees'
interest in the Corporation's growth and success. It is intended that the Plan
meet the requirements for an "employee stock purchase plan" under Section 423 of
the Internal Revenue Code of 1986, and is to be so applied and interpreted. The
provisions of the Plan are as follows:
1. Stock Offered and Price. An option to purchase shares of Marriott
-----------------------
International, Inc. Common Stock, par value $.0.01 per share with one vote per
share, through payroll savings will be granted to eligible employees in the
manner stated below. The Purchase Price of each share of stock will be the
lesser of (i) 100% of its fair market value on the date the option is granted,
or (ii) 100% of the fair market value on the day the option is exercised. In
the event that the Corporation should declare a stock dividend or a stock split
or reclassify its stock, the purchase price and the number of shares reserved
for the Plan will be adjusted proportionately. The maximum number of shares
which may be issued under this Plan shall be five million. In the event that
the Marriott International, Inc. Common Stock is converted into Marriott
International, Inc. Class A Common Stock, par value $0.01 per share with ten
votes per share, or the Common Stock and Class A Common Stock are combined into
a single class of common stock, the shares reserved for issuance under the Plan
will be the class of stock into which the Common Stock is converted or combined,
as the case may be.
2. Eligible Employees. All employees of the Corporation or any
------------------
subsidiary of the Corporation who are employed on May 1, 1998 and, thereafter,
the first business day of January of each year of the Plan, are eligible to
participate in the Plan during the following year, except the following who are
ineligible to participate: (a) employees whose customary employment is for not
more than five months in any calendar year; (b) employees whose customary
employment is 20 hours or less per week; and (c) any employee, who after grant
of an option under the Plan, would own or be deemed to own pursuant to
applicable attribution rules stock (including stock which may be acquired under
any outstanding options) possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of the Corporation, or a
subsidiary thereof. Notwithstanding the foregoing and with respect to
subsidiary corporations, the Board of Directors of the Corporation must first
approve participation in the Plan of the employees of each such subsidiary.
Furthermore, the Board of Directors may at any time in its sole discretion and
if it deems it advisable to do so, withdraw participation from the employees of
a particular subsidiary or subsidiaries.
<PAGE>
3. Participation in the Plan. An eligible employee may become a
-------------------------
participant in the Plan by completing an election to participate in the Plan on
a form provided by the Corporation and filing that form within the enrollment
period established by the Corporation for the year. Such form and participation
shall be effective only if the employee is still employed by the Corporation on
the last business day in January of the following year. An eligible employee may
revise his election at any time up to and including the last day in the
enrollment period established by the Corporation for the year.
4. Payroll Deductions. At the time an employee files his election (as
------------------
provided above), the employee shall elect to have deductions made from his pay
for pay periods paid after such election is filed and processed by the
Corporation and ending before the next February 1 as long as he shall
participate in the Plan. The election shall specify a percentage for deductions
from base compensation, including commissions and reported tips (but excluding
any bonus payments or other compensation to be taken into account for purposes
of determining Deferred Stock Bonus Awards under the Marriott International,
Inc. 1998 Comprehensive Stock and Cash Incentive Plan regardless of whether or
not the Participant receives a Deferred Stock Bonus Award) equal to 5%, 6%, 7%,
8%, 9% or 10% (or, for the year of the Plan beginning on May 21, 1998, 11%, 12%,
13%, 14% or 15%). These deductions will be credited to the participant's
account under the Plan. The participant may not during any then current year of
the Plan change his rate of payroll deduction after the end of the enrollment
period. An employee whose election for payroll deductions cannot be honored by
reason of other deductions or reported tips may contribute the shortfall
pursuant to procedures established by the Corporation. At any time a
participating employee may elect voluntarily to terminate, in total, his
participation in the Plan for the year in question (as provided in Section 8).
Once participation is terminated, it may not be reinstated during that year of
the Plan.
Upon retirement (as described in Section 8) a participant shall have no
further obligation nor will he be permitted to make further contributions to the
Plan. All amounts theretofore contributed by a retired participant shall be
retained in his account for the balance of the Plan year and applied as set
forth in Section 5.
5. Exercise of the Option to Purchase Shares. Unless a participating
-----------------------------------------
employee has given prior written notice terminating such employee's
participation in the Plan for the year in question, or his participation in the
Plan has otherwise been terminated as provided in Section 8, or if he has
retired, the option of such participating employee to purchase stock will be
automatically exercised for him on the last business day in January of the year
following the year in which he elected to participate in the Plan, for the
purchase of the number of full shares of stock (subject to the participation
adjustment provided in Section 6) which the accumulated funds in the
participating employee's account at that time will purchase at the Purchase
Price determined under Section 1. The option may not be exercised at any other
time. Any funds remaining in the participating employee's account insufficient
to purchase a full share of stock will be refunded to the employee. Effective
with exercise of the option the employee shall become a stockholder and
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<PAGE>
shall have all the rights incident thereto, including the right to such future
dividends as may be declared from time to time by the Board of Directors.
6. Participation Adjustment. If in any year the payroll deductions
------------------------
exceed the number of shares reserved under Section 1, a participation adjustment
will be made and the number of shares purchasable by participating employees
will be reduced proportionately. Any funds remaining in the participating
employee's account not used to purchase shares will be refunded to the employee.
7. Issuance of Stock Certificates. As soon after the option is exercised
------------------------------
as is reasonably possible the participating employee will be credited with the
number of shares purchased under the Plan for his account.
8. Termination of Participation. The employee will be refunded all
----------------------------
monies in his account and his participation in the Plan terminated, if: (a) the
employee elects in writing to terminate participation; (b) the employee's
employment with the Corporation or its subsidiaries is terminated for any reason
other than retirement; (c) the Board of Directors of the Corporation elects to
terminate the Plan as provided by Section 13; (d) participation is terminated
for failure to make contributions pursuant to procedures established under
Section 4; or (e) the employee dies. Once terminated, participation may not be
reinstated for the then current year but, if otherwise eligible, the employee
may elect to participate in any subsequent year of the Plan. For purposes of
this Section 8, the term "retirement" shall mean either (i) termination of
employment at or beyond age 55 with at least 10 years of service; or (ii)
termination of employment as a result of total and permanent disability. An
employee shall be considered totally and permanently disabled for purposes of
this Section 8 if the employee is permanently unable to engage in any occupation
for which he or she is reasonably qualified by education, training or experience
as certified by a competent medical authority designated by the Plan
Administrator to make such determination. An employee's termination of
employment shall be considered a "retirement" for purposes of this Section 8
only if such termination occurs not more than three months prior to the last
business day in January of the year following the year in which the employee has
filed his or her most recent valid election to participate in the Plan.
9. Assignment. No employee may assign his rights under the Plan
----------
(including his rights in the option). Any payment of cash or issuance of stock
hereunder may be made only to the employee (or, in the event of his death, to
his estate).
10. Administration. The Compensation Policy Committee of the Board of
--------------
Directors will administer the Plan and may prescribe rules as to the
administration of the Plan, including, without limitation, rules relating to the
definition of "base compensation" as used herein. The determination of the
Compensation Policy Committee as to any questions which may arise with respect
to the interpretation of the provisions of this Plan shall be final. Payroll
deduction authorizations and elections to terminate participation shall be
exercised only on forms provided by the Corporation for that purpose.
A-3
<PAGE>
11. Application of Funds. All funds received or held by the Corporation
--------------------
under this Plan may be used for any corporate purpose until applied to the
purchase of stock and/or refunded to participating employees, and participating
employee's accounts will not be segregated, nor will interest be paid thereon.
12. Amendment of Plan. The Board of Directors may, at any time, amend
-----------------
this Plan, in any respect, except that without approval of the stockholders of
the Corporation no amendment shall be made (a) changing the number of shares
subject to this Plan (except as provided in Section 1); (b) decreasing the
Purchase Price (except as provided in Section 1); or (c) changing administration
of the Plan from the Compensation Policy Committee or changing the
classification of employees eligible to participate in the Plan.
13. Term and Termination of the Plan. This Plan shall continue in effect
--------------------------------
on a year-to-year basis unless terminated or suspended by the Board of Directors
of the Corporation. The Board of Directors may terminate or suspend the Plan at
any time and for any reason. In any event the Plan shall, without further
action of the Board of Directors, terminate at such time as the total number of
shares reserved for purchase under Section 1 of the Plan has been distributed.
14. Governmental Regulation. The Corporation's obligation to issue, sell
-----------------------
and deliver its stock under this Plan is subject to the approval of any
governmental authority required in connection with the authorization, issuance
or sale of such stock.
15. Other Provisions. (a) Notwithstanding any other provisions of
----------------
this Plan, no employee may purchase in any one calendar year, under this Plan, a
number of shares of stock which exceed the number determined by dividing
$25,000.00 by the fair market value of a share as of the date the option is
granted. (b) "Fair Market Value" means the average of the high and low prices
per share of the Corporation's stock as reflected by composite transactions on
the various national securities exchanges on which such stock has been listed
and reported by the National Association of Securities Dealers on the day named,
or if there are no transactions on that date, then the closing price for the
preceding day upon which transactions occurred. (c) A "subsidiary of the
Corporation" is any corporation where the Corporation owns 50% or more of the
total combined voting power of all classes of stock. (d) Temporary disability
or an approved leave of absence shall not result in termination of employment
within the meaning of the Plan. (e) All employees granted options shall have the
same rights and privileges.
A-4
<PAGE>
APPENDIX B
DESCRIPTION OF THE COMPANY COMMON STOCK
(UNDER THE EXISTING CERTIFICATE OF INCORPORATION)
There are two classes of Company Common Stock--MAR Common Stock and MAR-A Common
Stock. The MAR Common Stock and the MAR-A Common Stock have different terms,
which are summarized below. This summary does not purport to be complete, and is
qualified in its entirety by reference to the complete Certificate of
Incorporation of the Company on file with the Securities and Exchange
Commission, which is incorporated herein by reference.
Voting Rights
Each holder of MAR Common Stock is entitled to one vote for each share
registered in his or her name on the books of the Company on all matters
submitted to a vote of shareholders. Subject to the Minority Rights Protection
Provision (as defined below), each holder of MAR-A Common Stock is entitled to
ten votes for each share registered in his or her name on the books of the
Company on all matters submitted to a vote of shareholders. Except as otherwise
provided by law, the holders of MAR Common Stock and MAR-A Common Stock will
vote as one class. The shares of MAR Common Stock and MAR-A Common Stock do not
have cumulative voting rights. As a result, subject to the voting rights, if
any, of the holders of any shares of the Company's preferred stock which may at
the time be outstanding, the holders of MAR Common Stock and MAR-A Common Stock
entitled to exercise more than 50 percent of the voting rights in an election of
directors will be able to elect 100 percent of the directors to be elected if
they choose to do so. In such event, the holders of the remaining MAR Common
Stock and MAR-A Common Stock voting for the election of directors will not be
able to elect any persons to the Board. The Certificate of Incorporation
provides that the Board is classified into three classes, each serving a three-
year term, with one class elected in each of three consecutive years.
Dividend Rights
Under the Certificate of Incorporation, each share of MAR Common Stock and MAR-A
Common Stock has identical rights with respect to dividends and distributions,
subject to the following: (i) the Board may declare a Regular Cash Dividend (as
defined below) on each share of MAR Common Stock, on an annual basis, equal to
up to 125 percent (one hundred and twenty-five percent) (rounded up to the
nearest penny) of the per share Regular Cash Dividend declared on each share of
MAR-A Common Stock, but in no case will the Regular Cash Dividend on each share
of MAR Common Stock be less than the equivalent Regular Cash Dividend per share
of MAR-A Common Stock; (ii) if the Board decides, in its discretion, to declare
a Special Dividend (as defined below), such dividend will be paid in equal
amounts per share of MAR Common Stock and MAR-A Common Stock; and (iii) if the
Board decides, in its discretion, to declare a dividend payable in shares of MAR
Common Stock or MAR-A Common Stock, the dividend will be paid in equal amounts
per share of MAR Common Stock and MAR-A Common Stock, except that, at the
discretion of the Board, the dividend may be paid to the holders of MAR Common
Stock in
<PAGE>
either MAR Common Stock or in MAR-A Common Stock or a combination thereof and
the dividend may be paid to the holders of MAR-A Common Stock in either MAR-A
Common Stock or in MAR Common Stock or a combination thereof. As used herein,
the term "Regular Cash Dividend" means dividends of the Company payable
quarterly in cash consistent with practices employed in the past by the Board,
subject to change at its discretion; and the term "Special Dividend" means any
dividend of cash or other property or assets (including securities), other than
a Regular Cash Dividend.
Mergers and Consolidations; Dissolution and Liquidation
In the event of a merger, consolidation or combination of the Company with
another entity (whether or not the Company is the surviving entity) or in the
event of dissolution or liquidation of the Company, the holders of shares of MAR
Common Stock and the holders of MAR-A Common Stock will each be entitled to
receive the same per share consideration, except that in the event of a merger,
consolidation or combination of the Company with another entity (whether or not
the Company is the surviving entity), any common stock that the holders of
Company Common Stock are entitled to receive in any such event may differ as to
voting rights and otherwise to the extent and only to the extent that the MAR
Common Stock and MAR-A Common Stock differ as set forth in the Certificate of
Incorporation.
Convertibility
At the discretion of the Board, all, but not less than all, of the then
outstanding shares of MAR Common Stock may be converted into MAR-A Common Stock
on a share-for-share basis. In addition, if the MAR Common Stock is excluded
from trading on a national securities exchange or the National Association of
Securities Dealers Automated Quotation System (the "NASDAQ"), and the MAR-A
Common Stock is, or is eligible to be, traded on a national securities exchange
or listed on the NASDAQ, then the MAR Common Stock will be converted
automatically into MAR-A Common Stock on a share-for-share basis.
Minority Rights Protection Provision
Company shareholder voting rights disproportionate to equity ownership could be
acquired through acquisitions of MAR-A Common Stock without corresponding
purchases of MAR Common Stock. In order to reduce somewhat the likelihood of
MAR-A Common Stock and MAR Common Stock trading at significantly different
market prices and to give holders of MAR Common Stock the opportunity to
participate in any premium paid in the future relating to the acquisition of 15
percent or more of the MAR-A Common Stock by a buyer who has not acquired a
proportionate number of shares of MAR Common Stock, the Certificate of
Incorporation includes a "Minority Rights Protection Provision" as described
below. There can be no assurance that the Company will in all instances be able
to identify readily persons whose holdings subject them to the Minority Rights
Protection Provision.
B-2
<PAGE>
Certain Definitions
For purposes of the Minority Rights Protection Provision, the following
definitions apply:
"Affiliate" of any Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person. For purposes of this definition, control when used with respect to
any specified Person means the possession of the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
controlling and controlled have meanings correlative to the foregoing.
"Person" means any individual, partnership, joint venture, limited
liability company, corporation, association, trust, incorporated organization,
government or governmental department or agency or any other entity.
The following shares of MAR-A Common Stock will be excluded for the purpose
of determining the shares of MAR-A Common Stock beneficially owned or acquired
by any Person or group but not for purpose of determining shares outstanding:
(i) shares beneficially owned by such Person or group (or, in the case of a
group, shares beneficially owned by Persons that are members of such group)
immediately after the Spinoff;
(ii) shares acquired by will or by the laws of descent and distribution, or
by gift that is made in good faith and not for the purpose of circumventing the
Minority Rights Protection Provision, or by termination or revocation of a trust
or similar arrangement or by a distribution from a trust or similar arrangement
if such trust or similar arrangement was created, and such termination,
revocation or distribution occurred or was effected, in good faith and not for
the purpose of circumventing the Minority Rights Protection Provision, or by
reason of the ability of a secured party (following a default) to exercise
voting rights with respect to, or to dispose of, shares that had been pledged in
good faith as security for a bona fide loan, or by foreclosure of a bona fide
pledge which secures a bona fide loan;
(iii) shares acquired upon issuance or sale by the Company;
(iv) shares acquired by operation of law (including a merger or
consolidation effected for the purpose of recapitalizing such Person or
reincorporating such Person in another jurisdiction but excluding a merger or
consolidation effected for the purpose of acquiring another Person);
(v) shares acquired in exchange for MAR Common Stock by a holder of MAR
Common Stock (or by a parent, lineal descendant or donee of such holder of MAR
Common Stock who received such MAR Common Stock from such holder) if the MAR
Common Stock so exchanged was acquired by such holder directly from the
corporation as a dividend on shares of MAR-A Common Stock;
B-3
<PAGE>
(vi) shares acquired by a plan of the Company qualified under Section
401(a) of the Internal Revenue Code, or any successor provision thereto, or
acquired by reason of a distribution from such a plan;
(vii) shares beneficially owned by a Person or group immediately after the
Spinoff which are thereafter acquired by an Affiliate of such Person or group
(or by the members of the immediate family (or trusts for the benefit thereof)
of any such Person or Affiliate) or by a group which includes such Person or
group or any such Affiliate; and
(viii) shares acquired indirectly through the acquisition of securities, or
all or substantially all of the assets, of a Person that has a class of its
equity securities registered under Section 12 (or any successor provision) of
the Exchange Act.
Notwithstanding anything to the contrary contained in the Minority Rights
Protection Provision, no Person (and no group including such Person) will be
deemed to have acquired after the Spinoff beneficial ownership of any shares of
MAR-A Common Stock owned by any other Person solely by reason of such Person
being or becoming an officer, director, executive, trustee, executor, custodian,
guardian, and/or other similar fiduciary or employee of or for such other Person
under circumstances not intended to circumvent the Minority Rights Protection
Provision.
For purposes of calculating the number of shares of MAR Common Stock
beneficially owned or acquired by any Person or group, shares of MAR Common
Stock acquired by gift will be deemed to be beneficially owned by such Person or
member of a group if such gift was made in good faith and not for the purpose of
circumventing the Minority Rights Protection Provision; and only shares of MAR
Common Stock owned of record by such Person or member of a group or held by
others as nominees of such Person or member of a group and identified as such to
the Company will be deemed to be beneficially owned by such Person or group
(provided that shares of MAR Common Stock with respect to which such Person or
member of a group has sole investment and voting power will be deemed to be
beneficially owned thereby).
Subject to the other definitional provisions applicable to the Minority Rights
Protection Provision, "beneficial ownership" will be determined pursuant to Rule
13d-3 (as in effect on January 1, 1998) promulgated under the Exchange Act, and
the formation or existence of a "group" will be determined pursuant to Rule 13d-
5(b) (as in effect on January 1, 1998) promulgated under the Exchange Act, in
each case subject to the following additional qualifications:
(i) relationships by blood or marriage between or among any Persons will
not constitute any of such Persons as a member of a group with any such other
Person(s), absent affirmative attributes of concerted action; and
(ii) any Person acting in his official capacity as a director or officer of
the Company will not be deemed to beneficially own shares when such ownership
exists solely by virtue of such Person's status as a trustee (or similar
position) with respect to shares held by plans or trusts for
B-4
<PAGE>
the general benefit of employees or former employees of the Company, and actions
taken or agreed to be taken by a Person in such Person's official capacity as an
officer or director of the Company will not cause such Person to become a member
of a group with any other Person.
Description of Minority Rights Protection Provision
If any Person or group acquires after the Spinoff beneficial ownership of 15
percent or more of the then outstanding MAR-A Common Stock, and such Person or
group (a "Significant Stockholder") does not then own an equal or greater
percentage of all then outstanding shares of MAR Common Stock acquired after the
Spinoff, the Minority Rights Protection Provision requires that such Significant
Stockholder must commence within a 90-day period beginning the day after
becoming a Significant Stockholder a public cash tender offer to acquire
additional shares of MAR Common Stock, as described below (a "Minority Rights
Protection Transaction") or the Significant Stockholder will not be permitted to
vote the MAR-A Common Stock acquired after the Spinoff. The 15 percent ownership
threshold of the number of shares of MAR-A Common Stock which triggers a
Minority Rights Protection Transaction may not be waived by the Board, nor may
this threshold be amended without shareholder approval, including a majority
vote of the outstanding MAR Common Stock voting separately as a class.
In a Minority Rights Protection Transaction, the Significant Stockholder must
make a public cash tender offer to acquire from the holders of MAR Common Stock
at least that number of additional shares of MAR Common Stock determined by (i)
multiplying (x) the percentage of the number of shares of outstanding MAR-A
Common Stock that are beneficially owned by such Significant Stockholder, and
were acquired after the Spinoff, by (y) the total number of the shares of MAR
Common Stock outstanding on the date such Person or group became a Significant
Stockholder, and (ii) subtracting therefrom the excess (if any) of the number of
shares of MAR Common Stock beneficially owned by such Significant Stockholder at
such time over the number of shares of MAR Common Stock beneficially owned by
such Person or group at the Spinoff. Such number of shares of MAR Common Stock
is referred to as the "MAR Common Stock Shortfall." The Significant Stockholder
must acquire all shares of MAR Common Stock validly tendered or, if the number
of such shares tendered exceeds the number determined pursuant to such formula,
a pro-rata number from each tendering holder (based on the number of shares
tendered by each tendering shareholder).
For example, if a shareholder owns 4 percent of the outstanding shares of MAR-A
Common Stock and 4 percent of the MAR Common Stock immediately after the Spinoff
and thereafter acquires an additional 16 percent of the outstanding shares of
MAR-A Common Stock without acquiring any additional shares of MAR Common Stock,
such shareholder must either commence a tender offer for an additional 16
percent of the MAR Common Stock at the prescribed price or such shareholder will
not be allowed to vote the 16 percent of the MAR-A Common Stock acquired after
the Spinoff.
B-5
<PAGE>
The offer price for any shares required to be purchased by the Significant
Stockholder pursuant to this provision would be the greater of: (i) the highest
price per share paid by the Significant Stockholder for any share of MAR-A
Common Stock in the six-month period ending on the date such person or group
became a Significant Stockholder; and (ii) the highest reported sale price for a
share of MAR-A Common Stock on the New York Stock Exchange (or if the MAR-A
Common Stock is not listed on the New York Stock Exchange, any other national
securities exchange on which it is listed, or if not so listed, on NASDAQ) on
the business day preceding the date the Significant Stockholder commences the
required tender offer.
If a Significant Stockholder fails to undertake a Minority Rights Protection
Transaction within the time provided therefor, such Significant Stockholder
shall not be entitled to vote any shares of MAR-A Common Stock beneficially
owned by such Significant Stockholder and acquired by such Significant
Stockholder after the Spinoff.
B-6
<PAGE>
APPENDIX C
AMENDMENT TO
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
MARRIOTT INTERNATIONAL, INC.
Marriott International, Inc., a corporation organized and existing
under the laws of the State of Delaware (the "Corporation"), hereby certifies as
follows:
1. The present name of the Corporation is "Marriott International, Inc."
The original Certificate of Incorporation of New Marriott MI, Inc. was filed
with the Secretary of State of the State of Delaware on September 19, 1997. An
Amended and Restated Certificate of Incorporation of New Marriott MI, Inc. was
filed with the Secretary of State of Delaware on March 27, 1998. The Amended and
Restated Certificate of Incorporation New Marriott MI, Inc. was further amended
and restated in a second Amended and Restated Certificate of Incorporation filed
March 27, 1998, which changed the name of the Corporation to "Marriott
International, Inc."
2. This Amendment to Amended and Restated Certificate of Incorporation
has been duly adopted and proposed to the stockholders of the Corporation by the
Board of Directors of the Corporation, and has been approved and adopted by the
stockholders of the Corporation, in accordance with Section 242 of the General
Corporation Law of the State of Delaware.
3. Pursuant to Section 242 of the General Corporation Law of the State of
Delaware, this Amendment to Amended and Restated Certificate of Incorporation
further amends the provisions of the Amended and Restated Certificate of
Incorporation of the Corporation.
4. Section B(2)(a) of Article FOURTH of the Amended and Restated
Certificate of Incorporation as heretofore amended and restated is hereby
restated and further amended to read in its entirety as hereinafter set forth:
(a) The holders of shares of Class A Common Stock shall be entitled
to ten votes for each share of Class A Common Stock held on all matters
voted upon by the stockholders of the corporation and shall vote together
with the holders of Common Stock and together with the holders of any other
series of stock who are entitled to vote in such manner and not as a
separate class; provided, however, that the holders of shares of Class A
Common Stock shall only be entitled to one vote for each share of Class A
Common Stock held, for stockholder votes on transactions with respect to
which the board of directors has agreed, or been ordered by a court or
other tribunal of competent jurisdiction, to waive or amend, or redeem the
rights granted under, the Rights Agreement dated as of March 27, 1998, by
and between the Corporation and the Bank of New York
<PAGE>
as Rights Agent, as the same may be amended from time to time, or any
similar successor agreement thereto;
5. Section B(6)(a) of Article FOURTH of the Amended and Restated
Certificate of Incorporation as heretofore amended and restated is hereby
restated and further amended to read in its entirety as hereinafter set forth:
(a) If, at any time after the date upon which the Common Stock and
the Class A Common Stock are distributed to the holders of common stock of
Sodexho Marriott Services, Inc. (formerly known as "Marriott International,
Inc.") (the "Distribution"), any Person or group, each as hereinafter
defined in this Paragraph 6, acquires beneficial ownership of shares
representing 5% or more of the number of then outstanding Class A Common
Stock and such Person or group (a "Significant Shareholder") does not then
beneficially own an equal or greater percentage of all then outstanding
shares of Common Stock, all of which Common Stock must have been acquired
by such Person or group after the Distribution, such Significant
Shareholder must, within a ninety-day period beginning the day after
becoming a Significant Shareholder, make a public cash tender offer in
compliance with all applicable laws and regulations to acquire additional
shares of Common Stock as provided in this Paragraph 6 (a "Minority Rights
Protection Transaction"). The 5% ownership threshold of the number of
Class A Common Shares which triggers a Minority Rights Protection
Transaction may not be waived by the board of directors, nor may this
threshold in this Amended and Restated Certificate of Incorporation be
amended without shareholder approval, including a majority vote of the
outstanding Common Stock voting separately as a class.
6. Section B(6)(d) of Article FOURTH of the Amended and Restated
Certificate of Incorporation as heretofore amended and restated is hereby
restated and further amended to read in its entirety as hereinafter set forth:
(d) A Minority Rights Protection Transaction shall also be required
to be effected by any Significant Shareholder each time that the
Significant Shareholder acquires after the Distribution beneficial
ownership of additional shares of Class A Common Stock in an amount equal
to or greater than the next higher integral multiple of 5% in excess of 5%
(e.g., 10%, 15%, 20%, etc.) of the number of shares of outstanding Class A
Common Stock if such Significant Shareholder does not then own an equal or
greater percentage of all then outstanding shares of Common Stock (all of
which shares of Common Stock must have been acquired by such Significant
Shareholder after the Distribution, including pursuant to a previous
Minority Rights Protection Transaction). Such Significant Shareholder shall
be required to make a public cash tender offer to acquire that number of
shares of Common Stock prescribed by the formula set forth in subparagraph
(b) above, and must acquire all shares validly tendered and not withdrawn
or a pro rata portion thereof, as specified in such subparagraph (b), at
the price determined pursuant to
C-2
<PAGE>
subparagraph (c) above, even if a previous Minority Rights Protection
Transaction resulted in fewer shares of Common Stock being tendered than
required in the previous offer.
7. Section B(6)(f) of Article FOURTH of the Amended and Restated Certificate
of Incorporation as heretofore amended and restated is hereby restated and
further amended to read in its entirety as hereinafter set forth:
(f) The Minority Rights Protection Transaction requirement shall not
apply to any increase in percentage beneficial ownership of shares of Class
A Common Stock resulting solely from a change in the aggregate amount of
shares of Class A Common Stock outstanding, provided that any acquisition
after such change which results in any Person or group having acquired after
the Distribution beneficial ownership of 5% or more of the number of then
outstanding shares of Class A Common Stock (or, after the last acquisition
which triggered the requirement for a Minority Rights Protection
Transaction, additional shares of Class A Common Stock in an amount equal to
the next higher integral multiple of 5% in excess of the number of shares of
Class A Common Stock then outstanding) shall be subject to any Minority
Rights Protection Transaction requirement that would be imposed pursuant to
this Paragraph 6.
IN WITNESS WHEREOF, Marriott International, Inc. has caused this
Amendment to Amended and Restated Certificate of Incorporation to be signed by
its _______________________ and attested to by its Secretary as of
__________________, 1998.
MARRIOTT INTERNATIONAL, INC.
By:
----------------------------------
Name:
Title:
ATTEST:
--------------------------------
Name:
Title:
C-3
<PAGE>
The 1998 Annual Meeting will begin at 10:30 a.m. at the Crystal Gateway Marriott
hotel. Coffee, tea, and juice will be provided to shareholders attending the
meeting. Due to anticipated hotel guest needs at the hotel on May 20, minimal
parking is available to shareholders in the hotel parking garage. As parking is
limited in the general area, it is recommended that shareholders attending the
Annual Meeting consider using public transportation. The Crystal City Metro
subway station, located on the Blue/Yellow line, is connected to the hotel. The
area is also served by Metro buses. A "Shareholder Annual Meeting" rate will be
offered at three local Marriott hotels for Tuesday, May 19, 1998, the night
before the meeting. The hotels and rates are listed below:
Crystal Gateway Marriott ($165)
1700 Jefferson Davis Highway
Arlington, VA 22202
703/920-3230
Crystal City Marriott ($165)
1999 Jefferson Davis Highway
Arlington, VA 22202
703/413-5500
Arlington-Pentagon City Residence Inn ($165)
550 Army Navy Drive
Arlington, VA 22202
703/413-6630
To receive these rates, call the hotel directly and ask for the "Shareholder
Annual Meeting" rate for May 19, 1998. Please note that a limited number of
rooms are offered at this rate. Applicable taxes and gratuities are extra and
advance reservations are required. This discount may not be used in conjunction
with other discounts, coupons, or group rates.
<PAGE>
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MARRIOTT INTERNATIONAL, INC.
P THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS
R
on May 20, 1998, 10:30 a.m.
O
The undersigned appoints J.W. Marriott, Jr. and Richard E. Marriott as
X Proxies. Each shall have the power to appoint a substitute. They are
authorized to represent and vote, as designated on the reverse side, all
Y shares of Marriott International, Inc. Common Stock and Class A Common
Stock, held of record by the undersigned on March 27, 1998, at the
Annual Meeting of Shareholders to be held on May 20, 1998, or any
adjournment or postponement thereof. The Board of Directors recommends
votes FOR Proposals 1,2,3, and 4, and AGAINST Proposals 5 and 6.
(change of address/comments)
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
-----------
SEE REVERSE
SIDE
-----------
- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
Detach Proxy Card Here
To Fellow Marriott International, Inc. Shareholders:
Here is your 1998 Marriott International, Inc. proxy card. Please read both
sides of the card and mark, sign, and date it. Then detach and return it
promptly using the enclosed envelope. We urge you to vote your shares.
You are invited to attend the Annual Meeting of Shareholders on Wednesday, May
20, 1998, at 10:30 a.m. in the Arlington Ballroom of the Crystal Gateway
Marriott Hotel, 1700 Jefferson Davis Highway, Arlington, Virginia.
Shareholder comments about any aspect of company business are welcome. Although
such notes are not answered on an individual basis, they do assist Marriott
management in determining and responding to the needs of its shareholders.
Thank you in advance for voting.
W. David Mann
Secretary
<PAGE>
- --------------------------------------------------------------------------------
Please mark
[X] votes as in this
example.
- --------------------------------------------------------------------------------
This proxy when properly executed will be voted in the manner directed herein
by the undersigned shareholder(s). If no instruction is indicated, such proxy
will be voted "FOR" Proposals 1, 2, 3, and 4, "AGAINST" Proposals 5 and 6, and
at the discretion of the Proxies on any other matter that may properly come
before the meeting.
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR Proposals 1, 2, 3, and 4.
Shareholders are encouraged to vote FOR both Proposal 3 and Proposal 4; the
Proposal receiving the greatest number of votes in favor will be adopted.
- --------------------------------------------------------------------------------
1. Election of Directors. FOR WITHHELD
Nominees: Gilbert M.
Grosvenor, Richard E. [ ] [ ]
Marriott, and Harry J.
Pearce.
For all nominees except as noted below:
_______________________________________
2. Approval of Marriott International, FOR AGAINST ABSTAIN
Inc. 1998 Employee Stock Purchase
Plan and reservation of 5 million [ ] [ ] [ ]
common shares for issuance thereunder.
3. Approval of retention of two classes of
common stock as currently in effect FOR AGAINST ABSTAIN
(if Proposal 3 and Proposal 4 are both
approved, then the Proposal receiving [ ] [ ] [ ]
the greatest number of votes in favor
will be adopted).
4. Approval of retention of two classes of
common stock, modified to (i) strengthen
the "minority rights protection" provision
by changing the threshold to 5% from 15%,
and (ii) provide that all classes of FOR AGAINST ABSTAIN
common stock have one vote per share when
voting on certain transactions (if [ ] [ ] [ ]
Proposal 3 and Proposal 4 are both
approved, the Proposal receiving the
greatest number of votes in favor will be
adopted).
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The Board of Directors recommends a vote AGAINST Proposals 5 and 6.
- --------------------------------------------------------------------------------
5. Shareholder proposal to adopt
cumulative voting for the election FOR AGAINST ABSTAIN
of directors.
[ ] [ ] [ ]
6. Shareholder proposal with respect
to certain attributes of the individuals FOR AGAINST ABSTAIN
to be directors of the Company.
[ ] [ ] [ ]
MARK HERE FOR ADDRESS
CHANGE AND NOTE ON [ ]
REVERSE SIDE
SIGNATURE(S)_____________________________________ DATE _______
Sign exactly as name appears hereon. When shares are held by joint tenants, both
should sign. When signing as attorney, executor, administrator, trustee or
guardian, give full title. If a corporation, sign full corporate name by
President or other authorized officer. If a partnership, sign in partnership
name by authorized trustee or partner.
- --------------------------------------------------------------------------------
Please carefully detach here and return this proxy in the enclosed reply
envelope.
