<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:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED
BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Marriott International, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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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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[MARRIOTT LOGO 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 FRIDAY, APRIL 30, 1999
----------------
To our Shareholders:
March 22, 1999
The 1999 annual meeting of shareholders of Marriott International, Inc. will
be held at the J.W. Marriott Hotel, 1331 Pennsylvania Avenue, N.W., Washington,
D.C. on Friday, April 30, 1999, beginning at 10:30 a.m. Doors to the meeting
will open at 9:30 a.m. At the meeting, shareholders will act on the following
matters:
(1) Election of three directors, each for a term of three years;
(2) Ratification of the appointment of Arthur Andersen LLP as the
Company's independent auditors for fiscal 1999;
(3) Approval of amending the Company's certificate of incorporation to
reflect the elimination of one of the two classes of common stock, and
authorization to file a restated certificate of incorporation to
embody this amendment;
(4) Approval of amending the Company's certificate of incorporation to
increase the number of authorized shares of Class A common stock to
800 million;
(5) Consideration of one shareholder proposal; and
(6) Any other matters that properly come before the meeting.
Shareholders of record at the close of business on March 5, 1999, will be
entitled to notice of and to vote at this meeting.
For the convenience of our shareholders, proxies may be given either by
telephone, electronically through the Internet, or by completing, signing and
returning the enclosed proxy card. In addition, shareholders may elect to
receive future shareholder communications, including proxy materials, through
the Internet. Instructions for each of these options can be found in the
enclosed materials.
By order of the Board of Directors,
[/s/ W. DAVID MANN]
W. David Mann
Secretary
PLEASE REFER TO THE OUTSIDE BACK COVER FOR DIRECTIONS TO THE MEETING
AND INFORMATION ON PARKING, PUBLIC TRANSPORTATION AND LODGING.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
About the Meeting
What is the purpose of the annual meeting?.............................. 1
Who is entitled to vote?................................................ 1
Who can attend the meeting?............................................. 1
What constitutes a quorum?.............................................. 1
How do I vote?.......................................................... 2
Can I vote by telephone or electronically?.............................. 2
Can I change my vote after I return my proxy card, or after I vote by
telephone or electronically?........................................... 2
What are the Board's recommendations?................................... 2
What vote is required to approve each item?............................. 3
Who will count the vote?................................................ 3
What shares are included on the proxy card(s)?.......................... 3
What does it mean if I receive more than one proxy card?................ 3
How will voting on any other business be conducted?..................... 4
When are shareholder proposals for the 2000 annual meeting of
shareholders due?...................................................... 4
Can a shareholder nominate someone to be a director of the Company?..... 4
How much did this proxy solicitation cost?.............................. 4
Can I receive future shareholder communications electronically through
the Internet?.......................................................... 4
Stock Ownership
Who are the largest owners of the Company's stock?...................... 5
How much stock do the Company's directors and executive officers own?... 5
Section 16(a) Beneficial Ownership Reporting Compliance................. 7
Item 1--Election of Directors
Directors Standing for Election......................................... 8
Directors Continuing in Office.......................................... 9
Committees of the Board of Directors.................................... 12
Directors' Compensation................................................. 13
Compensation Committee Interlocks and Insider Participation............. 13
Executive Compensation.................................................. 14
Summary Compensation Table............................................ 14
Stock Option Tables................................................... 16
Report on Executive Compensation by the Compensation Policy Committee... 18
Shareholder Return Performance Graph.................................... 22
Certain Transactions.................................................... 23
Item 2--Ratification of Appointment of Independent Auditors............... 25
Item 3--Approval of Amending the Company's Certificate of Incorporation to
Reflect the Elimination of One of the Two Classes of Common Stock, and
Authorization to File a Restated Certificate of Incorporation to Embody
this Amendment........................................................... 26
Item 4--Approval of Amending the Company's Certificate of Incorporation to
Increase the Number of Authorized Shares of Class A Common Stock to 800
million.................................................................. 27
Item 5--Shareholder Proposal.............................................. 28
Other Matters............................................................. 29
</TABLE>
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[MARRIOTT LOGO APPEARS HERE]
MARRIOTT INTERNATIONAL, INC.
10400 FERNWOOD ROAD, BETHESDA, MARYLAND 20817
----------------
PROXY STATEMENT
----------------
This proxy statement contains information related to the annual meeting of
shareholders of Marriott International, Inc. (the "Company") to be held on
Friday, April 30, 1999, beginning at 10:30 a.m., at the J.W. Marriott Hotel,
1331 Pennsylvania Avenue, N.W., Washington, D.C., and at any postponements or
adjournments thereof. This Proxy Statement is first being mailed to
shareholders on March 22, 1999.
Marriott International, Inc. conducts the lodging, senior living services and
distribution services businesses formerly conducted by "old" Marriott
International, Inc. ("Old Marriott"), now known as Sodexho Marriott Services,
Inc. The Company was spun off as a separate public company from Old Marriott on
March 27, 1998.
ABOUT THE MEETING
What is the purpose of the annual meeting?
At the Company's annual meeting, shareholders will act upon the matters
described in the accompanying notice of meeting. This includes the election of
three directors, ratification of the Company's independent auditors, approval
of amendments to the Company's certificate of incorporation, and consideration
of a shareholder proposal. In addition, the Company's management will report on
the performance of the Company during fiscal 1998 and respond to questions from
shareholders.
Who is entitled to vote?
Only shareholders of record at the close of business on the record date,
March 5, 1999, are entitled to receive notice of and to vote at the meeting, or
any postponement or adjournment of the meeting. Each outstanding share entitles
its holder to cast ten votes on each matter to be voted upon.
Who can attend the meeting?
All shareholders as of the record date, or their duly appointed proxies, may
attend the meeting. Cameras, recording devices and other electronic devices
will not be permitted at the meeting.
Directions to the meeting, and information on parking, public transportation
and lodging, can be found on the back cover of this proxy statement.
What constitutes a quorum?
The presence at the meeting, in person or by proxy, of the holders of a
majority of the shares of Class A common stock of the Company outstanding on
the record date will constitute a quorum. A quorum is required for business to
be conducted at the meeting. As of the record date, 247,078,029 shares of Class
A common stock of the Company were outstanding (on May 21, 1998, all shares of
<PAGE>
the Company's other class of common stock were converted, on a one-for-one
basis, into shares of Class A common stock of the Company). If you submit a
properly executed proxy card, even if you abstain from voting, then you will be
considered part of the quorum. However, abstentions are not counted in the
tally of votes FOR or AGAINST a proposal. A WITHHELD vote is the same as an
abstention.
How do I vote?
Sign and date each proxy card you receive and return it in the prepaid
envelope. If you return your signed proxy card but do not mark the boxes
showing how you wish to vote, your shares will be voted FOR items 1, 2, 3 and
4, and AGAINST item 5..
Can I vote by telephone or electronically?
You may vote by telephone or electronically through the Internet, by
following the instructions attached to your proxy card.
The telephone and Internet voting procedures are designed to authenticate
votes cast by use of a personal identification number. The procedures, which
comply with Delaware law, allow shareholders to appoint a proxy to vote their
shares and to confirm that their instructions have been properly recorded.
Can I change my vote after I return my proxy card, or after I vote by telephone
or electronically?
Yes. Even after you have submitted your proxy, you may change your vote at
any time before the proxy is exercised at the meeting. Regardless of the way in
which you submitted your original proxy, you may change it by:
(1) Returning a later-dated signed proxy card;
(2) Delivering a written notice of revocation to First Chicago Trust
Company of New York, P.O. Box 8089, Edison, New Jersey 08818-9355;
(3) Voting by telephone or the Internet; or
(4) Voting in person at the meeting.
What are the Board's recommendations?
The Board's recommendations are set forth after the description of each item
in this proxy statement. In summary, the Board recommends a vote:
. FOR election of the nominated directors (see Item 1 on page 8);
. FOR ratification of the appointment of Arthur Andersen LLP as the
Company's independent auditors for fiscal 1999 (see Item 2 on page 25);
. FOR approval of amending the Company's certificate of incorporation to
reflect the elimination of one of the two classes of common stock, and
authorization to file a restated certificate of incorporation to embody
this amendment (see Item 3 on page 26);
. FOR approval of amending the Company's certificate of incorporation to
increase the number of authorized shares of Class A common stock to 800
million (see Item 4 on page 27); and
. AGAINST approval of the shareholder proposal (see Item 5 on page 28).
Unless you give other instructions on your proxy card, the persons named as
proxy holders on the proxy card will vote in accordance with the
recommendations of the Board of Directors.
With respect to any other matter that properly comes before the meeting, the
proxy holders will vote as recommended by the Board of Directors or, if no
recommendation is given, in their own discretion.
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What vote is required to approve each item?
For Items 1, 2 and 5, the affirmative vote of the holders of a majority of
the shares of Class A common stock represented in person or by proxy and
entitled to vote on the item will be required for approval. A properly executed
proxy marked "ABSTAIN" with respect to any item will not be voted, although it
will be counted for purposes of determining whether there is a quorum.
Accordingly, an abstention will have the effect of a negative vote.
For Item 3, the approval of amending the certificate of incorporation of the
Company to reflect the elimination of one of the two classes of common stock,
and authorization to file a restated certificate of incorporation to embody
this amendment, and Item 4, the approval of amending the certification of
incorporation of the Company to increase the number of authorized shares of
Class A common stock to 800 million, the affirmative vote of the holders of a
majority of the shares of Class A common stock outstanding on the record date
will be required for approval. In addition, the amendment of certain sections
of the Company's certificate of incorporation (the "Higher Vote Sections")
requires the affirmative vote of the holders of at least 2/3 of the voting
power of all shares of Class A common stock outstanding on the record date. If
Item 3 receives the affirmative vote of the holders of 2/3 of the voting power
of all shares of Class A common stock outstanding on the record date, then an
amendment including the changes to the Higher Vote Sections will be effected.
If Item 3 receives the affirmative vote of the holders of a majority of shares
of Class A common stock outstanding on the record date, but less than 2/3 of
the voting power of all shares of Class A common stock outstanding on the
record date, then an amendment excluding the changes to the Higher Vote
Sections will be effected. However, the proposed amendment to the Higher Vote
Sections consists solely of the deletion of references to the class of common
stock that is no longer outstanding and that is proposed to be eliminated.
Failure to remove these references will not have any practical effect.
If you hold your shares in "street name" through a broker or other nominee,
your broker or nominee may not be permitted to exercise voting discretion with
respect to some of the items to be acted upon. Thus, if you do not give your
broker or nominee specific instructions, your shares may not be voted on those
items and will not be counted in determining the number of shares necessary for
approval for Items 1, 2 and 5. Shares represented by such "broker non-votes"
will, however, be counted in determining whether there is a quorum.
Who will count the vote?
Representatives of First Chicago Trust Company of New York, our independent
stock transfer agent, will count the votes and act as the inspector of
election.
What shares are included on the proxy card(s)?
The shares on your proxy card(s) represent ALL of your shares of Class A
common stock, including any shares you may hold through Marriott
International's Dividend Reinvestment Plan, or if you are a Marriott employee,
any shares that may be held in custody for your account by Bankers Trust
Company as trustee for Marriott International, Inc.'s Profit Sharing Plan
(401(k) plan) for employees. If you have shares in the Profit Sharing Plan and
do not vote by proxy, or return your proxy card with an unclear voting
designation or no voting designation at all, then Bankers Trust will vote your
plan shares in proportion to the way the other plan participants voted their
shares held in the plan.
What does it mean if I receive more than one proxy card?
If your shares are registered differently and are in more than one account,
you will receive more than one proxy card. To ensure that all your shares are
voted, sign and return all proxy cards, or if you choose, vote by telephone or
through the Internet using the personal identification number printed on each
proxy card. We encourage you to have all accounts registered in the same name
and address (whenever possible). You can accomplish this by contacting our
transfer agent, First Chicago Trust Company of New York, at (800) 311-4816.
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How will voting on any other business be conducted?
Although we do not know of any business to be considered at the 1999 annual
meeting other than the proposals described in this proxy statement, if any
other business is presented at the Annual Meeting, your proxy gives authority
to J.W. Marriott, Jr. and Richard E. Marriott to vote on such matters at their
discretion.
When are shareholder proposals for the 2000 annual meeting of shareholders
due?
The Company's 2000 annual meeting of shareholders is scheduled to be held on
April 28, 2000. To be considered for inclusion in the Company's proxy
statement for that meeting, shareholder proposals must be received at the
Company's offices no later than December 23, 1999. Proposals must be in
compliance with Rule 14a-8 under the Securities Exchange Act of 1934 and the
Company's bylaws, and must be submitted in writing delivered or mailed to the
Secretary, Marriott International, Inc., Department 52/862, Marriott Drive,
Washington, D.C. 20058.
In addition, the Company's bylaws require that, if a shareholder desires to
introduce a shareholder proposal or nominate a director candidate from the
floor of the 2000 annual meeting of shareholders, such proposal or nomination
must be submitted in writing to the Company's Secretary at the above address
not later than February 21, 2000. The written proposal or nomination must be
in compliance with the Company's bylaws. The Chairman of the meeting may
refuse to acknowledge or introduce any shareholder proposal or the nomination
of any person made later than February 21, 2000, or not in compliance with the
Company's bylaws.
Can a shareholder nominate someone to be a director of the Company?
As a shareholder, you may recommend any person as a nominee for director of
the Company by writing to the Nominating and Corporate Governance Committee of
the Board of Directors, c/o Marriott International, Inc., Marriott Drive,
Washington, D.C. 20058. Recommendations must be received by February 21, 2000
for the 2000 annual meeting of shareholders, and must comply with the
requirements in the Company's bylaws.
How much did this proxy solicitation cost?
MacKenzie Partners, Inc. was hired to assist in the distribution of proxy
materials and solicitation of votes for $6,500, plus reimbursement of certain
out-of-pocket expenses. We also reimburse brokerage houses and other
custodians, nominees and fiduciaries for their reasonable out-of-pocket
expenses for forwarding proxy and solicitation materials to shareholders.
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.
Can I receive future shareholder communications electronically through the
Internet?
Yes. You may elect to receive future notices of meetings, proxy materials
and annual reports electronically through the Internet, beginning with the
2000 annual meeting of shareholders. To consent to electronic delivery:
. If your shares are registered in your own name, and not in "street name"
through a broker or other nominee, fill out the consent form at the
Internet site maintained by our transfer agent, First Chicago Trust
Company of New York, at www.econsent.com/mar.
. If your shares are registered in "street name" through a broker or other
nominee, you must first vote your shares using the Internet, at
www.proxyvote.com, and immediately after voting, fill out the consent
form that appears on-screen at the end of the Internet voting procedure.
You may withdraw this consent at any time and resume receiving shareholder
communications in print form. More information on electronic delivery of
materials is set forth in an insert accompanying this proxy statement.
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STOCK OWNERSHIP
Who are the largest owners of the Company's stock?
As of January 31, 1999, the following persons or groups beneficially owned 5%
or more of the Company's outstanding shares of Class A common stock:
<TABLE>
<S> <C>
J.W. Marriott, Jr. ............. 10.9%
Richard E. Marriott............. 10.6%
Southeastern Asset Management,
Inc. .......................... 9.2% (see footnote 10 to the table below)
</TABLE>
How much stock do the Company's directors and executive officers own?
The following table sets forth the beneficial ownership of Class A common
stock by the Company's directors and executive officers as of January 31, 1999,
as well as additional information about beneficial owners of 5% or more of the
Company's Class A common stock.
<TABLE>
<CAPTION>
Shares
Beneficially Percent of
Name Owned Class(1)
---- ------------ ----------
<S> <C> <C>
Directors:
J.W. Marriott, Jr. ............................ 26,887,033(2)(3) 10.9
Richard E. Marriott............................ 25,871,473(2)(4) 10.6
Henry Cheng Kar-Shun........................... 2,600(5) *
Gilbert M. Grosvenor........................... 4,200(5) *
Floretta Dukes McKenzie........................ 870(5) *
Harry J. Pearce................................ 10,000(5) *
W. Mitt Romney................................. 10,000(5) *
Roger W. Sant.................................. 20,000(5) *
William J. Shaw................................ 1,366,144(6)(7) *
Lawrence M. Small.............................. 80,000(5) *
Named Executive Officers:
Joseph Ryan.................................... 190,725(6)(7) *
James M. Sullivan.............................. 327,655(6)(7) *
William R. Tiefel.............................. 1,015,783(6)(7)(8) *
All Directors and Executive Officers as a Group
(21 persons including the foregoing)........... 48,398,927(2)(9) 19.4
Other 5% Beneficial Owners:
Southeastern Asset Management, Inc. ........... 22,230,800(10) 9.2
</TABLE>
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* Less than 1 percent.
(1) Based on the number of shares outstanding (244,566,605) at, plus the
number of shares acquirable by the specified person(s) within 60 days of,
January 31, 1999.
(2) Includes: 3,150,040 shares held by J.W. Marriott, Jr. and Richard E.
Marriott as co-trustees of 16 trusts for the benefit of their children
and 5,073,574 shares owned by The J. Willard & Alice S. 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 and executive officers as a group. The shares
included herein do not include: (i) 3,801,883 shares owned and controlled
by certain other members of the Marriott family, (ii) 3,334,770 shares
held by a charitable annuity trust, created by the will of J. Willard
Marriott, in which J.W. Marriott, Jr. and Richard E. Marriott have a
remainder interest
5
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and in which their mother is trustee, or (iii) 269,083 shares 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)
1,739,557 shares subject to options exercisable within 60 days after
January 31, 1999, (ii) 804,860 shares held as trustee of two trusts for
the benefit of Richard E. Marriott, (iii) 137,537 shares owned by J.W.
Marriott, Jr.'s wife (Mr. Marriott disclaims beneficial ownership of
such shares), (iv) 1,340,534 shares owned by four trusts for the benefit
of J.W. Marriott, Jr.'s children, in which his wife serves as a co-
trustee, (v) 48,728 shares owned by six trusts for the benefit of J.W.
Marriott, Jr.'s grandchildren, in which his wife serves as a co-trustee,
(vi) 160,000 shares owned by JWM Associates Limited Partnership, whose
general partner is J.W. Marriott, Jr. and (vii) 5,415,180 shares owned
by JWM Family Enterprises, L.P., 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)
122,634 shares subject to options exercisable within 60 days after
January 31, 1999, (ii) 586,378 shares held as trustee of two trusts
established for the benefit of J.W. Marriott, Jr., (iii) 136,438 shares
owned by Richard E. Marriott's wife, (iv) 1,207,656 shares owned by four
trusts for the benefit of Richard E. Marriott's children, in which his
wife serves as a co-trustee, and (v) 4,605,458 shares owned by First
Media Limited Partners, whose general partner is a corporation in which
Richard E. Marriott is the controlling shareholder.
(5) The shares included herein do not include non-employee director annual
deferred share awards or stock units representing fees deferred at the
election of non-employee directors under the Company's 1998
Comprehensive Stock and Cash Incentive Plan. The combined number of
shares (i) subject to deferred share awards and (ii) in stock unit
accounts of non-employee directors as of December 31, 1998, were as
follows: Dr. Cheng: 700; Mr. Grosvenor: 12,104; Dr. McKenzie: 9,313; Mr.
Pearce: 8,751; Mr. Romney: 9,119; Mr. Sant: 10,089; and Mr. Small:
8,642. Neither share awards nor stock units carry voting rights or are
transferable. Stock unit accounts are credited with dividend equivalents
in the form of additional stock units. Share awards and stock units are
distributed following retirement as a director.
(6) Includes shares of unvested restricted stock awarded under the 1998
Comprehensive Stock and Cash Incentive Plan as follows: Mr. Ryan: 52,839
shares; Mr. Shaw: 81,834 shares; Mr. Tiefel: 4,404 shares; and Mr.
Sullivan: 42,615 shares. Shares of restricted stock are voted by the
holder thereof. See "Executive Compensation: Summary Compensation Table"
at page 14.
(7) Includes shares subject to options exercisable within 60 days after
January 31, 1999, as follows: Mr. Ryan: 88,064 shares; Mr. Shaw:
1,107,974 shares; Mr. Tiefel: 893,316 shares; and Mr. Sullivan: 249,064
shares.
(8) Includes 19,113 shares held by a limited partnership of which Mr. Tiefel
is the sole general partner and Mr. Tiefel and certain family members
are limited partners.
(9) All directors, nominees and executive officers as a group (other than
J.W. Marriott, Jr. and Richard E. Marriott) beneficially owned an
aggregate of 3,864,035 shares, or 1.6 percent of Class A common stock
outstanding as of January 31, 1999.
(10) Based on a Schedule 13G filed with the Securities and Exchange
Commission on February 9, 1999, reflecting ownership of Class A common
stock as of December 31, 1998, and total outstanding shares of Class A
common stock as of October 9, 1998. The following information is taken
from that filing. The Schedule 13G was filed by Southeastern Asset
Management, Inc., as a registered investment advisor, and by its
Chairman and Chief Executive Officer, O. Mason Hawkins in the event he
could be deemed to be a controlling person of that firm as the result of
his official position with or ownership of its voting securities,
although Mr. Hawkins disclaims
6
<PAGE>
beneficial ownership of the shares covered by the report ("Southeastern").
Southeastern's address is 6410 Poplar Avenue, Suite 900, Memphis, TN 38119.
All shares covered by the report are owned legally by Southeastern's
investment advisory clients and none are owned directly or indirectly by
Southeastern. The reporting persons reported sole voting power over
9,442,000 shares and shared voting power over 10,389,800 shares, and sole
dispositive power over 11,813,000 shares and shared dispositive power over
10,389,800 shares.
Section 16(a) Beneficial Ownership Reporting Compliance
Based upon a review of filings with the Securities and Exchange Commission
and written representations that no other reports were required, the Company
believes that all of the Company's directors and executive officers complied
during fiscal 1998 with the reporting requirements of Section 16(a) of the
Securities Exchange Act of 1934.
7
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ITEM 1--ELECTION OF DIRECTORS
The Board of Directors is divided into three classes, with approximately one-
third of the directors standing for election each year for a three-year term.
Alice S. Marriott and Sterling D. Colton each holds the title of director
emeritus.
Directors Standing for Election
Three directors are standing for re-election: J.W. Marriott, Jr., W. Mitt
Romney and William J. Shaw. Each has consented to serve for an additional term
ending at the 2002 annual meeting of shareholders.
If any of the nominees should become unavailable to serve as a director, the
Board may designate a substitute nominee. In that case, the persons named as
proxies will vote for the substitute nominee designated by the Board.
The Board recommends a vote FOR the nominees.
The following are the nominees for director for three-year terms ending in
2002:
J.W. Marriott, Jr. Mr. Marriott is Chairman of the Board and Chief
(Chairman of the Board) Executive Officer of the Company. He joined
Age: 67 Marriott Corporation in 1956 and has served as a
director of Marriott Corporation (now known as Host
Marriott Corporation) since 1964. He became
President of Marriott Corporation in 1964, Chief
Executive Officer in 1972 and Chairman of the Board
in 1985. Mr. Marriott also is a director of Host
Marriott Services Corporation, General Motors
Corporation, the U.S.-Russia Business Council, and
the Naval Academy Endowment Trust. He serves on the
Board of Trustees of the National Geographic
Society and The J. Willard & Alice S. Marriott
Foundation, and the Board of Directors of
Georgetown University, and is a member of the
Executive Committee of the World Travel & Tourism
Council and the Business Council. 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. He
is the brother of Richard E. Marriott.
[PHOTO OF J.W. MARRIOTT JR. APPEARS HERE]
W. Mitt Romney
Age: 52 Mr. Romney was appointed President and Chief
Executive Officer of the Salt Lake Olympic
Committee on February 19, 1999. He 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 board of the National Points of Light
Foundation. 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.
[PHOTO OF W. MITT ROMNEY APPEARS HERE]
8
<PAGE>
William J. Shaw Mr. Shaw has served as President and Chief
Age: 53 Operating Officer of the Company since March 1997
(including service in the same capacity with Old
Marriott until March 1998). Mr. Shaw joined
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 Chief Financial Officer and Executive
Vice President of Marriott Corporation in April
1988. In February 1992, he was elected President of
the Marriott Service Group. 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 and the Suburban Hospital
Foundation. Mr. Shaw has served as a director of
Old Marriott (now named Sodexho Marriott Services,
Inc.) since May 1997, and as a director of the
Company since March 1998.
[PHOTO OF WILLIAM J. SHAW APPEARS HERE]
Directors Continuing in Office
Richard E. Marriott
Age: 60 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
as 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 & Alice S. Marriott Foundation. He is
President and a member of the Board of Trustees of
the Marriott Foundation for People with
Disabilities. He also serves on the Board of
Trustees of Federal City Council 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 (now known as Host Marriott
Corporation) since 1979, served as a director of
Old Marriott from October 1993 to March 1998, and
has served as a director of the Company since March
1998. Mr. Marriott is currently serving a three-
year term expiring at the 2001 Annual Meeting of
Shareholders. He is the brother of J.W. Marriott,
Jr.
[PHOTO OF RICHARD E. MARRIOTT APPEARS HERE]
Henry Cheng Kar-Shun Dr. Cheng has served as Managing Director of New
Age: 52 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
[PHOTO OF HENRY CHENG KAR-SHUN APPEARS HERE]
9
<PAGE>
Hong Kong Foundation. Dr. Cheng serves as a 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 and Ninth
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.
Gilbert M. Grosvenor Mr. Grosvenor is Chairman of the Board of the
Age: 67 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 2001 Annual Meeting of
Shareholders.
[PHOTO OF GILBERT M. GROSVENOR APPEARS HERE]
Floretta Dukes McKenzie Dr. McKenzie is the founder, Chairwoman and Chief
Age: 63 Executive Officer of The McKenzie Group, Inc. (an
educational consulting firm). She is also a
director or trustee of Potomac Electric Power
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 OF FLORETTA DUKES McKENZIE APPEARS HERE]
10
<PAGE>
Harry J. Pearce Mr. Pearce is Vice Chairman of the Board of General
Age: 56 Motors Corporation (an automobile manufacturer) and
a director of General Motors Acceptance
Corporation, Hughes Electronics Corporation,
Alliance of Automobile Manufacturers, Delphi
Automotive Systems Corporation, 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 the Northwestern University School of
Law's Law Board. 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 2001 Annual Meeting of Shareholders.
[PHOTO OF HARRY J. PEARCE APPEARS HERE]
Roger W. Sant Mr. Sant is Chairman of the Board and a co-founder
Age: 67 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 OF ROGER W. SANT APPEARS HERE]
Lawrence M. Small Mr. Small is President, Chief Operating Officer and
Age: 57 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 Board of Directors of
Citicorp/Citibank. He also serves as a director of
The Fannie Mae Foundation and The Chubb
Corporation, Chairman of the Financial Advisory
Committee of Trans-Resources International, a
member of the Board of Trustees of the Mt. Sinai-
NYU Medical Center and Health System, trustee
emeritus of Brown University and Morehouse College.
Mr. Small 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 2000 Annual Meeting
of Shareholders.
[PHOTO OF LAWRENCE M. SMALL APPEARS HERE]
The Board of Directors met six times in 1998. Prior to the Spinoff of the
Company on March 27, 1998, the board of directors of Old Marriott consisted of
the same persons who are currently directors of the Company. The Old Marriott
board met four times from January 1, 1998 to March 27, 1998. No director
attended fewer than 75% of the total number of meetings of the Board and
Committees on which such director served, other than Mr. Pearce and Dr. Cheng.
11
<PAGE>
Committees of the Board of Directors
The Board of Directors has four standing committees: Audit; Compensation
Policy; Nominating and Corporate Governance; and Executive.
Audit Committee
. The members of the Committee are not employees of the Company. The Audit
Committee met three times in 1998.
. There is unrestricted access between the Audit Committee and the
independent auditors and internal auditors.
Functions:
. Meets with the Company's independent auditors, management
representatives and internal auditors.
. Reviews the results of internal and external audits, the accounting
principles applied in financial reporting and financial and operational
controls.
. Approves the scope of audits and other services to be performed by the
independent and internal auditors.
. Recommends to the Board the appointment of independent auditors
considering whether any circumstance, including the performance of any
professional services, would impair their independence.
Members: W. Mitt Romney (Chair), Gilbert M. Grosvenor, Harry J. Pearce,
Roger W. Sant and Lawrence M. Small.
Compensation Policy Committee
. The members of the Committee are not employees of the Company. The
Compensation Policy Committee met five times in 1998.
Functions:
. Recommends to the Board policies and procedures relating to senior
officers' compensation and various employee stock plans.
. Approves senior officer salary adjustments, bonus payments, and stock
awards.
Members: Floretta Dukes McKenzie (Chair), Roger W. Sant, W. Mitt Romney,
and Lawrence M. Small.
Nominating and Corporate Governance Committee
. The members of the Committee are not employees of the Company. The
Nominating and Corporate Governance Committee met once in 1998.
Functions:
. Makes recommendations to the Board regarding corporate governance
matters and considers nominees for election as directors.
. Advises the Board on 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.
Members: Gilbert M. Grosvenor (Chair), Floretta Dukes McKenzie and Harry J.
Pearce.
12
<PAGE>
Executive Committee
. The Executive Committee did not meet in 1998.
Function:
. Exercises the powers of the Board when the Board is not in session,
subject to specific restrictions as to powers retained by the full
Board. Powers retained by the full Board 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.
Members: J. W. Marriott, Jr. (Chair) and Roger W. Sant.
Directors' Compensation
Directors are compensated partially in cash and partially in Marriott common
stock to align their interests with those of shareholders. Company officers are
not paid for their service as directors.
Annual Retainer and Attendance Fees. For 1998, each non-employee director
received 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 received an additional annual fee of $1,000.
Beginning in May 1999, the annual retainer fee will be $30,000 and the
Committee Chair fee will be eliminated.
Annual Stock Awards. Each non-employee director also receives an annual
director stock award under the Marriott International, Inc. 1998
Comprehensive Stock and Cash Incentive Plan. The award is for a number of
shares having an aggregate market value as of the date of grant of
approximately the amount of the annual directors' retainer fee. This award
is granted immediately prior to the annual meeting of shareholders. In
1998, each award was for 700 shares.
Deferral of Payment. Any director may elect to defer payment of all or any
portion of his or her directors' fees 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.
Other. Directors are also reimbursed for travel expenses and other out-of-
pocket costs incurred when attending meetings.
Compensation Committee Interlocks and Insider Participation
During 1998, the Compensation Policy Committee's members were 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.
13
<PAGE>
EXECUTIVE COMPENSATION/1/
Summary Compensation Table
The following Summary Compensation Table shows the compensation paid by the
Company in 1998 (after the Spinoff of the Company on March 27, 1998), and paid
by Old Marriott in 1998 (up to the Spinoff) and in 1997 and 1996, to the Chief
Executive Officer and the other four most highly compensated executive officers
(other than the Chief Executive Officer) of the Company as of January 2, 1999.
<TABLE>
<CAPTION>
Restricted Stock All Other
Fiscal Salary Stock Options Compensation
Name Year (1)(2) Bonus (3)(4) (#) (5)(6)
---- ------ -------- ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
J.W. Marriott, Jr. .... 1998 $950,000 $1,001,300 $ 200,246 192,000 $148,048
Chairman and Chief 1997 900,000 990,000 198,000 287,500 79,590
Executive Officer 1996 840,866 809,754 161,975 71,000 32,125
William J. Shaw........ 1998 670,000 572,850 1,462,092 132,000 56,623
President and Chief 1997 618,846 556,961 111,410 195,000 24,009
Operating Officer 1996 545,289 425,325 85,085 46,000 19,780
William R. Tiefel...... 1998 595,000 449,225 89,856 90,000 48,354
Vice Chairman 1997 565,000 452,000 90,431 135,000 44,714
1996 545,289 393,699 1,175,020 46,000 40,323
Joseph Ryan............ 1998 425,000 325,125 65,023 66,000 34,148
Executive Vice
President 1997 400,000 320,000 741,766 100,000 12,493
and General Counsel 1996 371,000 248,941 49,775 25,000 1,170
James M. Sullivan...... 1998 425,000 325,125 770,498 66,000 34,375
Executive Vice
President 1997 400,000 320,000 63,966 100,000 29,684
Lodging Development 1996 320,000 236,730 47,355 23,000 24,622
</TABLE>
Footnotes to Summary Compensation Table.
(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 both 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 certain employee benefit plans.
(3) Includes restricted stock, deferred bonus stock and deferred stock
contracts, as follows:
Restricted Stock. Restricted stock awards 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 dividends and
exercise voting rights on their restricted shares.
- --------
/1/For 1997 and 1996, 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/SAR 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 the Company's common stock as a result of the Spinoff. In
connection with the Spinoff, the awards under the Old Marriott stock 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 Marriott stock
plans.
14
<PAGE>
Deferred Bonus Stock. The amount of a deferred bonus stock award generally
equals 20 percent of each individual's annual cash bonus award, based on
the stock price on the last trading day for the fiscal year. Holders of
deferred bonus awards do not receive dividends or exercise voting rights on
their deferred bonus stock until it is distributed to them. The recipient
can designate an award as current, which is distributed in 10 annual
installments beginning one year after the award is granted, or deferred,
which is distributed in a lump sum or in up to 10 installments following
termination of employment. Deferred bonus stock contingently vests in ten
equal annual installments beginning one year after the award is granted.
Deferred Stock Contracts. Deferred stock contracts are subject to general
restrictions, such as continued employment and non-competition. Holders of
deferred stock contacts do not receive dividends or exercise voting rights
on their deferred awards until they are distributed to them. The stock
typically vests in equal annual installments beginning one year after the
award is granted. The recipient may receive awards in 10 annual
installments following termination of employment.
(4) The total number of restricted or deferred shares held by each Named
Executive as of the end of the 1998 fiscal year, and the aggregate value
of these shares, is as follows:
<TABLE>
<CAPTION>
Shares
-------------------------------------
Deferred Restricted Deferred Aggregate Value
Named Executive Bonus Stock Stock Contract Stock at 1/1/99
--------------- ----------- ---------- -------------- ---------------
<S> <C> <C> <C> <C>
Mr. Marriott.......... 19,690 -- -- $ 582,706
Mr. Shaw.............. 33,563 81,834 55,042 5,043,972
Mr. Tiefel............ 149,275 4,404 110,003 7,803,413
Mr. Ryan.............. 9,049 52,839 22,018 2,483,114
Mr. Sullivan.......... 22,230 42,614 22,018 2,570,594
</TABLE>
(5) This column represents Company matching contributions made under the
Company's Profit Sharing Plan and Executive Deferred Compensation Plan for
fiscal 1998, as follows:
<TABLE>
<CAPTION>
Named Executive Profit Sharing Plan Deferred Plan
--------------- ------------------- -------------
<S> <C> <C>
Mr. Marriott............................... $4,928 $84,611
Mr. Shaw................................... 4,928 51,695
Mr. Tiefel................................. 4,964 43,390
Mr. Ryan................................... 4,928 29,220
Mr. Sullivan............................... 4,928 29,447
</TABLE>
(6) In 1996, J. W. Marriott, Jr. waived his vested right to receive post-
retirement distributions of cash under Old Marriott's executive deferred
compensation plan and Old Marriott common stock under Old Marriott's stock
incentive plan. The payments and stock distributions waived were awarded
to Mr. Marriott in 1995 and prior years and were disclosed as required in
earlier proxy statements of Old Marriott or of Marriott Corporation. In
connection with this waiver, Old Marriott agreed to purchase split-dollar
life insurance policies for the benefit of a trust established by Mr.
Marriott. This agreement to purchase split-dollar life insurance policies
has been assumed by the Company. The cost of the life insurance policies
to the Company will not exceed the expected after-tax cost to Old Marriott
if it had made the payments and stock distributions that were waived by
Mr. Marriott. For 1998, the taxable economic benefit to Mr. Marriott as a
result of these life insurance policies was $58,509.
15
<PAGE>
Stock Option Tables
The following two tables show information concerning options to purchase the
Company's Class A common stock granted in fiscal 1998 under the 1998
Comprehensive Stock and Cash Incentive Plan.
Stock Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Number of % of Total Stock
Securities Options Granted Exercise
Underlying To Employees in Price Expiration Grant Date
Name Options Fiscal Year Per Share Date (1) Present Value (2)
---- ---------- ---------------- --------- ---------- -----------------
<S> <C> <C> <C> <C> <C>
J. W. Marriott, Jr. .... 192,000 3.0 $28.2187 11/05/2013 $2,192,640
William J. Shaw......... 132,000 2.0 28.2187 11/05/2013 1,507,440
William R. Tiefel....... 90,000 1.4 28.2187 11/05/2013 1,027,800
Joseph Ryan............. 66,000 1.0 28.2187 11/05/2013 753,720
James M. Sullivan....... 66,000 1.0 28.2187 11/05/2013 753,720
</TABLE>
- --------
(1) All options will vest over four years on the anniversary date of the grant
at a rate of 25% per year and have a 15-year term. Options held by
executive officers may be transferred only as gifts for the benefit of
specified family members and approved charitable organizations.
(2) These values were established using the Black-Scholes stock option
valuation model. Assumptions used to calculate the grant date present
value of option shares granted during fiscal 1998 were in accordance with
SFAS 123, as follows:
Expected Volatility--The standard deviation of the continuously compounded
rates of return calculated on the average daily stock price over a period
of time immediately preceding the grant and equal in length to the expected
life. The volatility was 28.31%.
Risk-Free Interest Rate--The risk-free interest rate was 5.79%.
Dividend Yield--The expected annual dividend yield was $0.21 based on the
historical dividend yield over the expected term of the option.
Expected Life--The expected life of the grant was 7.15 years, calculated
based on the historical expected life of previous grants.
Forfeiture Rate--The probability of forfeiture due to termination of
employment prior to vesting was 13.3%.
Per Share Value--The per share value for these grants was $11.42.
16
<PAGE>
Aggregated Stock Option/SAR Exercises in Last Fiscal
Year and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Value of Unexercised
Shares Underlying In-the-Money
Shares Unexercised Options Stock Options
Acquired Value at Fiscal Year End at Fiscal Year End(2)
Company on Exercise Realized ------------------------- -------------------------
Name (1) (#) ($) Exercisable Unexercisable Exercisable Unexercisable
---- ------- ----------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
J.W. Marriott, Jr. ..... MI 110,082 2,312,839 1,838,630 923,768 $35,999,972 $3,797,991
HMC(3) 223,879 1,179,333 702,231 0 7,874,080 0
------- --------- --------- ------- ----------- ----------
TOTAL 333,961 3,492,172 2,540,861 923,768 43,875,052 3,797,991
William J. Shaw......... MI 165,122 1,416,928 1,107,974 615,808 21,961,104 2,428,026
HMC 83,955 1,411,676 426,166 0 4,845,648 0
------- --------- --------- ------- ----------- ----------
TOTAL 249,077 2,828,604 1,534,140 615,808 26,806,752 2,428,026
William R. Tiefel....... MI 0 0 893,316 447,214 17,057,845 1,821,917
HMC 33,582 519,791 298,853 0 3,398,895 0
------- --------- --------- ------- ----------- ----------
TOTAL 33,582 519,791 1,192,169 447,214 20,456,740 1,821,917
Joseph Ryan............. MI 0 0 115,586 319,191 1,228,469 1,307,194
HMC 0 0 0 0 0 0
------- --------- --------- ------- ----------- ----------
TOTAL 0 0 115,586 319,191 1,228,469 1,307,467
James M. Sullivan....... MI 26,422 517,141 249,064 306,803 4,613,968 1,167,472
HMC 0 0 15,749 0 175,449 0
------- --------- --------- ------- ----------- ----------
TOTAL 26,422 517,141 264,813 306,803 4,789,417 1,167,472
</TABLE>
- --------
(1) "MI" represents options to purchase Marriott International Class A common
stock. "HMC" represents options to purchase shares of beneficial interest
in Host Marriott Corporation.
(2) The number and terms of these options reflect several adjustments made as
a result of the spinoff of Old Marriott from Marriott Corporation in
October 1993; the spinoff of Host Marriott Services Corporation from Host
Marriott Corporation in December 1995; the spinoff of the Company from Old
Marriott in March 1998; and the conversion of Host Marriott Corporation
into a real estate investment trust (and a related spinoff transaction) in
December 1998, each in accordance with the applicable employee benefit
plans covering those options. These adjustments preserved, but did not
increase or decrease, the economic value of the options.
(3) In December 1998, the Board of Directors of Host Marriott Corporation
determined that it would be desirable and in the best interests of its
shareholders that certain options to purchase Host Marriott Corporation
held by Mr. Marriott be canceled and that these options be replaced with
Stock Appreciation Rights on equivalent economic terms subject to the
adjustments mentioned above. The conversion to SARs was completed in order
to comply with ownership limits applicable to the conversion of Host
Marriott Corporation into a real estate investment trust. The SARs are
fully vested.
17
<PAGE>
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 1998. 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 that
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 that is obtained from independent consultants. The data reflects
compensation practices with companies of approximately Marriott's size (the
comparison 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.
The Committee establishes target cash compensation levels (base salary plus
target bonus) at the median level of cash compensation for the comparison
group. The Committee establishes long-term incentive levels on the average of
two-year median long-term incentive values for the comparison group. Companies
in the comparison group may be included in the S&P Lodging-Hotels Index used in
the shareholder return performance graph included in this Proxy Statement,
although the comparison group is not made up exclusively of companies used in
that Index. As the Company is comprised of both lodging and service lines of
businesses and also recruits senior executives from outside the hospitality
industry, the Committee believes that the broad-based comparison group is a
more appropriate basis for establishing comparable pay programs.
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. The Committee
establishes merit increase guidelines based on survey information of annual
salary increase budgets for the comparison group, along with an assessment of
the Company's labor costs for management employees.
Annual Cash Incentives
The Company has established the 1998 Comprehensive Stock and Cash Incentive
Plan, which is focused on financial objectives. In addition, the Company
maintains the Executive Officer Individual
18
<PAGE>
Performance Plan, which is focused on human resource and other business
requirements, to help motivate the attainment of annual objectives. Under each
plan, goals and specific objectives are established for a minimum level, a
target level, and a maximum level of performance. Senior human resources
management of the Company provided the Committee with individual performance
objectives for the Chief Executive Officer and each of the other named
executives for the Committee's review and input. For each objective, actual
performance is measured against these levels in order to determine the actual
payment. No payment is made if performance fails to meet the minimum level for
a particular objective.
The 1998 incentive plans for the Chief Executive Officer and other senior
executive officers included objectives related to Company financial
performance, individual performance, human resource goals, customer
satisfaction, and lodging growth objectives.
Stock Incentives
The Committee believes that stock ownership by senior executive management is
essential for aligning management's interest with that of shareholders. To
emphasize this principle, in February 1999 the Company established stock
ownership guidelines for the Company's senior management. The guidelines
require the top 65 executives in the Company to own a multiple of their
individual salary grade midpoint in Company stock. Executives will have five
years in which to meet this goal.
The Company offers several stock-based incentive programs under the Company's
1998 Comprehensive Stock and Cash Incentive Plan. Through deferred stock
incentive awards, approximately 3,500 managers, including the Chief Executive
Officer and other senior executive officers, receive an award of shares equal
in value to 20% of their annual cash bonus. The award is distributed ratably
over a ten-year period or at retirement if so elected by certain levels of
management, and is contingent upon continued employment.
In addition, the Company also makes grants of stock options. Stock options
are the primary long-term incentive of the Company. The number of option shares
granted to each executive officer is related to a guideline number established
for each eligible salary grade or 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
Company's 1998 Comprehensive Stock and Cash Incentive Plan, awards of
restricted stock and deferred stock contracts 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.
1998 Compensation of the Chief Executive Officer and Named Executive Officers
The Committee reviewed the 1998 salaries for J.W. Marriott, Jr. and all other
executive officers in November 1997. Mr. Marriott received a 5.5% increase in
base pay on January 3, 1998, which resulted in his annual pay rate increasing
to $950,000. This salary is below the median for the comparison group. The
other four named senior executive officers in the Summary Compensation Table in
this Proxy Statement received base salary increases ranging from 4.5% to 6.2%,
effective January 3, 1998. As a group, the other named senior executive
officers have base salaries that approximate the median of the comparison
group.
19
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Under the 1998 Comprehensive Stock and Cash Incentive Plan, Mr. Marriott's
maximum 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 Executive Officer Individual Performance Plan, his maximum
opportunity was 22% related to individual objectives and 11% related to
customer satisfaction. In 1998, the Company exceeded the maximum level of
performance for both corporate cash flow and earnings per share objectives. Mr.
Marriott accomplished the majority of his individual objectives, including
performance for customer satisfaction which met the target level (but was below
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 payment of $1,001,300 corresponded to
105.4% of salary. Mr. Marriott's annual cash incentive payment was below the
median for the comparison group. From a total cash compensation perspective
(base plus bonus), his annual compensation is below the median for the
comparison group. In addition, Mr. Marriott received 6,846 shares of Deferred
Bonus Stock, which was equal in value to 20% of his bonus.
The other named senior executive officers are also participants in the 1998
Comprehensive Stock and Cash Incentive Plan. Performance measures utilized
include Company and, in some cases, business-group cash flow, customer
satisfaction, lodging rooms growth objectives and individual objectives. The
aggregate target payments for these other named executives were set at 50% to
60% of salary and the maximum aggregate payments from 80% to 90% of salary.
Actual total award payments for 1998 ranged from 75.5% to 85.5% of salary.
In recognition of outstanding contributions during the year, and to continue
to offer a competitive total compensation program, several of the other named
executives received restricted stock awards in 1998. Mr. Shaw received a
restricted stock grant of 40,000 shares and Mr. Sullivan received a restricted
stock grant of 25,000 shares.
In 1998, stock option grants were made to Mr. Marriott and the other named
executive officers. Mr. Marriott received an option to acquire 192,000 shares
in November 1998 that vests over four years. This grant, as well as similar
grants to the other named executive officers, was all at the guideline level
established for their specific salary grade.
In February 1997, special supplemental option grants were made to Mr.
Marriott and the other named executive officers to acquire from 80,000 to
150,000 shares, which will vest in February 2005. The options may vest earlier
at the end of year 2000, 2001, and 2002 if Marriott International's stock price
appreciation is at or above the 75th percentile of the S&P 500. The primary
objective of these grants is to focus executive management on opportunities for
significant stock price appreciation. If the options vest at the end of the
third year, the total compensation paid to the senior management team for that
period of time will approximate the 75th percentile of compensation paid to
executives in similar positions in other high performing companies.
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 1998 Comprehensive Stock and Cash Incentive Plan satisfies the requirements
for exemption under Internal Revenue Code Section 162(m). Payments made under
this
20
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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 Executive Officer Individual Performance Plan does not meet the
requirements necessary for exemption as performance-based compensation, the
Committee believes 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 1998, the
annual salary plus the bonus paid to Mr. Marriott and the other named executive
officers were in each case less than one million dollars after amounts deferred
into the Executive Deferred Compensation Plan. The Committee reserves the right
to pay non-deductible compensation if it considers that to be in the best
interest of the shareholders and the Company. The stock option awards made
under the terms of the 1998 Comprehensive Stock and Cash Incentive 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 1998 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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SHAREHOLDER RETURN PERFORMANCE GRAPH
The following graph compares the performance of the Company's Class A common
stock from the Spinoff of the Company on March 27, 1998 to the end of fiscal
1998, and prior to the Spinoff, the performance of Old Marriott's common stock
since December 31, 1993, with the performance of the Standard & Poor's
Corporation Composite 500 Index and the Standard and Poor's Corporation
Lodging-Hotels Composite Index. The graph assumes an initial investment of $100
on December 31, 1993, and reinvestment of dividends. In addition, the Sodexho
Marriott Services, Inc. shares received in connection with the Spinoff are
assumed to be sold on March 27, 1998, and immediately reinvested in the
Company's Class A Common Stock.
The Company believes that this shareholder return information has only
limited relevance to an understanding of its or Old Marriott's compensation
policies during the indicated periods and does not reflect all matters
appropriately considered by it or by Old Marriott in developing its
compensation strategy.
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
12/31/93 12/30/94 12/29/95 1/3/97 1/2/98 1/1/99
<S> <C> <C> <C> <C> <C> <C>
Marriott International, Inc. $100.0 $ 98.0 $134.3 $194.3 $242.2 $226.2
S&P Lodging-Hotels Index $100.0 $ 88.9 $105.0 $125.1 $172.1 $142.0
S&P 500 Index $100.0 $101.3 $139.3 $171.3 $223.4 $293.4
</TABLE>
22
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CERTAIN TRANSACTIONS
JWM Family Enterprises, L.P. ("Family Enterprises") is 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. Family Enterprises
owns a Courtyard Hotel in Long Beach, California, a Residence Inn in San
Antonio, Texas and a Fairfield Inn in Anaheim, California. Subsidiaries of the
Company operate the three properties pursuant to management agreements with
Family Enterprises. In fiscal 1998, the Company was paid management fees of
approximately $1.23 million, plus reimbursement of certain expenses, from its
operation of these hotels.
McIntosh Mill Ltd. ("McIntosh Mill") is a Utah limited partnership in which
Richard E. Marriott, a director of the Company, has a 40 percent limited
partnership interest. McIntosh Mill has sold certain parcels of land in Park
City, Utah to Marriott Ownership Resorts, Inc. ("MORI"), a subsidiary of the
Company, on which MORI has built a mixed-use development, including commercial
condominium units and a timeshare resort. McIntosh Mill purchased the
commercial condominium units from MORI for a cash purchase price of
approximately $3.95 million, which is the pro rata share of the total project
development and construction costs allocable to the commercial condominium
units, less (i) the value of the land allocated to the residential condominium
units retained by MORI for its timeshare resort, and (ii) an agreed-upon
development fee earned by McIntosh Mill. McIntosh Mill expects to pay this
purchase price with part of the proceeds from long term mortgage financing it
plans to obtain in 1999. MORI has secured payment of the purchase price with
purchase money mortgages on the commercial condominium units.
Dr. Henry Cheng Kar-Shun, a director of the Company, together with members of
the Cheng family, directly or indirectly owns or leases hotel properties that
are operated by subsidiaries of the Company. In fiscal 1998, the Company
recognized sales of $560 million from its operation of these properties. New
World Development, for which Dr. Cheng serves as Managing Director and which is
37.3 percent owned by Dr. Cheng and members of the Cheng family, its affiliates
or affiliates of Dr. Cheng, have indemnified Renaissance Hotel Group N.V.
("RHG"), a subsidiary of the Company, RHG's subsidiaries, and the Company for
certain lease and other obligations in connection with the formation of RHG as
a hotel management company in 1995, when Dr. Cheng and his family members and
affiliates owned a majority of RHG's stock.
Transactions with Host Marriott Corporation
On October 8, 1993, Old Marriott was spun off as a separate public company
from its former parent company, Marriott Corporation (which changed its name to
Host Marriott Corporation) ("Host Marriott"). Host Marriott retained the
ownership of lodging properties and certain other assets. Old Marriott
continued the businesses of lodging management, senior living services,
distribution services and certain other businesses.
At July 31, 1998, J.W. Marriott, Jr. and Richard E. Marriott and their
respective immediate family members beneficially owned approximately 6.50
percent and 6.47 percent, respectively, of the common stock of 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.
Pursuant to agreements between the Company and Host Marriott, in 1998 the
Company:
. operated lodging properties owned or leased by Host Marriott;
. operated senior living communities owned by Host Marriott;
23
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. guaranteed Host Marriott's performance in connection with certain loans
or other obligations; and
. provided Host Marriott with various administrative and consulting
services and a sublease of office space at the Marriott headquarters
building.
During 1998, the Company also had 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 occurred.
Lodging. The Company recognized sales of $2,144 million and operating profit
(before corporate expenses and interest) of $197 million in 1998 from its
operation of lodging properties owned or leased by Host Marriott. During 1998,
Host Marriott also served as the general partner of several unconsolidated
partnerships that own lodging properties. The Company recognized sales of $712
million and operating profit (before corporate expenses and interest) of $83
million in 1998 from its operation of these lodging properties. The Company
also leases land to certain of these partnerships and recognized land rent
income of $24 million in 1998.
Senior Living Services. During 1998, Marriott Senior Living Services, Inc., a
subsidiary of the Company, managed 31 senior living communities owned by Host
Marriott. The Company recognized sales of $173 million and operating profit
(before corporate expenses and interest) of $5 million from its operation of
these communities in 1998.
The Company believes that its lodging and senior living community operating
agreements with Host Marriott reflect then-existing market terms and
conditions, and are substantially similar to operating agreements between the
Company and other third parties for facilities of a similar type.
Financing. The Company has provided financing to Host Marriott for a portion
of the cost of acquiring properties to be operated or franchised by the Company
and may continue to provide financing to Host Marriott (or Crestline Capital
Corporation, as described below) in the future. In 1998, the Company recognized
$5 million in interest and fee income from loans to Host Marriott. At January
1, 1999, the outstanding principal balance of loans to Host Marriott was $9
million.
Guarantees. The Company has guaranteed Host Marriott's performance to certain
lenders and other third parties. These guarantees were limited to $70 million
at January 1, 1999. The Company has not been required to make any payments
under these guarantees.
Administrative Services. The Company also provides certain administrative and
consulting services to Host Marriott, and subleases space at its headquarters
building to Host Marriott. In 1998, the Company was paid approximately $7.7
million for these items, including reimbursements.
In December 1998, Host Marriott reorganized its business operations to
qualify as a real estate investment trust ("REIT"). In conjunction with its
conversion to a REIT, Host Marriott spun off, in a taxable transaction, a new
company called Crestline Capital Corporation ("Crestline"); acquired a
portfolio of luxury hotels for $1.5 billion; and completed partnership roll-ups
representing new hotel property acquisitions approximating $650 million. As
part of the Crestline spinoff, Host Marriott transferred to Crestline all of
the senior living communities previously owned by Host Marriott, and Host
Marriott leased or subleased to Crestline substantially all of Host Marriott's
lodging properties, including the properties acquired in the acquisition and
roll-up transactions described above. Host Marriott also assigned to Crestline
the lodging and senior living community management and franchise agreements
with the Company. In the case of the lodging agreements, Host Marriott remains
obligated under such agreements in the event that Crestline fails to perform
its obligations thereunder.
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<PAGE>
The Company continues to have the right to purchase up to 20 percent of Host
Marriott's outstanding common stock upon the occurrence of certain events
generally involving a change of control of Host Marriott. This right expires in
2017, and Host Marriott has granted an exception to the ownership limitations
in its charter to permit full exercise of this right, subject to certain
conditions related to ownership limitations applicable to REITs generally.
Following the conversion of Host Marriott into a REIT, the spinoff of
Crestline and the related transactions described above, J.W. Marriott, Jr. and
Richard E. Marriott and their respective immediate family members beneficially
owned approximately 6.1 percent and 6.3 percent, respectively, of the common
shares of Host Marriott and approximately 5.7 percent and 6.0 percent,
respectively, of the common shares of Crestline in each case as of January 31,
1999. Richard E. Marriott continues to serve as the Chairman of the Board of
Host Marriott, and J.W. Marriott continues to serve as a director of Host
Marriott. John W. Marriott III, the son of J.W. Marriott, Jr., is a director of
Crestline.
The Company believes that the transactions described above have not
materially changed its business or legal rights as they previously existed with
Host Marriott, although there can be no assurance that the new structure will
not adversely affect the Company under future circumstances.
Transactions with Host Marriott Services Corporation
In December 1995, Host Marriott Services was spun off as a separate public
company from its former parent, Host Marriott. Host Marriott Services is a
food, beverage and retail concessionaire at travel and entertainment venues.
J.W. Marriott, Jr. and Richard E. Marriott and their respective immediate
family members beneficially own approximately 5.49 percent and 5.17 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.
The Company procures and distributes food and supplies to Host Marriott
Services, for which the Company received payments of approximately $75.4
million in 1998, including the cost of food and supplies purchased. The Company
also provides certain administrative and consulting services to Host Marriott
Services similar to those provided to Host Marriott. The Company received
payments aggregating approximately $8.8 million, including reimbursements, for
these services in 1998.
ITEM 2--RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Acting upon the recommendation of the Audit Committee, the Board of Directors
has appointed Arthur Andersen LLP as the Company's independent auditors for
fiscal 1999. Arthur Andersen LLP, a firm of independent public accountants, has
served as the Company's independent auditors since the Spinoff in March 1998.
Arthur Andersen LLP also served as Old Marriott's independent auditors from
October 1993 (when Old Marriott was spun off as a public company) to March
1998. Arthur Andersen LLP will examine and report to shareholders on the
consolidated financial statements of the Company and its subsidiaries.
Representatives of Arthur Andersen LLP will be present at the annual meeting,
will be given an opportunity to make a statement, and are expected to be
available to respond to questions.
The Board of Directors recommends a vote FOR ratification of Arthur Andersen
LLP as the Company's independent auditors for fiscal 1999.
25
<PAGE>
ITEM 3--APPROVAL OF AMENDING THE COMPANY'S CERTIFICATE OF INCORPORATION TO
REFLECT THE ELIMINATION OF ONE OF THE TWO CLASSES OF COMMON STOCK , AND
AUTHORIZATION TO FILE A RESTATED CERTIFICATE OF INCORPORATION EMBODYING
THIS AMENDMENT.
Background. The Company was spun off from Old Marriott on March 27, 1998
through the issuance of one share of common stock of the Company, having one
vote per share, and one share of Class A common stock of the Company, having
ten votes per share, for each share of Old Marriott common stock outstanding
on March 27, 1998. At the 1998 annual meeting of shareholders of the Company,
shareholders voted on whether to retain the two classes of common stock of the
Company that had been authorized and issued as part of the Spinoff. As a
result of this shareholder vote, on May 21, 1998, the Board of Directors
effected the conversion of each outstanding share of the Company's common
stock into one share of the Company's Class A common stock. At the same time,
the Board pledged to take the necessary action to amend the Company's
certificate of incorporation to reflect the elimination of the dual class
common stock structure.
Purpose. The purpose of Item 3 is:
. to approve amending the Company's certificate of incorporation to
reflect the elimination of one of the two classes of common stock; and
. to authorize the filing of a restated certificate of incorporation
embodying this amendment.
Article Fourth of the Company's certificate of incorporation sets forth the
authorized capital stock of the Company and describes the rights and
preferences thereof. Article Fourth provides that there are 800 million
authorized shares of common stock, consisting of 300 million authorized shares
of Class A common stock and 500 million authorized shares of common stock, and
10 million authorized shares of preferred stock. Article Fourth is proposed to
be amended to eliminate the authorization for the class of common stock
referred to as the "common stock", leaving the Class A common stock as the
only authorized class of common stock of the Company. Likewise, the provisions
in the existing certificate of incorporation setting forth the rights and
preferences of the two classes of common stock are proposed to be deleted from
Article Fourth, as they are no longer necessary. The text of Article Fourth as
it is proposed to be amended by Item 3 (and by Item 4) is attached as Annex A.
In addition to the changes to Article Fourth described above, the only other
proposed change to the existing certificate of incorporation is to delete
references to the second class of common stock where they appear throughout
the certificate of incorporation.
A vote for Item 3 is also a vote for the filing of a restated certificate of
incorporation embodying the amendments proposed in Item 3.
Shareholders are reminded that share certificates representing common stock
are automatically deemed to represent the same number of shares of Class A
common stock, and do not need to be returned or exchanged.
The Board of Directors recommends a vote FOR approval of amending the
Company's certificate of incorporation to reflect the elimination of one of
the two classes of common stock, and the filing of a restated certificate of
incorporation embodying this amendment.
26
<PAGE>
ITEM 4--APPROVAL OF AMENDING THE COMPANY'S CERTIFICATE OF INCORPORATION TO
INCREASE THE NUMBER OF AUTHORIZED SHARES OF CLASS A COMMON STOCK TO 800
MILLION.
Background. As described above under Item 3, as a result of a vote of the
Company's shareholders at the 1998 annual meeting of shareholders, on May 21,
1998, the Board of Directors effected the conversion of each outstanding share
of the Company's common stock into one share of the Company's Class A common
stock.
Purpose. The purpose of Item 4 is to approve amending the Company's
certificate of incorporation to increase the number of authorized shares of
Class A common stock to 800 million.
Article Fourth of the Company's certificate of incorporation provides that,
upon the conversion of all shares of common stock into shares of Class A common
stock, the number of authorized shares of Class A common stock of the Company
shall be 800 million (from 300 million authorized shares prior to the
conversion), and the number of authorized shares of common stock of the Company
shall be zero (from 500 million authorized shares prior to the conversion). The
Delaware General Corporation Law provides that shareholder approval is required
to increase the authorized number of shares of a class of common stock. To
ensure compliance with Delaware law, the Company is seeking shareholder
approval for this increase in authorized shares of Class A common stock.
However, if Item 3 is approved and the second class of common stock is
eliminated as described above, the total number of authorized shares of common
stock of the Company will not increase or decrease, but will remain at 800
million shares. The text of Article Fourth as it is proposed to be amended by
Item 4 (and Item 3) is attached as Annex A.
At March 5, 1999, there were 247,078,029 issued and outstanding shares of
Class A common stock of the Company. The conversion of the common stock into
Class A common stock in May 1998 resulted in a doubling of the number of
outstanding shares of Class A common stock (there were approximately 128
million shares of Class A common stock, and an identical number of shares of
common stock, issued at the Spinoff). The Company has reserved 9,465,376 shares
of Class A common stock for issuance upon conversion of the Company's Liquid
Yield Option Notes due 2011. The Company also has share issuance obligations
under the Marriott International, Inc. 1998 Comprehensive Stock and Cash
Incentive Plan (56 million shares authorized for issuance; options for
approximately 31.5 million shares were outstanding at December 31, 1998, of
which options for approximately 19.1 million shares were exercisable), and
under the Company's Employee Stock Purchase Plan (5 million shares authorized
for issuance). However, the Company has in the past, and plans to continue,
using shares repurchased by the Company in the open market, rather than
authorized but unissued shares, to satisfy its employee plan share
requirements.
The additional authorized shares of Class A common stock can be issued for
corporate purposes without further shareholder approval, unless such approval
is required by applicable law or regulation. Although the Company currently has
no plans to issue any significant amount of shares of Class A common stock
(other than 2,081,962 shares to be issued in March 1999 as partial
consideration for the Company's acquisition of Execustay Corporation), future
purposes for issuances of the additional shares could include paying stock
dividends, subdividing outstanding shares through stock splits, effecting
acquisitions of other businesses or properties, securing additional financing
for the Company through the issuance of additional shares of Class A common
stock, and satisfying share issuance requirements under existing or future
employee benefit plans (although the Company plans to continue its practice of
using shares repurchased in the open market to satisfy these requirements for
its existing plans). These purposes are no different than the purposes for
which the originally authorized 800 million shares could be issued.
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<PAGE>
As with any share issuance, the issuance of additional shares of Class A
common stock without further shareholder approval may, among other things, have
a dilutive effect on earnings per share and on the equity of the present
holders of Class A common stock and on their voting power. The Class A common
stock has ten votes per share, while shares of common stock had one vote per
share.
The Board of Directors recommends a vote FOR approval of amending the
Company's certificate of incorporation to increase the number of authorized
shares of Class A common stock to 800 million.
ITEM 5--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 400 shares of Class A common stock, has notified the
Company of her intention to propose the following resolution at the Annual
Meeting:
"RESOLVED: That the shareholders 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 shareholder 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 shares representing 165,618,800 votes, representing approximately
14.2% of the voting power of shares voting, voted for this proposal."
"If you AGREE, please mark your proxy FOR this resolution."
The Board, and the Nominating and Corporate Governance Committee, have
considered this proposal. The Board 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 voting power of the Company's shares. This permits the
directors to administer the affairs of the Company 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 Delaware, where 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 most companies listed on the New York Stock Exchange.
The Board believes that this method is appropriate to ensure that directors
will represent all shareholders, and not just a particular group.
The Board recommends a vote AGAINST this proposal.
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OTHER MATTERS
The Company's management knows of no other matters which may be presented for
consideration at the 1999 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.
A copy of the Company's 1998 Annual Report on Form 10-K is being mailed to
shareholders together with this Proxy Statement. Any shareholder who desires an
additional copy may obtain one, without charge, by addressing a request to the
Secretary, Marriott International, Inc., Dept. 52/862, Marriott Drive,
Washington, D.C. 20058. The Company's copying costs will be charged if copies
of exhibits to the 10-K are requested.
BY ORDER OF THE BOARD OF DIRECTORS
/S/ W. DAVID MANN
W. David Mann
Secretary
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ANNEX A
Proposed Amended Article Fourth of the Company's
Certificate of Incorporation (See Item 3 and Item 4)
FOURTH. The total number of shares of all classes of stock which the
corporation shall have authority to issue is eight hundred ten million
(810,000,000) consisting of (i) eight hundred million (800,000,000) shares of
Class A common stock, with par value of $0.01 per share (the "Class A Common
Stock"); and (ii) ten million (10,000,000) shares of preferred stock, without
par value (the "Preferred Stock").
The shares of authorized Class A Common Stock of the corporation shall be
identical in all respects and shall have equal rights and privileges. Each
issued and outstanding share of Class A Common Stock shall have ten votes on
all matters submitted to a vote of the stockholders of the corporation.
No holder of stock of any class of the corporation, whether now or hereafter
authorized or issued, shall be entitled as such, as a matter of right, to
subscribe for or purchase any part of any new or additional issue of stock of
any class whatsoever, or of any securities convertible into stock of any class,
of any character or to which are attached or with which are issued warrants or
rights to purchase any such stock, whether now or hereafter authorized, issued
or sold, or whether issued for moneys, property or services, or by way of
dividend or otherwise, or any right or subscription to any thereof, other than
such, if any, as the board of directors in its discretion may from time to time
fix, pursuant to authority hereby conferred upon it; and any shares of stock or
convertible obligations with warrants or rights to purchase any such stock,
which the board of directors may determine to offer for subscription, may be
sold without being first offered to any of the holders of the stock of the
corporation of any class or classes or may, as such board shall determine, be
offered to holders of any class or classes of stock exclusively or to the
holders of all classes of stock, and if offered to more than one class of
stock, in such proportions as between such classes of stock as the board of
directors, in its discretion, may determine.
The Preferred Stock may be issued from time to time in one or more series
pursuant to a resolution or resolutions providing for such issue duly adopted
by the board of directors (authority to do so being hereby expressly vested in
the board) and such resolution or resolutions shall also set forth the voting
powers, full or limited or none, of each such series of Preferred Stock and
shall fix the designations, preferences and relative, participating, optional
or other special rights, and qualifications, limitations or restrictions of
each such series of Preferred Stock.
Pursuant to authority conferred by this Article FOURTH, the board of
directors of the corporation has designated a series of Preferred Stock as the
Series A Junior Participating Preferred Stock, consisting of the number of
shares, with such voting powers and with such designations, preferences and
relative, participating, optional or other special rights, and qualifications,
limitations or restrictions therefore as are stated in Exhibit A attached
hereto and incorporated herein by reference.
A-1
<PAGE>
1999 ANNUAL MEETING INFORMATION
Time and Location. The 1999 Annual Meeting will begin at 10:30 a.m. at the
J.W. Marriott Hotel. Coffee, tea, and juice will be provided to shareholders
attending the meeting.
Parking. Due to anticipated needs of other hotel guests on April 30, minimal
parking is expected to be available to shareholders in the parking garage
adjacent to the hotel. Several public lots are located within three blocks of
the hotel.
Public Transportation. As parking is limited in the general area, it is
recommended that shareholders attending the annual meeting consider using
public transportation. Two Metro subway stations, Federal Triangle and Metro
Center, are located less than three blocks from the hotel, and the area is
served by Metro buses.
Lodging. A "Shareholder Annual Meeting" rate will be offered at three local
Marriott hotels for Thursday, April 29, 1999, the night before the meeting. To
receive these rates, call the hotel directly and ask for the shareholder annual
meeting rate for April 29, 1999. 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.
J.W. Marriott Hotel--$185
1331 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
202/393-2000
Near Federal Triangle Metro Station
[MAP OF AREA
Washington Courtyard--$125 SURROUNDING
1900 Connecticut Avenue, N.W. MEETING
Washington, D.C. 20009 LOCATION
202/332-9300 APPEARS HERE]
Near Dupont Circle Metro Station
<PAGE>
[X] Please mark your
votes as in this
example.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER(S). IF NO INSTRUCTION IS INDICATED, SUCH PROXY
WILL BE VOTED "FOR" PROPOSALS 1, 2, 3 AND 4 AND "AGAINST" PROPOSAL 5, AND AT
THE DISCRETION OF THE PROXIES ON ANY OTHER MATTER THAT MAY PROPERLY OCCUR.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, 3 AND 4.
1. Election of Director Nominees FOR WITHHELD
1. J.W. Marriott, Jr., [_] [_]
2. W. Mitt Romney, and
3. William J. Shaw
For, except vote withheld from the following nominee(s):
_______________________________________________________
FOR AGAINST ABSTAIN
2. Ratify appointment of Arthur Andersen LLP as [_] [_] [_]
independent auditors.
3. Approval of amending the Company's certificate of [_] [_] [_]
incorporation to reflect the elimination of one of
the two classes of common stock, and authorization
to file a restated certificate of incorporation
embodying this amendment.
4. Approval of amending the Company's certificate of [_] [_] [_]
incorporation to increase the number of authorized
shares of Class A common stock to 800 million.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSAL 5.
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
5. Shareholder proposal to adopt cumulative voting [_] [_] [_]
for the election of directors.
- --------------------------------------------------------------------------------
MARK HERE FOR ADDRESS [_]
CHANGE AND MARK 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 envelope.
Dear Shareholder:
Marriott International, Inc. encourages you to take advantage of new and
convenient ways by which you can vote your shares. You can vote your shares
electronically through the Internet or by telephone. This eliminates the need to
return the proxy card.
To vote your shares electronically, you must use the control number printed in
the box above, just below the perforation. The series of numbers that appear in
the box above must be used to access the system.
1. To vote over the telephone: Using a touch-tone telephone, call 1-800-OK2-VOTE
(1-800-652-8683)
2. To vote over the internet: Log onto the Internet and go to the web site
http://www.vote-by-net.com
Your electronic vote authorizes the named proxies in the same manner as if you
marked, signed, dated and returned the proxy card.
If you choose to vote your shares electronically, there is no need for you to
mail back your proxy card.
Your vote is important. Thank you for voting.
<PAGE>
MARRIOTT INTERNATIONAL INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF THE SHAREHOLDERS
OF MARRIOTT INTERNATIONAL, INC.
P on April 30, 1999, 10:30 a.m.
R The undersigned appoints J.W. Marriott, Jr. and Richard E. Marriott as
Proxies. Each shall have the power to appoint a substitute. They are
O authorized to represent and vote, as designated on the reverse side, all
shares of Marriott International, Inc. Class A common stock held of
X record by the undersigned on March 5, 1999, at the Annual Meeting of
Shareholders to be held on April 30, 1999, or any adjournment or
Y postponement thereof. The Board of Directors recommends votes FOR
Proposals 1, 2, 3 and 4 and AGAINST Proposal 5.
(change of address/comments)
____________________________________
____________________________________
____________________________________
____________________________________
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
---------------
| SEE REVERSE |
| SIDE |
---------------
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
