<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(A) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] 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
Host Marriott Corporation
- --------------------------------------------------------------------------------
(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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, of 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:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
[LOGO OF MARRIOTT]
10400 Fernwood Road
Bethesda, Maryland 20817-1109
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD THURSDAY, MAY 18, 2000
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders of
Host Marriott Corporation, which will be held in Salon III at The Ritz-Carlton,
Tysons Corner, 1700 Tysons Boulevard, McLean, Virginia, on Thursday, May 18,
2000 at 11:00 a.m. Doors to the meeting will open at 10:30 a.m. At the meeting,
stockholders will be asked to consider and vote on the following proposals:
Proposal 1: Election of Robert M. Baylis, Terence C. Golden and Ann Dore
McLaughlin as Directors for three-year terms expiring at the
2003 Annual Meeting and Christopher J. Nassetta as a Director
for the remainder of the term expiring at the 2001 Annual
Meeting;
Proposal 2: Ratification of the appointment of Arthur Andersen LLP as our
independent auditors; and
Proposal 3: Consideration of a stockholder proposal to reinstate the annual
election of all Directors.
Stockholders will also transact other business if any is properly brought
before the annual meeting.
If you were a stockholder of record at the close of business on March 31,
2000, you may vote at the annual meeting. Whether or not you plan to attend the
meeting, please take the time to vote by completing and mailing the enclosed
proxy card to us in the envelope provided.
This proxy statement provides you with detailed information about the
proposals to be voted on at the meeting. With this proxy statement we are also
providing copies of our 1999 Annual Report to stockholders and our Form 10-K
for 1999 in order to provide you with additional information about us. We
encourage you to read the proxy statement and the other information carefully.
By order of the Board of Directors,
/s/ Christopher G. Townsend
Christopher G. Townsend
April 17, 2000 Corporate Secretary
Please promptly complete, date, sign and return the enclosed proxy card
whether or not you plan to attend the meeting.
Refer to the note on the outside of the back cover for information on
accommodations and for directions to the hotel.
<PAGE>
HOST MARRIOTT CORPORATION
10400 Fernwood Road
Bethesda, Maryland 20817-1109
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
MAY 18, 2000
INFORMATION ABOUT THE ANNUAL MEETING
Our annual meeting will be held in Salon III at The Ritz-Carlton, Tysons
Corner, 1700 Tysons Boulevard, McLean, Virginia, on Thursday, May 18, 2000 at
11:00 a.m. Doors to the meeting will open at 10:30 a.m. Please refer to the
outside back cover of this proxy statement for information on accommodations
and for directions to the hotel.
INFORMATION ABOUT THE PROXY STATEMENT
Our Board of Directors has sent you this proxy statement to solicit your
vote at the annual meeting (including any adjournment or postponement of the
annual meeting). In this proxy statement we summarize information that we are
required to provide to you under the Securities and Exchange Commission rules.
This proxy statement is designed to assist you in voting your shares. On April
17, 2000 we began mailing the proxy materials to all stockholders of record at
the close of business on March 31, 2000.
PROPOSALS TO BE CONSIDERED BY YOU AT THE ANNUAL MEETING
At the annual meeting, we will ask you to:
Proposal 1: elect Robert M. Baylis, Terence C. Golden and Ann Dore
McLaughlin as Directors for three-year terms expiring at the
2003 Annual Meeting and Christopher J. Nassetta as a Director
for the remainder of the term expiring at the 2001 Annual
Meeting;
Proposal 2: ratify the appointment of Arthur Andersen LLP as our
independent auditors; and
Proposal 3: consider a stockholder proposal to reinstate the annual
election of all Directors.
INFORMATION ABOUT VOTING
You may vote your shares if you were a stockholder of record of our common
stock as of the close of business on March 31, 2000. Each share is entitled to
one vote at the meeting. At the close of business on March 31, 2000, there were
219,824,338 outstanding shares of our common stock, par value $0.01 per share.
You may vote your shares either by proxy or in person, as follows:
. By Proxy: You can vote by completing, signing and dating the enclosed
proxy card and returning it to us by mail in the envelope provided. The
instructions for voting are contained on the enclosed proxy card. The
individuals named on the card are your proxies. They will vote your
shares as you indicate. If you sign your card without indicting how you
wish to vote, all of your shares will be voted:
. FOR all of the nominees for Director;
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<PAGE>
. FOR ratification of the appointment of Arthur Andersen LLP as our
independent auditors to serve for the 2000 fiscal year;
. AGAINST the stockholder proposal to reinstate the annual election of
all Directors; and
. at the discretion of your proxies on any other matters that may be
properly brought before the annual meeting.
. In Person: You may attend the annual meeting and vote in person.
You may revoke your proxy before it is voted at the meeting if you:
. file a written notice of revocation dated after the proxy date with
First Chicago Trust Company of New York, in its capacity as our transfer
agent; or
. send First Chicago Trust Company of New York a later-dated proxy for the
same shares of common stock; or
. attend the annual meeting AND vote in person there.
The mailing address for First Chicago Trust Company of New York is P.O. Box
8611, Edison, New Jersey 08818-9119.
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, please sign and return all proxy cards. 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.
INFORMATION ABOUT A QUORUM
Holders of a majority of the outstanding shares of common stock must be
present at the meeting, in person or by proxy, for a quorum to be present. If a
quorum is not present or if we decide that more time is necessary for the
solicitation of proxies, we may adjourn the annual meeting. We may do this with
or without a stockholder vote. If there is a stockholder vote to adjourn, the
named proxies will vote all shares of common stock for which they have voting
authority in favor of adjournment.
Shares of our common stock represented by proxies that are marked "withhold
authority" (with respect to the election of any nominee for election as
Director), or marked "abstain," or which constitute broker non-votes, will be
counted as present at the meeting for the purpose of determining a quorum.
Broker non-votes occur when a nominee holding shares of our common stock for a
beneficial owner has not received voting instructions from the beneficial owner
and such nominee does not possess or choose to exercise discretionary authority
with respect to such shares. With respect to any matter to be decided by a
plurality (such as the election of Directors) or by a majority of the votes
cast at the meeting, none of the proxies marked "withhold authority" or marked
"abstain," or which constitute broker non-votes, will be counted for the
purpose of determining the number of votes cast at the meeting.
VOTES NECESSARY FOR EACH PROPOSAL TO BE APPROVED
Proposal One: Election of Directors--The four persons nominated for Director
receiving the most votes will be elected. Shares not voted will not affect the
election of Directors except to the
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<PAGE>
extent that failure to vote for an individual results in another individual's
receiving a larger proportion of votes.
Proposal Two: Ratification of Independent Auditors--The ratification of
Arthur Andersen LLP as our independent auditors must receive an affirmative
vote from a majority of the shares of common stock that are present in person
or by proxy and are voting on such proposal. Shares not voted will reduce the
absolute number but not the percentage of the votes needed for approval. They
will not be counted as votes either for or against this proposal.
Proposal Three: Stockholder Proposal to Reinstate the Annual Election of all
Directors--Under our Articles of Incorporation, the stockholder proposal to
reinstate the annual election of all Directors must receive an affirmative vote
of the holders of at least two-thirds of the total number of outstanding shares
of our common stock as of the record date.
Other Matters--Unless otherwise required by our bylaws or by applicable
Maryland law, any other matter properly presented for a vote at the meeting
will require an affirmative vote from a majority of the shares of our common
stock present and voting on such proposal.
COSTS OF PROXIES
In addition to mailing you this proxy statement and the other enclosed
materials, we have hired MacKenzie Partners, Inc. to be our proxy solicitation
agent for a fee of $6,500 plus expenses. We may also make additional
solicitations by telephone, facsimile or other forms of communication. We will
reimburse brokers, banks and other nominees who hold our stock on behalf of
other beneficial owners for their expenses related to forwarding our proxy
materials to those beneficial owners. We will bear the entire cost of the
solicitation.
INFORMATION TO RELY UPON WHEN CASTING YOUR VOTE
You should rely only on the information contained in this proxy statement or
incorporated by reference when voting on these matters. We have not authorized
anyone to give any information or to make any representation in connection with
this proxy solicitation other than those contained in or incorporated by
reference in this proxy statement. You should not rely on such information or
representation as having been authorized by us. You should not infer under any
circumstances that because of the delivery to you of this proxy statement there
has not been a change in the facts set forth in this proxy statement or in our
affairs since the date on this proxy statement.
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<PAGE>
PROPOSAL ONE:
ELECTION OF DIRECTORS
Four Directors will be elected at the 2000 annual meeting. Robert M. Baylis,
Terence C. Golden and Ann Dore McLaughlin are being elected as Class II
Directors to serve until the annual meeting of stockholders in 2003.
Christopher J. Nassetta is being elected as a Class III Director to serve until
the annual meeting of stockholders in 2001. Mr. Nassetta was elected to the
Board on November 2, 1999 by a majority of the Board of Directors to fill a
vacancy caused by an increase in the number of Class III Directors from two to
three. Each of them is an incumbent Director. The table below contains certain
biographical information about them as well as our other Directors. They have
consented to serve if elected, but should any nominee be unavailable to serve,
the proxies named on your proxy card will vote for the substitute nominee
recommended by the Board of Directors.
Vote Required
The four persons nominated for Director who receive the most votes will be
elected.
The Board of Directors recommends that you vote FOR each of the persons
nominated for Director in Proposal One.
NOMINEES FOR DIRECTOR
Robert M. Baylis Mr. Baylis is a Director of The International
Director since 1996 Forum, an executive education program of the
Age: 61 Wharton School of the University of Pennsylvania.
He was formerly Vice Chairman of CS First Boston.
Mr. Baylis also serves as a Director of New York
Life Insurance Company, Covance, Inc. and Gildan
Activewear, Inc. In addition, he is an overseer of
the University of Pennsylvania Museum of Archeology
and Anthropology. Mr. Baylis's term as a Director
expires at the 2000 annual meeting of stockholders.
Terence C. Golden Mr. Golden is currently our President and Chief
President and Chief Executive Officer. However, he has announced his
Executive Officer retirement from such positions effective May 18,
Director since 1995 2000. He also serves as Chairman of Bailey Realty
Age: 55 Corporation and Bailey Capital Corporation and
various affiliated companies. In addition, Mr.
Golden is a Director of American Classic Voyages
Co., Cousins Properties, Inc., Potomac Electric
Power Company, The Morris and Gwendolyn Cafritz
Foundation and the District of Columbia Early
Childhood Collaborative. He is also a member of the
Executive Committee of the Federal City Council.
Mr. Golden's term as a Director expires at the 2000
annual meeting of stockholders. For additional
information on Mr. Golden, see "Executive Officers"
below.
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<PAGE>
Ann Dore McLaughlin Ms. McLaughlin is Chairman of the Aspen Institute.
Director since 1993 She formerly served as President of the Federal
Age: 58 City Council from 1990 until 1995. Ms. McLaughlin
has served with distinction in several United
States Administrations in such positions as
Secretary of Labor and Under Secretary of the
Department of the Interior. She also serves as a
Director of AMR Corporation, Fannie Mae, General
Motors Corporation, Kellogg Company, Microsoft
Corporation, Nordstrom, Inc., Donna Karan
International, Inc., Vulcan Materials Company and
Harman International Industries, Inc. Ms.
McLaughlin's term as a Director expires at the 2000
annual meeting of stockholders.
Christopher J. Nassetta Mr. Nassetta is currently our Executive Vice
President and Chief Operating Officer. Effective
May 18, 2000, upon the retirement of Mr. Golden,
Mr. Nassetta will be our President and our Chief
Executive Officer. In 1999, Mr. Nassetta was
elected to the Board of Directors by the Board to
fill a newly created vacancy. He also serves as a
Director of Prime Group Realty Trust. Mr.
Nassetta's term as a Director expires at the 2000
annual meeting of stockholders. For additional
information on Mr. Nassetta, see "Executive
Officers" below.
Executive Vice President and
Chief Operating Officer
Director since 1999
Age: 37
[Photo of Christoper J. Nassetta]
DIRECTORS CONTINUING IN OFFICE
Richard E. Marriott* Mr. Richard E. Marriott is a Director of Marriott
Chairman of the Board International, Inc. and the Polynesian Cultural
Director since 1979 Center, and he is Chairman of the Board of First
Age: 61 Media Corporation. He is a past President of the
National Restaurant Association. In addition, Mr.
Marriott is the President and a Trustee of the
Marriott Foundation for People with Disabilities.
Mr. Marriott's term as a Director expires at the
2001 annual meeting of stockholders. For additional
information on Mr. Marriott, see "Executive
Officers" below.
[Photo of Richard E. Marriott appears here]
5
<PAGE>
J.W. Marriott, Jr.* Mr. J.W. Marriott, Jr. is Chairman of the Board and
Director since 1964 Chief Executive Officer of Marriott International,
Age: 68 Inc., and a Director of General Motors Corporation
and the Naval Academy Endowment Trust. He also
serves on the Board of Directors of Georgetown
University and on the Board of Trustees of the
National Geographic Society. He serves on the
Executive Committee of the World Travel & Tourism
Council and is a member of the Business Council.
Mr. Marriott's term as a Director expires at the
2002 annual meeting of stockholders.
[Photo of J.W. Marriott, Jr. appears here]
R. Theodore Ammon Mr. Ammon is a private investor and Chairman of Big
Director since 1992 Flower Holdings, Inc. He was formerly a General
Age: 50 Partner of Kohlberg Kravis Roberts & Company (a New
York and San Francisco-based investment firm) from
1990 to 1992, and was an executive of such firm
prior to 1990. Mr. Ammon is also the Chairman of
the Board of 24/7 Media, Inc. and a Director of
CAIS Internet, Inc., and he serves on numerous
boards of privately held companies. In addition, he
is involved in a number of not-for-profit
organizations, including as a member of the Board
of Directors of The Municipal Art Society of New
York, The New York YMCA and Jazz @ Lincoln Center,
and of the Board of Trustees of Bucknell
University. Mr. Ammon's term as a Director expires
at the 2001 annual meeting of stockholders.
[Photo of R. Theodore Ammon appears here]
John G. Schreiber Mr. Schreiber is President of Centaur Capital
Director since 1998 Partners, Inc. and a senior advisor and partner of
Age: 53 Blackstone Real Estate Advisors L.P., an affiliate
of The Blackstone Group L.P. He serves as a Trustee
of AMLI Residential Properties Trust and as a
Director of Urban Shopping Centers, Inc., JMB
Realty Corporation, The Brickman Group, Ltd. and a
number of mutual funds advised by T. Rowe Price
Associates, Inc. Prior to his retirement as an
officer of JMB Realty Corporation in 1990, Mr.
Schreiber was Chairman and Chief Executive Officer
of JMB/Urban Development Company and an Executive
Vice President of JMB Realty Corporation. Mr.
Schreiber's term as a Director expires at the 2002
annual meeting of stockholders.
[Photo of John G. Schreiber appears here]
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* Richard E. Marriott and J.W. Marriott, Jr. are brothers.
6
<PAGE>
Harry L. Vincent, Jr. Mr. Vincent is a retired Vice Chairman of Booz-Allen
Director since 1969 & Hamilton, Inc. He also served as a Director of
Age: 80 Signet Banking Corporation from 1973 until 1989. Mr.
Vincent's term as a Director expires at the 2002
annual meeting of stockholders.
[Photo of Harry L. Vincent, Jr. appears here]
THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
Presently, there are nine members on our Board of Directors, six of whom are
neither officers nor employees of our company. Our Board of Directors is
divided into three classes, each consisting of three Directors. Class I
Directors, consisting of J.W. Marriott, Jr., John G. Schreiber and Harry L.
Vincent, Jr., will hold office until the 2002 annual meeting of stockholders;
Class II Directors, consisting of Robert M. Baylis, Terence C. Golden and Ann
Dore McLaughlin, will hold office until the 2000 annual meeting; and Class III
Directors, consisting of Richard E. Marriott and R. Theodore Ammon, will hold
office until the 2001 annual meeting of stockholders. Christopher J. Nassetta,
who is also a Class III Director, was elected by the Board of Directors to fill
a newly created vacancy; therefore, he will serve until the 2000 annual meeting
of stockholders. If reelected at that meeting, he will serve for the remainder
of the Class III term which ends at the 2001 annual meeting of stockholders.
Each Director serves for three years.
The Board met seven times in 1999. Each Director attended 75% or more of the
meetings held during 1999 for the period during which he or she was a Director.
The Board has adopted three standing committees: (1) Audit, (2) Compensation
Policy and (3) Nominating and Corporate Governance.
Audit Committee. The Audit Committee:
. recommends the appointment of independent auditors to the Board of
Directors;
. approves the scope of audits and other services to be performed by the
independent and internal auditors;
. considers whether the performance of any professional service by the
auditors other than services provided in connection with the audit
function could impair the independence of the outside auditors;
. reviews the results of internal and external audits, the accounting
principles applied in financial reporting, and financial and operational
controls;
. meets at least four times a year with the independents auditors,
management representatives and internal auditors; and
. reviews interim financial statements each quarter before the company
files its Form 10-Q with the Securities and Exchange Commission.
The independent and internal auditors have unrestricted access to the Audit
Committee and vice versa. The Audit Committee is composed of five Directors who
are not our employees. These
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Directors are R. Theodore Ammon (Chair), Robert M. Baylis, Ann Dore
McLaughlin, John G. Schreiber and Harry L. Vincent, Jr. The Audit Committee
met four times in 1999. Each member attended 75% or more of the meetings held
in 1999 for the period during which he or she was a Director. No membership
changes are contemplated for 2000.
The Audit Committee is currently in the process of amending its written
charter to incorporate new provisions relating to audit committees that were
included in recent changes to Securities and Exchange Commission regulations
and New York Stock Exchange rules. Among these provisions are new requirements
that future proxy statements include (i) an annual report of the Audit
Committee's findings with respect to its financial reporting oversight
responsibilities and (ii) a copy of the Audit Committee's charter at least
once every three years.
Compensation Policy Committee. The Compensation Policy Committee recommends
policies and procedures relating to senior officers' compensation and various
employee stock and cash incentive plans. It also approves individual salary
adjustments and stock awards in those areas. The Compensation Policy Committee
is composed of six Directors who are not our employees. These Directors are
Harry L. Vincent, Jr. (Chair), R. Theodore Ammon, Robert M. Baylis, J.W.
Marriott, Jr., Ann Dore McLaughlin and John G. Schreiber. The Compensation
Policy Committee met eight times in 1999. Each member attended 75% or more of
the meetings held in 1999 for the period during which he or she was a
Director. No membership changes are contemplated for 2000, except that John G.
Schreiber will become chairman of the committee following the 2000 annual
meeting.
Nominating and Corporate Governance Committee. The Nominating and Corporate
Governance Committee:
. considers candidates for election as Directors;
. keeps abreast of and makes recommendations with respect to corporate
governance in general; and
. fulfills an advisory function with respect to a range of matters
affecting the Board of Directors and its committees, including the
making of recommendations with respect to:
. qualifications of Director candidates,
. compensation of Directors,
. the selection of committee chairs,
. committee assignments, and
. related matters affecting the functioning of the Board.
The Nominating and Corporate Governance Committee is composed of six
Directors who are not our employees. These Directors are Ann Dore McLaughlin
(Chair), R. Theodore Ammon, Robert M. Baylis, J.W. Marriott, Jr., John G.
Schreiber and Harry L. Vincent, Jr. The Nominating and Corporate Governance
Committee met two times in 1999. Each member attended 75% or more of the
meetings held in 1999 for the period during which he or she was a Director. No
membership changes are contemplated for 2000.
EXECUTIVE OFFICERS
In the following table we set forth certain information on those persons
currently serving as our executive officers. Additional biographical
information on both Terence C. Golden, our current President and Chief
Executive Officer, and Christopher J. Nassetta, our current Executive Vice
President and Chief Operating Officer and our President-elect and Chief
Executive Officer-elect, is included above in the section "Nominees for
Director." In addition, biographical information on Richard E. Marriott,
Chairman of the Board, is included above in the section "Directors Continuing
in Office."
8
<PAGE>
<TABLE>
<CAPTION>
Business Experience Prior to Becoming
Name and Title Age an Executive Officer of the Company
-------------- --- -------------------------------------
<S> <C> <C>
Richard E. Marriott 61 Richard E. Marriott joined our company in 1965
Chairman of the Board and has served in various executive capacities.
In 1979, Mr. Marriott was elected to the Board
of Directors. In 1984, he was elected Executive
Vice President, and in 1986, he was elected Vice
Chairman of the Board of Directors. In 1993, Mr.
Marriott was elected Chairman of the Board.
Terence C. Golden 55 Terence C. Golden was named our President and
Current President and Chief Executive Officer in 1995. However, Mr.
Chief Executive Officer Golden has announced that he is retiring from
such positions effective May 18, 2000, but he
will continue serving as a member of our Board
of Directors as noted above. Prior to joining
us, Mr. Golden was Chairman of Bailey Realty
Corporation and prior to that had served as
Chief Financial Officer of The Oliver Carr
Company. Before joining The Oliver Carr Company,
he served as Administrator of the General
Services Administration and as Assistant
Secretary of Treasury, and he was co-founder and
national managing partner of Trammel Crow
Residential Companies.
</TABLE>
<TABLE>
<S> <C> <C>
Christopher J. Nassetta 37 Christopher J. Nassetta joined our company in
Current Executive Vice October 1995 and was elected our Chief Operating
President and Chief Officer in 1997. In 1999, Mr. Nassetta was
Operating Officer; chosen by our Board to be President and Chief
President-elect and Chief Executive Officer effective May 18, 2000 to
Executive Officer-elect replace Mr. Golden, who has announced his
retirement from those positions effective as of
that time. Prior to joining us, Mr. Nassetta
served as President of Bailey Realty Corporation
from 1991 until 1995. He had previously served
as Chief Development Officer and in various
other positions with The Oliver Carr Company
from 1984 through 1991.
Robert E. Parsons, Jr. 44 Robert E. Parsons, Jr. joined our Corporate
Executive Vice President Financial Planning staff in 1981 and was made
and Chief Financial Assistant Treasurer in 1988. In 1993, Mr.
Officer Parsons was elected our Senior Vice President
and Treasurer, and in 1995, he was elected
Executive Vice President and Chief Financial
Officer.
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Business Experience Prior to Becoming
Name and Title Age an Executive Officer of the Company
-------------- --- -------------------------------------
<S> <C> <C>
Christopher G. Townsend 52 Christopher G. Townsend joined our Law
Senior Vice President, Department in 1982 as a Senior Attorney. In
General Counsel and 1984, Mr. Townsend was made Assistant Secretary,
Corporate Secretary and in 1986, he was made Assistant General
Counsel. In 1993, Mr. Townsend was elected
Senior Vice President, Corporate Secretary and
Deputy General Counsel. In January 1997, he was
elected General Counsel.
Donald D. Olinger 41 Donald D. Olinger joined our company in 1993 as
Senior Vice President and Director of Corporate Accounting. Later in 1993,
Corporate Controller Mr. Olinger was promoted to Senior Director and
Assistant Controller. He was promoted to Vice
President of Corporate Accounting in 1995. In
1996, he was elected Senior Vice President and
Corporate Controller. Prior to joining us, Mr.
Olinger was with the public accounting firm of
Deloitte & Touche.
</TABLE>
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number of shares of our common stock and
of the partnership units of Host Marriott, L.P. (which we call the operating
partnership) that were beneficially owned as of January 31, 2000 by:
. each Director and Director nominee;
. each executive officer named in the Summary Compensation Table below;
. all of our Directors and executive officers as a group; and
. beneficial owners of 5% or more of the common stock or of the operating
partnership units.
Information about the ownership of operating partnership units is included
because the operating partnership units are redeemable for shares of our common
stock.
<TABLE>
<CAPTION>
% of % of Common
Number of Shares Number of Stock and
Shares of of Operating Operating
Common Common Partnership Partnership
Name Stock Stock(1) Units Units(2)
---- ---------- -------- ----------- -----------
<S> <C> <C> <C> <C>
Directors:
R. Theodore Ammon(3).............. 20,541 * 0 *
Robert M. Baylis(3)............... 24,712 * 0 *
Terrence C. Golden(4)............. 1,373,289 0.6 0 0.6
J.W. Marriott, Jr.(4)(5)(6)....... 13,052,222 5.9 583,635 6.2
Richard E. Marriott(4)(6)(7)...... 14,581,503 6.6 580,982 6.9
Ann Dore McLaughlin(3)............ 14,668 * 0 *
Christopher J. Nassetta(4)........ 759,581 0.3 0 0.3
John G. Schreiber(3)(8)........... 3,479 * 37,587,033 14.6
Harry L. Vincent, Jr.(3).......... 33,468 * 0 *
Non-Director Executive Officers:
Robert E. Parsons, Jr.(4)......... 693,690 0.3 0 0.3
Christopher G. Townsend(4)........ 225,475 0.1 0 0.1
All Directors and Executive
Officers as a group
(12 persons, including the
foregoing)(4)(9)(10).............. 26,616,270 12.1 38,185,070 25.1
Certain Beneficial Owners:
Blackstone Entities(11)........... 0 * 43,778,760 16.6
FMR Corp.(12)..................... 11,580,000 5.3 0 5.3
Southeastern Asset Management
Inc.(13).......................... 43,008,113 19.6 0 19.6
Wallace R. Weitz & Company(14).... 18,350,763 8.3 0 8.3
</TABLE>
- --------
* Reflects ownership of less than 1/10th of 1%.
(1) Any descriptions of ownership or aggregations of ownership of our common
stock within this proxy statement are based upon the disclosure
requirements of the federal securities laws. They do not indicate ownership
of our common stock under the Internal Revenue Code of 1986, as amended, or
for purposes of the ownership limitations set forth in our Articles of
Incorporation.
(2) This column assumes that all operating partnership units held by the named
person or entity are redeemed for shares of our common stock on a one-for-
one basis, but that none of the operating partnership units held by others
are redeemed for shares of our common stock.
(3) The number of shares of our common stock listed here includes the deferred
shares awarded annually to non-employee Directors under our Non-Employee
Directors' Deferred Stock Compensation Plan. This number also includes the
special one-time award of deferred shares under the Plan in 1997 to Mr.
Ammon, Mr. Baylis, Ms. McLaughlin and Mr. Vincent.
(4) The number of shares of our common stock listed here includes (1) the
shares of restricted stock granted under our 1993 Comprehensive Stock
Incentive Plan and 1997 Comprehensive Stock and Cash Incentive Plan, which
are voted by the holder thereof, and (2) the following number of shares
which could be acquired by the named persons through the exercise of stock
options: for J.W. Marriott, Jr., 50,492 shares; for Mr. Parsons, 11,045
shares; for Mr. Townsend, 6,676 shares; and for all Directors and executive
officers as a group, 97,904 shares. For additional information, see the
Tables under the caption "Executive Officer Compensation." This amount does
not include any other shares reserved, contingently vested or awarded under
the above named plans.
11
<PAGE>
(5) The number of shares of our common stock listed here includes: (1)
2,046,181 shares held in trust for which J.W. Marriott, Jr. is the trustee
or a co-trustee; (2) 68,426 shares held by the wife of J.W. Marriott, Jr.;
(3) 765,847 shares held in trust for which the wife of J.W. Marriott, Jr.
is the trustee or a co-trustee; (4) 2,642,370 shares held by the J. Willard
and Alice S. Marriott Foundation of which J.W. Marriott, Jr. is a co-
trustee; (5) 2,707,590 shares held by a limited partnership whose general
partner is a corporation of which J.W. Marriott, Jr. is the controlling
stockholder; and (6) 86,960 shares held by a limited partnership whose
general partner is J.W. Marriott, Jr. This amount does not include shares
held by the adult children of J.W. Marriott, Jr.; J.W. Marriott, Jr.
disclaims beneficial ownership of all such shares.
(6) J.W. Marriott, Jr., Richard E. Marriott, their mother Alice S. Marriott and
other members of the Marriott family and various trusts established by
members of the Marriott family owned beneficially an aggregate of
26,508,054 shares, or 12.0% of the total shares outstanding of our common
stock, as of January 31, 2000.
(7) The number of shares of our common stock listed here includes: (1)
1,903,440 shares held in trust for which Richard E. Marriott is the trustee
or a co-trustee; (2) 74,154 shares held by the wife of Richard E. Marriott;
(3) 603,828 shares held in trust for which the wife of Richard E. Marriott
is the trustee or a co-trustee; (4) 2,642,370 shares held by the J. Willard
and Alice S. Marriott Foundation of which Richard E. Marriott is a co-
trustee; (5) 732,800 shares held by the Richard E. and Nancy P. Marriott
Foundation of which Richard E. Marriott is a co-trustee; and (6) 2,503,066
shares held by a corporation of which Richard E. Marriott is the
controlling stockholder. It does not include shares held by the adult
children of Richard E. Marriott; Richard E. Marriott disclaims beneficial
ownership of all such shares.
(8) With respect to the calculations of the operating partnership units, the
listed figures represent the number of operating partnership units deemed
beneficially owned by Mr. Schreiber because he shares dispositive power
over the operating partnership units which are held by several of the
Blackstone Entities (as defined in footnote 11 below). Mr. Schreiber has
reported shared dispositive power over 37,587,033 operating partnership
units and no voting power over any of the operating partnership units in a
Schedule 13D filed with the Securities and Exchange Commission. The
operating partnership units which are listed in the table as being
beneficially owned by Mr. Schreiber are also included in the total and
calculations for the Blackstone Entities elsewhere in the table.
(9) The number of shares of our common stock listed here includes the total
number of shares held by trusts for which both J.W. Marriott, Jr. and
Richard E. Marriott are co-trustees. Beneficial ownership of such shares is
attributable to both J.W. Marriott, Jr. and Richard E. Marriott in the
table above under the Director subheading. These shares, however, are
included only once in reporting the total number of shares owned by all
Directors and executive officers as a group. All Directors and executive
officers as a group (other than members of the Marriott family) owned
beneficially an aggregate of 3,265,666 shares, or 1.5% of the total shares
outstanding of our common stock as of January 31, 2000. In addition, our
Retirement and Savings Plan owned 71,465 shares, or less than 0.1% of the
total shares outstanding of our common stock as of January 31, 2000.
(10) The number of operating partnership units listed here includes units held
by a partnership of which both J.W. Marriott, Jr. and Richard E. Marriott
are general partners. Beneficial ownership of such operating partnership
units is attributable to both J.W. Marriott, Jr. and Richard E. Marriott
in the table above under the Director subheading. These units, however,
are included only once in reporting the total number of operating
partnership units owned by all Directors and executive officers as a
group.
(11) The Blackstone Entities constitute The Blackstone Group L.P. and a series
of partnerships, persons and other entities affiliated with Blackstone
Real Estate Associates. As a group, the Blackstone Entities have filed a
Schedule 13D with the Securities and Exchange Commission in which they
reported beneficial ownership of an aggregate of 43,778,760 operating
partnership units, with varying levels of dispositive power and voting
power over the operating partnership units depending upon the partnership,
person or entity involved. The principal business address of the
Blackstone Entities is 345 Park Avenue, 31st Floor, New York, New York
10154.
(12) The number of shares of our common stock listed here represents shares of
our common stock held by FMR Corp. and its subsidiary, Fidelity Management
& Research Company ("FM&R"). The information in this table is derived from
a Schedule 13G that FMR Corp. filed with the Securities and Exchange
Commission. That Schedule 13G indicates that FMR Corp., through its
control of FM&R and certain investment funds for which FM&R acts as an
investment adviser, has sole power to dispose of 11,580,000 shares of our
common stock owned by such investment funds. FMR Corp. has no power to
vote or direct the voting of the shares of our common stock owned by the
investment funds. That power resides with the Board of Trustees of such
investment funds. The Schedule 13G filed by FMR Corp. also indicates that
its investment funds and another FMR Corp. subsidiary, Fidelity Management
Trust Company ("FMT"), own an aggregate of 939,400 shares of our
convertible preferred securities, which would be convertible under certain
circumstances into 2,814,255 shares of our common stock. The principal
business address for FMR Corp., FM&R and FMT is 82 Devonshire Street,
Boston, Massachusetts 02109-3614.
(13) The number of shares of our common stock listed here represents shares of
our common stock held by Southeastern Asset Management, Inc., which acts
as an investment adviser for certain investment funds. Southeastern Asset
Management, Inc. has reported in a Schedule 13G filed with the Securities
and Exchange Commission sole dispositive power over 27,809342 shares,
shared dispositive power over 15,134,658 shares and no dispositive power
over 64,133 shares. Of these shares, Southeastern Asset Management, Inc.
has reported sole voting power over 23,094,337 shares, shared voting power
over 15,134,658 shares and no voting power over 4,779,138 shares. The
principal business address of Southeastern Asset Management, Inc. is 6410
Poplar Avenue, Suite 900, Memphis, Tennessee 38119.
(14) The number of shares of our common stock listed here represents shares of
our common stock held by Wallace R. Weitz & Company, which acts as an
investment adviser for certain investment funds. Wallace R. Weitz &
Company has reported in a Schedule 13G filed with the Securities and
Exchange Commission sole dispositive and voting power over 18,350,763
shares. The principal business address of Wallace R. Weitz & Company is
1125 South 103rd Street, Suite 600, Omaha, Nebraska 68124-6008.
12
<PAGE>
COMPENSATION OF DIRECTORS
Directors are compensated partially in cash and partially in our common
stock to align their interest with those of our stockholders. Directors who are
also company employees receive no additional compensation for their services as
Directors.
Annual Retainer and Attendance Fees. Directors who are not company employees
receive an annual retainer fee of $30,000 as well as an attendance fee of
$1,250 for each stockholders' meeting, meeting of the Board of Directors or
meeting of a committee of the Board of Directors, regardless of the number of
meetings held on a given day. The chair of each committee of the Board of
Directors receives an additional annual retainer fee of $1,000, except for the
chair of the Compensation Policy Committee, who receives an annual retainer fee
of $6,000. The chair of the Compensation Policy Committee receives a higher
annual retainer fee because he has additional duties, which include, for
example, the performance appraisal of the chief executive officer on behalf of
the Board, although the final performance appraisal is determined by the Board.
Annual Stock Awards. Each Director who is not an employee of the company or
of one of our affiliates (other than J.W. Marriott, Jr.) also receives an
annual award of deferred shares of our common stock under our Non-Employee
Directors' Deferred Stock Compensation Plan. Under the Non-Employee Directors'
Deferred Stock Compensation Plan, an annual award of deferred shares equal in
value to the amount of the annual retainer fee paid to non-employee Directors
is distributed to such Directors immediately following the annual meeting of
stockholders. In 1999, each such award was for 2,341 shares. The plan also
permits participants under the plan to be credited with dividend equivalents.
These are equal in value to the dividends paid on our common stock.
Deferral of Payment. Directors may elect to defer payment of all or any
portion of their annual retainer and attendance fees under our Executive
Deferred Compensation Plan and/or our Non-Employee Directors' Deferred Stock
Compensation Plan.
Other. Directors are reimbursed for travel expenses and other out-of-pocket
costs incurred in attending meetings or in visiting properties controlled by us
or by Marriott International, Inc.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Federal securities laws require Directors, executive officers, and owners of
more than ten percent of our common stock to file reports with the Securities
and Exchange Commission and with the New York Stock Exchange. These reports
relate to the number of shares of our common stock that each of those persons
beneficially owns, and any changes in their ownership. All persons required to
file such forms have done so during 1999.
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<PAGE>
EXECUTIVE OFFICER COMPENSATION
Summary of Compensation
The table below sets forth a summary of the compensation we paid our Chief
Executive Officer and the four additional most highly compensated executive
officers for the last three fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
------------------------------- ---------------------
Restricted
Other Annual Stock All Other
Compensation Awards LTIP Compensation
Name and Principal Fiscal Salary(1) Bonus(2) (3)(4) (5)(6) Payouts(7) (8)
Position Year ($) ($) ($) ($) ($) ($)
- ------------------ ------ --------- -------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard E. Marriott 1999 307,008 150,434 262,548 0 0 26,111
Chairman of the Board 1998 290,450 116,180 275,607 2,138,750 0 23,923
1997 271,449 108,580 212,324 0 0 22,668
Terence C. Golden 1999 749,996 849,895 0 0 0 81,952
President and Chief 1998 669,782 602,804 67,489 11,800,000 0 73,051
Executive Officer 1997 619,045 557,141 58,783 354,693 0 66,105
Christopher J. Nassetta 1999 500,006 536,106 0 0 947,318 48,363
Executive Vice
President 1998 382,563 286,922 0 7,375,000 0 36,970
and Chief Operating 1997 338,889 254,167 0 0 0 36,231
Officer
Robert E. Parsons, Jr. 1999 424,996 455,681 0 0 947,318 42,672
Executive Vice
President 1998 369,583 277,187 0 6,195,000 0 36,970
and Chief Financial 1997 338,889 254,167 0 0 0 36,231
Officer
Christopher G. Townsend 1999 225,000 194,295 0 0 0 24,566
Senior Vice President 1998 215,904 118,747 0 1,696,250 0 19,683
and General Counsel 1997 202,962 111,629 0 1,015,800 0 18,405
</TABLE>
- --------
(1) Salary amounts include base salary earned and paid in cash during the
fiscal year as well as the amount of base salary deferred at the election
of the named executive officer under our Executive Deferred Compensation
Plan. An increase in base salary for the period November 2, 1997 through
the end of that fiscal year was paid in 1998 and reported as 1997 earnings.
The 1998 salary includes a competitive pay adjustment, paid in 1999 but
effective as of November 2, 1998 and reported as 1998 earnings. The 1998
salary adjustment resulted from a compensation study conducted by an
independent consulting firm retained by the Compensation Policy Committee
of the Board of Directors.
(2) The bonus consists of the cash bonus earned pursuant to our 1997
Comprehensive Stock and Cash Incentive Plan. It was either paid subsequent
to the end of each fiscal year or deferred under the Executive Deferred
Compensation Plan.
(3) The amounts set forth in this column for Mr. Marriott include $110,700,
$97,000 and $92,000 in 1999, 1998 and 1997, respectively, for the
allocation of company personnel costs for non-company business, and
$120,174, $133,626 and $101,535 in 1999, 1998 and 1997, respectively, for
additional cash compensation to cover taxes payable for all other
compensation in this column.
(4) The amounts set forth in this column for Mr. Golden represent reimbursement
of travel expenses of Mr. Golden's spouse when she accompanied him on Host
Marriott Corporation business trips. It also includes additional cash
compensation to cover taxes payable for such reimbursement.
14
<PAGE>
(5) Restricted Stock. Restricted stock awards are subject to various general
restrictions, such as continued employment, as well as several performance
restrictions. Holders of restricted stock receive dividends and exercise
voting rights on their restricted shares. The named executive officers have
agreed that any cash dividends on the shares of restricted stock shall,
after withholding for or payment of any taxes due on the dividends, be
reinvested in shares of our common stock either through a dividend
reinvestment program or otherwise. 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 stock awards do not receive
dividends or exercise voting rights on their deferred bonus stock until
such stock has been 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 annual installments following termination of
employment. Deferred bonus stock awards contingently vest in 10 equal
annual installments beginning one year after the awards are granted.
(6) Seventy percent of the restricted shares awarded in 1998 have performance
restrictions and thirty percent have general restrictions conditioned upon
continued employment. The performance criteria established by the
Compensation Policy Committee are based upon (i) the measurement of our
annual stock performance (Stockholder Return Performance) and (ii) either
(a) for 1999, the relative performance of our stock measured against a
published peer index (Relative Performance), or (b) for all other years,
our company's achieving specific earnings targets set by the Compensation
Policy Committee. Restricted shares granted in previous years which had not
had restrictions released, including those reflected in the table as having
been granted in 1997, were forfeited and replaced by the restricted shares
awarded in 1998. The total number of restricted and deferred shares held by
each named executive officer as of the end of the 1999 fiscal year and the
aggregate value of those shares at such time were as follows: Mr. Marriott,
150,176 shares valued at $1,262,417; Mr. Golden, 895,151 shares valued at
$7,524,863; Mr. Nassetta, 578,414 shares valued at $4,862,293; Mr. Parsons,
483,213 shares valued at $4,099,586; and Mr. Townsend, 138,075 shares
valued at $1,160,693.
(7) In 1999, the Compensation Policy Committee determined that the time and
performance criteria set forth in the long-term incentive plan established
in 1996 for Mr. Nassetta and Mr. Parsons (which has been described in
detail in our prior proxy statements) had been met. Accordingly, the
restricted shares awarded under such long-term incentive plan vested and
the restrictions were released.
(8) This column represents our matching contributions made under our Retirement
and Savings Plan and our Executive Deferred Compensation Plan. Under the
Retirement and Savings Plan, we contributed $9,600 for each of the named
executive officers in 1999. The amounts contributed under the Executive
Deferred Compensation Plan for 1999 for each named executive officer were
as follows: Mr. Marriott, $15,953; Mr. Golden, $72,352; Mr. Nassetta,
$38,763; Mr. Parsons, $33,072; and Mr. Townsend, $14,966. For Mr. Marriott,
this column also includes the amount of the taxable economic benefit to Mr.
Marriott as a result of our purchase of certain life insurance policies for
the benefit of a trust established by Mr. Marriott. For 1999, such taxable
economic benefit to Mr. Marriott was $558.
Aggregated Stock Option/SAR Exercises and Year-End Value
The table below sets forth, on an aggregated basis:
. information regarding the exercise of options to purchase our common
stock (and shares of common stock of other companies which we have
previously spun off) by each of the named executive officers listed
above on the Summary Compensation Table;
. information regarding the exercise of stock appreciation rights ("SARs")
in our common stock by each of the named executive officers listed above
on the Summary Compensation Table; and
. the value on December 31, 1999 of all unexercised options and stock
appreciation rights held by such individuals.
Terence C. Golden and Christopher J. Nassetta do not have any options to
purchase stock in any of the companies listed in the following table. Richard
E. Marriott is the only executive officer who holds stock appreciation rights
in our common stock. As we reported in last year's proxy statement, Mr.
Marriott entered into an agreement with our company in 1998 which canceled all
of his then outstanding options to purchase our common stock and replaced them
with stock appreciation rights on equivalent economic terms.
15
<PAGE>
AGGREGATED STOCK OPTION/SAR EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of
Shares Underlying Value of Unexercised
Shares Unexercised Options/SARs In-the-Money Options/SARs
Acquired at Fiscal Year End(2) at Fiscal Year End(3)
on Value (#) ($)
Exercise Realized ------------------------- -------------------------
Name Company(1) (#) ($) Exercisable Unexercisable Exercisable Unexercisable
---- ---------- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
R.E. Marriott........... HM 0 0 66,685 0 434,877 0
HMS 11,140 160,446 0 0 0 0
MI 0 0 122,634 0 3,227,392 0
------ ------- ------- --- --------- ---
TOTAL 11,140 160,446 189,319 0 3,662,269 0
R.E. Parsons, Jr........ HM 3,592 19,846 14,637 0 89,561 0
HMS 3,045 37,486 0 0 0 0
MI 0 0 0 0 0 0
------ ------- ------- --- --------- ---
TOTAL 6,637 57,332 14,637 0 89,561 0
C.G. Townsend........... HM 1,677 9,161 6,676 0 41,473 0
HMS 0 0 0 0 0 0
MI 0 0 0 0 0 0
------ ------- ------- --- --------- ---
TOTAL 1,677 9,161 6,676 0 41,473 0
</TABLE>
- --------
(1) "HM" represents options to purchase our common stock. "HMS" represents
options to purchase Host Marriott Services Corporation common stock. "MI"
represents options to purchase Marriott International, Inc. common stock.
(2) The number and terms of these options reflect several adjustments made as a
result of our spin-off of Marriott International in October 1993; our spin-
off of Host Marriott Services Corporation in December 1995; the spin-off of
Marriott International from Sodexho Marriott Services Corporation in March
1998; and our conversion into a real estate investment trust (and the
related spin-off of Crestline Capital Corporation) 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) These figures are based on a per share price for our common stock of $8.406
and a per share price for Marriott International, Inc. common stock of
$31.375. These prices reflect the average of the high and low trading
prices on the New York Stock Exchange on December 31, 1999.
EMPLOYMENT ARRANGEMENTS
Our written "Key Executives/Termination of Employment" policy governs
certain terms and conditions of the employment of Messrs. Golden, Nassetta,
Parsons and Townsend. Under specific circumstances, the policy governs the
termination of their employment. It is not a binding contract, however, and we
at Host Marriott Corporation can change it unilaterally at any time. In
addition, the terms of the policy are subject to the approval of the Board of
Directors or the Chief Executive Officer/President, as applicable.
There is an additional written employment agreement that governs some of the
terms and conditions of Mr. Golden's employment. As amended, it provides for an
annual salary of $750,000
16
<PAGE>
for 1999. In the case of a "termination event," Mr. Golden would receive a
payment equal to one year's salary and another payment equal to the maximum
bonus that could have been earned for the year in which such termination event
occurs. In addition, the restrictions on all remaining restricted stock held by
Mr. Golden would be lifted. A termination event is a significant reduction in
Mr. Golden's responsibilities, a requirement to relocate, a change in control,
a change in his responsibility to our Chairman or his failure to receive a
bonus equal to at least half of the maximum bonus available to be earned for a
particular year. If terminated without cause, Mr. Golden would receive one
year's salary and bonus and the restrictions would be lifted on the restricted
stock that is not subject to performance goals. If he is terminated for cause
or in the event of his resignation, Mr. Golden would receive no termination
payment and the restricted stock would be canceled.
Mr. Golden has announced his retirement from his position as President and
Chief Executive Officer, effective following the 2000 annual meeting of
stockholders. Mr. Golden will remain an employee of Host Marriott through the
remainder of fiscal year 2000 and, accordingly, he will receive any benefits
accruing in 2000 that are incidental to such employment. His bonus award for
fiscal year 2000, however, will be pro rated through May 2000.
REPORT ON EXECUTIVE COMPENSATION
To Our Stockholders
The Compensation Policy Committee of the Board of Directors oversees and
administers our executive pay program on behalf of the Board and, by extension,
our stockholders. This report provides details and background information
regarding the executive pay program.
The Committee
The Compensation Policy Committee is composed of six independent members of
the Board of Directors. It approves our executive compensation programs and
policies, sets performance targets and evaluates the performance of our company
and its senior management. The Committee met eight times during the year.
Goals of the Program
The Committee has established three primary objectives for the executive
compensation program:
. to provide annual and long-term incentives that emphasize performance-
based compensation dependent upon achieving corporate and individual
performance goals;
. to foster a strong relationship between stockholder value and executive
compensation programs and rewards by having a significant portion of
compensation comprised of equity-based incentives; and
. to provide overall levels of compensation that are competitive, and to
provide the means to attract, retain and motivate highly qualified
executives.
Competitiveness Targets
To establish compensation targets, the Committee uses data from independent
consultants that reflect the median compensation practices for a large group of
general industry, lodging and real estate companies.
17
<PAGE>
These surveys are based on a broader group of companies than the comparison
group used in the performance graph below because the Committee believes that
targeting compensation at a diverse group of companies better reflects the
labor market for our executives. The Committee reviews the data provided by
these surveys with a focus on the median level of compensation to determine
base salary and annual incentive levels. The Committee then makes decisions for
individual executives based on competitive levels of compensation and the need
to retain an experienced and effective management team. Consistent with the
philosophy of aligning executive compensation with stockholder value, long-term
incentive awards represent a substantial portion of the total pay package for
executive officers. The maximum incentive awards are targeted at levels higher
than the median for achievement of outstanding business performance as
determined by the Committee.
Base Salary
The Committee reviews each senior executive's base salary on a regular basis
and approves the assignment of each senior executive to a salary grade. Actual
base salaries fall in the mid-range for similar positions, based on tenure,
experience and individual performance. Increases to this base salary are driven
primarily by individual performance and the salary increase guidelines that we
have established. No specific weightings are applied to the factors considered
by the Committee in arriving at base salary actions.
Stock Incentives
We provide long-term incentives through our 1997 Comprehensive Stock and
Cash Incentive Plan, which permits restricted stock, stock options, deferred
stock awards and other stock-based awards. The Committee believes that
management's interest should be aligned with that of the stockholders, and that
stock ownership is an efficient and effective way to accomplish this goal.
Compensation of the Chief Executive Officer and other Executive Officers
Base Salary
Mr. Golden's salary for 1999 was $750,000. This salary is at the median for
the survey group examined by an independent compensation consulting firm in a
compensation study previously conducted for the Committee. Mr. Golden, who has
announced his retirement as President and Chief Executive Officer following the
2000 Annual Meeting, did not receive a salary increase in 1999. The salaries
for Mr. Marriott, Mr. Nassetta, Mr. Parsons and Mr. Townsend, which had been
adjusted for 1999 based on the results of the same compensation study, were
increased by approximately 4.5% in each case, effective January 1, 2000.
Annual Incentive Awards
The Committee determines the performance criteria applicable to the
performance-based cash awards at the beginning of each year. The company
performance measures adopted for 1999 were based on our financial performance
in the areas of funds from operations per share, capital productivity and
liquidity. The company performance measures were weighted equally in 1999, and
together they account for 50% of the criteria on which the annual cash
incentive awards are based. The other 50% is based on individual performance
criteria set by the Committee for each executive.
Mr. Golden received a bonus award of $849,895 for 1999 under the
performance-based 1997 Comprehensive Stock and Cash Incentive Plan and pursuant
to the 1999 individual and company performance criteria which the Committee set
for him. This award was 113.3% of his fiscal year base
18
<PAGE>
salary earnings. The other named executive officers received bonus payments
ranging from 49% to 107.2% of their salaries for 1999. The Committee considered
our financial performance and other objective individual criteria in making the
awards.
Restricted Stock
Restricted stock is our primary long-term incentive vehicle for senior
executives. It creates an incentive for senior executives to manage our company
in a manner that creates significant long-term value for stockholders. The 1997
Comprehensive Stock and Cash Incentive Plan permits the Committee to make
awards of stock with restrictions relating to either continued employment
("time-based" awards) or to performance standards that are set by the Committee
("performance-based" awards). The Committee emphasizes performance-based
awards. No additional restricted stock awards were made in 1999. It should be
noted that because the performance criteria set by the Committee were not met
in 1999, none of the performance-based restricted stock was released to the
named executive officers in 1999, and consequently the total compensation to
such executive officers was significantly lower in 1999.
Summary
The Committee believes that the caliber and motivation of our employees, and
their leadership, are critical to our success in a competitive marketplace.
Effective and motivational compensation programs are essential ingredients to
success. The Committee believes that our compensation programs are effective in
serving us and our stockholders in the short and long term.
Members of The Compensation Policy Committee
Harry L. Vincent, Jr., Chairman J. W. Marriott, Jr.
R. Theodore Ammon Ann Dore McLaughlin
Robert M. Baylis John G. Schreiber
19
<PAGE>
PERFORMANCE GRAPH
The following line graph compares the yearly percentage change in the
cumulative total stockholder return on our common stock against the cumulative
total return of the Standard & Poor's Corporation Composite 500 Index (the "S&P
500"), a new peer group index and an old peer group index for the period from
December 31, 1994 through December 31, 1999. We have replaced the old peer
group with our new peer group because we believe it represents a better
comparison for our business following our conversion into a real estate
investment trust, or REIT. The companies that make up our new peer group are
listed below, and they consist of other lodging companies, several of which are
also REITs. The graph assumes an initial investment of $100 in our common stock
and in each of the indexes, and the reinvestment of all dividends, including:
. our distribution of Host Marriott Services Corporation common stock on
December 29, 1995 to stockholders; and
. our distribution of Crestline Capital Corporation common stock on
December 29, 1998 to stockholders.
Comparisons of Five-Year Cumulative Total
Stockholder Returns
1995 1996 1997 1998 1999
------- ------- ------- ------- -------
Host Marriott Corp. $100.00 $152.78 $187.39 $177.25 $115.04
S&P 500 Index 100.00 120.26 157.56 199.57 238.54
Old Peer Group Index 100.00 161.91 198.96 239.55 252.75
New Peer Group Index 100.00 176.69 236.88 122.49 124.05
(1) The old peer group index consisted of the following companies: Catellus
Development Corp., Hilton Hotels Corp., Hospitality Franchise System, Inc.,
La Quinta Inns, Inc., Marriott International, Inc., Red Lion Inns LP, The
Rouse Company, and Del Webb Corp.
(2) The new peer group index consists of Boykin Lodging Company (BOY), Felcor
Lodging Trust Inc. (FCH), Hilton Hotels Corporation (HLT), Hospitality
Properties Trust (HPT), LaSalle Hotel Properties (LHO), MeriStar
Hospitality Corporation (MHX), Starwood Hotels & Resorts Worldwide, Inc.
(HOT) and Wyndham International, Inc. (WYN).
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THE REIT CONVERSION
We merged with the former Host Marriott Corporation (a Delaware corporation)
on December 29, 1998, in order to reincorporate in Maryland. The merger was
part of a series of transactions in which we and our subsidiaries converted our
business operations to qualify as a real estate investment trust or "REIT" for
federal income tax purposes (the "REIT conversion").
As a result of the REIT conversion, we now conduct our business primarily
through Host Marriott, L.P., a Delaware limited partnership (the "operating
partnership"). We are the sole general partner of the operating partnership and
hold the majority of the operating partner interest units. As part of the REIT
conversion, we and our subsidiaries contributed substantially all of our assets
to the operating partnership and its subsidiaries. In exchange, we received
their ownership interests in the operating partnership, and the operating
partnership and its subsidiaries assumed substantially all our and our
subsidiaries' liabilities. In addition, all our employees employed at the time
of the REIT conversion became employees of the operating partnership.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Relationship between Crestline Capital Corporation and Host Marriott
As part of the REIT conversion, we made certain taxable distributions to our
stockholders on December 29, 1998, including substantially all of the shares of
common stock of Crestline, which was formerly one of our wholly owned
subsidiaries. Crestline became a separate publicly traded company at that time.
Richard E. Marriott, the Chairman of our Board, beneficially owns
approximately 4.8% of the outstanding shares of common stock of Crestline, and
J.W. Marriott, Jr., one of our Directors, beneficially owns approximately 5.2%.
In connection with this distribution, we entered into a distribution
agreement with Crestline, which provided for, among other things:
. the distribution of shares of Crestline to our stockholders in
connection with the Crestline distribution;
. the division of certain assets and liabilities between Crestline and us;
. the contribution to Crestline of our interest in 31 senior living
communities;
. the transfer to Crestline of the 25% interest in Swissotel Management
(USA) L.L.C. which we acquired from the Blackstone Entities;
. a guarantee by us on certain Crestline debt obligations;
. the contingent right for a period of ten years to purchase Crestline's
interest in Swissotel Management (USA) L.L.C. at fair market value if
the tax laws are changed so that we could own such interest without
jeopardizing our status as a REIT; and
. certain other agreements governing the relationship between Crestline
and us following the Crestline distribution.
The Crestline distribution agreement also contained provisions that were
designed to allocate financial responsibility for liabilities connected to the
business of the senior living communities. Subject to certain exceptions, it
provided for Crestline to assume liabilities and cross-indemnities effective as
of the date of the distribution.
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A REIT cannot earn income from the operation of hotels but can receive
rental income by leasing hotels under the current federal income tax law.
Therefore, the operating partnership and its subsidiaries have leased virtually
all of their hotel properties to certain subsidiaries of Crestline. Generally,
there is a separate Crestline hotel lessee for each hotel property; however,
there is a separate lessee for each group of hotel properties if that group has
a separate mortgage financing or has additional owners. Each of the lessees is
a limited liability company or limited partnership, whose purpose is limited to
acting as lessee under an applicable lease.
Our or our subsidiaries' hotel management agreements, therefore, have been
assigned to the Crestline hotel lessees for the term of the applicable leases.
Although the lessees have primary liability under the management agreements
while the leases are in effect, the operating partnership retains primary
liability for certain obligations and contingent liability under the management
agreements for all other obligations that the lessees do not perform.
We have entered into other agreements with Crestline that govern our various
ongoing relationships with them. We believe the agreements are fair to both
parties and are generally comparable to those which would have been reached in
arm's-length negotiations with unaffiliated parties. Among such other
agreements between us are:
(1) Hotel Leases. Through the operating partnership and its subsidiaries, we
entered into hotel leases with subsidiaries of Crestline for 121 full-service
hotels. In 1999, we sold five of the leased full-service hotels, and we agreed
with Crestline to terminate the leases reducing the number of hotels leased
from us to 116 full-service hotels. Each hotel lease has a fixed term generally
ranging from seven to ten years. Crestline is required to pay:
. a minimum rent specified in each hotel lease;
. plus, to the extent it exceeds the minimum rent, a percentage rent based
upon a specified percentage of aggregate sales from the hotels in excess
of specified thresholds.
The amount of minimum rent and percentage rent thresholds will be increased
each year based upon any increases in the Consumer Price Index and the
Employment Cost Index during the previous twelve months. The hotel leases will
generally provide for a rent adjustment in the event of damage, destruction,
partial taking or certain capital expenditures. In 1999, Crestline paid us an
aggregate amount of $1.175 billion in rent for the hotels leased by us to
Crestline.
Under the hotel leases, Crestline is responsible for paying all hotel
operating expenses, including all personnel costs, utility costs, and general
repair and maintenance of the hotels. In addition, Crestline is responsible for
all fees payable to the hotel manager, including base and incentive management
fees, chain services payments and franchise or system fees. However, we remain
responsible for real estate and personal property taxes, property casualty
insurance, ground lease rent and capital expenditures and for maintaining a
reserve fund for furnishings, fixtures and equipment replacements.
If we dispose of a hotel free and clear of the hotel lease, we have to pay a
termination fee equal to the fair market value of Crestline's leasehold
interest in the remaining term of the hotel lease using a discount rate of 12%.
Alternatively, we are entitled either to:
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. substitute a comparable hotel for any hotel that is sold, with the terms
agreed to by Crestline; or
. sell the hotel subject to the hotel lease and to Crestline's approval
under certain circumstances, but without having to pay a termination
fee.
In addition, we have the right to terminate up to 12 hotel leases, in
connection with sales of hotels, without having to pay any termination fees.
During 1999, we exercised our right to terminate five hotel leases without
paying termination fees for five leased hotels that were sold during 1999,
although only three of such terminations counted against our right to terminate
12 hotel leases as described above. At the same time, Crestline may terminate
up to 12 full-service leases without penalty upon 180-days' notice to us.
During 1999, Crestline exercised its right to terminate five hotel leases. We
have subsequently agreed with Crestline to continue two of these leases on
modified terms, and we are in negotiations with Crestline to continue the other
leases for which we have received termination notices from Crestline. We expect
to agree with Crestline to extend these leases prior to their various
termination dates in fiscal year 2000, which in each case is 180 days after the
respective notification date.
In December 1999, the United States Congress passed new legislation,
effective for taxable years beginning after December 31, 2000, which
significantly amends the REIT laws applicable to us. Among the changes, the new
legislation allows a REIT to own up to 100% of the voting stock of one or more
taxable REIT subsidiaries subject to limitations on the value of those
subsidiaries. (A taxable REIT subsidiary is a corporation other than a REIT in
which a REIT directly or indirectly holds stock and that has made a joint
election with the REIT to be treated as a taxable REIT subsidiary.) This would
enable the operating partnership to lease its hotels to wholly owned taxable
subsidiaries if the hotels are operated and managed on behalf of such
subsidiaries by an independent third party. The rents received from such
subsidiaries would not be disqualified from being "rents from real property" by
reason of our ownership interest in the subsidiary so long as the property is
operated on behalf of the taxable REIT subsidiary by an "eligible independent
contractor."
As a result of these changes in the federal income tax laws, beginning
January 1, 2001, we could lease our hotels to a subsidiary of the operating
partnership that is a taxable corporation and that elects to be treated as a
"taxable REIT subsidiary." In addition, we have the right, on or after January
1, 2001, to purchase the leases from Crestline for a price equal to their fair
market value (which could be significant). We intend to evaluate our options
regarding the Crestline leases and have not yet made a decision whether or not
to purchase those leases.
Through the operating partnership we entered into guaranty and pooling
agreements with Crestline as part of the Crestline distribution by which
Crestline and certain of its subsidiaries guarantee the hotel lease
obligations. The hotel leases were placed into four different pools with all
hotel leases having similar terms placed into the same pool. The parent
subsidiary of each pool has a full guarantee obligation of the hotel leases in
its respective pool. For each pool, however, the cumulative limit of
Crestline's guaranty obligation will be the greater of:
. 10% of the aggregate rent payable for the immediately preceding fiscal
year under all hotel leases in the pool; or
. 10% of the aggregate rent payable under all hotel leases in the pool for
1999.
If Crestline's obligation under a guaranty agreement for a pool is reduced
to zero, Crestline can terminate its guaranty and pooling agreement for that
pool, and we can terminate the hotel leases in that pool without penalty.
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Upon the commencement of the hotel leases, Crestline purchased the working
capital of the hotels from us for approximately $95 million. The purchase price
is evidenced by notes that bear interest at 5.12%. Interest on each note is due
simultaneously with the rent payment of each hotel lease. The principal amount
of each note is due upon the termination of each hotel lease. Upon termination
of the hotel lease, Crestline will sell back to us the existing working capital
at its then current value. To the extent the working capital at that time is
worth less than the value of the note, Crestline will pay us the difference in
cash. As of December 31, 1999, the outstanding balance of the hotel working
capital notes was $90 million. In 1999, we received $5 million in interest
income from Crestline under the working capital notes.
(2) Furnishings, Fixtures and Equipment Leases. In connection with the
Crestline distribution, if the average tax basis of an individual hotel's
furnishings, fixtures and equipment ("FF&E") and other personal property
exceeded 15% of the aggregate average tax basis of the hotel's real and
personal property, there was excess FF&E. In these cases, subsidiaries of
Crestline and non-controlled subsidiaries of ours entered into lease agreements
for the excess FF&E. The terms of the FF&E leases generally range from two to
three years and rent under the FF&E leases is a fixed amount. Crestline will
have the option at the expiration of the lease term either to:
. renew the FF&E leases for consecutive one year renewal terms at a fair
market rental rate; or
. purchase the excess FF&E for a price equal to its fair market value.
If Crestline does not exercise its purchase or renewal option, it must pay a
termination fee equal to approximately one month's rent. In 1999, Crestline
paid our non-controlled subsidiaries an aggregate amount of $23 million in rent
under the FF&E leases.
(3) Limited-Service Hotel Subleases. We lease 71 limited-service hotels
under the Residence Inn and Courtyard brands from Hospitality Properties Trust,
Inc. These leases have initial terms expiring through 2010 for the Residence
Inn properties and 2012 for the Courtyard properties. They are renewable at our
option. In connection with the Crestline distribution, subsidiaries of
Crestline entered into sublease agreements with us for these limited service
hotels. The terms of the subleases will expire simultaneously with the
expiration of the initial term of the Hospitality Properties Trust leases. If
we elect to renew the leases, Crestline can elect to renew the subleases for
the corresponding renewal term.
Each sublease contains generally the same terms as the Hospitality
Properties Trust leases. The Hospitality Properties Trust leases require the
lessee to pay rent equal to:
. a fixed minimum rent, less the cost of any repairs, maintenance,
renovations or replacements of the hotel; and
. an additional rent based upon a specified percentage of gross revenues
to the extent they exceed gross revenues from a base year.
In addition, the leases require the lessee to pay all repair and maintenance
costs, impositions, utility charges, insurance premiums and all fees payable
under the hotel management agreements. Under the subleases, subsidiaries of
Crestline are required to pay us rent equal to the minimum rent due under the
leases plus an additional rent based on a percentage of revenues. To the extent
the reserves for FF&E replacements are insufficient to meet the hotel's capital
expenditure requirements, Hospitality Properties Trust is required to fund the
shortfall. Crestline guarantees the rent payable
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under the subleases up to a maximum of $30 million. The Crestline subsidiaries
that are parties to the subleases were capitalized with $30 million in notes
from Crestline payable on demand. In 1999, Crestline paid us an aggregate
amount of $80 million in rent under the subleases.
If the federal income tax laws change to allow our subsidiaries or us to
operate the hotels directly without jeopardizing our REIT status, we may
terminate all of the subleases upon payment of the termination fee. This fee is
equal to the fair market value of Crestline's leasehold interests in the
remaining term of the subleases using a discount rate of five percent.
(4) Asset Management Agreements. We and certain of our non-controlled
subsidiaries entered into asset management agreements with Crestline in which
Crestline agreed to provide advice on the operation of the hotels and review
financial results, projections, loan documents and hotel management agreements.
Crestline also agreed to consult on market conditions and competition, as well
as monitor and negotiate with governmental agencies, insurance companies and
contractors. Crestline was paid a fee of $4.5 million in 1999 for these
consulting services. The asset management agreements each have terms of two
years with an automatic one-year renewal, unless terminated earlier by either
party within the terms of the agreements.
(5) Tax Sharing Agreement. We entered into a tax sharing agreement with
Crestline which defines each party's rights and obligations with respect to:
. deficiencies and refunds of federal, state and other income or franchise
taxes relating to Crestline's business for taxable years before the
Crestline distribution; and
. certain tax attributes of Crestline after the Crestline distribution.
Generally, the result is that we will be responsible for filing consolidated
returns and paying taxes for periods until the date of the Crestline
distribution. Crestline will be responsible for filing returns and paying taxes
for later periods.
(6) Non-Competition Agreement. We entered into a non-competition agreement
with Crestline that limits both companies' future business opportunities. Until
the earlier of December 31, 2008 or the date when it is no longer a lessee of
more than 25% of the hotels that we owned at the time of the Crestline
distribution, Crestline is generally precluded from owning or acquiring any
full-service hotels not leased from us. Crestline is also subject to certain
restrictions relating to leasing, operating and managing full-service hotels
under its agreement with us.
In addition, we agreed:
. for the time period set forth above:
. not to lease limited-service or full-service hotels from any real
estate investment trust, or
. to invest in or advise any other entity that leases hotels under the
same type of arrangement, subject to certain exceptions; and
. until December 31, 2003, not to participate in the business of owning,
financing or operating senior living communities, subject to certain
exceptions.
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Relationship between the Blackstone Entities and Host Marriott
In conjunction with the REIT conversion, in December 1998 the operating
partnership acquired 12 upscale and luxury full-service hotels, a mortgage loan
secured by a thirteenth hotel, and certain other assets from The Blackstone
Group L.P. and a series of partnerships, persons and other entities affiliated
with Blackstone Real Estate Associates. We refer to this group of entities as
the Blackstone Entities. As part of the Blackstone acquisition, we and the
operating partnership entered into a contribution agreement with the Blackstone
Entities. This agreement provides that an affiliate of the Blackstone Entities
will have the right to designate one person to be included in the slate of
Directors nominated for election to our Board of Directors as long as the
Blackstone Entities own at least 5% of all of the outstanding operating
partnership units (including those operating partnership units held by us and
our subsidiaries). The Blackstone Entities designated John G. Schreiber, one of
our Directors who was re-elected to the Board at the 1999 annual meeting of
stockholders. Mr. Schreiber is a senior advisor and partner of Blackstone Real
Estate Advisors L.P., an affiliate of the Blackstone Entities.
In addition, the Blackstone contribution agreement provides that the
operating partnership units beneficially owned by the Blackstone Entities (and
their permitted transferees) are redeemable for cash or, at our election, for
our common stock. We have granted to the Blackstone Entities (and their
permitted transferees) certain registration rights with respect to shares of
our common stock obtained upon conversion of the Blackstone operating
partnership units.
The Blackstone contribution agreement also grants the Blackstone Entities an
exemption from the ownership limitations contained in the operating
partnership's partnership agreement. It also contains standstill provisions
which prohibit the Blackstone Entities from engaging in certain activities with
respect to the operating partnership and us. For example, the Blackstone
Entities may not take any actions in opposition to our Board of Directors. In
addition, the Blackstone Entities' ability to acquire and dispose of our voting
securities is restricted.
Relationship between Marriott International, Inc. and Host Marriott
We were operated as a single consolidated company with Marriott
International until October 8, 1993. On that date, in connection with the
issuance of a special dividend (the "Marriott International distribution"), the
consolidated company's businesses were split between Marriott International and
us. After that, we retained the capital intensive lodging real estate business
and the airport/tollroad concessions business, while Marriott International
took over the management of the lodging and service management businesses. (On
December 29, 1995, we distributed the airport/tollroad concessions business to
our stockholders in the spin-off of Host Marriott Services Corporation.)
Richard E. Marriott, the Chairman of our Board, beneficially owns
approximately 10.6% of the outstanding shares of common stock of Marriott
International, and J.W. Marriott, Jr., one of our Directors, beneficially owns
approximately 10.8%. In addition, J.W. Marriott, Jr. serves as Chairman of the
Board and Chief Executive Officer of Marriott International, and Richard E.
Marriott serves as a Director of Marriott International.
In connection with the Marriott International distribution, we entered into
a distribution agreement with Marriott International which allocated the
assumption of liabilities and cross-
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indemnities so that each company shouldered the financial responsibility for
its respective business. This distribution agreement has been amended from time
to time. Under the Marriott International distribution agreement, Marriott
International also obtained a right to purchase up to 20% of each class of our
voting stock (determined after assuming full exercise of the right) at its then
fair market value (based on an average of trading prices during a specified
period). This right is effective until June 2017, but only upon the occurrence
of certain specified events generally involving a change or potential change in
our control. We have granted Marriott International an exception to the
ownership limitations in our charter so that it can fully exercise its purchase
right, but the purchase right remains subject to certain ownership limitations
applicable to REITs generally.
We have entered into other agreements with Marriott International in the
ordinary course of business and for governing our ongoing relationships. We
believe that the agreements are fair to both parties and are generally
comparable to those which would have been reached in arm's-length negotiations
with unaffiliated parties. Among such other agreements between us and Marriott
International are:
(1) Lodging Management and Franchise Agreements. Marriott International and
certain of its subsidiaries entered into management agreements with us and
certain of our subsidiaries to manage for fees the Marriott Hotels, Resorts and
Suites, Ritz-Carlton hotels, Courtyard hotels and Residence Inns owned or
leased by us and our subsidiaries. Marriott International also entered into
franchise agreements with us and certain of our subsidiaries. The franchise
agreements allow us to use the Marriott brand, associated trademarks,
reservation systems and other related items in connection with 13 Marriott
hotels for which we have entered into operating agreements with hotel
management companies other than Marriott International.
These agreements reflect market terms and conditions and are substantially
the same as agreements of similar types with other third-party owners. As a
result of the REIT conversion, however, we have assigned the management
agreements and franchise agreements to Crestline. Consequently, it is
Crestline's primary obligation to pay Marriott International the management
fees and franchise fees owed under these agreements as long as Crestline
remains the lessee for hotels governed by these agreements.
In addition, certain of our non-controlled subsidiaries are partners in
several unconsolidated partnerships that owned 226 lodging properties, although
11 of those properties were sold during 1999. These properties are operated by
Marriott International or certain of its subsidiaries under long-term
agreements. Our non-controlled subsidiaries typically serve as the general
partners in such partnerships. In 1999, those unconsolidated partnerships paid
fees of $119 million to Marriott International under those agreements. The
partnerships also paid $22 million in rent to Marriott International in 1999
for leases of land upon which certain of the partnerships' hotels are located.
(2) Acquisition Financing. Marriott International has provided to us
financing for a portion of the cost of acquiring properties to be operated or
franchised by Marriott International. We expect that Marriott International may
from time to time provide this type of financing. In 1999, Marriott
International did not provide any new acquisition financing, although one of
our non-controlled subsidiaries remains indebted to Marriott International for
acquisition financing from prior years. The amount of such indebtedness at
December 31, 1999 was $38 million.
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(3) Tax Sharing Agreement. We entered into a tax sharing agreement with
Marriott International that defines the parties' rights and obligations with
respect to:
. deficiencies and refunds of federal, state and other income or franchise
taxes relating to our businesses for tax years prior to the Marriott
International distribution; and
. certain of our tax attributes after the Marriott International
distribution.
We have both agreed to cooperate with each other and to share information in
preparing tax returns and in dealing with other tax matters.
(4) Non-Competition Agreement. We entered into a non-competition agreement
with Marriott International that defines the parties' rights and obligations
with respect to certain businesses operated by Marriott International and us.
In general, we and our subsidiaries are prohibited from entering into or
acquiring any business that competes with Marriott International's hotel
management business.
(5) Administrative Services Agreements and Office Space Lease. We have
entered into a number of agreements with Marriott International in which
Marriott International has agreed to provide certain continuing administrative
services for us and our subsidiaries. In addition, we sublease office space
from Marriott International. These services and the sublease are provided on
market terms and conditions. In 1999, we paid Marriott International $4.6
million for such services and office space. In general, the administrative
services agreements can be kept in place at least through the end of 2000, and
the sublease continues to 2001.
(6) Guarantees. In connection with the Marriott International distribution,
we entered into agreements with Marriott International in which Marriott
International agreed to guarantee our performance in connection with certain
partnership, real estate and project loans and other company obligations. These
guarantees are limited in an aggregate principal amount to $24 million at
December 31, 1999. Marriott International has not been required to make any
payments pursuant to the guarantees.
Other Matters. On February 23, 2000, we entered into an agreement to resolve
pending litigation involving certain limited partnerships formed in the 1980s.
Host Marriott, Marriott International, and certain of their subsidiaries and
affiliates are defendants in these proceedings. Under the agreement, we (or an
affiliate) and Marriott International will form an unconsolidated joint venture
to acquire all of the limited partners' interests in two limited partnerships
that own a total of 120 Courtyard by Marriott hotels for approximately $372
million. The purchase price will be financed with $185 million in mezzanine
debt loaned to the joint venture by Marriott International and with equity
contributed in equal shares by us (or an affiliate) and by Marriott
International. A subsidiary of Marriott International will continue to manage
these 120 hotels under long-term agreements. We (or an affiliate) and Marriott
International each will also pay approximately $31 million to the limited
partners in several other limited partnerships in exchange for dismissal of the
complaints and full releases.
Consummation of the settlement is subject to numerous conditions, including
participation thresholds, court approval and various third-party consents.
Consequently, there can be no assurance that the settlement transactions will
be consummated, and if they are consummated, those transactions could differ
materially from those described above.
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PROPOSAL TWO:
APPOINTMENT OF AUDITORS
Upon the recommendation of its Audit Committee, our Board of Directors has
appointed Arthur Andersen LLP to serve as our independent auditors for the
2000 fiscal year. This appointment is subject to your ratification. Our
management considers Arthur Andersen LLP to be well qualified.
Representatives of Arthur Andersen LLP are expected to be present at the
annual meeting. They will have an opportunity to make a statement if they
desire to do so and are expected to be available to respond to appropriate
questions.
Vote Required
The favorable vote of at least a majority of the shares of common stock
present in person or by proxy and voting at a meeting at which a quorum is
present is required for ratification of the appointment of independent
auditors.
The Board of Directors unanimously recommends a vote FOR such appointment.
PROPOSAL THREE:
STOCKHOLDER PROPOSAL REGARDING
ANNUAL ELECTION OF ALL DIRECTORS
Stockholder Proposal
Mrs. Evelyn Y. Davis of Watergate Office Building, 2600 Virginia Avenue,
N.W., Suite 215, Washington, D.C. 20037, owns 200 shares of our common stock.
As a stockholder, Mrs. Davis has notified us of her intention to propose the
following resolution at the Annual Meeting of Stockholders:
"RESOLVED: That the shareholders of Host Marriott Corporation recommend
that the Board of Directors take the necessary steps to reinstate the election
of Directors ANNUALLY, instead of the stagger system which was adopted."
Stockholder's Supporting Statement
In support of the resolution, Mrs. Davis has submitted the following
statement:
"The great majority of New York Stock Exchange listed corporations elect
all their Directors each year.
"This insures that ALL Directors will be more accountable to ALL
shareholders each year and to a certain extent prevents the self-
perpetuation of the Board.
"Last year the owners of 78,082,573 shares, representing approximately
45% of shares voting, voted FOR this proposal.
"If you AGREE, please mark your proxy FOR this proposal."
The Company's Statement in Opposition
Mrs. Davis has submitted this proposal at the last fourteen annual meetings
of stockholders, and it has been defeated on each occasion. The Board of
Directors has again considered the proposal (as
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has the Nominating and Corporate Governance Committee) and again recommends
that stockholders vote AGAINST it for the following reasons:
. at the 1984 annual meeting of stockholders, holders of more than 86% of
the shares of our common stock approved an amendment to our then
Certificate of Incorporation (as a Delaware corporation) to classify the
Board of Directors into three classes, with one class being elected each
year; and
. at the special meeting of stockholders concerning the REIT conversion
held on December 15, 1998, holders of more than 99% of the shares of our
common stock voted to approve the transactions comprising the REIT
conversion, including the adoption of our Articles of Incorporation for
our reincorporation in Maryland. Those Articles of Incorporation
similarly classify the Board of Directors into three classes, with one
class being elected each year, and they were described in detail and
included in full in the proxy statement relating to the special meeting
of stockholders.
Because we have a classified Board of Directors, at least two stockholder
meetings are required to effect a change of control of the Board of Directors.
It is therefore more difficult to change the membership of the Board of
Directors. The Board of Directors believes that the longer time required to
elect a majority of a classified Board of Directors helps to assure continuity
and stability of our management and policies since a majority of the Directors
will always have prior experience as Directors of our company. Another benefit
of the existing arrangement is to enhance management's ability to negotiate
with the proponent of a proposed corporate takeover or restructuring. The Board
of Directors therefore believes that the proposed resolution would, if
implemented, be detrimental to the best interests of our stockholders.
Vote Required
Under our Articles of Incorporation, approval of the proposed resolution
requires the affirmative vote of the holders of at least two-thirds (66 2/3%)
of the total number of outstanding shares of our common stock as of the annual
meeting record date.
The Board of Directors of the Company unanimously recommends a vote AGAINST
such proposal.
OTHER MATTERS
We do not know of any other matters to be presented at the annual meeting
other than those discussed in this proxy statement. If however, other matters
are properly brought before the annual meeting, your proxies will be able to
vote those matters at their discretion.
STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
The annual meeting of stockholders for 2001 is tentatively scheduled to be
held on May 17, 2001. In order for stockholder proposals to be included in the
proxy statement for the 2001 annual meeting, we must receive them no later than
December 19, 2000. Stockholder proposals must be in compliance with Rule 14a-8
under the Securities Exchange Act of 1934 (the "Exchange Act") and with our
bylaws. They must also be submitted in writing by notice delivered to the
Corporate Secretary, Host Marriott Corporation, 10400 Fernwood Road, Bethesda,
Maryland 20817-1109. These notices must set forth:
. the stockholder's name and address;
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. the text of the proposal to be introduced;
. the number of shares of our common stock the stockholder held of record,
owned beneficially and represented by proxy as of the date of the
notice; and
. a representation that the stockholder intends to appear in person or by
proxy at the meeting to introduce the proposal specified in the notice.
In addition, any stockholder who meets the requirements of the proxy rules
under the Exchange Act may nominate a candidate for Director or may bring other
business before the annual meeting of stockholders for 2001. For such other
business to be included in the proxy materials, it must meet the additional
requirements set forth in the paragraph above. Any such nomination or other
business must be submitted in writing by notice delivered to the Corporate
Secretary, Host Marriott Corporation, 10400 Fernwood Road, Bethesda, Maryland
20817-1109 not later than February 17, 2001 nor earlier than January 18, 2001.
For Director nominations, the stockholder's notice must list all information
relating to the nominee that is required to be disclosed in solicitations of
proxies for election of Directors in an election contest, or that is required
under the Exchange Act. This includes the nominee's written consent to serving
as a Director, if elected. For other business, the stockholder's notice must
include a brief description of the business desired to be brought before the
meeting and the reasons for conducting such business at the meeting. It must
also describe any material interest that the stockholder or beneficial owner
has in that business. In both cases, the stockholder's notice must also set
forth (both as to the stockholder giving the notice and the beneficial owner,
if any, on whose behalf the nomination or proposal is made):
. the name and address of such stockholder and of such beneficial owner,
as they appear on our books; and
. the number of each class of our shares which are owned beneficially and
of record by such stockholder and such beneficial owner.
ANNUAL REPORT AND FORM 10-K
We are mailing a copy of our 1999 Annual Report and a copy of our Form 10-K
for the 1999 fiscal year together with this proxy statement to stockholders of
record on the annual meeting record date. Any stockholder who desires
additional copies may obtain one (excluding exhibits), without charge, by
addressing a request to the Corporate Secretary, Host Marriott Corporation,
10400 Fernwood Road, Bethesda, Maryland 20817-1109. We will charge an amount
equal to the reproduction cost if the exhibits are requested.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Christopher G. Townsend
Christopher G. Townsend
Corporate Secretary
31
<PAGE>
ANNUAL MEETING OF STOCKHOLDERS
OF HOST MARRIOTT CORPORATION
The 2000 Annual Meeting of Stockholders of Host Marriott Corporation will be
held in Salon III at The Ritz-Carlton, Tysons Corner, 1700 Tysons Boulevard,
McLean, Virginia on Thursday, May 18, 2000 at 11:00 a.m. Doors to the meeting
will open at 10:30 a.m.
A special "Stockholder Annual Meeting" rate is offered at the hotel for
Wednesday, May 17, 2000, the night before the meeting. A limited number of
rooms is available for this special rate of $209.00, single or double
occupancy. To receive this special rate, please call the hotel directly and ask
for the Host Marriott Corporation "Stockholder Annual Meeting" rate for May 17.
Applicable taxes and gratuities will be additional and reservations are
required in advance. This discount may not be used in conjunction with any
other discount, coupon or group rate.
The Ritz-Carlton, Tysons Corner
1700 Tysons Boulevard
McLean, Virginia 22102
Telephone: (703) 506-4300
Directions to the hotel:
From Ronald Reagan Washington National Airport: Take George Washington Parkway
north to I-495 South. Then exit on Tysons Corner/Route 123 South (Exit 11B).
Turn right at the first light onto Tysons Boulevard. The Ritz-Carlton Hotel is
on the left.
From Dulles International Airport: Take the Dulles Access Road East to Exit 17,
Spring Hill Road. Please stay in the far right lane. After paying the toll,
turn right onto Spring Hill Road and proceed straight through the traffic
light. Spring Hill Road becomes International Drive. Turn left at the third
light onto Tysons Boulevard. The Ritz-Carlton Hotel is on the right, next to
the MCI Building.
West on I-66 from Downtown Washington, D.C.: Take I-66 West to Exit 67, I 495-
Baltimore/Dulles. Then exit on Tysons Corner/Route 123 South, Exit 10A.
Continue on Route 123 South, bearing right at the fourth light onto Tysons
Boulevard. The Ritz-Carlton Hotel is on the left.
<PAGE>
P
R Host Marriott Corporation
O This Proxy is Solicited by the Board of Directors
X for the Annual Meeting of Stockholders
Y to be held Thursday, May 18, 2000, 11:00 a.m.
The undersigned appoints Richard E. Marriott and Terence C. Golden as Proxies.
Each shall have power to appoint his substitute. They are authorized to
represent and vote, as designated on the reverse side, all shares of Host
Marriott Corporation common stock held of record by the undersigned on March 31,
2000 at the Annual Meeting of Stockholders to be held on May 18, 2000, or any
adjournment thereof. The Board of Directors recommends votes FOR proposals 1 and
2 and AGAINST proposal 3.
Nominees for election as directors for three-year terms expiring at the 2003
Annual Meeting:
Robert M. Baylis
Terence C. Golden
Ann Dore McLaughlin
Nominee for election as a director for the remainder of the term expiring at the
2001 Annual Meeting:
Christopher J. Nassetta COMMENTS OR CHANGE OF ADDRESS
----------------------------------------
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(If you have written in the above space, please mark the corresponding box
on the reverse side of this card)
CONTINUED AND TO BE SIGNED ON REVERSE SIDE/SEE REVERSE SIDE
Detach Proxy Card Here
Host Marriott Corporation
10400 Fernwood Road
Bethesda, Maryland 20817-1109
Notice of Annual Meeting of Stockholders
to be held Thursday, May 18, 2000
The Annual Meeting of Stockholders of Host Marriott Corporation will be held on
Thursday, May 18, 2000, at 11:00 a.m. in Salon III of The Ritz-Carlton, Tysons
Corner, located at 1700 Tysons Boulevard, in McLean, Virginia. Doors to the
meeting will open at 10:30 a.m. At the meeting, stockholders will be asked to
consider and vote on the following proposals:
Proposal 1: to elect Robert M. Baylis, Terence C. Golden and Ann Dore McLaughlin
as Directors for three-year terms expiring at the 2003 Annual
Meeting and Christopher J. Nassetta as a Director for the remainder
of the term expiring at the 2001 Annual Meeting.
Proposal 2: to ratify the appointment of Arthur Andersen LLP as independent
auditors; and
Proposal 3: to consider a stockholder proposal to reinstate the annual election
of all Directors.
Stockholders will also transact other business if any is properly brought before
the annual meeting. If you were a stockholder of record at the close of business
on March 31, 2000, you may vote at the annual meeting. Whether or not you plan
to attend the meeting, please take the time to vote by completing and mailing
this proxy card to us in the envelope provided.
Christopher G. Townsend
Corporate Secretary
<PAGE>
Please mark your
votes as in this
example. 3562
[x]
- ------------------------------------------------------------------------
This proxy when properly executed will be voted in the manner directed herein.
If no direction is made, this proxy will be voted FOR election of directors,
FOR proposal 2 and AGAINST proposal 3.
- ------------------------------------------------------------------------
The Board of Directors Recommends a vote FOR proposals 1 and 2. The Board of
Directors Recommends a vote AGAINST proposal 3.
- ------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
1. Election of Directors (see reverse) For, except vote withheld FOR WITHHELD
from the following nominee(s): [ ] [ ]
2. Ratification of appointment of Arthur Andersen LLP as FOR AGAINST ABSTAIN
independent auditors FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN [ ] [ ] [ ]
3. Stockholder proposal to reinstate the annual election of all FOR AGAINST ABSTAIN
directors [ ] [ ] [ ]
</TABLE>
- ------------------------------------------------------------------------
I WILL ATTEND THE ANNUAL MEETING [ ]
CHANGE OF ADDRESS/COMMENTS ON REVERSE SIDE. [ ]
SIGNATURE(S)
- ------------------------------------------------------------------------
DATE
- ------------------------------------------------------------------------
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.
- ------------------------------------------------------------------------
Please carefully detach here and return this proxy in the enclosed reply
envelope.
Admission Ticket
Host Marriott Corporation
Annual Meeting of Stockholders
Thursday, May 18, 2000, 11:00 a.m. EDT
The Ritz-Carlton, Tysons Corner
Salon III
1700 Tysons Boulevard
McLean, Virginia 22102
AGENDA
1. ELECTION OF FOUR DIRECTORS
2. RATIFICATION OF ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS
3. STOCKHOLDER PROPOSAL TO REINSTATE ANNUAL ELECTION OF ALL DIRECTORS
TRANSACTION OF OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
It is important that your shares be represented at this meeting, whether or not
you attend the meeting in person. To make sure your shares are represented, we
urge you to complete and mail the proxy card above.
If you and your guest plan on attending the Annual Meeting, please mark the
appropriate box on the proxy card above. Present this Admission Ticket to the
Host Marriott Corporation representative at the entrance.
