LA QUINTA INNS INC, PRE 14A, 1994-04-04

LA QUINTA INNS INC
PRE 14A, 1994-04-04
HOTELS & MOTELS

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<PAGE>

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934

Filed by the Registrant / /
Filed by a Party other than the Registrant /X/

Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12

_____________________________________________________________

La Quinta Inns, Inc.
_____________________________________________________________

John F. Schmutz
Vice President-General Counsel
_____________________________________________________________

Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 14a-6(j)(2)

<PAGE>

[Insert La Quinta Logo Here]

April 15, 1994

Dear Shareholder:

You are cordially invited to attend the 1994 Annual Meeting of
Shareholders of La Quinta Inns, Inc. The meeting will be held on Thursday,
May 26, 1994, at the Company's corporate offices in the 3rd Floor Conference
Room, 112 East Pecan Street, San Antonio, Texas at 10:00 a.m., local time.

The Notice of meeting and the Proxy Statement on the following pages
cover the formal business of the meeting, which includes the election of
directors and the approval of auditors.

To familiarize you with the nominees for director, all of whom served as
directors last year, the Proxy Statement contains biographical information of
each nominee. Sam Barshop, the Company's founder and Chairman since inception,
retired from the Company in March 1994. Philip Barshop, a Director from
inception, has decided to retire from the Board in May.

We are also submitting for your approval a proposed amendment to the
Company's Restated Articles of Incorporation relating to capital matters. The
proposed amendment, if adopted, would increase the number of shares of Common
Stock available for issuance by the Company from forty million (40,000,000) to
one hundred million (100,000,000). We believe that this proposal is in the
best interests of the Company. Although the Company at present has no
definite plans for issuing any such newly authorized Common Stock, we are of
the opinion that it is now both desirable and prudent to increase the
authorized number of shares of Common Stock available for issuance in order to
accomplish various corporate purposes, such as stock dividends or splits, use
in employee benefit plans, and acquisitions other than for cash. Accordingly,
we recommend shareholder approval of this proposal to amend the Company's
Articles of Incorporation.

Finally, we are submitting for your approval an amendment to the 1984
Stock Option Plan that would automatically increase the number of shares for
which options are granted annually to non-employee directors in order to
reflect adjustments for future stock splits in the form of stock dividends of
the Company's Common Stock. The Board of Directors proposes to set the stock
option grant in lieu of fees for each year at 13,500 shares, which gives
effect to the three-for-two stock splits in the form of stock dividends of
October 1, 1993 and March 15, 1994.

We hope you will be able to attend the Annual Meeting of Shareholders.
In any event, in order that we may be assured of a quorum, please sign the
accompanying proxy card and return it promptly in the envelope enclosed for
your use. Your vote is important. We appreciate your confidence and
continued support.

Sincerely,

Thomas M. Taylor
Chairman of the Board

<PAGE>

[Insert La Quinta Logo here]

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

May 26, 1994

The Annual Meeting of Shareholders of La Quinta Inns, Inc., a Texas
corporation (the "Company"), will be held in the 3rd Floor Conference Room
of the Company's corporate offices, 112 East Pecan Street, San Antonio, Texas,
on Thursday, May 26, 1994, at 10:00 a.m., for the purpose of considering and
acting upon the following:

1. The election of eight (8) Directors of the Company;

2. The adoption of a proposed amendment to the Company's Articles of
Incorporation to increase the number of authorized shares of Common
Stock from 40,000,000 shares to 100,000,000 shares;

3. The adoption of proposed amendments to the 1984 Stock Option Plan to
(a) automatically adjust stock option grants of non-employee directors
to account for future stock splits and (b) to provide for limitations
on the number of options that may be granted to any employee in any one
year;

4. The approval of the appointment of independent auditors for the 1994
fiscal year; and

5. The transaction of such other business as may lawfully come before
the meeting or any adjournment thereof.

Only shareholders of record at the close of business on April 4, 1994
(the "Record Date") are entitled to notice of and to vote at the meeting or
any adjournment thereof.

We hope you will be represented at the meeting by signing and returning
the enclosed proxy card in the accompanying envelope as promptly as possible,
whether or not you expect to be present in person. The vote of every
shareholder is important and the Board of Directors of the Company appreciates
the cooperation of shareholders in promptly returning proxies which helps to
limit expenses incident to proxy solicitation.

BY ORDER OF THE
BOARD OF DIRECTORS

John F. Schmutz
Vice President-General Counsel
and Secretary

April 15, 1994

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[Insert La Quinta Logo Here]

P. O. Box 2636
San Antonio, Texas 78299-2636

PROXY STATEMENT

SOLICITATION AND REVOCABILITY OF PROXIES

The enclosed proxy is solicited on behalf of the Board of Directors of
La Quinta Inns, Inc., a Texas corporation (the "Company"), for use at the
Annual Meeting of Shareholders on Thursday, May 26, 1994, at 10:00 a.m. to be
held in the 3rd Floor Conference Room of the Company's corporate offices,
112 East Pecan Street, San Antonio, Texas, and at any adjournment thereof.

The cost of soliciting proxies will be borne by the Company. In
addition, the Company will reimburse its transfer agent, The First National
Bank of Boston, for charges and expenses in connection with the distribution
of proxy material to brokers or other persons holding stock in their names or
in the names of their nominees and for charges and expenses in forwarding
proxies and proxy material to the beneficial owners. Solicitations further
may be made by officers and regular employees of the Company, without
additional compensation, by use of mail, telephone, telegraph or personal
calls.

Any Shareholder giving a proxy for the meeting has the power to revoke
it at any time prior to its use by granting a subsequently dated proxy, by
attending the Annual Meeting and voting in person, or by otherwise giving
notice in person or in writing to the Secretary of the Company. If a proxy
card indicates an abstention or a broker non-vote on a particular matter, then
the shares represented by such proxy will be counted for quorum purposes. If
a quorum is present, an abstention will leave the effect of a vote against the
matter and broker non-votes will have no effect. The approximate date on
which this Proxy Statement and the accompanying form of proxy are first sent
or given to security holders is April 15, 1994.

OUTSTANDING SHARES AND VOTING RIGHTS

Only holders of record of Common Stock of the Company at the close of
business on April 4, 1994 shall be entitled to vote at the meeting. There
were __________ shares of Common Stock issued and outstanding on the record
date. Each share outstanding entitles the holder thereof to one vote.

ELECTION OF DIRECTORS

(PROPOSAL NO. 1)

The Board of Directors has, pursuant to the Company's Amended and
Restated By-Laws, recently fixed the number of members of the Board of
Directors at eight (8). The eight current directors are to be elected at the
Annual Meeting. Proxies cannot be voted for a greater number of directors
than the number of nominees named herein. Each director is to hold office
until the next Annual Meeting and until his successor is elected and
qualified. The directors will be elected by a majority of the votes cast at
the Annual Meeting, provided a quorum is present. A quorum will be present at
the Annual Meeting if the holders of a majority of shares of the Company's
Common Stock are represented in person or by proxy.

<PAGE>

The proxies named in the accompanying proxy, who have been designated by
the Board of Directors of the Company, intend to vote for the following
nominees for election as directors, unless otherwise instructed in such
proxy. The Board of Directors has no reason to believe that any nominee will
be unable to serve if elected. In the event any nominee shall become
unavailable to stand for election, the proxies named in the accompanying proxy
intend to vote for the election of a substitute nominee of their selection.
All nominees were previously elected by shareholders. Certain information
concerning such nominees is set forth below:

NOMINEE SERVED AS
FOR DIRECTOR
DIRECTOR SINCE AGE PRINCIPAL OCCUPATION
-------- --------- --- --------------------
<S> <C> <C> <C>
Joseph F. Azrack(1) 1992 47 Principal and Executive Director
of Aldrich, Eastman & Waltch,
L.P. since April 1983; President
and Director of AEW, Inc.

Dr. William H.
Cunningham 1985 50 Chancellor of The University of
Texas System since September
1992; prior thereto, President
of The University of Texas at
Austin from September 1985 to
September 1992; Dean of the
College of Business
Administration and Graduate
School of Business of The
University of Texas at Austin
from 1983 to August 1985;
Professor of Marketing,
University of Texas at Austin,
since 1979; director of Freeport
McMoRan Inc., Jefferson-Pilot
Corporation, and the following
mutual funds groups: Transamerica
Capital Appreciation Fund,
Transamerica Bond Fund,
Transamerica California Tax-
Free Income Fund, Transamerica
Cash Reserve, Inc., Transamerica
Investment Trust, Transamerica
Special Series, Inc.,
Transamerica Current Interest,
Inc., Transamerica Tax Free Bond
Fund; Transamerica Investment
Portfolios, Institutional
Government Portfolio and
advisory director of Texas
Commerce Bank -- Austin.

Barry K. Fingerhut 1991 48 Senior Vice President of
GeoCapital Corporation (an
investment advisory firm) since
March 1981; director of Lake
Shore Bancorp., Inc.; General
Partner of Applewood Associates
(an investment limited
partnership).

</TABLE>

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<TABLE>
<S> <C> <C> <C>
Dr. George Kozmetsky 1980 76 Director of the IC2 Institute at
The University of Texas at
Austin since 1976; Executive
Associate for Economic Affairs
for The University of Texas
System since 1966; Professor of
Management and Computer Science,
The University of Texas at
Austin since 1966; Dean of the
College of Business
Administration and Graduate
School of Business of The
University of Texas at Austin
from 1966-82; director of
Teledyne, Inc., Dell Computer
Corporation, Painewebber
Development Corporation, Inc.,
Scientific & Engineering
Software Industries, Inc., KMS
Industries, Inc. and KDT
Industries, Inc.

Donald J. McNamara 1991 41 Chairman & Chief Executive
Officer of The Hampstead Group
(a real estate investment firm)
since September 1987; Chairman
of Americana Hotels Corporation
(a hotel chain) from December
1984 to August 1988; director of
Forum Retirement Partners, L.P.

Gary L. Mead(2) 1992 46 Director and President and Chief
Executive Officer of the Company
since March 3, 1992; Executive
Vice President-Finance of Motel 6
G.P., Inc. the sole general
partner of Motel 6, L.P., from
October 1987 to January 1991.

Peter Sterling 1991 52 Vice President and Chief
Financial Officer of Sid R.
Bass, Inc. and Lee M. Bass, Inc.
(diversified investment firms)
since September 1, 1983.

Thomas M. Taylor 1991 51 Chairman of the Board of the
Company since March 11, 1994;
President of Thomas M. Taylor &
Co. (an investment consulting
firm) since May 1985; President
of TMT-FW (a diversified
investment firm) since September
1989.
<FN>
_____________

(1) Pursuant to the terms of a certain agreement of limited partnership of
La Quinta Development Partners, L.P., a Delaware limited partnership
("LQDP") dated March 21, 1990, between the Company and AEW Partners, L.P.
("AEW Partners"), the Company, if requested by AEW Partners, will nominate a
principal of AEW, Inc. who is reasonably acceptable to the Company's Board of
Directors for election as a director of the Company at each annual
shareholders' meeting for so long as AEW Partners holds a significant interest
in LQDP (see discussion of conversion option held by AEW Partners under the
caption "Transactions with Management"). AEW Partners has agreed to

</TABLE>

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<TABLE>
<S> <C>
indemnify Mr. Azrack and any replacement or successor acting as agent of AEW
Partners in connection with serving on the Company's Board of Directors.

(2) Pursuant to the terms of a five-year Employment Agreement entered into
between the Company and Mr. Mead on March 3, 1992, the Board of Directors of
the Company is to nominate Mr. Mead for election as a director of the Company
as part of management's slate of nominees at each annual meeting of
shareholders and to appoint Mr. Mead to the Board's Executive Committee during
the term of such Employment Agreement.

</TABLE>

None of the nominees for director or executive officers of the Company
has a family relationship with any of the other nominees for director or
executive officers.

Except as indicated above, none of the nominees for director is a
director of any other company which has a class of securities registered
under, or is required to file reports under, the Securities Exchange Act of
1934 or of any company registered under the Investment Company Act of 1940.

MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors of the Company held 15 meetings during the year
ended December 31, 1993. All directors with the exception of Messrs. Azrack,
Cunningham, Kozmetsky and McNamara attended at least 75 percent of the
aggregate of (a) the total number of meetings of the Board during his term as
Director and (b) the total number of meetings held by all committees of the
Board on which he served during such term. All directors except Messrs.
Cunningham and Kozmetsky attended at least 75 percent of the regularly
scheduled meetings of the Board of Directors during this period.

The Audit Committee of the Board is currently composed of Messrs.
Azrack, Philip Barshop, Kozmetsky, McNamara, and Sterling (Chairman).

The Audit Committee has the responsibility, among other things, to
recommend the selection of the Company's independent accountants, review and
approve the scope of the independent accountants' audit activities, review the
Company's financial statements which are the subject of the independent
accountants' certification, review with such independent accountants the
adequacy of the Company's basic accounting system and the effectiveness of the
Company's internal audit activities, and review related party transactions.

The Compensation and Stock Option Committee of the Board is currently
composed of Messrs. Cunningham (Chairman), Fingerhut and Taylor. The
Compensation and Stock Option Committee reviews the salaries, bonuses, stock
option grants and other direct and indirect benefits for all Company officers
and key employees. The Company's 1978 and 1984 Stock Option Plans are
administered by the Compensation and Stock Option Committee, which has sole
authority to grant options to employees of the Company.

The Board of Directors has created an Executive Committee of the Board,
consisting of Messrs. Mead and Taylor. The Executive Committee has the
authority to exercise substantially all the powers of the Board that may be
delegated to it by the Board in the management and direction of the business
and affairs of the Company during intervals between meetings of the Board of
Directors, other than matters involving a commitment in excess of $10,000,000.

The entire Board of Directors acts as the nominating committee for
directors and will consider nominations by shareholders for directors. Any
such nominations for the election to be considered at the next Annual Meeting,
currently scheduled for May, 1995, together with a statement of the nominee's
qualifications and consent to be considered as a nominee and to serve if
elected, should be mailed to the Secretary of the Company no later than
December 16, 1994, if the proponent desires the nominee to be included in the
Company's Proxy Statement for the 1995 Annual Meeting of Shareholders.

<PAGE>

PRINCIPAL SHAREHOLDERS

The Company knows of no person who, as of March 16, 1994, owned
beneficially more than five percent (5%) of the Company's outstanding voting
securities, except as indicated in the table below.

SHARES OF COMMON STOCK
NAME AND ADDRESS BENEFICIALLY OWNED PERCENT
OF BENEFICIAL OWNER AS OF MARCH 16, 1994(1) OF CLASS
- ------------------- ----------------------- --------
<S> <C> <C>
Thomas M. Taylor & Co. 1,604,430(2) 5.3%
Trust for the benefit of
Mr. Taylor's son 2,250 *
Sid R. Bass, Inc. 1,843,537 6.1%
Lee M. Bass, Inc. 1,843,537 6.1%
The Bass Management Trust 1,907,595(2) 6.3%
The Airlie Group, L.P. 1,350,000 4.4%
Annie R. Bass Grandson's Trust
for Lee M. Bass 357,525 1.2%
Annie R. Bass Grandson's Trust
for Sid R. Bass 357,525 1.2%
Peter Sterling Trusts 5,625 *
Douglas K. and Anne Marie Bratton 11,250 *
Douglas K. Bratton IRA 1,125 *
Miles Ellis Bratton 1991 Trust 1,125 *
Thomas W. Briggs 11,250 *
Geoffrey P. Raynor 9,000 *
Michael N. Christodolou 6,750 *
W. Forrest Tempel 2,250 *
Donald J. McNamara, III Trust 675 *
Donald J. McNamara 262,575 *
William P. Hallman, Jr. 112,500(3) *
Peter Sterling 177,750 *
--------- -
(as a Group) 9,868,274(4) 32.4%
c/o W. Robert Cotham
2600 First City Bank Tower
Fort Worth, Texas 76102

GeoCapital Corporation 3,128,989 10.3%
Barry K. Fingerhut
767 Fifth Avenue - 45th Floor 234,900 *
--------- -
New York, New York 10153 3,363,889(5) 11.1%
(as a Group)

Gary L. Mead 1,597,500(6) 5.3%
112 East Pecan
San Antonio, Texas 78205

FMR Corp. 3,514,050(7)(8) 11.6%
82 Devonshire Street
Boston, Massachusetts 02109

<FN>
______________
*Less than one percent (1%)

(1) Adjusted for the 3-for-2 stock splits in the form of stock dividends
occurring on October 1, 1993 and March 15, 1994.

</TABLE>

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<TABLE>
<S> <C>
(2) A February 8, 1994 Form 4 provided to the Company reflects that Thomas
M. Taylor has sole voting and dispositive power with respect to
1,577,430 shares owned by Thomas M. Taylor & Co., and 27,000 shares
which he presently has the right to acquire under the Company's 1984
Stock Option Plan. Perry R. Bass solely in his capacities as sole
trustee and as one of two trustors has sole voting and dispositive power
with respect to 1,907,595 shares owned by The Bass Management Trust.

(3) A March 26, 1993 Schedule 13D amendment provided to the Company reflects
that William P. Hallman, Jr., because of his position as the trustee,
has "sole voting power" and "sole dispositive power" with respect to
the following trusts: (i) Annie R. Bass Grandson's Trust for Sid R.
Bass with respect to 357,525 shares, (ii) Annie R. Bass Grandson's Trust
for Lee M. Bass with respect to 357,525 shares, (iii) Donald J.
McNamara, III Trust with respect to 675 shares, and (iv) Peter
Sterling Trusts with respect to 5,625 shares.

(4) Thomas M. Taylor, Sid R. Bass, Lee M. Bass and other investors,
including the persons named above, have filed a Schedule 13D Statement,
amended through March 26, 1993, with the Securities and Exchange
Commission. The persons making the Schedule 13D filing have stated that
neither the fact of such filing nor anything contained therein shall be
deemed admission by them that a "group" exists within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934.

(5) A March 8, 1994 Form 4 provided to the Company reflects that (i)
GeoCapital Corporation is an investment adviser registered under
Section 203 of the Investment Advisers Act of 1940, which has no voting
power with respect to the shares, but which has "sole dispositive
power" with respect to 3,128,989 shares, (ii) Mr. Fingerhut is a
principal stockholder of GeoCapital Corporation and directly owns
180,900 shares in his own name, (iii) 27,000 shares held by his spouse
as custodian under the Uniform Gift to Minors Act, and (iv) 27,000
shares which he presently has the right to acquire under the Company's
1984 Stock Option Plan. Mr. Fingerhut disclaims beneficial ownership
over the 3,128,989 shares deemed beneficially owned by GeoCapital
Corporation.

(6) A June 8, 1993 Schedule 13D provided to the Company reflects that Mr.
Mead has "sole voting power" and "sole dispositive power" with
respect to 135,000 shares which he beneficially owns and 1,462,500
shares which he presently has the right to acquire pursuant to a
non-qualified stock option agreement dated March 3, 1992.

(7) A February 11, 1994 Schedule 13G provided to the Company reflects that
Fidelity Management & Research Company, a wholly-owned subsidiary of FMR
Corp. and an investment adviser registered under Section 203 of the
Investment Advisers Act of 1940, is the beneficial owner of 2,508,750
shares as a result of acting as investment adviser to several investment
companies registered under Section 8 of the Investment Company Act of
1940, and as a result of acting as sub-advisor to Fidelity American
Special Situations Trust. FMR Corp. through its control of Fidelity,
and the Funds has no voting power with respect to the shares, but which
has "sole dispositive power" with respect to 2,508,750 shares.
Fidelity Management Trust Company, a wholly-owned subsidiary of FMR
Corp. and a bank as defined in Section 3(a)(6) of the Securities
Exchange Act of 1934, is the beneficial owner of 1,005,300 shares and
has no voting power with respect to the shares, but which has "sole
dispositive power" with respect to 1,005,300 shares.

(8) The information reflected for such groups or beneficial owners is based
on statements and reports filed with the Securities and Exchange
Commission and furnished to the Company by such persons and information
supplied relative to the Registration Rights Agreement dated March 9,
1993 between the Company and certain of the above persons; no
independent investigation concerning the accuracy thereof has been made
by the Company.

</TABLE>

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SECURITY OWNERSHIP OF MANAGEMENT

Based upon information received upon requests from the persons
concerned, each director, each nominee for director, and all directors and
officers of the Company as a group, owned beneficially as of March 16, 1994,
the number and percentage of outstanding shares of Common Stock of the Company
indicated in the following table:

NAMES OF INDIVIDUAL SHARES BENEFICIALLY OWNED
OR IDENTITY OF GROUP AS OF MARCH 16, 1994(1) PERCENT OF CLASS
- -------------------- ------------------------- ----------------
<S> <C> <C>
DIRECTORS:
Joseph F. Azrack 3,550,112(2) 11.7%
Sam Barshop 978,743(3) 2.3%
Philip M. Barshop 13,500(4) *
William H. Cunningham 13,500(4) *
Barry K. Fingerhut 3,363,889(5) 11.1%
George Kozmetsky 27,000(6) *
Donald J. McNamara 262,575(7) *
Gary L. Mead 1,597,500(8) 5.3%
Peter Sterling 177,750(6) *
Thomas M. Taylor 2,956,680(9) 9.7%

OTHER NAMED
EXECUTIVE OFFICERS:
Michael A. Depatie 65,250(10) *
William C. Hammett, Jr. 59,760(11) *
Thomas W Higgins 40,500(12) *

All directors and executive
officers as a group 7,104,147(13) 23.4%

<FN>
_____________
*Less than one percent (1%)

(1) Adjusted for the 3-for-2 stock splits in the form of stock dividends
occurring on October 1, 1993 and March 15, 1994.

(2) The shares shown as beneficially owned by Mr. Azrack include (i)
3,536,612 shares of the Company's Common Stock which are issuable upon
conversion of 40 units of limited partnership interest held by AEW
Partners, L.P. ("AEW Partners") in La Quinta Development Partners,
L.P., a Delaware limited partnership ("LQDP") and (ii) 13,500 shares
which he has the right to acquire on May 20, 1994 under the Company's
1984 Stock Option Plan. Such shares have been considered to be
outstanding for purposes of calculating the percent of class. Mr.
Azrack is a director, officer and shareholder of AEW, Inc., the sole
general partner of AEW Partners. Mr. Azrack disclaims beneficial
ownership of any other shares of Common Stock of the Company that may be
deemed beneficially owned by AEW Partners pursuant to its conversion
option granted in the agreement of limited partnership of LQDP.

(3) The shares shown as beneficially owned by Sam Barshop include 7,807
shares held by him as co-trustee of a trust for the benefit of his
grandchildren and 675,000 shares which he presently has the right to
acquire under the Company's 1984 Stock Option Plan. Prior to March 19,
1994, Mr. Barshop had the right to acquire 393,750 shares of the
Company's Common Stock under the 1984 Stock Option Plan. As a result of
the Separation, Settlement and Release Agreement referenced in
"Employment Arrangements," the remaining portion of his stock options
were vested and exercisable. As a co-trustee, Mr. Barshop shares voting
and investment power with respect to 7,807 shares. However, he
disclaims beneficial ownership of those shares held by him as trustee.
Mr. Barshop resigned from the Board effective March 19, 1994.

</TABLE>

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<S> <C>
(4) The shares shown as beneficially owned by Messrs. Philip Barshop and
William Cunningham represent 13,500 shares which each has the right to
acquire on May 20, 1994 under the Company's 1984 Stock Option Plan.
Mr. Philip Barshop has informed the Board of Directors of his desire not
to seek re-election as a director at the Company's 1994 Annual Meeting
of Shareholders.

(5) The shares shown as beneficially owned by Mr. Fingerhut include (i)
180,900 shares owned beneficially by Mr. Fingerhut, (ii) 27,000 shares
held by his spouse as custodian under the Uniform Gift to Minors Act,
(iii) 3,128,989 shares that Mr. Fingerhut may be deemed to own
beneficially because of his position as Senior Vice President and
principal stockholder of GeoCapital Corporation, (iv) 13,500 shares he
presently has the right to acquire on May 21, 1993 under the Company's
1984 Stock Option Plan, and (v) 13,500 shares he has the right to
acquire on May 20, 1994 under the Company's 1984 Stock Option Plan.
Mr. Fingerhut disclaims beneficial ownership of the 3,128,989 shares
deemed beneficially owned by GeoCapital Corporation.

(6) The shares shown as beneficially owned by Messrs. Kozmetsky and Sterling
include (i) 13,500 shares which each presently has the right to acquire
under the Company's 1984 Stock Option Plan and (ii) 13,500 shares which
each has the right to acquire on May 20, 1994 under the Company's 1984
Stock Option Plan.

(7) The shares shown as beneficially owned by Mr. McNamara include (i)
13,500 shares which he presently has the right to acquire on May 21,
1993 under the Company's 1984 Stock Option Plan and (ii) 13,500 shares
he has the right to acquire on May 20, 1994 under the Company's 1984
Stock Option Plan.

(8) The shares shown as beneficially owned by Mr. Mead reflect 1,462,500
shares which he presently has the right to acquire pursuant to a
non-qualified stock option agreement dated March 3, 1992.

(9) The shares shown as beneficially owned by Mr. Taylor (i) include
1,577,430 shares that Mr. Taylor may be deemed to own beneficially
because of his position as the President, sole director and principal
shareholder of Thomas M. Taylor & Co., (ii) 1,350,000 shares that
Mr. Taylor may be deemed to own beneficially because of his position as
President and principal shareholder of Thomas M. Taylor & Co., which is
one of two general partners of EBD L.P., which is the sole general
partner of the Airlie Group L.P., (iii) 2,250 shares owned by an
irrevocable trust for the benefit of his son, and (iv) 13,500 shares
which he presently has the right to acquire under the Company's 1984
Stock Option Plan, and 13,500 shares which he has the right to acquire
on May 20, 1994 under the Company's 1984 Stock Option Plan. Mr. Taylor's
mother, Annette B. Taylor, serves as trustee of this trust. Mr. Taylor
disclaims beneficial ownership of the shares owned by such trust.

(10) The shares shown as beneficially owned by Mr. Depatie, Senior Vice
President-Finance of the Company, include 9,000 shares held by a trust
for which he is sole trustee and beneficiary and 56,250 shares which he
has the right to acquire under the Company's 1984 Stock Option Plan.

(11) The shares shown beneficially owned by Mr. Hammett, Senior Vice
President-Accounting & Administration of the Company, include 1,980
shares held by his wife and 56,250 shares which he has the right to
acquire under the Company's 1984 Stock Option Plan. Mr. Hammett
disclaims beneficial ownership of the 1,980 shares held by his wife.

(12) The shares shown beneficially owned by Mr. Higgins, Senior Vice
President-Operations of the Company, reflect shares which he has the
right to acquire under the Company's 1984 Stock Option Plan.

</TABLE>

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<TABLE>
<S> <C>
(13) The holdings shown for all directors and executive officers as a group
include 2,286,712 shares which the directors and executive officers have
the right to acquire under the Company's 1984 Stock Option Plan and
Mr. Mead's Non-Qualified Stock Option Agreement. Shares acquirable
pursuant to stock options, which are exercisable within sixty (60) days
after March 16, 1994, are shown as being beneficially owned by members
of such group in the above table and have been considered to be
outstanding for purposes of calculating the percentage ownership of all
directors and executive officers as a group.

</TABLE>

All directors and executive officers as a group beneficially own a total
of 7,104,147 shares (23.4%) of the Company's outstanding Common Stock
excluding the 2,286,712 shares referred to in note (13) above which certain
directors and executive officers have the right to acquire under the Company's
Stock Option Plans and excluding the 3,536,612 shares referred to in note
(1) above which AEW Partners has the right to acquire under the provisions of
the LQDP partnership agreement.

Except as reflected in the notes to the preceding table, each nominee
for director owns directly the number of shares indicated in the table and has
the sole power to vote and dispose of such shares.

REPORT OF COMPENSATION AND STOCK OPTION COMMITTEE
ON EXECUTIVE COMPENSATION

The Compensation Committee of the Board of Directors (the "Committee")
is composed entirely of independent outside directors. The Committee is
responsible for setting and administering the policies which govern both
annual compensation and stock ownership programs.

The Company has maintained the philosophy that the compensation of its
executive officers and other key employees should be directly linked to
operating performance. Toward this end, base salaries of the executive
officers were set at or below median levels based upon comparative industry
data, while leveraging bonus payouts based upon performance. Base salaries
for new management employees are determined by evaluating the responsibilities
of the respective position and the individual's experience, and by reference
to the competitive marketplace for management talent. Annual salary
adjustments are determined by evaluating the performance of the Company, the
performance of the respective executive, other incentive based compensation,
and the competitive marketplace. Significant emphasis is placed upon stock
option grants based upon the Company's performance to reward its officers and
key employees. For 1994, based on the foregoing factors, the previous grants
of stock options, and a review made in December 1993, the Committee determined
that neither Mr. Mead nor the four next highest paid executives would receive
an increase in base salary.

The Company's 1984 Stock Option Plan ("1984 Plan") and other
non-qualified stock options issued by the Board are utilized to instill long
term incentives on the executives' part to continue the growth in shareholder
value. In 1992, members of the new management team, including the CEO and the
next four highest paid executive officers, were granted stock options upon
their initial employment with the Company and smaller grants in December, 1992
which provide considerable incentive in the long term growth of the Company.
The Company places great emphasis on these stock options as long term
incentives over increases in base compensation. On March 11, 1994, additional
stock option grants totaling 362,500 shares (pre-March 15 split) were made to
certain officers to be exercisable upon the post-March 15, 1994 stock split
price of the Company's Common Stock averaging $40 per share for 20 trading
days prior to March 11, 1997. In the event this condition is not met, the
grants will vest in 9 1/2 years, subject to the conditions of the 1984 Plan.

The Company's incentive compensation plan rewards officers and other key
employees of the Company who are in a position to make substantial
contributions to the growth and profitability of the

<PAGE>

Company. Continuance of the plan and the granting of bonuses are based upon
Company performance relative to the business plan. In 1993, 50% of the
executive officers' bonuses were based upon meeting a 12% increase in adjusted
operating income for Fiscal 1993 over Fiscal 1992. For 1993, the Company
achieved 83.2% of the adjusted operating income hurdle. The remaining 50% of
the officer bonus was discretionary, to be based upon individual performances
as determined by the individual officer's performance and contributions to the
Company. Outstanding performance could result in a bonus payment that exceeded
an individual's total opportunity. The target bonus potential ranges from 50%
of base salary for Mr. Mead, 40% for Senior Vice Presidents and 35% for Vice
Presidents. Bonus awards made to the CEO and the next four highest paid
executive officers are found in the "Cash Compensation" summary under
Executive Compensation.

For 1993, the CEO's base salary of $350,000 was unchanged from 1992.
Additionally, Mr. Mead was paid a bonus of $160,300. In future years,
Mr. Mead's base salary is subject to increases based upon Company performance
as determined by the Committee. Incentive compensation in 1994 and beyond will
be based upon the Company's performance against its business plan, as stated
above. This focus on operating earnings will closely align executive
compensation with that of the shareholders and drive the enhancement of
shareholder value.

In structuring the Company's compensation programs and in determining
the appropriateness of awards, the Committee's primary consideration is the
achievement of the Company's strategic business goals, taking into
consideration competitive practice, market economics, and other factors. To
the extent fulfilling these goals is consistent with favorable tax treatment,
the Committee intends to design the Company's compensation programs to conform
with the OBRA legislation and related regulations so that total compensation
paid to any employee will not exceed $1 million in any one year, except for
awards as part of executive compensation that are performance-based and thus
deductible by the Company. However, this commitment does not rule out the
ability to make awards or to approve compensation that may not qualify for the
compensation deduction, if there exists sound corporate reasons for so doing.

COMPENSATION AND STOCK OPTION COMMITTEE
Dr. William H. Cunningham, Chairman
Barry K. Fingerhut
Thomas M. Taylor

<PAGE>

COMPARISON OF FIVE YEAR CUMULATIVE RETURNS AMONG
LA QUINTA INNS, INC.,
DOW JONES EQUITY INDEX AND LODGING PEER GROUP

[Graph]

DJ EQUITY INDEX LODGING INDEX* LA QUINTA
--------------- ------------- ---------
<S> <C> <C> <C>
88 100 100 100
89 130.94 131.47 123.36
90 125.80 53.37 88.79
91 166.66 68.07 108.41
92 180.95 79.50 149.77
93 198.94 147.71 395.33

<FN>

NOTE: TOTAL RETURNS ASSUME REINVESTMENT OF DIVIDENDS.

* This peer group consists of Hilton Hotels Corporation and Marriott Corporation.

</TABLE>

<PAGE>

SUMMARY COMPENSATION
CASH COMPENSATION

The following table contains information with respect to compensation
for services rendered in all capacities to the Company during the year ended
December 31, 1993, for each of the five most highly compensated executive
officers of the Company.

Long Term Compensation
ANNUAL COMPENSATION AWARDS
------------------- ----------------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME/POSITION YEAR(A) SALARY BONUS(B) COMPENSATION(C) OPTIONS/SARS COMPENSATION(D)
- ------------- ------- ------ -------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Gary L. Mead 1993 $350,000 $160,300 $ 12,000 -- $ 4,328
President and CEO 1992 281,363 175,000 9,646 1,462,500(e) --
1991 -- -- -- -- 183,276

Sam Barshop 1993 $350,000 $ 72,800 $443,160 -- $ 18,007
Chairman of the Board 1992 345,155 157,391 $443,067 450,000(f) 13,649
1991 315,490 113,576 424,543 225,000 17,023

William C. Hammett, Jr. 1993 $200,000 $ 68,280 $ 12,000 -- $ 2,323
Sr. Vice President 1992 90,000 32,832 6,000 225,000(g) 100,126
Accounting & Administration 1991 -- -- -- -- --

Michael A. Depatie 1993 $200,000 $ 68,280 $ 12,000 -- $ 2,203
Sr. Vice President 1992 83,077 30,306 5,538 225,000(g) 43,177
Finance 1991 -- -- -- -- --

Thomas W. Higgins 1993 $175,000 $ 57,120 $ 12,000 -- $ 87,267
Sr. Vice President 1992 77,598 31,039 5,714 209,250(h) 72,143
Operations 1991 -- -- -- -- --

<FN>
____________________
(a) Each of the persons listed in the table above, with the exception of Sam
Barshop, became executive officers and employees of the Company during
1992. Mr. Mead on March 3, 1992, Mr. Higgins on June 18, 1992,
Mr. Hammett on June 22, 1992, and Mr. Depatie on July 14, 1992.
(b) These amounts are the cash awards under the Incentive Compensation Plan
described below.
(c) Other annual compensation for Messrs. Mead, Hammett, Depatie and Higgins
includes personal benefits consisting primarily of personal use of
Company automobiles. Other annual compensation for Mr. Barshop includes
the value of the forgiveness of 20% of a $2,200,000 loan made to
Mr. Barshop under his Employment Agreement, as detailed hereinafter
under "Employment Arrangements", and personal use of a Company
automobile.
(d) All other compensation for all named individuals includes personal
benefits consisting primarily of moving, relocation and closing costs on
the purchase of homes for Messrs. Hammett and Higgins, and the exercise
of stock options amounting to $75,253 in the case of Mr. Higgins.
(e) Mr. Mead received the option to acquire 650,000 shares of Common Stock
at $15.00 per share. Options for 100,000 shares vested on March 3, 1992
and March 3, 1993, respectively. On June 8, 1993, the remaining 450,000
options vested (see Non-Qualified Stock Options Granted to Mr. Mead).
Adjusted for stock splits in the form of stock dividends occurring on
October 1, 1993 and March 15, 1994, the total options amount to
1,462,500, with an exercise price of $6.667.
(f) Mr. Barshop received the option to acquire 100,000 shares of Common
Stock at $11.812 per share on January 2, 1991. At December 31, 1993,
one-half of these options were exercisable. Taking into account the
stock splits in the form of a stock dividend on October 1, 1993, and
March 15, 1994, this resulted in 112,500 options for an exercise price
of $5.249. On March

</TABLE>

<PAGE>

<TABLE>
<S> <C>
19, 1992, Mr. Barshop received the option to acquire 200,000 shares of
Common Stock at $17.062 per share. Of these options, 100,000 vested on
June 8, 1993 under a condition which provided for immediate vesting
when the Company's Common Stock traded at an average of $30.00 per share
for a defined number of days. Adjusted for the aforementioned stock
splits, this resulted in 225,000 shares. Of the remaining option,
Mr. Barshop was vested in one-forth at December 31, 1993 or an adjusted
amount of 56,250. Mr. Barshop retired from the Company effective March
19, 1994, and resigned from its Board of Directors effective the same
day.
(g) Messrs. Hammett and Depatie received the option to purchase 85,000
shares of Common Stock at $17.687 on June 5, 1992. On December 16,
1992, they received the option to acquire 15,000 shares of Common Stock
at $19.750 per share. Of these grants, one-fourth were exercisable at
December 31, 1993. Adjusted for the stock splits in the form of a stock
dividend on October 1, 1993 and March 15, 1994, the adjusted total of
such options was 225,000, of which 56,250 were exercisable at December
31, 1993.
(h) Mr. Higgins received the option to purchase 60,000 shares of Common
Stock at $17.687 on June 5, 1992. On September 17, 1992, he received
the option to acquire 25,000 shares of Common Stock at $17.87 per
share. On December 16, 1992, he received the option to acquire 15,000
shares of Common Stock at $19.750 per share. On August 3, 1993,
Mr. Higgins exercised options with respect to 7,000 shares granted
pursuant to his stock option granted on June 5, 1992. Of these grants,
one-fourth were exercisable at December 31, 1993. Adjusted for the
stock splits in the form of a stock dividend on October 1, 1993 and
March 15, 1994, the adjusted total of such options was 209,250 of which
40,500 were exercisable at December 31, 1993.

</TABLE>

COMPENSATION PURSUANT TO PLANS

INCENTIVE COMPENSATION PLAN

The Company has an incentive compensation plan which rewards officers
and other key employees of the Company who are in a position to make
substantial contributions to the growth and profitability of the Company.
Continuance of the plan and the granting of bonuses or awards are based on
Company performance relative to the business plan. The bonus plan approved by
the Compensation Committee for the year ended December 31, 1993 based bonus
awards on specific financial performance and individual goal attainment.

Plan participants for the year ended December 31, 1993 included 19
officers of the Company and 62 non-officer, key management persons. The
amounts shown in the Summary Compensation Table above include amounts paid as
bonuses for Company and individual goal attainment during the year ended
December 31, 1993. The individuals named in the Summary Compensation Table
above received the following bonuses under the Company's incentive
compensation plan for the year ended December 31, 1993: Mr. Mead, $160,300;
Mr. Sam Barshop, $72,800; Mr. Hammett, $68,280; Mr. Depatie, $68,280 and
Mr. Higgins, $57,120. During the year ended December 31, 1993, bonuses and
awards under incentive compensation plans accrued to all other participating
officers and key employees of the Company as a group, amounted to $1,240,155.

DEFERRED COMPENSATION PLAN

The Company has a Deferred Compensation Plan, the purpose of which is to
provide additional compensation of a deferred nature, and salary deferral
opportunities, for a select group of executive employees who materially
contribute to the growth, development and future success of the Company. It is
administered as an unfunded pension benefit plan for these highly compensated
employees. All corporate officers are eligible to be nominated for
participation. Eligible employees are designated as participants by the
Compensation Committee.

<PAGE>

Annual awards are a percentage of the participant's base salary as in
effect as of the end of each plan year as the Compensation and Stock Option
Committee shall designate -- designated to be 7% for 1993. Such awards are
credited to a general ledger reserve account in the participant's name as of
the end of each plan year. The account is not funded and the participant
shall be a general creditor of the Company. Amounts so credited shall be
incremented on a quarterly basis, with the quarterly equivalent of the Federal
Short-term Rate published by the Internal Revenue Service as in effect on the
prior January 2. The accumulated balance in a participant's account, less any
outstanding loans, shall be paid to a participant as a retirement benefit as
soon as practicable following the earlier of: (1) the January 2 following
the later of the participant's 65th birthday or retirement from the Company;
(2) death of the participant; or (3) an event constituting a change-in-control
of the Company. Additionally, a participant may elect that all or any part of
his or her base salary may be deferred from current income and credited to the
general ledger reserve account. Deferred amounts would be credited monthly and
would be subject to the same interest incrementation as annual awards. Such
amounts would be payable at the same time as accumulated annual awards. All
amounts credited to general ledger reserve accounts under this plan shall be
fully vested when credited.

Participants may borrow all or any part of the accumulated balance in his
or her general ledger reserve account from the Company. Loans shall be made on
a term basis, expiring on the last day of the plan year. There are no
limitations on the number of loans available to a participant, or on the
participant's ability to refinance an expiring loan. However, no more than 24
participants may have loans outstanding during any plan year. Loans may be made
to participants who are no longer in the Company's employ only with the consent
of the Compensation Committee. Loans shall bear interest at the Federal
Short-term Rate, as defined above, compounded quarterly. Any outstanding loan
shall be netted against the amount payable at payment time, as defined above.

Mr. Sam Barshop earned $24,500 under the Deferred Compensation Plan for
the fiscal year ended December 31, 1993. To date no additional individuals have
been designated to participate in the plan.

Mr. Barshop was also a party to an Agreement with Rodeway-San Antonio-Main
Avenue, Inc., which merged with a predecessor in interest to the Company, under
which he is to receive a retirement benefit following his 65th birthday. At
that time, he will receive $833.34 per month for 180 months. The Company treats
this Agreement as a deferred compensation agreement which accrues at $463 per
month until the balance reaches $150,000. The amount accrued for 1993 was
$5,556.

LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR

ESTIMATED FUTURE PAYOUTS
UNDER NON-STOCK PRICE BASED PLAN
--------------------------------
PERFORMANCE OR
NUMBER OF OTHER PERIOD
SHARES, UNITS OR UNTIL MATURATION
NAME OTHER RIGHTS OR PAYOUT THRESHOLD TARGET MAXIMUM
- ---- ------------ --------- --------- ------ -------
<S> <C> <C> <C> <C> <C>
Gary L. Mead -- -- -- -- --

Sam Barshop $30,156 -- * * *

William C. Hammett, Jr. -- -- -- -- --

Michael A. Depatie -- -- -- -- --

Thomas W. Higgins -- -- -- -- --

</TABLE>

See "Deferred Compensation Plan" above. Mr. Barshop was the only current
participant designated by the Compensation and Stock Option Committee under the
Deferred Compensation Plan, and the Rodeway-San Antonio-Main Avenue, Inc.
retirement plan in 1993.

14
<PAGE>

RETIREMENT PLANS

The Company has, since 1969, maintained a non-contributory defined benefit
pension plan (the "Retirement Plan"), which is a qualified plan under Federal
income tax laws, for all of its full-time employees who have attained the age of
21, which is designed to provide annual retirement benefits to employees,
subject to age and period-of-employment conditions. During the fiscal year
ended May 31, 1989, the Board established a Supplemental Executive Retirement
Plan for highly compensated employees, which constitutes a non-qualified plan
under Federal income tax laws (the "SERP").

RETIREMENT PLAN. The "Normal Retirement Date" under the Retirement Plan
is the later of age 65 or the fifth anniversary of plan participation. As a
result of the adoption of the SERP, (i) accrued benefits at December 31, 1988
were frozen under the Retirement Plan for participants who were highly
compensated employees, as defined by Internal Revenue Service ("IRS")
regulations (after being updated to accrue fully after 20 years of employment),
(ii) the benefit formula for future years is 1% of each year's compensation
(with minimum accrual based on prior formula and 1988 earnings for participants
as of December 31, 1988), and (iii) highly compensated employees (as defined by
IRS regulations) are excluded from active participation under the Retirement
Plan. The vesting schedule provides 100% vesting after 5 years of Vesting
Service. The maximum benefit limitation under the Retirement Plan is $118,800
per year. Prior to 1993, all employees not considered highly compensated
according to IRS regulations ($66,000 for 1994) are covered by the Plan once the
age and service requirements are met. An active participant who becomes highly
compensated will become an inactive participant, and will earn no additional
benefit accruals. Beginning January 1, 1993, highly compensated employees again
began participating actively in the Retirement Plan. Employees are credited
with one year for each plan year with at least 1,000 hours worked ("Vesting
Service"). Effective January 1, 1994, early retirement is allowed after the
employee has attained age 55 and has 5 years of Vesting Service. The monthly
benefit at Normal Retirement Date equals the accrued benefit as of December 31,
1988 based on the benefit formula in effect under the plan at that time plus,
(1) for years after 1988, the sum of 1% of each year's Compensation, and (2) for
years after 1992, 0.65 percent of each year's compensation that is in excess of
the average of the taxable wage base in effect for each calendar year during the
35-year period ending with the last day of the year in which the participant
attains social security retirement age, divided by 12. Commencement of benefit
payments prior to Normal Retirement Date is subject to actuarial reduction. The
Retirement Plan also provides late retirement, termination and death benefit
provisions.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. The SERP, which became effective
on January 1, 1989, covers all employees formerly considered highly compensated
according to IRS regulations (currently those earning over $66,000 per year) who
have attained the age of 21 and have completed one year of service, or the time
at which the individual becomes a Covered Employee, if later. As of January 1,
1993, however, new participants in the SERP are limited to corporate officers
(vice presidents and above) who are designated for participation by the Board of
Directors. "Vesting Service" under the SERP is one year for each plan year with
at least 1,000 hours worked.

15
<PAGE>

Using estimated Social Security of $13,764 (the Estimated Annual Primary
Insurance Amount for an age 65 retiree in 1994 with maximum Social Security
earnings in all years), the estimated annual retirement benefits under both the
Retirement Plan and the SERP are set forth in the following table:

YEARS OF SERVICE AT RETIREMENT
------------------------------
AVERAGE
ANNUAL
COMPENSATION 10 15 20 25 30
- ------------ -- -- -- -- --
<S> <C> <C> <C> <C> <C>
$100,000 $ 24,500 $ 36,700 $ 49,000 $ 49,000 $ 49,000
150,000 39,500 59,200 79,000 79,000 79,000
200,000 54,500 81,700 109,000 109,000 109,000
250,000 69,500 104,200 139,000 139,000 139,000
300,000 84,500 126,700 169,000 169,000 169,000
350,000 99,500 149,200 199,000 199,000 199,000
400,000 114,500 171,700 229,000 229,000 229,000
450,000 129,500 194,200 259,000 259,000 259,000
500,000 144,500 216,700 289,000 289,000 289,000
550,000 159,500 239,200 319,000 319,000 319,000
600,000 174,500 261,700 349,000 349,000 349,000

</TABLE>

"Compensation" under both the Retirement Plan and the SERP includes normal
base pay plus overtime and bonus during a plan year, but not compensation
resulting from the exercise of stock options or deferred compensation.

The years of credited service under the Company's Retirement Plans for the
persons named in the Cash Compensation Table are as follows: Mr. Mead, 2 years;
Mr. Barshop, 28 years; Mr. Hammett, 1 year, Mr. Depatie, 1 year and Mr. Higgins,
1 year.

For the computation of benefits, "Plan Compensation" under the SERP is
defined as the average of Compensation for the highest five consecutive calendar
years out of the last ten completed calendar years of Credited Service.
"Credited Service" under the SERP includes years and partial years of service
from date of employment to date of termination, exclusive of breaks in service.
"Estimated Annual Primary Insurance Amount" is the estimated old-age insurance
benefit payable at age 65, based on the Social Security Act as in effect on the
determination date (calculated assuming constant earnings to age 65 if
determination is prior to age 65). "Normal Retirement Date" is the first day of
the month coincident with or next following the later of the employee's 65th
birthday or the fifth anniversary of plan participation. "Early Retirement
Date" is the date on which a participant has completed at least five years of
service and is no longer employed by the Company. For employees who are not age
55 prior to January 1, 1994, however, early retirement requires that the
employee have reached age 55 or have completed five years of service, whichever
is later. The accrued monthly benefit at Normal Retirement Date equals 1/12 of
60% of Plan Compensation less 80% of the Estimated Annual Primary Insurance
Amount, reduced prorata if Credited Service is less than 20 years at the
determination date, less any accrued benefit earned under the Qualified Plan.
Commencement of benefit payments prior to Normal Retirement Date is subject to
actuarial reduction. The vesting schedule provides for 100% vesting after 5
years of Vesting Service. The SERP also provides late retirement, termination
and death benefits. Pursuant to an amendment of the SERP by the Company's Board
of Directors in January 1991, maximum benefits under the SERP are $98,064 per
year for all participants, except the six (6) most highly compensated employees,
for whom there is no maximum. As with the Retirement Plan, the Company pays the
entire cost of the SERP.

STOCK OPTION PLAN

THE 1984 PLAN: The Company's 1984 Stock Option Plan, adopted by the
Board of Directors on April 19, 1984 and approved by the shareholders on
October 11, 1984, as amended by the Board of Directors on January 15, 1987, as
amended and restated by shareholders on May 21, 1992 (the

<PAGE>

"1984 Plan"), provides for the issuance of a maximum of 2,600,000 shares of the
Company's Common Stock upon the exercise of stock options granted under the
plan, which amount is subject to adjustment upon the occurrence of certain
events. Adjusted for the 3-for-2 stock splits in the form of stock dividends
effected in October 1993 and March 1994, this total is equal to 5,850,000
shares. All key employees of the Company, as determined by the Compensation and
Stock Option Committee, persons engaged to be key employees of the Company and
non-employee directors of the Company are eligible to receive options under the
1984 Plan. Non-employee directors of the Company are only eligible to receive
grants of options under the 1984 Plan according to the special terms, conditions
and rules established under the Plan for non-employee directors. (See section
entitled "Compensation of Directors"). No stock option may be granted under the
1984 Plan after April 18, 1999.

Both non-qualified stock options and incentive stock options, or any
combination thereof, may be granted under the 1984 Plan at an option price not
less than 100% of the fair market value of a share of the Company's Common Stock
on the date of the grant. Stock options granted under the 1984 Plan are not
assignable or transferable, except by will or the laws of descent and
distribution. The 1984 Plan is administered by the Compensation and Stock
Option Committee of the Board of Directors (the "Committee"), which is composed
of not less than three (3) directors who are disinterested persons within the
meaning of Rule 16b-3 promulgated under the Securities Exchange Act of 1934.
The Committee is authorized to grant options to employee participants and to
determine the terms and conditions thereof in accordance with the provisions of
the 1984 Plan, including the dates after which options will be exercisable
(which may not be greater than 10 years from the date of the grant), whether
options will be exercisable in installments and, if so, whether installments or
portions thereof that are not exercised will accumulate and remain exercisable.
The Committee may also accelerate the date on which any stock option, or portion
thereof, may be exercised by an employee participant.

At or after the grant of any stock option under the 1984 Plan, the
Committee may grant an alternative means to exercise such stock option in the
form of a stock appreciation right ("SAR"), under which a participant is
entitled to receive cash in the amount of or shares of Company stock having a
value equal to the difference between the fair market value of the Common Stock
covered by the option and the exercise price for such shares. As of the date
hereof, there have been no SARs granted to any participant under the 1984 Plan,
and non-employee directors are not eligible for grants of SARs.

The Committee is also authorized as part of a stock option grant to
provide that shares acquired pursuant to the exercise of an option or SAR will
be subject for a number of years to restrictions on transferability, under which
an employee participant may not sell such shares and the Company retains an
option to repurchase all or a portion of such shares if the participant ceases
to be employed by the Company at a price equal to the amount paid by the
participant upon exercise of the option.

In the event an employee participant's employment with the Company ceases,
any outstanding option shall expire after ninety (90) days following termination
of employment, except, with respect to the 1984 Plan, in the event of
retirement, death or disability, options shall remain exercisable for three (3)
years from date of retirement and one (1) year from date of death or disability
so long as such options have not expired pursuant to their terms. However, if
employment is terminated because of a participant's breach of an employment
contract, dishonesty or other acts detrimental to the interests of the Company,
any outstanding options granted to such participant shall be void. In the event
a non-employee director ceases to be a director of the Company for any reason,
including death, disability, removal or resignation, any option granted to such
a director will expire one (1) year from the date that the person ceased to be a
director of the Company.

Incentive stock options within the meaning of Section 422 of the Internal
Revenue Code of 1986 are subject to a rule limiting to $100,000 the aggregate
value of such incentive stock options which may become exercisable for the first
time by a participant in any single year. This limitation is based on the
aggregate fair market value of the common stock of the Company at the time an
incentive stock option is granted. Non-employee directors are not eligible to
receive incentive stock options.

<PAGE>

STOCK OPTION GRANTS

No stock options were granted to any of the five most highly compensated
executive officers of the Company during the year ended December 31, 1993.

On March 11, 1994, the Compensation Committee approved additional stock
option grants to officers. These new grants are exercisable upon the post-
March 15, 1994 stock split price of the Company's Common Stock averaging $40 per
share for 20 trading days prior to March 11, 1997. In the event this condition
is not met, the grants will vest in 9-1/2 years, subject to the conditions of
the 1984 Plan. A total of 362,500 shares (pre-March 15 split) were granted
in varying amounts to most existing officers. Mr. Mead received 225,000
shares out of this total.

The following table shows as to each of the five most highly compensated
executive officers of the Company the net value of securities or cash realized
(market value less exercise price) with respect to stock options
exercisable/unexercisable during the last year:

AGGREGATED STOCK OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END STOCK OPTION VALUES

NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
STOCK OPTIONS STOCK OPTIONS
AT FY-END AT FY-END
--------- ---------
SHARES
ACQUIRED
ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
- ---- -------- -------- ------------- -------------
<S> <C> <C> <C> <C>
Gary L. Mead(1) 0 0 1,462,500/0 $24,804,000/0

Sam Barshop(2) 0 0 393,750/281,250 $ 6,579,900/$4,774,950

William C. Hammett(3) 0 0 56,250/168,750 $ 879,171/$2,637,455

Michael A. Depatie(3) 0 0 56,250/168,750 $ 879,171/$2,637,455

Thomas W. Higgins(4) 7,000 $75,254 40,500/168,750 $ 629,520/$2,637,493

<FN>
(1) Mr. Mead received the option to acquire 650,000 shares of Common Stock at
$15.00 per share. Options for 100,000 shares vested on March 3, 1992 and
March 3, 1993, respectively. On June 8, 1993, the remaining 450,000
options vested (see Non-Qualified Stock Options Granted to Mr. Mead).
Adjusted for stock splits in the form of stock dividends occurring on
October 1, 1993 and March 15, 1994, the total options amount to 1,462,500.
The original exercise price of $15.00 per share was likewise adjusted to
$6.667 taking these stock splits into account.
(2) Mr. Barshop received the option to acquire 100,000 shares of Common Stock
at $11.812 per share on January 2, 1991. At December 31, 1993, one-half of
these options were exercisable. Taking into account the stock splits in
the form of a stock dividend on October 1, 1993, and March 15, 1994, this
resulted in 112,500 options for an exercise price of $5.249. On March 19,
1992, Mr. Barshop received the option to acquire 200,000 shares of Common
Stock at $17.062 per share. Of these options, 100,000 vested on June 8,
1993 under a condition

</TABLE>

<PAGE>

<TABLE>
<S> <C>
which provided for immediate vesting when the Company's Common Stock traded
at an average of $30.00 per share for a defined number of days. Adjusted
for the aforementioned stock splits, this resulted in 225,000 shares. Of
the remaining option, Mr. Barshop was vested in one-forth at December 31,
1993 or an adjusted amount of 56,250. The exercise price, taking into
account the stock splits was $7.583.
(3) Messrs. Hammett and Depatie received the option to purchase 85,000 shares
of Common Stock at $17.687 on June 5, 1992. On December 16, 1992, they
received the option to acquire 15,000 shares of Common Stock at $19.750
per share. Of these grants, one-fourth were exercisable at December 31,
1993. Adjusted for the stock splits in the form of a stock dividend on
October 1, 1993 and March 15, 1994, the adjusted total of such options was
225,000, of which 56,250 were exercisable at December 31, 1993 (47,813 at
an adjusted price of $7.86 and 8,438 at an adjusted price of $8.777).
(4) Mr. Higgins received the option to purchase 60,000 shares of Common Stock
at $17.687 on June 5, 1992. On September 17, 1992, he received the option
to acquire 25,000 shares of Common Stock at $17.87 per share. On
December 16, 1992, he received the option to acquire 15,000 shares of
Common Stock at $19.750 per share. On August 3, 1993, Mr. Higgins
exercised options with respect to 7,000 shares granted pursuant to his
stock option of June 5, 1992. The average price of the high and low price
on August 3, 1993 was $28.4375. Of these grants, one-fourth were
exercisable at December 31, 1993. Adjusted for the stock splits in the
form of a stock dividend on October 1, 1993 and March 15, 1994, the
adjusted total of such options was 209,250 of which 40,500 were exercisable
at December 31, 1993 (18,000 at an adjusted price of $7.86; 14,062 at an
adjusted price of $7.94 and 8,438 at an adjusted price of $8.777).

</TABLE>

The market value of underlying securities at exercise or year-end is based
on a price per share of $35.44 which represents the average price of the high
and low price on December 31, 1993, which adjusted for the stock dividend paid
on March 15, 1994 is equal to a price of $23.627.

NON-QUALIFIED STOCK OPTIONS GRANTED TO MR. MEAD: In connection with his
employment as President and Chief Executive Officer of the Company, Mr. Gary L.
Mead was granted options to purchase up to 650,000 shares of the Company's
common stock at an exercise price of $15.00 per share pursuant to the terms of a
Non-Qualified Stock Option Agreement, dated as of March 3, 1992.

Under this agreement, options with respect to 200,000 shares of common
stock were vested and exercisable by Mr. Mead as of March 3, 1993. The
remaining shares became vested and exercisable on June 8, 1993, when the
Company's Common Stock traded at a predetermined level of $30 per share for a
defined number of days. Giving effect to the 3-for-2 stock splits in the form
of stock dividends on October 1, 1993 and March 15,1994, the total number of
shares currently vested and exercisable by Mr. Mead under the Non-Qualified
Stock Option Agreement are 1,462,500.

Although the exercise price of $15.00 per share ($6.67 giving effect to the
two aforementioned stock splits) of the options granted to Mr. Mead was less
than 100% of fair market value of the Company's common stock on the date of
grant on March 3, 1992, it represents the fair market value per share of the
Company's stock on the date that representatives of the Company and Mr. Mead
reached a general understanding with respect to the terms of his employment.
The closing price of the Company's common stock on the New York Stock Exchange
on March 3, 1992 was $17.00 per share.

The Company, in connection with the grant of stock options to Mr. Mead,
entered into a registration rights agreement, dated March 3, 1992, under the
terms of which the Company registered on behalf of Mr. Mead the offer and sale
of shares of common stock beneficially owned by Mr. Mead under the Securities
Act of 1933, upon certain limitations and conditions, with all expenses of such
registration to be borne by the Company.

<PAGE>

EMPLOYEE STOCK PURCHASE PLAN

The Company has an employee stock purchase plan which is available to all
full-time employees who have completed six months of consecutive service and
have elected to participate therein. The plan affords participants a means of
purchasing common stock of the Company through regular payroll deductions. The
Company currently contributes an amount equal to 50% of each participant's
actual payroll deduction, but not in excess of $10.00 per two-week pay period.
Commencing in the fourth quarter of 1993, plan participants, other than certain
employees, were allowed to apply ten percent of their bonus toward the purchase
of the Company's common stock, with a Company contribution of 50%. The plan is
administered by Merrill Lynch, Pierce, Fenner & Smith Incorporated, which
purchases common stock of the Company on the open market with the funds
generated by participants' payroll deductions and Company contributions.
Participation in the plan is voluntary and the plan is subject to modification
or discontinuance at any time upon notice to all participants. Executive
officers of the Company did not participate in the Employee Stock Purchase Plan
during 1993 under a Company policy which restricts their trading in the
Company's Common Stock during certain periods.

FLEXIBLE BENEFITS PLAN AND OTHER OFFICER INSURANCE

The Company has instituted a program to provide medical and other benefits
to all employees, which is generally characterized as a "cafeteria plan" and
named the "Flexible Benefits Plan." All active, full-time employees with six
months of service are eligible for participation in the Company's Flexible
Benefits Plan. There are certain basic coverages which are paid for by the
Company and there are additional coverages that may be acquired by the
employees, generally with pre-tax dollars under Section 125 of the Internal
Revenue Code of 1986. Coverage areas include medical and health benefits,
long-term disability benefits, dependent child care, and death benefits, among
other things.

The Flexible Benefits Plan provides life insurance, including accidental
death, dismemberment and loss of sight coverages, at varying amounts depending
on the employee's salary and level of job classification. Additional life
insurance coverage previously afforded officers of the Company has been
continued under the Flexible Benefits Plan. Under the program, all officers
of the Company receive paid life insurance (with accidental death,
dismemberment and loss of sight coverages) at an amount equal to three times
the individual officer's base salary rounded to the next higher multiple of
$1,000 (if not already an even multiple thereof), subject to an overall
maximum of $600,000. Because the Company's group insurance plan is deemed
discriminatory, the aggregate incremental cost of such insurance to the Company
per officer is taxable to each officer as ordinary income, and, therefore, has
been included in the "All Other Annual Compensation" amounts set forth in the
Cash Compensation Table above.

During 1990 the Company purchased an additional $3,750,000 of
"split-dollar" life insurance on Sam Barshop and his wife. Under this
"split-dollar" life insurance, the Company pays the entire premium for the
policy and recovers from the death benefit the premiums paid for the policy
upon the death of the last to die of the insureds, with the remainder of the
proceeds to go to the beneficiaries designated by the insureds. The cost of
the premiums paid by the Company on the "split-dollar" policy is taxable as
ordinary income to Mr. Barshop, and has been included in the "All Other
Compensation" amounts set forth in the Cash Compensation Table above. The
Company will continue payment of these premiums notwithstanding Mr. Barshop's
retirement effective March 19, 1994.

Under the terms of the employment agreement between Gary L. Mead and the
Company, dated as of March 3, 1992, the Company purchased and paid premiums on
a life insurance policy covering Mr. Mead in the amount of $1 million at
standard rates.

<PAGE>

OTHER COMPENSATION

Each officer of the Company is either furnished with an automobile for
use in connection with the Company's business or is given an allowance for
such automobile. Officers are permitted to use such automobiles for personal
purposes. The value assigned to such personal use based upon personal mileage
reported, or the allowance when an automobile is not furnished is taxable to
each officer as ordinary income, and, therefore, has been included in the
"Other Annual Compensation" amounts set forth in the Cash Compensation Table
above.

COMPENSATION OF DIRECTORS

At the 1992 Annual Meeting of Shareholders held May 21, 1992, the
shareholders approved an amendment of the 1984 Stock Option Plan to permit
non-employee directors of the Company to receive stock options for 6,000
shares of the Company's common stock annually in lieu of annual retainers and
all meeting fees presently paid by the Company to non-employee directors.
These options are granted annually following the election of directors at each
Annual Meeting of Shareholders. These options in lieu of directors' fees were
adjusted to 13,500 for 1994 to take into account the 3-for-2 stock splits in
the form of stock dividends of October 1993 and March 1994, and existing
grants were adjusted accordingly. Options granted to directors are for
ten-year terms at per share exercise prices of not less than the fair market
value of the Company's stock on the date of each annual grant and are
exercisable (except under the general acceleration provisions of the 1984 Plan
upon an offer that results in the acquisition of 40% or more of the Company's
outstanding stock) on the anniversary date of each grant.

In the event a non-employee director ceases to be a director of the
Company for any reason, any such option granted to such a director expires one
(1) year from the date that the person ceased to be a director of the
Company. Under the aforesaid amendment, the Board of Directors may grant an
option for 6,000 shares on a pre-October 1, 1993 and March 15, 1994 split
basis, to any new non-employee director elected to fill a vacancy on the Board
or newly created Board seat between Annual Meetings of Shareholders in lieu of
a retainer and meeting fees. Pursuant to the 1984 Plan, such previously made
grants may be adjusted for stock splits, which would equate such grants to
13,500 shares of the Company's common stock.

The provisions relating to the grant of stock options to non-employee
directors may not be amended in the future more than once every six months,
except to conform the 1984 Plan to any changes that may have occurred in the
Internal Revenue Code, the Employee Retirement Income Security Act, or the
rules thereunder. See Proposed Amendment 4 at page ____ to provide for
automatic adjustment of stock option grants in lieu of directors' fees to take
into account future stock split adjustments.

EMPLOYMENT ARRANGEMENTS

SEPARATION AGREEMENT WITH SAM BARSHOP

On March 11, 1994, the Company entered into a Separation, Settlement and
Release Agreement (the "Separation Agreement") with Sam Barshop concurrent
with his retirement from the Company and resignation as Chairman of the Board
of Directors. The Separation Agreement superseded substantially all other
agreements between the Company and Mr. Barshop. Under the terms of the
Separation Agreement, Mr. Barshop received $1,143,293 attributable to the
present value of salary and bonuses otherwise payable under his former
Employment Agreement, and the forgiveness of the $1,320,000 balance of a
$2,220,000 loan. The remaining balance of this loan in the form of prepaid
compensation expense was previously recognized as a charge to the Company's
earnings during the third quarter of 1992. Mr. Barshop additionally received
$378,673 under two deferred compensation plans with the Company, as well as
$1,092,444 in satisfaction of the

<PAGE>

Company's obligations under the La Quinta Supplemental Executive Retirement
Plan. Mr. Barshop will additionally be paid his accrued and vested benefits
under the Retirement Plan at La Quinta Inns, Inc. Additionally, all unvested
options under the Company's 1984 Stock Option Plan were vested as of March 19,
1994 (168,750 as adjusted for the stock splits in the form of stock dividends
of October 1, 1993 and March 15, 1994).

EMPLOYMENT AGREEMENT WITH GARY L. MEAD

On March 3, 1992, the Board of Directors elected Gary L. Mead as
President and Chief Executive Officer of the Company. In connection
therewith, the Board determined it would be in the best interests of the
Company to retain Mr. Mead's services for a five-year period under the terms
of an Employment Agreement, dated as of March 3, 1992, between the Company and
Mr. Mead (the "President's Employment Agreement").

Under this agreement, Mr. Mead is entitled to receive an annual salary of
$350,000, and such greater annual salary after the first year of employment as
the Compensation and Stock Option Committee of the Board of Directors (the
"Committee") in its sole discretion may determine. Mr. Mead is further
entitled to participate in the Company's bonus or incentive compensation plans
as established by the Committee from time to time. During the first year of
his employment the Company was required to pay Mr. Mead a minimum bonus of
$175,000, regardless of whether he would be entitled to such sum under the
Company's incentive compensation plan.

The President's Employment Agreement also provides, among other things,
that (i) Mr. Mead is entitled to participate in all employee benefit plans
that the Company may establish for senior executives, (ii) a country club
membership in Mr. Mead's name, for his and his family's use, and
(iii) severance pay in the amount of three (3) times his highest annual salary
as in effect during the term of the agreement period, plus three (3) times the
average of actual bonus paid to Mr. Mead over the life of the agreement if the
Company terminates Mr. Mead's employment without cause or if he resigns for
good reason.

UNTIMELY REPORTS OF BENEFICIAL OWNERSHIP BY INSIDERS

Pursuant to Section 16(a) of the Securities Exchange Act of 1934 (the
"Act"), directors, officers and shareholders beneficially owning in excess of
10% of the outstanding shares of the Company's common stock are required to
file various reports with the Securities and Exchange Commission ("SEC").
During 1991, the SEC extensively revised the insider reporting regulations under
Section 16 of the Act. Prior to May 1, 1991, insiders were not required to
report stock options held by them pursuant to the Company's various stock
option plans.

The filing of Form 4 Statement of Changes in Beneficial Ownership of
Securities for the calendar months of November 1993 and December 1993 for Sam
Barshop were untimely filed; however, the oversight was corrected
approximately two days after the deadline for timely filing the reports.

In addition, a Form 4 for the calendar month of August 1993 covering two
transactions for each of the Annie R. Bass Grandson's Trust for Sid R. Bass
and the Annie R. Bass Grandson's Trust for Lee M. Bass was untimely filed.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company and AEW Partners, L.P. ("AEW Partners") are parties to a
limited partnership agreement, dated March 21, 1990, which formed La Quinta
Development Partners, L.P. ("LQDP"). Joseph F. Azrack, who was elected as
director of the Company by the Board of Directors on September 17, 1992, is
the President of AEW, Inc., which is the managing general partner of AEW
Partners. Mr. Azrack is also a principal of Aldrich, Eastman & Waltch, Inc.,
an investment adviser

<PAGE>

registered with the SEC under Section 203 of the Investment Advisers Act of
1940. Certain of the principals of Aldrich, Eastman & Waltch, Inc. are the
shareholders of AEW, Inc.

In connection with LQDP's formation, the Company contributed 18 of its
inns and assets related thereto (net of indebtedness of approximately
$34,000,000 assumed by the partnership), along with cash, aggregating to an
agreed value of $48,000,000 to the partnership for a 40% ownership interest
thereof. AEW Partners contributed cash and a promissory note aggregating to
$72,000,000 for a 60% interest in the partnership. The partnership agreement
of LQDP provides that the partnership will pay management, development,
royalty and chain service fees to the Company. The partnership agreement
further provides (i) that a right of first refusal is granted by the Company
to LQDP on the acquisition or development of properties until the first to
occur of March 21, 1995 or until $150,000,000 is expended by the partnership;
(ii) that Michael Steinberg would be appointed a director of the Company, and
that he or a successor acceptable to the Company, would subsequently be
nominated for election to the Company's Board of Directors (see note (2) under
the caption "Election of Directors"); and (iii) that AEW Partners is granted an
option by the Company, expiring December 31, 1998, subject to vesting and
adjustment upon certain occurrences, whereby AEW Partners may convert 66 2/3%
of its ownership interest in the partnership into shares of the Company's
Common Stock and/or cash, as the Company may elect, commencing on December 31,
1991. The conversion option became 100% vested on January 1, 1994. As part
of the total consideration of this transaction, the Company received a
$3 million cash payment for the above mentioned option. Under the terms of
the partnership agreement, AEW Partners is also given certain registration
rights by the Company with respect to shares issuable upon its conversion
right.

During the year ended December 31, 1993, $35,908,000 was collected by
LQDP on the $69 million note receivable from AEW Partners. During 1993, the
Company received $6,146,000 in license, chain services and management fees and
received $1,812,000 in acquisition and conversion fees from LQDP.

On March 7, 1993, the Company registered the offer and sale of 650,000
shares of its common stock beneficially owned by Mr. Mead under the Securities
Act of 1933, pursuant to a Registration Rights Agreement between the Company
and Mr. Mead, dated March 3, 1992. These shares of common stock represent the
aggregate of stock options covered under Mr. Mead's Non-Qualified Stock
Option Agreement granted upon his employment with the Company. In connection
with the registration, the Company has and will incur expenses including legal
and accounting fees, SEC filing fees and other miscellaneous expenses.
Pursuant to the Registration Rights Agreement, these expenses are to be borne
by the Company. To date, options with respect to 1,462,500 shares of common
stock are currently vested and exercisable by Mr. Mead, adjusted for the stock
splits in the form of stock dividends of October 1993 and March 1994.

Incident to his employment and relocation to San Antonio, the Company on
December 18, 1992 granted Mr. John F. Schmutz a $100,000 interest free bridge
loan to facilitate the purchase of a residence, to be repaid upon the sale of
his residence in North Carolina. The loan was satisfied on March 31, 1994
upon the sale of said house.

<PAGE>

PROPOSAL AMENDMENT TO ARTICLES OF INCORPORATION
INCREASING AUTHORIZED COMMON STOCK

(PROPOSAL NO. 2)

At its meeting held on February 24, 1994, the Board of Directors voted to
recommend to the shareholders that the number of shares of the Common Stock,
par value $.10 per share, of the Company be increased from 40 million shares to
100 million shares by amendment of the Company's Restated Articles of
Incorporation (the "Amendment").

As of March 31, 1994 there were 30,424,178 shares of Common Stock
outstanding, exclusive of 1,694,445 shares held in treasury. As of that date,
there were reserved, out of authorized but unissued shares, 3,536,612 shares
that AEW Partners may convert into shares of the Company's Common Stock,
2,250 shares of Common Stock for issuance to employees upon exercise of
options under the Company's 1978 Non-Qualified Stock Option Plan (the "1978
Plan"), and ____________ shares of Common Stock for issuance to employees upon
exercise of options under the Company's 1984 Stock Option Plan (the "1984
Plan"). After giving effect to authorized but unissued shares reserved for
issuance in connection with the 1978 and the 1984 Plans, only ____________
authorized but unissued shares of Common Stock of the Company were available
for issuance as of that date for any other proper corporate purposes.

The Board of Directors considers it advantageous, desirable and prudent to
increase the number of authorized shares of Common Stock of the Company at this
time so that adequate shares of Common Stock will be available for issuance for
any proper corporate purpose, such as acquisitions other than for cash, stock
dividends or splits and future employee benefit plans. The Board of Directors
believes that increasing the additional authorized shares of Common Stock
available for issuance would provide management with the flexibility needed for
future expansion of the Company's activities. Having additional authorized
shares of Common Stock available would permit the Company to benefit from
advantageous market conditions for the sale of additional Common Stock, for
acquisition of desirable properties or companies, or for other proper corporate
purposes.

If the Amendment contained in this Proposal No. 2 is approved and adopted
by the shareholders, the additional authorized shares of Common Stock would be
available for issuance by the Board of Directors without further shareholder
authorizations, except as may otherwise be required by law or by the rules and
regulations of the New York Stock Exchange or any other stock exchange on which
the Company's shares might be listed. Holders of the Company's Common Stock
have no pre-emptive or other rights to subscribe for any additional shares that
might be issued. Moreover, any such issuance of additional authorized shares
of Common Stock could have the effect of diluting the earnings per share and
book value per share of existing shares of Common Stock. Except as stated
above, the Company currently has no specific plans, agreements, understandings
or commitments with respect to the issuance of any additional shares of Common
Stock. Although the Board of Directors has no present intention of so doing,
additional authorized shares of Common Stock could (within the limits imposed
by applicable law and the rules of the New York Stock Exchange) be issued in
one or more transactions, which could be used to dilute the stock ownership of
persons seeking to obtain control of the Company or otherwise make more
difficult and, therefore, less likely a takeover of the Company.

Proposal No. 2 is not being recommended in response to any specific effort
of any person, of which the Company is aware, to obtain control of the Company.

At its meeting held on February 24, 1994, the Board of Directors adopted
the following resolution for submission to the shareholders:

RESOLVED: That ARTICLE FOUR of the Restated Articles of Incorporation of
the Company be, and hereby is, amended in its entirety to read as follows:

<PAGE>

"The aggregate number of shares of Common Stock which the Corporation has
authority to issue is One Hundred Million (100,000,000) of a par value of Ten
Cents ($.10) per share."

The Persons named in the accompanying proxy will vote as directed by the
shareholders with respect to the proposed Amendment to the Restated Articles of
Incorporation to increase the authorized shares of Common Stock of the Company,
or, in absence of such direction, will vote for the adoption of the Amendment
to the Restated Articles of Incorporation. Adoption of the Amendment contained
in this Proposal No. 2 requires the affirmative vote of at least two-thirds of
the total number of outstanding shares entitled to vote thereon.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR"
PROPOSAL NO. 2 TO ADOPT THE AMENDMENT TO INCREASE THE COMPANY'S AUTHORIZED
COMMON STOCK.

PROPOSAL TO AMEND THE AMENDED AND RESTATED
LA QUINTA INNS, INC. 1984 STOCK OPTION PLAN

(PROPOSAL NO. 3)

GENERAL

The Board of Directors has recommended shareholder approval of certain
amendments to the La Quinta Motor Inns, Inc. 1984 Stock Option Plan (the "1984
Plan"), as amended and restated as of May 21, 1992, that would: (a) set the
stock option grant in lieu of directors' fees for each year at 13,500 shares;
(b) automatically increase the number of shares for which stock options are
granted annually to non-employee directors to reflect adjustments for future
stock splits in the form of stock dividends, and (c) limit the number of shares
subject to options which may be granted to any individual employee in any one
year to 350,000 shares. The proposed amendments are set forth at Appendix I.

On April 19, 1984, the Board of Directors of the Company adopted the 1984
Plan (also referred to sometimes herein as the "Plan"), which was approved by
vote of the shareholders at the Company's Annual Meeting of Shareholders held
on October 11, 1984. Amendment No. 1 to the Plan was adopted by the Board on
January 15, 1987 (pursuant to Sections 9.1 and 9.3 thereof) to conform
provisions of the Plan dealing with incentive stock options to changes in the
Internal Revenue Code of 1954, as amended, resulting from the enactment of the
Tax Reform Act of 1986, which embodies the Internal Revenue Code of 1986. (The
Internal Revenue Code of 1986, as amended, is hereafter referred to as the
"Code"). Amendment No. 2 to the Plan, adopted by the Board on June 23, 1988,
and approved by the shareholders on October 20, 1988, increased the number of
shares issuable under the Plan from 500,000 to 1,250,000. Amendment No. 3 to
the Plan was adopted by the Board on November 21, 1991 (pursuant to Sections 9.1
and 9.3 thereof) to conform various of its provisions to the technical
requirements of the revised rules of the Securities and Exchange Commission
("SEC") under Section 16 of the Securities Exchange Act of 1934 (the "Exchange
Act") and to reflect certain redesignations of Code section numbers that
occurred since 1987.

Amendment No. 4 to the 1984 Plan, adopted by the Board of Directors on
March 31, 1992 and approved by the shareholders on May 21, 1992, increased the
number of shares issuable under the Plan to 2,600,000, extended by five years
the date after which options may no longer be granted thereunder, and permitted
non-employee directors to receive annual stock options in lieu of directors'
fees. In connection with adoption of Amendment No. 4, the Board of Directors
of the Company caused the 1984 Plan to be restated to reflect changes made in
the Plan since its original adoption by each of the foregoing Amendments.

<PAGE>

The market value of the securities underlying options granted under the
1984 Plan as of March 16, 1994 was $28.1875 per share, based on the average of
the high and low prices of the Company's Common Stock on such date. As of
March 31, 1994, __ persons were eligible to participate in the Plan, all of
whom are currently participating.

The maximum number of shares issuable upon exercise of stock options
granted under the 1984 Plan has been adjusted upward pursuant to the terms of
the Plan from 2,600,000 shares to 5,850,000 shares as a result of the
three-for-two splits of the Company's Common Stock, effected in the form of
stock dividends, which occurred on October 1, 1993 and March 15, 1994,
respectively, and such amount is subject to further adjustment upon the
occurrence of certain events.

Whether or not the proposed amendment is approved by the shareholders at
the 1994 Annual Meeting of Shareholders, the Board of Directors has adopted an
amendment to the Plan to rename the 1984 Plan as the "La Quinta Inns, Inc. 1984
Stock Option Plan" to reflect the Company's name change as approved last year
by the shareholders.

Further information concerning the 1984 Plan as now in effect and in
effect during the past year for executive officers, directors and other
employees is set forth herein under the section entitled "Compensation Pursuant
to Plans -- Stock Option Plans."

PROPOSED CHANGES TO 1984 PLAN

The 1984 Plan currently provides that non-employee directors of the
Company will receive stock options for 6,000 shares of the Company's common
stock annually in lieu of annual retainers and other directors' fees formerly
paid by the Company to non-employee directors before the amendments to the Plan
approved by the shareholders on May 21, 1992. Options for 6,000 shares are
granted to each non-employee director annually, unless waived, following the
election of directors at each Annual Meeting of Shareholders. Options granted
to non-employee directors are for ten-year terms at per share exercise prices
of not less than the fair market value of the Company's stock on the date of
each annual grant and first become exercisable (except under the general
acceleration provisions of the 1984 Plan upon an offer that results in the
acquisition of 40% or more of the Company's outstanding stock) on the
anniversary date of each grant. The options granted to non-employee directors
under this proposal are not incentive stock options within the meaning of
Section 422 of the Code.

In the event a non-employee director ceases to be a director of the
Company for any reason, any stock option granted to such a director under the
terms of the 1984 Plan will expire one (1) year from the date that the person
ceased to be a director of the Company. The 1984 Plan also permits the Board of
Directors to grant an option for 6,000 shares to any new non-employee director
elected to fill a vacancy on the Board or newly created Board seat between
Annual Meetings of the Shareholders in lieu of a retainer and directors' fees.

The provisions relating to the grant of stock options to non-employee
directors may not be amended more than once every six months, except to conform
the 1984 Plan to any changes that may have occurred in the Code, the Employee
Retirement Income Security Act, or the rules thereunder.

On August 27, 1993, the Board of Directors declared a three-for-two split
of the Company's Common Stock, effected in the form of stock dividend of one
additional share of Common Stock for every two shares of Common Stock held by
the shareholders of record on September 10, 1993. Shares of Common Stock were
issued to the Company's shareholders out of the Company's authorized but
unissued shares on October 1, 1993 to effect such stock dividend. On
February 9, 1994, the Board of Directors declared a second three-for-two split
of the Company's Common Stock, effected in the form of a stock dividend of one
additional share of Common Stock for every two shares of Common Stock held by
the shareholders of record on February 21, 1994. Shares of

<PAGE>

Common Stock were issued to the Company's shareholders out of the Company's
authorized but unissued shares on March 15, 1994 to effect the second stock
dividend.

All outstanding options held by non-employee directors and employees
participating in the 1984 Plan, as well as the number of shares available for
issuance pursuant to future option grants under the Plan, were proportionally
adjusted to reflect these three-for-two splits of the Company's Common Stock
(effected in the form of stock dividends) pursuant to the terms of the
outstanding stock options and the 1984 Plan. Although outstanding options held
by non-employee directors have thus been adjusted upward from 6,000 shares for
each previous grant to 13,500 shares each (with a corresponding reduction in the
exercise price for the options, i.e., the fair market value of the Company's
stock on the date of grant) as a result of these three-for-two splits of the
Company's Common Stock, the 1984 Plan still provides for annual grants of stock
options to non-employee directors for only 6,000 shares.

The Board of Directors believes it is advisable and appropriate to amend
the 1984 Plan to (i) correct this anomalous situation by increasing the number
of shares subject to the annual grants of stock options to non-employee
directors provided for under the Plan from 6,000 shares to 13,500 shares,
thereby reflecting the two three-for-two splits of the Company's Common Stock
(effected in the form of stock dividends), which occurred since the date of the
last Annual Meeting of Shareholders, (ii) specifically provide that the number
of shares subject to the annual grants of stock options to non-employee
directors provided for under the Plan shall be adjusted in the future upon the
occurrence of certain events, such as stock splits and stock dividends; and
(iii) limit the number of shares subject to options which may be granted to any
individual employee in any one year to 350,000 shares.

The Board of Directors believes that shareholder approval of the amendment
to the 1984 Plan adjusting grants for non-employee directors is desirable in
order to maintain the level of incentive for non-employee directors to
contribute to the future success and prosperity of the Company; thereby,
enhancing the value of the Company's stock for the benefit of the
shareholders. Moreover, the increase in the number of shares subject to the
options granted annually to non-employee directors in lieu of directors' fees
strengthens the ability of the Company to attract and retain non-employee
directors. Furthermore, the Board of Directors believes that increasing the
number of shares subject to options granted to non-employee directors
commensurate with the increase in the Company's outstanding shares effected by
the recent stock splits should ensure that directors will continue to be
closely aligned with the equity interests of shareholders, thereby promoting
the Board's continued focus on further enhancement of shareholder value.

If the proposed amendments are approved by the shareholders, non-employee
directors of the Company will each receive, unless waived, a stock option grant
under the Plan for 13,500 shares of Common Stock following the Annual Meeting
of Shareholders on May 26, 1994.

The 1993 Omnibus Budget Reconciliation Act ("OBRA") became law in August
1993. Under the new law, income tax deductions of publicly-traded companies in
tax years beginning on or after January 1, 1994 may be limited to the extent
total compensation (including base salary, annual bonus, stock option
exercises, and non-qualified benefits) for certain executive officers exceeds
$1 million (less the amount of any "excess parachute payments" as defined in
Section 280G of the Code) in any one year. Under OBRA, the deduction limit
does not apply to payments which qualify as "performance-based." To qualify
as "performance-based," compensation payments must be based solely upon the
achievement of objective performance goals and made under a plan that is
administered by a committee of outside directors. In addition, the material
terms of the plan must be disclosed to and approved by stockholders, and the
compensation committee must certify that the performance goals were achieved
before payments can be made. In particular, stock options and stock
appreciation rights will satisfy the performance-based exception if the awards
are made by a qualifying compensation committee, the plan sets the maximum
number of shares that can be granted to any particular employee within a
specified period and the compensation is based solely on an increase in the
stock price after the grant date (i.e., the option exercise price is equal to
or greater than the fair market value of the stock subject to the award on the
grant date).

<PAGE>

It is the Company's policy generally to design the Company's compensation
programs to conform with the OBRA legislation and related regulations so that
total compensation paid to any employee will not exceed $1 million in any one
year, except for compensation payments in excess of $1 million which qualify
as "performance-based". Accordingly, the Board of Directors is asking
stockholders to approve an amendment to the 1984 Plan to provide for an annual
maximum limitation of 350,000 on the number of shares subject to options which
may be granted to any individual employee under the 1984 Plan. The Company
intends to comply with other requirements of the performance-based compensation
exclusion under OBRA, including option pricing requirements and requirements
governing the administration of the 1984 Plan, so that, upon stockholder
approval of the 1984 Plan (and such other plans), the deductibility of
compensation paid to top executives thereunder is not expected to be disallowed.

The proposed amendments will not affect the Federal income tax
consequences associated with the 1984 Plan except as noted above.

FEDERAL TAX CONSEQUENCES AND ACCOUNTING TREATMENT

The proposed amendment provides that non-employee directors will receive
non-incentive stock options, and therefore will receive non-qualified options.
With respect to a non-qualified stock option, as a general rule, a participant
will recognize ordinary income (and the Company will be entitled to a
corresponding deduction) as soon as the options are no longer subject to
substantial risk of forfeiture and the options can be valued with reasonable
accuracy. Generally, for all grantees, the options cannot be valued before the
date the options are exercised, and income will be recognized in an amount
equal to the difference between the option price and the fair market value of
the underlying stock on the date of exercise. For purposes of determining gain
or loss realized upon subsequent sale or exchange of such shares, a
participant's tax basis will be the sum of the option price paid and the amount
of ordinary income, if any, recognized by the participant.

DEDUCTIBILITY TO COMPANY. In any event, assuming compliance with
applicable withholding requirements, the Company will be entitled to a
deduction equal to the amount of ordinary income recognized by a participant in
connection with a non-qualified stock option.

ACCOUNTING TREATMENT. Under current generally accepted accounting
principles and provisions under the 1984 Plan, there will be no charge to the
Company's earnings associated with an incentive stock option or a non-qualified
stock option which are granted or exercised without associated stock
appreciation rights ("SARs") and which are not exercised through "pyramiding"
or the "successive-swap" method. Under certain circumstances, if options are
exercised through pyramiding or the successive-swap method, charges to the
Company's earnings will be required under generally accepted accounting
principles.

WITHHOLDING TAXES. The Company may in its discretion require participants
to pay to the Company at the time of exercise of any option an amount that it
deems necessary to satisfy the applicable withholding requirements under the
Code or state or local income tax laws. Upon the exercise of an option
requiring tax withholding, a participant, other than a non-employee director,
may make an election to have shares of Common Stock withheld by the Company
from the shares otherwise receivable upon exercise of the option in order to
satisfy applicable withholding requirements, based on the fair market value of
the Common Stock on the date of exercise.

The acceptance of any tax withholding election is within the sole
discretion of the Compensation and Stock Option Committee (the "Committee").
If an employee participant is a more than 10% beneficial owner of Common Stock,
a director or an officer of the Company (according to the meaning of such terms
under the SEC's rules under Section 16 of the Exchange Act), any such tax
withholding election and stock option exercise must occur within an "Exercise
Window" (i.e., the ten business-day period beginning on the third business day
after any quarterly or annual earnings press release and ending on the twelfth
business day after such press release). If an employee

<PAGE>

participant chooses to pay the amount necessary to satisfy any tax withholding
requirements by delivery of shares of Common Stock already owned by the
participant (subject to any limitations or prohibitions in connection therewith
which may be imposed by the Committee), the requirement that the stock option
exercise in connection therewith occur during an Exercise Window does not apply.

Where there is no withholding obligation on the part of the Company in
connection with an option exercise, the Company may in its discretion require
an employee participant to place shares of Common Stock acquired pursuant to an
option exercise in escrow for the benefit of the Company until such time as
income tax withholding is required or the shares acquired upon exercise are
disposed by the participant. At such time, the Company may in its discretion
require a participant to pay to the Company an amount that it deems sufficient
to satisfy applicable withholding requirements, in which case such shares of
Common Stock will be released from escrow. Alternatively, an employee
participant may make an election to have shares of Common Stock held in escrow
applied toward the Company obligation to make applicable tax withholding in
connection with an option exercise or the disposition of shares received upon
such exercise, based on the fair market value of the Common Stock on the date
of termination of the escrow arrangement, which must occur during an Exercise
Window if the employee participant is a more than 10% beneficial owner of
Common Stock, a director or officer of the Company (within the meaning of such
terms under the SEC's rules under Section 16 of the Exchange Act).

PLAN NOT QUALIFIED. The Plan is not a qualified plan under Section 401(a)
of the Code.

VOTE REQUIRED FOR ADOPTION OF PROPOSED AMENDMENTS TO THE 1984 PLAN

Adoption of the proposed amendments to the 1984 Plan will require the
affirmative vote of the holders of a majority of the total number of
outstanding shares of Common Stock of the Company represented in person or by
proxy at the 1994 Annual Meeting of Shareholders.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
PROPOSED AMENDMENTS TO THE COMPANY'S 1984 PLAN.

APPROVAL OF INDEPENDENT PUBLIC ACCOUNTANTS

(PROPOSAL NO. 4)

The Board of Directors of the Company, adopting the recommendation of its
Audit Committee, has unanimously appointed the firm of KPMG Peat Marwick as
independent auditors to examine the combined financial statements of the
Company for the year ending December 31, 1993. This firm has acted as
independent accountants of the Company since 1971.

A representative of KPMG Peat Marwick is expected to be present at the
Annual Meeting of Shareholders with the opportunity to make a statement, if
that person desires to do so, and is expected to be available to respond to
appropriate questions.

Approval of the appointment of independent accountants is not a matter
which is required to be submitted to a vote of shareholders, but the Board of
Directors considers it appropriate for the shareholders to express or withhold
their approval of the appointment. If shareholder approval should be withheld,
the Board of Directors would consider an alternative appointment for the
succeeding fiscal year.

THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT THE SHAREHOLDERS
VOTE "FOR" PROPOSAL NO. 4 TO APPROVE THE APPOINTMENT OF INDEPENDENT
ACCOUNTANTS. A majority of the votes cast is needed for approval.

<PAGE>

SHAREHOLDER PROPOSALS

It is anticipated that the 1995 Annual Meeting of Shareholders will be
held on May 25, 1995. Proposals of shareholders intended to be presented at
the 1994 Annual Meeting and included in the Company's proxy statement therefor
must be received in writing by the Secretary of the Company at its principal
executive offices, 112 East Pecan Street, Suite 200, San Antonio, Texas 78205,
not later than December 16, 1994.

OTHER MATTERS

No business other than the matters set forth in this Proxy Statement is
expected to come before the meeting, but should any other matters requiring a
vote of shareholders arise, including a question of adjourning the meeting, the
persons named in the accompanying proxy will vote thereon according to their
best judgment in the interests of the Company. In the event that any of the
nominees for director should withdraw or otherwise become unavailable for
reasons not presently known, the persons named as proxies in the accompanying
proxy will vote for other persons in their place in what they consider the best
interests of the Company.

The foregoing Notice and Proxy Statement are sent by order of the Board of
Directors.

JOHN F. SCHMUTZ

Vice President-General Counsel
and Secretary

April 15, 1994

3/29/94 5:41 PM

<PAGE>

APPENDIX I

PROPOSED AMENDMENTS TO THE COMPANY'S
AMENDED AND RESTATED 1984 STOCK OPTION PLAN

If Proposal No. 3 is adopted by the shareholders, Sections 3.3, 6.13 and
8.1 of the 1984 Plan would be amended to read as follows:

"3.3. Subject to the provisions of the Plan, the Committee shall in
its discretion, determine which employees of the Company shall be granted
Options, the number of shares subject to option under any such Options,
the dates after which Options may be exercised, in whole or in part,
whether Options shall be ISOs, and the terms and conditions of the
Options. In no event shall the number of shares subject to options
granted to any one employee exceed 350,000 in any one year."

"6.13. SPECIAL TERMS, CONDITIONS AND RULES FOR OPTIONS TO
NON-EMPLOYEE DIRECTORS. Non-employee directors of the Company shall be
granted Non-ISO Options under the Plan in lieu of annual monetary
retainers and regular and special Board and committee attendance fees
previously paid to non-employee directors by the Company prior to May 21,
1992. The grant of such Options shall occur annually on the date that,
and immediately after, each non-employee director is elected to the Board
at each annual meeting of shareholders, and the total number of shares
subject to each annual Option grant to each non-employee director shall be
13,500 shares, subject to adjustment in accordance with Article VIII of
the Plan. In the case where a non-employee director is first elected to
the Board to fill a vacancy or a newly created position on the Board,
either (i) by the shareholders at a special meeting of shareholders duly
called for such purpose or (ii) by action of the Board as may be permitted
under the Articles or Certificate of Incorporation, the By-Laws and the
governing corporate law of the Company, such non-employee director shall
be eligible at such election upon resolution of the Board to receive an
initial Option for 13,500 shares (subject to adjustment in accordance with
Article VIII of the Plan), and thereafter shall receive annual Options as
provided for in the preceding sentence above. Options granted to
non-employee directors pursuant to this section shall be fully vested on
the day following the date an Option is granted and shall be subject to
the provisions of Articles II, III, IV, V, VIII, IX, X, XI and XII of the
Plan and to the specific provisions of sections 6.1, 6.2, 6.5, 6.8, and
6.11 of this Article VI of the Plan to the extent that any such provisions
are not inconsistent with this section 6.13. Article VII of the Plan and
sections 6.3, 6.4, 6.6, 6.7, 6.9, 6.10 and 6.12 of this Article VI shall
not apply to Options granted to non-employee directors under this section
6.13. No Option or portion thereof granted pursuant to this section 6.13
shall be exercisable prior to the first anniversary of the date the Option
is granted or after the Termination Date. Moreover, upon any non-employee
director ceasing to be a director of the Company for any reason, including
death, disability, removal or resignation, each Option held by such
non-employee director, whether or not exercisable at that time, together
with all rights hereunder, shall terminate on the earlier of the
Termination Date or the first anniversary of the date that such
non-employee director ceased to be a director of the Company. This section
6.13 shall not be amended more than once every six months, other than to
comport with changes in the Code, the Employee Retirement Income Security
Act, or the rules thereunder."

"8.1. If (a) the Company shall at any time be involved in a
transaction to which section 424(a) of the Code is applicable; (b) the
Company shall declare a dividend payable in, or shall subdivide, split or
combine, its Common Stock; or (c) any other event shall occur which in the
judgment of the Committee necessitates action by way of adjusting the
terms of the outstanding Options,

<PAGE>

(i) the Committee shall forthwith take any such action as in its
judgment shall be necessary to preserve the Optionees' rights
substantially proportionate to the rights existing prior to such
event and, to the extent that such action shall include an increase or
decrease in the number of shares of Common Stock subject to
outstanding Options, the number of shares available under Article IV
above shall be increased or decreased, as the case may be,
proportionately; and

(ii) the number of shares specified as subject to the annual and
initial Options thereafter to be granted to non-employee directors of
the Company in lieu of annual monetary retainers and regular and
special Board and committee attendance fees pursuant to Section 6.13
above shall be increased or decreased, as the case may be,
proportionately.

The judgment of the Committee with respect to any matter referred to in
this Article shall be conclusive and binding upon each Optionee."