<PAGE>
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(c)
OF THE SECURITIES EXCHANGE ACT OF 1934 (Amendment No. )
Check the appropriate box:
[_] Preliminary Information Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED
BY RULE 14c-5(d)(2))
[X] Definitive Information Statement
HOST MARRIOTT CORPORATION
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14c-5(g).
[_] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
________________________________________________________________________
(5) Total fee paid:
________________________________________________________________________
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
________________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
________________________________________________________________________
(3) Filing Party:
________________________________________________________________________
(4) Date Filed:
________________________________________________________________________
Notes:
<PAGE>
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[LOGO OF HOST MARRIOTT APPEARS HERE]
10400 Fernwood Road
Bethesda, Maryland 20817-1109
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD THURSDAY, MAY 11, 1995
April 3, 1995
The Annual Meeting of Shareholders of Host Marriott Corporation (the "Company")
will be held on Thursday, May 11, 1995, at 10:30 a.m. in Salons A and B of the
Grand Ballroom in the Philadelphia Marriott Hotel, located at 1201 Market
Street (with the entrance on Filbert Street between 12th and 13th Streets) in
Philadelphia, Pennsylvania. Doors to the meeting will open at 9:45 a.m.
The meeting will be conducted:
1. To consider and vote upon the following proposals (collectively, the
"Proposals") described in the accompanying Proxy Statement, which
provide for:
(i) Proposal One: The election of Richard E. Marriott and R. Theodore
Ammon as directors for three-year terms expiring at the 1998 Annual
Meeting;
(ii) Proposal Two: The ratification of the appointment of Arthur
Andersen LLP as independent auditors;
(iii) Proposal Three: The approval of a performance-based annual
incentive bonus plan for senior executive officers;
(iv) Proposal Four: The approval of a deferred stock compensation plan
for non-employee directors; and
(v) Proposal Five: The consideration of a shareholder proposal to
reinstate the annual election of all directors.
2. To transact such other business as may properly come before the meeting.
Shareholders of record of the Company's Common Stock at the close of business
on March 24, 1995 will be entitled to notice of and to vote at this meeting.
/s/ Christopher G. Townsend
Christopher G. Townsend
Corporate Secretary
REFER TO THE NOTE ON THE OUTSIDE OF THE BACK COVER
FOR INFORMATION ON ACCOMMODATIONS AND TRANSPORTATION.
EACH SHAREHOLDER IS REQUESTED TO EXECUTE AND PROMPTLY RETURN
THE ENCLOSED PROXY. A PREPAID ENVELOPE IS ENCLOSED.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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<PAGE>
INTRODUCTION
This Proxy Statement (the "Proxy Statement") is being furnished to shareholders
of Host Marriott Corporation, a Delaware corporation (the "Company"), in
connection with the solicitation of proxies by the Board of Directors of the
Company (the "Board") from holders of record of the Company's outstanding
shares of common stock, par value $1.00 per share (the "Company Common Stock"),
as of the close of business on March 24, 1995 (the "Annual Meeting Record
Date") for use at the Annual Meeting of Shareholders of the Company (the
"Annual Meeting") to be held on May 11, 1995, at 10:30 a.m. in Salons A and B
of the Grand Ballroom in the Philadelphia Marriott Hotel, located at 1201
Market Street in Philadelphia, Pennsylvania, and at any adjournment or
postponement thereof. This Proxy Statement is first being mailed to the
Company's shareholders on April 3, 1995. The Company's Annual Report and the
Company's Securities and Exchange Commission Form 10-K for the 1994 fiscal year
ended December 30, 1994 are being mailed with this Proxy Statement to
shareholders of record.
VOTING RIGHTS AND PROXY INFORMATION
Except as set forth under "Voting Rights Relating to Convertible Preferred
Stock," only holders of record of shares of Company Common Stock as of the
close of business on the Annual Meeting Record Date will be entitled to notice
of and to vote at the Annual Meeting or any adjournment or postponement
thereof. Such holders of shares of Company Common Stock are entitled to one
vote per share on any matter which may properly come before the Annual Meeting.
The presence, either in person or by properly executed proxy, of the holders of
a majority of the then outstanding shares of Company Common Stock is necessary
to constitute a quorum at the Annual Meeting and to permit action to be taken
by the shareholders at such meeting. The affirmative vote of the holders of at
least a majority of the shares of Company Common Stock present in person or
represented by properly executed proxy at the Annual Meeting is required to
approve Proposals Two through Five. Under the Company's bylaws and Delaware
law, shares represented at the Annual Meeting (either by properly executed
proxy or in person) that reflect abstentions or "broker non-votes" (i.e.,
shares held by a broker or nominee which are represented at the Annual Meeting,
but with respect to which such broker or nominee is not empowered to vote on a
particular proposal) will be counted as shares that are present and entitled to
vote for purposes of determining the presence of a quorum. Abstentions as to
Proposals Two through Five will have the same effect as votes against such
proposals. Broker non-votes, however, will be treated as unvoted for purposes
of determining approval of such proposals (and therefore will reduce the
absolute number--although not the percentage--of the votes needed for approval)
and will not be counted as votes for or against such proposals.
The affirmative vote of a plurality of shares of Company Common Stock present
in person or represented by proxy at the Annual Meeting is required to elect
the directors nominated pursuant to Proposal One. "Plurality" means that the
individuals who receive the largest number of votes cast are elected as
directors up to the maximum number of directors to be chosen at the meeting.
Consequently any shares not voted (whether by abstention, broker non-vote or
otherwise) will have no impact in the election of directors, except to the
extent that the failure to vote for an individual results in another
individual's receiving a larger proportion of votes. As of January 31, 1995,
there were 153,964,061 shares of Company Common Stock outstanding and entitled
to vote at the Annual Meeting. As of that date, certain members of the Marriott
family (including various trusts established by members of the Marriott family)
in the aggregate owned approximately 16.48% of the number of
1
<PAGE>
outstanding shares of Company Common Stock. The members of the Marriott family
have indicated an intention to vote in accordance with the recommendations of
the Board as set forth herein with respect to the Proposals.
All shares of Company Common Stock that are represented at the Annual Meeting
by properly executed proxies received prior to or at the Annual Meeting and not
revoked will be voted at the Annual Meeting in accordance with the instructions
indicated in such proxies. If no instructions are indicated for Proposals One
through Four, such proxies will be voted in accordance with the recommendations
of the Board of Directors as set forth herein with respect to such proposal(s).
If no instructions are indicated for Proposal Five, such proxies will be
treated as abstentions.
In the event that a quorum is not present at the time the Annual Meeting is
convened, or if for any other reason the Company believes that additional time
should be allowed for the solicitation of proxies, the Company may adjourn the
Annual Meeting with or without a vote of the shareholders. If the Company
proposes to adjourn the Annual Meeting by a vote of the shareholders, the
persons named in the enclosed form of proxy will vote all shares of Company
Common Stock for which they have voting authority in favor of such adjournment.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by (i) filing
with First Chicago Trust Company of New York in its capacity as transfer agent
for the Company (the "Transfer Agent"), at or before the Annual Meeting, a
written notice of revocation bearing a later date than the proxy, (ii) duly
executing a subsequent proxy relating to the same shares of Company Common
Stock and delivering it to the Transfer Agent at or before the Annual Meeting,
or (iii) attending the Annual Meeting and voting in person (although attendance
at the Annual Meeting will not in and of itself constitute a revocation of a
proxy). Any written notice revoking a proxy should be sent to First Chicago
Trust Company of New York, P.O. Box 8611, Edison, New Jersey 08818-9119.
The Company will bear the cost of the solicitation. In addition to solicitation
by mail, the Company will request banks, brokers and other custodian nominees
and fiduciaries to supply proxy material to the beneficial owners of Company
Common Stock of whom they have knowledge, and will reimburse them for their
expenses in so doing; and certain directors, officers and other employees of
the Company, not specially employed for the purpose, may solicit proxies,
without additional remuneration therefor, by personal interview, mail,
telephone or telegraph.
2
<PAGE>
ELECTION OF DIRECTORS
DIRECTORS
[PHOTO OF Richard E. Marriott* Mr. Richard Marriott is a director of
RICHARD E. Chairman of the Marriott International, Inc. and Chairman
MARRIOTT Board of the Board of First Media Corporation.
APPEARS Director He also serves as a director of certain
HERE] since 1979 subsidiaries of the Company and of the
Age: 56 Potomac Electric Power Company and is a
past President of the National Restaurant
Association. For additional information
on Mr. Marriott, see "Executive Officers"
below.
--------------------------------------------------------------------------------
[PHOTO OF J.W. Marriott, Jr.* Mr. J. W. Marriott, Jr. is Chairman of
J.W. Director the Board and President of Marriott
MARRIOTT since 1964 International, Inc. and a director of
APPEARS Age: 63 General Motors Corporation, Outboard
HERE] Marine Corporation and the U.S.-Russia
Business Roundtable. He also serves on
the boards of trustees of the Mayo
Foundation and the National Geographic
Society, and on the advisory board of the
Boy Scouts of America. He is on the
President's Advisory Committee of the
American Red Cross and the Executive
Committee of the World Travel & Tourism
Council.
--------------------------------------------------------------------------------
[PHOTO OF R. Theodore Ammon Mr. Ammon is a private investor and
THEODORE Director since Chairman of BFP Holdings Corp. and Big
R. AMMON 1992 Flower Press, Inc. He was formerly a
APPEARS Age: 45 general partner of Kohlberg Kravis
HERE] Roberts & Company (a New York and San
Francisco-based investment firm). He also
serves on the boards of directors of
Astrum International Corp., Doskocil
Companies, Inc. and the New York YMCA,
and on the board of trustees of Bucknell
University.
--------------------------------------------------------------------------------
* Richard E. Marriott and J. W. Marriott, Jr. are brothers.
3
<PAGE>
[PHOTO OF Stephen F. Bollenbach Mr. Bollenbach is President and Chief
STEPHEN F. President and Executive Officer of the Company and
BOLLENBACH Chief Executive serves as a director of certain
APPEARS Officer subsidiaries of the Company. He also
HERE] Director since 1993 serves on the boards of directors of
Age: 52 America West Airlines, Inc., Carr Realty
Corporation and Mid-America Apartment
Communities, Inc. For additional
information on Mr. Bollenbach, see
"Executive Officers" below.
--------------------------------------------------------------------------------
[PHOTO OF Ann Dore McLaughlin Ms. McLaughlin is President of the
ANN DORE Director since Federal City Council and Vice Chairman of
MCLAUGHLIN 1993 the Aspen Institute. She was formerly
APPEARS Age: 53 President and Chief Executive Officer of
HERE] New American Schools Development
Corporation. Ms. McLaughlin has served
with distinction in several U.S.
Administrations in such positions as
Secretary of Labor and Under Secretary of
the Department of the Interior. Ms.
McLaughlin also serves as director of AMR
Corporation, Federal National Mortgage
Association, General Motors Corporation,
Kellogg Company, Nordstrom, Potomac
Electric Power Company, Union Camp
Corporation and Vulcan Materials Company.
Additionally, Ms. McLaughlin serves as a
member of the governing boards of a
number of civic, non-profit
organizations, including the Public
Agenda Foundation and the Conservation
Fund. Ms. McLaughlin is on the Board of
Overseers for the Wharton School of the
University of Pennsylvania and is a
Trustee of the Center for Strategic and
International Studies.
--------------------------------------------------------------------------------
[PHOTO OF Harry L. Vincent, Jr. Mr. Vincent is a retired Vice Chairman of
HARRY L. Director Booz-Allen & Hamilton, Inc. He also
VINCENT since 1969 served as a director of Signet Banking
APPEARS Age: 75 Corporation from 1973 until 1989.
HERE]
4
<PAGE>
[PHOTO OF Andrew J. Young Mr. Young is Co-Chairman of the Atlanta
ANDREW J. Director since Committee for the Olympic Games. Mr.
YOUNG 1993 Young has spent more than 35 years in
APPEARS Age: 63 public service. He was elected to three
HERE] terms in the U.S. Congress, representing
the Fifth Congressional District of
Georgia. In 1977 he was appointed U.S.
Ambassador to the United Nations. He was
elected mayor of Atlanta, Georgia in
1981, and reelected in 1985.Mr. Young is
a member of several additional boards
including those of Howard University, The
Martin Luther King, Jr. Center, the
Global Infrastructure Fund and the Center
for Global Partnership. He is also a
member of the Georgia Institute of
Technology advisory board.
(PHOTO)
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PROPOSAL ONE: DIRECTOR NOMINEES
The Board of Directors of the Company is composed of seven directors, with two
additional vacancies which may only be filled upon the exercise of certain
rights by the holders of the Company's Convertible Preferred Stock, as more
particularly described below. The Certificate of Incorporation classifies the
current seven-member Board of Directors into three classes. Each such director
serves for three years.
The terms of office of Richard E. Marriott and R. Theodore Ammon expire at the
1995 Annual Meeting of Shareholders. The Board of Directors, acting upon the
recommendation of its Nominating and Corporate Governance Committee, has
nominated and recommends the re-election of Mr. Marriott and Mr. Ammon, each
for a three-year term as director expiring at the 1998 Annual Meeting of
Shareholders.
Unless otherwise instructed, the proxy holders will vote the proxies received
by them for Messrs. Marriott and Ammon.
If elected, Messrs. Marriott and Ammon have consented to serve as directors for
terms of three years and until their respective successors are elected and
qualified. Further information with respect to the nominees is set forth under
the preceding section entitled "Directors." Although it is not contemplated
that any nominee will be unable to serve as director, in such event, the
proxies will be voted by the proxy holders for such other person or persons as
may be designated by the present Board of Directors.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS A VOTE FOR THE
FOREGOING NOMINEES AS DIRECTORS OF THE COMPANY.
VOTING RIGHTS RELATING TO CONVERTIBLE PREFERRED STOCK
Because six quarterly dividends payable on the Company's Series A Cumulative
Convertible Preferred Stock, without par value (the "Convertible Preferred
Stock"), are in arrears, the number of directors of the Company has been
increased by two and the holders of Convertible Preferred Stock, voting
separately as a class, are entitled to elect two directors for one-year terms
to fill such vacancies at the Annual Meeting. Such right to elect two
additional directors will continue at each subsequent annual meeting of
shareholders until all dividends in arrears have been paid or
5
<PAGE>
declared and set apart for payment. Upon payment or declaration and reservation
of funds for payment of all such dividends in arrearage, the term of office of
each director elected will immediately terminate and the number of directors
constituting the entire Board of Directors will be automatically reduced to
seven. The Company presently does not intend to pay preferred stock dividends.
Consequently, the holders of the Convertible Preferred Stock will continue to
be entitled to elect two members of the Board of Directors. Commencing January
15, 1996, however, the outstanding Convertible Preferred Stock may be redeemed
at an aggregate redemption price of approximately $2 million plus accrued and
unpaid dividends.
The Board of Directors has not set a record date to determine the holders of
Convertible Preferred Stock entitled to notice of, or to vote at, the Annual
Meeting. Therefore, under Delaware law such record date shall be at the close
of business on April 2, 1995 (the "Preferred Stock Record Date"), the day next
preceding the date notice of the Annual Meeting is being provided to holders of
record of Convertible Preferred Stock. The presence in person, or by properly
executed proxy, of the holders of a majority of the then outstanding shares of
Convertible Preferred Stock is necessary to constitute a quorum of the class of
Convertible Preferred Stock at the Annual Meeting and to permit action to be
taken by such holders at the Annual Meeting. The affirmative vote of a
plurality of shares of Convertible Preferred Stock present in person or
represented by a properly executed proxy at the Annual Meeting is required to
elect the two directors for which the holders of such shares are entitled to
vote. See "Voting Rights and Proxy Information" for the discussion of the
meaning of "Plurality" and the effect of abstentions and broker non-votes on
the election of directors, which effect is the same as with respect to the
election of directors by holders of Company Common Stock.
The Company has no knowledge as to whether or not the holders of the
Convertible Preferred Stock intend to exercise their right to elect two
directors at the Annual Meeting. WE ARE NOT ASKING HOLDERS OF CONVERTIBLE
PREFERRED STOCK FOR A PROXY AND HOLDERS OF CONVERTIBLE PREFERRED STOCK ARE
REQUESTED NOT TO SEND US A PROXY. The information being provided herein to
holders of Convertible Preferred Stock constitutes an Information Statement
only (and not a Proxy Statement) and is first being mailed to the holders of
Convertible Preferred Stock on April 3, 1995. The Company's Annual Report and
the Company's Securities and Exchange Commission Form 10-K for the 1994 fiscal
year ended December 30, 1994 are being mailed with this Information Statement
to the holders of record of Convertible Preferred Stock.
OWNERSHIP OF COMPANY SECURITIES
As of January 31, 1995, the Company had three outstanding classes of equity or
equity-linked securities: Common Stock, Warrants to acquire shares of Common
Stock ("Warrants") and Convertible Preferred Stock. None of the directors,
nominees or executive officers owns Warrants or shares of Convertible Preferred
Stock. The Company is not aware of any beneficial holder of 5% or more of the
Warrants.
Based upon a Schedule 13D filed with the Securities and Exchange Commission on
February 2, 1995, the Company believes that Joel M. Greenblatt of 100 Jericho
Quadrangle, Jericho, New York, 11753, beneficially owns 24,300 depositary
shares representing 24.3 shares of the Convertible Preferred Stock. Such
holdings represented 63.12% of the approximately 38,500 depositary shares
(representing 38.5 shares of Convertible Preferred Stock) outstanding as of
March 30, 1995 and are convertible into approximately 465,500 shares of Company
Common Stock.
6
<PAGE>
Set forth below is the ownership as of January 31, 1995 of Company Common Stock
by directors, nominees, the chief executive officer and the four additional
most highly compensated executive officers of the Company, as well as by all
directors and executive officers of the Company as a group, and to the best of
the Company's knowledge, beneficial holders of 5% or more of Company Common
Stock.
<TABLE>
<CAPTION>
SHARES OF COMPANY % OF SHARES
COMMON STOCK OUTSTANDING
BENEFICIALLY OWNED AS OF
NAME AS OF JANUARY 31, 1995 JANUARY 31, 1995
---- ---------------------- ----------------
<S> <C> <C>
DIRECTORS:
R. Theodore Ammon.................. 10,000 0.01
Stephen F. Bollenbach.............. 61,183(1) 0.04
J.W. Marriott, Jr. ................ 4,809,117(1)(2)(3) 3.12
Richard E. Marriott................ 6,102,746(1)(2)(3) 3.96
Ann Dore McLaughlin................ 1,000 0.00(4)
Harry L. Vincent, Jr. ............. 14,100 0.01
Andrew J. Young.................... 0 0.00
NON-DIRECTOR EXECUTIVE OFFICERS:
Matthew J. Hart.................... 22,671(1) 0.01
William W. McCarten................ 80,336(1) 0.05
Stephen J. McKenna................. 9,032(1) 0.01
ALL DIRECTORS AND EXECUTIVE
OFFICERS AS A GROUP: 11,117,040 7.22
FORSTMANN-LEFF ASSOCIATES, INC. ... 10,684,920(5) 6.94(5)
HARRIS ASSOCIATES L.P. ............ 8,575,065(6) 5.57(6)
</TABLE>
--------
(1) Does not include shares reserved or contingently vested under the Company's
1993 Comprehensive Stock Incentive Plan. For additional information, see
Tables I and II below.
(2) Does not include: (i) 1,568,298 shares held in trust for the children and
grandchildren of J.W. Marriott, Jr. or 1,096,357 shares held by his wife
and children; (ii) 1,408,768 shares held in trust for the children and
grandchildren of Richard E. Marriott or 374,240 shares held by his wife and
children; (iii) 2,536,787 shares held by the J. Willard Marriott
Foundation; (iv) 1,667,385 shares held by a charitable annuity trust,
created by the will of J. Willard Marriott, to which his descendants have a
remainder interest; (v) 2,707,590 shares held by a limited partnership
whose general partner is a corporation of which J.W. Marriott, Jr. is the
controlling shareholder; (vi) 80,000 shares held by a limited partnership
whose general partner is a corporation of which J.W. Marriott, Jr. is the
controlling shareholder; (vii) 2,302,729 shares held by a limited
partnership whose general partner is a corporation of which Richard E.
Marriott is the controlling shareholder; or (viii) 719,334 shares owned
directly or beneficially by certain other members of the Marriott family.
The shares referred to in this note aggregated 9.39% of the common shares
outstanding as of January 31, 1995.
(3) By virtue of their ownership of shares of common stock and their positions
as Chairman and director, respectively, Richard E. Marriott and J.W.
Marriott, Jr. would be deemed in control of the Company within the meaning
of the federal securities laws. Other members of the Marriott family might
also be deemed control persons by reason of their ownership of shares
and/or their relationship to other family members. J.W. Marriott, Jr.,
Richard E. Marriott, their mother Alice S. Marriott and other members of
the Marriott family and various trusts established by members of the
Marriott family owned beneficially an aggregate of 25,373,351 shares or
16.48% of the total common shares outstanding of the Company as of January
31, 1995. All directors, nominees and executive officers as a group (other
than members of the Marriott family) owned beneficially an aggregate of
205,177 shares or 0.13% of the total common shares outstanding as of
January 31, 1995. In addition, the Company's Employees' Profit Sharing,
Retirement and Savings Plan and Trust owned 865,755 shares or 0.56% of the
total common shares outstanding as of January 31, 1995.
(4) Ownership of less than l/l00th of 1% is reflected as 0.00 in the table
above.
(5) Represents shares of Company Common Stock held by Forstmann-Leff
Associates, Inc. ("Forstmann") and its subsidiaries FLA Asset Management,
Inc. ("FLA") and Stamford Advisors Corp. ("Stamford"). Forstmann has
reported in a Schedule
7
<PAGE>
13G under the Securities and Exchange Act of 1934, filed with the Securities
and Exchange Commission, sole dispositive power over 8,323,065 shares and
shared dispositive power over 2,361,855 shares. Of these shares, Forstmann
has reported sole voting power over 6,541,365 shares and shared voting power
over 867,300 shares. The principal business address of Forstmann, FLA and
Stamford is 55 East 52nd St. New York, New York 10055.
(6) Represents shares of Company Common Stock held in client accounts managed
by Harris Associates L.P. and its general partner, Harris Associates, Inc.
(collectively, "Harris"). Harris has reported in a Schedule 13G under the
Securities and Exchange Act of 1934, filed with the Securities and Exchange
Commission, sole dispositive power over 6,703,365 shares and shared
dispositive power over 1,871,700 shares. Of these shares, Harris has
reported sole voting power over none of the shares and shared voting power
over the entire 8,575,065 shares. The principal business address of Harris
is 2 North LaSalle Street, Suite 500, Chicago, Illinois 60602.
--------------------------------------------------------------------------------
THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
Presently, the Board of Directors is composed of seven members, five of whom
are not officers or employees of the Company. The Board met four times in 1994.
Each director, except Andrew J. Young, attended 75% or more of the meetings
held during 1994. Mr. Young attended 50% of the meetings held during 1994.
The Board has adopted four standing committees: (i) Executive, (ii) Audit,
(iii) Compensation Policy, and (iv) Nominating and Corporate Governance. The
members of the Executive Committee are Richard E. Marriott (Chair), J.W.
Marriott, Jr. and Harry L. Vincent, Jr. When the Board of Directors is not in
session, this Committee is authorized to exercise all powers of the Board of
Directors, subject to specific restrictions as to powers retained by the full
Board of Directors. Retained powers include those relating to amendments to the
certificate of incorporation and bylaws; mergers, consolidations, sales or
exchanges involving substantially all of the Company's assets; declaration of
dividends; and issuance of stock. The Executive Committee did not meet in 1994.
No change in the membership of the Executive Committee is contemplated
for 1995.
The Audit Committee is composed of four directors who are not employees of the
Company, namely, R. Theodore Ammon (Chair), Harry L. Vincent, Jr., Andrew J.
Young and Ann Dore McLaughlin. The Audit Committee meets at least three times a
year with the independent auditors, management representatives, and internal
auditors; recommends to the Board of Directors appointment of independent
auditors; approves the scope of audits and other services to be performed by
the independent and internal auditors; considers whether the performance of any
professional service by the auditors other than services provided in connection
with the audit function could impair the independence of the outside auditors;
and reviews the results of internal and external audits, the accounting
principles applied in financial reporting, and financial and operational
controls. The independent auditors and internal auditors have unrestricted
access to the Audit Committee and vice versa. The Audit Committee met four
times in 1994. All members, except Mr. Young, attended 75% or more of the
meetings held in 1994. Mr. Young attended 50% of the meetings held in 1994. No
membership changes are contemplated for 1995.
The Compensation Policy Committee is composed of three directors who are not
employees of the Company, namely, Harry L. Vincent, Jr. (Chair), R. Theodore
Ammon and Ann Dore McLaughlin. The Compensation Policy Committee's functions
include recommendations on policies and procedures relating to senior officers'
compensation and various employee stock plans, and approval of individual
salary adjustments and stock awards in those areas. The Compensation Policy
Committee met eight times in 1994. No membership changes are contemplated for
1995.
8
<PAGE>
The Nominating and Corporate Governance Committee is composed of three
directors who are not employees of the Company, namely, Andrew J. Young
(Chair), Harry L. Vincent, Jr. and Ann Dore McLaughlin. It considers candidates
for election as directors and is responsible for keeping abreast of and making
recommendations with regard to corporate governance in general. In addition,
the Committee fulfills an advisory function with respect to a range of matters
affecting the Board of Directors and its Committees, including the making of
recommendations with respect to qualifications of director candidates,
compensation of directors, the selection of committee chairs, committee
assignments and related matters affecting the functioning of the Board. The
Nominating and Corporate Governance Committee met once in 1994. No change in
the membership of the Committee is contemplated for 1995.
COMPENSATION OF DIRECTORS
Directors who are also officers of the Company receive no additional
compensation for their services as directors. Directors elected by the holders
of Company Common Stock and who are not officers receive an annual retainer fee
of $25,000 as well as an attendance fee of $1,250 for each shareholders'
meeting, meeting of the Board of Directors or meeting of a committee of the
Board of Directors, regardless of the number of meetings held on a given day.
Directors who may be elected by the holders of Convertible Preferred Stock will
receive no compensation for their services as directors. The chair of each
committee of the Board of Directors receives an additional annual retainer fee
of $1,000. Directors are also reimbursed for travel expenses and other out-of-
pocket costs incurred in attending meetings. Mr. Vincent receives an additional
$30,000 in compensation to perform the annual performance appraisal of the
chief executive officer on behalf of the Board, although the final appraisal is
determined by the Board.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than ten percent of
a registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
and the New York Stock Exchange. Specific due dates for these reports have been
established, and the Company is required to report in this Proxy Statement any
failure to file by these dates during 1994. All of these filing requirements
were satisfied by the Company's executive officers and directors.
EXECUTIVE OFFICERS
Set forth below is certain information with respect to the persons who are
executive officers of the Company.
<TABLE>
<CAPTION>
BUSINESS EXPERIENCE PRIOR TO BECOMING
NAME AND TITLE AGE AN EXECUTIVE OFFICER OF THE COMPANY
-------------- --- -------------------------------------
<S> <C> <C>
Richard E. Marriott 56 Richard E. Marriott joined the Company in 1965 and
Chairman of the Board has served in various executive capacities. In 1979,
Mr. Marriott was elected to the Board of Directors.
In 1984, he was elected Executive Vice President and
in 1986 he was elected Vice Chairman of the Board of
Directors. In 1993, Mr. Marriott was elected Chair-
man of the Board. Mr. Marriott also has been respon-
sible for management of the Company's government af-
fairs functions.
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
BUSINESS EXPERIENCE PRIOR TO BECOMING
NAME AND TITLE AGE AN EXECUTIVE OFFICER OF THE COMPANY
-------------- --- -------------------------------------
<S> <C> <C>
Stephen F. Bollenbach 52 Stephen F. Bollenbach rejoined the Company in 1992
Chief Executive Officer as Executive Vice President and Chief Financial Of-
and President ficer. He was named President and Chief Executive
Officer of the Company in 1993. During the period
from 1982 to 1986, Mr. Bollenbach was Senior Vice
President--Finance and Treasurer of the Company. He
subsequently served as Chief Financial Officer of
Promus Companies from 1986 to 1990 and served as
Chief Financial Officer with the Trump Organization
from 1990 until he rejoined the Company.
William W. McCarten 46 William W. McCarten joined the Company in 1979 as
Executive Vice Vice President and Controller--Corporate Accounting.
President and He was promoted to Vice President and Controller of
President--Host/Travel the Roy Rogers Division in 1982 and became Vice
Plazas President--Group Finance in 1984. He was named Vice
President and Corporate Controller in 1985. Mr. Mc-
Carten was elected Senior Vice President--Finance
and Corporate Vice President and Controller in 1986.
In 1991, he was elected Executive Vice President and
in 1992 was elected President--Host/Travel Plazas.
Matthew J. Hart 42 Matthew J. Hart joined the Company in 1981 as Man-
Executive Vice ager of Project Finance and was named Vice President
President and Chief of Project Finance in 1984. He was appointed Assis-
Financial Officer tant Treasurer in 1987 and was appointed Senior Vice
President--Finance and Treasurer in 1991. Mr. Hart
was named Executive Vice President and Chief Finan-
cial Officer in 1993. Prior to joining the Company,
Mr. Hart spent five years with Bankers Trust Company
in the corporate lending division.
Stephen J. McKenna 54 Stephen J. McKenna joined the Company in 1973 as an
Senior Vice President attorney. He was appointed Assistant General Counsel
and General Counsel in 1976, and was promoted to Vice President and As-
sistant General Counsel in 1986. He became Vice
President and Associate General Counsel in 1990 and
became Senior Vice President and General Counsel in
1993. Prior to joining the Company, Mr. McKenna was
employed as an attorney in the airline and aircraft
manufacturing industries.
Jeffrey P. Mayer 38 Jeffrey P. Mayer joined the Company in 1986 as Di-
Senior Vice President-- rector--Corporate Accounting. He was promoted to As-
Finance and Corporate sistant Controller--Corporate Accounting in 1987 and
Controller Vice President--Corporate Accounting in 1989. He was
appointed Vice President--Project Finance in the
Company's Treasury Department in 1991 and Senior
Vice President--Finance and Corporate Controller in
1993. Prior to joining the Company, Mr. Mayer spent
eight years with Arthur Andersen & Co.
</TABLE>
10
<PAGE>
CURRENT COMPENSATION
SUMMARY OF COMPENSATION
Table I below sets forth a summary of the compensation paid during the last
fiscal year to the chief executive officer of the Company and the additional
four most highly compensated executive officers of the Company.
TABLE I
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
------------------------------------
AWARDS PAYOUTS
------------------------- ----------
ANNUAL
COMPENSATION RESTRICTED SECURITIES ALL OTHER
------------------ STOCK UNDERLYING LTIP COMPEN-
NAME AND PRINCIPAL FISCAL SALARY(2) BONUS(3) AWARDS (4)(5) OPTIONS PAYOUTS(6) SATION(7)
POSITION YEAR ($) ($) ($) (#) ($) ($)
------------------ ------ --------- -------- ------------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard E. Marriott 1994 261,538 104,615 0 0 180,225 19,551
Chairman of the 1993 230,770 110,769 1,222,157(8) 0 0 10,693
Board 1992 210,000 100,800 42,080 14,500 0 10,078
Stephen F. Bollenbach
(1) 1994 550,000 385,000 0 0 901,125 50,062
Chief Executive 1993 473,077 327,370 6,644,470(8) 0 0 13,077
Officer and President 1992 380,769 255,115 304,156 193,000 0 150,000(9)
William W. McCarten 1994 300,000 270,000 0 0 402,503 22,426
Executive Vice 1993 280,705 116,773 1,166,712(8) 0 0 12,854
President 1992 245,024 115,896 23,181 23,000 0 13,073
Matthew J. Hart 1994 275,000 178,750 0 0 324,405 22,455
Executive Vice 1993 220,191 142,243 1,171,812(8) 0 0 11,172
President 1992 189,921 123,448 24,688 16,500 0 9,083
Stephen J. McKenna 1994 220,000 143,000 0 0 162,203 17,811
Senior Vice President 1993 195,178 119,009 595,482(8) 0 0 7,947
and General Counsel 1992 178,792 98,336 19,663 10,000 0 8,829
</TABLE>
--------
(1) Mr. Bollenbach joined the Company as Executive Vice President and Chief
Financial Officer on March 2, 1992.
(2) Salary amounts include base salary earned and paid in cash during the
fiscal year and the amount of base salary deferred at the election of the
executive officer under the Company's Employees' Profit Sharing, Retirement
and Savings Plan and Trust (the "Profit Sharing Plan") and the Company's
Executive Deferred Compensation Plan (the "Deferred Compensation Plan").
(3) Bonus includes the amount of cash bonus earned pursuant to the named
individual's bonus plan during the fiscal year and paid subsequent to the
end of each fiscal year.
(4) Under its long-term compensation program for executive officers, the
Company awards shares of restricted stock pursuant to the Company's 1993
Comprehensive Stock Incentive Plan (the "Comprehensive Stock Plan") and
previously awarded such shares under the Company's Restricted Stock Plan
for Key Employees (the "Company's Restricted Stock Plan") and the Company's
Deferred Stock Incentive Plan (the "Company's Deferred Stock Plan."),
predecessor plans to the Comprehensive Stock Plan. For Mr. R.E. Marriott
such restricted shares are as follows: for 1992, 963 shares of deferred
bonus stock awarded under the Company's Deferred Stock Plan and 1,275
shares of restricted stock awarded under the Company's Restricted Stock
Plan; for 1993, 2,411 shares of deferred bonus stock awarded under the
Company's Deferred Stock Plan and 160,000 shares awarded under the
Company's Comprehensive Stock Plan. For Mr. Bollenbach such restricted
shares are as follows: for 1992, 2,437 shares awarded under the Company's
Deferred Stock Plan and 15,000 shares awarded under the Company's
Restricted Stock Plan; for 1993, 7,124 shares awarded under the Company's
Deferred Stock Plan and 900,000 shares under the Company's Comprehensive
Stock Plan. For Mr. McCarten such restricted shares are as follows: for
1992, 1,107 shares awarded under the Company's Deferred Stock Plan; for
1993, 2,541 shares awarded under the
11
<PAGE>
Company's Deferred Stock Plan and 144,000 shares awarded under the Company's
Comprehensive Stock Plan. For Mr. Hart such restricted shares are as
follows: for 1992, 1,179 shares awarded under the Company's Deferred Stock
Plan; for 1993, 3,096 shares awarded under the Company's Deferred Stock Plan
and 144,000 shares awarded under the Company's Comprehensive Stock Plan. For
Mr. McKenna such restricted shares are as follows: for 1992, 939 shares
awarded under the Company's Deferred Stock Plan; for 1993, 2,590 shares
awarded under the Company's Deferred Stock Plan and 72,000 shares awarded
under the Company's Comprehensive Stock Plan. The restricted shares reported
in Table I and in this footnote are shares subject to "General Restrictions"
(see footnote 8 below). Restricted shares with "Performance Restrictions"
(see footnote 8 below) awarded as long-term incentive plan ("LTIP") awards
are excluded.
(5) The Deferred Stock Bonus Awards granted by the Company are generally
derived based on dividing twenty percent of each individual's annual cash
bonus award by the average of the high and low trading prices for a share
of Company Common Stock on the last trading day for the fiscal year. No
voting rights or dividends are attributed to award shares until such award
shares are distributed. Awards may be denominated as current awards or
deferred awards. A current award is distributed in 10 annual installments
commencing one year after the award is granted. A deferred award is
distributed in a lump sum or in up to 10 installments following termination
of employment. Deferred award shares contingently vest pro rata in annual
installments commencing one year after the Deferred Stock Bonus Award is
granted to the employee. Awards are not subject to forfeiture once the
employee reaches age 55 or after 10 years of service with the Company. The
aggregate number and value of shares of Company deferred stock and
restricted stock subject to "General Restrictions" and "Performance
Restrictions" (see footnote 8 below) held by each identified executive
officer as of the end of the fiscal year 1994 is as follows: Mr. R.E.
Marriott, 415,726 shares valued at $3,949,397; Mr. Bollenbach, 1,364,180
shares valued at $12,959,710; Mr. McCarten, 326,191 shares valued at
$3,098,815; Mr. Hart, 311,365 shares valued at $2,957,968; Mr. McKenna,
188,557 shares valued at $1,791,292. During the period in which any
restrictions apply, holders of restricted stock are entitled to receive all
dividends or other distributions paid with respect to such stock.
(6) For 1994, the amounts attributed to LTIP Payouts are the value for the
Performance-Based Restricted Stock Awards which were paid to the named
individuals following the close of the fiscal year. The value stated is the
average of the high and low trading prices of a share of stock on the date
the performance restrictions were approved.
(7) With the exception of Mr. Bollenbach's amount for 1992, amounts included as
"All Other Compensation" represent matching Company contribution amounts
received under the Profit Sharing Plan and the Deferred Compensation Plan.
For Mr. R.E. Marriott, $3,420 was attributable to the Profit Sharing Plan
and $16,131 was attributable to the Deferred Compensation Plan. For Mr.
Bollenbach, $3,420 was attributable to the Profit Sharing Plan and $46,642
was attributable to the Deferred Compensation Plan. For Mr. McCarten,
$3,420 was attributable to the Profit Sharing Plan and $19,006 was
attributable to the Deferred Compensation Plan. For Mr. Hart, $3,420 was
attributable to the Profit Sharing Plan and $19,035 was attributable to the
Deferred Compensation Plan. For Mr. McKenna, $3,420 was attributable to the
Profit Sharing Plan and $14,391 was attributable to the Deferred
Compensation Plan.
(8) On October 17, 1993, the Compensation Policy Committee (the "Committee") of
the Board of Directors approved grants of restricted stock to certain key
employees of the Company, including Mr. McCarten, Mr. Hart, and Mr.
McKenna. On October 29, 1993, the Board of Directors approved an award of
restricted stock to Mr. Bollenbach, and on December 2, 1993, the Board of
Directors approved a grant of restricted stock to Mr. R.E. Marriott. Each
such grant made in 1993 to Mr. R.E.Marriott, Mr. Bollenbach, Mr. McCarten,
Mr. Hart and Mr. McKenna consists of two awards: shares subject to
restrictions relating primarily to continued employment ("General
Restrictions") which vest ratably over a five or ten year period or at the
end of a five or ten year period and an award of shares subject to
performance objectives such as financial performance of the Company
("Performance Restrictions"). Performance objectives are established by the
Committee and are subject to periodic review and revision. All restricted
stock awards subject only to General Restrictions are presented on Table I
as "Restricted Stock Awards," and the value stated in Table I is the fair
market value on the date of the grant.
(9) Mr. Bollenbach received a one-time payment of $150,000 pursuant to the
Company's relocation program.
12
<PAGE>
AGGREGATED STOCK OPTION EXERCISES AND YEAR-END VALUE
Table II below sets forth, on an aggregated basis, information regarding the
exercise during fiscal year 1994 of options to purchase Company Common Stock by
each of the applicable persons listed on Table I above and the value on
December 31, 1994 of all unexercised options held by such individuals. The
Company did not grant any stock options to the persons listed on Table I during
fiscal years 1993 and 1994.
TABLE II
AGGREGATED STOCK OPTION EXERCISES IN
LAST FISCAL AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED
OPTIONS AT FISCAL YEAR- VALUE OF UNEXERCISED
SHARES END IN-THE-MONEY OPTIONS AT
ACQUIRED ON VALUE # FISCAL YEAR-END ($)(2)
EXERCISE REALIZED ------------------------- -------------------------
NAME COMPANY(1) (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ---------- ----------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
R.E. Marriott........... MI 0 0 79,400 11,300 836,709 146,961
HM 0 0 79,400 11,300 435,473 69,067
TOTAL 0 0 158,800 22,600 1,272,182 216,028
S. F. Bollenbach........ MI 79,500 1,228,662 17,000 96,500 203,114 1,292,810
HM 0 0 96,500 96,500 598,392 598,392
TOTAL 79,500 1,228,662 113,500 193,000 801,507 1,891,202
W.W. McCarten........... MI 20,050 385,882 52,250 20,750 415,532 230,516
HM 127,657 938,331 25,500 20,750 152,502 116,286
TOTAL 125,207 1,111,448 77,750 41,500 568,034 346,802
M.J. Hart............... MI 33,463 423,188 13,850 11,550 163,628 147,735
HM 0 0 47,313 11,550 276,687 70,033
TOTAL 33,463 423,188 61,163 23,100 440,315 217,768
S.J. McKenna............ MI 3,605 66,233 44,250 7,700 554,940 99,965
HM 0 0 93,257 7,700 570,667 47,023
TOTAL 3,605 66,233 137,507 15,400 1,125,608 146,989
</TABLE>
--------
(1) For the purposes of this Table II, "MI" means Marriott International, Inc.
and "HM" means the Company.
(2) Based on a per share price for Company Common Stock of $9.50, and a per
share price for Marriott International common stock of $27.94. These prices
represent the average of the high and low trading prices for a share on
December 31, 1994.
13
<PAGE>
REPORT ON EXECUTIVE COMPENSATION
TO OUR SHAREHOLDERS
The Compensation Policy Committee of the Board of Directors is charged with
overseeing and administering the executive pay program for the Company on
behalf of the Board and, by extension, the Company's shareholders. This report
provides details and background information regarding that program.
THE COMMITTEE
The Compensation Policy Committee (the "Committee"), composed of three
independent members of the Board of Directors, approves the executive
compensation programs and policies of the Company, sets performance targets and
also evaluates the performance of the Company and its senior management. The
Committee met eight times during the year.
GOALS OF THE PROGRAM
The Committee has established three primary objectives for the executive
compensation program:
. Provide base, annual and long-term incentives that emphasize performance-
based compensation dependent upon achieving corporate and individual
performance goals;
. Foster a strong relationship between shareholder value and executive
compensation programs and rewards by having a significant portion of
compensation comprised of equity-based incentives; and
. Provide overall levels of compensation that are competitive, reflective of
performance, and provide the means to attract, retain and motivate highly
qualified executives.
COMPETITIVENESS TARGETS
To establish compensation targets, the Committee uses data from independent
consultants that reflect compensation practices at a large group of general
industry companies. These surveys contain a broader group of companies than the
comparator group used in the performance graph because the Committee believes
that targeting compensation at a diverse group of companies appropriately
reflects the labor market for Host Marriott executives. The Committee believes
that a focus on the median level of compensation reflected in the survey data
strikes an appropriate balance between the need to control costs and the need
to retain an experienced and effective management team.
Annual compensation levels (base salary and target bonus) are established at
the median level of compensation based on the survey data. Consistent with the
philosophy of aligning shareholder value with executive compensation, however,
long-term incentive awards represent a substantial portion of the targeted
total pay package for executive officers.
ANNUAL CASH COMPENSATION
Base salary and bonus together equal annual cash compensation. The Committee
sets Host Marriott's salary range midpoints and target bonuses such that the
total of the two is at the median level of annual cash compensation for similar
positions in the survey data.
BASE SALARY
The Committee regularly reviews each senior executive's base salary and
approves the assignment of each senior executive to a salary grade with a
midpoint based on the survey data. Actual base salaries fall in a range around
the midpoint, based on tenure, experience and individual performance. Increases
to base salary are primarily driven by individual performance. They also
reflect position within the salary range and the salary increase guidelines
established for the Company.
ANNUAL INCENTIVES
The Annual Incentive Plan promotes the Company's pay for performance philosophy
by
14
<PAGE>
providing executives with financial incentives to achieve key business and
individual performance objectives. For most objectives, minimum, target and
maximum levels of performance are established. Actual performance is measured
relative to this range, and no payout is made if the minimum level of
performance is not achieved.
The 1994 performance measures and weightings as a percentage of salary for the
Chief Executive Officer were: corporate cash flow (15%), reduction of publicly
traded debt (10%), individual objectives (35%) and workforce diversity (10%).
Measures and weightings for other executive officers were similar to those of
the CEO, and in all cases reflected a high level of emphasis on corporate or
business group financial performance. Target levels of incentive awards ranged
from 25% to 45% of eligible fiscal year base salary, and maximum levels from
40% to 70%.
STOCK INCENTIVES
The Company provides long-term incentives through its 1993 Comprehensive Stock
Incentive Plan. Restricted stock, stock options and deferred stock awards are
permitted under the plan. The Committee believes that management's interest
should be aligned with those of shareholders, and that stock ownership is an
efficient and effective way to accomplish this.
RESTRICTED STOCK
Restricted stock is the primary long-term incentive vehicle for senior
executives. Its purpose is to provide an incentive to senior executives to
manage the Company in a manner that creates significant long-term value for
shareholders. The 1993 Comprehensive Stock Incentive Plan (the "Incentive Plan")
permits the Committee to make awards with either "General Restrictions" relating
to continued employment ("time-based" awards) or awards with "Performance
Restrictions" established by the Committee ("performance-based" awards). The
Committee emphasizes performance-based awards.
Pursuant to the Incentive Plan, each of the named senior executives of the
Company received separate time-based and performance-based awards in 1993(/1/).
The Committee "front-loaded" these grants of restricted stock to maximize the
stock ownership of senior executives and thereby provide a high level of
motivation and retention. Sixty percent of the restricted stock granted to each
executive consists of a performance-based award and forty percent of the shares
are contained in a separate time-based award. The awards are presently intended
to be the only long-term incentive grants made to these participants during the
vesting period.
The performance criteria applicable to the performance-based awards are
determined at the beginning of each year by the Committee. The performance
measures adopted for 1994 were cash coverage of interest, maintaining an
acceptable level of total Company debt in relation to total cash flow, free
cash flow, asset disposition, stock price appreciation and fostering a
strategic alliance with Marriott International, Inc. in lodging opportunities.
Compensation of the Chief Executive Officer and other Executive Officers
BASE SALARY
Mr. Bollenbach and the other named executive officers received salary increases
in October
--------
(1) The time-based awards granted in 1993 were 160,000 shares to Mr. Marriott,
which vest in ten equal annual installments; 144,000 shares each to Mr.
Hart and Mr. McCarten, which vest in five equal annual installments; 72,000
shares to Mr. McKenna, which vest in five equal annual installments; and
400,000 shares to Mr. Bollenbach, which vest in five equal annual
installments, and 500,000 shares to Mr. Bollenbach, which vest on the fifth
anniversary of the award. The performance-based awards granted in 1993 were
240,000 shares to Mr. Marriott, which vest in ten annual installments;
216,000 shares each to Mr. Hart and Mr. McCarten, which vest in five annual
installments; 108,000 shares to Mr. McKenna, which vest in five annual
installments; and 600,000 shares to Mr. Bollenbach, which vest in five
annual installments.
15
<PAGE>
1993, effective after the split of Marriott Corporation. Mr. Bollenbach did not
receive any salary increase in 1994, which resulted in his salary remaining at
$550,000. This salary is equal to the median for the survey group. The salary
for the Chairman and the other named executive officers were not increased
during 1994, which resulted in salaries that are slightly above the median for
the survey group.
ANNUAL INCENTIVE AWARD
Mr. Bollenbach's target annual incentive award for 1994 was 45% of base salary,
and his maximum payout is 70% of base salary. During 1994, Host Marriott
exceeded the maximum level of performance for cash flow and reduction in the
cost of publicly traded debt. In addition, Mr. Bollenbach accomplished his
individual objectives. As a result, his 1994 incentive award payout was
$385,000, or 70.0% of salary. The other named executives each received the
maximum annual incentive award which ranged from 40% to 65% of salary. Mr.
McCarten received an additional bonus of $75,000 which was based on the
financial results of the Host/Travel Plazas operating group.
RESTRICTED STOCK AWARD
During 1994, Mr. Bollenbach was eligible to vest in a maximum of 120,000 shares
of restricted stock based on the attainment of goals established by the
Committee. The cash flow, cash coverage and debt goals and the partnering goals
with Marriott International were fully achieved. The goal established for asset
sales was partially achieved and the goal established for year-end increase in
stock price was not achieved. As a result, Mr. Bollenbach vested in 81,000
shares of restricted stock. Of the 39,000 shares not vesting, 30,000 shares
were carried over to 1995 and will be eligible to vest based on 1995
performance goals. The remaining 9,000 shares are eligible to vest at
retirement.
IMPACT OF INTERNAL REVENUE CODE SECTION 162(M)
Under the Omnibus Budget Reconciliation Act of 1993, provisions were added to
the Internal Revenue Code under Section 162(m) that limit the tax deduction for
compensation expense in excess of $1,000,000. However, performance-based
compensation can be excluded from the determination of compensation expense so
long as it meets certain requirements. The Committee's policy is to consider
the impact of the law for its shareholders by qualifying as much of the
executive compensation programs for the performance-based exclusion as is
possible. The performance-restricted stock awards have annual measures and
goals which allow them to qualify as performance-based compensation under
Section 162(m). The Committee believes that it is appropriate to consider the
tax implications of the Company's compensation plans, but it does not believe
that it is necessarily in the best interest of the Company and its shareholders
that all plans meet the requirements of Section 162(m) for deductibility.
Accordingly, the Committee anticipates that the Company may lose deductions in
future restricted stock years with respect to vesting of the time-based grants.
The Committee is proposing changes to the Annual Incentive Plan beginning in
1995 to increase the portion of executive officer compensation which is
performance-based. See "Proposal Three: Executive Officers' Performance-Based
Annual Incentive Bonus Plan" on page 21 of the Proxy Statement. The Committee
believes these changes to the Annual Incentive Plan covering the five most
highly compensated executive officers are consistent with its policy of
emphasizing performance-based compensation. Under the new annual incentive
bonus plan, eligible executives would receive annual incentive payments if the
Company's earnings before interest expense, taxes, depreciation, amortization
and other non-cash items (EBITDA) exceeds a predetermined amount. The actual
incentive award paid to an executive officer would be determined by a specified
formula for each executive officer. The award would be from a pool and the
Committee, in its sole discretion, could reduce any and all awards. The new
annual incentive bonus plan is subject
16
<PAGE>
to shareholder approval at the 1995 Annual Meeting.
SUMMARY
The Committee believes that the caliber and motivation of the employees, and
especially their leadership, are critical to the Company's success in a
competitive marketplace. Effective and motivational compensation programs are
essential ingredients to the success in the marketplace. The Committee believes
that the compensation programs of the Company are effective in serving both the
Company and its shareholders, in both the short term and the long term.
MEMBERS OF THE COMPENSATION POLICY COMMITTEE
Harry L. Vincent, Jr., Chairman
R. Theodore Ammon
Ann Dore McLaughlin
17
<PAGE>
PERFORMANCE GRAPH
The following line graph compares the yearly percentage change in the
cumulative total shareholder return on the Company's Common Stock against the
cumulative total return of the Standard & Poor's Corporation Composite 500
Index (the "S&P 500 Index") and a peer group index of companies (the "Peer
Group") over the period of December 31, 1989 through December 31, 1994. The
graph assumes an investment of $100 at the start of this period in the
Company's Common Stock and in each of the indexes, with the reinvestment of all
dividends, including the Company's distribution of Marriott International
common stock on October 12, 1993 to shareholders, which is treated as a
reinvested special dividend.
The Peer Group index consists of the following companies: Catellus Development
Corp., Hilton Hotels Corp., Hospitality Franchise System, Inc., La Quinta Inns,
Inc., Marriott International, Inc., Red Lion Inns LP, The Rouse Company, and
Del Webb Corp.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL
SHAREHOLDER RETURNS
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Measurement Period HOST MARRIOTT S&P PEER
(Fiscal Year Covered) CORP. 500 INDEX GROUP
--------------------- --------------- --------- ----------
<S> <C> <C> <C>
Measurement Pt-12/31/1989 $100.00 $100.00 $100.00
FYE 12/31/1990 $ 32.10 $ 96.90 $ 50.70
FYE 12/31/1991 $ 51.60 $126.30 $ 59.80
FYE 12/31/1992 $ 65.50 $135.90 $ 62.00
FYE 12/31/1993 $135.40 $149.50 $ 92.90
FYE 12/31/1994 $142.80 $151.50 $ 98.90
</TABLE>
18
<PAGE>
CERTAIN TRANSACTIONS
NEW YORK MARRIOTT MARQUIS
In 1985, the Company sold for $10.03 million a 10.32% equity interest in the
Times Square Hotel Company partnership ("TSHCO"), owner of the New York
Marriott Marquis Hotel, to MM Times Square Hotel Investors ("MM Times Square"),
a limited partnership which includes J.W. Marriott, Jr. and Richard E. Marriott
as partners. The Company received cash at closing of $3.15 million and a $6.88
million nonrecourse promissory note due September 1, 2015 with interest at 12%
per annum, collateralized by the ownership interest sold. At the same time, the
Company sold a 28.68% interest in TSHCO to an unrelated third-party for
approximately $26.3 million on essentially the same terms.
Preliminary agreements were reached in 1991 with the purchaser of the 28.68%
interest, and in 1992 with MM Times Square, to restructure the respective
promissory notes payable to the Company. During the fourth quarter of 1992, the
purchaser of the 28.68% interest informed the Company that he would not be
making further payments on his promissory note. In view of this action, the
restructurings of the promissory notes with both TSHCO and MM Times Square have
been discontinued and, in the first quarter of 1994, the Company foreclosed on
the 28.68% interest. The Company also accepted from MM Times Square a transfer
of a 7.23% equity interest in TSHCO in exchange for cancellation of the
outstanding debt. The Company currently holds an 86% interest in TSHCO, which
is consolidated in the Company's financial statements.
RELATIONSHIP BETWEEN THE COMPANY AND MARRIOTT INTERNATIONAL, INC.
The Company was renamed Host Marriott Corporation on October 8, 1993 as a
result of a special dividend (the "Distribution") which split the Company's
businesses between the Company and Marriott International, Inc. ("Marriott
International"). Prior to October 8, 1993, Marriott International was a wholly-
owned subsidiary of the Company. Thereafter, the Company retained the capital
intensive lodging real estate business (the "Ownership Business") and the
airport/tollroad concessions business (the "Host/Travel Plazas Business"),
while Marriott International took over the management of the lodging and
service management businesses (the "Management Business"). The Company and its
subsidiaries and Marriott International and its subsidiaries have entered into
certain relationships following the Distribution. By reason of their ownership
of shares of common stock of Marriott International and their positions as
Chairman and director, respectively, J.W. Marriott, Jr. and Richard E.
Marriott, who also are a director and Chairman, respectively, of the Company,
would be deemed in control of Marriott International within the meaning of the
federal securities laws. Other members of the Marriott family might also be
deemed control persons of Marriott International by reason of their ownership
of shares of Marriott International and/or their relationship to other family
members.
Prior to the Distribution, the Company and Marriott International entered into
the Distribution Agreement, which provided for, among other things, (i) certain
asset transfers to occur prior to the Distribution, (ii) the Distribution,
(iii) the division between the Company and Marriott International of certain
liabilities and (iv) certain other agreements governing the relationship
between the Company and Marriott International following the Distribution.
Subject to certain exceptions, the Distribution Agreement provides for, among
other things, assumptions of liabilities and cross-indemnities designed to
allocate, effective as of the Distribution, financial responsibility for the
liabilities arising out of or in connection with the Management Business to
Marriott International and its subsidiaries, and financial responsibility for
the liabilities arising out of or in connection with the Ownership Business and
19
<PAGE>
Host/Travel Plazas Business, along with the Company's liabilities under a
substantial portion of its pre-existing financing and long-term debt
obligations, to the Company and its retained subsidiaries. The agreements
executed in connection with the Distribution Agreement also set forth certain
specific allocations of liabilities between the Company and Marriott
International.
Under the Distribution Agreement, Marriott International has a right to
purchase up to 20% of each class of the Company's voting stock (determined
after assuming full exercise of the right) at its then fair market value (based
on an average of trading prices during a specified period), upon the occurrence
of certain specified events generally involving a change in control of the
Company. The purchase right terminates on the tenth anniversary of the
Distribution. In addition, under the Distribution Agreement, Marriott
International has a right of first offer if the Company decides to sell all or
any substantial portion of the Host/Travel Plazas Business.
Among the other agreements between the Company and Marriott International are:
(i) Lodging Management Agreements. Marriott International and certain of its
subsidiaries entered into management agreements with the Company and certain of
its subsidiaries to manage for fees the Marriott Hotels, Resorts and Suites,
Courtyard hotels, Residence Inns and Fairfield Inns owned by the Company and
its subsidiaries.
(ii) Credit Agreement. Marriott International and a subsidiary of the Company
have entered into a Credit Agreement pursuant to which the subsidiary has the
right to borrow from Marriott International up to $630 million.
(iii) Tax Sharing Agreement. The Company and Marriott International have
entered into a tax sharing agreement that defines the parties' rights and
obligations with respect to deficiencies and refunds of federal, state and
other income or franchise taxes relating to the Company's businesses for tax
years prior to the Distribution and with respect to certain tax attributes of
the Company after the Distribution.
(iv) Host Consulting Agreement. Pursuant to the Host Consulting Agreement,
Marriott International has agreed to provide certain consulting and advisory
services to the Company and its subsidiaries with respect to certain
operational matters involving the Host/Travel Plazas Business. The Host
Consulting Agreement has an annual base fee of $500,000 and runs for an initial
three-year term and thereafter will automatically renew for additional one-year
terms unless cancelled by either party.
(v) Noncompetition Agreement. The Company and Marriott International entered
into a noncompetition agreement that defines the parties' rights and
obligations with respect to certain businesses operated by Marriott
International and the Company.
(vi) Transitional Services Agreements. Marriott International and the Company
entered into a number of agreements pursuant to which Marriott International
has agreed to provide certain services to the Company and its subsidiaries for
a transitional period. Such services are provided on market terms and
conditions.
(vii) Philadelphia Mortgage. Marriott International is providing first mortgage
financing for the Philadelphia Marriott Hotel, which is owned by an affiliate
of the Company.
(viii) New York East Side Mortgage. A subsidiary of Marriott International is
providing first mortgage financing for the New York East Side Marriott Hotel,
which is owned by an affiliate of the Company.
JOINT VENTURE WITH MARRIOTT INTERNATIONAL
During the third quarter of 1994, a joint venture between a subsidiary of the
Company
20
<PAGE>
and a subsidiary of Marriott International purchased the Leisure Park at
Lakewood Retirement Community in Lakewood, New Jersey. Through their respective
subsidiaries, the Company and Marriott International each hold a 5% general
partner interest and a 45% limited partner interest in the limited partnership
which owns the facility, with the Company's subsidiary acting as managing
general partner. The partners are currently engaged in arms'-length
negotiations to amend and restate their partnership agreement relating to their
respective rights and obligations thereunder. The partnership is also
renegotiating the management agreement with a separate Marriott International
subsidiary which manages the facility.
SALE OF LAND PARCEL
During the second quarter of 1994, a subsidiary of the Company sold a parcel of
land in San Antonio, Texas to JWM Family Enterprises, L.P., a partnership which
is comprised of members of J.W. Marriott, Jr.'s immediate family. The purchase
price of $1.3 million was determined by using an appraisal prepared by an
unaffiliated, professional land appraisal firm. The partnership intends to
develop a Residence Inn on the land.
PROPOSAL TWO: APPOINTMENT OF AUDITORS
Subject to shareholder approval, the Board of Directors, acting on the
recommendation of its Audit Committee, has appointed Arthur Andersen LLP, a
firm of independent public accountants, as auditors, to examine and report to
shareholders on the consolidated financial statements of the Company and its
subsidiaries for fiscal year 1995. Representatives of Arthur Andersen LLP will
be present at the Annual Meeting and will be available to respond to
appropriate questions.
VOTE REQUIRED
The action of the Board of Directors in appointing Arthur Andersen LLP as the
Company's auditors for fiscal year 1994 is subject to ratification by an
affirmative vote of the holders of a majority of shares of Company Common Stock
entitled to notice of and to vote at the Annual Meeting at which a quorum is
present.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS A VOTE FOR SUCH
APPOINTMENT.
PROPOSAL THREE: EXECUTIVE OFFICERS' PERFORMANCE-BASED ANNUAL INCENTIVE BONUS
PLAN
A primary objective of the Compensation Policy Committee is to emphasize
performance-based compensation for senior executives of the Company. Subject to
shareholder approval, the Committee has approved changes to the Company's
Annual Incentive Plan for the Company's five most highly compensated executive
officers, who in 1995 are Richard E. Marriott, Stephen F. Bollenbach, William
W. McCarten, Matthew J. Hart and Stephen J. McKenna. Under the new annual
incentive bonus plan, annual incentive payments would be paid from an annual
incentive pool calculated as eight percent (8%) of the Company's earnings
before interest expense, taxes, depreciation, amortization and other non-cash
items (EBITDA) over $300 million. The Committee will continue to set annual
target norm and maximum bonus payments for each of the five named executives.
Payments of the annual incentives would be from the pool. The Committee retains
the power to limit the annual incentive payment from the pool to the eligible
executives if the formula for calculating the incentive would result in an
annual incentive payment which the Committee believes is excessive and not in
the interests of shareholders. A copy of the new Performance-Based Annual
Incentive Bonus Plan is set forth in Appendix A.
21
<PAGE>
Table III below sets forth the maximum incentive payments for 1995 to the named
executive officers under the new annual incentive bonus plan. Although the
amounts set forth below may be reduced by the Compensation Policy Committee in
its sole discretion, such amounts have been determined by the Committee to be
the maximum award payouts to such executive officers regardless of 1995
financial performance.
TABLE III
NEW PERFORMANCE-BASED
1995 EXECUTIVE OFFICERS INCENTIVE BONUS PLAN (1)
<TABLE>
<CAPTION>
MAXIMUM
DOLLAR
NAME AND POSITION PAYOUT(2)
----------------- ----------
<S> <C>
Richard E. Marriott.............................................. $ 100,000
Chairman of the Board
Stephen F. Bollenbach............................................ $ 490,000
Chief Executive Officer and President
William W. McCarten ............................................. $ 205,000
Executive Vice President
Matthew J. Hart ................................................. $ 205,000
Executive Vice President
Stephen J. McKenna .............................................. $ 150,000
Senior Vice President and General Counsel
Executive Group Total (5 persons)................................ $1,150,000
</TABLE>
--------
(1) Participation in this plan is limited to the Company's five most highly
compensated executive officers. This plan is subject to shareholder
approval at the 1995 Annual Meeting.
(2) The dollar value represents the maximum plan award payouts based on the
estimated fiscal 1995 base salaries. Actual payouts may be lower than these
values based on 1995 financial performance. The actual payout from this
plan will be determined by the Compensation Policy Committee which, in its
sole discretion, may reduce any award under this plan if it believes such
reduction is in the best interests of the shareholders.
VOTE REQUIRED
The action of the independent directors of the Compensation Policy Committee in
approving the Company's new annual incentive bonus plan is subject to the
affirmative vote of the holders of a majority of shares of Company Common Stock
entitled to notice of and to vote at the Annual Meeting at which a quorum is
present.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS A VOTE FOR THE
EXECUTIVE OFFICERS' PERFORMANCE-BASED ANNUAL INCENTIVE BONUS PLAN.
PROPOSAL FOUR: NON-EMPLOYEE DIRECTORS' DEFERRED STOCK COMPENSATION PLAN
The Company currently does not have a plan allowing non-employee directors to
defer their director compensation into a stock acquisition program. The Board
of Directors believes that such a program will (i) help attract and retain
highly-qualified non-employee directors and (ii) more closely align the
interests of non-employee directors with the Company's shareholders. On
November 3, 1994, the Board
22
<PAGE>
therefore approved the adoption of the Non-Employee Directors' Deferred Stock
Compensation Plan (the "Directors' Deferred Stock Plan"), a copy of which is
set forth in Appendix B. The Directors' Deferred Stock Plan permits Board
members who are not employees of the Company to elect to defer receipt of fees
paid to them for service on the Board and to have such deferred fees paid in
shares of Company Common Stock. Five directors will be eligible to participate
in the Directors' Deferred Stock Plan in 1995.
Generally, each director choosing to participate must make an irrevocable
written election at least six months prior to the start of the calendar year
for which the fees would otherwise be paid. For participation in the Directors'
Deferred Stock Plan in 1995, however, a special rule permits directors to make
such an election at least sixty days prior to the date on which the deferred
fees would otherwise have been payable to such directors. Pending approval of
the Directors' Deferred Stock Plan by shareholders, R. Theodore Ammon made such
an election on November 3, 1994 and therefore would be eligible under the
Directors' Deferred Stock Plan to defer fees payable after January 2, 1995. As
of the date of this Proxy Statement, no other director has elected to
participate in the Directors' Deferred Stock Plan.
All deferred fees will be credited to a stock unit account as of the date the
fees would otherwise have been paid to the director and will be converted to
stock units based upon the fair market value of the Company Common Stock on the
deferral date. In addition, during the deferral period, the director's stock
unit account will be adjusted to reflect dividends paid on the Company Common
Stock. Upon termination of service as a member of the Board, the director may
elect to receive shares of Company Common Stock equal to the number of stock
units then credited to the director's account in either a lump sum or ten
annual installments.
The Board has approved the reservation of 100,000 shares of Company Common
Stock for issuance under the Directors' Deferred Stock Plan and agreed to
reduce the number of shares of Company Common Stock currently reserved for
issuance under the Company's 1993 Comprehensive Stock Incentive Plan by
100,000.
The Directors' Deferred Stock Plan will be administered by the Compensation
Policy Committee of the Board or such other committee or individual as may be
designated by the Board. Notwithstanding the foregoing, no director who is a
participant under the Directors' Deferred Stock Plan will participate in any
determination relating solely or primarily to his or her own shares or stock
units. The Board may terminate the Directors' Deferred Stock Plan at any time
or amend it in whole or in part, except where shareholder approval is required
by law or any stock exchange on which the shares may be listed, provided that
the provisions specifying amounts, pricing and timing of awards may not be
amended more than once every six months, other than to comport with specified
changes in applicable law.
23
<PAGE>
Table IV below sets forth the number of stock units that would have been
allocated to each of the members of the Board who are not employees of the
Company for the last completed fiscal year if the Directors' Deferred Stock
Plan had been in effect and if all eligible members had participated and
deferred 100% of their fees.
TABLE IV
NEW NON-EMPLOYEE DIRECTORS' DEFERRED STOCK COMPENSATION PLAN BENEFITS(1)
<TABLE>
<CAPTION>
NUMBER
OF STOCK
NAME UNITS
---- ----------
<S> <C>
R. Theodore Ammon.................................................... 4,211.763
J.W. Marriott, Jr.................................................... 2,847.058
Ann Dore McLaughlin.................................................. 4,047.058
Harry L. Vincent..................................................... 4,477.480
Andrew J. Young...................................................... 3,105.880
----------
TOTAL................................................................ 18,689.239
</TABLE>
--------
(1) This plan is subject to shareholder approval at the 1995 Annual Meeting.
VOTE REQUIRED
Approval of the Non-Employee Directors' Deferred Stock Compensation plan is
subject to the affirmative vote of the holders of a majority of shares of
Company Common Stock entitled to notice of and to vote at the Annual Meeting at
which a quorum is present.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS A VOTE FOR THE
NON-EMPLOYEE DIRECTORS' DEFERRED STOCK COMPENSATION PLAN.
PROPOSAL FIVE: SHAREHOLDER PROPOSAL REGARDING ELECTION OF DIRECTORS ANNUALLY
Mrs. Evelyn Y. Davis of Watergate Office Building, 2600 Virginia Avenue, N.W.,
Suite 215, Washington, D.C. 20037, who owns 200 shares of Company Common Stock,
has notified the Company of her intention to propose the following resolution
at the Annual Meeting of Shareholders:
"RESOLVED: That the stockholders of Host Marriott Corporation recommend
that the Board of Directors take the necessary steps to reinstate the
election of directors ANNUALLY, instead of the stagger system which was
recently adopted."
In support of the resolution, Mrs. Davis has submitted the following statement:
"The great majority of New York Stock Exchange listed corporations elect
all their directors each year.
"This insures that ALL directors will be more accountable to ALL
shareholders every year and to a certain extent prevents the self-
perpetuation of the Board.
"Last year the owners of 25.1% of shares voting, voted FOR this proposal.
"If you AGREE, please mark your proxy FOR this proposal."
This proposal has been submitted at the last nine Annual Meetings of
Shareholders and was overwhelmingly defeated on each occasion. The
24
<PAGE>
Board of Directors has again considered the proposal (as has the Nominating and
Corporate Governance Committee) and again recommends that shareholders vote
AGAINST it for the following reasons: At the 1984 Annual Meeting of
Shareholders, holders of more than 86% of the shares of the Company's common
stock approved an amendment to the Company's Certificate of Incorporation to
classify the Board of Directors into three classes, with one class being
elected each year. As a result, at least two shareholder meetings will be
required to effect a change of control of the Board of Directors, thus making
it more difficult to change the membership of the Board of Directors. The Board
of Directors believes that the longer time required to elect a majority of a
classified Board of Directors also helps to assure continuity and stability of
the Company's management and policies since a majority of the directors will
always have prior experience as directors of the Company. One benefit of the
existing arrangement is to enhance management's ability to negotiate with the
proponent of a proposal to take over or restructure the Company. The Board of
Directors therefore believes that the proposed resolution would, if
implemented, be detrimental to the best interests of the Company and its
shareholders.
VOTE REQUIRED
Approval of the proposed resolution is subject to the affirmative vote of the
holders of a majority of shares of Company Common Stock present in person or
represented by proxy at the Annual Meeting.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS A VOTE AGAINST
SUCH PROPOSAL.
SHAREHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
The Annual Meeting for 1996 is tentatively scheduled to be held on Thursday,
May 9, 1996. Any shareholder who meets the requirements of the proxy rules
under the Securities Exchange Act of 1934 may submit to the Board of Directors
proposals to be considered for submission to the shareholders at the 1996
Annual Meeting. Any such proposal should be submitted in writing by notice
delivered or mailed by first-class United States mail, postage prepaid, to the
Corporate Secretary, Host Marriott Corporation, 10400 Fernwood Road, Department
72/862, Bethesda, Maryland 20817-1109 and must be received no later than
December 7, 1995 to be eligible for inclusion in the proxy materials for that
meeting. Any such notice shall set forth: (a) the name and address of the
shareholder and the text of the proposal to be introduced; (b) the number of
shares of Company Common Stock held of record, owned beneficially and
represented by proxy by such shareholder as of the date of such notice; and (c)
a representation that the shareholder intends to appear in person or by proxy
at the meeting to introduce the proposal specified in the notice. The chairman
of the meeting may refuse to acknowledge the introduction of any shareholder
proposal not made in compliance with the foregoing procedures.
Any shareholder who meets the requirements of the proxy rules under the
Securities Exchange Act of 1934 may nominate a candidate for director of the
Company. Any such nomination should be submitted in writing by notice delivered
or mailed by first-class United States mail, postage prepaid, to the Corporate
Secretary, Host Marriott Corporation, 10400 Fernwood Road, Dept. 72/862,
Bethesda, Maryland 20817-1109 and must be received by February 14, 1996. Any
such notice shall set forth: (a) the name and address of the shareholder who
intends to make the nomination and of the person or persons to be nominated;
(b) a representation that the shareholder is a holder of record of Company
Common Stock entitled to vote at such meeting and intends to appear in person
or by proxy at the meeting to nominate the person or persons specified in the
25
<PAGE>
notice; (c) a description of all arrangements or understandings between the
shareholder and each nominee and any other person or persons (naming such
person or persons) pursuant to which the nomination or nominations are to be
made by the shareholder; (d) such other information regarding each nominee
proposed by such shareholder as would be required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities and Exchange
Commission, had the nominee been nominated, or intended to be nominated, by the
Board of Directors; and (e) the consent of each nominee to serve as a director
of the Company if so elected. The chairman of the meeting may refuse to
acknowledge the nomination of any person not made in compliance with the
foregoing procedure.
SOLICITATION OF PROXIES
Proxies will be solicited by mail, telephone, or other means of communication.
Solicitation also may be made by directors, officers, and regular employees of
the Company. The Company has retained MacKenzie Partners to assist in the
solicitation of proxies from shareholders. MacKenzie Partners will receive a
fee of $6,500 plus reimbursement of certain out-of-pocket expenses. The Company
will reimburse brokerage firms, custodians, nominees, and fiduciaries in
accordance with the rules of the New York Stock Exchange, for reasonable
expenses incurred by them in forwarding materials to the beneficial owners of
shares. The entire cost of solicitation will be borne by the Company.
FORM 10-K AND ANNUAL REPORT
All shareholders of record on the Annual Meeting Record Date will receive with
this Proxy Statement a copy of both the Company's 1994 Annual Report and Form
10-K filed with the Securities and Exchange Commission. Any shareholder who
desires additional copies of the Company's 1994 Annual Report or Form 10-K
filed may obtain a copy (excluding exhibits) without charge by addressing a
request to the Corporate Secretary, Host Marriott Corporation, 10400 Fernwood
Road, Dept. 72/862, Bethesda, Maryland 20817-1109. A charge equal to the
reproduction cost will be made if the exhibits are requested.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Christopher G. Townsend
Christopher G. Townsend
Corporate Secretary
26
<PAGE>
APPENDIX A
HOST MARRIOTT CORPORATION
PERFORMANCE-BASED
ANNUAL INCENTIVE BONUS PLAN
ARTICLE I
PURPOSE AND EFFECTIVE DATE
1.1 Purpose. The Host Marriott Corporation Performance-Based Annual Incentive
Bonus Plan ("Annual Incentive Bonus Plan") is intended to help effectuate the
policy of the Board of Directors (the "Board") of emphasizing performance-based
compensation for the five most highly compensated executives of the Company. In
addition, performance-based compensation maximizes the opportunity of the
Company to deduct compensation paid to senior executives under Section 162(m)
of the Internal Revenue Code.
1.2 Effective Date. The Annual Incentive Bonus Plan shall become effective
for the 1995 fiscal year when approved by the shareholders of the Company by
the affirmative vote of a majority of Shares present, or represented, and
entitled to vote on the subject matter, at the 1995 Annual Meeting of
Shareholders of the Company at which a quorum is present. The Annual Incentive
Bonus Plan shall remain in effect unless terminated by the Board or otherwise
terminated by force of law.
ARTICLE II
PARTICIPATION
Participation shall be limited to the five most highly compensated executives
of the Company. In 1995, these individuals are: Richard E. Marriott, Stephen F.
Bollenbach, William M. McCarten, Matthew J. Hart and Stephen J. McKenna.
ARTICLE III
PAYMENTS
3.1 Formula. Payments under the Annual Incentive Bonus Plan shall be made
from a pool of potential payments equal to eight percent (8%) of the Company's
annual earnings before interest expense, taxes, depreciation, amortization and
other non-cash items ("EBITDA") in excess of three hundred million dollars
($300,000,000) (the "Performance Goal").
3.2 Exclusions from EBITDA. EBITDA is defined solely for purposes of this
Annual Incentive Bonus Plan to exclude unusual or nonrecurring events which in
the opinion of the Directors of the Compensation Policy Committee of the Board
(the "Committee") should be excluded.
3.3 Discretion. The Committee shall, in its sole discretion, determine the
amount of payment to any Participant. If the formula for calculation of
payments under the Annual Incentive Bonus Plan would exceed the payment the
Committee believes is in the best interests of shareholders, the Committee may
reduce the actual payment or payments.
A-1
<PAGE>
3.4 Determination of Payment. Each Participant shall be eligible to receive a
Performance Award if the Performance Goal for the Performance Period is
achieved. The maximum amount of a Participant's Performance Award shall be
equal to his or her "pro rata share" of the Cash Bonus Pool for the Performance
Period. The Cash Bonus Pool shall be equal to eight percent (8%) of the
Company's EBITDA in excess of the Performance Goal, as determined under
generally accepted accounting principles consistently applied. A Participant's
"pro rata share" of the Cash Bonus Pool shall be equal to the Cash Bonus Pool
multiplied by a fraction, the numerator of which is the Participant's base
salary on the first day of the Performance Period and the denominator of which
is the aggregate of the base salaries of all Participants on the first day of
the Performance Period. The Committee, in its sole discretion, may reduce the
amount of, or eliminate, a Performance Award of any Participant. In determining
whether a Performance Award will be reduced or eliminated, the Committee shall
consider any extraordinary changes which may also have occurred during the
Performance Period, such as changes in accounting practices or the law, and
shall consider such business performance criteria that it deems appropriate,
including, but not limited to, the Company's net income, cash flow, earnings
per share and other relevant operating and strategic business results and such
business performance criteria that are applicable to an individual Participant.
3.5 Payment of Performance Awards. Subject to any shareholder approval
required by law, payment of any Performance Award for a Performance Period
shall be made to a Participant who is employed by the Company on the last day
of such period after the Committee shall have certified in writing that the
Performance Goal for the Performance Period was achieved and any other material
terms of the Performance Award have been satisfied.
ARTICLE IV
ADMINISTRATION
The Annual Incentive Bonus Plan shall be administered by the Compensation
Policy Committee of the Board and its successors. For 1995, the Committee is
composed of Harry L. Vincent (Chair), Ann Dore McLaughlin and R. Theodore
Ammon.
ARTICLE V
PLAN AMENDMENT AND TERMINATION
The Committee may amend or terminate the Annual Incentive Bonus Plan by
resolution at any time as it shall deem advisable, subject to any shareholder
approval required by law, provided that the Committee may not amend the Annual
Incentive Bonus Plan to change the Participants or the Performance Awards
without the approval of a majority of the votes cast by shareholders in a
separate vote. No amendment may impair the rights of a Participant to a
Performance Award granted in respect of a Performance Period.
A-2
<PAGE>
APPENDIX B
HOST MARRIOTT CORPORATION
NON-EMPLOYEE DIRECTORS'
DEFERRED STOCK COMPENSATION PLAN
ARTICLE I
PURPOSE AND EFFECTIVE DATE
1.1 Purpose. The Host Marriott Corporation Non-Employee Directors' Deferred
Stock Compensation Plan (the "Plan") is intended to advance the interests of
the Company and its shareholders by providing a means to attract and retain
highly-qualified persons to serve as non-employee Directors and to promote
ownership by non-employee Directors of a greater proprietary interest in the
Company, thereby aligning such Directors' interests more closely with the
interests of shareholders of the Company.
1.2 Effective Date. This Plan shall become effective November 3, 1994, the
date approved by the Board, subject to approval of the shareholders of the
Company by the affirmative vote of a majority of Shares present, or
represented, and entitled to vote on the subject matter, at the 1995 Annual
Meeting of Shareholders of the Company at which a quorum is present.
ARTICLE II
DEFINITIONS
The following terms shall be defined as set forth below:
2.1 "Board" means the Board of Directors of the Company.
2.2 "Committee" has the meaning set forth in Section 4.1.
2.3 "Company" means Host Marriott Corporation, a Delaware corporation, or any
successor thereto.
2.4 "Director" means any individual who is a member of the Board.
2.5 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
References to any provision of the Exchange Act include rules thereunder and
successor provisions and rules thereto.
2.6 "Fair Market Value" means the average of the highest and lowest quoted
selling prices for the Shares on the relevant date, or (if there were no sales
on such date) the average so computed on the nearest day before or the nearest
day after the relevant date, as reported in The Wall Street Journal or a
similar publication selected by the Committee.
2.7 "Fees" means all or part of any retainer and/or fees payable to a non-
employee Director in his or her capacity as a Director.
2.8 "Participant" means a non-employee Director who defers Fees under Article
VI of this Plan.
B-1
<PAGE>
2.9 "Secretary" means the Corporate Secretary or any Assistant Corporate
Secretary of Host Marriott.
2.10 "Shares" means shares of the common stock of Host Marriott Corporation,
par value $1.00 per share, or of any successor corporation or other legal
entity adopting this Plan.
2.11 "Stock Units" means the credits to a Participant's Stock Unit Account
under Article VI of this Plan, each of which represents the right to receive
one Share upon settlement of the Stock Unit Account.
2.12 "Stock Unit Account" means the bookkeeping account established by the
Company pursuant to Section 6.4.
2.13 "Termination of Service" means termination of service as a Director in
any of the following circumstances:
(a) Where the Participant voluntarily resigns or retires;
(b) Where the Participant is not re-elected (or elected in the case of an
appointed Director) to the Board by the shareholders; or
(c) Where the Participant dies.
ARTICLE III
SHARES AVAILABLE UNDER THE PLAN
Subject to adjustment as provided in Article X, the maximum number of Shares
that may be distributed in settlement of Stock Unit Accounts under this Plan
shall not exceed 100,000. Such Shares may include authorized but unissued
Shares or Treasury Shares.
ARTICLE IV
ADMINISTRATION
4.1 This Plan shall be administered by the Board's Compensation Policy
Committee (the "Committee"), or such other committee or individual as may be
designated by the Board. Notwithstanding the foregoing, no Director who is a
Participant under this Plan shall participate in any determination relating
solely or primarily to his or her own Shares, Stock Units or Stock Unit
Account.
4.2 It shall be the duty of the Committee to administer this Plan in
accordance with its provisions and to make such recommendations of amendments
or otherwise as it deems necessary or appropriate.
4.3 The Committee shall have the authority to make all determinations it
deems necessary or advisable for administering this Plan, subject to the
limitations in Section 4.1 and other explicit provisions of this Plan.
B-2
<PAGE>
ARTICLE V
ELIGIBILITY
5.1 Each Director who is not an employee of the Company shall be eligible to
defer Fees under Article VI of this Plan.
5.2 If such Director subsequently becomes an employee of the Company (or any
of its subsidiaries), but does not incur a Termination of Service, such
Director shall (a) continue as a Participant with respect to Fees previously
deferred and (b) cease eligibility with respect to all future Fees, if any,
earned while an employee.
ARTICLE VI
DEFERRAL ELECTIONS IN LIEU OF CASH PAYMENTS
6.1 General Rule. Each Director may, in lieu of receipt of Fees, defer such
Fees in accordance with this Article VI, provided that such Director is
eligible under Article V of this Plan to defer such Fees at the date any such
Fees are otherwise payable.
6.2 Timing of Election. Each eligible Director who wishes to defer Fees under
this Plan must make an irrevocable written election at least six (6) months
prior to the start of the calendar year for which the Fees would otherwise be
paid; provided, however, that with respect to (a) any elections made by
Directors in 1995, and (b) any election made by a newly-elected or appointed
Director, the following special rule shall apply: The election must be made at
least 60 days prior to the date the deferred Fees could otherwise have been
payable to the Director and the Company shall hold such deferred Fees (without
interest) and convert them pursuant to Section 6.4 on or as of the date which
follows by six months such deferral election. An election by a Director shall
be deemed to be continuing and therefore applicable to Fees to be paid in
future years unless the Director revokes or changes such election by filing a
new election form by the due date for such form specified in this Section 6.2.
6.3 Form of Election. An election shall be made in a manner satisfactory to
the Secretary. Generally, an election shall be made by completing and filing
the specified election form with the Secretary of the Company within the period
described in Section 6.2. At minimum, the form shall require the Director to
specify the following:
(a) a percentage (in 25% increments), not to exceed an aggregate of 100%
of the Fees to be deferred under this Plan; and
(b) the manner of settlement in accordance with Section 7.2.
In the event Directors' Fees are increased or decreased during any calendar
year, a Participant's election in effect for such year will apply to the
specified percentage of Fees as increased or decreased.
6.4 Establishment of Stock Unit Account. The Company will establish a Stock
Unit Account for each Participant. All Fees deferred pursuant to this Article
VI shall be credited to the Participant's Stock Unit Account as of the date the
Fees would otherwise have been paid to the Participant (the "Deferral Date")
and converted to Stock Units as follows: The number of Stock Units shall equal
the deferred Fees divided by the Fair Market Value of a Share on the Deferral
Date, with fractional units calculated to at least three (3) decimal places.
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6.5 Credit of Dividend Equivalents. As of each dividend payment date with
respect to Shares, each Participant shall have credited to his or her Stock
Unit Account an additional number of Stock Units equal to: the per-share cash
dividend payable with respect to a Share on such dividend payment date
multiplied by the number of Stock Units held in the Stock Unit Account as of
the close of business on the record date for such dividend divided by the Fair
Market Value of a Share on such dividend payment date. If dividends are paid on
Shares in a form other than cash, then such dividends shall be notionally
converted to cash, if their value is readily determinable, and credited in a
manner consistent with the foregoing and, if their value is not readily
determinable, shall be credited "in kind" to the Participant's Stock Unit
Account.
ARTICLE VII
SETTLEMENT OF STOCK UNITS
7.1 Settlement of Account. The Company will settle a Participant's Stock Unit
Account in the manner described in Section 7.2 as soon as administratively
feasible following notification of such Participant's Termination of Service.
7.2 Payment Options. An election filed under Article VI shall specify whether
the Participant's Stock Unit Account is to be settled by delivering to the
Participant (or his or her beneficiary) the number of Shares equal to the
number of whole Stock Units then credited to the Participant's Stock Unit
Account, in (a) a lump sum, or (b) substantially equal annual installments over
a period not to exceed ten (10) years. If, upon lump sum distribution or final
distribution of an installment, less than one whole Stock Unit is credited to a
Participant's Stock Unit Account, cash will be paid in lieu of fractional
shares on the date of such distribution.
7.3 Continuation of Dividend Equivalents. If payment of Stock Units is
deferred and paid in installments, the Participant's Stock Unit Account shall
continue to be credited with dividend equivalents as provided in Section 6.5.
7.4 In Kind Dividends. If any "in kind" dividends were credited to the
Participant's Stock Unit Account under Section 6.5, such dividends shall be
payable to the Participant in full on the date of the first distribution of
Shares under Section 7.2.
ARTICLE VIII
UNFUNDED STATUS
The interest of each Participant in any Fees deferred under this Plan (and
any Stock Units or Stock Unit Account relating thereto) shall be that of a
general creditor of the Company. Stock Unit Accounts, and Stock Units (and, if
any, "in kind" dividends) credited thereto, shall at all times be maintained by
the Company as bookkeeping entries evidencing unfunded and unsecured general
obligations of the Company.
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ARTICLE IX
DESIGNATION OF BENEFICIARY
Each Participant may designate, on a form provided by the Committee, one or
more beneficiaries to receive the Shares described in Section 7.2 in the event
of such Participant's death. The Company may rely upon the beneficiary
designation last filed with the Committee, provided that such form was executed
by the Participant or his or her legal representative and filed with the
Committee prior to the Participant's death.
ARTICLE X
ADJUSTMENT PROVISIONS
In the event any recapitalization, reorganization, merger, consolidation,
spin-off, combination, repurchase, exchange of shares or other securities of
the Company, stock split or reverse split, or similar corporate transaction or
event affects Shares such that an adjustment is determined by the Board or
Committee to be appropriate to prevent dilution or enlargement of Participants'
rights under this Plan, then the Board or Committee will, in a manner that is
proportionate to the change to the Shares and is otherwise equitable, adjust
the number or kind of Shares to be delivered upon settlement of Stock Unit
Accounts under Article VII.
ARTICLE XI
COMPLIANCE WITH RULE 16b-3
It is the intent of the Company that this Plan comply in all respects with
applicable provisions of Rule 16b-3 under the Exchange Act in the connection
with the deferral of Fees. Thus, other provisions of this Plan notwithstanding,
if any deferral of Fees would occur less than six (6) months after the
Participant filed an irrevocable election which would result in such deferral
and at a time that the Company's employee benefit plans are being operated in
conformity with Rule 16b-3 as adopted and in effect, such deferral election may
be modified in a manner consistent with the special rule described in Section
6.2 or in any other manner consistent with Rule 16b-3 as then applicable to any
transaction by a Participant subject to Section 16 of the Exchange Act, or
would cause any Participant or Director to no longer be deemed a "disinterested
person" within the meaning of Rule 16b-3, such provision will be construed or
deemed amended to the extent necessary to conform to such requirements with
respect to such Participant or Director.
ARTICLE XII
GENERAL PROVISIONS
12.1 No right to Continue as a Director. Nothing contained in this Plan will
confer upon any Participant any right to continue to serve as a Director.
12.2 No Shareholder Rights Conferred. Nothing contained in this Plan will
confer upon any Participant any rights of a shareholder of the Company unless
and until Shares are in fact issued or transferred to such Participant in
accordance with Article VII.
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12.3 Change to the Plan. The Board may amend, alter, suspend, discontinue, or
terminate the Plan without the consent of shareholders or Participants, except
that any such action will be subject to the approval of the Company's
shareholders at the next annual meeting of shareholders having a record date
after the date such action was taken if such stockholder approval is required
by any federal or state law or regulation or the rules of any stock exchange or
automated quotation system on which the Shares may then be listed or quoted, or
if the Board determines in its discretion to seek such shareholder approval;
provided, however, that, without the consent of an affected Participant, no
such action may materially impair the rights of such Participant with respect
to any Stock Units credited to his or her Stock Unit Account; and provided,
however, that any "plan provision" referred to in Rule 16b-3(c)(2)(ii)(B) under
the Exchange Act, shall not be amended more than once every six months, other
than to comport with changes in the Internal Revenue Code or the Exchange Act
or the rules thereunder.
12.4 Consideration; Agreements. The consideration for Shares issued or
delivered in lieu of payment of Fees will be the Director's service during the
period to which the Fees paid in the form of Shares related.
12.5 Compliance with Laws and Obligations. The Company will not be obligated
to issue or deliver Shares in connection with this Plan in a transaction
subject to the registration requirements of the Securities Act of 1933, as
amended, or any other federal or state securities law, any requirement under
any listing agreement between the Company and any national securities exchange
or automated quotation system or any other laws, regulations, or contractual
obligations of the Company, until the Company is satisfied that such laws,
regulations, and other obligations of the Company have been complied with in
full. Certificates representing Shares delivered under the Plan will be subject
to such stop-transfer orders and other restrictions as may be applicable under
such laws, regulations, and other obligations of the Company, including any
requirement that a legend or legends be placed thereon.
12.6 Limitations on Transferability. Stock Units and any other right under
the Plan that may constitute a "derivative security" as generally defined in
Rule 16a-1(c) under the Exchange Act will not be transferable by a Participant
except by will or the laws of descent and distribution (or to a designated
beneficiary in the event of a Participant's death); provided, however, that
such rights may be transferred to one or more trusts or other beneficiaries
during the lifetime of the Participant in connection with the Participant's
estate planning, but only if and to the extent then permitted under Rule 16b-3
and consistent with the registration of the offer and sale of Shares on Form S-
8 or a successor registration form of the Securities and Exchange Commission.
Stock Units and other rights under the Plan may not be pledged, mortgaged,
hypothecated, or otherwise encumbered, and shall not be subject to the claims
of creditors.
12.7 Governing Law. The validity, construction, and effect of the Plan and
any agreement hereunder will be determined in accordance with the Delaware
General Corporation Law, to the extent applicable, other laws (including those
governing contracts) of the State of Maryland, without giving effect to
principles of conflicts of laws, and applicable federal law.
12.8 Plan Termination. Unless earlier terminated by action of the Board or
Executive Committee of the Board, the Plan will remain in effect until such
time as no Shares remain available for delivery under the Plan and the Company
has no further rights or obligations under the Plan.
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ANNUAL MEETING OF SHAREHOLDERS
OF HOST MARRIOTT CORPORATION
The 1995 Annual Meeting of Shareholders of Host Marriott Corporation will
be held on Thursday, May 11, 1995 at the Philadelphia Marriott Hotel,
located at 1201 Market Street (with the entrance on Filbert Street between
12th and 13th Streets) in Philadelphia, Pennsylvania. The meeting will
begin at 10:30 a.m. in Salons A and B of the Grand Ballroom, with a
continental breakfast provided to shareholders attending the meeting
beginning at 9:00 a.m.
A special "Shareholder Annual Meeting" rate is offered at the hotel for
Wednesday, May 10, 1995, the night before the meeting. A limited number of
rooms is available for this special rate of $119.00. To receive this
special rate, please call the hotel directly and ask for the Host Marriott
"Shareholder Annual Meeting" rate for May 10. Applicable taxes and
gratuities will be additional and reservations are required in advance.
This discount may not be used in conjunction with any other discount,
coupon or group rate.
PHILADELPHIA MARRIOTT HOTEL
1201 MARKET STREET
PHILADELPHIA, PENNSYLVANIA 19107
(ENTRANCE ON FILBERT STREET BETWEEN 12TH AND 13TH STREETS)
TELEPHONE: (215) 972-6700
Because parking is extremely limited in the general area of the hotel, we
STRONGLY RECOMMEND that shareholders attending the Annual Meeting consider
using public transportation. The hotel is easily accessible by subway or
taxicab from Philadelphia 30th Street Station (Amtrak) and Philadelphia
International Airport. The Market East subway station is located directly
across the street from the hotel.
Directions to the hotel:
FROM WASHINGTON, BALTIMORE AND PHILADELPHIA INTERNATIONAL AIRPORT: Take I-
95 North to Exit 17, and follow Route 676 West/Central Philadelphia.
Continue on Route 676 West for one mile to the first exit, Broad
Street/Central Philadelphia. The exit will bring you onto 15th and Vine
Streets. At the intersection, make a left turn at the light, Vine Street
East. Follow Vine Street/Local Traffic to the third light, 12th Street.
Make a right turn onto 12th Street. After three blocks (one block past the
Pennsylvania Convention Center), make a right turn onto the next street,
Filbert Street. The hotel is on the left.
FROM NEW YORK AND THE NEW JERSEY TURNPIKE: Take the New Jersey Turnpike
South to Exit 4. Stay to the right through the toll booths. Take Route 73
North. Follow Route 73 North to Route 38 West. Continue on Route 38 West
to Route 30 West, which will take you to the Benjamin Franklin Bridge.
Cross the bridge and stay in the center lane. Follow the sign for Vine
Street/Local Traffic. Continue on Vine Street to 12th Street. Make a left
turn onto 12th Street. After three blocks (one block past the Pennsylvania
Convention Center), make a right turn onto the next street, Filbert
Street. The hotel is on the left.
